Eminent Domain.pdf

G.R. No. L-14355

October 31, 1919

THE CITY OF MANILA, plaintiff-appellant, vs. CHINESE COMMUNITY OF MANILA, ET AL., defendants-appellees. City Fiscal Diaz for appellant. Crossfield and O'Brien, Williams, Ferrier and Sycip, Delgado and Delgado, Filemon Sotto, and Ramon Salinas for appellees.

JOHNSON, J.: The important question presented by this appeal is: In expropriation proceedings by the city of Manila, may the courts inquire into, and hear proof upon, the necessity of the expropriation? That question arose in the following manner: On the 11th day of December, 1916, the city of Manila presented a petition in the Court of First Instance of said city, praying that certain lands, therein particularly described, be expropriated for the purpose of constructing a public improvement. The petitioner, in the second paragraph of the petition, alleged: That for the purpose of constructing a public improvement, namely, the extension of Rizal Avenue, Manila, it is necessary for the plaintiff to acquire ownership in fee simple of certain parcels of land situated in the district of Binondo of said city within Block 83 of said district, and within the jurisdiction of this court. The defendant, the Comunidad de Chinos de Manila [Chinese Community of Manila], answering the petition of the plaintiff, alleged that it was a corporation organized and existing under and by virtue of the laws of the Philippine Islands, having for its purpose the benefit and general welfare of the Chinese Community of the City of Manila; that it was the owner of parcels one and two of the land described in paragraph 2 of the complaint; that it denied that it was either necessary or expedient that the said parcels be expropriated for street purposes; that existing street and roads furnished ample means of communication for the public in the district covered by such proposed expropriation; that if the construction of the street or road should be considered a public necessity, other routes were available, which would fully satisfy the plaintiff's purposes, at much less expense and without disturbing the resting places of the dead; that it had a Torrens title for the lands in question; that the lands in question had been used by the defendant for cemetery purposes; that a great number of Chinese were buried in said cemetery; that if said expropriation be carried into effect, it would disturb the resting places of the dead, would require the expenditure of a large sum of money in the transfer or removal of the bodies to some other place or site and in the purchase of such new sites, would involve the destruction of existing monuments and the erection of new monuments in their stead, and would create irreparable loss and injury to the defendant and to all those persons owning and interested in the graves and monuments which would have to be destroyed; that the plaintiff was without right or authority to expropriate said cemetery or any part or portion thereof for street purposes; and that the expropriation, in fact, was not necessary as a public improvement.

The defendant Ildefonso Tambunting, answering the petition, denied each and every allegation of the complaint, and alleged that said expropriation was not a public improvement; that it was not necessary for the plaintiff to acquire the parcels of land in question; that a portion of the lands in question was used as a cemetery in which were the graves of his ancestors; that monuments and tombstones of great value were found thereon; that the land had becomequasipublic property of a benevolent association, dedicated and used for the burial of the dead and that many dead were buried there; that if the plaintiff deemed it necessary to extend Rizal Avenue, he had offered and still offers to grant a right of way for the said extension over other land, without cost to the plaintiff, in order that the sepulchers, chapels and graves of his ancestors may not be disturbed; that the land so offered, free of charge, would answer every public necessity on the part of the plaintiff. The defendant Feliza Concepcion de Delgado, with her husband, Jose Maria Delgado, and each of the other defendants, answering separately, presented substantially the same defense as that presented by the Comunidad de Chinos de Manila and Ildefonso Tambunting above referred to. The foregoing parts of the defense presented by the defendants have been inserted in order to show the general character of the defenses presented by each of the defendants. The plaintiff alleged that the expropriation was necessary. The defendants each alleged (a) that no necessity existed for said expropriation and (b) that the land in question was a cemetery, which had been used as such for many years, and was covered with sepulchres and monuments, and that the same should not be converted into a street for public purposes. Upon the issue thus presented by the petition and the various answers, the Honorable Simplicio del Rosario, judge, in a very elucidated opinion, with very clear and explicit reasons, supported by ambulance of authorities, decided that there was no necessity for the expropriation of the particular strip of land in question, and absolved each and all of the defendants from all liability under the complaint, without any finding as to costs. From that judgment the plaintiff appealed and presented the above question as its principal ground of appeal. The theory of the plaintiff is, that once it has established the fact, under the law, that it has authority to expropriate land, it may expropriate any land it may desire; that the only function of the court in such proceedings is to ascertain the value of the land in question; that neither the court nor the owners of the land can inquire into the advisible purpose of purpose of the expropriation or ask any questions concerning the necessities therefor; that the courts are mere appraisers of the land involved in expropriation proceedings, and, when the value of the land is fixed by the method adopted by the law, to render a judgment in favor of the defendant for its value. That the city of Manila has authority to expropriate private lands for public purposes, is not denied. Section 2429 of Act No. 2711 (Charter of the city of Manila) provides that "the city (Manila) . . . may condemn private property forpublic use." The Charter of the city of Manila contains no procedure by which the said authority may be carried into effect. We are driven, therefore, to the procedure marked out by Act No. 190 to ascertain how the said authority may be exercised. From an examination of Act No. 190, in its section 241, we find how the right of eminent domain may be exercised. Said section 241

provides that, "The Government of the Philippine Islands, or of any province or department thereof, or of any municipality, and any person, or public or private corporation having, by law, the right to condemn private property for public use, shall exercise that right in the manner hereinafter prescribed." Section 242 provides that a complaint in expropriation proceeding shall be presented; that the complaint shall state with certainty the right of condemnation, with a description of the property sought to be condemned together with the interest of each defendant separately. Section 243 provides that if the court shall find upon trial that the right to expropriate the land in question exists, it shall then appoint commissioners. Sections 244, 245 and 246 provide the method of procedure and duty of the commissioners. Section 248 provides for an appeal from the judgment of the Court of First Instance to the Supreme Court. Said section 248 gives the Supreme Court authority to inquire into the right of expropriation on the part of the plaintiff. If the Supreme Court on appeal shall determine that no right of expropriation existed, it shall remand the cause to the Court of First Instance with a mandate that the defendant be replaced in the possession of the property and that he recover whatever damages he may have sustained by reason of the possession of the plaintiff. It is contended on the part of the plaintiff that the phrase in said section, "and if the court shall find the right to expropriate exists," means simply that, if the court finds that there is some law authorizing the plaintiff to expropriate, then the courts have no other function than to authorize the expropriation and to proceed to ascertain the value of the land involved; that the necessity for the expropriation is a legislative and not a judicial question. Upon the question whether expropriation is a legislative function exclusively, and that the courts cannot intervene except for the purpose of determining the value of the land in question, there is much legal legislature. Much has been written upon both sides of that question. A careful examination of the discussions pro and con will disclose the fact that the decisions depend largely upon particular constitutional or statutory provisions. It cannot be denied, if the legislature under proper authority should grant the expropriation of a certain or particular parcel of land for some specified public purpose, that the courts would be without jurisdiction to inquire into the purpose of that legislation. If, upon the other hand, however, the Legislature should grant general authority to a municipal corporation to expropriate private land for public purposes, we think the courts have ample authority in this jurisdiction, under the provisions above quoted, to make inquiry and to hear proof, upon an issue properly presented, concerning whether or not the lands were private and whether the purpose was, in fact, public. In other words, have no the courts in this jurisdiction the right, inasmuch as the questions relating to expropriation must be referred to them (sec. 241, Act No. 190) for final decision, to ask whether or not the law has been complied with? Suppose in a particular case, it should be denied that the property is not private property but public, may not the courts hear proof upon that question? Or, suppose the defense is, that the purpose of the expropriation is not public but private, or that there exists no public purpose at all, may not the courts make inquiry and hear proof upon that question? The city of Manila is given authority to expropriate private lands for public purposes. Can it be possible that said authority confers the right to determine for itself that the land is private and that the purpose is public, and that the people of the city of Manila who pay the taxes for its

support, especially those who are directly affected, may not question one or the other, or both, of these questions? Can it be successfully contended that the phrase used in Act No. 190, "and if the court upon trial shall find that such right exists," means simply that the court shall examine thestatutes simply for the purpose of ascertaining whether a law exists authorizing the petitioner to exercise the right of eminent domain? Or, when the case arrives in the Supreme Court, can it be possible that the phrase, "if the Supreme Court shall determine that no right of expropriation exists," that that simply means that the Supreme Court shall also examine the enactments of the legislature for the purpose of determining whether or not a law exists permitting the plaintiff to expropriate? We are of the opinion that the power of the court is not limited to that question. The right of expropriation is not an inherent power in a municipal corporation, and before it can exercise the right some law must exist conferring the power upon it. When the courts come to determine the question, they must only find (a) that a law or authority exists for the exercise of the right of eminent domain, but (b) also that the right or authority is being exercised in accordance with the law. In the present case there are two conditions imposed upon the authority conceded to the City of Manila: First, the land must be private; and, second, the purpose must be public. If the court, upon trial, finds that neither of these conditions exists or that either one of them fails, certainly it cannot be contended that the right is being exercised in accordance with law. Whether the purpose for the exercise of the right of eminent domain is public, is a question of fact. Whether the land is public, is a question of fact; and, in our opinion, when the legislature conferred upon the courts of the Philippine Islands the right to ascertain upon trial whether the right exists for the exercise of eminent domain, it intended that the courts should inquire into, and hear proof upon, those questions. Is it possible that the owner of valuable land in this jurisdiction is compelled to stand mute while his land is being expropriated for a use not public, with the right simply to beg the city of Manila to pay him the value of his land? Does the law in this jurisdiction permit municipalities to expropriate lands, without question, simply for the purpose of satisfying the aesthetic sense of those who happen for the time being to be in authority? Expropriation of lands usually calls for public expense. The taxpayers are called upon to pay the costs. Cannot the owners of land question the public use or the public necessity? As was said above, there is a wide divergence of opinion upon the authority of the court to question the necessity or advisability of the exercise of the right of eminent domain. The divergence is usually found to depend upon particular statutory or constitutional provisions. It has been contended — and many cases are cited in support of that contention, and section 158 of volume 10 of Ruling Case Law is cited as conclusive — that the necessity for taking property under the right of eminent domain is not a judicial question. But those who cited said section evidently overlooked the section immediately following (sec. 159), which adds: "But it is obvious that if the property is taken in the ostensible behalf of a public improvementwhich it can never by any possibility serve, it is being taken for a use not public, and the owner's constitutional rights call for protection by the courts. While many courts have used sweeping expression in the decisions in which they have disclaimed the power of supervising the power of supervising the selection of the sites of public improvements, it may be safely said that the courts of the various states would feel bound to interfere to prevent an abuse of the discretion delegated by the legislature, by an attempted appropriation of land in utter disregard of the possible necessity of its use, or when the alleged purpose was a cloak to some sinister scheme." (Norwich City vs. Johnson, 86 Conn., 151; Bell vs. Mattoon Waterworks, etc. Co., 245

Ill., 544; Wheeling, etc. R. R. Co. vs. Toledo Ry. etc. Co., 72 Ohio St., 368; State vs. Stewart, 74 Wis., 620.) Said section 158 (10 R. C. L., 183) which is cited as conclusive authority in support of the contention of the appellant, says: The legislature, in providing for the exercise of the power of eminent domain, may directly determine the necessity for appropriating private property for a particular improvement for public use, and it may select the exact location of the improvement. In such a case, it is well settled that the utility of the proposed improvement, the extent of the public necessity for its construction, the expediency of constructing it, the suitableness of the location selected and the consequent necessity of taking the land selected for its site, are all questions exclusively for the legislature to determine, and the courts have no power to interfere, or to substitute their own views for those of the representatives of the people. Practically every case cited in support of the above doctrine has been examined, and we are justified in making the statement that in each case the legislature directly determined the necessity for the exercise of the right of eminent domain in the particular case. It is not denied that if the necessity for the exercise of the right of eminent domain is presented to the legislative department of the government and that department decides that there exists a necessity for the exercise of the right in a particular case, that then and in that case, the courts will not go behind the action of the legislature and make inquiry concerning the necessity. But, in the case of Wheeling, etc. R. R. Co. vs. Toledo, Ry, etc., Co. (72 Ohio St., 368 [106 Am. St. rep., 622, 628]), which was cited in support of the doctrine laid down in section 158 above quoted, the court said: But when the statute does not designate the property to be taken nor how may be taken, then the necessity of taking particular property is a question for the courts. Where the application to condemn or appropriate is made directly to the court, the question (of necessity) should be raised and decided in limene. The legislative department of the government was rarely undertakes to designate the precise property which should be taken for public use. It has generally, like in the present case, merely conferred general authority to take land for public use when a necessity exists therefor. We believe that it can be confidently asserted that, under such statute, the allegation of the necessity for the appropriation is an issuable allegation which it is competent for the courts to decide. (Lynch vs. Forbes, 161 Mass., 302 [42 Am. St. Rep., 402, 407].) There is a wide distinction between a legislative declaration that a municipality is given authority to exercise the right of eminent domain, and a decision by the municipality that there exist a necessity for the exercise of that right in a particular case. The first is a declaration simply that there exist reasons why the right should be conferred upon municipal corporation, while the second is the application of the right to a particular case. Certainly, the legislative declaration relating to the advisability of granting the power cannot be converted into a declaration that a necessity exists for its exercise in a particular case, and especially so when, perhaps, the land in question was not within the territorial authority was granted. Whether it was wise, advisable, or necessary to confer upon a municipality the power to exercise the right of eminent domain, is a question with which the courts are not concerned. But

when that right or authority is exercised for the purpose of depriving citizens of their property, the courts are authorized, in this jurisdiction, to make inquiry and to hear proof upon the necessity in the particular case, and not the general authority. Volume 15 of the Cyclopedia of Law and Procedure (Cyc.), page 629, is cited as a further conclusive authority upon the question that the necessity for the exercise of the right of eminent domain is a legislative and not a judicial question. Cyclopedia, at the page stated, says: In the absence of some constitutional or statutory provision to the contrary, the necessity and expediency of exercising the right of eminent domain are questions essentially political and not judicial in their character. The determination of those questions (the necessity and the expediency) belongs to the sovereign power; the legislative department is final and conclusive, and the courts have no power to review it (the necessity and the expediency) . . . . It (the legislature) may designate the particular property to be condemned, and its determination in this respect cannot be reviewed by the courts. The volume of Cyclopedia, above referred to, cites many cases in support of the doctrine quoted. While time has not permitted an examination of all of said citations, many of them have been examined, and it can be confidently asserted that said cases which are cited in support of the assertion that, "the necessity and expediency of exercising the right of eminent domain are questions essentially political and not judicial," show clearly and invariably that in each case the legislature itself usually, by a special law, designated the particular case in which the right of eminent domain might be exercised by the particular municipal corporation or entity within the state. (Eastern R. Co. vs.Boston, etc., R. Co., 11 Mass., 125 [15 Am. Rep., 13]; Brooklyn Park Com'rs vs. Armstrong, 45 N.Y., 234 [6 Am. Rep., 70]; Hairston vs. Danville, etc. Ry. Co., 208 U. S. 598; Cincinnati vs. Louisville, etc. Ry. Co., 223 U. S., 390; U.S. vs. Chandler-Dunbar Water Power Co., 229 U. S., 53; U.S. vs. Gettysburg, etc. Co., 160 U. S., 668; Traction Co. vs. Mining Co., 196 U.S., 239; Sears vs. City of Akron, 246 U.S., 351 [erroneously cited as 242 U.S.].) In the case of Traction Co. vs. Mining Co. (196 U.S., 239), the Supreme Court of the United States said: "It is erroneous to suppose that the legislature is beyond the control of the courts in exercising the power of eminent domain, either as to the nature of the use or the necessity to the use of any particular property. For if the use be not public or no necessity for the taking exists, the legislature cannot authorize the taking of private property against the will of the owner, notwithstanding compensation may be required." In the case of School Board of Carolina vs. Saldaña (14 Porto Rico, 339, 356), we find the Supreme Court of Porto Rico, speaking through Justice MacLeary, quoting approvingly the following, upon the question which we are discussing: "It is well settled that although the legislature must necessarily determine in the first instance whether the use for which they (municipalities, etc.) attempt to exercise the power is a public one or not, their (municipalities, etc.) determination is not final, but is subject to correction by the courts, who may undoubtedly declare the statute unconstitutional, if it shall clearly appear that the use for which it is proposed to authorize the taking of private property is in reality not public but private." Many cases are cited in support of that doctrine. Later, in the same decision, we find the Supreme Court of Porto Rico says: "At any rate, the rule is quite well settled that in the cases under consideration the determination of the necessity of

taking a particular piece or a certain amount of land rests ultimately with the courts." (Spring Valley etc. Co. vs. San Mateo, etc. Co., 64 Cal., 123.) . In the case of Board of Water Com'rs., etc. vs. Johnson (86 Conn., 571 [41 L. R. A., N. S., 1024]), the Supreme Court of Connecticut approvingly quoted the following doctrine from Lewis on Eminent Domain (3d ed.), section 599: "In all such cases the necessity of public utility of the proposed work or improvement is a judicial question. In all such cases, where the authority is to take property necessary for the purpose, the necessity of taking particular property for a particular purpose is a judicial one, upon which the owner is entitled to be heard." (Riley vs.Charleston, etc. Co., 71 S. C., 457, 489 [110 Am. St. Rep., 579]; Henderson vs. Lexington 132 Ky., 390, 403.) The taking of private property for any use which is not required by the necessities or convenience of the inhabitants of the state, is an unreasonable exercise of the right of eminent domain, and beyond the power of the legislature to delegate. (Bennett vs. Marion, 106 Iowa, 628, 633; Wilson vs. Pittsburg, etc. Co., 222 Pa. St., 541, 545; Greasy, etc. Co. vs. Ely, etc. Co., 132 Ky., 692, 697.) In the case of New Central Coal Co. vs. George's etc. Co. (37 Md., 537, 564), the Supreme Court of the State of Maryland, discussing the question before us, said: "To justify the exercise of this extreme power (eminent domain) where the legislature has left it to depend upon the necessity that may be found to exist, in order to accomplish the purpose of the incorporation, as in this case, the party claiming the right to the exercise of the power should be required to show at least a reasonable degree of necessity for its exercise. Any rule less strict than this, with the large and almost indiscriminate delegation of the right to corporations, would likely lead to oppression and the sacrifice of private right to corporate power." In the case of Dewey vs. Chicago, etc. Co. (184 Ill., 426, 433), the court said: "Its right to condemn property is not a general power of condemnation, but is limited to cases where a necessity for resort to private property is shown to exist. Such necessity must appear upon the face of the petition to condemn. If the necessary is denied the burden is upon the company (municipality) to establish it." (Highland, etc. Co. vs. Strickley, 116 Fed., 852, 856; Kiney vs.Citizens' Water & Light Co., 173 Ind., 252, 257 ; Bell vs. Mattoon Waterworks, etc. Co., 245 Ill., 544 [137 Am. St. Rep. 338].) It is true that naby decisions may be found asserting that what is a public use is a legislative question, and many other decisions declaring with equal emphasis that it is a judicial question. But, as long as there is a constitutional or statutory provision denying the right to take land for any use other than a public use, it occurs to us that the question whether any particular use is a public one or not is ultimately, at least, a judicial question. The legislative may, it is true, in effect declare certain uses to be public, and, under the operation of the well-known rule that a statute will not be declared to be unconstitutional except in a case free, or comparatively free, from doubt, the courts will certainly sustain the action of the legislature unless it appears that the particular use is clearly not of a public nature. The decisions must be understood with this limitation; for, certainly, no court of last resort will be willing to declare that any and every purpose which the legislative might happen to designate as a public use shall be conclusively held to be so, irrespective of the purpose in question and of its manifestly private character Blackstone in his Commentaries on the English Law remarks that, so great is the regard of the law for private property that it will not authorize the least violation of it, even for the public good, unless there exists a very great necessity therefor.

In the case of Wilkinson vs. Leland (2 Pet. [U.S.], 657), the Supreme Court of the United States said: "That government can scarcely be deemed free where the rights of property are left solely defendant on the legislative body, without restraint. The fundamental maxims of free government seem to require that the rights of personal liberty and private property should be held sacred. At least no court of justice in this country would be warranted in assuming that the power to violate and disregard them — a power so repugnant to the common principles of justice and civil liberty — lurked in any general grant of legislature authority, or ought to be implied from any general expression of the people. The people ought no to be presumed to part with rights so vital to their security and well-being without very strong and direct expression of such intention." (Lewis on Eminent Domain, sec. 603; Lecoul vs.Police Jury 20 La. Ann., 308; Jefferson vs. Jazem, 7 La. Ann., 182.) Blackstone, in his Commentaries on the English Law said that the right to own and possess land — a place to live separate and apart from others — to retain it as a home for the family in a way not to be molested by others — is one of the most sacred rights that men are heirs to. That right has been written into the organic law of every civilized nation. The Acts of Congress of July 1, 1902, and of August 29, 1916, which provide that "no law shall be enacted in the Philippine Islands which shall deprive any person of his property without due process of law," are but a restatement of the time-honored protection of the absolute right of the individual to his property. Neither did said Acts of Congress add anything to the law already existing in the Philippine Islands. The Spaniard fully recognized the principle and adequately protected the inhabitants of the Philippine Islands against the encroachment upon the private property of the individual. Article 349 of the Civil Code provides that: "No one may be deprived of his property unless it be by competent authority, for some purpose of proven public utility, and after payment of the proper compensation Unless this requisite (proven public utility and payment) has been complied with, it shall be theduty of the courts to protect the owner of such property in its possession or to restore its possession to him , as the case may be." The exercise of the right of eminent domain, whether directly by the State, or by its authorized agents, is necessarily in derogation of private rights, and the rule in that case is that the authority must be strictly construed. No species of property is held by individuals with greater tenacity, and none is guarded by the constitution and laws more sedulously, than the right to the freehold of inhabitants. When the legislature interferes with that right, and, for greater public purposes, appropriates the land of an individual without his consent, the plain meaning of the law should not be enlarged by doubtly interpretation. (Bensely vs. Mountainlake Water Co., 13 Cal., 306 and cases cited [73 Am. Dec., 576].) The statutory power of taking property from the owner without his consent is one of the most delicate exercise of government authority. It is to be watched with jealous scrutiny. Important as the power may be to the government, the inviolable sanctity which all free constitutions attach to the right of property of the citizens, constrains the strict observance of the substantial provisions of the law which are prescribed as modes of the exercise of the power, and to protect it from abuse. Not only must the authority of municipal corporations to take property be expressly conferred and the use for which it is taken specified, but the power, with all constitutional limitation and directions for its exercise, must be strictly pursued. (Dillon on Municipal Corporations [5th Ed.], sec. 1040, and cases cited; Tenorio vs. Manila Railroad Co., 22 Phil., 411.) It can scarcely be contended that a municipality would be permitted to take property for some public use unless some public necessity existed therefor. The right to take private property for

public use originates in the necessity, and the taking must be limited by such necessity. The appellant contends that inasmuch as the legislature has given it general authority to take private property for public use, that the legislature has, therefore, settled the question of the necessity in every case and that the courts are closed to the owners of the property upon that question. Can it be imagined, when the legislature adopted section 2429 of Act No. 2711, that it thereby declared that it was necessary to appropriate the property of Juan de la Cruz, whose property, perhaps, was not within the city limits at the time the law was adopted? The legislature, then, not having declared the necessity, can it be contemplated that it intended that a municipality should be the sole judge of the necessity in every case, and that the courts, in the face of the provision that "if upon trial they shall find that a right exists," cannot in that trial inquire into and hear proof upon the necessity for the appropriation in a particular case? The Charter of the city of Manila authorizes the taking of private property for public use. Suppose the owner of the property denies and successfully proves that the taking of his property serves no public use: Would the courts not be justified in inquiring into that question and in finally denying the petition if no public purpose was proved? Can it be denied that the courts have a right to inquire into that question? If the courts can ask questions and decide, upon an issue properly presented, whether the use is public or not, is not that tantamount to permitting the courts to inquire into the necessity of the appropriation? If there is no public use, then there is no necessity, and if there is no necessity, it is difficult to understand how a public use can necessarily exist. If the courts can inquire into the question whether a public use exists or not, then it seems that it must follow that they can examine into the question of the necessity. The very foundation of the right to exercise eminent domain is a genuine necessity, and that necessity must be of a public character. The ascertainment of the necessity must precede or accompany, and not follow, the taking of the land. (Morrison vs. Indianapolis, etc. Ry. Co., 166 Ind., 511; Stearns vs. Barre, 73 Vt., 281; Wheeling, etc. R. R. Co. vs. Toledo, Ry. etc. Co., 72 Ohio St., 368.) The general power to exercise the right of eminent domain must not be confused with the right to exercise it in aparticular case. The power of the legislature to confer, upon municipal corporations and other entities within the State, general authority to exercise the right of eminent domain cannot be questioned by the courts, but that general authority of municipalities or entities must not be confused with the right to exercise it in particular instances. The moment the municipal corporation or entity attempts to exercise the authority conferred, it must comply with the conditions accompanying the authority. The necessity for conferring the authority upon a municipal corporation to exercise the right of eminent domain is admittedly within the power of the legislature. But whether or not the municipal corporation or entity is exercising the right in a particular case under the conditions imposed by the general authority, is a question which the courts have the right to inquire into. The conflict in the authorities upon the question whether the necessity for the exercise of the right of eminent domain is purely legislative and not judicial, arises generally in the wisdom and propriety of the legislature in authorizing the exercise of the right of eminent domain instead of in the question of the right to exercise it in a particular case. (Creston Waterworks Co. vs. McGrath, 89 Iowa, 502.) By the weight of authorities, the courts have the power of restricting the exercise of eminent domain to the actual reasonable necessities of the case and for the purposes designated by the law. (Fairchild vs. City of St. Paul. 48 Minn., 540.)

And, moreover, the record does not show conclusively that the plaintiff has definitely decided that their exists a necessity for the appropriation of the particular land described in the complaint. Exhibits 4, 5, 7, and E clearly indicate that the municipal board believed at one time that other land might be used for the proposed improvement, thereby avoiding the necessity of distributing the quiet resting place of the dead. Aside from insisting that there exists no necessity for the alleged improvements, the defendants further contend that the street in question should not be opened through the cemetery. One of the defendants alleges that said cemetery is public property. If that allegations is true, then, of course, the city of Manila cannot appropriate it for public use. The city of Manila can only expropriate private property. It is a well known fact that cemeteries may be public or private. The former is a cemetery used by the general community, or neighborhood, or church, while the latter is used only by a family, or a small portion of the community or neighborhood. (11 C. J., 50.) Where a cemetery is open to public, it is a public use and no part of the ground can be taken for other public uses under a general authority. And this immunity extends to the unimproved and unoccupied parts which are held in good faith for future use. (Lewis on Eminent Domain, sec. 434, and cases cited.) The cemetery in question seems to have been established under governmental authority. The Spanish Governor-General, in an order creating the same, used the following language: The cemetery and general hospital for indigent Chinese having been founded and maintained by the spontaneous and fraternal contribution of their protector, merchants and industrials, benefactors of mankind, in consideration of their services to the Government of the Islands its internal administration, government and regime must necessarily be adjusted to the taste and traditional practices of those born and educated in China in order that the sentiments which animated the founders may be perpetually effectuated. It is alleged, and not denied, that the cemetery in question may be used by the general community of Chinese, which fact, in the general acceptation of the definition of a public cemetery, would make the cemetery in question public property. If that is true, then, of course, the petition of the plaintiff must be denied, for the reason that the city of Manila has no authority or right under the law to expropriate public property. But, whether or not the cemetery is public or private property, its appropriation for the uses of a public street, especially during the lifetime of those specially interested in its maintenance as a cemetery, should be a question of great concern, and its appropriation should not be made for such purposes until it is fully established that the greatest necessity exists therefor. While we do not contend that the dead must not give place to the living, and while it is a matter of public knowledge that in the process of time sepulchres may become the seat of cities and cemeteries traversed by streets and daily trod by the feet of millions of men, yet, nevertheless such sacrifices and such uses of the places of the dead should not be made unless and until it is fully established that there exists an eminent necessity therefor. While cemeteries and sepulchres and the places of the burial of the dead are still within the memory and command of the active care of the living; while they are still devoted to pious

uses and sacred regard, it is difficult to believe that even the legislature would adopt a law expressly providing that such places, under such circumstances, should be violated. In such an appropriation, what, we may ask, would be the measure of damages at law, for the wounded sensibilities of the living, in having the graves of kindred and loved ones blotted out and desecrated by a common highway or street for public travel? The impossibility of measuring the damage and inadequacy of a remedy at law is too apparent to admit of argument. To disturb the mortal remains of those endeared to us in life sometimes becomes the sad duty of the living; but, except in cases of necessity, or for laudable purposes, the sanctity of the grave, the last resting place of our friends, should be maintained, and the preventative aid of the courts should be invoked for that object. (Railroad Company vs. Cemetery Co., 116 Tenn., 400; Evergreen Cemetery Association vs. The City of New Haven, 43 Conn., 234; Anderson vs. Acheson, 132 Iowa, 744; Beatty vs. Kurtz, 2 Peters, 566.) In the present case, even granting that a necessity exists for the opening of the street in question, the record contains no proof of the necessity of opening the same through the cemetery. The record shows that adjoining and adjacent lands have been offered to the city free of charge, which will answer every purpose of the plaintiff. For all of the foregoing, we are fully persuaded that the judgment of the lower court should be and is hereby affirmed, with costs against the appellant. So ordered. [G.R. No. 107916. February 20, 1997] PERCIVAL MODAY, ZOTICO MODAY (deceased) and LEONORA MODAY, petitioners, vs. COURT OF APPEALS, JUDGE EVANGELINE S. YUIPCO OF BRANCH 6, REGIONAL TRIAL COURT, AGUSAN DEL SUR AND MUNICIPALITY OF BUNAWAN, respondents. DECISION ROMERO, J.: The main issue presented in this case is whether a municipality may expropriate private property by virtue of a municipal resolution which was disapproved by the Sangguniang Panlalawigan. Petitioner seeks the reversal of the Court of Appeals decision and resolution, promulgated on July 15, 1992 and October 22, 1992 respectively[1], and a declaration that Municipal Resolution No. 43-89 of the Bunawan Sangguniang Bayan is null and void. On July 23, 1989, the Sangguniang Bayan of the Municipality of Bunawan in Agusan del Sur passed Resolution No. 43-89, "Authorizing the Municipal Mayor to Initiate the Petition for Expropriation of a One (1) Hectare Portion of Lot No. 6138-Pls-4 along the National Highway Owned by Percival Moday for the Site of Bunawan Farmers Center and Other Government Sports Facilities."[2] In due time, Resolution No. 43-89 was approved by then Municipal Mayor Anuncio C. Bustillo and transmitted to the Sangguniang Panlalawigan for its approval. On September 11, 1989, the Sangguniang Panlalawigan disapproved said Resolution and returned it with the comment that "expropriation is unnecessary considering that there are still available lots in Bunawan for the establishment of the government center."[3]

