G.R. No.

L-12792 February 28, 1961

REPUBLIC OF THE PHILIPPINES, plaintiff-appellant,

vs.
LA ORDEN DE PP. BENEDICTINOS DE FILIPINAS, defendant-appellee.

Office of the Solicitor General for plaintiff-appellant.

Ledesma, Puno, Guytingco, Antonio and Associates for defendant-appellee.

DIZON, J.:

To ease and solve the daily traffic congestion on Legarda Street, the Government drew plans to extend
Azcarraga street from its junction with Mendiola street, up to the Sta. Mesa Rotonda, Sampaloc, Manila.
To carry out this plan it offered to buy a portion of approximately 6,000 square meters of a bigger parcel
belonging to La Orden de PP. Benedictinos de Filipinas, a domestic religious corporation that owns the
San Beda College, a private educational institution situated on Mendiola street. Not having been able to
reach an agreement on the matter with the owner, the Government instituted the present
expropriation proceedings.

On May 27, 1957 the trial court, upon application of the Government — hereinafter referred to as
appellant — issued an order fixing the provisional value of the property in question at P270,000.00 and
authorizing appellant to take immediate possession thereof upon depositing said amount. The deposit
having been made with the City Treasurer of Manila, the trial court issued the corresponding order
directing the Sheriff of Manila to place appellant in possession of the property aforesaid.

On June 8, 1957, as directed by the Rules of Court, the herein appellee, in lieu of an answer, filed a
motion to dismiss the complaint based on the following grounds:

I. That the property sought to be expropriated is already dedicated to public use and therefore is not
subject to expropriation.

II. That there is no necessity for the proposed expropriation.

III. That the proposed Azcarraga Extension could pass through a different site which would entail less
expense to the Government and which would not necessitate the expropriation of a property dedicated
to education.

IV. That the present action filed by the plaintiff against the defendant is discriminatory.

V. That the herein plaintiff does not count with sufficient funds to push through its project of
constructing the proposed Azcarraga Extension and to allow the plaintiff to expropriate defendant's
property at this time would be only to needlessly deprive the latter of the use of its property.".

The government filed a written opposition to the motion to dismiss (Record on Appeal, pp. 30-37) while
appellee filed a reply thereto (Id., pp. 38-48). On July 29, 1957, without receiving evidence upon the
questions of fact arising from the complaint, the motion to dismiss and the opposition thereto filed, the
trial court issued the appealed order dismissing the case.
The appealed order shows that the trial court limited itself to deciding the point of whether or not the
expropriation of the property in question is necessary (Rec. on Ap., p. 50) and, having arrived at the
conclusion that such expropriation was not of extreme necessity, dismissed the proceedings.

It is to be observed that paragraph IV of the complaint expressly alleges that appellant needs, among
other properties, the portion of appellee's property in question for the purpose of constructing the
Azcarraga street extension, and that paragraph VII of the same complaint expressly alleges that, in
accordance with Section 64(b) of the Revised Administrative Code, the President of the Philippines had
authorized the acquisition, thru condemnation proceedings, of the aforesaid parcel of land belonging to
appellee, as evidenced by the third indorsement dated May 15, 1957 of the Executive Secretary, Office
of the President of the Philippines, a copy of which was attached to the complaint as Annex "C" and
made an integral part thereof. In denial of these allegations appellee's motion to dismiss alleged that
"there is no necessity for the proposed expropriation". Thus, the question of fact decisive of the whole
case arose.

It is the rule in this jurisdiction that private property may be expropriated for public use and upon
payment of just compensation; that condemnation of private property is justified only if it is for the
public good and there is a genuine necessity therefor of a public character. Consequently, the courts
have the power to inquire into the legality of the exercise of the right of eminent domain and to
determine whether or not there is a genuine necessity therefor (City of Manila vs. Chinese Community,
40 Phil. 349; Manila Railroad Company vs. Hacienda Benito, Inc., 37 O.G. 1957).

Upon the other hand, it does not need extended argument to show that whether or not the proposed
opening of the Azcarraga extension is a necessity in order to relieve the daily congestion of traffic on
Legarda St., is a question of fact dependent not only upon the facts of which the trial court very liberally
took judicial notice but also up on other factors that do not appear of record and must, therefore, be
established by means of evidence. We are, therefore, of the opinion that the parties should have been
given an opportunity to present their respective evidence upon these factors and others that might be
of direct or indirect help in determining the vital question of fact involved, namely, the need to open the
extension of Azcarraga street to ease and solve the traffic congestion on Legarda street.

WHEREFORE, the appealed order of dismissal is set aside and the present case is remanded to the trial
court for further proceedings in accordance with this decision. Without costs.
DIOSDADO LAGCAO, DOROTEO LAGCAO and URSULA LAGCAO, Petitioners, versus JUDGE GENEROSA
G. LABRA, Branch 23, Regional Trial Court, Cebu, and the CITY OF CEBU, Respondent.

DECISION

CORONA, J.:

Before us is a petition for review of the decision dated July 1, 2002 of the Regional Trial Court, Branch
23, Cebu City[1] upholding the validity of the City of Cebu's Ordinance No. 1843, as well as the lower
court's order dated August 26, 2002 denying petitioner's motion for reconsideration.

In 1964, the Province of Cebu donated 210 lots to the City of Cebu. One of these lots was Lot 1029,
situated in Capitol Hills, Cebu City, with an area of 4,048 square meters. In 1965, petitioners purchased
Lot 1029 on installment basis. But then, in late 1965, the 210 lots, including Lot 1029, reverted to the
Province of Cebu.[2] Consequently, the province tried to annul the sale of Lot 1029 by the City of Cebu
to the petitioners. This prompted the latter to sue the province for specific performance and damages in
the then Court of First Instance.

On July 9, 1986, the court a quo ruled in favor of petitioners and ordered the Province of Cebu to
execute the final deed of sale in favor of petitioners. On June 11, 1992, the Court of Appeals affirmed
the decision of the trial court. Pursuant to the ruling of the appellate court, the Province of Cebu
executed on June 17, 1994 a deed of absolute sale over Lot 1029 in favor of petitioners. Thereafter,
Transfer Certificate of Title (TCT) No. 129306 was issued in the name of petitioners and Crispina
Lagcao.[3]

After acquiring title, petitioners tried to take possession of the lot only to discover that it was already
occupied by squatters. Thus, on June 15, 1997, petitioners instituted ejectment proceedings against the
squatters. The Municipal Trial Court in Cities (MTCC), Branch 1, Cebu City, rendered a decision on April 1,
1998, ordering the squatters to vacate the lot. On appeal, the RTC affirmed the MTCC's decision and
issued a writ of execution and order of demolition.

However, when the demolition order was about to be implemented, Cebu City Mayor Alvin Garcia wrote
two letters[4] to the MTCC, requesting the deferment of the demolition on the ground that the City was
still looking for a relocation site for the squatters. Acting on the mayor's request, the MTCC issued two
orders suspending the demolition for a period of 120 days from February 22, 1999. Unfortunately for
petitioners, during the suspension period, the Sangguniang Panlungsod (SP) of Cebu City passed a
resolution which identified Lot 1029 as a socialized housing site pursuant to RA 7279.[5] Then, on June
30, 1999, the SP of Cebu City passed Ordinance No. 1772[6] which included Lot 1029 among the
identified sites for socialized housing. On July, 19, 2000, Ordinance No. 1843[7] was enacted by the SP of
Cebu City authorizing the mayor of Cebu City to initiate expropriation proceedings for the acquisition of
Lot 1029 which was registered in the name of petitioners. The intended acquisition was to be used for
the benefit of the homeless after its subdivision and sale to the actual occupants thereof. For this
purpose, the ordinance appropriated the amount of P6,881,600 for the payment of the subject lot. This
ordinance was approved by Mayor Garcia on August 2, 2000.

On August 29, 2000, petitioners filed with the RTC an action for declaration of nullity of Ordinance No.
1843 for being unconstitutional. The trial court rendered its decision on July 1, 2002 dismissing the
complaint filed by petitioners whose subsequent motion for reconsideration was likewise denied on
August 26, 2002.

In this appeal, petitioners argue that Ordinance No. 1843 is unconstitutional as it sanctions the
expropriation of their property for the purpose of selling it to the squatters, an endeavor contrary to the
concept of "public use" contemplated in the Constitution.[8] They allege that it will benefit only a
handful of people. The ordinance, according to petitioners, was obviously passed for politicking, the
squatters undeniably being a big source of votes.

In sum, this Court is being asked to resolve whether or not the intended expropriation by the City of
Cebu of a 4,048-square-meter parcel of land owned by petitioners contravenes the Constitution and
applicable laws.

Under Section 48 of RA 7160,[9] otherwise known as the Local Government Code of 1991,[10] local
legislative power shall be exercised by the Sangguniang Panlungsod of the city. The legislative acts of the
Sangguniang Panlungsod in the exercise of its lawmaking authority are denominated ordinances.

Local government units have no inherent power of eminent domain and can exercise it only when
expressly authorized by the legislature.[11] By virtue of RA 7160, Congress conferred upon local
government units the power to expropriate. Ordinance No. 1843 was enacted pursuant to Section 19 of
RA 7160:

SEC. 19. Eminent Domain. - A local government unit may, through its chief executive and acting pursuant
to an ordinance, exercise the power of eminent domain for public use, or purpose, or welfare for the
benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of
the Constitution and pertinent laws xxx. (italics supplied).
Ordinance No. 1843 which authorized the expropriation of petitioners' lot was enacted by the SP of
Cebu City to provide socialized housing for the homeless and low-income residents of the City.

However, while we recognize that housing is one of the most serious social problems of the country,
local government units do not possess unbridled authority to exercise their power of eminent domain in
seeking solutions to this problem.

There are two legal provisions which limit the exercise of this power: (1) no person shall be deprived of
life, liberty, or property without due process of law, nor shall any person be denied the equal protection
of the laws;[12] and (2) private property shall not be taken for public use without just compensation.[13]
Thus, the exercise by local government units of the power of eminent domain is not absolute. In fact,
Section 19 of RA 7160 itself explicitly states that such exercise must comply with the provisions of the
Constitution and pertinent laws.

The exercise of the power of eminent domain drastically affects a landowner's right to private property,
which is as much a constitutionally-protected right necessary for the preservation and enhancement of
personal dignity and intimately connected with the rights to life and liberty.[14] Whether directly
exercised by the State or by its authorized agents, the exercise of eminent domain is necessarily in
derogation of private rights.[15] For this reason, the need for a painstaking scrutiny cannot be
overemphasized.

The due process clause cannot be trampled upon each time an ordinance orders the expropriation of a
private individual's property. The courts cannot even adopt a hands-off policy simply because public use
or public purpose is invoked by an ordinance, or just compensation has been fixed and determined. In
De Knecht vs. Bautista,[16] we said:

It is obvious then that a land-owner is covered by the mantle of protection due process affords. It is a
mandate of reason. It frowns on arbitrariness, it is the antithesis of any governmental act that smacks of
whim or caprice. It negates state power to act in an oppressive manner. It is, as had been stressed so
often, the embodiment of the sporting idea of fair play. In that sense, it stands as a guaranty of justice.
That is the standard that must be met by any governmental agency in the exercise of whatever
competence is entrusted to it. As was so emphatically stressed by the present Chief Justice, "Acts of
Congress, as well as those of the Executive, can deny due process only under pain of nullity. xxx.

The foundation of the right to exercise eminent domain is genuine necessity and that necessity must be
of public character.[17] Government may not capriciously or arbitrarily choose which private property
should be expropriated. In this case, there was no showing at all why petitioners' property was singled
out for expropriation by the city ordinance or what necessity impelled the particular choice or selection.
Ordinance No. 1843 stated no reason for the choice of petitioners' property as the site of a socialized
housing project.

Condemnation of private lands in an irrational or piecemeal fashion or the random expropriation of

small lots to accommodate no more than a few tenants or squatters is certainly not the condemnation
for public use contemplated by the Constitution. This is depriving a citizen of his property for the
convenience of a few without perceptible benefit to the public.[18]

RA 7279 is the law that governs the local expropriation of property for purposes of urban land reform
and housing. Sections 9 and 10 thereof provide:

SEC 9. Priorities in the Acquisition of Land. - Lands for socialized housing shall be acquired in the
following order:

(a) Those owned by the Government or any of its subdivisions, instrumentalities, or agencies, including
government-owned or controlled corporations and their subsidiaries;

(b) Alienable lands of the public domain;

(c) Unregistered or abandoned and idle lands;

(d) Those within the declared Areas or Priority Development, Zonal Improvement Program sites, and
Slum Improvement and Resettlement Program sites which have not yet been acquired;

(e) Bagong Lipunan Improvement of Sites and Services or BLISS which have not yet been acquired; and

(f) Privately-owned lands.

Where on-site development is found more practicable and advantageous to the beneficiaries, the
priorities mentioned in this section shall not apply. The local government units shall give budgetary
priority to on-site development of government lands. (Emphasis supplied).
SEC. 10. Modes of Land Acquisition. - The modes of acquiring lands for purposes of this Act shall include,
among others, community mortgage, land swapping, land assembly or consolidation, land banking,
donation to the Government, joint venture agreement, negotiated purchase, and expropriation:
Provided, however, That expropriation shall be resorted to only when other modes of acquisition have
been exhausted: Provided further, That where expropriation is resorted to, parcels of land owned by
small property owners shall be exempted for purposes of this Act: xxx. (Emphasis supplied).

In the recent case of Estate or Heirs of the Late Ex-Justice Jose B.L. Reyes et al. vs. City of Manila,[19] we
ruled that the above-quoted provisions are strict limitations on the exercise of the power of eminent
domain by local government units, especially with respect to (1) the order of priority in acquiring land
for socialized housing and (2) the resort to expropriation proceedings as a means to acquiring it. Private
lands rank last in the order of priority for purposes of socialized housing. In the same vein, expropriation
proceedings may be resorted to only after the other modes of acquisition are exhausted. Compliance
with these conditions is mandatory because these are the only safeguards of oftentimes helpless owners
of private property against what may be a tyrannical violation of due process when their property is
forcibly taken from them allegedly for public use.

We have found nothing in the records indicating that the City of Cebu complied strictly with Sections 9
and 10 of RA 7279. Ordinance No. 1843 sought to expropriate petitioners' property without any attempt
to first acquire the lands listed in (a) to (e) of Section 9 of RA 7279. Likewise, Cebu City failed to establish
that the other modes of acquisition in Section 10 of RA 7279 were first exhausted. Moreover, prior to
the passage of Ordinance No. 1843, there was no evidence of a valid and definite offer to buy
petitioners' property as required by Section 19 of RA 7160.[20] We therefore find Ordinance No. 1843 to
be constitutionally infirm for being violative of the petitioners' right to due process.

It should also be noted that, as early as 1998, petitioners had already obtained a favorable judgment of
eviction against the illegal occupants of their property. The judgment in this ejectment case had, in fact,
already attained finality, with a writ of execution and an order of demolition. But Mayor Garcia
requested the trial court to suspend the demolition on the pretext that the City was still searching for a
relocation site for the squatters. However, instead of looking for a relocation site during the suspension
period, the city council suddenly enacted Ordinance No. 1843 for the expropriation of petitioners' lot. It
was trickery and bad faith, pure and simple. The unconscionable manner in which the questioned
ordinance was passed clearly indicated that respondent City transgressed the Constitution, RA 7160 and
RA 7279.

For an ordinance to be valid, it must not only be within the corporate powers of the city or municipality
to enact but must also be passed according to the procedure prescribed by law. It must be in accordance
with certain well-established basic principles of a substantive nature. These principles require that an
ordinance (1) must not contravene the Constitution or any statute (2) must not be unfair or oppressive
(3) must not be partial or discriminatory (4) must not prohibit but may regulate trade (5) must be
general and consistent with public policy, and (6) must not be unreasonable.[21]

Ordinance No. 1843 failed to comply with the foregoing substantive requirements. A clear case of
constitutional infirmity having been thus established, this Court is constrained to nullify the subject
ordinance. We recapitulate:

first, as earlier discussed, the questioned ordinance is repugnant to the pertinent provisions of the
Constitution, RA 7279 and RA 7160;

second, the precipitate manner in which it was enacted was plain oppression masquerading as a pro-
poor ordinance;

third, the fact that petitioners' small property was singled out for expropriation for the purpose of
awarding it to no more than a few squatters indicated manifest partiality against petitioners, and

fourth, the ordinance failed to show that there was a reasonable relation between the end sought and
the means adopted. While the objective of the City of Cebu was to provide adequate housing to slum
dwellers, the means it employed in pursuit of such objective fell short of what was legal, sensible and
called for by the circumstances.

Indeed, experience has shown that the disregard of basic liberties and the use of short-sighted methods
in expropriation proceedings have not achieved the desired results. Over the years, the government has
tried to remedy the worsening squatter problem. Far from solving it, however, government's kid-glove
approach has only resulted in the multiplication and proliferation of squatter colonies and blighted
areas. A pro-poor program that is well-studied, adequately funded, genuinely sincere and truly
respectful of everyone's basic rights is what this problem calls for, not the improvident enactment of
politics-based ordinances targeting small private lots in no rational fashion.

WHEREFORE, the petition is hereby GRANTED. The July 1, 2002 decision of Branch 23 of the Regional
Trial Court of Cebu City is REVERSED and SET ASIDE.

SO ORDERED.
THE CITY OF MANILA, plaintiff-appellant,
vs.
CHINESE COMMUNITY OF MANILA, ET AL., defendants-appellees.

EN BANC

JOHNSON, J.:

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

That question arose in the following manner:

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

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

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

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

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

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

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

From that judgment the plaintiff appealed and presented the above question as its principal ground of
appeal.

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

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

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

Section 242 provides that a complaint in expropriation proceeding shall be presented; that the
complaint shall state with certainty the right of condemnation, with a description of the property sought
to be condemned together with the interest of each defendant separately.

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

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

It is contended on the part of the plaintiff that the phrase in said section, "and if the court shall find
the rightto expropriate exists," means simply that, if the court finds that there is some law authorizing
the plaintiff to expropriate, then the courts have no other function than to authorize the expropriation
and to proceed to ascertain the value of the land involved; that the necessity for the expropriation is a
legislative and not a judicial question.
Upon the question whether expropriation is a legislative function exclusively, and that the courts cannot
intervene except for the purpose of determining the value of the land in question, there is much legal
legislature. Much has been written upon both sides of that question. A careful examination of the
discussions pro and con will disclose the fact that the decisions depend largely upon particular
constitutional or statutory provisions. It cannot be denied, if the legislature under proper authority
should grant the expropriation of a certain or particular parcelof land for some specified public purpose,
that the courts would be without jurisdiction to inquire into the purpose of that legislation.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In the case of Dewey vs. Chicago, etc. Co. (184 Ill., 426, 433), the court said: "Its right to condemn
property is not a general power of condemnation, but is limited to cases where a necessity for resort to
private property is shown to exist. Such necessity must appear upon the face of the petition to
condemn. If the necessary is denied the burden is upon the company (municipality) to establish it."
(Highland, etc. Co. vs. Strickley, 116 Fed., 852, 856; Kiney vs. Citizens' Water & Light Co., 173 Ind., 252,
257 ; Bell vs. Mattoon Waterworks, etc. Co., 245 Ill., 544 [137 Am. St. Rep. 338].)
It is true that naby decisions may be found asserting that what is a public use is a legislative question,
and many other decisions declaring with equal emphasis that it is a judicial question. But, as long as
there is a constitutional or statutory provision denying the right to take land for any use other than a
public use, it occurs to us that the question whether any particular use is a public one or not is
ultimately, at least, a judicial question. The legislative may, it is true, in effect declare certain uses to be
public, and, under the operation of the well-known rule that a statute will not be declared to be
unconstitutional except in a case free, or comparatively free, from doubt, the courts will certainly
sustain the action of the legislature unless it appears that the particular use is clearly not of a public
nature. The decisions must be understood with this limitation; for, certainly, no court of last resort will
be willing to declare that any and every purpose which the legislative might happen to designate as a
public use shall be conclusively held to be so, irrespective of the purpose in question and of its
manifestly private character Blackstone in his Commentaries on the English Law remarks that, so great is
the regard of the law for private property that it will not authorize the least violation of it, even for the
public good, unless there exists a very great necessity therefor.

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

Blackstone, in his Commentaries on the English Law said that the right to own and possess land — a
place to live separate and apart from others — to retain it as a home for the family in a way not to be
molested by others — is one of the most sacred rights that men are heirs to. That right has been written
into the organic law of every civilized nation. The Acts of Congress of July 1, 1902, and of August 29,
1916, which provide that "no law shall be enacted in the Philippine Islands which shall deprive any
person of his property without due process of law," are but a restatement of the time-honored
protection of the absolute right of the individual to his property. Neither did said Acts of Congress add
anything to the law already existing in the Philippine Islands. The Spaniard fully recognized the principle
and adequately protected the inhabitants of the Philippine Islands against the encroachment upon the
private property of the individual. Article 349 of the Civil Code provides that: "No one may be deprived
of his property unless it be by competent authority, for some purpose of proven public utility, and after
payment of the proper compensation Unless this requisite (proven public utility and payment) has been
complied with, it shall be the duty of the courts to protect the owner of such property in its possession
or to restore its possession to him , as the case may be."
The exercise of the right of eminent domain, whether directly by the State, or by its authorized agents, is
necessarily in derogation of private rights, and the rule in that case is that the authority must be strictly
construed. No species of property is held by individuals with greater tenacity, and none is guarded by
the constitution and laws more sedulously, than the right to the freehold of inhabitants. When the
legislature interferes with that right, and, for greater public purposes, appropriates the land of an
individual without his consent, the plain meaning of the law should not be enlarged by doubtly
interpretation. (Bensely vs. Mountainlake Water Co., 13 Cal., 306 and cases cited [73 Am. Dec., 576].)

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

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

The Charter of the city of Manila authorizes the taking of private property for public use. Suppose the
owner of the property denies and successfully proves that the taking of his property serves no public
use: Would the courts not be justified in inquiring into that question and in finally denying the petition if
no public purpose was proved? Can it be denied that the courts have a right to inquire into that
question? If the courts can ask questions and decide, upon an issue properly presented, whether the use
is public or not, is not that tantamount to permitting the courts to inquire into the necessity of the
appropriation? If there is no public use, then there is no necessity, and if there is no necessity, it is
difficult to understand how a public use can necessarily exist. If the courts can inquire into the question
whether a public use exists or not, then it seems that it must follow that they can examine into the
question of the necessity.

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

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

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

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

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

Aside from insisting that there exists no necessity for the alleged improvements, the defendants further
contend that the street in question should not be opened through the cemetery. One of the defendants
alleges that said cemetery is public property. If that allegations is true, then, of course, the city of Manila
cannot appropriate it for public use. The city of Manila can only expropriate private property.
It is a well known fact that cemeteries may be public or private. The former is a cemetery used by the
general community, or neighborhood, or church, while the latter is used only by a family, or a small
portion of the community or neighborhood. (11 C. J., 50.)

Where a cemetery is open to public, it is a public use and no part of the ground can be taken for other
public uses under a general authority. And this immunity extends to the unimproved and unoccupied
parts which are held in good faith for future use. (Lewis on Eminent Domain, sec. 434, and cases cited.)

The cemetery in question seems to have been established under governmental authority. The Spanish
Governor-General, in an order creating the same, used the following language:

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

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

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

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

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

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

For all of the foregoing, we are fully persuaded that the judgment of the lower court should be and is
hereby affirmed, with costs against the appellant. So ordered.
REPUBLIC OF THE PHILIPPINES, plaintiff-appellant, vs. PHILIPPINE LONG DISTANCE TELEPHONE
COMPANY, defendant-appellant.

