Rule 67

Expropriation

This is how the government may exercise the power of eminent domain.
All properties may be expropriated except money.

How is it commenced?
By the filing of a complaint. You have the plaintiff filing a complaint against the defendant. This is a
complaint for Expropriation.

The case will undergo two stages

First stage: The issue will be the right and authority of the plaintiff to expropriate.

Upon the filing of the complaint the plaintiff may already take possession of the property sought to
be expropriated.

Upon the filing of the complaint the plaintiff should deposit with any government depository an
amount equivalent to the assessed value of the property. This will be deposited with a government
depository (ex. Landbank)

But if the one expropriating is a Local Government Unit (LGU) then the amount to be deposited is
15% of the fair market value of the property, to be deposited in court.

But if the purpose of expropriation by a government agency is right of way or any government
infrastructure project or even not a government agency but the purpose is right of way or government
infrastructure project then the plaintiff must pay to the owner the amount equivalent to the zonal valuation of
the property to be paid to the owner.

What is the amount to be deposited?

The amount to be deposited is equivalent to the assessed value of the property but if the one
expropriating is the LGU then it should be 15% of the fair market value to be deposited in court but if the
purpose is right of way or government infrastructure then the amount that should be paid to the owner is
the amount equivalent to the zonal valuation of the property

How will you know the assessed value of the property?

Go to the current tax declaration then you will see the assessed value.

The assessed value is much lower than the market value because the assessed value is basis of
computing the real property tax

If you file a complaint and you deposit or you pay then the plaintiff can immediately take possession
of the property sought to be expropriated.

What may the defendant file?

The defendant may file either a manifestation or an answer.

If he files a manifestation, he will say in his manifestation that he has no objection to the proposed
expropriation of his property

If he files an answer, it should contain all his objections and defenses and those objections and
defenses that are not pleaded are deemed waived.

In expropriation the following are not allowed

1. No counterclaim is allowed
2. No cross-claim is allowed
3. No third party complaint is allowed
Example

X v Y (Expropriation case)

Y filed a counterclaim against X, is that allowed?

No, because in expropriation proceeding the following are not allowed: counterclaim, cross-
claim and third party complaint.

If the one seeking to expropriate or the plaintiff is a LGU, this LGU should be represented by the
local chief executive ( mayor).

Example: City of Baguio represented by Honorable Mayor ……..plaintiff

The authority of the mayor to represent the LGU in an expropriation proceeding must be stated in
an ordinance not a resolution. If is by means of a resolution, the case must be dismissed because the
authority of the mayor must be embodied in an ordinance.

Distinction of an ordinance and a resolution

A resolution merely expresses the sentiments, feeling or sympathy of the council.

Ordinance has the effect of a law that applies only within the city, municipality or barangay.

In the first stage, there will be a pre-trial and then presentation of evidence but the issue will only be
the issue on the right and authority of the plaintiff to expropriate.

Assuming that the evidence presented will show that indeed that the plaintiff has the right and
authority to expropriate and then the purpose is for public use then the court will issue an order known as
order of expropriation. The moment this order is issued the case will go to the second stage.

An order of expropriation is appealable, the defendant can appeal this order of expropriation but
notwithstanding the appeal, the case will go to the second stage.

Second stage: Determination of just compensation

The rule says that upon the issuance of the order of expropriation, the court shall appoint not more
than 3 commissioners whose function is to determine just compensate. They will receive evidence to
determine the just compensation of the property and then report to the court.

The parties will again present evidence on the issue of just compensation. The commissioner/s will
submit his report to the court on the just compensation of the property and then the court will issue an order
fixing just compensation.

The court may either adopt the commissioners’ report, reject it, adopt it in part, reject it in part or
totally reject it and then direct the same commissioners to submit another report or appoint another set of
commissioners. But in the end the court will issue an order fixing just compensation.

The judge issued an order fixing just compensation without appointing any commissioners.
Q: Assuming that the order is correct, is it valid?

A: No, because the Rule says there must be commissioners.

The judge has to appoint not more than 3 commissioners.

The order fixing just compensation is also appealable that is why this is what you call multiple
appeals and when it is a multiple appeal or multiple appeals you need a record on appeal.
Rule 68
Judicial Foreclosure of a Mortgage

Two ways to foreclose a mortgage

1. Extrajudicial
2. Judicial

For the mortgagee to be able to foreclose the mortgage extrajudicially upon default of the debtor in
the payment of his debt there must be a Special Power of Attorney appended to or incorporated in the deed
of mortgage authorizing the mortgagee to cause the sale of the mortgage property upon default of the
debtor in the payment of his debt without the SPA the only way to foreclose is by judicial foreclosure.

Q: If the debt is secured by a mortgage, what are the remedies of the mortgagee in the event the
debtor fails to pay?

The remedies are:

1. to file an action for collection of the indebtedness or
2. to foreclose the mortgage.

Take note that the one excludes the other, the mortgagee cannot pursue both remedies.

If the mortgagee files an action for collection, he abandons the mortgage and if he will foreclose the
mortgage he abandons the action for collection.

He cannot file an action to foreclose and at the same time file an action for collection. Suppose he
does that, then one of them can be dismissed on the ground of litis pendentia. This is an example of
splitting a single cause of action. There is only one cause of action because there is only one right violated
which is the right to be paid.

Example

X (debtor) borrowed money from Y.