The Municipality of Bunawan, herein public respondent, subsequently filed a Petition for Eminent Domain against petitioner Percival Moday before the Regional Trial Court at Prosperidad, Agusan del Sur.[4] The complaint was later amended to include the registered owners, Percival Moday's parents, Zotico and Leonora Moday, as party defendants. On March 6, 1991, public respondent municipality filed a Motion to Take or Enter Upon the Possession of Subject Matter of This Case stating that it had already deposited with the municipal treasurer the necessary amount in accordance with Section 2, Rule 67 of the Revised Rules of Court and that it would be in the government's best interest for public respondent to be allowed to take possession of the property. Despite petitioners' opposition and after a hearing on the merits, the Regional Trial Court granted respondent municipality's motion to take possession of the land. The lower court held that the Sangguniang Panlalawigan's failure to declare the resolution invalid leaves it effective. It added that the duty of the Sangguniang Panlalawigan is merely to review the ordinances and resolutions passed by the Sangguniang Bayan under Section 208 (l) of B.P. Blg. 337, old Local Government Code and that the exercise of eminent domain is not one of the two acts enumerated in Section 19 thereof requiring the approval of the Sangguniang Panlalawigan.[5] The dispositive portion of the lower court's Order dated July 2, 1991 reads: "WHEREFORE, it appearing that the amount of P632.39 had been deposited as per Official Receipt No. 5379647 on December 12, 1989 which this Court now determines as the provisional value of the land, the Motion to Take or Enter Upon the Possession of the Property filed by petitioner through counsel is hereby GRANTED. The Sheriff of this Court is ordered to forthwith place the plaintiff in possession of the property involved. Let the hearing be set on August 9, 1991 at 8:30 o'clock in the morning for the purpose of ascertaining the just compensation or fair market value of the property sought to be taken, with notice to all the parties concerned. SO ORDERED."[6] Petitioners' motion for reconsideration was denied by the trial court on October 31, 1991. Petitioners elevated the case in a petition for certiorari alleging grave abuse of discretion on the part of the trial court, but the same was dismissed by respondent appellate court on July 15, 1992.[7] The Court of Appeals held that the public purpose for the expropriation is clear from Resolution No. 43-89 and that since the Sangguniang Panlalawigan of Agusan del Sur did not declare Resolution No. 43-89 invalid, expropriation of petitioners' property could proceed. Respondent appellate court also denied petitioners' motion for reconsideration on October 22, 1992.[8] Meanwhile, the Municipality of Bunawan had erected three buildings on the subject property: the Association of Barangay Councils (ABC) Hall, the Municipal Motorpool, both wooden structures, and the Bunawan Municipal Gymnasium, which is made of concrete. In the instant petition for review filed on November 23, 1992, petitioner seeks the reversal of the decision and resolution of the Court of Appeals and a declaration that Resolution No. 43-89 of the Municipality of Bunawan is null and void. On December 8, 1993, the Court issued a temporary restraining order enjoining and restraining public respondent Judge Evangeline Yuipco from enforcing her July 2, 1991 Order

and respondent municipality from using and occupying all the buildings constructed and from further constructing any building on the land subject of this petition.[9] Acting on petitioners' Omnibus Motion for Enforcement of Restraining Order and for Contempt, the Court issued a Resolution on March 15, 1995, citing incumbent municipal mayor Anuncio C. Bustillo for contempt, ordering him to pay the fine and to demolish the "blocktiendas" which were built in violation of the restraining order.[10] Former Mayor Anuncio C. Bustillo paid the fine and manifested that he lost in the May 8, 1995 election.[11] The incumbent Mayor Leonardo Barrios, filed a Manifestation, Motion to Resolve "Urgent Motion for Immediate Dissolution of the Temporary Restraining Order" and Memorandum on June 11, 1996 for the Municipality of Bunawan.[12] Petitioners contend that the Court of Appeals erred in upholding the legality of the condemnation proceedings initiated by the municipality. According to petitioners, the expropriation was politically motivated and Resolution No. 43-89 was correctly disapproved by the Sangguniang Panlalawigan, there being other municipal properties available for the purpose. Petitioners also pray that the former Mayor Anuncio C. Bustillo be ordered to pay damages for insisting on the enforcement of a void municipal resolution. The Court of Appeals declared that the Sangguniang Panlalawigan's reason for disapproving the resolution "could be baseless, because it failed to point out which and where are 'those available lots.' Respondent court also concluded that since the Sangguniang Panlalawigan did not declare the municipal board's resolution as invalid, expropriation of petitioners' property could proceed.[13] The Court finds no merit in the petition and affirms the decision of the Court of Appeals. Eminent domain, the power which the Municipality of Bunawan exercised in the instant case, is a fundamental State power that is inseparable from sovereignty.[14] It is government's right to appropriate, in the nature of a compulsory sale to the State, private property for public use or purpose.[15] Inherently possessed by the national legislature, the power of eminent domain may be validly delegated to local governments, other public entities and public utilities.[16] For the taking of private property by the government to be valid, the taking must be for public use and there must be just compensation.[17] The Municipality of Bunawan's power to exercise the right of eminent domain is not disputed as it is expressly provided for in Batas Pambansa Blg. 337, the Local Government Code[18] in force at the time expropriation proceedings were initiated. Section 9 of said law states: "Section 9. Eminent Domain. A local government unit may, through its head and acting pursuant to a resolution of its sanggunian, exercise the right of eminent domain and institute condemnation proceedings for public use or purpose." What petitioners question is the lack of authority of the municipality to exercise this right since the Sangguniang Panlalawigan disapproved Resolution No. 43-89. Section 153 of B.P. Blg. 337 provides: "Sec. 153. Sangguniang Panlalawigan Review. (1) Within thirty days after receiving copies of approved ordinances, resolutions and executive orders promulgated by the municipal mayor, the sangguniang panlalawigan shall examine the documents or transmit them to the provincial attorney, or if there be none, to the provincial fiscal, who shall examine them promptly and

inform the sangguniang panlalawigan in writing of any defect or impropriety which he may discover therein and make such comments or recommendations as shall appear to him proper. (2) If the sangguniang panlalawigan shall find that any municipal ordinance, resolution or executive order is beyond the power conferred upon the sangguniang bayan or the mayor, it shall declare such ordinance, resolution or executive order invalid in whole or in part, entering its actions upon the minutes and advising the proper municipal authorities thereof. The effect of such an action shall be to annul the ordinance, resolution or executive order in question in whole or in part. The action of the sangguniang panlalawigan shall be final. xxx xxx xxx." (Emphasis supplied.) The Sangguniang Panlalawigan's disapproval of Municipal Resolution No. 43-89 is an infirm action which does not render said resolution null and void. The law, as expressed in Section 153 of B.P. Blg. 337, grants the Sangguniang Panlalawigan the power to declare a municipal resolution invalid on the sole ground that it is beyond the power of the Sangguniang Bayan or the Mayor to issue. Although pertaining to a similar provision of law but different factual milieu then obtaining, the Court's pronouncements in Velazco v. Blas,[19] where we cited significant early jurisprudence, are applicable to the case at bar. "The only ground upon which a provincial board may declare any municipal resolution, ordinance, or order invalid is when such resolution, ordinance, or order is 'beyond the powers conferred upon the council or president making the same.' Absolutely no other ground is recognized by the law. A strictly legal question is before the provincial board in its consideration of a municipal resolution, ordinance, or order. The provincial (board's) disapproval of any resolution, ordinance, or order must be premised specifically upon the fact that such resolution, ordinance, or order is outside the scope of the legal powers conferred by law. If a provincial board passes these limits, it usurps the legislative functions of the municipal council or president. Such has been the consistent course of executive authority."[20] Thus, the Sangguniang Panlalawigan was without the authority to disapprove Municipal Resolution No. 43-89 for the Municipality of Bunawan clearly has the power to exercise the right of eminent domain and its Sangguniang Bayan the capacity to promulgate said resolution, pursuant to the earlier-quoted Section 9 of B.P. Blg. 337. Perforce, it follows that Resolution No. 43-89 is valid and binding and could be used as lawful authority to petition for the condemnation of petitioners' property. As regards the accusation of political oppression, it is alleged that Percival Moday incurred the ire of then Mayor Anuncio C. Bustillo when he refused to support the latter's candidacy for mayor in previous elections. Petitioners claim that then incumbent Mayor C. Bustillo used the expropriation to retaliate by expropriating their land even if there were other properties belonging to the municipality and available for the purpose. Specifically, they allege that the municipality owns a vacant seven-hectare property adjacent to petitioners' land, evidenced by a sketch plan.[21] The limitations on the power of eminent domain are that the use must be public, compensation must be made and due process of law must be observed.[22] The Supreme Court, taking cognizance of such issues as the adequacy of compensation, necessity of the taking and the public use character or the purpose of the taking [23], has ruled that the necessity of exercising eminent domain must be genuine and of a public character.[24] Government may not capriciously choose what private property should be taken.

After a careful study of the records of the case, however, we find no evidentiary support for petitioners' allegations. The uncertified photocopy of the sketch plan does not conclusively prove that the municipality does own vacant land adjacent to petitioners' property suited to the purpose of the expropriation. In the questioned decision, respondent appellate court similarly held that the pleadings and documents on record have not pointed out any of respondent municipality's "other available properties available for the same purpose.[25] " The accusations of political reprisal are likewise unsupported by competent evidence. Consequently, the Court holds that petitioners' demand that the former municipal mayor be personally liable for damages is without basis. WHEREFORE, the instant petition is hereby DENIED. The questioned Decision and Resolution of the Court of Appeals in the case of "Percival Moday, et al. v. Municipality of Bunawan, et al." (CA G.R. SP No. 26712) are AFFIRMED. The Temporary Restraining Order issued by the Court on December 8, 1993 is LIFTED. G.R. No. L-18841

January 27, 1969

REPUBLIC OF THE PHILIPPINES, plaintiff-appellant, vs. PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, defendant-appellant. Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor General Antonio A. Torres and Solicitor Camilo D. Quiason for plaintiff-appellant. Ponce Enrile, Siguion Reyna, Montecillo and Belo for defendant-appellant. REYES, J.B.L., J.: Direct appeals, upon a joint record on appeal, by both the plaintiff and the defendant from the dismissal, after hearing, by the Court of First Instance of Manila, in its Civil Case No. 35805, of their respective complaint and counterclaims, but making permanent a preliminary mandatory injunction theretofore issued against the defendant on the interconnection of telephone facilities owned and operated by said parties. The plaintiff, Republic of the Philippines, is a political entity exercising governmental powers through its branches and instrumentalities, one of which is the Bureau of Telecommunications. That office was created on 1 July 1947, under Executive Order No. 94, with the following powers and duties, in addition to certain powers and duties formerly vested in the Director of Posts: 1awphil.ñêt SEC. 79. The Bureau of Telecommunications shall exercise the following powers and duties: (a) To operate and maintain existing wire-telegraph and radio-telegraph offices, stations, and facilities, and those to be established to restore the pre-war telecommunication service under the Bureau of Posts, as well as such additional offices or stations as may hereafter be established to provide telecommunication service in places requiring such service; (b) To investigate, consolidate, negotiate for, operate and maintain wire-telephone or radio telephone communication service throughout the Philippines by utilizing such existing facilities in cities, towns, and provinces as may be found feasible and under

such terms and conditions or arrangements with the present owners or operators thereof as may be agreed upon to the satisfaction of all concerned; (c) To prescribe, subject to approval by the Department Head, equitable rates of charges for messages handled by the system and/or for time calls and other services that may be rendered by said system; (d) To establish and maintain coastal stations to serve ships at sea or aircrafts and, when public interest so requires, to engage in the international telecommunication service in agreement with other countries desiring to establish such service with the Republic of the Philippines; and (e) To abide by all existing rules and regulations prescribed by the International Telecommunication Convention relative to the accounting, disposition and exchange of messages handled in the international service, and those that may hereafter be promulgated by said convention and adhered to by the Government of the Republic of the Philippines. 1 The defendant, Philippine Long Distance Telephone Company (PLDT for short), is a public service corporation holding a legislative franchise, Act 3426, as amended by Commonwealth Act 407, to install, operate and maintain a telephone system throughout the Philippines and to carry on the business of electrical transmission of messages within the Philippines and between the Philippines and the telephone systems of other countries. 2 The RCA Communications, Inc., (which is not a party to the present case but has contractual relations with the parties) is an American corporation authorized to transact business in the Philippines and is the grantee, by assignment, of a legislative franchise to operate a domestic station for the reception and transmission of long distance wireless messages (Act 2178) and to operate broadcasting and radio-telephone and radio-telegraphic communications services (Act 3180). 3 Sometime in 1933, the defendant, PLDT, and the RCA Communications, Inc., entered into an agreement whereby telephone messages, coming from the United States and received by RCA's domestic station, could automatically be transferred to the lines of PLDT; and vice-versa, for calls collected by the PLDT for transmission from the Philippines to the United States. The contracting parties agreed to divide the tolls, as follows: 25% to PLDT and 75% to RCA. The sharing was amended in 1941 to 30% for PLDT and 70% for RCA, and again amended in 1947 to a 50-50 basis. The arrangement was later extended to radio-telephone messages to and from European and Asiatic countries. Their contract contained a stipulation that either party could terminate it on a 24-month notice to the other.4 On 2 February 1956, PLDT gave notice to RCA to terminate their contract on 2 February 1958. 5 Soon after its creation in 1947, the Bureau of Telecommunications set up its own Government Telephone System by utilizing its own appropriation and equipment and by renting trunk lines of the PLDT to enable government offices to call private parties. 6 Its application for the use of these trunk lines was in the usual form of applications for telephone service, containing a statement, above the signature of the applicant, that the latter will abide by the rules and regulations of the PLDT which are on file with the Public Service Commission. 7 One of the many rules prohibits the public use of the service furnished the telephone subscriber for his private use. 8 The Bureau has extended its services to the general public since 1948, 9 using the same trunk lines owned by, and rented from, the PLDT, and prescribing its (the Bureau's) own schedule of rates. 10 Through these trunk lines, a Government Telephone System (GTS)

subscriber could make a call to a PLDT subscriber in the same way that the latter could make a call to the former. On 5 March 1958, the plaintiff, through the Director of Telecommunications, entered into an agreement with RCA Communications, Inc., for a joint overseas telephone service whereby the Bureau would convey radio-telephone overseas calls received by RCA's station to and from local residents. 11 Actually, they inaugurated this joint operation on 2 February 1958, under a "provisional" agreement. 12 On 7 April 1958, the defendant Philippine Long Distance Telephone Company, complained to the Bureau of Telecommunications that said bureau was violating the conditions under which their Private Branch Exchange (PBX) is inter-connected with the PLDT's facilities, referring to the rented trunk lines, for the Bureau had used the trunk lines not only for the use of government offices but even to serve private persons or the general public, in competition with the business of the PLDT; and gave notice that if said violations were not stopped by midnight of 12 April 1958, the PLDT would sever the telephone connections. 13 When the PLDT received no reply, it disconnected the trunk lines being rented by the Bureau at midnight on 12 April 1958. 14 The result was the isolation of the Philippines, on telephone services, from the rest of the world, except the United States. 15 At that time, the Bureau was maintaining 5,000 telephones and had 5,000 pending applications for telephone connection. 16 The PLDT was also maintaining 60,000 telephones and had also 20,000 pending applications. 17Through the years, neither of them has been able to fill up the demand for telephone service. The Bureau of Telecommunications had proposed to the PLDT on 8 January 1958 that both enter into an interconnecting agreement, with the government paying (on a call basis) for all calls passing through the interconnecting facilities from the Government Telephone System to the PLDT. 18 The PLDT replied that it was willing to enter into an agreement on overseas telephone service to Europe and Asian countries provided that the Bureau would submit to the jurisdiction and regulations of the Public Service Commission and in consideration of 37 1/2% of the gross revenues. 19 In its memorandum in lieu of oral argument in this Court dated 9 February 1964, on page 8, the defendant reduced its offer to 33 1/3 % (1/3) as its share in the overseas telephone service. The proposals were not accepted by either party. On 12 April 1958, plaintiff Republic commenced suit against the defendant, Philippine Long Distance Telephone Company, in the Court of First Instance of Manila (Civil Case No. 35805), praying in its complaint for judgment commanding the PLDT to execute a contract with plaintiff, through the Bureau, for the use of the facilities of defendant's telephone system throughout the Philippines under such terms and conditions as the court might consider reasonable, and for a writ of preliminary injunction against the defendant company to restrain the severance of the existing telephone connections and/or restore those severed. Acting on the application of the plaintiff, and on the ground that the severance of telephone connections by the defendant company would isolate the Philippines from other countries, the court a quo, on 14 April 1958, issued an order for the defendant: (1) to forthwith reconnect and restore the seventy-eight (78) trunk lines that it has disconnected between the facilities of the Government Telephone System, including its overseas telephone services, and the facilities of defendant; (2) to refrain from carrying

into effect its threat to sever the existing telephone communication between the Bureau of Telecommunications and defendant, and not to make connection over its telephone system of telephone calls coming to the Philippines from foreign countries through the said Bureau's telephone facilities and the radio facilities of RCA Communications, Inc.; and (3) to accept and connect through its telephone system all such telephone calls coming to the Philippines from foreign countries — until further order of this Court. On 28 April 1958, the defendant company filed its answer, with counterclaims. It denied any obligation on its part to execute a contrary of services with the Bureau of Telecommunications; contested the jurisdiction of the Court of First Instance to compel it to enter into interconnecting agreements, and averred that it was justified to disconnect the trunk lines heretofore leased to the Bureau of Telecommunications under the existing agreement because its facilities were being used in fraud of its rights. PLDT further claimed that the Bureau was engaging in commercial telephone operations in excess of authority, in competition with, and to the prejudice of, the PLDT, using defendants own telephone poles, without proper accounting of revenues. After trial, the lower court rendered judgment that it could not compel the PLDT to enter into an agreement with the Bureau because the parties were not in agreement; that under Executive Order 94, establishing the Bureau of Telecommunications, said Bureau was not limited to servicing government offices alone, nor was there any in the contract of lease of the trunk lines, since the PLDT knew, or ought to have known, at the time that their use by the Bureau was to be public throughout the Islands, hence the Bureau was neither guilty of fraud, abuse, or misuse of the poles of the PLDT; and, in view of serious public prejudice that would result from the disconnection of the trunk lines, declared the preliminary injunction permanent, although it dismissed both the complaint and the counterclaims. Both parties appealed. Taking up first the appeal of the Republic, the latter complains of the action of the trial court in dismissing the part of its complaint seeking to compel the defendant to enter into an interconnecting contract with it, because the parties could not agree on the terms and conditions of the interconnection, and of its refusal to fix the terms and conditions therefor. We agree with the court below that parties can not be coerced to enter into a contract where no agreement is had between them as to the principal terms and conditions of the contract. Freedom to stipulate such terms and conditions is of the essence of our contractual system, and by express provision of the statute, a contract may be annulled if tainted by violence, intimidation, or undue influence (Articles 1306, 1336, 1337, Civil Code of the Philippines). But the court a quo has apparently overlooked that while the Republic may not compel the PLDT to celebrate a contract with it, the Republic may, in the exercise of the sovereign power of eminent domain, require the telephone company to permit interconnection of the government telephone system and that of the PLDT, as the needs of the government service may require, subject to the payment of just compensation to be determined by the court. Nominally, of course, the power of eminent domain results in the taking or appropriation of title to, and possession of, the expropriated property; but no cogent reason appears why the said power may not be availed of to impose only a burden upon the owner of condemned property, without loss of title and possession. It is unquestionable that real property may, through expropriation, be subjected to an easement of right of way. The use of the PLDT's lines and services to allow inter-service

connection between both telephone systems is not much different. In either case private property is subjected to a burden for public use and benefit. If, under section 6, Article XIII, of the Constitution, the State may, in the interest of national welfare, transfer utilities to public ownership upon payment of just compensation, there is no reason why the State may not require a public utility to render services in the general interest, provided just compensation is paid therefor. Ultimately, the beneficiary of the interconnecting service would be the users of both telephone systems, so that the condemnation would be for public use. The Bureau of Telecommunications, under section 78 (b) of Executive Order No. 94, may operate and maintain wire telephone or radio telephone communications throughout the Philippines by utilizing existing facilities in cities, towns, and provinces under such terms and conditions or arrangement with present owners or operators as may be agreed upon to the satisfaction of all concerned; but there is nothing in this section that would exclude resort to condemnation proceedings where unreasonable or unjust terms and conditions are exacted, to the extent of crippling or seriously hampering the operations of said Bureau. A perusal of the complaint shows that the Republic's cause of action is predicated upon the radio telephonic isolation of the Bureau's facilities from the outside world if the severance of interconnection were to be carried out by the PLDT, thereby preventing the Bureau of Telecommunications from properly discharging its functions, to the prejudice of the general public. Save for the prayer to compel the PLDT to enter into a contract (and the prayer is no essential part of the pleading), the averments make out a case for compulsory rendering of inter-connecting services by the telephone company upon such terms and conditions as the court may determine to be just. And since the lower court found that both parties "are practically at one that defendant (PLDT) is entitled to reasonable compensation from plaintiff for the reasonable use of the former's telephone facilities" (Decision, Record on Appeal, page 224), the lower court should have proceeded to treat the case as one of condemnation of such services independently of contract and proceeded to determine the just and reasonable compensation for the same, instead of dismissing the petition. This view we have taken of the true nature of the Republic's petition necessarily results in overruling the plea of defendant-appellant PLDT that the court of first instance had no jurisdiction to entertain the petition and that the proper forum for the action was the Public Service Commission. That body, under the law, has no authority to pass upon actions for the taking of private property under the sovereign right of eminent domain. Furthermore, while the defendant telephone company is a public utility corporation whose franchise, equipment and other properties are under the jurisdiction, supervision and control of the Public Service Commission (Sec. 13, Public Service Act), yet the plaintiff's telecommunications network is a public service owned by the Republic and operated by an instrumentality of the National Government, hence exempt, under Section 14 of the Public Service Act, from such jurisdiction, supervision and control. The Bureau of Telecommunications was created in pursuance of a state policy reorganizing the government offices — to meet the exigencies attendant upon the establishment of the free and independent Government of the Republic of the Philippines, and for the purpose of promoting simplicity, economy and efficiency in its operation (Section 1, Republic Act No. 51) — and the determination of state policy is not vested in the Commission (Utilities Com. vs. Bartonville Bus Line, 290 Ill. 574; 124 N.E. 373).

Defendant PLDT, as appellant, contends that the court below was in error in not holding that the Bureau of Telecommunications was not empowered to engage in commercial telephone business, and in ruling that said defendant was not justified in disconnecting the telephone trunk lines it had previously leased to the Bureau. We find that the court a quo ruled correctly in rejecting both assertions. Executive Order No. 94, Series of 1947, reorganizing the Bureau of Telecommunications, expressly empowered the latter in its Section 79, subsection (b), to "negotiate for, operate and maintain wire telephone or radio telephone communication service throughout the Philippines", and, in subsection (c), "to prescribe, subject to approval by the Department Head, equitable rates of charges for messages handled by the system and/or for time calls and other services that may be rendered by the system". Nothing in these provisions limits the Bureau to noncommercial activities or prevents it from serving the general public. It may be that in its original prospectuses the Bureau officials had stated that the service would be limited to government offices: but such limitations could not block future expansion of the system, as authorized by the terms of the Executive Order, nor could the officials of the Bureau bind the Government not to engage in services that are authorized by law. It is a well-known rule that erroneous application and enforcement of the law by public officers do not block subsequent correct application of the statute (PLDT vs. Collector of Internal Revenue, 90 Phil. 676), and that the Government is never estopped by mistake or error on the part of its agents (Pineda vs. Court of First Instance of Tayabas, 52 Phil. 803, 807; Benguet Consolidated Mining Co. vs. Pineda, 98 Phil. 711, 724). The theses that the Bureau's commercial services constituted unfair competition, and that the Bureau was guilty of fraud and abuse under its contract, are, likewise, untenable. First, the competition is merely hypothetical, the demand for telephone service being very much more than the supposed competitors can supply. As previously noted, the PLDT had 20,000 pending applications at the time, and the Bureau had another 5,000. The telephone company's inability to meet the demands for service are notorious even now. Second, the charter of the defendant expressly provides: SEC. 14. The rights herein granted shall not be exclusive, and the rights and power to grant to any corporation, association or person other than the grantee franchise for the telephone or electrical transmission of message or signals shall not be impaired or affected by the granting of this franchise: — (Act 3436) And third, as the trial court correctly stated, "when the Bureau of Telecommunications subscribed to the trunk lines, defendant knew or should have known that their use by the subscriber was more or less public and all embracing in nature, that is, throughout the Philippines, if not abroad" (Decision, Record on Appeal, page 216). The acceptance by the defendant of the payment of rentals, despite its knowledge that the plaintiff had extended the use of the trunk lines to commercial purposes, continuously since 1948, implies assent by the defendant to such extended use. Since this relationship has been maintained for a long time and the public has patronized both telephone systems, and their interconnection is to the public convenience, it is too late for the defendant to claim misuse of its facilities, and it is not now at liberty to unilaterally sever the physical connection of the trunk lines.

..., but there is high authority for the position that, when such physical connection has been voluntarily made, under a fair and workable arrangement and guaranteed by contract and the continuous line has come to be patronized and established as a great public convenience, such connection shall not in breach of the agreement be severed by one of the parties. In that case, the public is held to have such an interest in the arrangement that its rights must receive due consideration. This position finds approval in State ex rel. vs. Cadwaller, 172 Ind. 619, 636, 87 N.E. 650, and is stated in the elaborate and learned opinion of Chief Justice Myers as follows: "Such physical connection cannot be required as of right, but if such connection is voluntarily made by contract, as is here alleged to be the case, so that the public acquires an interest in its continuance, the act of the parties in making such connection is equivalent to a declaration of a purpose to waive the primary right of independence, and it imposes upon the property such a public status that it may not be disregarded" — citing Mahan v. Mich. Tel. Co., 132 Mich. 242, 93 N.W. 629, and the reasons upon which it is in part made to rest are referred to in the same opinion, as follows: "Where private property is by the consent of the owner invested with a public interest or privilege for the benefit of the public, the owner can no longer deal with it as private property only, but must hold it subject to the right of the public in the exercise of that public interest or privilege conferred for their benefit." Allnut v. Inglis (1810) 12 East, 527. The doctrine of this early case is the acknowledged law. (Clinton-Dunn Tel. Co. v. Carolina Tel. & Tel. Co., 74 S.E. 636, 638). It is clear that the main reason for the objection of the PLDT lies in the fact that said appellant did not expect that the Bureau's telephone system would expand with such rapidity as it has done; but this expansion is no ground for the discontinuance of the service agreed upon. The last issue urged by the PLDT as appellant is its right to compensation for the use of its poles for bearing telephone wires of the Bureau of Telecommunications. Admitting that section 19 of the PLDT charter reserves to the Government — the privilege without compensation of using the poles of the grantee to attach one tenpin cross-arm, and to install, maintain and operate wires of its telegraph system thereon; Provided, however, That the Bureau of Posts shall have the right to place additional cross-arms and wires on the poles of the grantee by paying a compensation, the rate of which is to be agreed upon by the Director of Posts and the grantee; — the defendant counterclaimed for P8,772.00 for the use of its poles by the plaintiff, contending that what was allowed free use, under the aforequoted provision, was one ten-pin cross-arm attachment and only for plaintiff's telegraph system, not for its telephone system; that said section could not refer to the plaintiff's telephone system, because it did not have such telephone system when defendant acquired its franchise. The implication of the argument is that plaintiff has to pay for the use of defendant's poles if such use is for plaintiff's telephone system and has to pay also if it attaches more than one (1) ten-pin cross-arm for telegraphic purposes. As there is no proof that the telephone wires strain the poles of the PLDT more than the telegraph wires, nor that they cause more damage than the wires of the telegraph system, or that the Government has attached to the poles more than one ten-pin cross-arm as permitted by the PLDT charter, we see no point in this assignment of error. So long as the burden to be borne by the PLDT poles is not increased, we see no reason why the reservation in favor of the

telegraph wires of the government should not be extended to its telephone lines, any time that the government decided to engage also in this kind of communication. In the ultimate analysis, the true objection of the PLDT to continue the link between its network and that of the Government is that the latter competes "parasitically" (sic) with its own telephone services. Considering, however, that the PLDT franchise is non-exclusive; that it is well-known that defendant PLDT is unable to adequately cope with the current demands for telephone service, as shown by the number of pending applications therefor; and that the PLDT's right to just compensation for the services rendered to the Government telephone system and its users is herein recognized and preserved, the objections of defendant-appellant are without merit. To uphold the PLDT's contention is to subordinate the needs of the general public to the right of the PLDT to derive profit from the future expansion of its services under its non-exclusive franchise. WHEREFORE, the decision of the Court of First Instance, now under appeal, is affirmed, except in so far as it dismisses the petition of the Republic of the Philippines to compel the Philippine Long Distance Telephone Company to continue servicing the Government telephone system upon such terms, and for a compensation, that the trial court may determine to be just, including the period elapsed from the filing of the original complaint or petition. And for this purpose, the records are ordered returned to the court of origin for further hearings and other proceedings not inconsistent with this opinion. No costs. [G.R. No. 138896. June 20, 2000] BARANGAY SAN ROQUE, TALISAY, CEBU, petitioner, vs. Heirs of FRANCISCO PASTOR, namely: EUGENIO SYLIANCO, TEODORO SYLIANCO, ISABEL SYLIANCO, EUGENIA S. ONG, LAWRENCE SYLIANCO, LAWSON SYLIANCO, LAWINA S. NOTARIO, LEONARDO SYLIANCO JR. and LAWFORD SYLIANCO, respondents. DECISION PANGANIBAN, J.: An expropriation suit is incapable of pecuniary estimation. Accordingly, it falls within the jurisdiction of the regional trial courts, regardless of the value of the subject property. The Case Before us is a Petition for Review on Certiorari assailing the March 29, 1999 Order[1] of the Regional Trial Court (RTC) of Cebu City (Branch 58) in Civil Case No. CEB-21978, in which it dismissed a Complaint for eminent domain. It ruled as follows: "Premises considered, the motion to dismiss is hereby granted on the ground that this Court has no jurisdiction over the case. Accordingly, the Orders dated February 19, 1999 and February 26, 1999, as well as the Writ of Possession issued by virtue of the latter Order are hereby recalled for being without force and effect."[2] Petitioner also challenges the May 14, 1999 Order of the RTC denying reconsideration.