DECISION

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
therefore issued against the defendant on the inter-connection 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:

"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 timecalls 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 1956. 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 interconnected 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. 17 Through 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 contract 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. The 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 defendant's 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. 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 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 interservice connection
between both telephone systems is not much different. In either case private property is subjected to a
burden for public use and benefit. If under Section 6, Article XIII, of the Constitution, the State may, in
the interest of national welfare, transfer utilities to public ownership upon payment of just
compensation, there is no reason why the State may not require a public utility to render services in the
general interest, provided just compensation is paid therefor. Ultimately, the beneficiary of the
interconnecting service would be the users of both telephone systems, so that the condemnation would
be for public use.

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

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

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

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

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

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

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

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

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

"Sec. 14. The rights herein granted shall not be exclusive, and the rights and power to grant to any
corporation, association or person other than the grantee franchise for the telephone or electrical
transmission of messages 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 Mohan 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 rights 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 in 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 line, 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 "politically" (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.
CARMEN AYALA DE ROXAS and PEDRO P. ROXAS, plaintiffs,
vs.
THE CITY OF MANILA and ROBERT G. DIECK, as city engineer, defendants.

G.R. No. L-3144 | November 19, 1907

EN BANC

ARELLANO, C.J.:

The defendants' demurred to the amended complaint having been overruled, an answer was presented,
and the trial of the case proceeded with.

Briefly, the subject of this action may be stated as follows:

1. That on the 15th of January, 1906, the plaintiff, as owner of the property situated on the Escolta,
district of Binondo, city of Manila, the eastern boundary of which adjoins the canal of San Jacinto or
Sibacon to the extent of 23.50 meters, the total area of the ground being 658.19 square meters, applied
to the city engineer, Robert G. Dieck, the defendant herein, for a license to construct a terrace over "the
strip of land 3 meters in width between the main wall of her house and the edge of the said canal of
Sibacon or San Jacinto, which strip of land belongs exclusively to her"; but the defendant refused to
grant the license or authorize the plaintiff to build the terrace.

2. That a similar petition was addressed to the Municipal Board of the city of Manila on the 30th of said
month and year, and it also was denied.

3. That, as the plaintiff has been informed, the sole reason wherefore the license was denied is because
"the said defendants pretend to compel the plaintiff to leave vacant and without any construction
whatever thereon the said strip of 3 meters in width which is a portion of the ground belonging to her,
in order to use the same as the wharf or public way so that the plaintiff will only be able to use the said
strip in the same manner and for the same purposes as the public in general, thus losing the enjoyment,
use, and exclusive possession of the said strip of the property which the plaintiff and the former owners
thereof have enjoyed quietly and peacefully during more than seventy years."

4. That the strip in question was occupied by a two-storey building constructed more than seventy years
ago.
It appears from the evidence:

First. That the plaintiff's ownership of the whole ground and of the strip in question is beyond all doubt,
both by reason of her title thereto and the entry thereof in the registry of property, and by the
acknowledgment thereof made by the city itself when obtaining by means of condemnation proceedings
a portion of the same property adjoining the public road.

Second. That as a matter of fact, the license which the plaintiff, using her right of ownership, requested
for the construction of a terrace on the strip of 3 meters adjoining the canal of San Jacinto or Sibacon,
was denied; both parties agreeing that the denial was due to the intent to reserve the said strip for the
establishment of a public easement, although the opposing witnesses did not agree as to the special
easement intended to be established.

Third. That it was agreed between both parties that the strip above referred to had not been
expropriated in whole or in part by the municipality of Manila, and that neither had the latter offered
any compensation for the same to the owner thereof.

Fourth. That according to Engineer Dieck, a defendant, the purpose of the city was to use the said strip
of 3 meters as a place for discharging and landing goods, and as a place of shelter for shipwrecked
persons and for fishermen, and to devote it also, together with other strips along the canal, by the
gradual acquisition of land, to a towpath for craft passing through the canal; that a building line has
been established by the Municipal Board along the Sibacon Creek leaving a strip of 3 meters within
which, according to ordinances, no constructions would be permitted; that such is the purpose and the
intent on which the existing ordinances are based. But John Tuther, the secretary of the Municipal
Board, declares that, when Ordinance No. 78 was under discussion, he does not recall having heard any
of the members of the board make reference to a towpath nor did he ever hear anything said with
reference to the purpose to which the strip of 3 meters mentioned in Ordinance No. 78 was to be
devoted, though he believes that, by thus leaving a strip of 3 meters, it would be easier to prevent
collisions; that it would facilitate navigation, and that it had never been the intention of the Board to
indemnify the owners of such strips of 3 meters by reason of the use which parties landing thereon may
make of the same.

Fifth. That, as stated in the brief of the defendants, "the intention of the Municipal Board, when denying
the permit asked for by the plaintiff, has never been to establish any way whatever along the Sibacon
Creek so that said plaintiff could, if she chose to, close her property with walls or the like perpendicularly
to said creek, that is, over the two lines perpendicular to said creek, provided she does not close or
build over the 3-meter space running along the creek," which space is subject, as stated in the evidence
submitted by the defendants, to the "easement of public use for the general interest of navigation,
flotation, fishing, and salvage," citing the Law of Waters and the Civil Code.
Sixth. And that the result is, according to No. 19 of the statement of facts of the complaint, "that the
plaintiff shall only be able to use said strip in the same manner and for the same purposes as the general
public, thus losing the enjoyment, use, and exclusive possession of said strip of the ground which the
plaintiff and the former owners of the same have enjoyed as such owners quietly and peacefully during
more than seventy years."

What the defendants have therefore done is to prevent the plaintiffs from continuing to enjoy, use, and
freely dispose of such strip of their ground, as they had been doing up to the time when they applied for
a license to construct a terrace over said strip, and the defendants prevented it with the intention of
establishing a public easement provided for in an ordinance of their own which they consider is
pursuant to the provisions of the Law of Waters and of the Civil Code in force.

In the decision entered by this court on the 5th of May, 1906, regarding the demurrer, the following was
set forth:

The easement of a zone for public use, authorized by article 73 of the Law of Waters of 1866, is
developed in articles 160 and 161, inclusive, of said law; the general interest on behalf of which the
easement is supported is determined, for navigation, by articles 160 and 161; for flotation, by article
162; for salvage, by article 163; and for fishing, by article 164; in all of them the owner of the riverside
property supports the easement "upon being previously indemnified for loss and damage." (Folio 41.)

Said zone for public use, the same as a towpath, is solely available for the purposes of navigation,
flotation, fishing, and salvage, being closed to any other use which be attempted; therefore, it is
erroneous to pretend that the right of the owner of the property bordering upon the stream can be
reduced to the level of the public right; on the contrary he should only be called upon to bear those
burdens which are in the general interest, but not without prior, or subsequently indemnity. (Folio 43.)

If as affirmed in statement No. 4, and accepted by the defendants, the Sibacon Creek is a canal — let us
grant that it is navigable, because it has been held by competent authority — and that under the name
of a public wharf, which is the largest in area, it is desired to establish a towpath, which is the smallest, it
must be remembered that the law does not grant it along navigable canals (art. 157), and, at all events,
the establishment thereof must be preceded by the corresponding indemnity. (Arts. 154 and 157.)

The matter at issue herein being the enforcement of the Law of Waters and of the Civil Code, it is not
out of place nor untimely, even now, to point out the administrative law which ought to have been
applied had this act of the city of Manila been carried out by the late ayuntamiento during the former
sovereignty; an administrative law which, owing to its having been so often repeated, is now raised to
the rank of an incontrovertible principle of law on the matter.

The powers of the administration do not extend to the establishment of new easements upon private
property but simply to preserve old ones, whenever a recent and easily proven usurpation exists.
(Decision of January 23, 1866.)

Ayuntamientos are not authorized to impose an easement upon private property; therefore, any order
thus given can not be held to have been issued in the exercise of their lawful powers. (Decision of July
28, 1866.)

Administrative action for the recovery of a public easement which has been usurped by a constructive
work of private ownership can only be taken when such usurpation is of recent date and easily proven.

When real rights are concerned an ayuntamiento may prosecute such actions as it may consider itself
entitled to, for the possession or ownership in accordance with law. (Decision of October 26, 1866.)

This doctrine will be found far more vigorous at present upon reference to the principles of the law now
in force.

According to article 349 of the Civil Code, no one shall be deprived of his property, except by competent
authority and with sufficient cause of public utility, always after proper indemnity; if this requisite has
not been fulfilled the courts must protect, and eventually restore possession to the injured party.

Under section 5 of the act of Congress of July 1, 1902, no legislation shall be enacted in the Philippine
Islands which shall deprive any person of life, liberty, or property without due process of law; and the
due process of law in order to deprive a person of his property is, according to the Code of Civil
Procedure, reserved to the judicial authority. The refusal to grant a license or the enactment of an
ordinance whereby a person may be deprived of property or rights, or an attempt thereat is made,
without previously indemnifying him therefor, is not, nor can it be, due process of law.

And, considering that the easement intended to be established, whatever may be the object thereof, is
not merely a real right that will encumber the property, but is one tending to prevent the exclusive use
of one portion of the same, by expropriating it for a public use which, be it what it may, can not be
accomplished unless the owner of the property condemned or seized be previously and duly
indemnified, it is proper to protect the appellant by means of the remedy employed in such cases, as it
is the only adequate remedy when no other legal action can be resorted to, against an intent which is
nothing short of an arbitrary restriction imposed by the city by virtue of the coercive power with which
the same is invested. The question involved here is not the actual establishment of an easement which
might be objected to by an action in court, but a mere act of obstruction, a refusal which is beyond the
powers of the city of Manila, because it is not simply a measure in connection with building regulations,
but is an attempt to suppress, without due process of law, real rights which are attached to the right of
ownership.

When . . . any corporation, board, or person unlawfully neglects the performance of an act which the
law specially enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes the
plaintiff from the use and enjoyment of a right or office to which he is entitled and from which he is
unlawfully precluded by such inferior tribunal, corporation, board, or person, and the court, on trial,
finds the allegations of the complaint to be true, it may, if there is no other plain, speedy, and adequate
remedy in the ordinary courts of law, render a judgment granting a peremptory order against the
defendant, commanding him, immediately after the receipt of such order, or at some other specified
time, to do the act required to be done to protect the rights of the plaintiff. (Code of Civil Procedure, sec
222.)

Therefore, we hereby command the defendants, the city of Manila, and Robert G. Dieck, as city
engineer, or whomsoever may now be acting as such, to immediately issue a license in favor of the
plaintiff herein, Doña Carmen Ayala de Roxas, to construct the terrace as aforesaid in accordance with
the plan and specification as per Exhibit A, the said defendants to pay the costs of these proceedings. So
ordered.
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. JUAN F. FAJARDO, ET AL., defendants-
appellants.

G.R. No. L-12172 | 1958-08-29

DECISION

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

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

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

"SECTION 1. Any person or persons who will construct or repair a building should, before constructing or
repairing, obtain a written permit from the Municipal Mayor.

SEC. 2. A fee of not less than P2.00 should be charged for each building permit and P1.00 for each repair
permit issued.

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

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

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

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

We find that the appealed conviction can not stand.

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

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

xxx xxx xxx

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

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

"An ordinance which permanently so restricts the use of property that it can not be used for any
reasonable purpose goes, it is plain, beyond regulation and must be recognized as a taking of the
property. The only substantial difference, in such case, between restriction and actual taking, is that the
restriction leaves the owner subject to the burden of payment of taxation, while outright confiscation
would relieve him of that burden." (Arverne Bay Constr. Co. vs. Thatcher (N.Y.) 117 ALR. 1110, 1116)

'A regulation which substantially deprives an owner of all beneficial use of his property is confiscation
and is a deprivation within the meaning of the 14th Amendment." (Sundlum vs. Zoning Bd., 145 Atl. 451;
also Eaton vs. Sweeny, 177 NE 412; Taylor vs. Jacksonville, 133 So. 114)

"Zoning which admittedly limits property to a use which can not reasonably be made of it cannot be said
to set aside such property to a use but constitutes the taking of such property without just
compensation. Use of property is an element of ownership therein. Regardless of the opinion of zealots
that property may properly, by zoning, be utterly destroyed without compensation, such principle finds
no support in the genius of our government nor in the principles of justice as we known them. Such a
doctrine shocks the sense of justice. If it be of public benefit that property remain open and unused,
then certainly the public, and not the private individuals, should bear the cost of reasonable
compensation for such property under the rules of law governing the condemnation of private property
for public use. (Tews vs. Woolhiser (1933) 352 111. 212, 185 N.E. 827)

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

"SEC. 2243. Certain legislative powers of discretionary character. - The municipal council shall have
authority to exercise the following discretionary powers:

xxx xxx xxx

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

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

We rule that the regulation in question, Municipal Ordinance No. 7, Series of 1950, of the Municipality
of Baao, Camarines Sur, was beyond the authority of said municipality to enact, and is therefore null and
void. Hence, the conviction of herein appellants is reversed, and said accused are acquitted, with costs
de oficio. So ordered.
NATIONAL POWER CORPORATION, petitioner, vs. HON. SYLVA G. AGUIRRE PADERANGA, Presiding
Judge, Regional Trial Court of Danao City, Branch 25, PETRONA O. DILAO, FEDIL T. OSMEA, ISABEL T.
OSMEA, CELESTINO O. GALON, POTENCIA O. BATUCAN, TRINIDAD T. OSMEA, LULIA T. OSMEA,
LOURDES O. DAFFON, VICTORIA O. BARRIGA and JUAN T. OSMEA, JR., and ESTEFANIA
ENRIQUEZ, respondents.

DECISION

CARPIO MORALES, J.:

The Court of Appeals Decision[1] dated June 6, 2002, as well as its Resolution[2] dated August 30, 2002,
affirming the decision[3] of the Regional Trial Court of Danao City, Branch 25 which granted the
complaint for expropriation filed by herein petitioner National Power Corporation (NPC) against herein
respondents Petrona Dilao et al. are being assailed in the present Petition for Review on Certiorari.

To implement its Leyte-Cebu Interconnection Project, the NPC filed on March 19, 1996 before the
Regional Trial Court of Danao City a complaint for expropriation[4] of parcels of land situated at Baring
and Cantumog, Carmen, Cebu[5] against the following defendants:

NAMES ADDRESS

1. Petrona O.[6] Dilao Poblacion, Carmen, Cebu

2. Fidel T. Osmea -do-

3. Isabel T. Osmea -do-

4. Celestina O. Galon -do-

5. Potenciana O. Batucan -do-

6. Trinidad T. Osmea -do-

7. Lulia T.Osmea -do-

8. Lourdes O. Daffon -do-

9. Victoria O. Barriga -do-

10. Juan T. Osmea, Jr. -do-

11. Estefania Enriquez Marijoy Realty Corp.

Natalio Bacalso Ave.

Mambaling, Cebu City[7]

(Underscoring supplied)

The complaint covers (a) 7,281 square meters of the 25,758 square meters of land co-owned by herein
respondents Petrona O. Dilao (Dilao) and the above-listed defendant Nos. 2-10 who are her siblings, and
(b) 7,879 square meters of the 17,019 square meters of land owned by Estefania Enriquez (Enriquez).[8]
A day after the complaint was filed or on March 20, 1996, NPC filed an urgent ex parte motion for the
issuance of writ of possession of the lands.

Dilao filed her Answer with Counterclaim on April 19, 1996.[9] Enriquez did not.[10]

On May 9, 1996, Branch 25 of the RTC Danao, issued an Order[11] granting NPCs motion for the issuance
of writ of possession. It then appointed a Board of Commissioners to determine just compensation.[12]

The commissioners submitted on April 15, 1999 their report[13] to the trial court containing, among other
things, their recommended appraisal of the parcel of land co-owned by defendants Dilao and her
siblings at P516.66 per square meter.

To the Commissioners Report, the NPC filed its Comment/Opposition[14] assailing the correctness of the
appraisal for failing to take into account Republic Act (R.A.) No. 6395 (AN ACT REVISING THE CHARTER
OF THE NATIONAL POWER CORPORATION), as amended, specifically Section 3A[15] thereof which
provides that the just compensation for right-of-way easement (for which that portion of the Dilao
property is being expropriated) shall be equivalent to ten percent (10%) of the market value of the
property. The traversed land, NPC asserted, could still be used for agricultural purposes by the
defendants, subject only to its easement. It added that the lots were of no use to its operations except
for its transmission lines.[16]

By Decision of November 10, 1999, the trial court rendered a decision on the complaint, adopting the
commissioners recommended appraisal of the land co-owned by Dilao and her siblings. The dispositive
portion of the decision reads:

WHEREFORE, judgment is hereby rendered condemning the property of Petrona Dilao et al. which has
been affected by 7,281 square meters in favor of plaintiff; declaring in favor of defendants for plaintiff
to pay the fair market value of said area affected at P516.66 per square or a total of P3,761,801.40
plus P250,000.00 for the value of the improvements affected by herein expropriation.

SO ORDERED.[17] (Emphasis and underscoring supplied).

Copy of the decision was received by NPC on November 18, 1999.[18]

NPC filed a Notice of Appeal[19] but the trial court, by Order of January 17, 2000, denied the same for
NPCs failure to file and perfect it within the reglementary period, it having failed to file a record on
appeal.[20] To the Order, NPC filed a motion for reconsideration,[21] contending that a record on appeal
was not required as the trial court rendered judgment against all the defendants including Enriquez as
shown, so it claimed, by the dispositive portion of the decision referring to Petrona Dilao et al.

By Resolution[22] of March 7, 2000, the trial court denied NPCs motion for reconsideration, clarifying that
the reference to Petrona Dilao et al. in the dispositive portion of its decision was meant to cover only
Dilao and her co-owner-siblings.[23]

NPC subsequently filed before the trial court a petition for relief from the denial of its appeal on the
ground that its failure to file a record on appeal was due to honest mistake and excusable neglect, it
having believed that a record on appeal was not required in light of the failure of the other defendant,
Enriquez, to file an answer to the complaint.[24]

The trial court denied NPCs petition for relief for lack of factual and legal basis.[25]
On August 17, 2001, the trial court granted Dilao et al.s motion for execution of judgment.[26] NPC
thereupon filed a petition for certiorari with the Court of Appeals with prayer for temporary restraining
order and a writ of preliminary injunction[27] assailing the trial courts order denying its appeal and other
orders related thereto, as well as the order granting Dilao et al.s motion for execution. The appellate
court, however, denied NPCs petition,[28] it holding that under Rule 41, Section 2 of the 1997 Rules of
Civil Procedure, the filing of a record on appeal is required in special proceedings and other cases of
multiple or separate appeals, as in an action for expropriation in which the order determining the right
of the plaintiff to expropriate and the subsequent adjudication on the issue of just compensation may
be the subject of separate appeals.[29]

Aggrieved, NPC challenged the appellate courts decision via the present petition,[30] it contending that
the trial courts questioned orders effectively deprived it of its constitutional right to due process.

NPC argues that a complaint for expropriation is a Special Civil Action under Rule 67 of the Rules of Civil
Procedure, not a special proceeding as contemplated under Rule 41, Section 2 of the Rules of Civil
Procedure; that there is no law or rules specifically requiring that a record on appeal shall be filed in
expropriation cases; and of the two sets of defendants in the present case, the Dilaos and Enriquez, the
first, while they filed an answer, did not appeal the trial courts decision, while with respect to the
second, there is no showing that summons was served upon her, hence, the trial court did not acquire
jurisdiction over her and, therefore, no appeal could arise whatsoever with respect to the complaint
against her. Ergo, petitioner concludes, no possibility of multiple appeals arose from the case.

The petition fails.

Rule 41, Section 2 of the 1997 Rules of Civil Procedure, as amended, clearly provides:

SEC. 2. Modes of Appeals.

(a) Ordinary appeal. The appeal to the Court of Appeals in cases decided by the Regional Trial Court in
the exercise of its original jurisdiction shall be taken by filing a notice of appeal with the court which
rendered the judgment or final order appealed from and serving a copy thereof upon the adverse party.
No record on appeal shall be required except in special proceedings and other cases of multiple or
separate appeals where the law or these Rules so require. In such cases, the record on appeal shall be
filed and served in like manner.

x x x (Emphasis and underscoring supplied).

While admittedly a complaint for expropriation is not a special proceeding, the above-quoted rule
requires the filing of a record on appeal in other cases of multiple or separate appeal.

Jurisprudential law, no doubt, recognizes the existence of multiple appeals in a complaint for
expropriation.[31] The case of Municipality of Bian v. Garcia[32] vividly expounds on the matter, viz:

1. There are two (2) stages in every action of expropriation. The first is concerned with the
determination of the authority of the plaintiff to exercise the power of eminent domain and the
propriety of its exercise in the context of the facts involved in the suit. It ends with an order, if not of
dismissal of the action, "of condemnation declaring that the plaintiff has a lawful right to take the
property sought to be condemned, for the public use or purpose described in the complaint, upon the
payment of just compensation to be determined as of the date of the filing of the complaint." An order
of dismissal, if this be ordained, would be a final one, of course, since it finally disposes of the action and
leaves nothing more to be done by the Court on the merits. So, too, would an order of condemnation be
a final one, for thereafter, as the Rules expressly state, in the proceedings before the Trial Court, "no
objection to the exercise of the right of condemnation (or the propriety thereof) shall be filed or heard.

The second phase of the eminent domain action is concerned with the determination by the Court of
"the just compensation for the property sought to be taken." This is done by the Court with the
assistance of not more than three (3) commissioners. The order fixing the just compensation on the
basis of the evidence before, and findings of, the commissioners would be final, too. It would finally
dispose of the second stage of the suit, and leave nothing more to be done by the Court regarding the
issue. Obviously, one or another of the parties may believe the order to be erroneous in its appreciation
of the evidence or findings of fact or otherwise. Obviously, too, such a dissatisfied party may seek
reversal of the order by taking an appeal therefrom. (Underscoring supplied).

Thus, in Municipality of Bian, this Court held that in actions for eminent domain, since no less than two
appeals are allowed by law, the period for appeal from an order of condemnation is thirty days counted
from notice thereof and not the ordinary period of fifteen days prescribed for actions in general.[33] As
such, the complaint falls under the classification of other cases of multiple or separate appeal where the
law or these rules so require in above-quoted Section 2(a) of Rule 41 of the Rules of Civil Procedure in
which a record on appeal is required to be filed and served.

Respecting NPCs claim that the trial court did not acquire jurisdiction over the other defendant,
Enriquez, there being no evidence that summons was served on her and, therefore, no appeal with
respect to the case against her arose, the trial courts Order[34] of May 9, 1996 belies said claim:

xxx

In the letter-appeal by defendant Estefania V. Enriquez addressed to the Court, defendant did
manifest no opposition to the right of plaintiff to the use of her land but only wich (sic) that payment
be based on the actual market value of the property sought to be expropriated. In comment to said
letter-appeal, plaintiff stressed that the amount deposited was purely to secure a writ of possession as
provided under PD 42. It agreed with defendant that the fair market value or actual market value shall
be the basis for the just compensation of the property.

x x x (Emphasis and underscoring supplied)

That the defendant Enriquez did not file an answer to the complaint did not foreclose the possibility of
an appeal arising therefrom. For Section 3 of Rule 67 provides:

Sec. 3. Defenses and objections. If a defendant has no objection or defense to the action or the taking of
his property, he may file and serve a notice of appearance and a manifestation to that effect, specifically
designating or identifying the property in which he claims to be interested, within the time stated in the
summons. Thereafter, he shall be entitled to notice of all proceedings affecting the same.

If a defendant has any objection to the filing of or the allegations in the complaint, or any objection or
defense to the taking of his property, he shall serve his answer within the time stated in the summons.
The answer shall specifically designate or identify the property in which he claims to have an interest,
state the nature and extent of the interest claimed, and adduce all his objections and defenses to the
taking of his property. No counterclaim, cross-claim or third-party complaint shall be alleged or allowed
in the answer or any subsequent pleading.