X issued a post-dated check for the payment of the indebtedness and at the same time mortgage to
Y a land. If the debt becomes due Y can either encash the check or to foreclose the mortgage. When the
debt became due and Y demanded payment, X failed to pay. Y file a complaint of a criminal case for
violation of BP 22 against X. While the case was pending in court Y file against X an action to foreclose the
mortgage

Q: What is the remedy of X in this action for foreclosure?

X can file a motion to dismiss this civil case on the ground of litis pendentia.

Q: Why does this become litis pendentia when it is a criminal case?

Because in a criminal case involving violation of BP 22, the offended party like Y cannot
reserve the right to file it separately. The civil action to collect the amount of the check is deemed
instituted in the criminal case. It is always deemed included in the criminal case so if deemed
included there is already an action for collection.

The criminal case for BP 22 is the action for collection and therefore because this include the action
for collection Y cannot foreclose the mortgage anymore.

When Y he filed this criminal case he has abandoned the mortgage.

 Mortgagee files a complaint so he is now the plaintiff against the mortgagor. The second mortgagee
and those holding liens subsequent to the mortgage may also be pleaded as defendants so as to foreclose
their equity of redemption.

Plaintiff files a complaint against the defendant mortgagor to foreclose the mortgage, this is a
judicial foreclosure of a mortgage. The defendant should also file his answer to the complaint then the court
will call a pre-trial and then hearing. There will be presentation of evidence. After the evidence of both
parties shall have been presented the court will now determine if the facts alleged in the complaint are true.

If the court finds that the facts alleged in the complaint to be true, it will issue an order directing the
defendant to pay to the judgment obligee or to the court the amount so found due within the period of not
less than 90 days nor more than 120 days from entry of judgment.

This order is known as judgment on foreclosure and this is appealable. This is also a multiple
appeal. When you appeal from this order you need to file a record of appeal because the case is not ended
you go to the second stage so the judgment of foreclosure will be final.

Suppose the defendant pays

If the defendant pays that will end the proceedings.

Suppose the defendant does not pay

The judgment obligee should now file a motion in court for the sale of the mortgage property.

Q: What will trigger the motion for the sale of the mortgage property?
A: The non-payment of the amount so found due within the period of not less than 90 days nor more than
120 days.

The sale will be conducted in accordance with Rule 39, those exempted from execution will be
exempted also. (Rule 39, Sec. 13)

There will be foreclosure sale and then the sale will be conducted. The mortgagee can also bid.

In a foreclosure sale, the judgment obligee should file a motion in court for the confirmation of the
sale (motion for the compensation of the sale)

Judicial confirmation
The court will confirm the sale, this is a litigable motion.
If the court finds the motion to be meritorious it will issue an order confirming the sale. This order is
also appealable.

Q: What do you call the right of the judgment obligor or the mortgagor to pay into the court the amount so
found due within the period of not less than 90 days nor more than 120 days from entry of judgment?
A: The equity of redemption

Q: May the judgment obligor or the mortgagor exercise the equity of redemption even after 120 days?
A: Yes, provided that the sale has not yet been confirmed. The moment the sale is confirmed by the court
that will also foreclose the equity of redemption.

Example
1. Let us say that there is a junior mortgagee and creditors holding lien subsequent to the mortgage.

Q: Should they be impleaded as defendants? Yes

Q: Why do you implead them as defednats?

A: To foreclose their equity of redemption.

2. Suppose here is X, a junior mortgagee he was not impleaded.

Q Can he exercise the equity of redemption even after the confirmation of the sale?
A: Yes because his equity has not been foreclosed.

You have to include them to foreclose their equity of redemption so that they cannot exercise it
anymore. If you do not implead them they are not affected and so they can exercise their equity of
redemption even after the confirmation of the sale.

3. There is a mortgage between X (mortgagor) and Y this is registered in the office of register of deeds
Q: Can X mortgage the same land to Z notwithstanding the existence of the first mortgage?
A: Yes, in fact X can even sell it

4. Z is a mortgagee, X is the mortgagor and Y is the first mortgagee

The one who will file an action to foreclose is Y.

5. Y v X to foreclose the mortgage

If Y would like to foreclose Z’s equity, he must be impleaded as defendant. If not impleaded he can
exercise the equity of redemption any time even after the court’s confirmation of the sale because he was
not impleaded as a defendant

Z is a necessary party he is not indispensable because there can be a judgment but if you want to
foreclose his equity you have to implead him.

Q: What will happen if Z exercises his right of equity of redemption?

A: He can buy the property from anyone.

Equity of redemption is the equivalent of the right of redemption but in judicial foreclosure of a
mortgage there is no right of redemption, there is only a right of redemption

In an extrajudicial foreclosure you have right of redemption to be exercised 1 year from the date of
the sale

In a judicial foreclosure there is only a right of equity of redemption, there is no right of redemption
except only if the mortgagee is a bank or a financial institution.
If the mortgagee is a bank or a financial institution there is a right of redemption

For foreclosure you have to wait until there is an entry of judgment before you can go to the second
stage.

In expropriation, while the appeal is pending you will go to the second stage.

In expropriation what if it will proceed to next stage that would be determination of just
compensation and after that the property was expropriated. Q: What if the appeal was granted?

A: There will be a restoration that would be very messy because you will restore the property. But how can
you restore you have altered the property. If the defendant has sustained damages the plaintiff must
compensate him for the damage he has sustained.

If the appeal is successful there would be a restoration and the plaintiff must compensate the
defendant if he sustained damages.

The Rules says restoration but in practical aspect of the matter it would be very difficult.