The Facts Petitioner filed before the Municipal Trial Court (MTC) of Talisay, Cebu (Branch 1) [3] a Complaint to expropriate a property of the respondents. In an Order dated April 8, 1997, the MTC dismissed the Complaint on the ground of lack of jurisdiction. It reasoned that "[e]minent domain is an exercise of the power to take private property for public use after payment of just compensation. In an action for eminent domain, therefore, the principal cause of action is the exercise of such power or right. The fact that the action also involves real property is merely incidental. An action for eminent domain is therefore within the exclusive original jurisdiction of the Regional Trial Court and not with this Court."[4]

Assailed RTC Ruling The RTC also dismissed the Complaint when filed before it, holding that an action for eminent domain affected title to real property; hence, the value of the property to be expropriated would determine whether the case should be filed before the MTC or the RTC. Concluding that the action should have been filed before the MTC since the value of the subject property was less than P20,000, the RTC ratiocinated in this wise: "The instant action is for eminent domain. It appears from the current Tax Declaration of the land involved that its assessed value is only One Thousand Seven Hundred Forty Pesos (P1,740.00). Pursuant to Section 3, paragraph (3), of Republic Act No. 7691, all civil actions involving title to, or possession of, real property with an assessed value of less than P20,000.00 are within the exclusive original jurisdiction of the Municipal Trial Courts. In the case at bar, it is within the exclusive original jurisdiction of the Municipal Trial Court of Talisay, Cebu, where the property involved is located. "The instant action for eminent domain or condemnation of real property is a real action affecting title to or possession of real property, hence, it is the assessed value of the property involved which determines the jurisdiction of the court. That the right of eminent domain or condemnation of real property is included in a real action affecting title to or possession of real property, is pronounced by retired Justice Jose Y. Feria, thus, Real actions are those affecting title to or possession of real property. These include partition or condemnation of, or foreclosures of mortgage on, real property. x x x"[5] Aggrieved, petitioner appealed directly to this Court, raising a pure question of law. [6] In a Resolution dated July 28, 1999, the Court denied the Petition for Review "for being posted out of time on July 2, 1999, the due date being June 2, 1999, as the motion for extension of time to file petition was denied in the resolution of July 14, 1999."[7] In a subsequent Resolution dated October 6, 1999, the Court reinstated the Petition.[8] Respondents, on the other hand, contend that the Complaint for Eminent Domain affects the title to or possession of real property. Thus, they argue that the case should have been brought before the MTC, pursuant to BP 129 as amended by Section 3 (3) of RA 7691. This law

provides that MTCs shall have exclusive original jurisdiction over all civil actions that involve title to or possession of real property, the assessed value of which does not exceed twenty thousand pesos or, in civil actions in Metro Manila, fifty thousand pesos exclusive of interest, damages of whatever kind, attorneys fees, litigation expenses and costs. We agree with the petitioner that an expropriation suit is incapable of pecuniary estimation. The test to determine whether it is so was laid down by the Court in this wise: "A review of the jurisprudence of this Court indicates that in determining whether an action is one the subject matter of which is not capable of pecuniary estimation, this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance would depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, or where the money claim is purely incidental to, or a consequence of, the principal relief sought, like in suits to have the defendant perform his part of the contract (specific performance) and in actions for support, or for annulment of a judgment or to foreclose a mortgage, this Court has considered such actions as cases where the subject of the litigation may not be estimated in terms of money, and are cognizable exclusively by courts of first instance. The rationale of the rule is plainly that the second class cases, besides the determination of damages, demand an inquiry into other factors which the law has deemed to be more within the competence of courts of first instance, which were the lowest courts of record at the time that the first organic laws of the Judiciary were enacted allocating jurisdiction (Act 136 of the Philippine Commission of June 11, 1901)."10 In the present case, an expropriation suit does not involve the recovery of a sum of money. Rather, it deals with the exercise by the government of its authority and right to take private property for public use.11 In National Power Corporation v. Jocson,12 the Court ruled that expropriation proceedings have two phases: "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. x x x" It should be stressed that the primary consideration in an expropriation suit is whether the government or any of its instrumentalities has complied with the requisites for the taking of private property. Hence, the courts determine the authority of the government entity, the necessity of the expropriation, and the observance of due process.13 In the main, the subject of an expropriation suit is the governments exercise of eminent domain, a matter that is incapable of pecuniary estimation. True, the value of the property to be expropriated is estimated in monetary terms, for the court is duty-bound to determine the just compensation for it. This, however, is merely incidental to the expropriation suit. Indeed, that amount is determined only after the court is satisfied with the propriety of the expropriation. Verily, the Court held in Republic of the Philippines v. Zurbano that "condemnation proceedings are within the jurisdiction of Courts of First Instance,"14 the forerunners of the regional trial courts. The said case was decided during the effectivity of the Judiciary Act of 1948 which, like BP 129 in respect to RTCs, provided that courts of first instance had original jurisdiction over "all civil actions in which the subject of the litigation is not capable of pecuniary estimation."15 The 1997 amendments to the Rules of Court were not intended to change these jurisprudential precedents. We are not persuaded by respondents argument that the present action involves the title to or possession of a parcel of land. They cite the observation of retired Justice Jose Y. Feria, an eminent authority in remedial law, that condemnation or expropriation proceedings are examples of real actions that affect the title to or possession of a parcel of land.16 Their reliance is misplaced. Justice Feria sought merely to distinguish between real and personal actions. His discussion on this point pertained to the nature of actions, not to the jurisdiction of courts. In fact, in his pre-bar lectures, he emphasizes that jurisdiction over eminent domain cases is still within the RTCs under the 1997 Rules. To emphasize, the question in the present suit is whether the government may expropriate private property under the given set of circumstances. The government does not dispute respondents title to or possession of the same. Indeed, it is not a question of who has a better title or right, for the government does not even claim that it has a title to the property. It merely asserts its inherent sovereign power to "appropriate and control individual property for the public benefit, as the public necessity, convenience or welfare may demand."17 WHEREFORE, the Petition is hereby GRANTED and the assailed Orders SET ASIDE. The Regional Trial Court is directed to HEAR the case. No costs.

G.R. No. L-20620 August 15, 1974 REPUBLIC OF THE PHILIPPINES, plaintiff-appellant, vs. CARMEN M. VDA. DE CASTELLVI, ET AL., defendants-appellees. Office of the Solicitor General for plaintiff-appellant. C.A. Mendoza & A. V. Raquiza and Alberto Cacnio & Associates for defendant-appellees.

ZALDIVAR, J.: Appeal from the decision of the Court of First Instance of Pampanga in its Civil Case No. 1623, an expropriation proceeding. Plaintiff-appellant, the Republic of the Philippines, (hereinafter referred to as the Republic) filed, on June 26, 1959, a complaint for eminent domain against defendant-appellee, Carmen M. Vda. de Castellvi, judicial administratrix of the estate of the late Alfonso de Castellvi (hereinafter referred to as Castellvi), over a parcel of land situated in the barrio of San Jose, Floridablanca, Pampanga, described as follows: A parcel of land, Lot No. 199-B Bureau of Lands Plan Swo 23666. Bounded on the NE by Maria Nieves Toledo-Gozun; on the SE by national road; on the SW by AFP reservation, and on the NW by AFP reservation. Containing an area of 759,299 square meters, more or less, and registered in the name of Alfonso Castellvi under TCT No. 13631 of the Register of Pampanga ...; and against defendant-appellee Maria Nieves Toledo Gozun (hereinafter referred to as ToledoGozun over two parcels of land described as follows: A parcel of land (Portion Lot Blk-1, Bureau of Lands Plan Psd, 26254. Bounded on the NE by Lot 3, on the SE by Lot 3; on the SW by Lot 1-B, Blk. 2 (equivalent to Lot 199-B Swo 23666; on the NW by AFP military reservation. Containing an area of 450,273 square meters, more or less and registered in the name of Maria Nieves Toledo-Gozun under TCT No. 8708 of the Register of Deeds of Pampanga. ..., and A parcel of land (Portion of lot 3, Blk-1, Bureau of Lands Plan Psd 26254. Bounded on the NE by Lot No. 3, on the SE by school lot and national road, on the SW by Lot 1-B Blk 2 (equivalent to Lot 199-B Swo 23666), on the NW by Lot 1-B, Blk-1. Containing an area of 88,772 square meters, more or less, and registered in the name of Maria Nieves Toledo Gozun under TCT No. 8708 of the Register of Deeds of Pampanga, .... In its complaint, the Republic alleged, among other things, that the fair market value of the above-mentioned lands, according to the Committee on Appraisal for the Province of Pampanga, was not more than P2,000 per hectare, or a total market value of P259,669.10; and

prayed, that the provisional value of the lands be fixed at P259.669.10, that the court authorizes plaintiff to take immediate possession of the lands upon deposit of that amount with the Provincial Treasurer of Pampanga; that the court appoints three commissioners to ascertain and report to the court the just compensation for the property sought to be expropriated, and that the court issues thereafter a final order of condemnation. On June 29, 1959 the trial court issued an order fixing the provisional value of the lands at P259,669.10. In her "motion to dismiss" filed on July 14, 1959, Castellvi alleged, among other things, that the land under her administration, being a residential land, had a fair market value of P15.00 per square meter, so it had a total market value of P11,389,485.00; that the Republic, through the Armed Forces of the Philippines, particularly the Philippine Air Force, had been, despite repeated demands, illegally occupying her property since July 1, 1956, thereby preventing her from using and disposing of it, thus causing her damages by way of unrealized profits. This defendant prayed that the complaint be dismissed, or that the Republic be ordered to pay her P15.00 per square meter, or a total of P11,389,485.00, plus interest thereon at 6% per annum from July 1, 1956; that the Republic be ordered to pay her P5,000,000.00 as unrealized profits, and the costs of the suit. By order of the trial court, dated August, 1959, Amparo C. Diaz, Dolores G. viuda de Gil, Paloma Castellvi, Carmen Castellvi, Rafael Castellvi, Luis Castellvi, Natividad Castellvi de Raquiza, Jose Castellvi and Consuelo Castellvi were allowed to intervene as parties defendants. Subsequently, Joaquin V. Gozun, Jr., husband of defendant Nieves Toledo Gozun, was also allowed by the court to intervene as a party defendant. After the Republic had deposited with the Provincial Treasurer of Pampanga the amount of P259,669.10, the trial court ordered that the Republic be placed in possession of the lands. The Republic was actually placed in possession of the lands on August 10, 1959.1 In her "motion to dismiss", dated October 22, 1959, Toledo-Gozun alleged, among other things, that her two parcels of land were residential lands, in fact a portion with an area of 343,303 square meters had already been subdivided into different lots for sale to the general public, and the remaining portion had already been set aside for expansion sites of the already completed subdivisions; that the fair market value of said lands was P15.00 per square meter, so they had a total market value of P8,085,675.00; and she prayed that the complaint be dismissed, or that she be paid the amount of P8,085,675.00, plus interest thereon at the rate of 6% per annum from October 13, 1959, and attorney's fees in the amount of P50,000.00. Intervenors Jose Castellvi and Consuelo Castellvi in their answer, filed on February 11, 1960, and also intervenor Joaquin Gozun, Jr., husband of defendant Maria Nieves Toledo-Gozun, in his motion to dismiss, dated May 27, 1960, all alleged that the value of the lands sought to be expropriated was at the rate of P15.00 per square meter. On November 4, 1959, the trial court authorized the Provincial Treasurer of Pampanga to pay defendant Toledo-Gozun the sum of P107,609.00 as provisional value of her lands.2 On May 16, 1960 the trial Court authorized the Provincial Treasurer of Pampanga to pay defendant Castellvi the amount of P151,859.80 as provisional value of the land under her administration, and ordered said defendant to deposit the amount with the Philippine National Bank under the

supervision of the Deputy Clerk of Court. In another order of May 16, 1960 the trial Court entered an order of condemnation.3 The trial Court appointed three commissioners: Atty. Amadeo Yuzon, Clerk of Court, as commissioner for the court; Atty. Felicisimo G. Pamandanan, counsel of the Philippine National Bank Branch at Floridablanca, for the plaintiff; and Atty. Leonardo F. Lansangan, Filipino legal counsel at Clark Air Base, for the defendants. The Commissioners, after having qualified themselves, proceeded to the performance of their duties. On March 15,1961 the Commissioners submitted their report and recommendation, wherein, after having determined that the lands sought to be expropriated were residential lands, they recommended unanimously that the lowest price that should be paid was P10.00 per square meter, for both the lands of Castellvi and Toledo-Gozun; that an additional P5,000.00 be paid to Toledo-Gozun for improvements found on her land; that legal interest on the compensation, computed from August 10, 1959, be paid after deducting the amounts already paid to the owners, and that no consequential damages be awarded.4 The Commissioners' report was objected to by all the parties in the case — by defendants Castellvi and Toledo-Gozun, who insisted that the fair market value of their lands should be fixed at P15.00 per square meter; and by the Republic, which insisted that the price to be paid for the lands should be fixed at P0.20 per square meter.5 After the parties-defendants and intervenors had filed their respective memoranda, and the Republic, after several extensions of time, had adopted as its memorandum its objections to the report of the Commissioners, the trial court, on May 26, 1961, rendered its decision6 the dispositive portion of which reads as follows: WHEREFORE, taking into account all the foregoing circumstances, and that the lands are titled, ... the rising trend of land values ..., and the lowered purchasing power of the Philippine peso, the court finds that the unanimous recommendation of the commissioners of ten (P10.00) pesos per square meter for the three lots of the defendants subject of this action is fair and just. xxx xxx xxx The plaintiff will pay 6% interest per annum on the total value of the lands of defendant Toledo-Gozun since (sic) the amount deposited as provisional value from August 10, 1959 until full payment is made to said defendant or deposit therefor is made in court. In respect to the defendant Castellvi, interest at 6% per annum will also be paid by the plaintiff to defendant Castellvi from July 1, 1956 when plaintiff commenced its illegal possession of the Castellvi land when the instant action had not yet been commenced to July 10, 1959 when the provisional value thereof was actually deposited in court, on the total value of the said (Castellvi) land as herein adjudged. The same rate of interest shall be paid from July 11, 1959 on the total value of the land herein adjudged minus the amount deposited as provisional value, or P151,859.80, such interest to run until full payment is made to said defendant or deposit therefor is made in court. All the intervenors having failed to produce evidence in support of their respective interventions, said interventions are ordered dismissed.

The costs shall be charged to the plaintiff. On June 21, 1961 the Republic filed a motion for a new trial and/or reconsideration, upon the grounds of newly-discovered evidence, that the decision was not supported by the evidence, and that the decision was against the law, against which motion defendants Castellvi and Toledo-Gozun filed their respective oppositions. On July 8, 1961 when the motion of the Republic for new trial and/or reconsideration was called for hearing, the Republic filed a supplemental motion for new trial upon the ground of additional newly-discovered evidence. This motion for new trial and/or reconsideration was denied by the court on July 12, 1961. On July 17, 1961 the Republic gave notice of its intention to appeal from the decision of May 26, 1961 and the order of July 12, 1961. Defendant Castellvi also filed, on July 17, 1961, her notice of appeal from the decision of the trial court. The Republic filed various ex-parte motions for extension of time within which to file its record on appeal. The Republic's record on appeal was finally submitted on December 6, 1961. Defendants Castellvi and Toledo-Gozun filed not only a joint opposition to the approval of the Republic's record on appeal, but also a joint memorandum in support of their opposition. The Republic also filed a memorandum in support of its prayer for the approval of its record on appeal. On December 27, 1961 the trial court issued an order declaring both the record on appeal filed by the Republic, and the record on appeal filed by defendant Castellvi as having been filed out of time, thereby dismissing both appeals. On January 11, 1962 the Republic filed a "motion to strike out the order of December 27, 1961 and for reconsideration", and subsequently an amended record on appeal, against which motion the defendants Castellvi and Toledo-Gozun filed their opposition. On July 26, 1962 the trial court issued an order, stating that "in the interest of expediency, the questions raised may be properly and finally determined by the Supreme Court," and at the same time it ordered the Solicitor General to submit a record on appeal containing copies of orders and pleadings specified therein. In an order dated November 19, 1962, the trial court approved the Republic's record on appeal as amended. Defendant Castellvi did not insist on her appeal. Defendant Toledo-Gozun did not appeal. The motion to dismiss the Republic's appeal was reiterated by appellees Castellvi and ToledoGozun before this Court, but this Court denied the motion. In her motion of August 11, 1964, appellee Castellvi sought to increase the provisional value of her land. The Republic, in its comment on Castellvi's motion, opposed the same. This Court denied Castellvi's motion in a resolution dated October 2,1964. The motion of appellees, Castellvi and Toledo-Gozun, dated October 6, 1969, praying that they be authorized to mortgage the lands subject of expropriation, was denied by this Court or October 14, 1969. On February 14, 1972, Attys. Alberto Cacnio, and Associates, counsel for the estate of the late Don Alfonso de Castellvi in the expropriation proceedings, filed a notice of attorney's lien, stating that as per agreement with the administrator of the estate of Don Alfonso de Castellvi

they shall receive by way of attorney's fees, "the sum equivalent to ten per centum of whatever the court may finally decide as the expropriated price of the property subject matter of the case." --------Before this Court, the Republic contends that the lower court erred: 1. In finding the price of P10 per square meter of the lands subject of the instant proceedings as just compensation; 2. In holding that the "taking" of the properties under expropriation commenced with the filing of this action; 3. In ordering plaintiff-appellant to pay 6% interest on the adjudged value of the Castellvi property to start from July of 1956; 4. In denying plaintiff-appellant's motion for new trial based on newly discovered evidence. In its brief, the Republic discusses the second error assigned as the first issue to be considered. We shall follow the sequence of the Republic's discussion. 1. In support of the assigned error that the lower court erred in holding that the "taking" of the properties under expropriation commenced with the filing of the complaint in this case, the Republic argues that the "taking" should be reckoned from the year 1947 when by virtue of a special lease agreement between the Republic and appellee Castellvi, the former was granted the "right and privilege" to buy the property should the lessor wish to terminate the lease, and that in the event of such sale, it was stipulated that the fair market value should be as of the time of occupancy; and that the permanent improvements amounting to more that half a million pesos constructed during a period of twelve years on the land, subject of expropriation, were indicative of an agreed pattern of permanency and stability of occupancy by the Philippine Air Force in the interest of national Security.7 Appellee Castellvi, on the other hand, maintains that the "taking" of property under the power of eminent domain requires two essential elements, to wit: (1) entrance and occupation by condemn or upon the private property for more than a momentary or limited period, and (2) devoting it to a public use in such a way as to oust the owner and deprive him of all beneficial enjoyment of the property. This appellee argues that in the instant case the first element is wanting, for the contract of lease relied upon provides for a lease from year to year; that the second element is also wanting, because the Republic was paying the lessor Castellvi a monthly rental of P445.58; and that the contract of lease does not grant the Republic the "right and privilege" to buy the premises "at the value at the time of occupancy."8 Appellee Toledo-Gozun did not comment on the Republic's argument in support of the second error assigned, because as far as she was concerned the Republic had not taken possession of her lands prior to August 10, 1959.9 In order to better comprehend the issues raised in the appeal, in so far as the Castellvi property is concerned, it should be noted that the Castellvi property had been occupied by the Philippine

Air Force since 1947 under a contract of lease, typified by the contract marked Exh. 4-Castellvi, the pertinent portions of which read: CONTRACT OF LEASE This AGREEMENT OF LEASE MADE AND ENTERED into by and between INTESTATE ESTATE OF ALFONSO DE CASTELLVI, represented by CARMEN M. DE CASTELLVI, Judicial Administratrix ... hereinafter called the LESSOR and THE REPUBLIC OF THE PHILIPPINES represented by MAJ. GEN. CALIXTO DUQUE, Chief of Staff of the ARMED FORCES OF THE PHILIPPINES, hereinafter called the LESSEE, WITNESSETH: 1. For and in consideration of the rentals hereinafter reserved and the mutual terms, covenants and conditions of the parties, the LESSOR has, and by these presents does, lease and let unto the LESSEE the following described land together with the improvements thereon and appurtenances thereof, viz: Un Terreno, Lote No. 27 del Plano de subdivision Psu 34752, parte de la hacienda de Campauit, situado en el Barrio de San Jose, Municipio de Floridablanca Pampanga. ... midiendo una extension superficial de cuatro milliones once mil cuatro cientos trienta y cinco (4,001,435) [sic] metros cuadrados, mas o menos. Out of the above described property, 75.93 hectares thereof are actually occupied and covered by this contract. . Above lot is more particularly described in TCT No. 1016, province of Pampanga ... of which premises, the LESSOR warrants that he/she/they/is/are the registered owner(s) and with full authority to execute a contract of this nature. 2. The term of this lease shall be for the period beginning July 1, 1952 the date the premises were occupied by the PHILIPPINE AIR FORCE, AFP until June 30, 1953, subject to renewal for another year at the option of the LESSEE or unless sooner terminated by the LESSEE as hereinafter provided. 3. The LESSOR hereby warrants that the LESSEE shall have quiet, peaceful and undisturbed possession of the demised premises throughout the full term or period of this lease and the LESSOR undertakes without cost to the LESSEE to eject all trespassers, but should the LESSOR fail to do so, the LESSEE at its option may proceed to do so at the expense of the LESSOR. The LESSOR further agrees that should he/she/they sell or encumber all or any part of the herein described premises during the period of this lease, any conveyance will be conditioned on the right of the LESSEE hereunder. 4. The LESSEE shall pay to the LESSOR as monthly rentals under this lease the sum of FOUR HUNDRED FIFTY-FIVE PESOS & 58/100 (P455.58) ...

5. The LESSEE may, at any time prior to the termination of this lease, use the property for any purpose or purposes and, at its own costs and expense make alteration, install facilities and fixtures and errect additions ... which facilities or fixtures ... so placed in, upon or attached to the said premises shall be and remain property of the LESSEE and may be removed therefrom by the LESSEE prior to the termination of this lease. The LESSEE shall surrender possession of the premises upon the expiration or termination of this lease and if so required by the LESSOR, shall return the premises in substantially the same condition as that existing at the time same were first occupied by the AFP, reasonable and ordinary wear and tear and damages by the elements or by circumstances over which the LESSEE has no control excepted: PROVIDED, that if the LESSOR so requires the return of the premises in such condition, the LESSOR shall give written notice thereof to the LESSEE at least twenty (20) days before the termination of the lease and provided, further, that should the LESSOR give notice within the time specified above, the LESSEE shall have the right and privilege to compensate the LESSOR at the fair value or the equivalent, in lieu of performance of its obligation, if any, to restore the premises. Fair value is to be determined as the value at the time of occupancy less fair wear and tear and depreciation during the period of this lease. 6. The LESSEE may terminate this lease at any time during the term hereof by giving written notice to the LESSOR at least thirty (30) days in advance ... 7. The LESSEE should not be responsible, except under special legislation for any damages to the premises by reason of combat operations, acts of GOD, the elements or other acts and deeds not due to the negligence on the part of the LESSEE. 8. This LEASE AGREEMENT supersedes and voids any and all agreements and undertakings, oral or written, previously entered into between the parties covering the property herein leased, the same having been merged herein. This AGREEMENT may not be modified or altered except by instrument in writing only duly signed by the parties. 10 It was stipulated by the parties, that "the foregoing contract of lease (Exh. 4, Castellvi) is 'similar in terms and conditions, including the date', with the annual contracts entered into from year to year between defendant Castellvi and the Republic of the Philippines (p. 17, t.s.n., Vol. III)". 11 It is undisputed, therefore, that the Republic occupied Castellvi's land from July 1, 1947, by virtue of the above-mentioned contract, on a year to year basis (from July 1 of each year to June 30 of the succeeding year) under the terms and conditions therein stated. Before the expiration of the contract of lease on June 30, 1956 the Republic sought to renew the same but Castellvi refused. When the AFP refused to vacate the leased premises after the termination of the contract, on July 11, 1956, Castellvi wrote to the Chief of Staff, AFP, informing the latter that the heirs of the property had decided not to continue leasing the property in question because they had decided to subdivide the land for sale to the general public, demanding that the property be vacated within 30 days from receipt of the letter, and that the premises be returned in substantially the same condition as before occupancy (Exh. 5 — Castellvi). A follow-up letter was sent on January 12, 1957, demanding the delivery and return of the property within one month from said date (Exh. 6 Castellvi). On January 30, 1957,

Lieutenant General Alfonso Arellano, Chief of Staff, answered the letter of Castellvi, saying that it was difficult for the army to vacate the premises in view of the permanent installations and other facilities worth almost P500,000.00 that were erected and already established on the property, and that, there being no other recourse, the acquisition of the property by means of expropriation proceedings would be recommended to the President (Exhibit "7" — Castellvi). Defendant Castellvi then brought suit in the Court of First Instance of Pampanga, in Civil Case No. 1458, to eject the Philippine Air Force from the land. While this ejectment case was pending, the Republic instituted these expropriation proceedings, and, as stated earlier in this opinion, the Republic was placed in possession of the lands on August 10, 1959, On November 21, 1959, the Court of First Instance of Pampanga, dismissed Civil Case No. 1458, upon petition of the parties, in an order which, in part, reads as follows: 1. Plaintiff has agreed, as a matter of fact has already signed an agreement with defendants, whereby she has agreed to receive the rent of the lands, subject matter of the instant case from June 30, 1966 up to 1959 when the Philippine Air Force was placed in possession by virtue of an order of the Court upon depositing the provisional amount as fixed by the Provincial Appraisal Committee with the Provincial Treasurer of Pampanga; 2. That because of the above-cited agreement wherein the administratrix decided to get the rent corresponding to the rent from 1956 up to 1959 and considering that this action is one of illegal detainer and/or to recover the possession of said land by virtue of non-payment of rents, the instant case now has become moot and academic and/or by virtue of the agreement signed by plaintiff, she has waived her cause of action in the above-entitled case. 12 The Republic urges that the "taking " of Castellvi's property should be deemed as of the year 1947 by virtue of afore-quoted lease agreement. In American Jurisprudence, Vol. 26, 2nd edition, Section 157, on the subject of "Eminent Domain, we read the definition of "taking" (in eminent domain) as follows: Taking' under the power of eminent domain may be defined generally as entering upon private property for more than a momentary period, and, under the warrant or color of legal authority, devoting it to a public use, or otherwise informally appropriating or injuriously affecting it in such a way as substantially to oust the owner and deprive him of all beneficial enjoyment thereof. 13 Pursuant to the aforecited authority, a number of circumstances must be present in the "taking" of property for purposes of eminent domain. First, the expropriator must enter a private property. This circumstance is present in the instant case, when by virtue of the lease agreement the Republic, through the AFP, took possession of the property of Castellvi. Second, the entrance into private property must be for more than a momentary period. "Momentary" means, "lasting but a moment; of but a moment's duration" (The Oxford English Dictionary, Volume VI, page 596); "lasting a very short time; transitory; having a very brief life; operative or recurring at every moment" (Webster's Third International Dictionary, 1963 edition.) The word "momentary" when applied to possession or occupancy of (real) property should be

construed to mean "a limited period" — not indefinite or permanent. The aforecited lease contract was for a period of one year, renewable from year to year. The entry on the property, under the lease, is temporary, and considered transitory. The fact that the Republic, through the AFP, constructed some installations of a permanent nature does not alter the fact that the entry into the land was transitory, or intended to last a year, although renewable from year to year by consent of 'The owner of the land. By express provision of the lease agreement the Republic, as lessee, undertook to return the premises in substantially the same condition as at the time the property was first occupied by the AFP. It is claimed that the intention of the lessee was to occupy the land permanently, as may be inferred from the construction of permanent improvements. But this "intention" cannot prevail over the clear and express terms of the lease contract. Intent is to be deduced from the language employed by the parties, and the terms 'of the contract, when unambiguous, as in the instant case, are conclusive in the absence of averment and proof of mistake or fraud — the question being not what the intention was, but what is expressed in the language used. (City of Manila v. Rizal Park Co., Inc., 53 Phil. 515, 525); Magdalena Estate, Inc. v. Myrick, 71 Phil. 344, 348). Moreover, in order to judge the intention of the contracting parties, their contemporaneous and subsequent acts shall be principally considered (Art. 1371, Civil Code). If the intention of the lessee (Republic) in 1947 was really to occupy permanently Castellvi's property, why was the contract of lease entered into on year to year basis? Why was the lease agreement renewed from year to year? Why did not the Republic expropriate this land of Castellvi in 1949 when, according to the Republic itself, it expropriated the other parcels of land that it occupied at the same time as the Castellvi land, for the purpose of converting them into a jet air base? 14 It might really have been the intention of the Republic to expropriate the lands in question at some future time, but certainly mere notice - much less an implied notice — of such intention on the part of the Republic to expropriate the lands in the future did not, and could not, bind the landowner, nor bind the land itself. The expropriation must be actually commenced in court (Republic vs. Baylosis, et al., 96 Phil. 461, 484). Third, the entry into the property should be under warrant or color of legal authority. This circumstance in the "taking" may be considered as present in the instant case, because the Republic entered the Castellvi property as lessee. Fourth, the property must be devoted to a public use or otherwise informally appropriated or injuriously affected. It may be conceded that the circumstance of the property being devoted to public use is present because the property was used by the air force of the AFP. Fifth, the utilization of the property for public use must be in such a way as to oust the owner and deprive him of all beneficial enjoyment of the property. In the instant case, the entry of the Republic into the property and its utilization of the same for public use did not oust Castellvi and deprive her of all beneficial enjoyment of the property. Castellvi remained as owner, and was continuously recognized as owner by the Republic, as shown by the renewal of the lease contract from year to year, and by the provision in the lease contract whereby the Republic undertook to return the property to Castellvi when the lease was terminated. Neither was Castellvi deprived of all the beneficial enjoyment of the property, because the Republic was bound to pay, and had been paying, Castellvi the agreed monthly rentals until the time when it filed the complaint for eminent domain on June 26, 1959. It is clear, therefore, that the "taking" of Catellvi's property for purposes of eminent domain cannot be considered to have taken place in 1947 when the Republic commenced to occupy the property as lessee thereof. We find merit in the contention of Castellvi that two essential

elements in the "taking" of property under the power of eminent domain, namely: (1) that the entrance and occupation by the condemnor must be for a permanent, or indefinite period, and (2) that in devoting the property to public use the owner was ousted from the property and deprived of its beneficial use, were not present when the Republic entered and occupied the Castellvi property in 1947. Untenable also is the Republic's contention that although the contract between the parties was one of lease on a year to year basis, it was "in reality a more or less permanent right to occupy the premises under the guise of lease with the 'right and privilege' to buy the property should the lessor wish to terminate the lease," and "the right to buy the property is merged as an integral part of the lease relationship ... so much so that the fair market value has been agreed upon, not, as of the time of purchase, but as of the time of occupancy" 15 We cannot accept the Republic's contention that a lease on a year to year basis can give rise to a permanent right to occupy, since by express legal provision a lease made for a determinate time, as was the lease of Castellvi's land in the instant case, ceases upon the day fixed, without need of a demand (Article 1669, Civil Code). Neither can it be said that the right of eminent domain may be exercised by simply leasing the premises to be expropriated (Rule 67, Section 1, Rules of Court). Nor can it be accepted that the Republic would enter into a contract of lease where its real intention was to buy, or why the Republic should enter into a simulated contract of lease ("under the guise of lease", as expressed by counsel for the Republic) when all the time the Republic had the right of eminent domain, and could expropriate Castellvi's land if it wanted to without resorting to any guise whatsoever. Neither can we see how a right to buy could be merged in a contract of lease in the absence of any agreement between the parties to that effect. To sustain the contention of the Republic is to sanction a practice whereby in order to secure a low price for a land which the government intends to expropriate (or would eventually expropriate) it would first negotiate with the owner of the land to lease the land (for say ten or twenty years) then expropriate the same when the lease is about to terminate, then claim that the "taking" of the property for the purposes of the expropriation be reckoned as of the date when the Government started to occupy the property under the lease, and then assert that the value of the property being expropriated be reckoned as of the start of the lease, in spite of the fact that the value of the property, for many good reasons, had in the meantime increased during the period of the lease. This would be sanctioning what obviously is a deceptive scheme, which would have the effect of depriving the owner of the property of its true and fair market value at the time when the expropriation proceedings were actually instituted in court. The Republic's claim that it had the "right and privilege" to buy the property at the value that it had at the time when it first occupied the property as lessee nowhere appears in the lease contract. What was agreed expressly in paragraph No. 5 of the lease agreement was that, should the lessor require the lessee to return the premises in the same condition as at the time the same was first occupied by the AFP, the lessee would have the "right and privilege" (or option) of paying the lessor what it would fairly cost to put the premises in the same condition as it was at the commencement of the lease, in lieu of the lessee's performance of the undertaking to put the land in said condition. The "fair value" at the time of occupancy, mentioned in the lease agreement, does not refer to the value of the property if bought by the lessee, but refers to the cost of restoring the property in the same condition as of the time when the lessee took possession of the property. Such fair value cannot refer to the purchase price, for purchase was never intended by the parties to the lease contract. It is a rule in the interpretation of contracts that "However general the terms of a contract may be, they shall not be understood to comprehend things that are distinct and cases that are different from those upon which the parties intended to agree" (Art. 1372, Civil Code).