A defendant waives all defenses and objections not so alleged but the court, in the interest of justice,
may permit amendments to the answer to be made not later than ten (10) days from the filing thereof.
However, at the trial of the issue of just compensation, whether or not a defendant has previously
appeared or answered, he may present evidence as to the amount of the compensation to be paid for
his property, and he may share in the distribution of the award. (Emphasis and underscoring supplied).

In other words, once the compensation for Enriquez property is placed in issue at the trial, she could,
following the third paragraph of the immediately-quoted Section 3 of Rule 67, participate therein and if
she is not in conformity with the trial courts determination of the compensation, she can appeal
therefrom.

Multiple or separate appeals being existent in the present expropriation case, NPC should have filed a
record on appeal within 30 days from receipt of the trial courts decision. The trial courts dismissal of its
appeal, which was affirmed by the appellate court, was thus in order.

En passant, glossing over NPCs failure to file record on appeal, its appeal would still not prosper on
substantive grounds.

NPC anchored its appeal[35] on the alleged overvalued appraisal by the commissioners of the
compensation to be awarded to Dilao et al., the commissioners having allegedly lost sight of the already
mentioned 10% limit provided under Section 3A of R.A. No. 6395.

In National Power Corporation v. Chiong,[36] petitioner similarly argued therein that the Court of Appeals
gravely erred in upholding the RTC order requiring it to pay the full market value of the expropriated
properties, despite the fact that it was only acquiring an easement of right-of-way for its transmission
lines. It pointed out, as it does in the present case, that under Section 3A of RA No. 6395, as amended,
where only an easement of right-of-way shall be acquired, with the principal purpose for which the land
is actually devoted is unimpaired, the compensation should not exceed ten percent (10%) of the
market value of the property. Upholding the trial court and the Court of Appealss approval of the
commissioners recommendation in that case, this Court declared:

In fixing the valuation at P500.00 per square meter, the Court of Appeals noted that the trial court had
considered the reports of the commissioners and the proofs submitted by the parties. This includes
the fair market value of P1,100.00 per square meter proffered by the respondents. This valuation by
owners of the property may not be binding upon the petitioner or the court, although it should at
least set a ceiling price for the compensation to be awarded. The trial court found that the parcels of
land sought to be expropriated are agricultural land, with minimal improvements. It is the nature and
character of the land at the time of its taking that is the principal criterion to determine just
compensation to the landowner. Hence, the trial court accepted not the owners valuation of P1,100
per square meter but only P500 as recommended in the majority report of the commissioners.

xxx

In finding that the trial court did not abuse its authority in evaluating the evidence and the reports
placed before it nor did it misapply the rules governing fair valuation, the Court of Appeals found the
majority reports valuation of P500 per square meter to be fair. Said factual finding of the Court of
Appeals, absent any showing that the valuation is exorbitant or otherwise unjustified, is binding on
the parties as well as this Court. (Emphasis and underscoring supplied).

Indeed, expropriation is not limited to the acquisition of real property with a corresponding transfer of
title or possession. The right-of-way easement resulting in a restriction or limitation on property rights
over the land traversed by transmission lines, as in the present case, also falls within the ambit of the
term expropriation. As explained in National Power Corporation v. Gutierrez,[37] viz:

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

The foregoing facts considered, the acquisition of the right-of-way easement falls within the purview
of the power of eminent domain. Such conclusion finds support in similar cases of easement of right-of-
way where the Supreme Court sustained the award of just compensation for private property
condemned for public use (See National Power Corporation 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. (Emphasis and underscoring supplied).

From the Commissioners Report[38] chronicling the following findings:

xxx

1. The parcel of land owned by the defendant PETRONA O. DILAO, et al. is very fertile, plain, suited for
any crops production, portion of which planted with coco trees and mango trees, portion planted with
corn, sometimes planted with sugar cane, the said land has a distance of about 1 kilometer from the
trading center, about 100 meters from an industrial land (Shemberg Biotech Corp.) adjacent to a Poultry
Farm and lies along the Provincial Road.

xxx

IMPROVEMENTS AFFECTED
Per ocular inspection made on lot own by PETRONA O. DILAO, et al. traversed by a transmission line of
NPC and with my verification as to the number of improvements, the following trees had been
damaged.

1. 55 coco trees productive

2. 10 mango trees productive

3. 30 cacao trees productive

4. 110 bananas

5. 400 ipil-ipil trees

x x x,[39]

it cannot be gainsaid that NPCs complaint merely involves a simple case of mere passage of transmission
lines over Dilao et al.s property. Aside from the actual damage done to the property traversed by the
transmission lines, the agricultural and economic activity normally undertaken on the entire property is
unquestionably restricted and perpetually hampered as the environment is made dangerous to the
occupants life and limb.

The determination of just compensation in expropriation proceedings being a judicial function,[40] this
Court finds the commissioners recommendation of P516.66 per square meter, which was approved by
the trial court, to be just and reasonable compensation for the expropriated property of Dilao and her
siblings.

In fine, the appeal sought by NPC does not stand on both procedural and substantive grounds.

WHEREFORE, the petition is hereby DENIED.

SO ORDERED.
REPUBLIC OF THE PHILIPPINES, plaintiff-appellant, vs. CARMEN M. VDA. DE CASTELLVI, ET AL.,
defendants-appellees.

G.R. No. L-20620 | 1974-08-15

DECISION

ZALDIVAR, J:

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

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

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

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

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

"A parcel of land (Portion of Lot 3, Blk-1, Bureau of Lands Plan Psd 26254. Bounded on the NE by Lot No.
3, on the SE by school lot and national road, on the SW by Lot 1-B Blk 2 (equivalent to Lot 199-B Swo
23666), on the NW by Lot 1-B, Blk-1. Containing an area of 88,772 square meters, more or less, and
registered in the name of Maria Nieves Toledo Gozun under TCT No. 8708 of the Register of Deeds of
Pampanga, . . ."
In its complaint, the Republic alleged, among other things, that the fair market value of the above-
mentioned lands, according to the Committee on Appraisal for the Province of Pampanga, was not more
than P2,000 per hectare, or a total market value of P259,669.10; and prayed, that the provisional value
of the lands be fixed at P259,669.10, that the court authorizes plaintiff to take immediate possession of
the lands upon deposit of that amount with the Provincial Treasurer of Pampanga; that the court
appoints three commissioners to ascertain and report to the court the just compensation for the
property sought to be expropriated, and that the court issues thereafter a final order of condemnation.

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

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

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

After the Republic had deposited with the Provincial Treasurer of Pampanga the amount of P259,669.10,
the trial court ordered that the Republic be placed in possession of the lands. The Republic was actually
placed in possession of the lands on August 10, 1959. 1

In her "motion to dismiss", dated October 22, 1959, Toledo-Gozun alleged, among other things, that her
two parcels of land were residential lands, in fact a portion with an area of 343,303 square meters had
already been subdivided into different lots for sale to the general public, and the remaining portion had
already been set aside for expansion sites of the already completed subdivisions; that the fair market
value of said lands was P15.00 per square meter, so they had a total market value of P8,085,675.00; and
she prayed that the complaint be dismissed, or that she be paid the amount of P8,085,675.00, plus
interest thereon at the rate of 6% per annum from October 13, 1959, and attorney's fees in the amount
of P50,000.00.
Intervenors Jose Castellvi and Consuelo Castellvi in their answer, filed on February 11, 1960, and also
intervenor Joaquin Gozun, Jr., husband of defendant Maria Nieves Toledo-Gozun, in his motion to
dismiss, dated May 27, 1960, all alleged that the value of the lands sought to be expropriated was at the
rate of P15.00 per square meter.

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

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

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

After the parties-defendants and intervenors had filed their respective memoranda, and the Republic,
after several extensions of time, had adopted as its memorandum its objections to the report of the
Commissioners, the trial court, on May 26, 1961, rendered its 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 oil appeal, against which motion the defendants
Castellvi and Toledo-Gozun filed their opposition. On July 26, 1962 the trial court issued an order, stating
that "in the interest of expediency, the questions raised may be properly and finally determined by the
Supreme Court," and at the same time it ordered the Solicitor General to submit a record on appeal
containing copies of orders and pleadings specified therein. In an order dated November 19, 1962, the
trial court approved the Republic's record on appeal as amended.

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

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

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

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

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

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

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

3. In ordering plaintiff-appellant to pay 6% interest on the adjudged value of the Castellvi property to
start from July of 1956;

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

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

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

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

Appellee Toledo-Gozun did not comment on the Republic's argument in support of the second error
assigned, because as far as she was concerned the Republic had not taken possession of her lands prior
to August 10, 1959. 9

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

"CONTRACT OF LEASE

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

"WITNESSETH:

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

'Un Terreno, Lote No. 27 del Plano de subdivision Psu 34752, parte de la hacienda de Campauit, situado
en el Barrio de San Jose, Municipio de Floridablanca, Pampanga . . . midiendo una extension superficial
de cuatro milliones once mil cuatro cientos trienta y cinco (4,001,435) [sic] metros cuadrados, mas o
menos.

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

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

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

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

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

"4.The LESSEE shall pay to the LESSOR as monthly rentals under this lease the sum of FOUR HUNDRED
FIFTY-FIVE PESOS & 58/100(P455.58) . . .

"5.The LESSEE may, at anytime prior to the termination of this lease, use the property for any purpose or
purposes and, at its own costs and expense make alteration, install facilities and fixtures and 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 nonpayment of rents, the instant case now has
become moot and academic and/or by virtue of the agreement signed by plaintiff, she has waived her
cause of action in the 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 wag, 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 Castellvi's property for purposes of eminent domain cannot be
considered to have taken place in 1947 when the Republic commenced to occupy the property as lessee
thereof. We find merit in the contention of Castellvi that two essential elements in the "taking" of
property under the power of eminent domain, namely: (1) that the entrance and occupation by the
condemnor must be for a permanent, or indefinite period, and (2) that in devoting the property to
public use the owner was ousted from the property and deprived of its beneficial use, were not present
when the Republic entered and occupied the Castellvi property in 1947.

Untenable also is the Republic's contention that although the contract between the parties was one of
lease on a year to year basis, it was "in reality a more or less permanent right to occupy the premises
under the guise of lease with the 'right and privilege' to buy the property should the lessor wish to
terminate the lease," and "the right to buy the property is merged as an integral part of the lease
relationship . . . so much so that the fair market value has been agreed upon, not as of the time of
purchase, but as of the time of occupancy". 15 We cannot accept the Republic's contention that a lease
on a year to year basis can give rise to a permanent right to occupy, since by express legal provision a
lease made for a determinate time, as was the lease of Castellvi's land in the instant case, ceases upon
the day fixed, without need of a demand (Article 1669, Civil Code). Neither can it be said that the right of
eminent domain may be exercised by simply leasing the premises to be expropriated (Rule 67, Section 1,
Rules of Court). Nor can it be accepted that the Republic would enter into a contract of lease where its
real intention was to buy, or why the Republic should enter into a simulated contract of lease ("under
the guise of lease", as expressed by counsel for the Republic) when all the time the Republic had the
right of eminent domain, and could expropriate Castellvi's land if it wanted to without resorting to any
guise whatsoever. Neither can we see how a right to buy could be merged in a contract of lease in the
absence of any agreement between the parties to that effect. To sustain the contention of the Republic
is to sanction a practice whereby in order to secure a low price for a land which the government intends
to expropriate (or would eventually expropriate) it would first negotiate with the owner of the land to
lease the land (for say ten or twenty years) then expropriate the same when the lease is about to
terminate, then claim that the "taking" of the property for the purposes of the expropriation be
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 (Phil. 82, 98) this Court laid down basic guidelines in
determining the value of the property expropriated for public purposes. This Court said:

"In determining the value of land appropriated for public purposes, the same consideration are to be
regarded as in a sale of property between private parties. The inquiry, in such cases, must be what is the
property worth in the market, viewed not merely with reference to the uses to which it is at the time
applied, but with reference to the uses to which it is plainly adapted, that is to say, What is it worth from
its availability for valuable uses?
"So many and varied are the circumstances to be taken into account in determining the value of
property condemned for public purposes, that it is practically impossible to formulate a rule to govern
its appraisement in all cases. Exceptional circumstances will modify the most carefully guarded rule, but,
as a general thing, we should say that the compensation of the owner is to be estimated by reference to
the use for which the property is suitable, having regard to the existing business or wants of the
community, or such as may be reasonably expected in the immediate future. (Miss. and Rum River
Boom Co. vs. Patterson, 98 U.S., 403)."

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

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

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

The evidence shows that Castellvi broached the idea of subdividing her land into residential lots as early
as July 11, 1956 in her letter to the Chief of Staff of the Armed Forces of the Philippines. (Exh. 5-
Castellvi) As a matter of fact, the layout of the subdivision plan was tentatively approved by the National
Planning Commission on September 7, 1956. (Exh. 8-Castellvi). The land of Castellvi had not been
devoted to agriculture since 1947 when it was leased to the Philippine Army. In 1957 said land was
classified as residential, and taxes based on its classification as residential had been paid since then (Exh.
13-Castellvi). The location of the Castellvi land justifies its suitability for a residential subdivision. As
found by the trial court, "It is at the left side of the entrance of the Basa Air Base and bounded on two
sides by roads (Exh. 13-Castellvi), paragraphs 1 and 2, Exh. 12-Castellvi), the poblacion, (of Floridablanca)
the municipal building, and the Pampanga Sugar Mills are closed by. The barrio schoolhouse and chapel
are also near (T.S.N. November 23, 1960, p. 68)". 20
The lands of Toledo-Gozun (Lot 1-B and Lot 3) are practically of the same condition as the land of
Castellvi. The lands of Toledo-Gozun adjoin the land of Castellvi. They are also contiguous to the Basa Air
Base, and are along the road. These lands are near the barrio schoolhouse, the barrio chapel, the
Pampanga Sugar Mills, and the poblacion of Floridablanca (Exhs. 1, 3 and 4-Toledo-Gozun). As a matter
of fact, regarding lot 1-B it had already been surveyed and subdivided, and its conversion into a
residential subdivision was tentatively approved by the National Planning Commission on July 8, 1959
(Exhs. 5 and 6 Toledo-Gozun). As early as June, 1958, no less than 32 man connected with the Philippine
Air Force among them commissioned officers, non-commission officers, and enlisted men had requested
Mr. and Mrs. Joaquin D. Gozun to open a subdivision on their lands in question (Exhs. 8, 8-A to 8-ZZ-
Toledo-Gozun). 21

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

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

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

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

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

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

". . . 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 he sold for from P3.00 to P4.00 per square meter, while the land of Toledo-
Gozun could be sold for from P2.50 to P3.00 per square meter. The Court has weighed all the
circumstances relating to this expropriations proceedings, and in fixing the price of the lands that are
being expropriated the Court arrived at a happy medium between the price as recommended by the
commissioners and approved by the court, and the price advocated by the Republic. This Court has also
taken judicial notice of the fact that the value of the Philippine peso has considerably gone down since
the year 1959. 30 Considering that the lands of Castellvi and Toledo-Gozun are adjoining each other, and
are of the same nature, the Court has deemed it proper to fix the same price for all these lands.

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

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

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

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

4.The fourth error assigned by the Republic relates to the denial by the lower court of its motion for a
new trial based on nearly discovered evidence. We do not find merit in this assignment of error.
After the lower court had decided this case on May 26, 1961, the Republic filed a motion for a new trial,
supplemented by another motion, both based upon the ground of newly discovered evidence. The
alleged newly discovered evidence in the motion filed on June 21, 1961 was a deed of absolute sale
executed on January 25, 1961, showing that a certain Serafin Francisco had sold to Pablo L. Narciso a
parcel of sugar land having an area of 100,000 square meters with a sugar quota of 100 piculs, covered
by P.A. No. 1701, situated in Barrio Fortuna, Floridablanca, for P14,000, or P.14 per square meter.

In the supplemental motion, the alleged newly discovered evidence were: (1) a deed of sale of some
35,000 square meters of land situated at Floridablanca for P7,500.00 (or about P.21 per square meter)
executed in July, 1959, by the spouses Evelyn D. Laird and Cornelio G. Laird in favor of spouses
Bienvenido S. Aguas and Josefina Q. Aguas; and (2) a deed of absolute sale of a parcel of land having an
area of 4,120,101 square meters, including the sugar quota covered by Plantation Audit No. 16-1345,
situated at Floridablanca, Pampanga, for P860.00 per hectare (a little less than P.09 per square meter)
executed on October 22, 1957 by Jesus Toledo y Mendoza in favor of the Land Tenure Administration.

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

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

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

We agree with the trial court. In eminent domain proceedings, in order that evidence as to the sale price
of other lands may be admitted in evidence to prove the fair market value of the land sought to be
expropriated, the lands must, among other things, be shown to be similar.

But even assuming, gratia argumenti, that the lands mentioned in those deeds of sale were residential,
the evidence would still not warrant the grant of a new trial, for said evidence could have been
discovered and produced at the trial, and they cannot be considered newly discovered evidence as
contemplated in Section 1(b) of Rule 37 of 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
under the circumstances, the correct qualification that can be given is 'forgotten evidence'. Forgotten
evidence, 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.
MARINA z. REYES; ALFREDO A. FRANCISCO; ANGELITA Z. GARCIA; ALFREDO Z. FRANCISCO, JR;
ARMANDO Z. FRANCISCO; ALMA C. FRANCISCO; EUGENIA Z. LUNA; CLARITA Z. ZABALLERO,
LEONARDO Z. ZABALLERO, JR, and TEODORO Z. ZABALLERO, in substitution of LEONARDO M.
ZABALLERO; AUGUSTO M. ZABALLERO; FRINE A. ZABALLERO; ELENA FRONDA ZABALLERO; VICTOR
GREGORIO F. ZABALLERO; MARIA ELENA F. ZABALLERO; LOURDES ZABALLERO-LAVA; SOCORRO
EMILIA ZABALLERO-YAP; and TERESITA F. ZABALLERO, petitioners, vs. NATIONAL HOUSING
AUTHORITY, respondent.

G.R. No. 147511 | 2003-01-20

DECISION

PUNO, J.:

This is an appeal by certiorari from the decision of the Court of Appeals in CA-GR CV No. 51641 dated
September 29, 2000[1] affirming the judgment of the Regional Trial Court of Quezon City, Branch 79
which dismissed the complaint for forfeiture of rights filed by herein petitioners, as well as the
Resolution dated March 13, 2001 denying petitioners' motion for reconsideration.

Records show that in 1977, respondent National Housing Authority (NHA) filed separate complaints for
the expropriation of sugarcane lands, particularly Lot Nos. 6450, 6448-E, 6198-A and 6199 of the
cadastral survey of Dasmariñas, Cavite belonging to the petitioners, before the then Court of First
Instance of Cavite, and docketed as Civil Case Nos. T.G.-392, T.G.-396 and T.G.-417. The stated public
purpose of the expropriation was the expansion of the Dasmariñas Resettlement Project to
accommodate the squatters who were relocated from the Metropolitan Manila area. The trial court
rendered judgment ordering the expropriation of these lots and the payment of just compensation. This
was affirmed by the Supreme Court in a decision rendered on October 29, 1987 in the case of NHA vs.
Zaballero[2] and which became final on November 26, 1987.[3]

On February 24, 1989, the expropriation court (now Branch 18, Regional Trial Court of Tagaytay City)
issued an Order[4] the dispositive portion of which reads:

"WHEREFORE, and resolving thus, let an Alias Writ of Execution be immediately issued and that:

(1) The Register of Deeds of the Province of Cavite is hereby ordered to transfer, in the name of the
plaintiff National Housing Authority, the following:
(a) Transfer Certificate No. RT-638 containing an area of 79,167 square meters situated in Barrio
Bangkal, Dasmariñas, Cavite;

(b) Transfer Certificate of Title No. T-55702 containing an area of 20,872 square meters situated in
Barrio Bangkal, Dasmariñas, Cavite;

(c) Transfer Certificate of Title No. RT-639 and RT-4641 covering Lot Nos. 6198-A and 6199 with an
aggregate area of 159,985 square meters also situated in Barrio Bangkal, Dasmariñas, Cavite.

(2) Plaintiff National Housing Authority is likewise hereby ordered, under pain of contempt, to
immediately pay the defendants, the amounts stated in the Writ of Execution as the adjudicated
compensation of their expropriated properties, which process was received by it according to the
records, on September 26, 1988, segregating therefrom, and in separate check, the lawyer's fees in
favor of Atty. Bobby P. Yuseco, in the amount of P322,123.05, as sustained by their contract as gleaned
from the records, with no other deduction, paying on its own (NHA) account, the necessary legal
expenses incident to the registration or issuance of new certificates of title, pursuant to the provisions
of the Property Registration Law (PD 1529);

(3) Defendants, however, are directed to pay the corresponding capital gains tax on the subject
properties, directing them additionally, to coordinate with the plaintiff NHA in this regard, in order to
facilitate the termination of this case, put an end to this controversy and consign the same to its final
rest."

For the alleged failure of respondent NHA to comply with the above order, petitioners filed on April 28,
1992 a complaint[5] for forfeiture of rights before the Regional Trial Court of Quezon City, Branch 79, in
Civil Case No. Q-92-12093. They alleged that respondent NHA had not relocated squatters from the
Metropolitan Manila area on the expropriated lands in violation of the stated public purpose for
expropriation and had not paid the just compensation fixed by the court. They prayed that respondent
NHA be enjoined from disposing and alienating the expropriated properties and that judgment be
rendered forfeiting all its rights and interests under the expropriation judgment. In its Answer,[6]
respondent NHA averred that it had already paid a substantial amount to herein petitioners and that the
expropriation judgment could not be executed in view of several issues raised by respondent NHA
before the expropriation court (now Branch 18, RTC, Tagaytay City) concerning capital gains tax,
registration fees and other expenses for the transfer of title to respondent NHA, as well as the claims for
attorney's fees of Atty. Joaquin Yuseco, Jr., collaborating counsel for petitioners.

Ocular inspections[7] conducted by the trial court on the subject properties show that:
"1. 80% of Lot No. 6198-A with an area of 120,146 square meters is already occupied by relocatees
whose houses are made of light materials with very few houses partly made of hollow blocks. The
relocatees were relocated only on (sic) March of 1994;

2. Most of the area covered by Lot No. 2075 is almost occupied by houses and structures, most of which
are made of concrete materials. These houses are not being occupied by squatters relocated to the said
lot by the defendant NHA;

3. Lot No. 6199 is also occupied by concrete houses and structures but likewise there are no relocatees
in said lot. A large area of the same is still unoccupied."

On September 29, 1995, the trial court rendered judgment dismissing the complaint. Finding that the
failure of respondent NHA to pay just compensation and of petitioners to pay capital gains tax are both
unjustified and unreasonable, the trial court held that: (1) respondent NHA is not deemed to have
abandoned the public purpose for which the subject properties were expropriated because the
relocation of squatters involves a long and tedious process. It ruled that respondent NHA actually
pursued the public purpose of the expropriation when it entered into a contract with Arceo C. Cruz
involving the construction of low cost housing on the expropriated lots to be sold to qualified low
income beneficiaries; (2) there is no condition imposed in the expropriation judgment that the subject
properties shall revert back to its original owners in case the purpose of expropriation is terminated or
abandoned; (3) the payment of just compensation is independent of the obligation of herein petitioners
to pay capital gains tax; and (4) in the payment of just compensation, the basis should be the value at
the time the property was taken. On appeal, the Court of Appeals affirmed the decision of the trial
court.