We hold, therefore, that the "taking" of the Castellvi property should not be reckoned as of the year 1947 when the Republic first occupied the same pursuant to the contract of lease, and that the just compensation to be paid for the Castellvi property should not be determined on the basis of the value of the property as of that year. The lower court did not commit an error when it held that the "taking" of the property under expropriation commenced with the filing of the complaint in this case. Under Section 4 of Rule 67 of the Rules of Court, 16 the "just compensation" is to be determined as of the date of the filing of the complaint. This Court has ruled that when the taking of the property sought to be expropriated coincides with the commencement of the expropriation proceedings, or takes place subsequent to the filing of the complaint for eminent domain, the just compensation should be determined as of the date of the filing of the complaint. (Republic vs. Philippine National Bank, L-14158, April 12, 1961, 1 SCRA 957, 961-962). In the instant case, it is undisputed that the Republic was placed in possession of the Castellvi property, by authority of the court, on August 10, 1959. The "taking" of the Castellvi property for the purposes of determining the just compensation to be paid must, therefore, be reckoned as of June 26, 1959 when the complaint for eminent domain was filed. Regarding the two parcels of land of Toledo-Gozun, also sought to be expropriated, which had never been under lease to the Republic, the Republic was placed in possession of said lands, also by authority of the court, on August 10, 1959, The taking of those lands, therefore, must also be reckoned as of June 26, 1959, the date of the filing of the complaint for eminent domain. 2. Regarding the first assigned error — discussed as the second issue — the Republic maintains that, even assuming that the value of the expropriated lands is to be determined as of June 26, 1959, the price of P10.00 per square meter fixed by the lower court "is not only exhorbitant but also unconscionable, and almost fantastic". On the other hand, both Castellvi and Toledo-Gozun maintain that their lands are residential lands with a fair market value of not less than P15.00 per square meter. The lower court found, and declared, that the lands of Castellvi and Toledo-Gozun are residential lands. The finding of the lower court is in consonance with the unanimous opinion of the three commissioners who, in their report to the court, declared that the lands are residential lands. The Republic assails the finding that the lands are residential, contending that the plans of the appellees to convert the lands into subdivision for residential purposes were only on paper, there being no overt acts on the part of the appellees which indicated that the subdivision project had been commenced, so that any compensation to be awarded on the basis of the plans would be speculative. The Republic's contention is not well taken. We find evidence showing that the lands in question had ceased to be devoted to the production of agricultural crops, that they had become adaptable for residential purposes, and that the appellees had actually taken steps to convert their lands into residential subdivisions even before the Republic filed the complaint for eminent domain. In the case of City of Manila vs. Corrales (32 Phil. 82, 98) this Court laid down basic guidelines in determining the value of the property expropriated for public purposes. This Court said: In determining the value of land appropriated for public purposes, the same consideration are to be regarded as in a sale of property between private parties. The inquiry, in such cases, must be what is the property worth in the market,

viewed not merely with reference to the uses to which it is at the time applied, but with reference to the uses to which it is plainly adapted, that is to say, What is it worth from its availability for valuable uses? So many and varied are the circumstances to be taken into account in determining the value of property condemned for public purposes, that it is practically impossible to formulate a rule to govern its appraisement in all cases. Exceptional circumstances will modify the most carefully guarded rule, but, as a general thing, we should say that the compensation of the owner is to be estimated by reference to the use for which the property is suitable, having regard to the existing business or wants of the community, or such as may be reasonably expected in the immediate future. (Miss. and Rum River Boom Co. vs. Patterson, 98 U.S., 403). In expropriation proceedings, therefore, the owner of the land has the right to its value for the use for which it would bring the most in the market. 17 The owner may thus show every advantage that his property possesses, present and prospective, in order that the price it could be sold for in the market may be satisfactorily determined. 18 The owner may also show that the property is suitable for division into village or town lots. 19 The trial court, therefore, correctly considered, among other circumstances, the proposed subdivision plans of the lands sought to be expropriated in finding that those lands are residential lots. This finding of the lower court is supported not only by the unanimous opinion of the commissioners, as embodied in their report, but also by the Provincial Appraisal Committee of the province of Pampanga composed of the Provincial Treasurer, the Provincial Auditor and the District Engineer. In the minutes of the meeting of the Provincial Appraisal Committee, held on May 14, 1959 (Exh. 13-Castellvi) We read in its Resolution No. 10 the following: 3. Since 1957 the land has been classified as residential in view of its proximity to the air base and due to the fact that it was not being devoted to agriculture. In fact, there is a plan to convert it into a subdivision for residential purposes. The taxes due on the property have been paid based on its classification as residential land; The evidence shows that Castellvi broached the idea of subdividing her land into residential lots as early as July 11, 1956 in her letter to the Chief of Staff of the Armed Forces of the Philippines. (Exh. 5-Castellvi) As a matter of fact, the layout of the subdivision plan was tentatively approved by the National Planning Commission on September 7, 1956. (Exh. 8Castellvi). 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 4Toledo-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-ToledoGozun). 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 ToledoGozun were classified partly as sugar land and partly as urban land, and that the sugar land was assessed at P.40 per square meter, while part of the urban land was assessed at P.40 per square meter and part at P.20 per square meter; and that in 1956 the Castellvi land was classified as sugar land and was assessed at P450.00 per hectare, or P.045 per square meter. We can not also consider this certification of the Acting Assistant Provincial Assessor as a basis for fixing the fair market value of the lands of Castellvi and Toledo-Gozun because, as the evidence shows, the lands in question, in 1957, were already classified and assessed for taxation purposes as residential lands. The certification of the assessor refers to the year 1950 as far as the lands of Toledo-Gozun are concerned, and to the year 1956 as far as the land of Castellvi is concerned. Moreover, this Court has held that the valuation fixed for the purposes of the assessment of the land for taxation purposes can not bind the landowner where the latter did not intervene in fixing it. 25 On the other hand, the Commissioners, appointed by the court to appraise the lands that were being expropriated, recommended to the court that the price of P10.00 per square meter would be the fair market value of the lands. The commissioners made their recommendation on the basis of their observation after several ocular inspections of the lands, of their own personal knowledge of land values in the province of Pampanga, of the testimonies of the owners of the land, and other witnesses, and of documentary evidence presented by the appellees. Both Castellvi and Toledo-Gozun testified that the fair market value of their respective land was at P15.00 per square meter. The documentary evidence considered by the commissioners consisted of deeds of sale of residential lands in the town of San Fernando and in Angeles City, in the province of Pampanga, which were sold at prices ranging from P8.00 to P20.00 per square meter (Exhibits 15, 16, 17, 18, 19, 20, 21, 22, 23-Castellvi). The commissioners also considered the decision in Civil Case No. 1531 of the Court of First Instance of Pampanga, entitled Republic vs. Sabina Tablante, which was expropriation case filed on January 13, 1959, involving a parcel of land adjacent to the Clark Air Base in Angeles City, where the court fixed the price at P18.00 per square meter (Exhibit 14-Castellvi). In their report, the commissioners, among other things, said: ... This expropriation case is specially pointed out, because the circumstances and factors involved therein are similar in many respects to the defendants' lands in this case. The land in Civil Case No. 1531 of this Court and the lands in the present case (Civil Case No. 1623) are both near the air bases, the Clark Air Base and the Basa Air Base respectively. There is a national road fronting them and are situated in a first-class municipality. As added advantage it may be said

that the Basa Air Base land is very near the sugar mill at Del Carmen, Floridablanca, Pampanga, owned by the Pampanga Sugar Mills. Also just stone's throw away from the same lands is a beautiful vacation spot at Palacol, a sitio of the town of Floridablanca, which counts with a natural swimming pool for vacationists on weekends. These advantages are not found in the case of the Clark Air Base. The defendants' lands are nearer to the poblacion of Floridablanca then Clark Air Base is nearer (sic) to the poblacion of Angeles, Pampanga. The deeds of absolute sale, according to the undersigned commissioners, as well as the land in Civil Case No. 1531 are competent evidence, because they were executed during the year 1959 and before August 10 of the same year. More specifically so the land at Clark Air Base which coincidentally is the subject matter in the complaint in said Civil Case No. 1531, it having been filed on January 13, 1959 and the taking of the land involved therein was ordered by the Court of First Instance of Pampanga on January 15, 1959, several months before the lands in this case were taken by the plaintiffs .... From the above and considering further that the lowest as well as the highest price per square meter obtainable in the market of Pampanga relative to subdivision lots within its jurisdiction in the year 1959 is very well known by the Commissioners, the Commission finds that the lowest price that can be awarded to the lands in question is P10.00 per square meter. 26 The lower court did not altogether accept the findings of the Commissioners based on the documentary evidence, but it considered the documentary evidence as basis for comparison in determining land values. The lower court arrived at the conclusion that "the unanimous recommendation of the commissioners of ten (P10.00) pesos per square meter for the three lots of the defendants subject of this action is fair and just". 27 In arriving at its conclusion, the lower court took into consideration, among other circumstances, that the lands are titled, that there is a rising trend of land values, and the lowered purchasing power of the Philippine peso. In the case of Manila Railroad Co. vs. Caligsihan, 40 Phil. 326, 328, this Court said: A court of first instance or, on appeal, the Supreme Court, may change or modify the report of the commissioners by increasing or reducing the amount of the award if the facts of the case so justify. While great weight is attached to the report of the commissioners, yet a court may substitute therefor its estimate of the value of the property as gathered from the record in certain cases, as, where the commissioners have applied illegal principles to the evidence submitted to them, or where they have disregarded a clear preponderance of evidence, or where the amount allowed is either palpably inadequate or excessive. 28 The report of the commissioners of appraisal in condemnation proceedings are not binding, but merely advisory in character, as far as the court is concerned. 29 In our analysis of the report of the commissioners, We find points that merit serious consideration in the determination of the just compensation that should be paid to Castellvi and Toledo-Gozun for their lands. It should be noted that the commissioners had made ocular inspections of the lands and had considered the nature and similarities of said lands in relation to the lands in other places in the province of Pampanga, like San Fernando and Angeles City. We cannot disregard the observations of the

commissioners regarding the circumstances that make the lands in question suited for residential purposes — their location near the Basa Air Base, just like the lands in Angeles City that are near the Clark Air Base, and the facilities that obtain because of their nearness to the big sugar central of the Pampanga Sugar mills, and to the flourishing first class town of Floridablanca. It is true that the lands in question are not in the territory of San Fernando and Angeles City, but, considering the facilities of modern communications, the town of Floridablanca may be considered practically adjacent to San Fernando and Angeles City. It is not out of place, therefore, to compare the land values in Floridablanca to the land values in San Fernando and Angeles City, and form an idea of the value of the lands in Floridablanca with reference to the land values in those two other communities. The important factor in expropriation proceeding is that the owner is awarded the just compensation for his property. We have carefully studied the record, and the evidence, in this case, and after considering the circumstances attending the lands in question We have arrived at the conclusion that the price of P10.00 per square meter, as recommended by the commissioners and adopted by the lower court, is quite high. It is Our considered view that the price of P5.00 per square meter would be a fair valuation of the lands in question and would constitute a just compensation to the owners thereof. In arriving at this conclusion We have particularly taken into consideration the resolution of the Provincial Committee on Appraisal of the province of Pampanga informing, among others, that in the year 1959 the land of Castellvi could be sold for from P3.00 to P4.00 per square meter, while the land of Toledo-Gozun could be sold for from P2.50 to P3.00 per square meter. The Court has weighed all the circumstances relating to this expropriations proceedings, and in fixing the price of the lands that are being expropriated the Court arrived at a happy medium between the price as recommended by the commissioners and approved by the court, and the price advocated by the Republic. This Court has also taken judicial notice of the fact that the value of the Philippine peso has considerably gone down since the year 1959. 30 Considering that the lands of Castellvi and Toledo-Gozun are adjoining each other, and are of the same nature, the Court has deemed it proper to fix the same price for all these lands. 3. The third issue raised by the Republic relates to the payment of interest. The Republic maintains that the lower court erred when it ordered the Republic to pay Castellvi interest at the rate of 6% per annum on the total amount adjudged as the value of the land of Castellvi, from July 1, 1956 to July 10, 1959. We find merit in this assignment of error. In ordering the Republic to pay 6% interest on the total value of the land of Castellvi from July 1, 1956 to July 10, 1959, the lower court held that the Republic had illegally possessed the land of Castellvi from July 1, 1956, after its lease of the land had expired on June 30, 1956, until August 10, 1959 when the Republic was placed in possession of the land pursuant to the writ of possession issued by the court. What really happened was that the Republic continued to occupy the land of Castellvi after the expiration of its lease on June 30, 1956, so much so that Castellvi filed an ejectment case against the Republic in the Court of First Instance of Pampanga. 31 However, while that ejectment case was pending, the Republic filed the complaint for eminent domain in the present case and was placed in possession of the land on August 10, 1959, and because of the institution of the expropriation proceedings the ejectment case was later dismissed. In the order dismissing the ejectment case, the Court of First Instance of Pampanga said:

Plaintiff has agreed, as a matter of fact has already signed an agreement with defendants, whereby she had agreed to receive the rent of the lands, subject matter of the instant case from June 30, 1956 up to 1959 when the Philippine Air Force was placed in possession by virtue of an order of the Court upon depositing the provisional amount as fixed by the Provincial Appraisal Committee with the Provincial Treasurer of Pampanga; ... If Castellvi had agreed to receive the rentals from June 30, 1956 to August 10, 1959, she should be considered as having allowed her land to be leased to the Republic until August 10, 1959, and she could not at the same time be entitled to the payment of interest during the same period on the amount awarded her as the just compensation of her land. The Republic, therefore, should pay Castellvi interest at the rate of 6% per annum on the value of her land, minus the provisional value that was deposited, only from July 10, 1959 when it deposited in court the provisional value of the land. 4. The fourth error assigned by the Republic relates to the denial by the lower court of its motion for a new trial based on nearly discovered evidence. We do not find merit in this assignment of error. After the lower court had decided this case on May 26, 1961, the Republic filed a motion for a new trial, supplemented by another motion, both based upon the ground of newly discovered evidence. The alleged newly discovered evidence in the motion filed on June 21, 1961 was a deed of absolute sale-executed on January 25, 1961, showing that a certain Serafin Francisco had sold to Pablo L. Narciso a parcel of sugar land having an area of 100,000 square meters with a sugar quota of 100 piculs, covered by P.A. No. 1701, situated in Barrio Fortuna, Floridablanca, for P14,000, or P.14 per square meter. In the supplemental motion, the alleged newly discovered evidence were: (1) a deed of sale of some 35,000 square meters of land situated at Floridablanca for P7,500.00 (or about P.21 per square meter) executed in July, 1959, by the spouses Evelyn D. Laird and Cornelio G. Laird in favor of spouses Bienvenido S. Aguas and Josefina Q. Aguas; and (2) a deed of absolute sale of a parcel of land having an area of 4,120,101 square meters, including the sugar quota covered by Plantation Audit No. 161 1345, situated at Floridablanca, Pampanga, for P860.00 per hectare (a little less than P.09 per square meter) executed on October 22, 1957 by Jesus Toledo y Mendoza in favor of the Land Tenure Administration. We find that the lower court acted correctly when it denied the motions for a new trial. To warrant the granting of a new trial based on the ground of newly discovered evidence, it must appear that the evidence was discovered after the trial; that even with the exercise of due diligence, the evidence could not have been discovered and produced at the trial; and that the evidence is of such a nature as to alter the result of the case if admitted. 32 The lower court correctly ruled that these requisites were not complied with. The lower court, in a well-reasoned order, found that the sales made by Serafin Francisco to Pablo Narciso and that made by Jesus Toledo to the Land Tenure Administration were immaterial and irrelevant, because those sales covered sugarlands with sugar quotas, while the lands sought to be expropriated in the instant case are residential lands. The lower court also concluded that the land sold by the spouses Laird to the spouses Aguas was a sugar land.

We agree with the trial court. In eminent domain proceedings, in order that evidence as to the sale price of other lands may be admitted in evidence to prove the fair market value of the land sought to be expropriated, the lands must, among other things, be shown to be similar. But even assuming, gratia argumenti, that the lands mentioned in those deeds of sale were residential, the evidence would still not warrant the grant of a new trial, for said evidence could have been discovered and produced at the trial, and they cannot be considered newly discovered evidence as contemplated in Section 1(b) of Rule 37 of the Rules of Court. Regarding this point, the trial court said: The Court will now show that there was no reasonable diligence employed. The land described in the deed of sale executed by Serafin Francisco, copy of which is attached to the original motion, is covered by a Certificate of Title issued by the Office of the Register of Deeds of Pampanga. There is no question in the mind of the court but this document passed through the Office of the Register of Deeds for the purpose of transferring the title or annotating the sale on the certificate of title. It is true that Fiscal Lagman went to the Office of the Register of Deeds to check conveyances which may be presented in the evidence in this case as it is now sought to be done by virtue of the motions at bar, Fiscal Lagman, one of the lawyers of the plaintiff, did not exercise reasonable diligence as required by the rules. The assertion that he only went to the office of the Register of Deeds 'now and then' to check the records in that office only shows the half-hazard [sic] manner by which the plaintiff looked for evidence to be presented during the hearing before the Commissioners, if it is at all true that Fiscal Lagman did what he is supposed to have done according to Solicitor Padua. It would have been the easiest matter for plaintiff to move for the issuance of a subpoena duces tecum directing the Register of Deeds of Pampanga to come to testify and to bring with him all documents found in his office pertaining to sales of land in Floridablanca adjacent to or near the lands in question executed or recorded from 1958 to the present. Even this elementary precaution was not done by plaintiff's numerous attorneys. The same can be said of the deeds of sale attached to the supplementary motion. They refer to lands covered by certificate of title issued by the Register of Deeds of Pampanga. For the same reason they could have been easily discovered if reasonable diligence has been exerted by the numerous lawyers of the plaintiff in this case. It is noteworthy that all these deeds of sale could be found in several government offices, namely, in the Office of the Register of Deeds of Pampanga, the Office of the Provincial Assessor of Pampanga, the Office of the Clerk of Court as a part of notarial reports of notaries public that acknowledged these documents, or in the archives of the National Library. In respect to Annex 'B' of the supplementary motion copy of the document could also be found in the Office of the Land Tenure Administration, another government entity. Any lawyer with a modicum of ability handling this expropriation case would have right away though [sic] of digging up documents diligently showing conveyances of lands near or around the parcels of land sought to be expropriated in this case in the offices that would have naturally come to his mind such as the offices mentioned above, and had counsel for the movant really exercised the reasonable diligence required by the Rule'

undoubtedly they would have been able to find these documents and/or caused the issuance of subpoena duces tecum. ... It is also recalled that during the hearing before the Court of the Report and Recommendation of the Commissioners and objection thereto, Solicitor Padua made the observation: I understand, Your Honor, that there was a sale that took place in this place of land recently where the land was sold for P0.20 which is contiguous to this land. The Court gave him permission to submit said document subject to the approval of the Court. ... This was before the decision was rendered, and later promulgated on May 26, 1961 or more than one month after Solicitor Padua made the above observation. He could have, therefore, checked up the alleged sale and moved for a reopening to adduce further evidence. He did not do so. He forgot to present the evidence at a more propitious time. Now, he seeks to introduce said evidence under the guise of newly-discovered evidence. Unfortunately the Court cannot classify it as newly-discovered evidence, because tinder the circumstances, the correct qualification that can be given is 'forgotten evidence'. Forgotten however, is not newly-discovered evidence. 33 The granting or denial of a motion for new trial is, as a general rule, discretionary with the trial court, whose judgment should not be disturbed unless there is a clear showing of abuse of discretion. 34 We do not see any abuse of discretion on the part of the lower court when it denied the motions for a new trial. WHEREFORE, the decision appealed from is modified, as follows: (a) the lands of appellees Carmen Vda. de Castellvi and Maria Nieves ToledoGozun, 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. G.R. No. L-34915 June 24, 1983 CITY GOVERNMENT OF QUEZON CITY and CITY COUNCIL OF QUEZON CITY, petitioners, vs. HON. JUDGE VICENTE G. ERICTA as Judge of the Court of First Instance of Rizal, Quezon City, Branch XVIII; HIMLAYANG PILIPINO, INC., respondents. City Fiscal for petitioners. Manuel Villaruel, Jr. and Feliciano Tumale for respondents.

GUTIERREZ, JR., J.: This is a petition for review which seeks the reversal of the decision of the Court of First Instance of Rizal, Branch XVIII declaring Section 9 of Ordinance No. 6118, S-64, of the Quezon City Council null and void. Section 9 of Ordinance No. 6118, S-64, entitled "ORDINANCE REGULATING THE ESTABLISHMENT, MAINTENANCE AND OPERATION OF PRIVATE MEMORIAL TYPE CEMETERY OR BURIAL GROUND WITHIN THE JURISDICTION OF QUEZON CITY AND PROVIDING PENALTIES FOR THE VIOLATION THEREOF" provides: Sec. 9. At least six (6) percent of the total area of the memorial park cemetery shall be set aside for charity burial of deceased persons who are paupers and have been residents of Quezon City for at least 5 years prior to their death, to be determined by competent City Authorities. The area so designated shall immediately be developed and should be open for operation not later than six months from the date of approval of the application. For several years, the aforequoted section of the Ordinance was not enforced by city authorities but seven years after the enactment of the ordinance, the Quezon City Council passed the following resolution: RESOLVED by the council of Quezon assembled, to request, as it does hereby request the City Engineer, Quezon City, to stop any further selling and/or transaction of memorial park lots in Quezon City where the owners thereof have failed to donate the required 6% space intended for paupers burial. Pursuant to this petition, the Quezon City Engineer notified respondent Himlayang Pilipino, Inc. in writing that Section 9 of Ordinance No. 6118, S-64 would be enforced Respondent Himlayang Pilipino reacted by filing with the Court of First Instance of Rizal Branch XVIII at Quezon City, a petition for declaratory relief, prohibition and mandamus with preliminary

injunction (Sp. Proc. No. Q-16002) seeking to annul Section 9 of the Ordinance in question The respondent alleged that the same is contrary to the Constitution, the Quezon City Charter, the Local Autonomy Act, and the Revised Administrative Code. There being no issue of fact and the questions raised being purely legal both petitioners and respondent agreed to the rendition of a judgment on the pleadings. The respondent court, therefore, rendered the decision declaring Section 9 of Ordinance No. 6118, S-64 null and void. A motion for reconsideration having been denied, the City Government and City Council filed the instant petition. Petitioners argue that the taking of the respondent's property is a valid and reasonable exercise of police power and that the land is taken for a public use as it is intended for the burial ground of paupers. They further argue that the Quezon City Council is authorized under its charter, in the exercise of local police power, " to make such further ordinances and resolutions not repugnant to law as may be necessary to carry into effect and discharge the powers and duties conferred by this Act and such as it shall deem necessary and proper to provide for the health and safety, promote the prosperity, improve the morals, peace, good order, comfort and convenience of the city and the inhabitants thereof, and for the protection of property therein." On the other hand, respondent Himlayang Pilipino, Inc. contends that the taking or confiscation of property is obvious because the questioned ordinance permanently restricts the use of the property such that it cannot be used for any reasonable purpose and deprives the owner of all beneficial use of his property. The respondent also stresses that the general welfare clause is not available as a source of power for the taking of the property in this case because it refers to "the power of promoting the public welfare by restraining and regulating the use of liberty and property." The respondent points out that if an owner is deprived of his property outright under the State's police power, the property is generally not taken for public use but is urgently and summarily destroyed in order to promote the general welfare. The respondent cites the case of a nuisance per se or the destruction of a house to prevent the spread of a conflagration. We find the stand of the private respondent as well as the decision of the respondent Judge to be well-founded. We quote with approval the lower court's ruling which declared null and void Section 9 of the questioned city ordinance: The issue is: Is Section 9 of the ordinance in question a valid exercise of the police power? An examination of the Charter of Quezon City (Rep. Act No. 537), does not reveal any provision that would justify the ordinance in question except the provision granting police power to the City. Section 9 cannot be justified under the power granted to Quezon City to tax, fix the license fee, and regulate such other business, trades, and occupation as may be established or practised in the City.' (Subsections 'C', Sec. 12, R.A. 537). The power to regulate does not include the power to prohibit (People vs. Esguerra, 81 PhiL 33, Vega vs. Municipal Board of Iloilo, L-6765, May 12, 1954; 39 N.J. Law, 70, Mich. 396). A fortiori, the power to regulate does not include the

power to confiscate. The ordinance in question not only confiscates but also prohibits the operation of a memorial park cemetery, because under Section 13 of said ordinance, 'Violation of the provision thereof is punishable with a fine and/or imprisonment and that upon conviction thereof the permit to operate and maintain a private cemetery shall be revoked or cancelled.' The confiscatory clause and the penal provision in effect deter one from operating a memorial park cemetery. Neither can the ordinance in question be justified under sub- section "t", Section 12 of Republic Act 537 which authorizes the City Council to'prohibit the burial of the dead within the center of population of the city and provide for their burial in such proper place and in such manner as the council may determine, subject to the provisions of the general law regulating burial grounds and cemeteries and governing funerals and disposal of the dead.' (Sub-sec. (t), Sec. 12, Rep. Act No. 537). There is nothing in the above provision which authorizes confiscation or as euphemistically termed by the respondents, 'donation' We now come to the question whether or not Section 9 of the ordinance in question is a valid exercise of police power. The police power of Quezon City is defined in sub-section 00, Sec. 12, Rep. Act 537 which reads as follows: (00) To make such further ordinance and regulations not repugnant to law as may be necessary to carry into effect and discharge the powers and duties conferred by this act and such as it shall deem necessary and proper to provide for the health and safety, promote, the prosperity, improve the morals, peace, good order, comfort and convenience of the city and the inhabitants thereof, and for the protection of property therein; and enforce obedience thereto with such lawful fines or penalties as the City Council may prescribe under the provisions of subsection (jj) of this section. We start the discussion with a restatement of certain basic principles. Occupying the forefront in the bill of rights is the provision which states that 'no person shall be deprived of life, liberty or property without due process of law' (Art. Ill, Section 1 subparagraph 1, Constitution). On the other hand, there are three inherent powers of government by which the state interferes with the property rights, namely-. (1) police power, (2) eminent domain, (3) taxation. These are said to exist independently of the Constitution as necessary attributes of sovereignty. Police power is defined by Freund as 'the power of promoting the public welfare by restraining and regulating the use of liberty and property' (Quoted in Political Law by Tanada and Carreon, V-11, p. 50). It is usually exerted in order to merely regulate the use and enjoyment of property of the owner. If he is deprived of his property outright, it is not taken for public use but rather to destroy in order to promote the general welfare. In police power, the owner does not recover from

the government for injury sustained in consequence thereof (12 C.J. 623). It has been said that police power is the most essential of government powers, at times the most insistent, and always one of the least limitable of the powers of government (Ruby vs. Provincial Board, 39 PhiL 660; Ichong vs. Hernandez, 1,7995, May 31, 1957). This power embraces the whole system of public regulation (U.S. vs. Linsuya Fan, 10 PhiL 104). The Supreme Court has said that police power is so far-reaching in scope that it has almost become impossible to limit its sweep. As it derives its existence from the very existence of the state itself, it does not need to be expressed or defined in its scope. Being coextensive with self-preservation and survival itself, it is the most positive and active of all governmental processes, the most essential insistent and illimitable Especially it is so under the modern democratic framework where the demands of society and nations have multiplied to almost unimaginable proportions. The field and scope of police power have become almost boundless, just as the fields of public interest and public welfare have become almost all embracing and have transcended human foresight. Since the Courts cannot foresee the needs and demands of public interest and welfare, they cannot delimit beforehand the extent or scope of the police power by which and through which the state seeks to attain or achieve public interest and welfare. (Ichong vs. Hernandez, L-7995, May 31, 1957). The police power being the most active power of the government and the due process clause being the broadest station on governmental power, the conflict between this power of government and the due process clause of the Constitution is oftentimes inevitable. It will be seen from the foregoing authorities that police power is usually exercised in the form of mere regulation or restriction in the use of liberty or property for the promotion of the general welfare. It does not involve the taking or confiscation of property with the exception of a few cases where there is a necessity to confiscate private property in order to destroy it for the purpose of protecting the peace and order and of promoting the general welfare as for instance, the confiscation of an illegally possessed article, such as opium and firearms. It seems to the court that Section 9 of Ordinance No. 6118, Series of 1964 of Quezon City is not a mere police regulation but an outright confiscation. It deprives a person of his private property without due process of law, nay, even without compensation. In sustaining the decision of the respondent court, we are not unmindful of the heavy burden shouldered by whoever challenges the validity of duly enacted legislation whether national or local As early as 1913, this Court ruled in Case v. Board of Health (24 PhiL 250) that the courts resolve every presumption in favor of validity and, more so, where the ma corporation asserts that the ordinance was enacted to promote the common good and general welfare. In the leading case of Ermita-Malate Hotel and Motel Operators Association Inc. v. City Mayor of Manila (20 SCRA 849) the Court speaking through the then Associate Justice and now Chief Justice Enrique M. Fernando stated