Petitioners are now before us raising the following assignment of errors:

"1. The Honorable Court of Appeals had decided a question of substance not in accord with justice and
equity when it ruled that, as the judgment of the expropriation court did not contain a condition that
should the expropriated property be not used for the intended purpose it would revert to the
condemnee, the action to declare the forfeiture of rights under the expropriation judgment can not
prosper;

2. The Honorable Court of Appeals decided a question of substance not in accord with jurisprudence,
justice and equity when it ruled that the non-payment is not a ground for forfeiture;
3. The Honorable Court of Appeals erred in not declaring the judgment of expropriation forfeited in light
of the failure of respondent to use the expropriated property for the intended purpose but for a totally
different purpose."

The petition is not impressed with merit.

Petitioners contend that respondent NHA violated the stated public purpose for the expansion of the
Dasmariñas Resettlement Project when it failed to relocate the squatters from the Metro Manila area,
as borne out by the ocular inspection conducted by the trial court which showed that most of the
expropriated properties remain unoccupied. Petitioners likewise question the public nature of the use
by respondent NHA when it entered into a contract for the construction of low cost housing units, which
is allegedly different from the stated public purpose in the expropriation proceedings. Hence, it is
claimed that respondent NHA has forfeited its rights and interests by virtue of the expropriation
judgment and the expropriated properties should now be returned to herein petitioners. We are not
persuaded.

The 1987 Constitution explicitly provides for the exercise of the power of eminent domain over private
properties upon payment of just compensation. More specifically, section 9, Article III states that private
property shall not be taken for public use without just compensation. The constitutional restraints are
public use and just compensation.

Petitioners cannot insist on a restrictive view of the eminent domain provision of the Constitution by
contending that the contract for low cost housing is a deviation from the stated public use. It is now
settled doctrine that the concept of public use is no longer limited to traditional purposes. Here, as
elsewhere, the idea that "public use" is strictly limited to clear cases of "use by the public" has been
abandoned. The term "public use" has now been held to be synonymous with "public interest," "public
benefit," "public welfare," and "public convenience."[8] The rationale for this new approach is well
explained in the case of Heirs of Juancho Ardona, et al. vs. Reyes, et al.,[9] to wit:

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

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

The act of respondent NHA in entering into a contract with a real estate developer for the construction
of low cost housing on the expropriated lots to be sold to qualified low income beneficiaries cannot be
taken to mean as a deviation from the stated public purpose of their taking. Jurisprudence has it that
the expropriation of private land for slum clearance and urban development is for a public purpose even
if the developed area is later sold to private homeowners, commercials firms, entertainment and service
companies, and other private concerns.[10]

Moreover, the Constitution itself allows the State to undertake, for the common good and in
cooperation with the private sector, a continuing program of urban land reform and housing which will
make at affordable cost decent housing and basic services to underprivileged and homeless citizens in
urban centers and resettlement areas.[11] The expropriation of private property for the purpose of
socialized housing for the marginalized sector is in furtherance of the social justice provision under
Section 1, Article XIII of the Constitution which provides that:

"SECTION 1. The Congress shall give highest priority to the enactment of measures that protect and
enhance the right of all the people to human dignity, reduce social, economic, and political inequalities,
and remove cultural inequities by equitably diffusing wealth and political power for the common good.

To this end, the State shall require the acquisition, ownership, use and disposition of property and its
increments."

It follows that the low cost housing project of respondent NHA on the expropriated lots is compliant
with the "public use" requirement.

We likewise do not subscribe to petitioners' contention that the stated public purpose was abandoned
when respondent NHA failed to occupy the expropriated lots by relocating squatters from the Metro
Manila area. The expropriation judgment declared that respondent NHA has a lawful right to take
petitioners properties "for the public use or purpose of expanding the Dasmariñas Resettlement
Project." The taking here is absolute, without any condition, restriction or qualification. Contrary to
petitioners' submission, the ruling enunciated in the early case of Fery vs. Municipality of
Cabanatuan,[12] is still good and sound doctrine, viz.:

"x x x If, for example, land is expropriated for a particular purpose, with the condition that when that
purpose is ended or abandoned the property shall return to its former owner, then, of course, when the
purpose is terminated or abandoned the former owner reacquires the property so expropriated. x x x If,
upon the contrary, however, the decree of expropriation gives to the entity a fee simple title, then, of
course, the land becomes the absolute property of the expropriator x x x.

When land has been acquired for public use in fee simple unconditionally, either by the exercise of
eminent domain or by purchase, the former owner retains no rights in the land, and the public use may
be abandoned, or the land may be devoted to a different use, without any impairment of the estate or
title acquired, or any reversion to the former owner."

Petitioners further aver that the continued failure of respondent NHA to pay just compensation for a
long period of time justifies the forfeiture of its rights and interests over the expropriated lots. They
demand the return of the expropriated lots. Respondent NHA justifies the delay to pay just
compensation by reason of the failure of petitioners to pay the capital gains tax and to surrender the
owners' duplicate certificates of title.

In the recent case of Republic of the Philippines vs. Court of Appeals, et al.,[13] the Court ruled that non-
payment of just compensation does not entitle the private landowners to recover possession of their
expropriated lots. Thus:

"Thus, in Valdehueza vs. Republic where the private landowners had remained unpaid ten years after
the termination of the expropriation proceedings, this Court ruled -

'The points in dispute are whether such payment can still be made and, if so, in what amount. Said lots
have been the subject of expropriation proceedings. By final and executory judgment in said
proceedings, they were condemned for public use, as part of an airport, and ordered sold to the
government. x x x. It follows that both by virtue of the judgment, long final, in the expropriation suit, as
well as the annotations upon their title certificates, plaintiffs are not entitled to recover possession of
their expropriated lots - which are still devoted to the public use for which they were expropriated - but
only to demand the market value of the same.
Said relief may be granted under plaintiffs' prayer for such other remedies, which may be deemed just
and equitable under the premises.'

The Court proceeded to reiterate its pronouncement in Alfonso vs. Pasay City where the recovery of
possession of property taken for public use prayed for by the unpaid landowner was denied even while
no requisite expropriation proceedings were first instituted. The landowner was merely given the relief
of recovering compensation for his property computed at its market value at the time it was taken and
appropriated by the State.

The judgment rendered by the Bulacan RTC in 1979 on the expropriation proceedings provides not only
for the payment of just compensation to herein respondents but likewise adjudges the property
condemned in favor of petitioner over which parties, as well as their privies, are bound. Petitioner has
occupied, utilized and, for all intents and purposes, exercised dominion over the property pursuant to
the judgment. The exercise of such rights vested to it as the condemnee indeed has amounted to at
least a partial compliance or satisfaction of the 1979 judgment, thereby preempting any claim of bar by
prescription on grounds of non-execution. In arguing for the return of their property on the basis of non-
payment, respondents ignore the fact that the right of the expropriating authority is far from that of an
unpaid seller in ordinary sales, to which the remedy of rescission might perhaps apply. An in rem
proceeding, condemnation acts upon the property. After condemnation, the paramount title is in the
public under a new and independent title; thus, by giving notice to all claimants to a disputed title,
condemnation proceedings provide a judicial process for securing better title against all the world than
may be obtained by voluntary conveyance.

We, however, likewise find the refusal of respondent NHA to pay just compensation, allegedly for failure
of petitioners to pay capital gains tax and surrender the owners' duplicate certificates of title, to be
unfounded and unjustified.

First, under the expropriation judgment the payment of just compensation is not subject to any
condition. Second, it is a recognized rule that although the right to enter upon and appropriate the land
to public use is completed prior to payment, title to the property expropriated shall pass from the owner
to the expropriator only upon full payment of the just compensation. In the case of Association of Small
Landowners in the Phils., Inc., et al. vs. Secretary of Agrarian Reform,[14] it was held that:

"Title to property which is the subject of condemnation proceedings does not vest the condemnor until
the judgment fixing just compensation is entered and paid, but the condemnor's title relates back to the
date on which the petition under the Eminent Domain Act, or the commissioner's report under the Local
Improvement Act, is filed.
x x x Although the right to appropriate and use land taken for a canal is complete at the time of entry,
title to the property taken remains in the owner until payment is actually made.

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

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

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

With respect to the amount of the just compensation still due and demandable from respondent NHA,
the lower courts erred in not awarding interest computed from the time the property is actually taken
to the time when compensation is actually paid or deposited in court. In Republic, et al. vs. Court of
Appeals, et al.,[15] the Court imposed interest at 12% per annum in order to help eliminate the issue of
the constant fluctuation and inflation of the value of the currency over time, thus:

"The constitutional limitation of 'just compensation' is considered to be the sum equivalent to the
market value of the property, broadly described to be the price fixed by the seller in open market in the
usual and ordinary course of legal action and competition or the fair value of the property as between
one who receives, and one who desires to sell, it being fixed at the time of the actual taking by the
government. Thus, if property is taken for public use before compensation is deposited with the court
having jurisdiction over the case, the final compensation must include interests on its just value to be
computed from the time the property is taken to the time when compensation is actually paid or
deposited with the court. In fine, between the taking of the property and the actual payment, legal
interests accrue in order to place the owner in a position as good as (but not better than) the position he
was in before the taking occurred.
x x x This allowance of interest on the amount found to be the value of the property as of the time of the
taking computed, being an effective forbearance, at 12% per annum should help eliminate the issue of
the constant fluctuation and inflation of the value of the currency over time. Article 1250 of the Civil
Code, providing that, in case of extraordinary inflation or deflation, the value of the currency at the time
of the establishment of the obligation shall be the basis for the payment when no agreement to the
contrary is stipulated, has strict application only to contractual obligations. In other words, a contractual
agreement is needed for the effects of extraordinary inflation to be taken into account to alter the value
of the currency."

Records show that there is an outstanding balance of P1,218,574.35 that ought to be paid to
petitioners.[16] It is not disputed that respondent NHA took actual possession of the expropriated
properties in 1977.[17] Perforce, while petitioners are not entitled to the return of the expropriated
property, they are entitled to be paid the balance of P1,218,574.35 with legal interest thereon at 12%
per annum computed from the taking of the property in 1977 until the due amount shall have been fully
paid.

WHEREFORE, the appealed judgment is modified as follows:

1. Ordering respondent National Housing Authority to pay petitioners the amount of P1,218,574.35 with
legal interest thereon at 12% per annum computed from the taking of the expropriated properties in
1997 until the amount due shall have been fully paid;

2. Ordering petitioners to pay the capital gains tax; and

3. Ordering petitioners to surrender to respondent National Housing Authority the owners' duplicate
certificates of title of the expropriated properties upon full payment of just compensation.

SO ORDERED.
PROVINCE OF CAMARINES SUR, represented by GOV. LUIS R. VILLAFUERTE and HON. BENJAMIN V.
PANGA as Presiding Judge of RTC Branch 33 at Pili, Camarines Sur, petitioners, vs. THE COURT OF
APPEALS (THIRD DIVISION), ERNESTO SAN JOAQUIN and EFREN SAN JOAQUIN, respondents.

G.R. No. 103125 | 1993-05-17

DECISION

QUIASON, J.:

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

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

The "WHEREAS" clause of the Resolution states:

"WHEREAS, the province of Camarines Sur has adopted a five-year Comprehensive Development plan,
some of the vital components of which includes the establishment of model and pilot farm for non-food
and non-traditional agricultural crops, soil testing and tissue culture laboratory centers, 15 small scale
technology soap making, small scale products of plaster of paris, marine biological and sea farming
research center, and other progressive feasibility concepts objective of which is to provide the necessary
scientific and technology know-how to farmers and fishermen in Camarines Sur and to establish a
housing project for provincial government employees;

"WHEREAS, the province would need additional land to be acquired either by purchase or expropriation
to implement the above program component;

"WHEREAS, there are contiguous/adjacent properties to be (sic) present Provincial Capitol Site ideally
suitable to establish the same pilot development center;

"WHEREFORE, . . . ."

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

Forthwith, the Province of Camarines Sur filed a motion for the issuance of a writ of possession. The San
Joaquins failed to appear at the hearing of the motion.
The San Joaquins moved to dismiss the complaints on the ground of inadequacy of the price offered for
their property. In an order dated December 6, 1989, the trial court denied the motion to dismiss and
authorized the Province of Camarines Sur to take possession of the property upon the deposit with the
Clerk of Court of the amount of P5,714.00, the amount provisionally fixed by the trial court to answer
for damages that private respondents may suffer in the event that the expropriation cases do not
prosper. The trial court issued a writ of possession in an order dated January 18, 1990.

The San Joaquins filed a motion for relief from the order, authorizing the Province of Camarines Sur to
take possession of their property and a motion to admit an amended motion to dismiss. Both motions
were denied in the order dated February 26, 1990.

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

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

Asked by the Court of Appeals to give his Comment to the petition, the Solicitor General stated that
under Section 9 of the Local Government Code (B.P. Blg. 337), there was no need for the approval by the
Office of the President of the exercise by the Sangguniang Panlalawigan of the right of eminent domain.
However, the Solicitor General expressed the view that the Province of Camarines Sur must first secure
the approval of the Department of Agrarian Reform of the plan to expropriate the lands of petitioners
for use as a housing project.

The Court of Appeals set aside the order of the trial court, allowing the Province of Camarines Sur to
take possession of private respondents' lands and the order denying the admission of the amended
motion to dismiss. It also ordered the trial court to suspend the expropriation proceedings until after the
Province of Camarines Sur shall have submitted the requisite approval of the Department of Agrarian
Reform to convert the classification of the property of the private respondents from agricultural to non-
agricultural land.

Hence this petition.

It must be noted that in the Court of Appeals, the San Joaquins asked for: (i) the dismissal of the
complaints for expropriation on the ground of the inadequacy of the compensation offered for the
property and (ii) the nullification of Resolution No. 129, Series of 1988 of the Sangguniang Panlalawigan
of the Province of Camarines Sur.
The Court of Appeals did not rule on the validity of the questioned resolution; neither did it dismiss the
complaints. However, when the Court of Appeals ordered the suspension of the proceedings until the
Province of Camarines Sur shall have obtained the authority of the Department of Agrarian Reform to
change the classification of the lands sought to be expropriated from agricultural to non-agricultural
use, it assumed that the resolution is valid and that the expropriation is for a public purpose or public
use.

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

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

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

The Court of Appeals, following the recommendation of the Solicitor General, held that the Province of
Camarines Sur must comply with the provision of Section 65 of the Comprehensive Agrarian Reform Law
and must first secure the approval of the Department of Agrarian Reform of the plan to expropriate the
lands of the San Joaquins.

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

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

It is true that local government units have no inherent power of eminent domain and can exercise it only
when expressly authorized by the legislature (City of Cincinnati v. Vester, 281 US 439, 74 L.ed. 950, 50 S
Ct. 360). It is also true that in delegating the power to expropriate, the legislature may retain certain
control or impose certain restraints on the exercise thereof by the local governments (Joslin Mfg. Co. v.
Providence, 262 US 668 67 L. ed. 1167, 43 S Ct. 684). While such delegated power may be a limited
authority, it is complete within its limits. Moreover, the limitations on the exercise of the delegated
power must be clearly expressed, either in the law conferring the power or in other legislations.
Resolution No. 219, Series of 1988, was promulgated pursuant to Section 9 of B.P. Blg. 337, the Local
Government Code, which provides:

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

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

"SEC. 65. Conversion of Lands. -- After the lapse of five (5) years from its award, when the land ceases to
be economically feasible and sound for agricultural purposes, or the locality has become urbanized and
the land will have a greater economic value for residential, commercial or industrial purposes, the DAR,
upon application of the beneficiary or the landowner, with due notice to the affected parties, and
subject to existing laws, may authorize the reclassification or conversion of the land and its disposition:
Provided, That the beneficiary shall have fully paid his obligation."

The opening, adverbial phrase of the provision sends signals that it applies to lands previously placed
under the agrarian reform program as it speaks of "the lapse of five (5) years from its award."

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

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

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

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

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

The fears of private respondents that they will be paid on the basis of the valuation declared in the tax
declarations of their property, are unfounded. This Court has declared as unconstitutional the
Presidential Decrees fixing the just compensation in expropriation cases to be the value given to the
condemned property either by the owners or the assessor, whichever was lower ([Export Processing
Zone Authority v. Dulay, 149 SCRA 305 [1987]). As held in Municipality of Talisay Ramirez, 183 SCRA 528
[1990]7 the rules for determining just compensation are those laid down in Rule 67 of the Rules of
Court, which allow private respondents to submit evidence on what they consider shall be the just
compensation for their property.

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

SO ORDERED.
SANTIAGO ESLABAN, JR., in his capacity as Project Manager of the National Irrigation Administration,
petitioner, vs. CLARITA VDA. DE ONORIO, respondent.

G.R. No. 146062 | 2001-06-28

DECISION

MENDOZA, J.:

This is a petition for review of the decision[1] of the Court of Appeals which affirmed the decision of the
Regional Trial Court, Branch 26, Surallah, South Cotabato, ordering the National Irrigation
Administration (NIA for brevity) to pay respondent the amount of P107,517.60 as just compensation for
the taking of the latter's property.

The facts are as follows:

Respondent Clarita Vda. de Enorio is the owner of a lot in Barangay M. Roxas, Sto. Niño, South Cotabato
with an area of 39,512 square meters. The lot, known as Lot 1210-A-Pad-11-000586, is covered by TCT
No. T-22121 of the Registry of Deeds, South Cotabato. On October 6, 1981, Santiago Eslaban, Jr., Project
Manager of the NIA, approved the construction of the main irrigation canal of the NIA on the said lot,
affecting a 24,660 square meter portion thereof. Respondent's husband agreed to the construction of
the NIA canal provided that they be paid by the government for the area taken after the processing of
documents by the Commission on Audit.

Sometime in 1983, a Right-of-Way agreement was executed between respondent and the NIA (Exh. 1).
The NIA then paid respondent the amount of P4,180.00 as Right-of-Way damages. Respondent
subsequently executed an Affidavit of Waiver of Rights and Fees whereby she waived any compensation
for damages to crops and improvements which she suffered as a result of the construction of a right-of-
way on her property (Exh. 2). The same year, petitioner offered respondent the sum of P35,000.00 by
way of amicable settlement pursuant to Executive Order No. 1035, §18, which provides in part that ¾
Financial assistance may also be given to owners of lands acquired under C.A. 141, as amended, for the
area or portion subject to the reservation under Section 12 thereof in such amounts as may be
determined by the implementing agency/instrumentality concerned in consultation with the
Commission on Audit and the assessor's office concerned.

Respondent demanded payment for the taking of her property, but petitioner refused to pay.
Accordingly, respondent filed on December 10, 1990 a complaint against petitioner before the Regional
Trial Court, praying that petitioner be ordered to pay the sum of P111,299.55 as compensation for the
portion of her property used in the construction of the canal constructed by the NIA, litigation expenses,
and the costs.

Petitioner, through the Office of the Solicitor-General, filed an Answer, in which he admitted that NIA
constructed an irrigation canal over the property of the plaintiff and that NIA paid a certain landowner
whose property had been taken for irrigation purposes, but petitioner interposed the defense that: (1)
the government had not consented to be sued; (2) the total area used by the NIA for its irrigation canal
was only 2.27 hectares, not 24,600 square meters; and (3) respondent was not entitled to compensation
for the taking of her property considering that she secured title over the property by virtue of a
homestead patent under C.A. No. 141.

At the pre-trial conference, the following facts were stipulated upon: (1) that the area taken was 24,660
square meters; (2) that it was a portion of the land covered by TCT No. T-22121 in the name of
respondent and her late husband (Exh. A); and (3) that this area had been taken by the NIA for the
construction of an irrigation canal.[2]

On October 18, 1993, the trial court rendered a decision, the dispositive portion of which reads:

In view of the foregoing, decision is hereby rendered in favor of plaintiff and against the defendant
ordering the defendant, National Irrigation Administration, to pay to plaintiff the sum of One Hundred
Seven Thousand Five Hundred Seventeen Pesos and Sixty Centavos (P107,517.60) as just compensation
for the questioned area of 24,660 square meters of land owned by plaintiff and taken by said defendant
NIA which used it for its main canal plus costs.[3]

On November 15, 1993, petitioner appealed to the Court of Appeals which, on October 31, 2000,
affirmed the decision of the Regional Trial Court. Hence this petition.

The issues in this case are:

1. WHETHER OR NOT THE PETITION IS DISMISSIBLE FOR FAILURE TO COMPLY WITH THE PROVISIONS OF
SECTION 5, RULE 7 OF THE REVISED RULES OF CIVIL PROCEDURE.

2. WHETHER OR NOT LAND GRANTED BY VIRTUE OF A HOMESTEAD PATENT AND SUBSEQUENTLY

REGISTERED UNDER PRESIDENTIAL DECREE 1529 CEASES TO BE PART OF THE PUBLIC DOMAIN.
3. WHETHER OR NOT THE VALUE OF JUST COMPENSATION SHALL BE DETERMINED FROM THE TIME OF
THE TAKING OR FROM THE TIME OF THE FINALITY OF THE DECISION.

4. WHETHER THE AFFIDAVIT OF WAIVER OF RIGHTS AND FEES EXECUTED BY RESPONDENT EXEMPTS
PETITIONER FROM MAKING PAYMENT TO THE FORMER.

We shall deal with these issues in the order they are stated.

First. Rule 7, §5 of the 1997 Revised Rules on Civil Procedure provides ¾

Certification against forum shopping. - The plaintiff or principal party shall certify under oath in the
complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed
thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any action or
filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of
his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action
or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that
the same or similar action or claim has been filed or is pending, he shall report the fact within five (5)
days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed.

Failure to comply with the foregoing requirements shall not be curable by mere amendment of the
complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice,
unless otherwise provided, upon motion and after hearing . . . .

By reason of Rule 45, §4 of the 1997 Revised Rules on Civil Procedure, in relation to Rule 42, §2 thereof,
the requirement of a certificate of non-forum shopping applies to the filing of petitions for review on
certiorari of the decisions of the Court of Appeals, such as the one filed by petitioner.

As provided in Rule 45, §5, "The failure of the petitioner to comply with any of the foregoing
requirements regarding . . . the contents of the document which should accompany the petition shall be
sufficient ground for the dismissal thereof."

The requirement in Rule 7, §5 that the certification should be executed by the plaintiff or the principal
means that counsel cannot sign the certificate against forum-shopping. The reason for this is that the
plaintiff or principal knows better than anyone else whether a petition has previously been filed
involving the same case or substantially the same issues. Hence, a certification signed by counsel alone
is defective and constitutes a valid cause for dismissal of the petition.[4]

In this case, the petition for review was filed by Santiago Eslaban, Jr., in his capacity as Project Manager
of the NIA. However, the verification and certification against forum-shopping were signed by Cesar E.
Gonzales, the administrator of the agency. The real party-in-interest is the NIA, which is a body
corporate. Without being duly authorized by resolution of the board of the corporation, neither
Santiago Eslaban, Jr. nor Cesar E. Gonzales could sign the certificate against forum-shopping
accompanying the petition for review. Hence, on this ground alone, the petition should be dismissed.

Second. Coming to the merits of the case, the land under litigation, as already stated, is covered by a
transfer certificate of title registered in the Registry Office of Koronadal, South Cotabato on May 13,
1976. This land was originally covered by Original Certificate of Title No. (P-25592) P-9800 which was
issued pursuant to a homestead patent granted on February 18, 1960. We have held:

Whenever public lands are alienated, granted or conveyed to applicants thereof, and the deed grant or
instrument of conveyance [sales patent] registered with the Register of Deeds and the corresponding
certificate and owner's duplicate of title issued, such lands are deemed registered lands under the
Torrens System and the certificate of title thus issued is as conclusive and indefeasible as any other
certificate of title issued to private lands in ordinary or cadastral registration proceedings.[5]

The Solicitor-General contends, however, that an encumbrance is imposed on the land in question in
view of §39 of the Land Registration Act (now P.D. No. 1529, §44) which provides:

Every person receiving a certificate of title in pursuance of a decree of registration, and every
subsequent purchaser of registered land who takes a certificate of title for value in good faith shall hold
the same free from all encumbrances except those noted on said certificate, and any of the following
encumbrances which may be subsisting, namely:

....

Third. Any public highway, way, private way established by law, or any government irrigation canal or
lateral thereof, where the certificate of title does not state that the boundaries of such highway, way,
irrigation canal or lateral thereof, have been determined.
As this provision says, however, the only servitude which a private property owner is required to
recognize in favor of the government is the easement of a "public highway, way, private way established
by law, or any government canal or lateral thereof where the certificate of title does not state that the
boundaries thereof have been pre-determined." This implies that the same should have been pre-
existing at the time of the registration of the land in order that the registered owner may be compelled
to respect it. Conversely, where the easement is not pre-existing and is sought to be imposed only after
the land has been registered under the Land Registration Act, proper expropriation proceedings should
be had, and just compensation paid to the registered owner thereof.[6]

In this case, the irrigation canal constructed by the NIA on the contested property was built only on
October 6, 1981, several years after the property had been registered on May 13, 1976. Accordingly,
prior expropriation proceedings should have been filed and just compensation paid to the owner
thereof before it could be taken for public use.

Indeed, the rule is that where private property is needed for conversion to some public use, the first
thing obviously that the government should do is to offer to buy it.[7] If the owner is willing to sell and
the parties can agree on the price and the other conditions of the sale, a voluntary transaction can then
be concluded and the transfer effected without the necessity of a judicial action. Otherwise, the
government will use its power of eminent domain, subject to the payment of just compensation, to
acquire private property in order to devote it to public use.

Third. With respect to the compensation which the owner of the condemned property is entitled to
receive, it is likewise settled that it is the market value which should be paid or "that sum of money
which a person, desirous but not compelled to buy, and an owner, willing but not compelled to sell,
would agree on as a price to be given and received therefor."[8] Further, just compensation means not
only the correct amount to be paid to the owner of the land but also the payment of the land within a
reasonable time from its taking. Without prompt payment, compensation cannot be considered "just"
for then the property owner is made to suffer the consequence of being immediately deprived of his
land while being made to wait for a decade or more before actually receiving the amount necessary to
cope with his loss.[9] Nevertheless, as noted in Ansaldo v. Tantuico, Jr.,[10] there are instances where
the expropriating agency takes over the property prior to the expropriation suit, in which case just
compensation shall be determined as of the time of taking, not as of the time of filing of the action of
eminent domain.

Before its amendment in 1997, Rule 67, §4 provided:

Order of condemnation. When such a motion is overruled or when any party fails to defend as required
by this rule, the court may enter an order of condemnation declaring that the plaintiff has a lawful right
to take the property sought to be condemned, for the public use or purpose described in the complaint
upon the payment of just compensation to be determined as of the date of the filing of the complaint. . .
.

It is now provided that-

SEC. 4. Order of expropriation. ¾ If the objections to and the defense against the right of the plaintiff to
expropriate the property are overruled, or when no party appears to defend as required by this Rule,
the court may issue an order of expropriation declaring that the plaintiff has a lawful right to take the
property sought to be expropriated, for the public use or purpose described in the complaint, upon the
payment of just compensation to be determined as of the date of the taking of the property or the filing
of the complaint, whichever came first.

A final order sustaining the right to expropriate the property may be appealed by any party aggrieved
thereby. Such appeal, however, shall not prevent the court from determining the just compensation to
be paid.

After the rendition of such an order, the plaintiff shall not be permitted to dismiss or discontinue the
proceeding except on such terms as the court deems just and equitable. (Emphasis added)

Thus, the value of the property must be determined either as of the date of the taking of the property or
the filing of the complaint, "whichever came first." Even before the new rule, however, it was already
held in Commissioner of Public Highways v. Burgos[11] that the price of the land at the time of taking,
not its value after the passage of time, represents the true value to be paid as just compensation. It was,
therefore, error for the Court of Appeals to rule that the just compensation to be paid to respondent
should be determined as of the filing of the complaint in 1990, and not the time of its taking by the NIA
in 1981, because petitioner was allegedly remiss in its obligation to pay respondent, and it was
respondent who filed the complaint. In the case of Burgos,[12] it was also the property owner who
brought the action for compensation against the government after 25 years since the taking of his
property for the construction of a road.

Indeed, the value of the land may be affected by many factors. It may be enhanced on account of its
taking for public use, just as it may depreciate. As observed in Republic v. Lara:[13]

[W]here property is taken ahead of the filing of the condemnation proceedings, the value thereof may
be enhanced by the public purpose for which it is taken; the entry by the plaintiff upon the property
may have depreciated its value thereby; or there may have been a natural increase in the value of the
property from the time it is taken to the time the complaint is filed, due to general economic conditions.
The owner of private property should be compensated only for what he actually loses; it is not intended
that his compensation shall extend beyond his loss or injury. And what he loses is only the actual value
of his property at the time it is taken. This is the only way that compensation to be paid can be truly just,
i.e., "just" not only to the individual whose property is taken, "but to the public, which is to pay for it" . .
..

In this case, the proper valuation for the property in question is P16,047.61 per hectare, the price level
for 1982, based on the appraisal report submitted by the commission (composed of the provincial
treasurer, assessor, and auditor of South Cotabato) constituted by the trial court to make an assessment
of the expropriated land and fix the price thereof on a per hectare basis.[14]

Fourth. Petitioner finally contends that it is exempt from paying any amount to respondent because the
latter executed an Affidavit of Waiver of Rights and Fees of any compensation due in favor of the
Municipal Treasurer of Barangay Sto. Niño, South Cotabato. However, as the Court of Appeals correctly
held:

[I]f NIA intended to bind the appellee to said affidavit, it would not even have bothered to give her any
amount for damages caused on the improvements/crops within the appellee's property. This,
apparently was not the case, as can be gleaned from the disbursement voucher in the amount of
P4,180.00 (page 10 of the Folder of Exhibits in Civil Case 396) issued on September 17, 1983 in favor of
the appellee, and the letter from the Office of the Solicitor General recommending the giving of
"financial assistance in the amount of P35,000.00" to the appellee.

Thus, We are inclined to give more credence to the appellee's explanation that the waiver of rights and
fees "pertains only to improvements and crops and not to the value of the land utilized by NIA for its
main canal."[15]

WHEREFORE, premises considered, the assailed decision of the Court of Appeals is

hereby AFFIRMED with MODIFICATION to the extent that the just compensation for the contested
property be paid to respondent in the amount of P16,047.61 per hectare, with interest at the legal rate
of six percent (6%) per annum from the time of taking until full payment is made. Costs against
petitioner.

SO ORDERED.
COMMISSIONER OF PUBLIC HIGHWAYS, petitioner, vs. HON. FRANCISCO P. BURGOS, in his capacity as
Judge of the Court of First Instance of Cebu City, Branch II, and Victoria Amigable, respondents.

G.R. No. L-36706 | 1980-03-31

DECISION

DE CASTRO, J.:

Victoria Amigable is the owner of parcel of land situated in Cebu City with an area of 6,167 square
meters. Sometime in 1924, the Government took this land for road-right-of way purpose. The land had
since become streets known as Mango Avenue and Gorordo Avenue in Cebu City.

On February 6, 1959, Victoria Amigable filed in the Court of First Instance of Cebu City a complaint,
which was later amended on April 17, 1959 to recover ownership and possession of the land, and for
damages in the sum of P50,000.00 for the alleged illegal occupation of the land by the Government,
moral damages in the sum of P25,000.00, and attorney's fees in the sum of P5,000.00, plus costs of suit.
The complaint was docketed as Civil Case No. R-5977 of the Court of First Instance of Cebu, entitled
"Victoria Amigable vs. Nicolas Cuenca, in his capacity as Commissioner of Public Highways and Republic
of the Philippines." 1

In its answer, 2 the Republic alleged, among others, that the land was either donated or sold by its
owners to the province of Cebu to enhance its value, and that in any case, the right of the owner, if any,
to recover the value of said property was already barred by estoppel and the statute of limitations,
defendants also invoking the non-suability of the Government.

In a decision rendered on July 29, 1959 by Judge Amador E. Gomez, the plaintiff's complaint was
dismissed on the grounds relied upon by the defendants therein. 3 The plaintiff appealed the decision to
the Supreme Court where it was reversed, and the case was remanded to the court of origin for the
determination of the compensation to be paid the plaintiff-appellant as owner of the land, including
attorney's fees. 4 The Supreme Court decision also directed that to determine just compensation for the
land, the basis should be the price or value thereof at the time of the taking. 5

In the hearing held pursuant to the decision of the Supreme Court, the Government proved the value of
the property at the time of the taking thereof in 1924 with certified copies, issued by the Bureau of
Records Management, of deeds of conveyance executed in 1924 or thereabouts, of several parcels of
land in the Banilad Friar Lands in which the property in question is located, showing the price to be at
P2.37 per square meter. For her part, Victoria Amigable presented newspaper clippings of the Manila
Times showing the value of the peso to the dollar obtaining about the middle of 1972, which was P6.775
to a dollar.

Upon consideration of the evidence presented by both parties, the court which is now the public
respondent in the instant petition, rendered judgment on January 9, 1973 directing the Republic of the
Philippines to pay Victoria Amigable the sum of P49,459.34 as the value of the property taken, plus
P145,410.44 representing interest at 6% on the principal amount of P49,459.34 from the year 1924 up
to the date of the decision, plus attorney's fees of 10% of the total amount due to Victoria Amigable, or
a grand total of P214,356.75. 6

The aforesaid decision of the respondent court is now the subject of the present petition for review by
certiorari, filed by the Solicitor General as counsel of the petitioner, Republic of the Philippines, against
the landowner, Victoria Amigable, as private respondent. The petition was given due course after
respondents had filed their comment thereto, as required. The Solicitor General, as counsel of
petitioner, was then required to file petitioner's brief and to serve copies thereof to the adverse parties.
7 Petitioner's brief was duly filed on January 29, 1974 8 to which respondents filed only a "comment." 9
instead of a brief, and the case was then considered submitted for decision. 10

1. The issue of whether or not the provision of Article 1250 of the New Civil Code is applicable in
determining the amount of compensation to be paid to respondent Victoria Amigable for the property
taken is raised because the respondent court applied said Article by considering the value of the peso to
the dollar at the time of hearing, in determining due compensation to be paid for the property taken.
The Solicitor General contends that in so doing, the respondent court violated the order of this Court, in
its decision in G.R. No. L-26400, February 29, 1972, to make as basis of the determination of just
compensation the price or value of the land at the time of the taking.

It is to be noted that respondent judge did consider the value of the property at the time of the taking,
which as proven by the petitioner was P2.37 per square meter in 1924. However, applying Article 1250
of the New Civil Code, and considering that the value of the peso to the dollar during the hearing in
1972 was P6.775 to a dollar, as proven by the evidence of the private respondent Victoria Amigable, the
Court fixed the value of the property at the deflated value of the peso in relation, to the dollar, and
came up with the sum of P49,459.34 as the just compensation to be paid by the Government. To this
action of the respondent judge, the Solicitor General has taken exception.

Article 1250 of the New Civil Code seems to be the only provision in our statutes which provides for
payment of an obligation in an amount different from what has been agreed upon by the parties
because of the supervention of extra-ordinary inflation or deflation. Thus, the Article provides:
"ART. 1250. In case extra-ordinary inflation or deflation of the currency stipulated should supervene, the
value of the currency at the time of the establishment of the obligation shall be the basis of payment,
unless there is an agreement to the contrary."

It is clear that the foregoing provision applies only to cases where a contract or agreement is involved. It
does not apply where the obligation to pay arises from law, independent of contract. The taking of
private property by the Government in the exercise of its power of eminent domain does not give rise to
a contractual obligation. We have expressed this view in the case of Velasco vs. Manila Electric Co., et
al., L-19390, December 29, 1971. 11

Moreover, the law as quoted, clearly provides that the value of the currency at the time of the
establishment of the obligation shall be the basis of payment which, in cases of expropriation, would be
the value of the peso at the time of the taking of the property when the obligation of the Government
to pay arises. 12 It is only when there is an "agreement to the contrary" that the extraordinary inflation
will make the value of the currency at the time of payment, not at the time of the establishment of the
obligation, the basis for payment. In other words, an agreement is needed for the effects of an
extraordinary inflation to be taken into account to alter the value of the currency at the time of the
establishment of the obligation which, as a rule, is always the determinative element, to be varied by
agreement that would find reason only in the supervention of extraordinary inflation or deflation.

We hold, therefore, that under the law, in the absence of any agreement to the contrary, even assuming
that there has been an extraordinary inflation within the meaning of Article 1250 of the New Civil Code,
a fact We decline to declare categorically, the value of the peso at the time of the establishment of the
obligation, which in the instant case is when the property was taken possession of by the Government,
must be considered for the purpose of determining just compensation. Obviously, there can be no
"agreement to the contrary" to speak of because the obligation of the Government sought to be
enforced in the present action does not originate from contract, but from law which, generally is not
subject to the will of the parties. And there being no other legal provision cited which would justify a
departure from the rule that just compensation is determined on the basis of the value of the property
at the time of the taking thereof in expropriation by the Government, the value of the property as it is
when the Government took possession of the land in question, not the increased value resulting from
the passage of time which invariably brings unearned increment to landed properties, represents the
true value to be paid as just compensation for the property taken. 13

In the present case, the unusually long delay of private respondent in bringing the present action - a
period of almost 25 years - which a stricter application of the law on estoppel and the statute of
limitations and prescription may have divested her of the rights she seeks on this action over the
property in question, is an added circumstance militating against payment to her of an amount bigger -
nay three-fold more - than the value of the property as should have been paid at the time of the taking.
For conformably to the rule that one should take good care of his own concern, private respondent
should have commenced proper action soon after she had been deprived of her right of ownership and
possession over the land, a deprivation she knew was permanent in character, for the land was intended
for, and had become, avenues in the City of Cebu. A penalty is always visited upon one for his inaction,
neglect or laches in the assertion of his rights allegedly withheld from him, or otherwise transgressed
upon by another.

From what has been said, the correct amount of compensation due private respondent for the taking of
her land for a public purpose would be not P49,459.34, as fixed by the respondent court, but only
P14,615.79 at P2.37 per square meter, the actual value of the land of 6,167 square meters when it was
taken in 1924. The interest in the sum of P145,410.44 at the rate of 6% from 1924 up to the time
respondent court rendered its decision, as was awarded by the said court should accordingly be
reduced.

In Our decision in G.R. No. L-26400, February 29, 1972, 14 We have said that Victoria Amigable is
entitled to the legal interest on the price of the land from the time of the taking. This holding is however
contested by the Solicitor General, citing the case of Raymunda S. Digsan vs. Auditor General, et al.

2. On the amount of attorney's fees to be paid private respondent, about which the Solicitor General has
next taken issue with the respondent court because the latter fixed the same at P19,486.97, while in her
complaint, respondent Amigable had asked for only P5,000.00, the amount as awarded by the
respondent court, would be too exhorbitant, based as it is, on the inflated value of the land. An
attorney's fees of P5,000.00, which is the amount asked for by private respondent herself in her
complaint. would be reasonable.

WHEREFORE, the judgment appealed from is hereby reversed as to the basis in the determination of the
price of the land taken as just compensation for its expropriation, which should be the value of the land
at the time of the taking, in 1924. Accordingly, the same is hereby fixed at P14,615.79 at P2.37 per
square meter, with interest thereon at 6% per annum, from the taking of the property in 1924, to be
also paid by Government to private respondent, Victoria Amigable, until the amount due is fully paid,
plus attorney's fees of P5,000.00.

SO ORDERED.
EXPORT PROCESSING ZONE AUTHORITY, petitioner, vs. HON. CEFERINO E. DULAY, in his capacity as
the Presiding Judge, Court of First Instance of Cebu, Branch XVI, Lapu-Lapu City, and SAN ANTONIO
DEVELOPMENT CORPORATION, respondents.

G.R. No. L-59603 | 1987-04-29

DECISION

GUTIERREZ, JR., J.:

The question raised in this petition is whether or not Presidential Decrees Numbered 76, 464, 794 and
1533 have repealed and superseded Sections 5 to 8 of Rule 67 of the Revised Rules of Court, such that in
determining the just compensation of property in an expropriation case, the only basis should be its
market value as declared by the owner or as determined by the assessor, whichever is lower.

On January 15, 1979, the President of the Philippines, issued Proclamation No. 1811, reserving a certain
parcel of land of the public domain situated in the City of Lapu-Lapu, Island of Mactan, Cebu and
covering a total area of 1,193,669 square meters, more or less, for the establishment of an export
processing zone by petitioner Export Processing Zone Authority (EPZA).

Not all the reserved area, however, was public land. The proclamation included, among others, four (4)
parcels of land with an aggregate area of 22,328 square meters owned and registered in the name of the
private respondent. The petitioner, therefore, offered to purchase the parcels of land from the
respondent in accordance with the valuation set forth in Section 92, Presidential Decree (P.D.) No. 464,
as amended. The parties failed to reach an agreement regarding the sale of the property.

The petitioner filed with the then Court of First Instance of Cebu, Branch XVI, Lapu-Lapu City, a
complaint for expropriation with a prayer for the issuance of a writ of possession against the private
respondent, to expropriate the aforesaid parcels of land pursuant to P.D. No. 66, as amended, which
empowers the petitioner to acquire by condemnation proceedings any property for the establishment
of export processing zones, in relation to Proclamation No. 1811, for the purpose of establishing the
Mactan Export Processing Zone.

On October 21, 1980, the respondent judge issued a writ of possession authorizing the petitioner to take
immediate possession of the premises. On December 23, 1980, the private respondent filed its answer.
At the pre-trial conference on February 13, 1981, the respondent judge issued an order stating that the
parties have agreed that the only issue to be resolved is the just compensation for the properties and
that the pre-trial is thereby terminated and the hearing on the merits is set on April 2, 1981.

On February 17, 1981, the respondent judge issued the order of condemnation declaring the petitioner
as having the lawful right to take the properties sought to be condemned, upon the payment of just
compensation to be determined as of the filing of the complaint. The respondent judge also issued a
second order, subject of this petition, appointing certain persons as commissioners to ascertain and
report to the court the just compensation for the properties sought to be expropriated.

On June 19, 1981, the three commissioners submitted their consolidated report recommending the
amount of P15.00 per square meter as the fair and reasonable value of just compensation for the
properties.

On July 29, 1981, the petitioner filed a Motion for Reconsideration of the order of February 19, 1981 and
Objection to Commissioner's Report on the grounds that P.D. No. 1533 has superseded Sections 5 to 8
of Rule 67 of the Rules of Court on the ascertainment of just compensation through commissioners; and
that the compensation must not exceed the maximum amount set by P.D. No. 1533.

On November 14, 1981, the trial court denied the petitioner's motion for reconsideration and gave the
latter ten (10) days within which to file its objection to the Commissioner's Report.

On February 9, 1982, the petitioner filed this present petition for certiorari and mandamus with
preliminary restraining order, enjoining the trial court from enforcing the order dated February 17, 1981
and from further proceeding with the hearing of the expropriation case.

The only issue raised in this petition is whether or not Sections 5 to 8, Rule 67 of the Revised Rules of
Court had been repealed or deemed amended by P.D. No. 1533 insofar as the appointment of
commissioners to determine the just compensation is concerned. Stated in another way, is the exclusive
and mandatory mode of determining just compensation in P.D. No. 1533 valid and constitutional?

The petitioner maintains that the respondent judge acted in excess of his jurisdiction and with grave
abuse of discretion in denying the petitioner's motion for reconsideration and in setting the
commissioner's report for hearing because under P.D. No. 1533, which is the applicable law herein, the
basis of just compensation shall be the fair and current market value declared by the owner of the
property sought to be expropriated or such market value as determined by the assessor, whichever is
lower. Therefore, there is no more need to appoint commissioners as prescribed by Rule 67 of the
Revised Rules of Court and for said commissioners to consider other highly variable factors in order to
determine just compensation. The petitioner further maintains that P.D. No. 1533 has vested on the
assessors and the property owners themselves the power or duty to fix the market value of the
properties and that said property owners are given the full opportunity to be heard before the Local
Board of Assessment Appeals and the Central Board of Assessment Appeals. Thus, the vesting on the
assessor or the property owner of the right to determine the just compensation in expropriation
proceedings, with appropriate procedure for appeal to higher administrative boards, is valid and
constitutional.

Prior to the promulgation of P.D. Nos. 76, 464, 794 and 1533, this Court has interpreted the eminent
domain provisions of the Constitution and established the meaning, under the fundamental law, of just
compensation and who has the power to determine it. Thus, in the following cases, wherein the filing of
the expropriation proceedings were all commenced prior to the promulgation of the aforementioned
decrees, we laid down the doctrine on just compensation:

Municipality of Daet v. Court of Appeals (93 SCRA 503, 516),

xxx xxx xxx

". . . And in the case of J.M. Tuason & Co., Inc. v. Land Tenure Administration, 31 SCRA 413, the Court,
speaking thru now Chief Justice Fernando, reiterated the 'well-settled (rule) that just compensation
means the equivalent for the value of the property at the time of its taking. Anything beyond that is
more and anything short of that is less, than just compensation. It means a fair and full equivalent for
the loss sustained, which is the measure of the indemnity, not whatever gain would accrue to the
expropriating entity.' "

Garcia v. Court of Appeals (102 SCRA 597, 608),

xxx xxx xxx

". . . Hence, in estimating the market value, all the capabilities of the property and all the uses to which
it may be applied or for which it is adapted are to be considered and not merely the condition it is in the
time and the use to which it is then applied by the owner. All the facts as to the condition of the
property and its surroundings, its improvements and capabilities may be shown and considered in
estimating its value."
Republic v. Santos (141 SCRA 30, 35-36),

"According to section 8 of Rule 67, the court is not bound by the commissioners' report. It may make
such order or render such judgment as shall secure to the plaintiff the property essential to the exercise
of his right of condemnation, and to the defendant just compensation for the property expropriated.
This Court may substitute its own estimate of the value as gathered from the record (Manila Railroad
Company v. Velasquez, 32 Phil. 286).

However, the promulgation of the aforementioned decrees practically set aside the above and many
other precedents hammered out in the course of evidence-laden, well argued, fully heard, studiously
deliberated, and judiciously considered court proceedings. The decrees categorically and peremptorily
limited the definition of just compensation thus:

P.D. No. 76:

xxx xxx xxx

"For purposes of just compensation in cases of private property acquired by the government for public
use, the basis shall be the current and fair market value declared by the owner or administrator, or such
market value as determined by the Assessor, whichever is lower."

P.D. No. 464:

"Section 92. Basis for payment of just compensation in expropriation proceedings. In determining just
compensation which private property is acquired by the government for public use, the basis shall be
the market value declared by the owner or administrator or anyone having legal interest in the property,
or such market value as determined by the assessor, whichever is lower."

P.D. No. 794:

"Section 92. Basis for payment of just compensation in expropriation proceedings. In determining just
compensation when private property is acquired by the government for public use, the same shall not
exceed the market value declared by the owner or administrator or anyone having legal interest in the
property, or such market value as determined by the assessor, whichever is lower."
P.D. No. 1533:

"Section 1. In determining just compensation for private property acquired through eminent domain
proceedings, the compensation to be paid shall not exceed the value declared by the owner or
administrator or anyone having legal interest in the property or determined by the assessor, pursuant to
the Real Property Tax Code, whichever value is lower, prior to the recommendation or decision of the
appropriate Government office to acquire the property."