Primarily what calls for a reversal of such a decision is the a of any evidence to offset the presumption of validity that attaches to a statute or ordinance. As was expressed categorically by Justice Malcolm 'The presumption is all in favor of validity. ... The action of the elected representatives of the people cannot be lightly set aside. The councilors must, in the very nature of things, be familiar with the necessities of their particular ... municipality and with all the facts and lances which surround the subject and necessitate action. The local legislative body, by enacting the ordinance, has in effect given notice that the regulations are essential to the well-being of the people. ... The Judiciary should not lightly set aside legislative action when there is not a clear invasion of personal or property rights under the guise of police regulation. (U.S. v. Salaveria (1918], 39 Phil. 102, at p. 111. There was an affirmation of the presumption of validity of municipal ordinance as announced in the leading Salaveria decision in Ebona v. Daet, [1950]85 Phil. 369.) We have likewise considered the principles earlier stated in Case v. Board of Health supra : ... Under the provisions of municipal charters which are known as the general welfare clauses, a city, by virtue of its police power, may adopt ordinances to the peace, safety, health, morals and the best and highest interests of the municipality. It is a well-settled principle, growing out of the nature of well-ordered and society, that every holder of property, however absolute and may be his title, holds it under the implied liability that his use of it shall not be injurious to the equal enjoyment of others having an equal right to the enjoyment of their property, nor injurious to the rights of the community. An property in the state is held subject to its general regulations, which are necessary to the common good and general welfare. Rights of property, like all other social and conventional rights, are subject to such reasonable limitations in their enjoyment as shall prevent them from being injurious, and to such reasonable restraints and regulations, established by law, as the legislature, under the governing and controlling power vested in them by the constitution, may think necessary and expedient. The state, under the police power, is possessed with plenary power to deal with all matters relating to the general health, morals, and safety of the people, so long as it does not contravene any positive inhibition of the organic law and providing that such power is not exercised in such a manner as to justify the interference of the courts to prevent positive wrong and oppression. but find them not applicable to the facts of this case. There is no reasonable relation between the setting aside of at least six (6) percent of the total area of an private cemeteries for charity burial grounds of deceased paupers and the promotion of health, morals, good order, safety, or the general welfare of the people. The ordinance is actually a taking without compensation of a certain area from a private cemetery to benefit paupers who are charges of the municipal corporation. Instead of building or maintaining a public cemetery for this purpose, the city passes the burden to private cemeteries. The expropriation without compensation of a portion of private cemeteries is not covered by Section 12(t) of Republic Act 537, the Revised Charter of Quezon City which empowers the city council to prohibit the burial of the dead within the center of population of the city and to provide

for their burial in a proper place subject to the provisions of general law regulating burial grounds and cemeteries. When the Local Government Code, Batas Pambansa Blg. 337 provides in Section 177 (q) that a Sangguniang panlungsod may "provide for the burial of the dead in such place and in such manner as prescribed by law or ordinance" it simply authorizes the city to provide its own city owned land or to buy or expropriate private properties to construct public cemeteries. This has been the law and practise in the past. It continues to the present. Expropriation, however, requires payment of just compensation. The questioned ordinance is different from laws and regulations requiring owners of subdivisions to set aside certain areas for streets, parks, playgrounds, and other public facilities from the land they sell to buyers of subdivision lots. The necessities of public safety, health, and convenience are very clear from said requirements which are intended to insure the development of communities with salubrious and wholesome environments. The beneficiaries of the regulation, in turn, are made to pay by the subdivision developer when individual lots are sold to home-owners. As a matter of fact, the petitioners rely solely on the general welfare clause or on implied powers of the municipal corporation, not on any express provision of law as statutory basis of their exercise of power. The clause has always received broad and liberal interpretation but we cannot stretch it to cover this particular taking. Moreover, the questioned ordinance was passed after Himlayang Pilipino, Inc. had incorporated. received necessary licenses and permits and commenced operating. The sequestration of six percent of the cemetery cannot even be considered as having been impliedly acknowledged by the private respondent when it accepted the permits to commence operations. WHEREFORE, the petition for review is hereby DISMISSED. The decision of the respondent court is affirmed. G.R. No. L-12172

August 29, 1958

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. JUAN F. FAJARDO, ET AL., defendants-appellants. Assistant Solicitor General Esmeraldo Umali and Higinio V. Catalan for appellee. Prila, Pardalis and Pejo for appellants. REYES, J. B. L., J.: Appeal from the decision of the Court of First Instance of Camarines Sur convicting defendantsappellants 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 inlaw, 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 others; to refuse the application of one landowner or lessee and to grant that of another, when for all material purposes, the two 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. 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 I11. 212, 185 N.E. 827) (Emphasis supplied.) 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.

G.R. No. L-60077

January 18, 1991

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

thereafter, prepare their appraisals as to the fair and just compensation to be paid to the owners of the lots. Hearings were consequently held before said commissioners and during their hearings, the case of defendant Heirs of Natalia Paule was amicably settled by virtue of a Right of Way Grant (Exh. C) executed by Guadalupe Sangalang for herself and in behalf of her co-heirs in favor of the plaintiff corporation. The case against Matias Cruz was earlier decided by the court, thereby leaving only the case against the defendant spouses Ricardo Malit and Misericordia Gutierrez still to be resolved. Accordingly, the commissioners submitted their individual reports. The commissioner for the plaintiff corporation recommended the following: . . . that plaintiff be granted right of way easement over the 760 square meters of the defendants Malit and Gutierrez land for plaintiff transmission line upon payment of an easement fee of P1.00 therefor. . . . (Annex M) The commissioner for the defendant spouses recommended the following: . . . that Mr. and Mrs. Ricardo Malit be paid as disturbance compensation the amount of P10.00 sq. meter or the total amount of P7,600.00' (Annex K) The Court's commissioner recommended the following: . . . the payment of Five (P 5.OO) Pesos per square meter of the area covered by the Right-of-way to be granted, . . .(Annex L) The plaintiff corporation urged the Court that the assessment as recommended by their commissioner be the one adopted. Defendant spouses, however, dissented and objected to the price recommended by both the representative of the court and of the plaintiff corporation. With these reports submitted by the three commissioners and on the evidence adduced by the defendants as well as the plaintiff for the purpose of proving the fair market value of the property sought to be expropriated, the lower court rendered a decision the dispositive portion of which reads as follows: WHEREFORE, responsive to the foregoing considerations, judgment is hereby rendered ordering plaintiff National Power Corporation to pay defendant spouses Ricardo Malit and Misericordia Gutierrez the sum of P10.00 per square meter as the fair and reasonable compensation for the right-of-way easement of the affected area, which is 760 squares, or a total sum of P7,600.00 and P800.00 as attorney's fees' (Record on Appeal, p. 83) Dissatisfied with the decision, the plaintiff corporation filed a motion for reconsideration which was favorably acted upon by the lower court, and in an order dated June 10, 1973, it amended its previous decision in the following tenor: On the basis of an ocular inspection made personally by the undersigned, this court finally classified the land of the spouses Ricardo Malit and Misericordia to be partly commercial and partly agricultural, for which

reason the amount of P10.00 per sq. meter awarded in the decision of December 4,1972 is hereby reduced to P5.00 per square meter as the fair and reasonable market value of the 760 square meters belonging to the said spouses. There being no claim and evidence for attorney's fees, the amount of P800.00 awarded as attorney's fees, in the decision of December 4, 1972 is hereby reconsidered and set aside. (Annex S) Still not satisfied, an appeal was filed by petitioner (NPC) with the Court of Appeals but respondent Court of Appeals in its March 9, 1982, sustained the trial court, as follows: WHEREFORE, finding no reversible error committed by the court a quo, the appealed judgment is hereby affirmed with costs against the plaintiffappellant. Hence, the instant petition. The First Division of this Court gave due course to the petition and required both parties to submit their respective memoranda (Resolution of January 12, 1983). It also noted in an internal resolution of August 17, 1983 that petitioner flied its memorandum while the respondents failed to file their memorandum within the period which expired on February 24,1983; hence, the case was considered submitted for decision. The sole issue raised by petitioner is — WHETHER PETITIONER SHOULD BE MADE TO PAY SIMPLE EASEMENT FEE OR FULL COMPENSATION FOR THE LAND TRAVERSED BY ITS TRANSMISSION LINES. It is the contention of petitioner that the Court of Appeals committed gross error by adjudging the petitioner liable for the payment of the full market value of the land traversed by its transmission lines, and that it overlooks the undeniable fact that a simple right-of-way easement (for the passage of transmission lines) transmits no rights, except that of the easement. Full ownership is retained by the private respondents and they are not totally deprived of the use of the land. They can continue planting the same agricultural crops, except those that would result in contact with the wires. On this premise, petitioner submits that if full market value is required, then full transfer of ownership is only the logical equivalent. The petition is devoid of merit. The resolution of this case hinges on the determination of whether the acquisition of a mere right-of-way is an exercise of the power of eminent domain contemplated by law.1âwphi1 The trial court's observation shared by the appellate court show that ". . . While it is true that plaintiff are (sic) only after a right-of-way easement, it nevertheless perpetually deprives defendants of their proprietary rights as manifested by the imposition by the plaintiff upon defendants that below said transmission lines no plant higher than three (3) meters is allowed. Furthermore, because of the high-tension current conveyed through said transmission lines, danger to life and limbs that may be caused beneath said wires cannot altogether be

discounted, and to cap it all plaintiff only pays the fee to defendants once, while the latter shall continually pay the taxes due on said affected portion of their property." The foregoing facts considered, the acquisition of the right-of-way easement falls within the purview of the power of eminent domain. Such conclusion finds support in similar cases of easement of 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. For these reasons, the owner of the property expropriated is entitled to a just compensation, which should be neither more nor less, whenever it is possible to make the assessment, than the money equivalent of said property. Just compensation has always been understood to be the just and complete equivalent of the loss which the owner of the thing expropriated has to suffer by reason of the expropriation (Province of Tayabas vs. Perez, 66 Phil. 467 [1938]; Assoc. of Small Land Owners of the Phils., Inc. vs. Secretary of Agrarian Reform, G.R. No. 78742; Acuna vs. Arroyo, G.R. No. 79310; Pabrico vs. Juico, G.R. No. 79744; Manaay v. Juico, G.R. No. 79777,14 July 1989, 175 SCRA 343 [1989]). The price or value of the land and its character at the time it was taken by the Government are the criteria for determining just compensation (National Power Corp. v. Court of Appeals, 129 SCRA 665, [1984]). The above price refers to the market value of the land which may be the full market value thereof. According to private respondents, the market value of their lot is P50.00 per square meter because the said lot is adjacent to the National and super highways of Gapan, Nueva Ecija and Olongapo City. Private respondents recognize the inherent power of eminent domain being exercised by NPC when it finally consented to the expropriation of the said portion of their land, subject however to payment of just compensation. No matter how laudable NPC's purpose is, for which expropriation was sought, it is just and equitable that they be compensated the fair and full equivalent for the loss sustained, which is the measure of the indemnity, not whatever gain would accrue to the expropriating entity (EPZA v. Dulay, 149 SCRA 305 [1987]; Mun. of Daet v. Court of Appeals, 93 SCRA 503 (1979]). It appearing that the trial court did not act capriciously and arbitrarily in setting the price of P5.00 per square meter of the affected property, the said award is proper and not unreasonable. On the issue of ownership being claimed by petitioner in the event that the price of P5.00 per square meter be sustained, it is well settled that an issue which has not been raised in the Court a quo cannot be raised for the first time on appeal as it would be offensive to the basic

rules of fair play, justice and due process . . . (Filipino Merchants v. Court of Appeals, G.R. No. 85141, November 8, 1989, 179 SCRA 638; Commissioner of Internal Revenue v. Procter and Gamble Philippines Manufacturing Corporation, 160 SCRA 560 [1988]; Commissioner of Internal Revenue v. Wander Philippines, Inc., 160 SCRA 573 1988]). Petitioner only sought an easement of right-of-way, and as earlier discussed, the power of eminent domain may be exercised although title was not transferred to the expropriator. WHEREFORE, the assailed decision of the Court of Appeals is AFFIRMED. SO ORDERED. September 26, 2006 NATIONAL POWER CORPORATION, petitioner, vs. MARIA MENDOZA SAN PEDRO, represented by VICENTE, HERMINIA and FRANCISCO, all surnamed SAN PEDRO, respondents. DECISION CALLEJO, SR., J.: Before the Court is a Petition for Review on Certiorari under Rule 45 of the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 72860, and its Resolution2 denying the motion for reconsideration thereof. The Antecedents The National Power Corporation (NPC) is a government-owned-and-controlled corporation created to undertake the development of hydro-electric generation of power and the production of electricity from any and all sources; and particularly the construction, operation, and maintenance of power plants, auxiliary plants, dams, reservoirs, pipes, mains, transmission lines, power stations and substations, and other works for the purpose of developing hydraulic power from any river, lake, creek, spring and waterfalls in the Philippines and supplying such power to the inhabitants thereof.3 Under Republic Act No. 6395, as amended, the NPC is authorized to enter private property provided that the owners thereof shall be indemnified for any actual damage caused thereby.4 For the construction of its San Manuel-San Jose 500 KV Transmission Line and Tower No. SMJ-389, NPC negotiated with Maria Mendoza San Pedro, then represented by her son, Vicente, for an easement of right of way over her property, Lot No. 2076. The property, which was partly agricultural and partly residential land, was located in Barangay Partida, Norzagaray, Bulacan and covered by Tax Declaration No. 00386. On June 19, 1997, Maria executed a Right of Way Grant5 in favor of NPC over the lot for P1,277,886.90. The NPC paid her P524,635.50 for the damaged improvements thereon.6 The payment voucher for the residential portion of the lot valued at P6,000,000.00 (at P600.00 per square meter) was then processed.7 However, the NPC Board of Directors approved Board Resolution No. 97-2468 stating that it would pay only P230.00 per sq m for the residential portion and P89.00 per sq m for the agricultural portion, on the following premises:

A) The proposed land valuations were evaluated and analyzed using the joint appraisal report on fair market value of lands by Cuervo Appraisal, Inc., Development Bank of the Philippines, and the Land Bank of the Philippines and the fair market values established by the respective Provincial Appraisal Committee (PAC) of Zambales, Pangasinan, Nueva Ecija, Pampanga and Bulacan as well as the City Appraisal Committee (CAC) of San Carlos and Cabanatuan. B) For lot acquisition, adopt PAC or CUERVO Appraisal, whichever is lower; if there is a problem of acceptance, refer same to the Board; C) For easement over agricultural lands, adopt median or average if there are several amounts involved; and D) Always oppose any proposals for conversion of agricultural lands.9 On January 15, 1998, the NPC filed a complaint10 for eminent domain in the Regional Trial Court (RTC) of Bulacan against Maria and other landowners. The case was docketed as Civil Case No. 28-M-98. According to NPC, in order to construct and maintain its Northwestern Luzon Transmission Line Project (San Manuel-San Jose 500 KV Transmission Line Project), it was necessary to acquire several lots in the Municipalities of San Jose del Monte and Norzagaray, Bulacan for an easement of right of way in the total area of more or less 35,288.5 sq m. The owners of the affected areas and their corresponding assessed values are: OWNER/ CLAIMANT

LOT/ BLK. NO.

Ma. Mendoza San 2076 Pedro rep. by Vicente San Pedro Lorenza Manuel / 1250 Sps. Raul & Edna Lagula Sps. Segundo & 1251 Maxima Manuel / Sps. Raul & Edna Lagula

TAX DEC. NO. 00386

TITLE NO.

TOTAL AREA

AREA ASSESSED CLASSIFICATION AFFECTED VALUE OF OF LAND IN SQ. M. AREA AFFECTED 122,821.32 17,195 P 18,555.75 Agricultural 10,000 6,565 P147,712.50 Residential

96T5,700 21017- 28392P-(M) 00084 96P-3965 6,362 21017(M) 00083

51,666.5

P 13,481.03 Agricultural

6,362

P 16,210.00 Agricultural

Maria San Pedro filed her Answer11 on February 2, 1998, alleging that there had already been an agreement as to the just compensation for her property. She prayed, among others, that she should be paid the consideration stated in the Right of Way Grant, P600.00 per sq m for the residential portion of the land as agreed upon by her and NPC, and to base the values from Resolution No. 97-00512 of the Provincial Appraisal Committee. Meanwhile, Maria San Pedro filed an Amended Answer13 in which she alleged that NPC had resorted to deceit, trickery and machination to induce her to grant a right of way by assuring her that it would also pay for the residential portion of the property at P600.00 per sq m.

On August 10, 1998, the RTC issued a writ of possession against Maria San Pedro.14 When she passed away on August 22, 1998,15 she was substituted by her heirs, Vicente, Herminia and Francisco, all surnamed San Pedro, on September 11, 1998.16 During the pre-trial on January 25, 1999, the parties agreed that the only issue for resolution was the just compensation for the property. The court appointed a committee of commissioners to ascertain and recommend to the trial court the just compensation for the properties, composed of Atty. Josephine L. Sineneng-Baltazar, the Clerk of Court, as chairperson; and Engr. Oscar C. Cruz, Provincial Assessor of Bulacan, and Atty. Henry P. Alog of the Litigation Department of NPC to serve as members-commissioners thereof.17 On July 12, 1999, Atty. Baltazar and Engr. Cruz submitted their report, 18 recommending as payment for just compensation P800.00 per sq m for the residential lot and P700.00 per sq m for the agricultural lot.19 The majority report reads: I. Description of the Property A parcel of land with a total area of 132,821.32 square meters located at Partida, Norzagaray, Bulacan and declared for taxation purposes in the name of Maria Mendoza San Pedro is sought to be expropriated by plaintiff National Power Corporation for the construction and maintenance of its Northwestern Luzon Transmission Line Project (San Miguel-San Jose 500 KV Transmission Line Project), to wit: Lot No.

Tax No.

2076

01337

Dec. Total Area

Area Classification Affected in sq. m.

122,821.32

17,195

Agricultural

10,000.00

6,565

Residential

The pertinent tax declaration is hereto attached as Annex "A." The residential lot is not affected by NPC's project in its entirety. Around 2,000 sq. m. remains on each side of the residential lot. Likewise, only a portion or 17,195 sq. m. of (sic) more than 12 hectares agricultural land, (sic) is affected by the project. A sketch plan of the affected area is attached hereto as Annex "B." II. Claims of the Parties Defendants allege that they had signed a Right of Way Grant Contract dated June 19, 1997 which plaintiff itself prepared and was notarized by Atty. Marcelo Aure; that, among others, defendants and plaintiff agreed that the price of the residential land is P600.00 per square meter, based on the Provincial Appraisals Committee (PAC) Resolution No. 97-005; that, on December 6, 1997, plaintiff informed them that the NPC Board passed Resolution No. 97-246 dated October 27, 1997, pursuant to which the board approved

price for acquisition of subject property is P230.00 per sq. m. for residential and P89.00 per sq. m. for agricultural lot. Defendants did not accept the new offer. On the other hand, plaintiff alleges that the price for residential land is P230.00 per sq. m. as approved by NPC's Board and not P600.00 per sq. m. being asked by defendants. It further recommended the appointment of commissioners to report to the Court the just compensation to be paid to the defendants. III. Observations The Commissioners went to the site on May 11, 1999 and were able to observe that: (1) The residential lot of Vicente San Pedro is not affected by NPC's project in its entirety. Around 2,000 sq. m. remains on each side of the residential lot. There are no existing structures or improvements on said residential lot, which is situated along the all-weather (gravel) road. Defendants are afraid to utilize the said remaining portions for residential purposes because of the reported constant loud buzzing and exploding sounds emanating from the towers and transmission lines, especially on rainy days. The two children of Vicente San Pedro had wanted to construct their residential houses on said land, but decided against it now because of fear that the large transmission lines looming not far above their land and the huge tower in front of their lot will affect their safety and health. Moreover, there is a slim chance now that somebody will still buy the remaining portions on each side of the residential lot affected by the project, to the damage of the defendant, both as to future actual use of the land and financial gains to be derived therefrom. (2) Likewise only a portion, or 17,195 sq. m. of the 122,821.32 square meter agricultural land, is affected by the transmission line project. It was not planted with palay at the time of the inspection. According to the defendants, their farm helpers are already afraid to work on the land because of the buzzing and cracking sounds coming from the tower and transmission lines. (3) The site is located in a highly developed area about 1.5 kms. away from Norzagaray Municipal Building. The vast land owned by Jesus Is Lord congregation is on the same side of the road as subject property. Opposite the road is an ongoing resort project, the Falcon Crest Resort about ½ kilometers away, and the proposed Catholic Retreat House about 200 meters away. Attached as Annex "C" is the Location Plan of said lot. IV. Available Data (1) Based on the Zoning Certificate issued by the Municipal Mayor, subject parcel of land has been classified as residential pursuant to the proposed Comprehensive Land Use Plan of local government unit. Copy of said Zoning Certificate is hereto attached as Annex "D." (2) Based on the BIR Zonal Valuation attached as Annex "E," subject land has a zonal value of P60.00/sq. m. for residential and P30.00/sq. m. for agricultural lot. However, it is common knowledge that zonal valuation provided by BIR cannot

be made as basis for the purpose of determining just compensation in eminent domain cases because it is only for the purpose of computing internal revenue taxes. (3) Opinion values gathered by the Provincial Assessor on the price of the property are as follows: Residential - P1,075.00 / sq. m. Agricultural - P 643.00 / sq. m. The summary of Opinion Values is hereto attached as Annex "F." (4) There are no available sales data on properties within the vicinity of subject land for the years 1996 and 1997, approximate time of the taking. IV. Recommendation The Commissioners, after considering the location of the subject property in a highly developed area and accessibility thru the all-weather road (gravel); its potential for full development as shown by the existence of building projects in the vicinity; and the longterm effect the expropriation will have on the lives, comfort and financial condition of herein defendants, respectfully recommend the following amounts as payment for the affected portions of subject property. P800. / sq. m. - for the residential lot P700. / sq. m. - for the agricultural lot20 However, Atty. Alog, who represented NPC, dissented from the report, claiming that it was merely based on "opinion values," and the self-serving declarations and opinions of defendants. He maintained that, in determining just compensation, the trial court should instead consider the appraisal report of Cuervo Appraisers, Inc., upon which Resolution No. 97-246 of NPC was based. He likewise argued that the property involved was actually and principally used as agricultural, though declared as agricultural/residential lots; hence, only the easement fee of right of way should be paid, as the principal purpose for which the lot was devoted would not be impaired by the construction of transmission lines. His report reads: I. FINDINGS The ocular inspection and research conducted by the undersigned Commissioner on May 12, 1999 disclosed the following pertinent information and data: 1) The subject lots can be reached through a 1.4 km two lane concrete road, from the Sta. Maria-Norzagaray National Highway intersection at Poblacion, Norzagaray, Bulacan (refer to Annex "B"); 2) The low lying northern portion of the property is presently used as riceland and the rest planted with assorted trees (refer to Annex "C," pictures);

3) The property is a portion of hill in the area with sides sloping downward on the northern eastern boundaries (refer to Annex "C"); 4) There is no visible structural development in the area except for: a) a two lane concrete road adjacent to the property at the northwest boundaries going to San Jose Del Monte, Bulacan; b) newly constructed steel towers of NPC; c) barbed wire fence with wooden post covering the northwestern portion of the lot adjacent to the concrete road to San Jose Del Monte, Bulacan and a bamboo fence that covers the southern portion (refer to Annex "C"); and d) residential house approximately 200 meters from affected area. 5) During the ocular inspection, it is noted that they still use the affected area for agricultural purposes; 6) The Falcon Crest Resort is approximately 1 km. from the affected property; 7) Price data gathered are as follows (in square meter unless specified): Agri-Orchard Riceland (Interior) unirrigated (Interior)

Subd. along Sta. Maria (Garay)

Provincial Appraisal Committee – Bulacan (Res. No. 97005) (Annex "D") NP Board No. (Annex "E")

Resolution P89.00 97-246

Res'l

Agr'l

P600.00 P400.00

P80.00

P230.00

Cuervo Appraisers, Inc. P890,000/ha. P800,000/ha. P230.0021 (Annex "F") Atty. Alog also recommended that only P2,640,274.70 be paid to defendants by way of just compensation, broken down as follows: Eight Hundred Two Thousand Three - Payment for damaged Hundred Sixty Eight Pesos and 50/100 crops/plants/trees (P802,368.50) One Hundred Sixty Two Thousand Eight - Payment for structures

Hundred Sixty Five Pesos and 65/100 (P162,865.65) One Million Five Hundred Nine Thousand - Payment for residential Nine Hundred Fifty Pesos portion of lot (P1,509,950.00) One Hundred Fifty One Thousand Six - Easement fee for Hundred Ninety One Pesos and 60/100 agricultural portion of lot (P151,691.60) Thirteen Thousand Three Hundred - Tower Occupancy Fee Ninety-Eight and 95/100 (P13,398.95)22 On October 28, 1999, the RTC rendered judgment,23 declaring as well-grounded, fair and reasonable the compensation for the property as recommended by Atty. Baltazar and Engr. Cruz. The fallo of the RTC decision reads: WHEREFORE, premises considered, this Court hereby orders the above-described 5,700-square meter lot from Lot No. 1250 of defendants Spouse (sic) Raul (sic) and the afore-described 6,362-square meter lot from Lot No. 1251 of same defendants, subject to the covering Compromise Agreements; and the above-described 17,195-square meter lot from Lot No. 2076 of defendant Maria Mendoza San Pedro, CONDEMNED and/or EXPROPRIATED for the construction and maintenance of plaintiff's Northwestern Luzon Transmission Line Project (San Manuel - San Jose 500 KV Transmission Line Project), a project for public purpose. Accordingly, this Court hereby fixes the just compensation for the expropriated lots, as follows: OWNERS

LOT NO.

AREA PRICE/ EXPROPRIATED S.Q. METER

JUST COMPENSATION

Sps. Raul & Edna 1250 5,700 sq. m. Lagula

P499.00

P2,844,300.00

Sps. Raul & Edna 1251 6,362 sq. m. Lagula

499.00

2,174,638

Ma. Mendoza San 2076 17,195 sq. m. Pedro her heirs

800.00

13,756,000

Hence, plaintiff is ordered to pay, as soon as possible, herein defendants the just compensation enumerated above for their respective lots aforementioned. For this purpose, plaintiff may withdraw the sum of money deposited with the Land Bank of the Philippines or any other banks pursuant to Section 2 of Rule 67 of the Rules of Court, as amended by P.D. No. 42. FURTHER, defendants are ordered to clear and vacate the lots in question within 30 days from receipt hereof and to surrender possession thereof to the plaintiff.

The fees for the 3 Commissioners of the Appraisal Committee in the sum of P6,000.00 for the Chairman and P5,000.00 each for the 2 members, shall be paid by the plaintiff. SO ORDERED.24 On November 19, 1999, the heirs of Maria San Pedro filed a Manifestation and Motion 25 for the partial reconsideration of the decision on the ground that the court failed to include in its decision the just compensation for the 6,565-square-meter residential portion of their land, with prayer for attorney's fees equivalent to 10% of the total amount to be awarded to them. On December 3, 1999, NPC filed its motion for reconsideration,26 insisting that the just compensation awarded to defendants was without legal and factual basis, and that it should only be made to pay an easement fee. On June 6, 2001, the trial court issued an Order granting the motion of the heirs and denied that of NPC.27 The RTC declared that the just compensation for the residential portion of the property should be the same as that of the spouses Lagula's property, which was P499.00 per sq m. On the claim of NPC in its motion for reconsideration that it should be made to pay only an easement fee, the trial court ruled that Lot No. 2076 should be treated the same way as NPC treated the properties of the spouses Lagula. It was pointed out that in the compromise agreements executed by plaintiff and spouses Lagula, plaintiff paid P499.00 per sq m on the basis of a straight sale of their agricultural land, and not merely an easement fee for a right of way thereon. The fallo of the amended decision reads: WHEREFORE, in the light of the foregoing, the Court hereby: 1. Grants the motion of defendant Maria Mendoza San Pedro and thus orders that the 1st paragraph of page 8 of the Decision be amended to read as follows: "Plaintiff is expropriating portions of defendants' above-described properties to give way to the construction and maintenance of its Northern Luzon Transmission Line Project (San Manuel - San Jose 500 KV Transmission Line Project), a project for public purpose. The area of the lots sought to be expropriated from the lot of defendant Maria Mendoza San Pedro, represented by her heirs, are 17,195 square meters more or less of agricultural land and 6,565 square meters of residential land, while the area of the land sought to be expropriated from the two lots of defendants Sps. Raul and Edna Lagula are only 5,166.50 square meters, more or less, from Lot No. 1250 and 6,363 (sic) square meters, more or less, from Lot No. 1251. Furthermore, the second paragraph of the dispositive portion of the Decision should be amended as follows: "Accordingly, this Court hereby fixes the just compensation for the expropriated lots, as follows: OWNERS

LOT NO.