We are constrained to declare the provisions of the Decrees on just compensation unconstitutional and
void and accordingly dismiss the instant petition for lack of merit.

The method of ascertaining just compensation under the aforecited decrees constitutes impermissible
encroachment on judicial prerogatives. It tends to render this Court inutile in a matter which under the
Constitution is reserved to it for final determination.

Thus, although in an expropriation proceeding the court technically would still have the power to
determine the just compensation for the property, following the applicable decrees, its task would be
relegated to simply stating the lower value of the property as declared either by the owner or the
assessor. As a necessary consequence, it would be useless for the court to appoint commissioners under
Rule 67 of the Rules of Court. Moreover, the need to satisfy the due process clause in the taking of
private property is seemingly fulfilled since it cannot be said that a judicial proceeding was not had
before the actual taking. However, the strict application of the decrees during the proceedings would be
nothing short of a mere formality or charade as the court has only to choose between the valuation of
the owner and that of the assessor, and its choice is always limited to the lower of the two. The court
cannot exercise its discretion or independence in determining what is just or fair. Even a grade school
pupil could substitute for the judge insofar as the determination of constitutional just compensation is
concerned.

In the case of National Housing Authority v. Reyes (123 SCRA 245), this Court upheld P.D. No. 464, as
further amended by P.D. Nos. 794, 1224 and 1259. In this case, the petitioner National Housing
Authority contended that the owner's declaration at P1,400.00 which happened to be lower than the
assessor's assessment, is the just compensation for the respondent's property under section 92 of P.D.
No. 464. On the other hand, the private respondent stressed that while there may be basis for the
allegation that the respondent judge did not follow the decree, the matter is still subject to his final
disposition, he having been vested with the original and competent authority to exercise his judicial
discretion in the light of the constitutional clauses on due process and equal protection.
To these opposing arguments, this Court ruled that under the conceded facts, there should be a
recognition that the law as it stands must be applied; that the decree having spoken so clearly and
unequivocably calls for obedience; and that on a matter where the applicable law speaks in no uncertain
language, the Court has no choice except to yield to its command. We further stated that "the courts
should recognize that the rule introduced by P.D. No. 76 and reiterated in subsequent decrees does not
upset the established concepts of justice or the constitutional provision on just compensation for,
precisely, the owner is allowed to make his own valuation of his property."

While the Court yielded to executive prerogative exercised in the form of absolute law-making power,
its members, nonetheless, remained uncomfortable with the implications of the decision and the abuse
and unfairness which might follow in its wake. For one thing, the President himself did not seem assured
or confident with his own enactment. It was not enough to lay down the law on determination of just
compensation in P.D. 76. It had to be repeated and reiterated in P.D. 464, P.D. 794, and P.D. 1533. The
provision is also found in P.D. 1224, P.D. 1259 and P.D. 1313. Inspite of its effectivity as general law and
the wide publicity given to it, the questioned provision or an even stricter version had to be embodied in
cases of specific expropriations by decree as in P.D. 1669 expropriating the Tambunting Estate and P.D.
1670 expropriating the Sunog Apog area in Tondo, Manila.

In the present petition, we are once again confronted with the same question of whether the courts
under P.D. 1533, which contains the same provision on just compensation as its predecessor decrees,
still have the power and authority to determine just compensation, independent of what is stated by the
decree and to this effect, to appoint commissioners for such purpose.

This time, we answer in the affirmative.

In overruling the petitioner's motion for reconsideration and objection to the commissioner's report, the
trial court said:

"Another consideration why the Court is empowered to appoint commissioners to assess the just
compensation of these properties under eminent domain proceedings, is the well-entrenched ruling
that 'the owner of property expropriated is entitled to recover from expropriating authority the fair and
full value of the lot, as of the time when possession thereof was actually taken by the province, plus
consequential damages ---- including attorney's fees ---- from which the consequential benefits, if any
should be deducted, with interest at the legal rate, on the aggregate sum due to the owner from and
after the date of actual taking.' (Capitol Subdivision, Inc. v. Province of Negros Occidental, 7 SCRA 60). In
fine, the decree only establishes a uniform basis for determining just compensation which the Court may
consider as one of the factors in arriving at 'just compensation,' as envisage in the Constitution. In the
words of Justice Barredo, 'Respondent court's invocation of General Order No. 3 of September 21, 1972
is nothing short of an unwarranted abdication of judicial authority, which no judge duly imbued with the
implications of the paramount principle of independence of the judiciary should ever think of doing.'
(Lina v. Purisima, 82 SCRA 344, 361; Cf. Prov. of Pangasinan v. CFI Judge of Pangasinan, Br. VIII, 80 SCRA
117) Indeed, where this Court simply follows PD 1533, thereby limiting the determination of just
compensation on the value declared by the owner or administrator or as determined by the Assessor,
whichever is lower, it may result in the deprivation of the landowner's right of due process to enable it
to prove its claim to just compensation, as mandated by the Constitution. (Uy v. Genato, 57 SCRA 123).
The tax declaration under the Real Property Tax Code is, undoubtedly, for purposes of taxation."

We are convinced and so rule that the trial court correctly stated that the valuation in the decree may
only serve as a guiding principle or one of the factors in determining just compensation but it may not
substitute the court's own judgment as to what amount should be awarded and how to arrive at such
amount. A return to the earlier well-established doctrine, to our mind, is more in keeping with the
principle that the judiciary should live up to its mission "by vitalizing and not denigrating constitutional
rights." (See Salonga v. Cruz Paño, 134 SCRA 438, 462; citing Mercado v. Court of First Instance of Rizal,
116 SCRA 93.) The doctrine we enunciated in National Housing Authority v. Reyes, supra, therefore,
must necessarily be abandoned if we are to uphold this Court's role as the guardian of the fundamental
rights guaranteed by the due process and equal protection clauses and as the final arbiter over
transgressions committed against constitutional rights.

The basic unfairness of the decrees is readily apparent.

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

In this particular case, the tax declarations presented by the petitioner as basis for just compensation
were made by the Lapu-Lapu municipal, later city assessor long before martial law, when land was not
only much cheaper but when assessed values of properties were stated in figures constituting only a
fraction of their true market value. The private respondent was not even the owner of the properties at
the time. It purchased the lots for development purposes. To peg the value of the lots on the basis of
documents which are out of date and at prices below the acquisition cost of present owners would be
arbitrary and confiscatory.

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

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

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

As was held in the case of Gideon v. Wainwright (93 ALR 2d, 733, 742):

"In the light of these and many other prior decisions of this Court, it is not surprising that the Betts
Court, when faced with the contention that 'one charged with crime, who is unable to obtain counsel'
must be furnished counsel by the State,' conceded that '[E]xpressions in the opinions of this court lend
color to the argument . . .' 316 U.S., at 462, 463, 86 L ed. 1602, 62 S Ct. 1252. The fact is that in deciding
as it did - that 'appointment of counsel is not a fundamental right, essential to a fair trial' ---- the Court in
Betts v. Brady made an abrupt brake with its own well-considered precedents. In returning to these old
precedents, sounder we believe than the new, we but restore constitutional principles established to
achieve a fair system of justice. . . .'.

We return to older and more sound precedents. This Court has the duty to formulate guiding and
controlling constitutional principles, precepts, doctrines, or rules. (See Salonga v. Cruz Pano, supra).

The determination of "just compensation" in eminent domain cases is a judicial function. The executive
department or the legislature may make the initial determinations but when a party claims a violation of
the guarantee in the Bill of Rights that private property may not be taken for public use without just
compensation, no statute, decree, or executive order can mandate that its own determination shall
prevail over the court's findings. Much less can the courts be precluded from looking into the "just-ness"
of the decreed compensation.
We, therefore, hold that P.D. No. 1533, which eliminates the court's discretion to appoint
commissioners pursuant to Rule 67 of the Rules of Court, is unconstitutional and void. To hold otherwise
would be to undermine the very purpose why this Court exists in the first place.

WHEREFORE, IN VIEW OF THE FOREGOING, the petition is hereby DISMISSED. The temporary
restraining order issued on February 16, 1982 is LIFTED and SET ASIDE.

SO ORDERED.
ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, INC., JUANITO D. GOMEZ, GERARDO B.
ALARCIO, FELIFE A. GUICO, JR., BERNARDO M. ALMONTE, CANUTO RAMIR B. CABRITO, ISIDRO T.
GUICO, FELISA I. LLAMIDO, FAUSTO J. SALVA, REYNALDO G. ESTRADA, FELISA C. BAUTISTA, ESMENIA J.
CABE, TEODORO B. MADRIAGA, AUREA J. PRESTOSA, EMERENCIANA J. ISLA, FELICISIMA C. APRESTO,
CONSUELO M. MORALES, BENJAMIN R. SEGISMUNDO, CIRILA A. JOSE & NAPOLEON S. FERRER,
petitioners, vs. HONORABLE SECRETARY OF AGRARIAN REFORM, respondent. / ARSENIO AL. ACUNA,
NEWTON JISON, VICTORINO FERRARIS, DENNIS JEREZA, HERMINIGILDO GUSTILO, PAULINO D.
TOLENTINO and PLANTERS' COMMITTEE, INC., Victorias Mill District, Victorias, Negros Occidental,
petitioners, vs. JOKER ARROYO, PHILIP E. JUICO and PRESIDENTIAL AGRARIAN REFORM COUNCIL,
respondents. / INOCENTES PABICO, petitioner, vs. HON. PHILIP E. JUICO, SECRETARY OF THE
DEPARTMENT OF AGRARIAN REFORM, HON. JOKER ARROYO, EXECUTIVE SECRETARY OF THE OFFICE
OF THE PRESIDENT, and Messrs. SALVADOR TALENTO, JAIME ABOGADO, CONRADO AVANCENA, and
ROBERTO TAAY, respondents. / NICOLAS S. MANAAY and AGUSTIN HERMANO, JR., petitioners, vs.
HON. PHILIP ELLA JUICO, as Secretary of Agrarian Reform, and LAND BANK OF THE PHILIPPINES,
respondents.

G.R. Nos. 78742, 79310, 79744, and 79777 | 1989-07-14

DECISION

CRUZ, J.:

In ancient mythology, Antaeus was a terrible giant who blocked and challenged Hercules for his life on
his way to Mycenae after performing his eleventh labor. The two wrestled mightily and Hercules flung
his adversary to the ground thinking him dead, but Antaeus rose even stronger to resume their struggle.
This happened several times to Hercules' increasing amazement. Finally, as they continued grappling, it
dawned on Hercules that Antaeus was the son of Gaea and could never die as long as any part of his
body was touching his Mother Earth. Thus forewarned, Hercules then held Antaeus up in the air, beyond
the reach of the sustaining soil, and crushed him to death.

Mother Earth. The sustaining soil. The giver of life, without whose invigorating touch even the powerful
Antaeus weakened and died.

The cases before us are not as fanciful as the foregoing tale. But they also tell of the elemental forces of
life and death, of men and women who, like Antaeus, need the sustaining strength of the precious earth
to stay alive.

"Land for the Landless" is a slogan that underscores the acute imbalance in the distribution of this
precious resource among our people. But it is more than a slogan. Through the brooding centuries, it has
become a battlecry dramatizing the increasingly urgent demand of the dispossessed among us for a plot
of earth as their place in the sun.

Recognizing this need, the Constitution in 1935 mandated the policy of social justice to "insure the well-
being and economic security of all the people," 1 especially the less privileged. In 1973, the new
Constitution affirmed this goal, adding specifically that "the State shall regulate the acquisition,
ownership, use, enjoyment and disposition of private property and equitably diffuse property ownership
and profits.' 2 Significantly, there was also the specific injunction to "formulate and implement an
agrarian reform program aimed at emancipating the tenant from the bondage of the soil." 3

The Constitution of 1987 was not to be outdone. Besides echoing these sentiments, it also adopted one
whole and separate Article XIII on Social Justice and Human Rights, containing grandiose but
undoubtedly sincere provisions for the uplift of the common people. These include a call in the following
words for the adoption by the State of an agrarian reform program:

SEC. 4. The State shall, by law, undertake an agrarian reform program founded on the right of farmers
and regular farmworkers, who are landless, to own directly or collectively the lands they till or, in the
case of other farmworkers, to receive a just share of the fruits thereof. To this end, the State shall
encourage and undertake the just distribution of all agricultural lands, subject to such priorities and
reasonable retention limits as the Congress may prescribe, taking into account ecological,
developmental, or equity considerations and subject to the payment of just compensation. In
determining retention limits, the State shall respect the right of small landowners. The State shall
further provide incentives for voluntary land-sharing.

Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural Land Reform Code, had already been
enacted by the Congress of the Philippines on August 8, 1963, in line with the above-stated principles.
This was substantially superseded almost a decade later by P.D. No. 27, which was promulgated on
October 21, 1972, along with martial law, to provide for the compulsory acquisition of private lands for
distribution among tenant-farmers and to specify maximum retention limits for landowners.

The people power revolution of 1986 did not change and indeed even energized the thrust for agrarian
reform. Thus, on July 17, 1987, President Corazon C. Aquino issued E.O. No. 228, declaring full land
ownership in favor of the beneficiaries of P.D. No. 27 and providing for the valuation of still unvalued
lands covered by the decree as well as the manner of their payment. This was followed on July 22, 1987
by Presidential Proclamation No. 131, instituting a comprehensive agrarian reform program (CARP), and
E.O. No. 229, providing the mechanics for its implementation.
Subsequently, with its formal organization, the revived Congress of the Philippines took over legislative
power from the President and started its own deliberations, including extensive public hearings, on the
improvement of the interests of farmers. The result, after almost a year of spirited debate, was the
enactment of R.A. No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988,
which President Aquino signed on June 10, 1988. This law, while considerably changing the earlier
mentioned enactments, nevertheless gives them suppletory effect insofar as they are not inconsistent
with its provisions. 4

The above-captioned cases have been consolidated because they involve common legal questions,
including serious challenges to the constitutionality of the several measures mentioned above. They will
be the subject of one common discussion and resolution. The different antecedents of each case will
require separate treatment, however, and will must be explained hereunder.

G.R. No. 79777

Squarely raised in this petition is the constitutionality of P.D. No. 27, E.O. Nos. 228 and 229, and R.A. No.
6657.

The subjects of this petition are a 9-hectare riceland worked by four tenants and owned by petitioner
Nicolas Manaay and his wife and a 5-hectare riceland worked by four tenants and owned by petitioner
Augustin Hermano, Jr. The tenants were declared full owners of these lands by E.O. No. 228 as qualified
farmers under P.D. No. 27.

The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on grounds inter alia of
separation of powers, due process, equal protection and the constitutional limitation that no private
property shall be taken for public use without just compensation.

They contend that President Aquino usurped legislative power when she promulgated E.O. No. 228. The
said measure is invalid also for violation of Article XIII, Section 4, of the Constitution, for failure to
provide for retention limits for small landowners. Moreover, it does not conform to Article VI, Section
25(4) and the other requisites of a valid appropriation.

In connection with the determination of just compensation, the petitioners argue that the same may be
made only by a court of justice and not by the President of the Philippines. They invoke the recent cases
of EPZA v. Dulay 5 and Manotok v. National Food Authority. 6 Moreover, the just compensation
contemplated by the Bill of Rights is payable in money or in cash and not in the form of bonds or other
things of value.
In considering the rentals as advance payment on the land, the executive order also deprives the
petitioners of their property rights as protected by due process. The equal protection clause is also
violated because the order places the burden of solving the agrarian problems on the owners only of
agricultural lands. No similar obligation is imposed on the owners of other properties.

The petitioners also maintain that in declaring the beneficiaries under P.D. No. 27 to be the owners of
the lands occupied by them, E.O. No. 228 ignored judicial prerogatives and so violated due process.
Worse, the measure would not solve the agrarian problem because even the small farmers are deprived
of their lands and the retention rights guaranteed by the Constitution.

In his Comment, the Solicitor General stresses that P.D. No. 27 has already been upheld in the earlier
cases of Chavez v. Zobel, 7 Gonzales v. Estrella, 8 and Association of Rice and Corn Producers of the
Philippines, Inc. v. the National Land Reform council 9 The determination of just compensation by the
executive authorities conformably to the formula prescribed under the questioned order is at best initial
or preliminary only. It does not foreclose judicial intervention whenever sought or warranted. At any
rate, the challenge to the order is premature because no valuation of their property has as yet been
made by the Department of Agrarian Reform. The petitioners are also not proper parties because the
lands owned by them do not exceed the maximum retention limit of 7 hectares.

Replying, the petitioners insist they are proper parties because P.D. No. 27 does not provide for
retention limits on tenanted lands and that in any event their petition is a class suit brought in behalf of
landowners with landholdings below 24 hectares. They maintain that the determination of just
compensation by the administrative authorities is a final ascertainment. As for the cases invoked by the
public respondent, the constitutionality of P.D. No. 27 was merely assumed in Chavez, while what was
decided in Gonzales was the validity of the imposition of martial law.

In the amended petition dated November 22, 1988, it is contended that P.D. No. 27, E.O. Nos. 228 and
229 (except Sections 20 and 21) have been impliedly repealed by R.A. No. 6657. Nevertheless, this
statute should itself also be declared unconstitutional because it suffers from substantially the same
infirmities as the earlier measures.

A petition for intervention was filed with leave of court on June 1, 1988 by Vicente Cruz, owner of a
1.83-hectare land, who complained that the DAR was insisting on the implementation of P.D. No. 27 and
E.O. No. 228 despite a compromise agreement he had reached with his tenant on the payment of
rentals. In a subsequent motion dated April 10, 1989, he adopted the allegations in the basic amended
petition that the above-mentioned enactments have been impliedly repealed by R.A. No. 6657.
G.R. No. 79310

The petitioners herein are landowners and sugar planters in the Victorias Mill District, Victorias, Negros
Occidental. Co-petitioner Planters' Committee, Inc. is an organization composed of 1,400 planter-
members. This petition seeks to prohibit the implementation of Proc. No. 131 and E.O. No. 229.

The petitioners claim that the power to provide for a Comprehensive Agrarian Reform Program as
decreed by the Constitution belongs to Congress and not the President. Although they agree that the
President could exercise legislative power until the Congress was convened, she could do so only to
enact emergency measures during the transition period. At that, even assuming that the interim
legislative power of the President was properly exercised, Proc. No. 131 and E.O. No. 229 would still
have to be annulled for violating the constitutional provisions on just compensation, due process, and
equal protection.

They also argue that under Section 2 of Proc. No. 131 which provides:

Agrarian Reform Fund. - There is hereby created a special fund, to be known as the Agrarian Reform
Fund, an initial amount of FIFTY BILLION PESOS (P50,000,000,000.00) to cover the estimated cost of the
Comprehensive Agrarian Reform Program from 1987 to 1992 which shall be sourced from the receipts
of the sale of the assets of the Asset Privatization Trust and Receipts of sale of ill-gotten wealth received
through the Presidential Commission on Good Government and such other sources as government may
deem appropriate. The amounts collected and accruing to this special fund shall be considered
automatically appropriated for the purpose authorized in this Proclamation.

the amount appropriated is in futuro, not in esse. The money needed to cover the cost of the
contemplated expropriation has yet to be raised and cannot be appropriated at this time.

Furthermore, they contend that taking must be simultaneous with payment of just compensation as it is
traditionally understood, i.e., with money and in full, but no such payment is contemplated in Section 5
of the E.O. No. 229. On the contrary, Section 6, thereof provides that the Land Bank of the Philippines
"shall compensate the landowner in an amount to be established by the government, which shall be
based on the owner's declaration of current fair market value as provided in Section 4 hereof, but
subject to certain controls to be defined and promulgated by the Presidential Agrarian Reform Council."
This compensation may not be paid fully in money but in any of several modes that may consist of part
cash and part bond, with interest, maturing periodically, or direct payment in cash or bond as may be
mutually agreed upon by the beneficiary and the landowner or as may be prescribed or approved by the
PARC.
The petitioners also argue that in the issuance of the two measures, no effort was made to make a
careful study of the sugar planters' situation. There is no tenancy problem in the sugar areas that can
justify the application of the CARP to them. To the extent that the sugar planters have been lumped in
the same legislation with other farmers, although they are a separate group with problems exclusively
their own, their right to equal protection has been violated.

A motion for intervention was filed on August 27, 1987 by the National Federation of Sugarcane Planters
(NASP) which claims a membership of at least 20,000 individual sugar planters all over the country. On
September 10, 1987, another motion for intervention was filed, this time by Manuel Barcelona, et al.,
representing coconut and riceland owners. Both motions were granted by the Court.

NASP alleges that President Aquino had no authority to fund the Agrarian Reform Program and that, in
any event, the appropriation is invalid because of uncertainty in the amount appropriated. Section 2 of
Proc. No. 131 and Sections 20 and 21 of E.O. No. 229 provide for an initial appropriation of fifty billion
pesos and thus specifies the minimum rather than the maximum authorized amount. This is not allowed.
Furthermore, the stated initial amount has not been certified to by the National Treasurer as actually
available.

Two additional arguments are made by Barcelona, to wit, the failure to establish by clear and convincing
evidence the necessity for the exercise of the powers of eminent domain, and the violation of the
fundamental right to own property.

The petitioners also decry the penalty for non-registration of the lands, which is the expropriation of the
said land for an amount equal to the government assessor's valuation of the land for tax purposes. On
the other hand, if the landowner declares his own valuation, he is unjustly required to immediately pay
the corresponding taxes on the land, in violation of the uniformity rule.

In his consolidated Comment, the Solicitor General first invokes the presumption of constitutionality in
favor of Proc. No. 131 and E.O. No. 229. He also justifies the necessity for the expropriation as explained
in the "whereas" clauses of the Proclamation and submits that, contrary to the petitioner's contention, a
pilot project to determine the feasibility of CARP and a general survey on the people's opinion thereon
are not indispensable prerequisites to its promulgation.

On the alleged violation of the equal protection clause, the sugar planters have failed to show that they
belong to a different class and should be differently treated. The Comment also suggests the possibility
of Congress first distributing public agricultural lands and scheduling the expropriation of private
agricultural lands later. From this viewpoint, the petition for prohibition would be premature.

The public respondent also points out that the constitutional prohibition is against the payment of
public money without the corresponding appropriation. There is no rule that only money already in
existence can be the subject of an appropriation law. Finally, the earmarking of fifty billion pesos as
Agrarian Reform Fund, although denominated as an initial amount, is actually the maximum sum
appropriated. The word "initial" simply means that additional amounts may be appropriated later when
necessary.

On April 11, 1988, Prudencio Serrano, a coconut planter, filed a petition on his own behalf, assailing the
constitutionality of E.O. No. 229. In addition to the arguments already raised, Serrano contends that the
measure is unconstitutional because:

(1) Only public lands should be included in the CARP;

(2) E.O. No. 229 embraces more than one subject which is not expressed in the title;

(3) The power of the President to legislate was terminated on July 2, 1987; and

(4) The appropriation of a P50 billion special fund from the National Treasury did not originate from the
House of Representatives.

G.R. No. 79744

The petitioner alleges that the then Secretary of Department of Agrarian Reform, in violation of due
process and the requirement for just compensation, placed his landholding under the coverage of
Operation Land Transfer. Certificates of Land Transfer were subsequently issued to the private
respondents, who then refused payment of lease rentals to him.

On September 3, 1986, the petitioner protested the erroneous inclusion of his small landholding under
Operation Land Transfer and asked for the recall and cancellation of the Certificates of Land Transfer in
the name of the private respondents. He claims that on December 24, 1986, his petition was denied
without hearing. On February 17, 1987, he filed a motion for reconsideration, which had not been acted
upon when E.O. Nos. 228 and 229 were issued. These orders rendered his motion moot and academic
because they directly effected the transfer of his land to the private respondents.