AREA PRICE/ EXPROPRIATED S.Q. METER

JUST COMPENSATION

Sps. Raul & Edna Lagula 1250 5,700 sq. m.

P499.00

P2,844,300.00

Sps. Raul & Edna Lagula 1251 6,362 sq. m.

499.00

3,174,638.00

Ma. Mendoza San Pedro her heirs 2076 17,195 sq. m.

499.00

8,580,305.00

Ma. Mendoza San Pedro her heirs

800.00

5,252,000.00

6,565 sq. m.

2. Denies the plaintiff's Motion for Reconsideration for lack of merit. SO ORDERED.28 NPC appealed the amended decision to the CA, asserting that: THE LOWER COURT GRAVELY ERRED IN FIXING P800.00 AND P499.00 PER SQUARE METER AS JUST COMPENSATION FOR APPELLEE'S 6,565 SQUARE METERS OF RESIDENTIAL LAND AND 17,195 SQUARE METERS OF AGRICULTURAL LAND, RESPECTIVELY.29 On September 28, 2005, the CA rendered judgment dismissing the appeal. The CA ruled that the July 12, 1999 majority report was based on uncontroverted facts, supported by documentary evidence and confirmed by the commissioners' ocular inspection of the subject properties. To arrive at a reasonable estimate of just compensation, the commissioners considered factors such as the location, the most profitable likely use of the remaining area, size, shape, accessibility, as well as listings of other properties within the vicinity. Citing National Power Corporation v. Manubay AgroIndustrial Development Corporation,30 the CA found as unpersuasive NPC's argument that it should only pay an easement fee. It ruled that considering the nature and effect of the installation of power lines, the limitations on the use of land for an indefinite period deprives the owner of its normal use. The falloof the CA decision reads: WHEREFORE, the Appeal is hereby DENIED. The assailed Decision and Order dated 28 October 1999 and 6 June 2001, respectively, are AFFIRMED. SO ORDERED.31 NPC filed a Motion for Reconsideration,32 which the CA denied in its Resolution33 dated December 22, 2005; hence, the instant petition based on the following ground: THE COURT OF APPEALS COMMITTED A GRAVE ERROR WHEN IT UPHELD THE DECISION OF THE TRIAL COURT FIXING THE JUST COMPENSATION FOR RESPONDENT'S 6,565 SQ. METERS OF RESIDENTIAL LAND AND 17,195 SQUARE METERS OF AGRICULTURAL LAND, AT PHP800.00 AND PHP499.00 PER SQUARE METER RESPECTIVELY, INSTEAD OF THE EASEMENT FEE AS PRAYED FOR IN

THE COMPLAINT AND PROVIDED UNDER REPUBLIC ACT NO. 6395, AS AMENDED, OTHERWISE KNOWN AS THE REVISED NPC CHARTER.34 The Ruling of the Court The petition is denied for lack of merit. The CA found no reversible error in the trial court's finding of just compensation. Inasmuch as the determination of just compensation in eminent domain cases is a judicial function and factual findings of the CA are conclusive on the parties and reviewable only when the case falls within the recognized exceptions, which does not obtain in this case, we see no reason to disturb the factual findings as to the valuation of the subject property.35 Petitioner avers that the rulings of the trial court affirmed by the appellate court, based on the majority report on the subject property's just compensation, is not supported by documentary evidence. It avers that in the majority report, Commissioners Atty. Baltazar and Engr. Cruz, even admit that there were no available sales data on properties within the vicinity of the subject property for the years 1996 and 1997. Moreover, the Bureau of Internal Revenue (BIR) valued the property at P60.00 per sq m for residential, and P30.00 per sq m for agricultural lot.36 Petitioner further argues that respondents have not shown that the condition of the adjoining properties or improvements thereon had increased their land's economic value.37 The valuation, thus, of the trial court, as affirmed by the CA, was exorbitant and devoid of factual and legal basis.38 We are not persuaded. 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, fixed at the time of the actual taking by the government.39 To determine the just compensation to be paid to the landowner, the nature and character of the land at the time of its taking is the principal criterion. 40 In the July 12, 1999 Majority Report, the commissioners found that the property was located in a highly-developed area and was accessible through an all-weather road. The fact that the property had potential for full development as shown by the existence of building projects in the vicinity, and the long-term effect of the expropriation on the lives, comfort and financial condition of petitioners was likewise considered. The report also took into account the ocular inspection conducted by the commissioners on May 11, 1999. The tax declaration of the subject property,41the NPC sketch plan,42 the location plan,43 the zoning certificates,44 the zonal valuation of the BIR,45 and the opinion values46 were also considered. The lone fact that there was no available sales data on properties within the vicinity of respondent's land for 1996 and 1997 and that the BIR zonal value was P60.00 per sq m for residential and P30.00 per sq m for agricultural did not proscribe the commissioners and the trial court from making their own reasonable estimates of just compensation, after considering all the facts as to the condition of the property and its surroundings, its improvements and capabilities. As had been amply explained by this Court in Export Processing Zone Authority v. Dulay:47

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.48 Conformably with the rulings of this Court, the majority report took into account the most profitable likely use of the remaining area; and the size, shape, accessibility, as well as listings of other properties within the vicinity.49 As gleaned from the location plan50 of the property in the case at bar, Lot No. 2076 is connected via a cemented road to the National Road, 1.5 kilometers away. The same is likewise strategically located at a junction of the barrio road leading to the Provincial Road, the National Road and to Sapang Palay. The lot is also on the same side of the road as the land owned by the Jesus Is Lord Congregation and the Partida Elementary School. The ocular inspection of the commissioners also reveals that opposite the road, about half a km away, is an ongoing resort project, the Falcon Crest Resort, and, about 200 meters away, the proposed Catholic Retreat House. While there are no existing structures or improvements on the residential portion of the lot, the same is situated along the all-weather (gravel) road and is fronting the property. On the agricultural portion thereof, the same appears to have been cultivated prior to the taking, as petitioner offered to compensate respondent's heirs' damages to the crops, plants and trees. The trial court fixed the just compensation for the property as follows: (1) P499.00 per sq m on the 17,195 sq m agricultural portion of the subject land; and (2) P800.00 per sq m on the 6,565 sq m residential portion of the lot. Noticeably, the trial court did not blindly accept the recommendation of majority of the commissioners of P800.00 per sq m for the residential lot and P700.00 per sq m for the agricultural lot. Indeed, the trial court took into account the evidence of the parties, in tandem with the findings and recommendation of the majority of the commissioners. Considering that such valuation of the trial court as affirmed by the CA is reasonable as it is and supported by the evidence on record, we find no compelling reason to disturb the same.51

The Court is not persuaded by petitioner's argument that respondents had not shown that the condition of the adjoining properties, i.e., improvements, had increased their land's economic value. It bears stressing that there is absence of any available sales data on properties within the vicinity of respondent's land for the years 1996 and 1997, the time of the taking. The property of respondent was the first to be sold. It is thus an exercise in futility for respondents to require evidence of sales of properties in the vicinity when no such transactions took place. Petitioner's contention that the trial court should have based the fixing of just compensation on the appraisal report of Cuervo Appraisers, Inc. (where petitioner based its Resolution No. 97246) is likewise untenable. Petitioner failed to present the so-called report of the Cuervo Appraisers, Inc. as evidence. We note that annexed to NPC Resolution No. 97-246 is a data of the NPC Board Appraisal on the Fair Market Value of residential lands along the concrete road in Sapang Palay, San Jose Del Monte, valued at P499.00 per sq m, which, however, is not signed nor authenticated. If, at all, the values indicated therein are self-serving to petitioner. Parenthetically, petitioner has not explained why it agreed on paying just compensation of P499.00 per sq m on the agricultural lands of the spouses Lagula, when the purported Cuervo Appraisal Report indicates that the fair market value of unirrigated riceland along the road is only P110.00 per sq m, and for an unirrigated interior only P85.00 per sq m.52 Had petitioner really believed Cuervo's appraisal, then, it should have likewise insisted on the values therein when it dealt with the spouses Lagulas. Notably, the lower court's valuations of respondent's property –P499.00 per sq m on the agricultural portion and P800.00 per sq m on the residential portion of the lot – are near the estimates made by the following: (1) the Provincial Appraisal Committee, in its Resolution No. 97-005, which are P400.00 for agricultural and P600.00 for residential;53 (2) the recommendation in the majority report of the commissioners (P700.00 for agricultural and P800.00 for residential); and (3) the opinion values, which are P643.00 for agricultural and P1,075.00 for residential. On the other hand, the valuations made by Atty. Alog, P89.00 for agricultural and P230.00 for residential, are unconscionably low, understandably so because he works for petitioner. On the question as to whether petitioner shall pay only an easement fee to respondent's heirs, the following pronouncement in National Power Corporation v. Aguirre-Paderanga54 is enlightening: 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, viz: The trial court's 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 hightension 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 v. Court of Appeals, 129 SCRA 665, 1984; Garcia v. Court of Appeals, 102 SCRA 597, 1981). The Supreme Court, in Republic of the Philippines v. PLDT, thus held that: "Normally, of course, the power of eminent domain results in the taking or appropriation of title to, and possession of, the expropriated property; but no cogent reason appears why said power may not be availed of to impose only a burden upon the owner of condemned property, without loss of title and possession. It is unquestionable that real property may, through expropriation, be subjected to an easement of right-of-way." 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.55 Similarly, in this case, the commissioners' observation on the reported constant loud buzzing and exploding sounds emanating from the towers and transmission lines, especially on rainy days; the constant fear on the part of the landowners that the large transmission lines looming not far above their land and the huge tower in front of their lot will affect their safety and health; and the slim chance that no one would be interested to buy the remaining portions on each side of the residential lot affected by the project, to the damage of the landowners, both as to future actual use of the land and financial gains to be derived therefrom, makes the instant case fall within the ambit of expropriation. WHEREFORE, premises considered, the appeal is hereby DENIED for lack of merit. The ruling of the Court of Appeals in CA-G.R. CV No. 72860 is AFFIRMED. G.R. No. L-119694 May 22, 1995 PHILIPPINE PRESS INSTITUTE, INC., for and in behalf of 139 members, represented by its President, Amado P. Macasaet and its Executive Director Ermin F. Garcia, Jr., petitioner, vs. COMMISSION ON ELECTIONS, respondent. RESOLUTION

FELICIANO, J.:

The Philippine Press Institute, Inc. ("PPI") is before this Court assailing the constitutional validity of Resolution No. 2772 issued by respondent Commission on Elections ("Comelec") and its corresponding Comelec directive dated 22 March 1995, through a Petition for Certiorari and Prohibition. Petitioner PPI is a non-stock, non-profit organization of newspaper and magazine publishers. On 2 March 1995, Comelec promulgated Resolution No. 2772, which reads in part: xxx xxx xxx Sec. 2. Comelec Space. — The Commission shall procure free print space of not less than one half (1/2) page in at least one newspaper of general circulation in every province or city for use as "Comelec Space" from March 6, 1995 in the case of candidates for senator and from March 21, 1995 until May 12, 1995. In the absence of said newspaper, "Comelec Space" shall be obtained from any magazine or periodical of said province or city. Sec. 3. Uses of Comelec Space. — "Comelec Space" shall be allocated by the Commission, free of charge, among all candidates within the area in which the newspaper, magazine or periodical is circulated to enable the candidates to make known their qualifications, their stand on public issues and their platforms and programs of government. "Comelec Space" shall also be used by the Commission for dissemination of vital election information. Sec. 4. Allocation of Comelec Space. — (a) "Comelec Space" shall also be available to all candidates during the periods stated in Section 2 hereof. Its allocation shall be equal and impartial among all candidates for the same office. All candidates concerned shall be furnished a copy of the allocation of "Comelec Space" for their information, guidance and compliance. (b) Any candidate desiring to avail himself of "Comelec Space" from newspapers or publications based in the Metropolitan Manila Area shall submit an application therefor, in writing, to the Committee on Mass Media of the Commission. Any candidate desiring to avail himself of "Comelec Space" in newspapers or publications based in the provinces shall submit his application therefor, in writing, to the Provincial Election Supervisor concerned. Applications for availment of "Comelec Space" maybe filed at any time from the date of effectivity of this Resolution. (c) The Committee on Mass Media and the Provincial Election Supervisors shall allocate available "Comelec Space" among the candidates concerned by lottery of which said candidates shall be notified in advance, in writing, to be present personally or by representative to witness the lottery at the date, time and place specified in the notice. Any party objecting to the result of the lottery may appeal to the Commission. (d) The candidates concerned shall be notified by the Committee on Mass Media or the Provincial Election Supervisor, as the case maybe, sufficiently in advance

and in writing of the date of issue and the newspaper or publication allocated to him, and the time within which he must submit the written material for publication in the "Comelec Space". xxx xxx xxx Sec. 8. Undue Reference to Candidates/Political Parties in Newspapers. — No newspaper or publication shall allow to be printed or published in the news, opinion, features, or other sections of the newspaper or publication accounts or comments which manifestly favor or oppose any candidate or political party by unduly or repeatedly referring to or including therein said candidate or political party. However, unless the facts and circumstances clearly indicate otherwise, the Commission will respect the determination by the publisher and/or editors of the newspapers or publications that the accounts or views published are significant, newsworthy and of public interest. (Emphasis supplied) Apparently in implementation of this Resolution, Comelec through Commissioner Regalado E. Maambong sent identical letters, dated 22 March 1995, to various publishers of newspapers like the Business World, the Philippine Star, the Malaya and the Philippine Times Journal, all members of PPI. These letters read as follows: This is to advise you that pursuant to Resolution No. 2772 of the Commission on Elections, you are directed to provide free print space of not less than one half (1/2) page for use as "Comelec Space" or similar to the print support which you have extended during the May 11, 1992 synchronized elections which was 2 full pages for each political party fielding senatorial candidates, from March 6, 1995 to May 6, 1995, to make known their qualifications, their stand on public issues and their platforms and programs of government. We shall be informing the political parties and candidates to submit directly to you their pictures, biographical data, stand on key public issues and platforms of government either as raw data or in the form of positives or camera-ready materials. Please be reminded that the political parties/candidates may be accommodated in your publication any day upon receipt of their materials until May 6, 1995 which is the last day for campaigning. We trust you to extend your full support and cooperation in this regard. (Emphasis supplied) In this Petition for Certiorari and Prohibition with prayer for the issuance of a Temporary Restraining Order, PPI asks us to declare Comelec Resolution No. 2772 unconstitutional and void on the ground that it violates the prohibition imposed by the Constitution upon the government, and any of its agencies, against the taking of private property for public use without just compensation. Petitioner also contends that the 22 March 1995 letter directives of Comelec requiring publishers to give free "Comelec Space" and at the same time process raw data to make it camera-ready, constitute impositions of involuntary servitude, contrary to the provisions of Section 18 (2), Article III of the 1987 Constitution. Finally, PPI argues that Section 8 of

Comelec Resolution No. 2772 is violative of the constitutionally guaranteed freedom of speech, of the press and of expression.1 On 20 April 1995, this Court issued a Temporary Restraining Order enjoining Comelec from enforcing and implementing Section 2 of Resolution No. 2772, as well as the Comelec directives addressed to various print media enterprises all dated 22 March 1995. The Court also required the respondent to file a Comment on the Petition. The Office of the Solicitor General filed its Comment on behalf of respondent Comelec alleging that Comelec Resolution No. 2772 does not impose upon the publishers any obligation to provide free print space in the newspapers as it does not provide any criminal or administrative sanction for non-compliance with that Resolution. According to the Solicitor General, the questioned Resolution merely established guidelines to be followed in connection with the procurement of "Comelec space," the procedure for and mode of allocation of such space to candidates and the conditions or requirements for the candidate's utilization of the "Comelec space" procured. At the same time, however, the Solicitor General argues that even if the questioned Resolution and its implementing letter directives are viewed as mandatory, the same would nevertheless be valid as an exercise of the police power of the State. The Solicitor General also maintains that Section 8 of Resolution No. 2772 is a permissible exercise of the power of supervision or regulation of the Comelec over the communication and information operations of print media enterprises during the election period to safeguard and ensure a fair, impartial and credible election.2 At the oral hearing of this case held on 28 April 1995, respondent Comelec through its Chairman, Hon. Bernardo Pardo, in response to inquiries from the Chief Justice and other Members of the Court, stated that Resolution No. 2772, particularly Section 2 thereof and the 22 March 1995 letters dispatched to various members of petitioner PPI, were not intended to compel those members to supply Comelec with free print space. Chairman Pardo represented to the Court that Resolution and the related letter-directives were merely designed to solicit from the publishers the same free print space which many publishers had voluntarily given to Comelec during the election period relating to the 11 May 1992 elections. Indeed, the Chairman stated that the Comelec would, that very afternoon, meet and adopt an appropriate amending or clarifying resolution, a certified true copy of which would forthwith be filed with the Court. On 5 May 1995, the Court received from the Office of the Solicitor General a manifestation which attached a copy of Comelec Resolution No. 2772-A dated 4 May 1995. The operative portion of this Resolution follows: NOW THEREFORE, pursuant to the powers vested in it by the Constitution, the Omnibus Election Code, Republic Acts No. 6646 and 7166 and other election laws, the Commission on Elections RESOLVED to clarify Sections 2 and 8 of Res. No. 2772 as follows: 1. Section 2 of Res. No. 2772 shall not be construed to mean as requiring publishers of the different mass media print publications to provide print space under pain of prosecution, whether administrative, civil or criminal, there being no sanction or penalty for violation of said Section provided for either in said Resolution or in Section

90 of Batas Pambansa Blg. 881, otherwise known as the Omnibus Election Code, on the grant of "Comelec space." 2. Section 8 of Res. No. 2772 shall not be construed to mean as constituting prior restraint on the part of publishers with respect to the printing or publication of materials in the news, opinion, features or other sections of their respective publications or other accounts or comments, it being clear from the last sentence of said Section 8 that the Commission shall, "unless the facts and circumstances clearly indicate otherwise . . . respect the determination by the publisher and/or editors of the newspapers or publications that the accounts or views published are significant, newsworthy and of public interest." This Resolution shall take effect upon approval. (Emphasis in the original) While, at this point, the Court could perhaps simply dismiss the Petition for Certiorari and Prohibition as having become moot and academic, we consider it not inappropriate to pass upon the first constitutional issue raised in this case. Our hope is to put this issue to rest and prevent its resurrection. Section 2 of Resolution No. 2772 is not a model of clarity in expression. Section 1 of Resolution No. 2772-A did not try to redraft Section 2; accordingly, Section 2 of Resolution No. 2772 persists in its original form. Thus, we must point out that, as presently worded, and in particular as interpreted and applied by the Comelec itself in its 22 March 1995 letter-directives to newspaper publishers, Section 2 of Resolution No. 2772 is clearly susceptible of the reading that petitioner PPI has given it. That Resolution No. 2772 does not, in express terms, threaten publishers who would disregard it or its implementing letters with some criminal or other sanction, does not by itself demonstrate that the Comelec's original intention was simply to solicit or request voluntary donations of print space from publishers. A written communication officially directing a print media company to supply free print space, dispatched by a government (here a constitutional) agency and signed by a member of the Commission presumably legally authorized to do so, is bound to produce a coercive effect upon the company so addressed. That the agency may not be legally authorized to impose, or cause the imposition of, criminal or other sanctions for disregard of such directions, only aggravates the constitutional difficulties inhearing in the present situation. The enactment or addition of such sanctions by the legislative authority itself would be open to serious constitutional objection. To compel print media companies to donate "Comelec-space" of the dimensions specified in Section 2 of Resolution No. 2772 (not less than one-half page), amounts to "taking" of private personal property for public use or purposes. Section 2 failed to specify the intended frequency of such compulsory "donation:" only once during the period from 6 March 1995 (or 21 March 1995) until 12 May 1995? or everyday or once a week? or as often as Comelec may direct during the same period? The extent of the taking or deprivation is not insubstantial; this is not a case of a de minimistemporary limitation or restraint upon the use of private property. The monetary value of the compulsory "donation," measured by the advertising

rates ordinarily charged by newspaper publishers whether in cities or in non-urban areas, may be very substantial indeed. The taking of print space here sought to be effected may first be appraised under the rubric of expropriation of private personal property for public use. The threshold requisites for a lawful taking of private property for public use need to be examined here: one is the necessity for the taking; another is the legal authority to effect the taking. The element of necessity for the taking has not been shown by respondent Comelec. It has not been suggested that the members of PPI are unwilling to sell print space at their normal rates to Comelec for election purposes. Indeed, the unwillingness or reluctance of Comelec to buy print space lies at the heart of the problem. 3 Similarly, it has not been suggested, let alone demonstrated, that Comelec has been granted the power of eminent domain either by the Constitution or by the legislative authority. A reasonable relationship between that power and the enforcement and administration of election laws by Comelec must be shown; it is not casually to be assumed. That the taking is designed to subserve "public use" is not contested by petitioner PPI. We note only that, under Section 3 of Resolution No. 2772, the free "Comelec space" sought by the respondent Commission would be used not only for informing the public about the identities, qualifications and programs of government of candidates for elective office but also for "dissemination of vital election information" (including, presumably, circulars, regulations, notices, directives, etc. issued by Comelec). It seems to the Court a matter of judicial notice that government offices and agencies (including the Supreme Court) simply purchase print space, in the ordinary course of events, when their rules and regulations, circulars, notices and so forth need officially to be brought to the attention of the general public. The taking of private property for public use is, of course, authorized by the Constitution, but not without payment of "just compensation" (Article III, Section 9). And apparently the necessity of paying compensation for "Comelec space" is precisely what is sought to be avoided by respondent Commission, whether Section 2 of Resolution No. 2772 is read as petitioner PPI reads it, as an assertion of authority to require newspaper publishers to "donate" free print space for Comelec purposes, or as an exhortation, or perhaps an appeal, to publishers to donate free print space, as Section 1 of Resolution No. 2772-A attempts to suggest. There is nothing at all to prevent newspaper and magazine publishers from voluntarily giving free print space to Comelec for the purposes contemplated in Resolution No. 2772. Section 2 of Resolution No. 2772 does not, however, provide a constitutional basis for compelling publishers, against their will, in the kind of factual context here present, to provide free print space for Comelec purposes. Section 2 does not constitute a valid exercise of the power of eminent domain. We would note that the ruling here laid down by the Court is entirely in line with the theory of democratic representative government. The economic costs of informing the general public about the qualifications and programs of those seeking elective office are most appropriately distributed as widely as possible throughout our society by the utilization of public funds, especially funds raised by taxation, rather than cast solely on one small sector of society, i.e., print media enterprises. The benefits which flow from a heightened level of information on and the awareness of the electoral process are commonly thought to be community-wide; the burdens should be allocated on the same basis. As earlier noted, the Solicitor General also contended that Section 2 of Resolution No. 2772, even if read as compelling publishers to "donate" "Comelec space, " may be sustained as a

valid exercise of the police power of the state. This argument was, however, made too casually to require prolonged consideration on our part. Firstly, there was no effort (and apparently no inclination on the part of Comelec) to show that the police power — essentially a power of legislation — has been constitutionally delegated to respondent Commission.4 Secondly, while private property may indeed be validly taken in the legitimate exercise of the police power of the state, there was no attempt to show compliance in the instant case with the requisites of a lawful taking under the police power. 5 Section 2 of Resolution No. 2772 is a blunt and heavy instrument that purports, without a showing of existence of a national emergency or other imperious public necessity, indiscriminately and without regard to the individual business condition of particular newspapers or magazines located in differing parts of the country, to take private property of newspaper or magazine publishers. No attempt was made to demonstrate that a real and palpable or urgent necessity for the taking of print space confronted the Comelec and that Section 2 of Resolution No. 2772 was itself the only reasonable and calibrated response to such necessity available to the Comelec. Section 2 does not constitute a valid exercise of the police power of the State. We turn to Section 8 of Resolution No. 2772, which needs to be quoted in full again: Sec. 8. Undue Reference to Candidates/Political Parties in Newspapers. — No newspaper or publication shall allow to be printed or published in the news, opinion, features, or other sections of the newspaper or publication accounts or comments which manifestly favor or oppose any candidate or political party by unduly or repeatedly referring to or including therein said candidate or political party. However, unless the facts and circumstances clearly indicate otherwise, the Commission will respect the determination by the publisher and/or editors of the newspapers or publications that the accounts or views published are significant, newsworthy and of public interest. It is not easy to understand why Section 8 was included at all in Resolution No. 2772. In any case, Section 8 should be viewed in the context of our decision in National Press Club v. Commission on Elections. 6 There the Court sustained the constitutionality of Section 11 (b) of R.A. No. 6646, known as the Electoral Reforms Law of 1987, which prohibits the sale or donation of print space and airtime for campaign or other political purposes, except to the Comelec. In doing so, the Court carefully distinguished (a) paid political advertisements which are reached by the prohibition of Section 11 (b), from (b) the reporting of news, commentaries and expressions of belief or opinion by reporters, broadcasters, editors, commentators or columnists which fall outside the scope of Section 11 (b) and which are protected by the constitutional guarantees of freedom of speech and of the press: Secondly, and more importantly, Section 11 (b) is limited in its scope of application. Analysis of Section 11 (b) shows that it purports to apply only to the purchase and sale, including purchase and sale disguised as a donation, of print space and air time for campaign or other political purposes. Section 11 (b) does not purport in any way to restrict the reporting by newspapers or radio or television stations of news or news-worthy events relating to candidates, their qualifications, political parties and programs of government. Moreover, Section 11 (b) does not reach commentaries and expressions of belief or opinion by reporters or broadcaster or editors or commentators or columnists in respect of candidates, their qualifications, and programs and so forth, so long

at least as such comments, opinions and beliefs are not in fact advertisements for particular candidates covertly paid for. In sum, Section 11 (b) is not to be read as reaching any report or commentary or other coverage that, in responsible media, is not paid for by candidates for political office. We read Section 11 (b) as designed to cover only paid political advertisements of particular candidates. The above limitation in scope of application of Section 11 (b) — that it does not restrict either the reporting of or the expression of belief or opinion or comment upon the qualifications and programs and activities of any and all candidates for office — constitutes the critical distinction which must be made between the instant case and that of Sanidad v. Commission on Elections. . . . 7 (Citations omitted; emphasis supplied) Section 8 of Resolution No. 2772 appears to represent the effort of the Comelec to establish a guideline for implementation of the above-quoted distinction and doctrine in National Press Club an effort not blessed with evident success. Section 2 of Resolution No. 2772-A while possibly helpful, does not add substantially to the utility of Section 8 of Resolution No. 2772. The distinction between paid political advertisements on the one hand and news reports, commentaries and expressions of belief or opinion by reporters, broadcasters, editors, etc. on the other hand, can realistically be given operative meaning only in actual cases or controversies, on a case-to-case basis, in terms of very specific sets of facts. At all events, the Court is bound to note that PPI has failed to allege any specific affirmative action on the part of Comelec designed to enforce or implement Section 8. PPI has not claimed that it or any of its members has sustained actual or imminent injury by reason of Comelec action under Section 8. Put a little differently, the Court considers that the precise constitutional issue here sought to be raised — whether or not Section 8 of Resolution No. 2772 constitutes a permissible exercise of the Comelec's power under Article IX, Section 4 of the Constitution to supervise or regulate the enjoyment or utilization of all franchise or permits for the operation of — media of communication or information — [for the purpose of ensuring] equal opportunity, time and space, and the right of reply, including reasonable, equal rates therefore, for public information campaigns and forums among candidates in connection with the objective of holding free, orderly honest, peaceful and credible elections — is not ripe for judicial review for lack of an actual case or controversy involving, as the very lis mota thereof, the constitutionality of Section 8. Summarizing our conclusions: 1. Section 2 of Resolution No. 2772, in its present form and as interpreted by Comelec in its 22 March 1995 letter directives, purports to require print media enterprises to "donate" free print space to Comelec. As such, Section 2 suffers from a fatal constitutional vice and must be set aside and nullified. 2. To the extent it pertains to Section 8 of Resolution No. 2772, the Petition for Certiorari and Prohibition must be dismissed for lack of an actual, justiciable case or controversy.

WHEREFORE, for all the foregoing, the Petition for Certiorari and Prohibition is GRANTED in part and Section 2 of Resolution No. 2772 in its present form and the related letter-directives dated 22 March 1995 are hereby SET ASIDE as null and void, and the Temporary Restraining Order is hereby MADE PERMANENT. The Petition is DISMISSED in part, to the extent it relates to Section 8 of Resolution No. 2772. No pronouncement as to costs. THIRD DIVISION

[G.R. No. 125218. January 23, 1998]

FILSTREAM INTERNATIONAL INCORPORATED, petitioner, vs. COURT OF APPEALS, JUDGE FELIPE S. TONGCO and THE CITY OF MANILA, respondent.

[G.R. No. 128077. January 23, 1998]

FILSTREAM INTERNATIONAL INCORPORATED, petitioner, vs., COURT OF APPEALS, ORLANDO MALIT, ANTONIO CAGUIAT, ALICIA CABRERA, ARMANDO LACHICA, JACINTO CAGUIAT, GLORIA ANTONIO, ELIZALDE NAVARRA, DOLORES FUENTES, SUSANA ROY, ANTONIO IBANEZ, BENIGNO BASILIO, LUCERIA DEMATULAC, FLORENCIA GOMEZ, LAZARO GOMEZ, JOSE GOMEZ, VENANCIO MANALOTO, CRISTINO UMALI, DEMETRIA GATUS, PRISCILLA MALONG, DOMINGO AGUILA, RAMON SAN AGUSTIN, JULIAN FERRER, JR., FRANCISCO GALANG, FLORENTINO MALIWAT, SEVERINA VILLAR, TRINIDAD NAGUIT, JOSE NAGUIT, FORTUNATO AGUSTIN CABRERA, GAUDENCIO INTAL, DANILO DAVID, ENRIQUE DAVID, VICENTE DE GUZMAN, POLICARPIO LUMBA, BELEN PALMA, ELEN SOMVILLO, LEONARDO MANICAD, OPRENG MICLAT, BENITA MATA, GREGORIO LOPEZ, MARCELINA SAPNO, JESUS MERCADO, and CALIXTO GOMEZ, respondent. DECISION FRANCISCO, J.: In resolving the instant petitions, the Court is tasked to strike a balance between the contending interests when the state exercised its power of eminent domain. On one side we have the owners of the property to be expropriated who must be duly compensated for the loss of their property, while on the other is the State which must take the property for public use. Petitioner, Filstream International Inc., is the registered owner of the properties subject of this dispute consisting of adjacent parcels of land situated in Antonio Rivera Street, Tondo II, Manila, with a total area of 3,571.10 square meters and covered by T.C.T. Nos. 203937, 203936, 169198, 169199, 169200 and 169202 of the Register of Deeds of Manila.