The petitioner now argues that:

(1) E.O. Nos. 228 and 229 were invalidly issued by the President of the Philippines.

(2) The said executive orders are violative of the constitutional provision that no private property shall
be taken without due process or just compensation.

(3) The petitioner is denied the right of maximum retention provided for under the 1987 Constitution.

The petitioner contends that the issuance of E.O Nos. 228 and 229 shortly before Congress convened is
anomalous and arbitrary, besides violating the doctrine of separation of powers. The legislative power
granted to the President under the Transitory Provisions refers only to emergency measures that may
be promulgated in the proper exercise of the police power.

The petitioner also invokes his rights not to be deprived of his property without due process of law and
to the retention of his small parcels of riceholding as guaranteed under Article XIII, Section 4 of the
Constitution. He likewise argues that, besides denying him just compensation for his land, the provisions
of E.O. No. 228 declaring that:

Lease rentals paid to the landowner by the farmer-beneficiary after October 21, 1972 shall be
considered as advance payment for the land.

is an unconstitutional taking of a vested property right. It is also his contention that the inclusion of even
small landowners in the program along with other landowners with lands consisting of seven hectares or
more is undemocratic.

In his Comment, the Solicitor General submits that the petition is premature because the motion for
reconsideration filed with the Minister of Agrarian Reform is still unresolved. As for the validity of the
issuance of E.O. Nos. 228 and 229, he argues that they were enacted pursuant to Section 6, Article XVIII
of the Transitory Provisions of the 1987 Constitution which reads:
The incumbent president shall continue to exercise legislative powers until the first Congress is
convened.

On the issue of just compensation, his position is that when P.D. No. 27 was promulgated on October
21, 1972, the tenant-farmer of agricultural land was deemed the owner of the land he was tilling. The
leasehold rentals paid after that date should therefore be considered amortization payments.

In his Reply to the public respondents, the petitioner maintains that the motion he filed was resolved on
December 14, 1987. An appeal to the Office of the President would be useless with the promulgation of
E.O. Nos. 228 and 229, which in effect sanctioned the validity of the public respondent's acts.

G.R. No. 78742

The petitioners in this case invoke the right of retention granted by P.D. No. 27 to owners of rice and
corn lands not exceeding seven hectares as long as they are cultivating or intend to cultivate the same.
Their respective lands do not exceed the statutory limit but are occupied by tenants who are actually
cultivating such lands.

According to P.D. No. 316, which was promulgated in implementation of P.D. No. 27:

No tenant-farmer in agricultural lands primarily devoted to rice and corn shall be ejected or removed
from his farmholding until such time as the respective rights of the tenant-farmers and the landowner
shall have been determined in accordance with the rules and regulations implementing P.D. No. 27.

The petitioners claim they cannot eject their tenants and so are unable to enjoy their right of retention
because the Department of Agrarian Reform has so far not issued the implementing rules required
under the above-quoted decree. They therefore ask the Court for a writ of mandamus to compel the
respondent to issue the said rules.

In his Comment, the public respondent argues that P.D. No. 27 has been amended by LOI 474 removing
any right of retention from persons who own other agricultural lands of more than 7 hectares in
aggregate area or lands used for residential, commercial, industrial or other purposes from which they
derive adequate income for their family. And even assuming that the petitioners do not fall under its
terms, the regulations implementing P.D. No. 27 have already been issued, to wit, the Memorandum
dated July 10, 1975 (Interim Guidelines on Retention by Small Landowners, with an accompanying
Retention Guide Table), Memorandum Circular No. 11 dated April 21, 1978, (Implementation Guidelines
of LOI No. 474), Memorandum Circular No. 18-81 dated December 29, 1981 (Clarificatory Guidelines on
Coverage of P.D. No. 27 and Retention by Small Landowners), and DAR Administrative Order No. 1,
series of 1985 (Providing for a Cut-off Date for Landowners to Apply for Retention and/or to Protest the
Coverage of their Landholdings under Operation Land Transfer pursuant to P.D. No. 27). For failure to
file the corresponding applications for retention under these measures, the petitioners are now barred
from invoking this right.

The public respondent also stresses that the petitioners have prematurely initiated this case
notwithstanding the pendency of their appeal to the President of the Philippines. Moreover, the
issuance of the implementing rules, assuming this has not yet been done, involves the exercise of
discretion which cannot be controlled through the writ of mandamus. This is especially true if this
function is entrusted, as in this case, to a separate department of the government.

In their Reply, the petitioners insist that the above-cited measures are not applicable to them because
they do not own more than seven hectares of agricultural land. Moreover, assuming arguendo that the
rules were intended to cover them also, the said measures are nevertheless not in force because they
have not been published as required by law and the ruling of this Court in Tañada v. Tuvera. 10 As for
LOI 474, the same is ineffective for the additional reason that a mere letter of instruction could not have
repealed the presidential decree.

Although holding neither purse nor sword and so regarded as the weakest of the three departments of
the government, the judiciary is nonetheless vested with the power to annul the acts of either the
legislative or the executive or of both when not conformable to the fundamental law. This is the reason
for what some quarters call the doctrine of judicial supremacy. Even so, this power is not lightly
assumed or readily exercised. The doctrine of separation of powers imposes upon the courts a proper
restraint, born of the nature of their functions and of their respect for the other departments, in striking
down the acts of the legislative and the executive as unconstitutional. The policy, indeed, is a blend of
courtesy and caution. To doubt is to sustain. The theory is that before the act was done or the law was
enacted, earnest studies were made by Congress or the President, or both, to insure that the
Constitution would not be breached.

In addition, the Constitution itself lays down stringent conditions for a declaration of unconstitutionality,
requiring therefor the concurrence of a majority of the members of the Supreme Court who took part in
the deliberations and voted on the issue during their session en banc. 11 And as established by judge-
made doctrine, the Court will assume jurisdiction over a constitutional question only if it is shown that
the essential requisites of a judicial inquiry into such a question are first satisfied. Thus, there must be
an actual case or controversy involving a conflict of legal rights susceptible of judicial determination, the
constitutional question must have been opportunely raised by the proper party, and the resolution of
the question is unavoidably necessary to the decision of the case itself. 12

With particular regard to the requirement of proper party as applied in the cases before us, we hold that
the same is satisfied by the petitioners and intervenors because each of them has sustained or is in
danger of sustaining an immediate injury as a result of the acts or measures complained of. 13 And even
if, strictly speaking, they are not covered by the definition, it is still within the wide discretion of the
Court to waive the requirement and so remove the impediment to its addressing and resolving the
serious constitutional questions raised.

In the first Emergency Powers Cases, 14 ordinary citizens and taxpayers were allowed to question the
constitutionality of several executive orders issued by President Quirino although they were invoking
only an indirect and general interest shared in common with the public. The Court dismissed the
objection that they were not proper parties and ruled that "the transcendental importance to the public
of these cases demands that they be settled promptly and definitely, brushing aside, if we must,
technicalities of procedure." We have since then applied this exception in many other cases. 15

The other above-mentioned requisites have also been met in the present petitions.

In must be stressed that despite the inhibitions pressing upon the Court when confronted with
constitutional issues like the ones now before it, it will not hesitate to declare a law or act invalid when
it is convinced that this must be done. In arriving at this conclusion, its only criterion will be the
Constitution as God and its conscience give it the light to probe its meaning and discover its purpose.
Personal motives and political considerations are irrelevancies that cannot influence its decision.
Blandishment is as ineffectual as intimidation.

For all the awesome power of the Congress and the Executive, the Court will not hesitate to "make the
hammer fall, and heavily," to use Justice Laurel's pithy language, where the acts of these departments,
or of any public official, betray the people's will as expressed in the Constitution.

It need only be added, to borrow again the words of Justice Laurel, that -

. . . when the judiciary mediates to allocate constitutional boundaries, it does not assert any superiority
over the other departments; it does not in reality nullify or invalidate an act of the Legislature, but only
asserts the solemn and sacred obligation assigned to it by the Constitution to determine conflicting
claims of authority under the Constitution and to establish for the parties in an actual controversy the
rights which that instrument secures and guarantees to them. This is in truth all that is involved in what
is termed "judicial supremacy" which properly is the power of judicial review under the Constitution. 16

The cases before us categorically raise constitutional questions that this Court must categorically
resolve. And so we shall.

II

We proceed first to the examination of the preliminary issues before resolving the more serious
challenges to the constitutionality of the several measures involved in these petitions.

The promulgation of P.D. No. 27 by President Marcos in the exercise of his powers under martial law has
already been sustained in Gonzales v. Estrella and we find no reason to modify or reverse it on that
issue. As for the power of President Aquino to promulgate Proc. No. 131 and E.O. Nos. 228 and 229, the
same was authorized under Section 6 of the Transitory Provisions of the 1987 Constitution, quoted
above.

The said measures were issued by President Aquino before July 27, 1987, when the Congress of the
Philippines was formally convened and took over legislative power from her. They are not "midnight"
enactments intended to pre-empt the legislature because E.O. No. 228 was issued on July 17, 1987, and
the other measures, i.e., Proc. No. 131 and E.O. No. 229, were both issued on July 22, 1987. Neither is it
correct to say that these measures ceased to be valid when she lost her legislative power for, like any
statute, they continue to be in force unless modified or repealed by subsequent law or declared invalid
by the courts. A statute does not ipso facto become inoperative simply because of the dissolution of the
legislature that enacted it. By the same token, President Aquino's loss of legislative power did not have
the effect of invalidating all the measures enacted by her when and as long as she possessed it.

Significantly, the Congress she is alleged to have undercut has not rejected but in fact substantially
affirmed the challenged measures and has specifically provided that they shall be suppletory to R.A. No.
6657 whenever not inconsistent with its provisions. 17 Indeed, some portions of the said measures, like
the creation of the P50 billion fund in Section 2 of Proc. No. 131, and Sections 20 and 21 of E.O. No. 229,
have been incorporated by reference in the CARP Law. 18

That fund, as earlier noted, is itself being questioned on the ground that it does not conform to the
requirements of a valid appropriation as specified in the Constitution. Clearly, however, Proc. No. 131 is
not an appropriation measure even if it does provide for the creation of said fund, for that is not its
principal purpose. An appropriation law is one the primary and specific purpose of which is to authorize
the release of public funds from the treasury. 19 The creation of the fund is only incidental to the main
objective of the proclamation, which is agrarian reform.

It should follow that the specific constitutional provisions invoked, to wit, Section 24 and Section 25(4)
of Article VI, are not applicable. With particular reference to Section 24, this obviously could not have
been complied with for the simple reason that the House of Representatives, which now has the
exclusive power to initiate appropriation measures, had not yet been convened when the proclamation
was issued. The legislative power was then solely vested in the President of the Philippines, who
embodied, as it were, both houses of Congress.

The argument of some of the petitioners that Proc. No. 131 and E.O. No. 229 should be invalidated
because they do not provide for retention limits as required by Article XIII, Section 4 of the Constitution
is no longer tenable. R.A. No. 6657 does provide for such limits now in Section 6 of the law, which in fact
is one of its most controversial provisions. This section declares:

Retention Limits. - Except as otherwise provided in this Act, no person may own or retain, directly or
indirectly, any public or private agricultural land, the size of which shall vary according to factors
governing a viable family-sized farm, such as commodity produced, terrain, infrastructure, and soil
fertility as determined by the Presidential Agrarian Reform Council (PARC) created hereunder, but in no
case shall retention by the landowner exceed five (5) hectares. Three (3) hectares may be awarded to
each child of the landowner, subject to the following qualifications: (1) that he is at least fifteen (15)
years of age; and (2) that he is actually tilling the land or directly managing the farm; Provided, That
landowners whose lands have been covered by Presidential Decree No. 27 shall be allowed to keep the
area originally retained by them thereunder, further, That original homestead grantees or direct
compulsory heirs who still own the original homestead at the time of the approval of this Act shall retain
the same areas as long as they continue to cultivate said homestead.

The argument that E.O. No. 229 violates the constitutional requirement that a bill shall have only one
subject, to be expressed in its title, deserves only short attention. It is settled that the title of the bill
does not have to be a catalogue of its contents and will suffice if the matters embodied in the text are
relevant to each other and may be inferred from the title. 20

The Court wryly observes that during the past dictatorship, every presidential issuance, by whatever
name it was called, had the force and effect of law because it came from President Marcos. Such are the
ways of despots. Hence, it is futile to argue, as the petitioners do in G.R. No. 79744, that LOI 474 could
not have repealed P.D. No. 27 because the former was only a letter of instruction. The important thing is
that it was issued by President Marcos, whose word was law during that time.
But for all their peremptoriness, these issuances from the President Marcos still had to comply with the
requirement for publication as this Court held in Tañada v. Tuvera. 21 Hence, unless published in the
Official Gazette in accordance with Article 2 of the Civil Code, they could not have any force and effect if
they were among those enactments successfully challenged in that case. (LOI 474 was published,
though, in the Official Gazette dated November 29, 1976.)

Finally, there is the contention of the public respondent in G.R. No. 78742 that the writ of mandamus
cannot issue to compel the performance of a discretionary act, especially by a specific department of
the government. That is true as a general proposition but is subject to one important qualification.
Correctly and categorically stated, the rule is that mandamus will lie to compel the discharge of the
discretionary duty itself but not to control the discretion to be exercised. In other words, mandamus can
issue to require action only but not specific action.

Whenever a duty is imposed upon a public official and an unnecessary and unreasonable delay in the
exercise of such duty occurs, if it is a clear duty imposed by law, the courts will intervene by the
extraordinary legal remedy of mandamus to compel action. If the duty is purely ministerial, the courts
will require specific action. If the duty is purely discretionary, the courts by mandamus will require
action only. For example, if an inferior court, public official, or board should, for an unreasonable length
of time, fail to decide a particular question to the great detriment of all parties concerned, or a court
should refuse to take jurisdiction of a cause when the law clearly gave it jurisdiction, mandamus will
issue, in the first case to require a decision, and in the second to require that jurisdiction be taken of the
cause. 22

And while it is true that as a rule the writ will not be proper as long as there is still a plain, speedy and
adequate remedy available from the administrative authorities, resort to the courts may still be
permitted if the issue raised is a question of law. 23

III

There are traditional distinctions between the police power and the power of eminent domain that
logically preclude the application of both powers at the same time on the same subject. In the case of
City of Baguio v. NAWASA, 24 for example, where a law required the transfer of all municipal
waterworks systems to the NAWASA in exchange for its assets of equivalent value, the Court held that
the power being exercised was eminent domain because the property involved was wholesome and
intended for a public use. Property condemned under the police power is noxious or intended for a
noxious purpose, such as a building on the verge of collapse, which should be demolished for the public
safety, or obscene materials, which should be destroyed in the interest of public morals. The
confiscation of such property is not compensable, unlike the taking of property under the power of
expropriation, which requires the payment of just compensation to the owner.
In the case of Pennsylvania Coal Co. v. Mahon, 25 Justice Holmes laid down the limits of the police
power in a famous aphorism: "The general rule at least is that while property may be regulated to a
certain extent, if regulation goes too far it will be recognized as a taking." The regulation that went "too
far" was a law prohibiting mining which might cause the subsidence of structures for human habitation
constructed on the land surface. This was resisted by a coal company which had earlier granted a deed
to the land over its mine but reserved all mining rights thereunder, with the grantee assuming all risks
and waiving any damage claim. The Court held the law could not be sustained without compensating the
grantor. Justice Brandeis filed a lone dissent in which he argued that there was a valid exercise of the
police power. He said:

Every restriction upon the use of property imposed in the exercise of the police power deprives the
owner of some right theretofore enjoyed, and is, in that sense, an abridgment by the State of rights in
property without making compensation. But restriction imposed to protect the public health, safety or
morals from dangers threatened is not a taking. The restriction here in question is merely the
prohibition of a noxious use. The property so restricted remains in the possession of its owner. The state
does not appropriate it or make any use of it. The state merely prevents the owner from making a use
which interferes with paramount rights of the public. Whenever the use prohibited ceases to be noxious
- as it may because of further changes in local or social conditions - the restriction will have to be
removed and the owner will again be free to enjoy his property as heretofore.

Recent trends, however, would indicate not a polarization but a mingling of the police power and the
power of eminent domain, with the latter being used as an implement of the former like the power of
taxation. The employment of the taxing power to achieve a police purpose has long been accepted. 26
As for the power of expropriation, Prof. John J. Costonis of the University of Illinois College of Law
(referring to the earlier case of Euclid v. Ambler Realty Co., 272 US 365, which sustained a zoning law
under the police power) makes the following significant remarks:

Euclid, moreover, was decided in an era when judges located the police and eminent domain powers on
different planets. Generally speaking, they viewed eminent domain as encompassing public acquisition
of private property for improvements that would be available for "public use," literally construed. To the
police power, on the other hand, they assigned the less intrusive task of preventing harmful
externalities, a point reflected in the Euclid opinion's reliance on an analogy to nuisance law to bolster
its support of zoning. So long as suppression of a privately authored harm bore a plausible relation to
some legitimate "public purpose," the pertinent measure need have afforded no compensation
whatever. With the progressive growth of government's involvement in land use, the distance between
the two powers has contracted considerably. Today government often employs eminent domain
interchangeably with or as a useful complement to the police power - a trend expressly approved in the
Supreme Court's 1954 decision in Berman v. Parker, which broadened the reach of eminent domain's
"public use" test to match that of the police power's standard of "public purpose." 27
The Berman case sustained a redevelopment project and the improvement of blighted areas in the
District of Columbia as a proper exercise of the police power. On the role of eminent domain in the
attainment of this purpose, Justice Douglas declared:

If those who govern the District of Columbia decide that the Nation's Capital should be beautiful as well
as sanitary, there is nothing in the Fifth Amendment that stands in the way.

Once the object is within the authority of Congress, the right to realize it through the exercise of
eminent domain is clear.

For the power of eminent domain is merely the means to the end. 28

In Penn Central Transportation Co. v. New York City, 29 decided by a 6-3 vote in 1978, the U.S. Supreme
Court sustained the respondent's Landmarks Preservation Law under which the owners of the Grand
Central Terminal had not been allowed to construct a multi-story office building over the Terminal,
which had been designated a historic landmark. Preservation of the landmark was held to be a valid
objective of the police power. The problem, however, was that the owners of the Terminal would be
deprived of the right to use the airspace above it although other landowners in the area could do so
over their respective properties. While insisting that there was here no taking, the Court nonetheless
recognized certain compensatory rights accruing to Grand Central Terminal which it said would
"undoubtedly mitigate" the loss caused by the regulation. This "fair compensation," as he called it, was
explained by Prof. Costonis in this wise:

In return for retaining the Terminal site in its pristine landmark status, Penn Central was authorized to
transfer to neighboring properties the authorized but unused rights accruing to the site prior to the
Terminal's designation as a landmark - the rights which would have been exhausted by the 59-story
building that the city refused to countenance atop the Terminal. Prevailing bulk restrictions on
neighboring sites were proportionately relaxed, theoretically enabling Penn Central to recoup its losses
at the Terminal site by constructing or selling to others the right to construct larger, hence more
profitable buildings on the transferee sites. 30

The cases before us present no knotty complication insofar as the question of compensable taking is
concerned. To the extent that the measures under challenge merely prescribe retention limits for
landowners, there is an exercise of the police power for the regulation of private property in accordance
with the Constitution. But where, to carry out such regulation, it becomes necessary to deprive such
owners of whatever lands they may own in excess of the maximum area allowed, there is definitely a
taking under the power of eminent domain for which payment of just compensation is imperative. The
taking contemplated is not a mere limitation of the use of the land. What is required is the surrender of
the title to and the physical possession of the said excess and all beneficial rights accruing to the owner
in favor of the farmer-beneficiary. This is definitely an exercise not of the police power but of the power
of eminent domain.

Whether as an exercise of the police power or of the power of eminent domain, the several measures
before us are challenged as violative of the due process and equal protection clauses.

The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the ground that no retention limits are
prescribed has already been discussed and dismissed. It is noted that although they excited many bitter
exchanges during the deliberation of the CARP Law in Congress, the retention limits finally agreed upon
are, curiously enough, not being questioned in these petitions. We therefore do not discuss them here.
The Court will come to the other claimed violations of due process in connection with our examination
of the adequacy of just compensation as required under the power of expropriation.

The argument of the small farmers that they have been denied equal protection because of the absence
of retention limits has also become academic under Section 6 of R.A. No. 6657. Significantly, they too
have not questioned the area of such limits. There is also the complaint that they should not be made to
share the burden of agrarian reform, an objection also made by the sugar planters on the ground that
they belong to a particular class with particular interests of their own. However, no evidence has been
submitted to the Court that the requisites of a valid classification have been violated.

Classification has been defined as the grouping of persons or things similar to each other in certain
particulars and different from each other in these same particulars. 31 To be valid, it must conform to
the following requirements: (1) it must be based on substantial distinctions; (2) it must be germane to
the purposes of the law; (3) it must not be limited to existing conditions only; and (4) it must apply
equally to all the members of the class. 32 The Court finds that all these requisites have been met by the
measures here challenged as arbitrary and discriminatory.

Equal protection simply means that all persons or things similarly situated must be treated alike both as
to the rights conferred and the liabilities imposed. 33 The petitioners have not shown that they belong
to a different class and entitled to a different treatment. The argument that not only landowners but
also owners of other properties must be made to share the burden of implementing land reform must
be rejected. There is a substantial distinction between these two classes of owners that is clearly visible
except to those who will not see. There is no need to elaborate on this matter. In any event, the
Congress is allowed a wide leeway in providing for a valid classification. Its decision is accorded
recognition and respect by the courts of justice except only where its discretion is abused to the
detriment of the Bill of Rights.
It is worth remarking at this juncture that a statute may be sustained under the police power only if
there is a concurrence of the lawful subject and the lawful method. Put otherwise, the interests of the
public generally as distinguished from those of a particular class require the interference of the State
and, no less important, the means employed are reasonably necessary for the attainment of the
purpose sought to be achieved and not unduly oppressive upon individuals. 34 As the subject and
purpose of agrarian reform have been laid down by the Constitution itself, we may say that the first
requirement has been satisfied. What remains to be examined is the validity of the method employed to
achieve the constitutional goal.

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

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

This brings us now to the power of eminent domain.

IV

Eminent domain is an inherent power of the State that enables it to forcibly acquire private lands
intended for public use upon payment of just compensation to the owner. Obviously, there is no need to
expropriate where the owner is willing to sell under terms also acceptable to the purchaser, in which
case an ordinary deed of sale may be agreed upon by the parties. 35 It is only where the owner is
unwilling to sell, or cannot accept the price or other conditions offered by the vendee, that the power of
eminent domain will come into play to assert the paramount authority of the State over the interests of
the property owner. Private rights must then yield to the irresistible demands of the public interest on
the time-honored justification, as in the case of the police power, that the welfare of the people is the
supreme law.
But for all its primacy and urgency, the power of expropriation is by no means absolute (as indeed no
power is absolute). The limitation is found in the constitutional injunction that "private property shall
not be taken for public use without just compensation" and in the abundant jurisprudence that has
evolved from the interpretation of this principle. Basically, the requirements for a proper exercise of the
power are: (1) public use and (2) just compensation.

Let us dispose first of the argument raised by the petitioners in G.R. No. 79310 that the State should first
distribute public agricultural lands in the pursuit of agrarian reform instead of immediately disturbing
property rights by forcibly acquiring private agricultural lands. Parenthetically, it is not correct to say
that only public agricultural lands may be covered by the CARP as the Constitution calls for "the just
distribution of all agricultural lands." In any event, the decision to redistribute private agricultural lands
in the manner prescribed by the CARP was made by the legislative and executive departments in the
exercise of their discretion. We are not justified in reviewing that discretion in the absence of a clear
showing that it has been abused.