On January 7, 1993, petitioner filed an ejectment suit before the Metropolitan Trial Court of Manila (Branch 15) docketed as Civil Case No. 140817-CV against the occupants of the abovementioned parcels of land (herein private respondents in G.R. No. 128077) on the grounds of termination of the lease contract and non-payment of rentals. Judgment was rendered by the MTC on September 14, 1993 ordering private respondents to vacate the premises and pay back rentals to petitioner.[1] Not satisfied, private respondents appealed the decision to the Regional Trial Court of Manila, Branch 4 (Civil Case No. 93-68130) which in turn affirmed the decision of the MTC in its decision dated February 22, 1994. Still not content, private respondents proceeded to the Court of Appeals via a petition for review (CA-G.R. SP No. 33714). The result however remained the same as the CA affirmed the decision of the RTC in its decision dated August 25, 1994.[2] Thereafter, no further action was taken by the private respondents, as a result of which the decision in the ejectment suit became final and executory. However, it appeared that during the pendency of the ejectment proceedings private respondents filed on May 25, 1993, a complaint for Annulment of Deed of Exchange against petitioner Filstream which was docketed in Civil Case No. 93-66059 before the RTC of Manila, Branch 43. It was at this stage that respondent City of Manila came into the picture when the city government approved Ordinance No. 7813[3] on November 5, 1993, authorizing Mayor Alfredo S. Lim to initiate the acquisition by negotiation, expropriation, purchase, or other legal means certain parcels of land registered under T.C.T. Nos. 169193, 169198, 169190, 169200, 169202, and 169192 of the Registry of Deeds of Manila which formed part of the properties of petitioner then occupied by private respondents. Subsequently, the City of Manila approved Ordinance No. 7855[4] declaring the expropriation of certain parcels of land situated along Antonio Rivera and Fernando Ma. Guerero streets in Tondo, Manila which were owned by Mr. Enrique Quijano Gutierez, petitioners predecessor-in-interest. The said properties were to be sold and distributed to qualified tenants of the area pursuant to the Land Use Development Program of the City of Manila. On May 23, 1994, respondent City of Manila filed a complaint for eminent domain (Civil Case No. 94-70560) before the RTC of Manila, Branch 42,[5] seeking to expropriate the aforecited parcels of land owned by petitioner Filstream which are situated at Antonio Rivera Street, Tondo II, Manila.[6] Pursuant to the complaint filed by respondent City of Manila,the trial court issued a Writ of Possession[7] in favor of the former which ordered the transfer of possession over the disputed premises to the City of Manila. At this juncture, petitioner Filstream filed a motion to dismiss the complaint for eminent domain as well as a motion to quash the writ of possession. The motion to dismiss was premised on the following grounds: no valid cause of action; the petition does not satisfy the requirements of public use and a mere clandestine maneuver to circumvent the writ execution issued by the RTC of Manila, Branch 4 in the ejectment suit; violation of the constitutional guarantee against non-impairment of obligation and contract; price offered was too low hence violative of the just compensation provision of the constitution and the said amount is without the certification of the City Treasurer for availability of funds. [8] With respect to the motion to quash the writ of possession, petitioner raised the following objections: failure to comply with Section 2 of Rule 67 of the Rules of Court, Ordinance No. 7813 is a void enactment for it was approved without a public hearing and violative of the constitutional guarantee against impairment of obligation and contracts; the price is too low and unconscionable violating the just compensation provision of the constitution, and the said writ is tainted with infirmity considering

the absence of a certification from the City of Manila that there is an immediately available fund for the subject expropriation.[9] Respondent City of Manila filed its opposition[10] to petitioner Filstreams two motion and to which petitioner accordingly filed a reply.[11] On September 30, 1994, the RTC of Manila, Branch 42, issued an order denying petitioner Filstreams motion to dismiss and the motion to quash the Writ of Possession and declared as follows: IN FINE, the defendants motion to dismiss and motion to quash writ of possession are both without merit and are hereby DENIED and the subject parcels of lands covered by TCT Nos. 203937, 203936, 169198, 169199, 169200, and 169202 (of the Register of Deeds of Manila) located at Antonio Rivera Street, Tondo II, Manila with a total area of 3,571.10 square meters are hereby declared CONDEMNED in favor of the City of Manila for distribution and resale to all poor and landless qualified residents/tenants in the said area under the citys land-for-thelandless program upon payment of just compensation which is yet to be determined by this Court.[12] Petitioner filed a motion for reconsideration[13] as well as a supplemental motion for reconsideration[14] seeking the reversal of the above-quoted order but the same were denied.[15] Still, petitioner filed a subsequent motion to be allowed to file a second motion for reconsideration but it was also denied. Aggrieved, petitioner filed on March 31, 1996, a Petition for Certiorari with the Court of Appeals (CA-G.R. SP No. 36904) seeking to set aside the September 30, 1994 order of the RTC of Manila, Branch 42. However, on March 18, 1996, respondent CA issued a resolution dismissing the petition in this wise: It appearing that the above-entitled petition is insufficient in form and substance -- it does not comply with Section 2(a), Rule 6 of the Revised Internal Rules of the Court of Appeals which requires that the petition shall be x x x accompanied by x x x other pertinent documents and papers, aside from the fact that copies of the pleadings attached to the petition are blurred and unreadable -- this Court resolved to summarily DISMISS the same (petition).[16] Petitioner filed a motion for reconsideration and attached clearer copies of the pertinent documents and papers pursuant to Section 2(a) Rule 6 of the Revised Internal Rules of the Court of Appeals. But on May 20, 1996, respondent CA issued a resolution denying the motion as petitioner failed to submit clearer and readable copies of the pleadings.[17]This prompted petitioner to proceed to this Court giving rise to the instant petition for review on certiorari under Rule 45 and docketed herein as G.R. No. 125218, assailing the dismissal of its petition by the CA in its resolution dated March 18, 1996 as well as that of its motion for reconsideration in the resolution dated May 20, 1996. Meanwhile, owing to the finality of the decision in the ejectment suit (Civil Case No 140817 CV), the MTC of Manila, Branch 15, upon motion of petitioner Filstream, issued a Writ of Execution as well as a Notice to Vacate the disputed premises.[18] Private respondents filed a Motion to Recall/Quash the Writ of Execution and Notice to Vacate[19] alleging the existence of a supervening event in that the properties subject of the dispute have already been ordered condemned in an expropriation proceeding in favor of the City of Manila for the benefit of the qualified occupants thereof, thus execution shall be stayed. Petitioner opposed the motion, reiterating that the decision in the ejectment case is already final and executory and disputed private respondents right to interpose the expropriation proceedings as a defense because the latter were not parties to the same.

For its part, the City of Manila filed on March 13, 1996, a motion for intervention with prayer to stay/quash the writ of execution on the ground that it is the present possessor of the property subject of execution. In its order dated March 14, 1996, the MTC of Manila, Branch 14, denied private respondents motion as it found the allegations therein bereft of merit and upheld the issuance of the Writ of Execution and Notice to Vacate in petitioners favor.[20] Subsequently, the trial court also denied the motion filed by the City of Manila. On April 22, 1996, the trial court issued an order commanding the demolition of the structure erected on the disputed premises. To avert the demolition, private respondents filed before the RTC of Manila, Branch 14, a Petition for Certiorari and Prohibition with prayer for the issuance of a temporary restraining order and preliminary injunction (docketed as Civil Case No. 96-78098). On April 29, 1996, the RTC of Manila, Branch 33, issued a TRO enjoining the execution if the writ issued in Civil Case No. 140817-CV by the MTC of Manila, Branch 14.[21] Subsequently, the RTC issued a writ of preliminary injunction on May 14, 1996.[22] On May 15, 1996, the City of Manila filed its Petition for Certiorari and Prohibition with prayer for the issuance of a temporary restraining order and preliminary injunction which was raffled to Branch 23 of the RTC of Manila (docketed as Civil Case No. 96-78382), seeking the reversal of the orders issued by the MTC of Manila, Branch 14, which denied its motion to intervene and quash the writ of execution in Civil Case No. 140817-CV. Thereafter, upon motion filed by the City of Manila, an order was issued by the RTC of Manila, Branch 10, ordering the consolidation of Civil Case No. 96-78382 with Civil Case No. 96-78098 pending before Branch 14 of the RTC of Manila.[23] On May 21, 1996, the RTC of Manila, Branch 14, issued an injunction in Civil Case No. 96-78098 enjoining the implementation of the writ of execution until further orders from the court. [24] Petitioner Filstream filed a Motion to Dissolve the Writ of Preliminary Injunction and to be allowed to post a counterbond but the trial court denied the same. Filstream then filed a motion for reconsideration from the order of denial but pending resolution of this motion for voluntary inhibition of the presiding judge of the RTC of Manila, Branch 14. The motion for inhibition was granted[25] and as a result, the consolidated cases (Civil Case No. 96-78382 and 96-78098) were re-raffled to the RTC of Manila, Branch 33. During the proceedings before the RTC of Manila, Branch 33, petitioner Filstream moved for the dismissal of the consolidated cases (Civil Case No. 96-78382 and 96-78098) for violation of Supreme Court Circular No. 04-94 (forum shopping) because the same parties, causes of action and subject matter involved therein have already been disposed of in the decision in the ejectment case (Civil Case No. 140817) which has already become final and executory prior to the filing of these consolidated cases. On December 9, 1996, an order was issued by the RTC of Manila, Branch 33, ordering the dismissal of Civil Cases Nos. 96-78382 and 96-78098 for violation of Supreme Court Circular No. 04-94.[26] Immediately thereafter, petitioner Filstream filed an Ex-parte Motion for Issuance of an Alias Writ of Demolition and Ejectment and a supplemental motion to the same dated January 10 and 13, 1997, respectively,[27] before the MTC of Manila, Branch 15, which promulgated the decision in the ejectment suit (Civil Case No. 140817-CV).On January 23, 1997, the court granted the motion and issued the corresponding writ of demolition. As a consequence of the dismissal of the consolidated cases, herein private respondents filed a Petition for Certiorari and Prohibition with prayer for the issuance of a temporary restraining order and preliminary injunction before the Court of Appeals (docketed as CA-G.R. SP No. 43101)[28] assailing the above-mentioned order of dismissal by the RTC of Manila,

Branch 33, as having been issued with grave abuse of discretion tantamount to lack or in excess of jurisdiction. In a resolution dated January 28, 1997, the Court of Appeals granted herein private respondents prayer for the issuance of a temporary restraining order and directed the MTC of Manila, Branch 15, to desist from implementing the order of demolition dated January 23, 1997, unless otherwise directed.[29] At the conclusion of the hearing for the issuance of a writ of preliminary injunction, the Court of Appeals, in its resolution dated February 18, 1997, found merit in private respondents allegations in support of their application of the issuance of the writ and granted the same, to wit: Finding that the enforcement or implementation of the writ of execution and notice to vacate issued in Civil Case No. 140817-CV, the ejectment case before respondent Judge Jiro, during the pendency of the instant petition, would probably be in violation of petitioners right, and would tend to render the judgment in the instant case ineffectual, and probably work injustice to the petitioners, the application for the issuance of a writ of preliminary injunction is hereby GRANTED. WHEREFORE, upon the filing of a bond in the amount of P150,000.00, let a writ of preliminary injunction be issued enjoining respondents, their employees, agents, representatives and anyone acting in their behalf from enforcing or executing the writ of execution and notice to vacate issued in Civil Case No. 140817-CV of the court of respondent Judge Jiro, or otherwise disturbing the status quo, until further orders of this Court.[30] In turn, petitioner Filstream is now before this Court via a Petition for Certiorari under Rule 65 (G.R. No. 128077), seeking to nullify the Resolutions of the Court of Appeals dated January 28, 1997 and February 18, 1997 which granted herein private respondents prayer for a TRO and Writ of Preliminary Injunction, the same being null and void for having been issued in grave abuse of discretion. Upon motion filed by petitioner Filstream, in order to avoid any conflicting decision on the legal issues raised in the petitions, the Court ordered that the later petition, G.R. No. 128077 be consolidated with G.R. No. 128077 in the resolution of March 5, 1997.[31] The issue raised in G.R. No. 125218 is purely procedural and technical matter. Petitioner takes exception to the resolutions of respondent CA dated March 18, 1996 and May 20, 1996 which ordered the dismissal of its Petition for Certiorari for non-compliance with Sec. 2(a) of Rule 6 of the Revised Internal Rules of the Court of Appeals by failing to attach to its petition other pertinent documents and papers and for attaching copies of pleadings which are blurred and unreadable. Petitioner argues that respondent appellate court seriously erred in giving more premium to form rather than the substance. We agree with the petitioner. A strict adherence to the technical and procedural rules in this case would defeat rather than meet the ends of justice as it would result in the violation of the substantial rights of petitioner. At stake in the appeal filed by petitioner before the CA is the exercise of their property rights over the disputed premises which have been expropriated and have in fact been ordered condemned in favor of the City of Manila. In effect, the dismissal of their appeal in the expropriation proceedings based on the aforementioned grounds is tantamount to a deprivation of property without due process of law as it would automatically validate the expropriation proceedings based on the aforementioned grounds is tantamount to a deprivation of property without due process of law as it would automatically validate the

expropriation proceedings which the petitioner is still disputing. It must be emphasized that where substantial rights are affected, as in this case, the stringent application of procedural rules may be relaxed if only to meet the ends of substantial justice. In these instances, respondent CA can exercise its discretion to suspend its internal rules and allow the parties to present and litigate their causes of action so that the Court can make an actual and complete disposition of the issues presented in the case. Rather than simply dismissing the petition summarily for non-compliance with respondent courts internal rules, respondent CA should have instead entertained petitioner Filstreams petition for review on Certiorari, and ordered petitioner to submit the corresponding pleadings which it deems relevant and replace those which are unreadable. This leniency could not have caused any prejudiced to the rights of the other parties. With regard to the other petition, G.R. No. 128077, petitioner Filstream objects to the issuance by respondent CA of the restraining order and the preliminary injunction enjoining the execution of the writ of demolition issued in the ejectment suit (Civil Case No. 140817-CV) as an incident to private respondents pending petition assailing the dismissal by the RTC of Manila, Branch 33, of the consolidated petitions for certiorari filed by private respondents and the City of Manila on the ground of forum shopping. The propriety of the issuance of the restraining order and the writ of preliminary injunction is but a mere incient to the actual controversy which is rooted in the assertion of the conflicting rights of the parties in this case over the disputed premises. In order to determine whether private respondents are entitled to the injunctive reliefs granted by respondent CA, we deemed it proper to extract the source of discord. Petitioner Filstream anchors its claim by virtue of its ownership over the properties and the existence of a final and executory judgment against private respondents ordering the latters ejectment from the premises (Civil Case No. 140817-CV). Private respondents claim on the other hand hinges on an alleged supervening event which has rendered the enforcement of petitioners rights moot, that is, the expropriation proceedings (Civil Case No. 94-70560) undertaken by the City of Manila over the disputed premises for the benefit of herein private respondents. For its part, the City of Manila is merely exercising its power of eminent domain within its jurisdiction by expropriating petitioners properties for public use. There is no dispute as to the existence of a final and executory judgment in favor of petitioner Filstream ordering the ejectment of private respondents from the properties subject of this dispute. The judgment in the ejectment suit became final and executory after private respondents failed to interpose any appeal from the adverse decision of the Court of Appeals dated August 25, 1994 in CA-G.R. SP No. 33714. Thus, petitioner has every right to assert the execution of this decision as it had already became final and executory. However, it must also be conceded that the City of Manila has an undeniable right to exercise its power of eminent domain within its jurisdiction. The right to expropriate private property for public use is expressly granted to it under Section 19 of the 1991 Local Government Code, to wit: SECTION 19. Eminent Domain A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose, or welfare for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws: Provided, however, that the power of eminent domain may not be exercised unless a valid and definite

offer has been previously made to the owner, and such offer was not accepted; Provided, further, That the local government unit may immediately take possession of the property upon the filing of the expropriation proceedings and upon making a deposit with the proper court of at least fifteen (15%) of the fair market value of the property based on the current tax declaration of the property to be expropriated: Provided, finally, That the amount to be paid for the expropriated property shall be determined by the proper court, based on the fair market value at the time of the taking of the property. (Italics supplied) More specifically, the City of Manila has the power to expropriate private property in the pursuit of its urban land reform and housing program as explicitly laid out in the Revised Charter of the City of Manila (R.A. No. 409) as follows: General powers The city may have a common seal and alter the same at pleasure, and may take, purchase, receive, hold, lease, convey, and dispose of real and personal property for the general interest of the city, condemn private property for public use, contract and be contracted with, sue and be sued, and prosecute and defend to final judgment and execution, and exercise all the powers hereinafter conferred. (R.A. 409, Sec. 3; Italics supplied). xxxxxxxxx Sec. 100. The City of Manila is authorized to acquire private lands in the city and to subdivide the same into home lots for sale on easy terms to city residents, giving first priority to the bona fide tenants or occupants of said lands, and second priority to laborers and low-salaried employees. For the purpose of this section, the city may raise necessary funds by appropriations of general funds, by securing loans or by issuing bonds, and, if necessary, may acquire the lands through expropriation proceedings in accordance with law, with the approval of the President x x x. (Italics supplied). In fact, the City of Manilas right to exercise these prerogatives notwithstanding the existence of a final and executory judgment over the property to be expropriated has been upheld by this Court in the case of Philippine Columbian Association vs. Panis, G.R. No. 106528, December 21, 1993.[32] Relying on the aforementioned provisions of the Revised Charter of the City of Manila, the Court declared that: The City of Manila, acting through its legislative branch, has the express power to acquire private lands in the city and subdivide these lands into home lots for sale to bona-fide tenants or occupants thereof, and to laborers and low-salaried employees of the city. That only a few could actually benefit from the expropriation of the property does not diminish its public use character. It is simply not possible to provide all at once land and shelter for all who need them (Sumulong v. Guerrero, 154 SCRA 461 [1987]). Corollary to the expanded notion of public use, expropriation is not anymore confined to vast tracts of land and landed estates (Province of Camarines Sur v. Court of Appeals, G.R. Nol 103125, May 17, 1993; J. M. Tuason and Co., Inc. v. Land Tenure Administration, 31 SCRA 413 [1970]). It is therefore of no moment that the land sought to be expropriated in this case is less than the half a hectare only (Pulido v. Court of Appeals, 122 SCRA 63 [1983]). Through the years, the public use requirement in eminent domain has evolved into a flexible concept, influenced by changing conditions (Sumulong v. Guerrero, supra; Manotok v. National

Housing Authority, 150 SCRA 89 [1987]; Heirs of Juancho Ardona v. Reyes, 125 SCRA 220 [1983]). Public use now includes the broader notion of indirect public benefit or advantage, including a particular, urban land reform and housing.[33] We take judicial notice of the fact that urban land reform has become a paramount task in view of the acute shortage of decent housing in urban areas particularly in Metro Manila. Nevertheless, despite the existence of a serious dilemma, local government units are not given an unbridled authority when exercising their power of eminent domain in pursuit of solutions to these problems. The basic rules still have to be followed, which are as follows: 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 (Art. 3, Sec. 1, 1987 Constitution); private property shall not be taken for public use without just compensation (Art. 3, Section 9, 1987 Constitution). Thus the exercise by local government units of the power of eminent domain is not without limitations. Even Section 19 of the 1991 Local Government Code is very explicit that it must comply with the provisions of the Constitution and pertinent laws, to wit: SECTION 19. Eminent Domain. A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose, or welfare for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws: x x x. (Italics supplied). The governing law that deals with the subject of expropriation for purposed of urban land reform and housing in Republic Act No. 7279 (Urban Development and Housing Act of 1992) and Sections 9 and 10 of which specifically provide as follows: 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 sub-divisions, 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 of Priority Development, Zonal Improvement sites, and Slum Improvement and Resettlement Program sites which have not yet been acquired; (e) Bagong Lipunan Improvement sites and Services or BLISS sites 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.

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: Provided, finally, That abandoned property, as herein defined, shall be reverted and escheated to the State in a proceeding analogous to the procedure laid down in Rule 91 of the Rules of Court. For the purpose of socialized housing, government-owned and foreclosed properties shall be acquired by the local government units, or by the National Housing Authority primarily through negotiated purchase: Provided, That qualified beneficiaries who are actual occupants of the land shall be given the right of first refusal. (Italics supplied). Very clear from the abovequoted provisions are the limitations with respect to the order of priority in acquiring private lands and in resorting to expropriation proceedings as means to acquire the same. Private lands rank last in the order of priority for purposes of socialized housing. In the same vein, expropriation proceedings are to be resorted to only when the other modes of acquisition have been exhausted. Compliance with these conditions must be deemed mandatory because these are the only safeguards in securing the right of owners of private property to due process when their property is expropriated for public use. Proceeding from the parameters laid out in the above disquisitions, we now pose the crucial question: Did the city of Manila comply with the abovementioned conditions when it expropriated petitioner Filstreams properties? We have carefully scrutinized the records of this case and found nothing that would indicate the respondent City of Manila complied with Sec. 9 and Sec. 10 of R.A. 7279. Petitioners Filstreams properties were expropriated and ordered condemned in favor of the City of Manila sans any showing that resort to the acquisition of other lands listed under Sec. 9 of RA 7279 have proved futile. Evidently, there was a violation of petitioner Filstreams right to due process which must accordingly be rectified. Indeed, it must be emphasized that the State has a paramount interest in exercising its power of eminent domain for the general good considering that the right of the State to expropriate private property as long as it is for public use always takes precedence over the interest of private property owners. However we must not lose sight of the fact that the individual rights affected by the exercise of such right are also entitled to protection, bearing in mind that the exercise of this superior right cannot override the guarantee of due process extended by the law to owners of the property to be expropriated. In this regard, vigilance over compliance with the due process requirements is in order. WHEREFORE, the petitions are hereby GRANTED. In G.R. 125218, the resolutions of the Court of Appeals in CA-G.R. SP No. 36904 dated March 18, 1996 and May 20, 1996 are hereby REVERSED and SET ASIDE. In G.R. No. 128077, the resolution of the Court of Appeals in CAG.R. SP No. 43101 dated January 28, 1997 and February 18, 1997 are REVERSED and SET ASIDE. SECOND DIVISION

[G.R. No. 152230. August 9, 2005]

JESUS IS LORD CHRISTIAN SCHOOL FOUNDATION, INC., petitioner, vs. MUNICIPALITY (now CITY) OF PASIG, METRO MANILA, respondent. DECISION CALLEJO, SR., J.: Before us is a petition for review of the Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 59050, and its Resolution dated February 18, 2002, denying the motion for reconsideration thereof. The assailed decision affirmed the order of the Regional Trial Court (RTC) of Pasig, Branch 160, declaring the respondent Municipality (now City) of Pasig as having the right to expropriate and take possession of the subject property.

The Antecedents The Municipality of Pasig needed an access road from E. R. Santos Street, a municipal road near the Pasig Public Market, to Barangay Sto. Tomas Bukid, Pasig, where 60 to 70 houses, mostly made of light materials, were located. The road had to be at least three meters in width, as required by the Fire Code, so that fire trucks could pass through in case of conflagration.[2] Likewise, the residents in the area needed the road for water and electrical outlets.[3] The municipality then decided to acquire 51 square meters out of the 1,791-square meter property of Lorenzo Ching Cuanco, Victor Ching Cuanco and Ernesto Ching Cuanco Kho covered by Transfer Certificate of Title (TCT) No. PT-66585,[4] which is abutting E. R. Santos Street. On April 19, 1993, the Sangguniang Bayan of Pasig approved an Ordinance[5] authorizing the municipal mayor to initiate expropriation proceedings to acquire the said property and appropriate the fund therefor. The ordinance stated that the property owners were notified of the municipalitys intent to purchase the property for public use as an access road but they rejected the offer. On July 21, 1993, the municipality filed a complaint, amended on August 6, 1993, against the Ching Cuancos for the expropriation of the property under Section 19 of Republic Act (R.A.) No. 7160, otherwise known as the Local Government Code. The plaintiff alleged therein that it notified the defendants, by letter, of its intention to construct an access road on a portion of the property but they refused to sell the same portion. The plaintiff appended to the complaint a photocopy of the letter addressed to defendant Lorenzo Ching Cuanco.[6] The plaintiff deposited with the RTC 15% of the market value of the property based on the latest tax declaration covering the property. On plaintiffs motion, the RTC issued a writ of possession over the property sought to be expropriated. On November 26, 1993, the plaintiff caused the annotation of a notice of lis pendens at the dorsal portion of TCT No. PT-92579 under the name of the Jesus Is Lord Christian School Foundation, Incorporated (JILCSFI) which had purchased the property.[7] Thereafter, the plaintiff constructed therein a cemented road with a width of three meters; the road was called Damayan Street. In their answer,[8] the defendants claimed that, as early as February 1993, they had sold the said property to JILCSFI as evidenced by a deed of sale[9] bearing the signature of defendant Ernesto Ching Cuanco Kho and his wife.

When apprised about the complaint, JILCSFI filed a motion for leave to intervene as defendant-in-intervention, which motion the RTC granted on August 26, 1994.[10] In its answer-in-intervention, JILCSFI averred, by way of special and affirmative defenses, that the plaintiffs exercise of eminent domain was only for a particular class and not for the benefit of the poor and the landless. It alleged that the property sought to be expropriated is not the best portion for the road and the least burdensome to it. The intervenor filed a crossclaim against its co-defendants for reimbursement in case the subject property is expropriated. [11] In its amended answer, JILCSFI also averred that it has been denied the use and enjoyment of its property because the road was constructed in the middle portion and that the plaintiff was not the real party-in-interest. The intervenor, likewise, interposed counterclaims against the plaintiff for moral damages and attorneys fees.[12] During trial, Rolando Togonon, the plaintiffs messenger, testified on direct examination that on February 23, 1993, he served a letter of Engr. Jose Reyes, the Technical Assistant to the Mayor on Infrastructure, to Lorenzo Ching Cuanco at his store at No. 18 Alkalde Jose Street, Kapasigan, Pasig. A lady received the same and brought it inside the store. When she returned the letter to him, it already bore the signature of Luz Bernarte. He identified a photocopy of the letter as similar to the one he served at the store. On cross-examination, he admitted that he never met Luz Bernarte. [13] Edgardo del Rosario, a resident of Sto. Tomas Bukid since 1982 declared that pass through a wooden bridge to go to E. R. Santos Street. At times, the bridge slippery and many had met accidents while walking along the bridge. Because of requested Mayor Vicente Eusebio to construct a road therein. He attested that construction of the cemented access road, the residents had water and electricity.[14]

he would would be this, they after the

Augusto Paz of the City Engineers Office testified that, sometime in 1992, the plaintiff constructed a road perpendicular from E. R. Santos Street to Sto. Tomas Bukid; he was the Project Engineer for the said undertaking. Before the construction of the road, the lot was raw and they had to put filling materials so that vehicles could use it. According to him, the length of the road which they constructed was 70 meters long and 3 meters wide so that a fire truck could pass through. He averred that there is no other road through which a fire truck could pass to go to Sto. Tomas Bukid.[15] Manuel Tembrevilla, the Fire Marshall, averred that he had seen the new road, that is, Damayan Street, and found that a fire truck could pass through it. He estimated the houses in the area to be around 300 to 400. Tembrevilla also stated that Damayan Street is the only road in the area.[16] Finally, Bonifacio Maceda, Jr., Tax Mapper IV, testified that, according to their records, JILCSFI became the owner of the property only on January 13, 1994.[17] The plaintiff offered in evidence a photocopy of the letter of Engr. Jose Reyes addressed to Lorenzo Ching Cuanco to prove that the plaintiff made a definite and valid offer to acquire the property to the co-owners. However, the RTC rejected the same letter for being a mere photocopy.[18] For the defendant-intervenor, Normita del Rosario, owner of the property located across the subject property, testified that there are other roads leading to E. R. Santos Street. She asserted that only about ten houses of the urban poor are using the new road because the other residents are using an alternative right-of-way. She averred that she did not actually occupy her property; but there were times that she visited it.[19]

Danilo Caballero averred that he had been a resident of Sto. Tomas Bukid for seven years. From his house, he could use three streets to go to E. R. Santos Street, namely, Catalina Street, Damayan Street and Bagong Taon Street. On cross-examination, he admitted that no vehicle could enter Sto. Tomas Bukid except through the newly constructed Damayan Street.[20] Eduardo Villanueva, Chairman of the Board of Trustees and President of JILCSFI, testified that the parcel of land was purchased for purposes of constructing a school building and a church as worship center. He averred that the realization of these projects was delayed due to the passing of the ordinance for expropriation.[21] The intervenor adduced documentary evidence that on February 27, 1993, Lorenzo Ching Cuanco and the co-owners agreed to sell their property covered by TCT No. PT-66585 for P1,719,000.00.[22] It paid a down payment of P1,000,000.00 for the property. After payment of the total purchase price, the Ching Cuancos executed a Deed of Absolute Sale[23] over the property on December 13, 1993. On December 21, 1993, TCT No. PT-92579 was issued in the name of JILCSFI.[24] It declared the property for taxation purposes under its name.[25] On September 3, 1997, the RTC issued an Order in favor of the plaintiff, the dispositive portion of which reads: WHEREFORE, in view of the foregoing and in accordance with Section 4, Rule 67 of the Revised Rules of Court, the Court Resolves to DECLARE the plaintiff as having a lawful right to take the property in question for purposes for which the same is expropriated. The plaintiff and intervenor are hereby directed to submit at least two (2) names of their recommended commissioners for the determination of just compensation within ten (10) days from receipt hereof. SO ORDERED.[26] The RTC held that, as gleaned from the declaration in Ordinance No. 21, there was substantial compliance with the definite and valid offer requirement of Section 19 of R.A. No. 7160, and that the expropriated portion is the most convenient access to the interior of Sto. Tomas Bukid. Dissatisfied, JILCSFI elevated the case to the CA on the following assignment of errors: First Assignment of Error THE LOWER COURT SERIOUS[LY] ERRED WHEN IT RULED THAT PLAINTIFF-APPELLEE SUBSTANTIALLY COMPLIED WITH THE LAW WHEN IT EXPROPRIATED JILS PROPERTY TO BE USED AS A RIGHT OF WAY. Second Assignment of Error THE LOWER COURT ERRED IN DISREGARDING JILS EVIDENCE PROVING THAT THERE WAS NO PUBLIC NECESSITY TO WARRANT THE EXPROPRIATION OF THE SUBJECT PROPERTY.[27]