A becoming courtesy admonishes us to respect the decisions of the political departments when they
decide what is known as the political question. As explained by Chief Justice Concepcion in the case of
Tañada v. Cuenco: 36

The term "political question" connotes what it means in ordinary parlance, namely, a question of policy.
It refers to "those questions which, under the Constitution, are to be decided by the people in their
sovereign capacity; or in regard to which full discretionary authority has been delegated to the
legislative or executive branch of the government." It is concerned with issues dependent upon the
wisdom, not legality, of a particular measure.

It is true that the concept of the political question has been constricted with the enlargement of judicial
power, which now includes the authority of the courts "to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government." 37 Even so, this should not be construed as a license for us to
reverse the other departments simply because their views may not coincide with ours.

The legislature and the executive have been seen fit, in their wisdom, to include in the CARP the
redistribution of private landholdings (even as the distribution of public agricultural lands is first
provided for, while also continuing space under the Public Land Act and other cognate laws). The Court
sees no justification to interpose its authority, which we may assert only if we believe that the political
decision is not unwise, but illegal. We do not find it to be so.

In U.S. v. Chandler-Dunbar Water Power Company, 38 it was held:

Congress having determined, as it did by the Act of March 3, 1909 that the entire St. Mary's river
between the American bank and the international line, as well as all of the upland north of the present
ship canal, throughout its entire length, was "necessary for the purpose of navigation of said waters, and
the waters connected therewith," that determination is conclusive in condemnation proceedings
instituted by the United States under that Act, and there is no room for judicial review of the judgment
of Congress . . .

As earlier observed, the requirement for public use has already been settled for us by the Constitution
itself. No less than the 1987 Charter calls for agrarian reform, which is the reason why private
agricultural lands are to be taken from their owners, subject to the prescribed maximum retention
limits. The purposes specified in P.D. No. 27, Proc. No. 131 and R.A. No. 6657 are only an elaboration of
the constitutional injunction that the State adopt the necessary measures "to encourage and undertake
the just distribution of all agricultural lands to enable farmers who are landless to own directly or
collectively the lands they till." That public use, as pronounced by the fundamental law itself, must be
binding on us.

The second requirement, i.e., the payment of just compensation, needs a longer and more thoughtful
examination.

Just compensation is defined as the full and fair equivalent of the property taken from its owner by the
expropriator. 39 It has been repeatedly stressed by this Court that the measure is not the taker's gain
but the owner's loss. 40 The word "just" is used to intensify the meaning of the word "compensation" to
convey the idea that the equivalent to be rendered for the property to be taken shall be real,
substantial, full, ample. 41

It bears repeating that the measures challenged in these petitions contemplate more than a mere
regulation of the use of private lands under the police power. We deal here with an actual taking of
private agricultural lands that has dispossessed the owners of their property and deprived them of all its
beneficial use and enjoyment, to entitle them to the just compensation mandated by the Constitution.

As held in Republic of the Philippines v. Castellvi, 42 there is compensable taking when the following
conditions concur: (1) the expropriator must enter a private property; (2) the entry must be for more
than a momentary period; (3) the entry must be under warrant or color of legal authority; (4) the
property must be devoted to public use or otherwise informally appropriated or injuriously affected;
and (5) the utilization of the property for public use must be in such a way as to oust the owner and
deprive him of beneficial enjoyment of the property. All these requisites are envisioned in the measures
before us.
Where the State itself is the expropriator, it is not necessary for it to make a deposit upon its taking
possession of the condemned property, as "the compensation is a public charge, the good faith of the
public is pledged for its payment, and all the resources of taxation may be employed in raising the
amount." 43 Nevertheless, Section 16(e) of the CARP Law provides that:

Upon receipt by the landowner of the corresponding payment or, in case of rejection or no response
from the landowner, upon the deposit with an accessible bank designated by the DAR of the
compensation in cash or in LBP bonds in accordance with this Act, the DAR shall take immediate
possession of the land and shall request the proper Register of Deeds to issue a Transfer Certificate of
Title (TCT) in the name of the Republic of the Philippines. The DAR shall thereafter proceed with the
redistribution of the land to the qualified beneficiaries.

Objection is raised, however, to the manner of fixing the just compensation, which it is claimed is
entrusted to the administrative authorities in violation of judicial prerogatives. Specific reference is
made to Section 16(d), which provides that in case of the rejection or disregard by the owner of the
offer of the government to buy his land -

. . . the DAR shall conduct summary administrative proceedings to determine the compensation for the
land by requiring the landowner, the LBP and other interested parties to submit evidence as to the just
compensation for the land, within fifteen (15) days from the receipt of the notice. After the expiration of
the above period, the matter is deemed submitted for decision. The DAR shall decide the case within
thirty (30) days after it is submitted for decision.

To be sure, the determination of just compensation is a function addressed to the courts of justice and
may not be usurped by any other branch or official of the government. EPZA v. Dulay 44 resolved a
challenge to several decrees promulgated by President Marcos providing that the just compensation for
property under expropriation should be either the assessment of the property by the government or the
sworn valuation thereof by the owner, whichever was lower. In declaring these decrees
unconstitutional, the Court held through Mr. Justice Hugo E. Gutierrez, Jr.:

The method of ascertaining just compensation under the aforecited decrees constitutes impermissible
encroachment on judicial prerogatives. It tends to render this Court inutile in a matter which under this
Constitution is reserved to it for final determination.

Thus, although in an expropriation proceeding the court technically would still have the power to
determine the just compensation for the property, following the applicable decrees, its task would be
relegated to simply stating the lower value of the property as declared either by the owner or the
assessor. As a necessary consequence, it would be useless for the court to appoint commissioners under
Rule 67 of the Rules of Court. Moreover, the need to satisfy the due process clause in the taking of
private property is seemingly fulfilled since it cannot be said that a judicial proceeding was not had
before the actual taking. However, the strict application of the decrees during the proceedings would be
nothing short of a mere formality or charade as the court has only to choose between the valuation of
the owner and that of the assessor, and its choice is always limited to the lower of the two. The court
cannot exercise its discretion or independence in determining what is just or fair. Even a grade school
pupil could substitute for the judge insofar as the determination of constitutional just compensation is
concerned.

xxx xxx xxx

In the present petition, we are once again confronted with the same question of whether the courts
under P.D. No. 1533, which contains the same provision on just compensation as its predecessor
decrees, still have the power and authority to determine just compensation, independent of what is
stated by the decree and to this effect, to appoint commissioners for such purpose.

This time, we answer in the affirmative.

xxx xxx xxx

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

A reading of the aforecited Section 16(d) will readily show that it does not suffer from the arbitrariness
that rendered the challenged decrees constitutionally objectionable. Although the proceedings are
described as summary, the landowner and other interested parties are nevertheless allowed an
opportunity to submit evidence on the real value of the property. But more importantly, the
determination of the just compensation by the DAR is not by any means final and conclusive upon the
landowner or any other interested party, for Section 16(f) clearly provides:
Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction for
final determination of just compensation.

The determination made by the DAR is only preliminary unless accepted by all parties concerned.
Otherwise, the courts of justice will still have the right to review with finality the said determination in
the exercise of what is admittedly a judicial function.

The second and more serious objection to the provisions on just compensation is not as easily resolved.

This refers to Section 18 of the CARP Law providing in full as follows:

SEC. 18. Valuation and Mode of Compensation. - The LBP shall compensate the landowner in such
amount as may be agreed upon by the landowner and the DAR and the LBP, in accordance with the
criteria provided for in Sections 16 and 17, and other pertinent provisions hereof, or as may be finally
determined by the court, as the just compensation for the land.

The compensation shall be paid in one of the following modes, at the option of the landowner:

(1) Cash payment, under the following terms and conditions:

(a) For lands above fifty (50) hectares, insofar as the excess hectarage is concerned - Twenty-five
percent (25%) cash, the balance to be paid in government financial instruments negotiable at any time.

(b) For lands above twenty-four (24) hectares and up to fifty (50) hectares - Thirty percent (30%) cash,
the balance to be paid in government financial instruments negotiable at any time.

(c) For lands twenty-four (24) hectares and below - Thirty-five percent (35%) cash, the balance to be
paid in government financial instruments negotiable at any time.

(2) Shares of stock in government-owned or controlled corporations, LBP preferred shares, physical
assets or other qualified investments in accordance with guidelines set by the PARC;
(3) Tax credits which can be used against any tax liability;

(4) LBP bonds, which shall have the following features:

(a) Market interest rates aligned with 91-day treasury bill rates. Ten percent (10%) of the face value of
the bonds shall mature every year from the date of issuance until the tenth (10th) year: Provided, That
should the landowner choose to forego the cash portion, whether in full or in part, he shall be paid
correspondingly in LBP bonds;

(b) Transferability and negotiability. Such LBP bonds may be used by the landowner, his successors-in-
interest or his assigns, up to the amount of their face value, for any of the following:

(i) Acquisition of land or other real properties of the government, including assets under the Asset
Privatization Program and other assets foreclosed by government financial institutions in the same
province or region where the lands for which the bonds were paid are situated;

(ii) Acquisition of shares of stock of government owned or controlled corporations or shares of stock
owned by the government in private corporations;

(iii) Substitution for surety or bail bonds for the provisional release of accused persons, or for
performance bonds;

(iv) Security for loans with any government financial institution, provided the proceeds of the loans shall
be invested in an economic enterprise, preferably in a small and medium-scale industry, in the same
province or region as the land for which the bonds are paid;

(v) Payment for various taxes and fees to government: Provided, That the use of these bonds for these
purposes will be limited to a certain percentage of the outstanding balance of the financial instruments;
Provided, further, That the PARC shall determine the percentages mentioned above;

(vi) Payment for tuition fees of the immediate family of the original bondholder in government
universities, colleges, trade schools, and other institutions;
(vii) Payment for fees of the immediate family of the original bondholder in government hospital; and

(viii) Such other uses as the PARC may from time to time allow.

The contention of the petitioners in G.R. No. 79777 is that the above provision is unconstitutional
insofar as it requires the owners of the expropriated properties to accept just compensation therefor in
less than money, which is the only medium of payment allowed. In support of this contention, they cite
jurisprudence holding that:

The fundamental rule in expropriation matters is that the owner of the property expropriated is entitled
to a just compensation, which should be neither more nor less, whenever it is possible to make the
assessment, than the money equivalent of said property. Just compensation has always been
understood to be the just and complete equivalent of the loss which the owner of the thing
expropriated has to suffer by reason of the expropriation. 45 (Emphasis supplied.)

In J.M. Tuazon Co. v. Land Tenure Administration, 46 this Court held:

It is well-settled that just compensation means the equivalent for the value of the property at the time
of its taking. Anything beyond that is more, and anything short of that is less, than just compensation. It
means a fair and full equivalent for the loss sustained, which is the measure of the indemnity, not
whatever gain would accrue to the expropriating entity. The market value of the land taken is the just
compensation to which the owner of condemned property is entitled, the market value being that sum
of money which a person desirous, but not compelled to buy, and an owner, willing, but not compelled
to sell, would agree on as a price to be given and received for such property. (Emphasis supplied.)

In the United States, where much of our jurisprudence on the subject has been derived, the weight of
authority is also to the effect that just compensation for property expropriated is payable only in money
and not otherwise. Thus -

The medium of payment of compensation is ready money or cash. The condemnor cannot compel the
owner to accept anything but money, nor can the owner compel or require the condemnor to pay him
on any other basis than the value of the property in money at the time and in the manner prescribed by
the Constitution and the statutes. When the power of eminent domain is resorted to, there must be a
standard medium of payment, binding upon both parties, and the law has fixed that standard as money
in cash. 47 (Emphasis supplied.)
Part cash and deferred payments are not and cannot, in the nature of things, be regarded as a reliable
and constant standard of compensation. 48

"Just compensation" for property taken by condemnation means a fair equivalent in money, which must
be paid at least within a reasonable time after the taking, and it is not within the power of the
Legislature to substitute for such payment future obligations, bonds, or other valuable advantage. 49
(Emphasis supplied.)

It cannot be denied from these cases that the traditional medium for the payment of just compensation
is money and no other. And so, conformably, has just compensation been paid in the past solely in that
medium. However, we do not deal here with the traditional exercise of the power of eminent domain.
This is not an ordinary expropriation where only a specific property of relatively limited area is sought to
be taken by the State from its owner for a specific and perhaps local purpose. What we deal with here is
a revolutionary kind of expropriation.

The expropriation before us affects all private agricultural lands whenever found and of whatever kind
as long as they are in excess of the maximum retention limits allowed their owners. This kind of
expropriation is intended for the benefit not only of a particular community or of a small segment of the
population but of the entire Filipino nation, from all levels of our society, from the impoverished farmer
to the land-glutted owner. Its purpose does not cover only the whole territory of this country but goes
beyond in time to the foreseeable future, which it hopes to secure and edify with the vision and the
sacrifice of the present generation of Filipinos. Generations yet to come are as involved in this program
as we are today, although hopefully only as beneficiaries of a richer and more fulfilling life we will
guarantee to them tomorrow through our thoughtfulness today. And, finally, let it not be forgotten that
it is no less than the Constitution itself that has ordained this revolution in the farms, calling for "a just
distribution" among the farmers of lands that have heretofore been the prison of their dreams but can
now become the key at least to their deliverance.

Such a program will involve not mere millions of pesos. The cost will be tremendous. Considering the
vast areas of land subject to expropriation under the laws before us, we estimate that hundreds of
billions of pesos will be needed, far more indeed than the amount of P50 billion initially appropriated,
which is already staggering as it is by our present standards. Such amount is in fact not even fully
available at this time.

We assume that the framers of the Constitution were aware of this difficulty when they called for
agrarian reform as a top priority project of the government. It is a part of this assumption that when
they envisioned the expropriation that would be needed, they also intended that the just compensation
would have to be paid not in the orthodox way but a less conventional if more practical method. There
can be no doubt that they were aware of the financial limitations of the government and had no
illusions that there would be enough money to pay in cash and in full for the lands they wanted to be
distributed among the farmers. We may therefore assume that their intention was to allow such manner
of payment as is now provided for by the CARP Law, particularly the payment of the balance (if the
owner cannot be paid fully with money), or indeed of the entire amount of the just compensation, with
other things of value. We may also suppose that what they had in mind was a similar scheme of
payment as that prescribed in P.D. No. 27, which was the law in force at the time they deliberated on
the new Charter and with which they presumably agreed in principle.

The Court has not found in the records of the Constitutional Commission any categorial agreement
among the members regarding the meaning to be given the concept of just compensation as applied to
the comprehensive agrarian reform program being contemplated. There was the suggestion to "fine
tune" the requirement to suit the demands of the project even as it was also felt that they should "leave
it to Congress" to determine how payment should be made to the landowner and reimbursement
required from the farmer-beneficiaries. Such innovations as "progressive compensation" and "State-
subsidized compensation" were also proposed. In the end, however, no special definition of the just
compensation for the lands to be expropriated was reached by the Commission. 50

On the other hand, there is nothing in the records either that militates against the assumptions we are
making of the general sentiments and intention of the members on the content and manner of the
payment to be made to the landowner in the light of the magnitude of the expenditure and the
limitations of the expropriator.

With these assumptions, the Court hereby declares that the content and manner of the just
compensation provided for in the afore-quoted Section 18 of the CARP Law is not violative of the
Constitution. We do not mind admitting that a certain degree of pragmatism has influenced our decision
on this issue, but after all this Court is not a cloistered institution removed from the realities and
demands of society or oblivious to the need for its enhancement. The Court is as acutely anxious as the
rest of our people to see the goal of agrarian reform achieved at last after the frustrations and
deprivations of our peasant masses during all these disappointing decades. We are aware that
invalidation of the said section will result in the nullification of the entire program, killing the farmer's
hopes even as they approach realization and resurrecting the spectre of discontent and dissent in the
restless countryside. That is not in our view the intention of the Constitution, and that is not what we
shall decree today.

Accepting the theory that payment of the just compensation is not always required to be made fully in
money, we find further that the proportion of cash payment to the other things of value constituting the
total payment, as determined on the basis of the areas of the lands expropriated, is not unduly
oppressive upon the landowner. It is noted that the smaller the land, the bigger the payment in money,
primarily because the small landowner will be needing it more than the big landowners, who can afford
a bigger balance in bonds and other things of value. No less importantly, the government financial
instruments making up the balance of the payment are "negotiable at any time." The other modes,
which are likewise available to the landowner at his option, are also not unreasonable because payment
is made in shares of stock, LBP bonds, other properties or assets, tax credits, and other things of value
equivalent to the amount of just compensation.

Admittedly, the compensation contemplated in the law will cause the landowners, big and small, not a
little inconvenience. As already remarked, this cannot be avoided. Nevertheless, it is devoutly hoped
that these countrymen of ours, conscious as we know they are of the need for their forebearance and
even sacrifice, will not begrudge us their indispensable share in the attainment of the ideal of agrarian
reform. Otherwise, our pursuit of this elusive goal will be like the quest for the Holy Grail.

The complaint against the effects of non-registration of the land under E.O. No. 229 does not seem to be
viable any more as it appears that Section 4 of the said Order has been superseded by Section 14 of the
CARP Law. This repeats the requisites of registration as embodied in the earlier measure but does not
provide, as the latter did, that in case of failure or refusal to register the land, the valuation thereof shall
be that given by the provincial or city assessor for tax purposes. On the contrary, the CARP Law says that
the just compensation shall be ascertained on the basis of the factors mentioned in its Section 17 and in
the manner provided for in Section 16.

The last major challenge to CARP is that the landowner is divested of his property even before actual
payment to him in full of just compensation, in contravention of a well-accepted principle of eminent
domain.

The recognized rule, indeed, is that title to the property expropriated shall pass from the owner to the
expropriator only upon full payment of the just compensation. Jurisprudence on this settled principle is
consistent both here and in other democratic jurisdictions. Thus:

Title to property which is the subject of condemnation proceedings does not vest the condemnor until
the judgment fixing just compensation is entered and paid, but the condemnor's title relates back to the
date on which the petition under the Eminent Domain Act, or the commissioner's report under the Local
Improvement Act, is filed. 51

. . . although the right to appropriate and use land taken for a canal is complete at the time of entry, title
to the property taken remains in the owner until payment is actually made. 52 (Emphasis supplied.)

In Kennedy v. Indianapolis, 53 the US Supreme Court cited several cases holding that title to property
does not pass to the condemnor until just compensation had actually been made. In fact, the decisions
appear to be uniformly to this effect. As early as 1838, in Rubottom v. McLure, 54 it was held that
"actual payment to the owner of the condemned property was a condition precedent to the investment
of the title to the property in the State" albeit "not to the appropriation of it to public use." In Rexford v.
Knight, 55 the Court of Appeals of New York said that the construction upon the statutes was that the
fee did not vest in the State until the payment of the compensation although the authority to enter
upon and appropriate the land was complete prior to the payment. Kennedy further said that "both on
principle and authority the rule is . . . that the right to enter on and use the property is complete, as
soon as the property is actually appropriated under the authority of law for a public use, but that the
title does not pass from the owner without his consent, until just compensation has been made to him."

Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes, 56 that:

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

It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as October 21, 1972 and
declared that he shall "be deemed the owner" of a portion of land consisting of a family-sized farm
except that "no title to the land owned by him was to be actually issued to him unless and until he had
become a full-fledged member of a duly recognized farmers' cooperative." It was understood, however,
that full payment of the just compensation also had to be made first, conformably to the constitutional
requirement.

When E.O. No. 228, categorically stated in its Section 1 that:

All qualified farmer-beneficiaries are now deemed full owners as of October 21, 1972 of the land they
acquired by virtue of Presidential Decree No. 27. (Emphasis supplied.)

it was obviously referring to lands already validly acquired under the said decree, after proof of full-
fledged membership in the farmers' cooperatives and full payment of just compensation. Hence, it was
also perfectly proper for the Order to also provide in its Section 2 that the "lease rentals paid to the
landowner by the farmer-beneficiary after October 21, 1972 (pending transfer of ownership after full
payment of just compensation), shall be considered as advance payment for the land."

The CARP Law, for its part, conditions the transfer of possession and ownership of the land to the
government on receipt by the landowner of the corresponding payment or the deposit by the DAR of
the compensation in cash or LBP bonds with an accessible bank. Until then, title also remains with the
landowner. 57 No outright change of ownership is contemplated either.

Hence, the argument that the assailed measures violate due process by arbitrarily transferring title
before the land is fully paid for must also be rejected.

It is worth stressing at this point that all rights acquired by the tenant-farmer under P.D. No. 27, as
recognized under E.O. No. 228, are retained by him even now under R.A. No. 6657. This should
counterbalance the express provision in Section 6 of the said law that "the landowners whose lands
have been covered by Presidential Decree No. 27 shall be allowed to keep the area originally retained by
them thereunder, further, That original homestead grantees or direct compulsory heirs who still own
the original homestead at the time of the approval of this Act shall retain the same areas as long as they
continue to cultivate said homestead."

In connection with these retained rights, it does not appear in G.R. No. 78742 that the appeal filed by
the petitioners with the Office of the President has already been resolved. Although we have said that
the doctrine of exhaustion of administrative remedies need not preclude immediate resort to judicial
action, there are factual issues that have yet to be examined on the administrative level, especially the
claim that the petitioners are not covered by LOI 474 because they do not own other agricultural lands
than the subjects of their petition.

Obviously, the Court cannot resolve these issues. In any event, assuming that the petitioners have not
yet exercised their retention rights, if any, under P.D. No. 27, the Court holds that they are entitled to
the new retention rights provided for by R.A. No. 6657, which in fact are on the whole more liberal than
those granted by the decree.

The CARP Law and the other enactments also involved in these cases have been the subject of bitter
attack from those who point to the shortcomings of these measures and ask that they be scrapped
entirely. To be sure, these enactments are less than perfect; indeed, they should be continuously re-
examined and rehoned, that they may be sharper instruments for the better protection of the farmer's
rights. But we have to start somewhere. In the pursuit of agrarian reform, we do not tread on familiar
ground but grope on terrain fraught with pitfalls and expected difficulties. This is inevitable. The CARP
Law is not a tried and tested project. On the contrary, to use Justice Holmes's words, "it is an
experiment, as all life is an experiment," and so we learn as we venture forward, and, if necessary, by
our own mistakes. We cannot expect perfection although we should strive for it by all means.
Meantime, we struggle as best we can in freeing the farmer from the iron shackles that have
unconscionably, and for so long, fettered his soul to the soil.

By the decision we reach today, all major legal obstacles to the comprehensive agrarian reform program
are removed, to clear the way for the true freedom of the farmer. We may now glimpse the day he will
be released not only from want but also from the exploitation and disdain of the past and from his own
feelings of inadequacy and helplessness. At last his servitude will be ended forever. At last the farm on
which he toils will be his farm. It will be his portion of the Mother Earth that will give him not only the
staff of life but also the joy of living. And where once it bred for him only deep despair, now can he see
in it the fruition of his hopes for a more fulfilling future. Now at last can he banish from his small plot of
earth his insecurities and dark resentments and "rebuild in it the music and the dream."

WHEREFORE, the Court holds as follows:

1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and 229 are SUSTAINED against all the
constitutional objections raised in the herein petitions.

2. Title to all expropriated properties shall be transferred to the State only upon full payment of
compensation to their respective owners.

3. All rights previously acquired by the tenant-farmers under P.D. No. 27 are retained and recognized.

4. Landowners who were unable to exercise their rights of retention under P.D. No. 27 shall enjoy the
retention rights granted by R.A. No. 6657 under the conditions therein prescribed.

5. Subject to the above-mentioned rulings, all the petitions are DISMISSED, without pronouncement as
to costs.

SO ORDERED.