The Court of Appeals Decision

In a Decision dated March 13, 2001, the CA affirmed the order of the RTC. [28] The CA agreed with the trial court that the plaintiff substantially complied with Section 19 of R.A. No. 7160, particularly the requirement that a valid and definite offer must be made to the owner. The CA declared that the letter of Engr. Reyes, inviting Lorenzo Ching Cuanco to a conference to discuss with him the road project and the price of the lot, was a substantial compliance with the valid and definite offer requirement under said Section 19. In addition, the CA noted that there was also constructive notice to the defendants of the expropriation proceedings since a notice of lis pendens was annotated at the dorsal portion of TCT No. PT-92579 on November 26, 1993.[29] Finally, the CA upheld the public necessity for the subject property based on the findings of the trial court that the portion of the property sought to be expropriated appears to be, not only the most convenient access to the interior of Sto. Tomas Bukid, but also an easy path for vehicles entering the area, particularly fire trucks. Moreover, the CA took into consideration the provision of Article 33 of the Rules and Regulations Implementing the Local Government Code, which regards the construction or extension of roads, streets, sidewalks as public use, purpose or welfare.[30] On April 6, 2001, JILCSFI filed a motion for reconsideration of the said decision alleging that the CA erred in relying on the photocopy of Engr. Reyes letter to Lorenzo Ching Cuanco because the same was not admitted in evidence by the trial court for being a mere photocopy. It also contended that the CA erred in concluding that constructive notice of the expropriation proceeding, in the form of annotation of the notice of lis pendens, could be considered as a substantial compliance with the requirement under Section 19 of the Local Government Code for a valid and definite offer. JILCSFI also averred that no inspection was ever ordered by the trial court to be conducted on the property, and, if there was one, it had the right to be present thereat since an inspection is considered to be part of the trial of the case.[31] The CA denied the motion for reconsideration for lack of merit. It held that it was not precluded from considering the photocopy[32] of the letter, notwithstanding that the same was excluded by the trial court, since the fact of its existence was duly established by corroborative evidence. This corroborative evidence consisted of the testimony of the plaintiffs messenger that he personally served the letter to Lorenzo Ching Cuanco, and Municipal Ordinance No. 21 which expressly stated that the property owners were already notified of the expropriation proceeding. The CA noted that JILCSFI failed to adduce controverting evidence, thus the presumption of regularity was not overcome.[33]

The Present Petition In this petition, petitioner JILCSFI raises the following issues: (1) whether the respondent complied with the requirement, under Section 19 of the Local Government Code, of a valid and definite offer to acquire the property prior to the filing of the complaint; (2) whether its property which is already intended to be used for public purposes may still be expropriated by the respondent; and (3) whether the requisites for an easement for right-of-way under Articles 649 to 657 of the New Civil Code may be dispensed with. The petitioner stresses that the law explicitly requires that a valid and definite offer be made to the owner of the property and that such offer was not accepted. It argues that, in this case, there was no evidence to show that such offer has been made either to the previous owner or the petitioner, the present owner. The petitioner contends that the photocopy of the letter of

Engr. Reyes, notifying Lorenzo Ching Cuanco of the respondents intention to construct a road on its property, cannot be considered because the trial court did not admit it in evidence. And assuming that such letter is admissible in evidence, it would not prove that the offer has been made to the previous owner because mere notice of intent to purchase is not equivalent to an offer to purchase. The petitioner further argues that the offer should be made to the proper party, that is, to the owner of the property. It noted that the records in this case show that as of February 1993, it was already the owner of the property. Assuming, therefore, that there was an offer to purchase the property, the same should have been addressed to the petitioner, as present owner.[34] The petitioner maintains that the power of eminent domain must be strictly construed since its exercise is necessarily in derogation of the right to property ownership. All the requirements of the enabling law must, therefore, be strictly complied with. Compliance with such requirements cannot be presumed but must be proved by the local government exercising the power. The petitioner adds that the local government should, likewise, comply with the requirements for an easement of right-of-way; hence, the road must be established at a point least prejudicial to the owner of the property. Finally, the petitioner argues that, if the property is already devoted to or intended to be devoted to another public use, its expropriation should not be allowed.[35] For its part, the respondent avers that the CA already squarely resolved the issues raised in this petition, and the petitioner failed to show valid and compelling reason to reverse the CAs findings. Moreover, it is not the function of the Supreme Court to weigh the evidence on factual issues all over again.[36] The respondent contends that the Ching Cuancos were deemed to have admitted that an offer to purchase has been made and that they refused to accept such offer considering their failure to specifically deny such allegation in the complaint. In light of such admission, the exclusion of the photocopy of the letter of Engr. Reyes, therefore, is no longer significant.[37]

The Ruling of the Court The petition is meritorious. At the outset, it must be stressed that only questions of law may be raised by the parties and passed upon by the Supreme Court in petitions for review on certiorari.[38] Findings of fact of the CA, affirming those of the trial court, are final and conclusive and may not be reviewed on appeal.[39] Nonetheless, where it is shown that the conclusion is a finding grounded on speculations, surmises or conjectures or where the judgment is based on misapprehension of facts, the Supreme Court may reexamine the evidence on record.[40]

Eminent Domain: Nature and Scope The right of eminent domain is usually understood to be an ultimate right of the sovereign power to appropriate any property within its territorial sovereignty for a public purpose. The nature and scope of such power has been comprehensively described as follows:

It is an indispensable attribute of sovereignty; a power grounded in the primary duty of government to serve the common need and advance the general welfare. Thus, the right of eminent domain appertains to every independent government without the necessity for constitutional recognition. The provisions found in modern constitutions of civilized countries relating to the taking of property for the public use do not by implication grant the power to the government, but limit the power which would, otherwise, be without limit. Thus, our own Constitution provides that [p]rivate property shall not be taken for public use without just compensation. Furthermore, the due process and equal protection clauses act as additional safeguards against the arbitrary exercise of this governmental power.[41]

Strict Construction and Burden of Proof 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.[42] It is one of the harshest proceedings known to the law. Consequently, when the sovereign delegates the power to a political unit or agency, a strict construction will be given against the agency asserting the power.[43] The authority to condemn is to be strictly construed in favor of the owner and against the condemnor.[44] When the power is granted, the extent to which it may be exercised is limited to the express terms or clear implication of the statute in which the grant is contained.[45] Corollarily, the respondent, which is the condemnor, has the burden of proving all the essentials necessary to show the right of condemnation.[46] It has the burden of proof to establish that it has complied with all the requirements provided by law for the valid exercise of the power of eminent domain. The grant of the power of eminent domain to local government units is grounded on Section 19 of R.A. No. 7160 which reads: 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; Provided, however, That the power of eminent domain may not be exercised unless a valid and definite offer has been previously made to the owner, and such offer was not accepted: Provided, further, That the local government unit may immediately take possession of the property upon the filing of the expropriation proceedings and upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market value of the property based on the current tax declaration of the property to be expropriated: Provided, finally, That the amount to be paid for the expropriated property shall be determined by the proper court based on the fair market value at the time of the taking of the property. The Court declared that the following requisites for the valid exercise of the power of eminent domain by a local government unit must be complied with: 1. An ordinance is enacted by the local legislative council authorizing the local chief executive, in behalf of the local government unit, to exercise the power of eminent domain or pursue expropriation proceedings over a particular private property.

2. The power of eminent domain is exercised for public use, purpose or welfare, or for the benefit of the poor and the landless. 3. There is payment of just compensation, as required under Section 9, Article III of the Constitution, and other pertinent laws. 4. A valid and definite offer has been previously made to the owner of the property sought to be expropriated, but said offer was not accepted.[47]

Valid and Definite Offer Article 35 of the Rules and Regulations Implementing the Local Government Code provides: ARTICLE 35. Offer to Buy and Contract of Sale. (a) The offer to buy private property for public use or purpose shall be in writing. It shall specify the property sought to be acquired, the reasons for its acquisition, and the price offered. (b) If the owner or owners accept the offer in its entirety, a contract of sale shall be executed and payment forthwith made. (c) If the owner or owners are willing to sell their property but at a price higher than that offered to them, the local chief executive shall call them to a conference for the purpose of reaching an agreement on the selling price. The chairman of the appropriation or finance committee of the sanggunian, or in his absence, any member of the sanggunian duly chosen as its representative, shall participate in the conference. When an agreement is reached by the parties, a contract of sale shall be drawn and executed. (d) The contract of sale shall be supported by the following documents: (1) Resolution of the sanggunian authorizing the local chief executive to enter into a contract of sale. The resolution shall specify the terms and conditions to be embodied in the contract; (2) Ordinance appropriating the amount specified in the contract; and (3) Certification of the local treasurer as to availability of funds together with a statement that such fund shall not be disbursed or spent for any purpose other than to pay for the purchase of the property involved. The respondent was burdened to prove the mandatory requirement of a valid and definite offer to the owner of the property before filing its complaint and the rejection thereof by the latter.[48] It is incumbent upon the condemnor to exhaust all reasonable efforts to obtain the land it desires by agreement.[49] Failure to prove compliance with the mandatory requirement will result in the dismissal of the complaint.[50] An offer is a unilateral proposition which one party makes to the other for the celebration of a contract.[51] It creates a power of acceptance permitting the offeree, by accepting the offer, to transform the offerors promise into a contractual obligation.[52] Corollarily, the offer must be

complete, indicating with sufficient clearness the kind of contract intended and definitely stating the essential conditions of the proposed contract.[53] An offer would require, among other things, a clear certainty on both the object and the cause or consideration of the envisioned contract.[54] The purpose of the requirement of a valid and definite offer to be first made to the owner is to encourage settlements and voluntary acquisition of property needed for public purposes in order to avoid the expense and delay of a court action.[55] The law is designed to give to the owner the opportunity to sell his land without the expense and inconvenience of a protracted and expensive litigation. This is a substantial right which should be protected in every instance.[56] It encourages acquisition without litigation and spares not only the landowner but also the condemnor, the expenses and delays of litigation. It permits the landowner to receive full compensation, and the entity acquiring the property, immediate use and enjoyment of the property. A reasonable offer in good faith, not merely perfunctory or pro forma offer, to acquire the property for a reasonable price must be made to the owner or his privy.[57] A single bona fide offer that is rejected by the owner will suffice. The expropriating authority is burdened to make known its definite and valid offer to all the owners of the property. However, it has a right to rely on what appears in the certificate of title covering the land to be expropriated. Hence, it is required to make its offer only to the registered owners of the property. After all, it is well-settled that persons dealing with property covered by a Torrens certificate of title are not required to go beyond what appears on its face. [58] In the present case, the respondent failed to prove that before it filed its complaint, it made a written definite and valid offer to acquire the property for public use as an access road. The only evidence adduced by the respondent to prove its compliance with Section 19 of the Local Government Code is the photocopy of the letter purportedly bearing the signature of Engr. Jose Reyes, to only one of the co-owners, Lorenzo Ching Cuanco. The letter reads: MR. LORENZO CHING CUANCO 18 Alcalde Jose Street Capasigan, Pasig Metro Manila Dear Mr. Cuanco: This refers to your parcel of land located along E. Santos Street, Barangay Palatiw, Pasig, Metro Manila embraced in and covered by TCT No. 66585, a portion of which with an area of fifty-one (51) square meters is needed by the Municipal Government of Pasig for conversion into a road-right of way for the benefit of several residents living in the vicinity of your property. Attached herewith is the sketch plan for your information. In this connection, may we respectfully request your presence in our office to discuss this project and the price that may be mutually agreed upon by you and the Municipality of Pasig. Thank you. Very truly yours, (Sgd.) ENGR. JOSE L. REYES Technical Asst. to the Mayor

on Infrastructure[59] It bears stressing, however, that the respondent offered the letter only to prove its desire or intent to acquire the property for a right-of-way.[60] The document was not offered to prove that the respondent made a definite and valid offer to acquire the property. Moreover, the RTC rejected the document because the respondent failed to adduce in evidence the original copy thereof.[61] The respondent, likewise, failed to adduce evidence that copies of the letter were sent to and received by all the co-owners of the property, namely, Lorenzo Ching Cuanco, Victor Ching Cuanco and Ernesto Kho. The respondent sought to prove, through the testimony of its messenger, Rolando Togonon, that Lorenzo Ching Cuanco received the original of the said letter. But Togonon testified that he merely gave the letter to a lady, whom he failed to identify. He stated that the lady went inside the store of Lorenzo Ching Cuanco, and later gave the letter back to him bearing the signature purportedly of one Luz Bernarte. However, Togonon admitted, on crossexamination, that he did not see Bernarte affixing her signature on the letter. Togonon also declared that he did not know and had never met Lorenzo Ching Cuanco and Bernarte: Q And after you received this letter from that lady, what did you do afterwards? A I brought it with me, that letter, and then I went to Caruncho. Q So, [M]r. Witness, you are telling this Honorable Court that this letter intended to Mr. Lorenzo was served at Pasig Trading which was situated at No. 18 Alkalde Jose Street on February 23, 1993? A Yes, Maam. ATTY. TAN: That is all for the witness, Your Honor. COURT: Do you have any cross-examination? ATTY. JOLO: Just a few cross, Your Honor, please. With the kind permission of the Honorable Court. COURT: Proceed. CROSS-EXAMINATION BY ATTY. JOLO: Q Mr. Witness, do you know Mr. Lorenzo Ching [Cuanco] A I do not know him. Q As a matter of fact, you have not seen him even once, isnt not (sic)? A Yes, Sir. Q This Luz Bernarte, do you know her? A I do not know her.

Q As a matter of fact, you did not see Mrs. Bernarte even once? A That is correct. Q And as a matter of fact, [M]r. Witness, you did not see Mrs. Luz Bernarte affixing her signature on the bottom portion of this demand letter, marked as Exh. C-2? A Yes, Sir.[62] Even if the letter was, indeed, received by the co-owners, the letter is not a valid and definite offer to purchase a specific portion of the property for a price certain. It is merely an invitation for only one of the co-owners, Lorenzo Ching Cuanco, to a conference to discuss the project and the price that may be mutually acceptable to both parties. There is no legal and factual basis to the CAs ruling that the annotation of a notice of lis pendens at the dorsal portion of petitioners TCT No. PT-92579 is a substantial compliance with the requisite offer. A notice of lis pendens is a notice to the whole world of the pendency of an action involving the title to or possession of real property and a warning that those who acquire an interest in the property do so at their own risk and that they gamble on the result of the litigation over it.[63] Moreover, the lis pendens was annotated at the dorsal portion of the title only on November 26, 1993, long after the complaint had been filed in the RTC against the Ching Cuancos. Neither is the declaration in one of the whereas clauses of the ordinance that the property owners were already notified by the municipality of the intent to purchase the same for public use as a municipal road, a substantial compliance with the requirement of a valid and definite offer under Section 19 of R.A. No. 7160. Presumably, the Sangguniang Bayan relied on the erroneous premise that the letter of Engr. Reyes reached the co-owners of the property. In the absence of competent evidence that, indeed, the respondent made a definite and valid offer to all the co-owners of the property, aside from the letter of Engr. Reyes, the declaration in the ordinance is not a compliance with Section 19 of R.A. No. 7160. The respondent contends, however, that the Ching Cuancos, impliedly admitted the allegation in its complaint that an offer to purchase the property was made to them and that they refused to accept the offer by their failure to specifically deny such allegation in their answer. This contention is wrong. As gleaned from their answer to the complaint, the Ching Cuancos specifically denied such allegation for want of sufficient knowledge to form a belief as to its correctness. Under Section 10,[64] Rule 8 of the Rules of Court, such form of denial, although not specific, is sufficient.

Public Necessity We reject the contention of the petitioner that its property can no longer be expropriated by the respondent because it is intended for the construction of a place for religious worship and a school for its members. As aptly explained by this Court in Manosca v. Court of Appeals,[65] thus: It has been explained as early as Sea v. Manila Railroad Co., that: A historical research discloses the meaning of the term public use to be one of constant growth. As society advances, its demands upon the individual increases and each demand is a new use

to which the resources of the individual may be devoted. for whatever is beneficially employed for the community is a public use. Chief Justice Enrique M. Fernando states: The taking to be valid must be for public use. There was a time when it was felt that a literal meaning should be attached to such a requirement. Whatever project is undertaken must be for the public to enjoy, as in the case of streets or parks. Otherwise, expropriation is not allowable. It is not so any more. As long as the purpose of the taking is public, then the power of eminent domain comes into play. As just noted, the constitution in at least two cases, to remove any doubt, determines what is public use. One is the expropriation of lands to be subdivided into small lots for resale at cost to individuals. The other is the transfer, through the exercise of this power, of utilities and other private enterprise to the government. It is accurate to state then that at present whatever may be beneficially employed for the general welfare satisfies the requirements of public use. Chief Justice Fernando, writing the ponencia in J.M. Tuason & Co. vs. Land Tenure Administration, has viewed the Constitution a dynamic instrument and one that is not to be construed narrowly or pedantically so as to enable it to meet adequately whatever problems the future has in store. Fr. Joaquin Bernas, a noted constitutionalist himself, has aptly observed that what, in fact, has ultimately emerged is a concept of public use which is just as broad as public welfare. Petitioners ask: But (w)hat is the so-called unusual interest that the expropriation of (Felix Manalos) birthplace become so vital as to be a public use appropriate for the exercise of the power of eminent domain when only members of the Iglesia ni Cristo would benefit? This attempt to give some religious perspective to the case deserves little consideration, for what should be significant is the principal objective of, not the casual consequences that might follow from, the exercise of the power. The purpose in setting up the marker is essentially to recognize the distinctive contribution of the late Felix Manalo to the culture of the Philippines, rather than to commemorate his founding and leadership of the Iglesia ni Cristo. The practical reality that greater benefit may be derived by members of the Iglesia ni Cristo than by most others could well be true but such a peculiar advantage still remains to be merely incidental and secondary in nature. Indeed, that only a few would actually benefit from the expropriation of property, does not necessarily diminish the essence and character of public use. The petitioner asserts that the respondent must comply with the requirements for the establishment of an easement of right-of-way, more specifically, the road must be constructed at the point least prejudicial to the servient state, and that there must be no adequate outlet to a public highway. The petitioner asserts that the portion of the lot sought to be expropriated is located at the middle portion of the petitioners entire parcel of land, thereby splitting the lot into two halves, and making it impossible for the petitioner to put up its school building and worship center. The subject property is expropriated for the purpose of constructing a road. The respondent is not mandated to comply with the essential requisites for an easement of right-of-way under the New Civil Code. Case law has it that in the absence of legislative restriction, the grantee of the power of eminent domain may determine the location and route of the land to be taken[66] unless such determination is capricious and wantonly injurious.[67] Expropriation is justified so long as it is for the public good and there is genuine necessity of public character.[68] Government may not capriciously choose what private property should be taken.[69]

The respondent has demonstrated the necessity for constructing a road from E. R. Santos Street to Sto. Tomas Bukid. The witnesses, who were residents of Sto. Tomas Bukid, testified that although there were other ways through which one can enter the vicinity, no vehicle, however, especially fire trucks, could enter the area except through the newly constructed Damayan Street. This is more than sufficient to establish that there is a genuine necessity for the construction of a road in the area. After all, absolute necessity is not required, only reasonable and practical necessity will suffice.[70] Nonetheless, the respondent failed to show the necessity for constructing the road particularly in the petitioners property and not elsewhere.[71] We note that the whereas clause of the ordinance states that the 51-square meter lot is the shortest and most suitable access road to connect Sto. Tomas Bukid to E. R. Santos Street. The respondents complaint also alleged that the said portion of the petitioners lot has been surveyed as the best possible ingress and egress. However, the respondent failed to adduce a preponderance of evidence to prove its claims. On this point, the trial court made the following findings: The contention of the defendants that there is an existing alley that can serve the purpose of the expropriator is not accurate. An inspection of the vicinity reveals that the alley being referred to by the defendants actually passes thru Bagong Taon St. but only about one-half (1/2) of its entire length is passable by vehicle and the other half is merely a foot-path. It would be more inconvenient to widen the alley considering that its sides are occupied by permanent structures and its length from the municipal road to the area sought to be served by the expropriation is considerably longer than the proposed access road. The area to be served by the access road is composed of compact wooden houses and literally a slum area. As a result of the expropriation of the 51-square meter portion of the property of the intervenor, a 3-meter wide road open to the public is created. This portion of the property of the intervenor is the most convenient access to the interior of Sto. Tomas Bukid since it is not only a short cut to the interior of the Sto. Tomas Bukid but also an easy path for vehicles entering the area, not to mention the 3-meter wide road requirement of the Fire Code.[72] However, as correctly pointed out by the petitioner, there is no showing in the record that an ocular inspection was conducted during the trial. If, at all, the trial court conducted an ocular inspection of the subject property during the trial, the petitioner was not notified thereof. The petitioner was, therefore, deprived of its right to due process. It bears stressing that an ocular inspection is part of the trial as evidence is thereby received and the parties are entitled to be present at any stage of the trial.[73] Consequently, where, as in this case, the petitioner was not notified of any ocular inspection of the property, any factual finding of the court based on the said inspection has no probative weight. The findings of the trial court based on the conduct of the ocular inspection must, therefore, be rejected. IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision and Resolution of the Court of Appeals are REVERSED AND SET ASIDE. The RTC is ordered to dismiss the complaint of the respondent without prejudice to the refiling thereof.

G.R. Nos. L-60549, 60553 to 60555 October 26, 1983 HEIRS OF JUANCHO ARDONA (represented by Gloria Ardona) ANASTACIO C. CABILAO, HEIRS OF CIPRIANO CABILAO (represented by Jose Cabilao) MODESTA CABILAO, HEIRS OF ROMAN CABUENAS (represented by Alberto Cabuenas), AGRIPINO GABISAY and PRUDENCIA MABINI, ANTONIO LABRADOR and LUCIA GABISAY, GERONIMO MABINI and MARCELINA SABAL, INOCENCIO MABINI and ARSENIA REYES, PATRICIO MABINI and GREGORIA BORRES, ANICETO GADAPAN and MAXIMA GABISAY, BARTOLOME MAGNO and CALINECA E. MAGNO, ALBERTO CABUENAS, NARCISO CABUENAS and VICTORIA CABUENAS, EUTIQUIOSENO, HEIRS OF ESPERIDION CABUENAS (represented by Alberto Cabuenas), MAXIMINA NAVARO, SULPICIO NAVARO, EDUARDO NAVARO, MARTINIANO ROMA (in representation of Arcadio Mabini, deceased), MARTIN SENO, FAUSTO ARDA, MAXIMA CABILAO, ESTRELLA SENO, EDUVEGIS S. CABILAO, ROSARIO CABILAO, MINORS DANILO, SOCORRO, JOSEFINA and MARITES, all surnamed Cabilao, JUAN BORRES (represented by Francisca Borres), RAMON JABADAN, JESUS ALIPAR and LEONILA KABAHAR, ANTONIO LABRADOR, HEIRS OF NICASIO GABISAY (represented by Arsenio Gabisay), PACIFICO LABRADOR, DEMETRIO LABRADOR and FRUCTOSA TABURA, VENANCIO DEL MAR, MARINO DEL MAR, HEIRS OF TEODORA ARCILLO (represented by Brigida Arcillo) DIONISIA GABUNADA, HEIRS OF BUENAVENTURA FRANCISCO (represented by Felicidad Sadaya Francisco), HEIRS OF VICTORIA C. CABUENAS (represented by Alberto Cabuenas) HEIRS OF CIPRIANO GABUNADA (represented by Claudio Gabunada), petitioners, vs. HON. JUAN Y. REYES, Executive Judge and Presiding Judge of Branch I, COURT OF FIRST instance OF CEBU, and the PHILIPPINE TOURISM AUTHORITY, respondents. George M. Baladjay, Mario G. dela Victoria, Olegario Sarmiento, Jr., and Democrito Barcenas for petitioners. The Solicitor General for respondent Judge. F.A. Sugue & Elino B. Lingas for Philippine Tourism Authoirity

GUTIERREZ, JR., J.: This is a petition for certiorari with preliminary injunction challenging the constitutionality of Presidential Decree No. 564, the Revised Charter of the Philippine Tourism Authority, and Proclamation No. 2052 declaring the barangays of Sibugay, Malubog, Babag and Sirao including the proposed Lusaran Dam in the City of Cebu and in the municipalities of Argao and Dalaguete in the province of Cebu as tourist zones. The petitioners ask that we restrain respondent Court of First Instance of Cebu and the Philippine Tourism Authority (PTA) from enforcing and implementing the writs of possession issued in four (4) expropriation cases filed by PTA against the petitioners: Civil Cases Nos. R-19562, R-19684, R-20701, and R-21608 of the Court of First Instance of Cebu (Branch 1). The Philippine Tourism Authority filed four (4) Complaints with the Court of First Instance of Cebu City for the expropriation of some 282 hectares of rolling land situated in barangays Malubog and Babag, Cebu City, under PTA's express authority "to acquire by purchase, by

negotiation or by condemnation proceedings any private land within and without the tourist zones" for the purposes indicated in Section 5, paragraph B(2), of its Revised Charter (PD 564), more specifically, for the development into integrated resort complexes of selected and welldefined geographic areas with potential tourism value. As uniformly alleged in the complaints, the purposes of the expropriation are: xxx xxx xxx V Plaintiff, in line with the policy of the government to promote tourism and development of tourism projects will construct in Barangays Malubog, Busay and Babag, all of Cebu City, a sports complex (basketball courts, tennis courts, volleyball courts, track and field, baseball and softball diamonds, and swimming pools), clubhouse, gold course, children's playground and a nature area for picnics and horseback riding for the use of the public. The development plan, covering approximately 1,000 hectares, includes the establishment of an electric power grid in the area by the National Power Corporation, thus assuring the supply of electricity therein for the benefit of the whole community. Deep wells will also be constructed to generate water supply within the area. Likewise, a complex sewerage and drainage system will be devised and constructed to protect the tourists and nearby residents from the dangers of pollution. Complimentary and support facilities for the project will be constructed, including public rest houses, lockers, dressing rooms, coffee shops, shopping malls, etc. Said facilities will create and offer employment opportunities to residents of the community and further generate income for the whole of Cebu City. Plaintiff needs the property above described which is directly covered by the proposed golf court. xxx xxx xxx The defendants in Civil Cases Nos. R-20701 and R-21608 filed their respective Opposition with Motion to Dismiss and/or Reconsideration. The defendants in Civil Case No. R-19562 filed a manifestation adopting the answer of defendants in Civil Case No. R-19864. The defendants, now petitioners, had a common allegation in that the taking is allegedly not impressed with public use under the Constitution. In their motions to dismiss, the petitioners alleged, in addition to the issue of public use, that there is no specific constitutional provision authorizing the taking of private property for tourism purposes; that assuming that PTA has such power, the intended use cannot be paramount to the determination of the land as a land reform area; that limiting the amount of compensation by Legislative fiat is constitutionally repugnant; and that since the land is under the land reform program, it is the Court of Agrarian Relations and not the Court of First Instance that has jurisdiction over the expropriation cases.

The Philippine Tourism Authority having deposited with The Philippine National Bank, Cebu City Branch, an amount equivalent to 10% of the value of the properties pursuant to Presidential Decree No. 1533. the lower court issued separate orders authorizing PTA to take immediate possession of the premises and directing the issuance of writs of possession. On May 25, 1982, petitioners filed this petition questioning the orders of the respondent Judge, The respondents have correctly restated the grounds in the petition as follows: xxx xxx xxx A. The complaints for expropriation lack basis because the Constitution does not provide for the expropriation of private property for tourism or other related purposes; B. The writs of possession or orders authorizing PTA to take immediate possession is premature because the "public use" character of the taking has not been previously demonstrated; C. The taking is not for public use in contemplation of eminent domain law; D. The properties in question have been previously declared a land reform area; consequently, the implementation of the social justice pro- ,vision of the Constitution on agrarian reform is paramount to the right of the State to expropriate for the purposes intended; E. Proclamation No. 2052 declaring certain barangays in Cebu City, which include the lands subject of expropriation as within a tourist zone, is unconstitutional for it impairs the obligation of contracts; "F. Since the properties are within a land reform area, it is the Court of Agrarian Relations, not the lower court, that has jurisdiction pursuant to Pres. Decree No. 946; F. The forcible ejectment of defendants from the premises constitutes a criminal act under Pres. Decree No. 583; In their memorandum, the petitioners have summarized the issues as follows: I. Enforcement of the Writ of Possession is Premature: II. Presidential Decree 564 Amending Presidential Decree l89 is Constitutionally Repugnant: III. The Condemnation is not for Public Use, Therefore, Unconstitutional: IV. The Expropriation for Tourism Purposes of Lands Covered by the Land Reform Program Violates the Constitution: V. Presidential Proclamation 2052 is Unconstitutional: VI. Presidential Decree No 1533 is Unconstitutional:

VII. The Court of First Instance has no Jurisdiction: VIII. The Filing of the Present Petition is not Premature. The issues raised by the petitioners revolve around the proposition that the actions to expropriate their properties are constitutionally infirm because nowhere in the Constitution can a provision be found which allows the taking of private property for the promotion of tourism. The petitioners' arguments in their pleadings in support of the above proposition are subsumed under the following headings: 1. Non-compliance with the "public use" requirement under the eminent domain provision of the Bill of Rights. 2. Disregard of the land reform nature of the property being expropriated. 3. Impairment of the obligation of contracts. There are three provisions of the Constitution which directly provide for the exercise of the power of eminent domain. Section 2, Article IV states that private property shall not be taken for public use without just compensation. Section 6, Article XIV allows the State, in the interest of national welfare or defense and upon payment of just compensation to transfer to public ownership, utilities and other private enterprises to be operated by the government. Section 13, Article XIV states that the Batasang Pambansa may authorize upon payment of just compensation the expropriation of private lands to be subdivided into small lots and conveyed at cost to deserving citizens. While not directly mentioning the expropriation of private properties upon payment of just compensation, the provisions on social justice and agrarian reforms which allow the exercise of police power together with the power of eminent domain in the implementation of constitutional objectives are even more far-reaching insofar as taking of private property is concerned. Section 6, Article II provides: Sec. 6. The State shall promote social justice to ensure the dignity, welfare, and security of all the people. Towards its end, the State shall regulate the acquisition, ownership, use, enjoyment, and disposition of private property, and equitably diffuse property ownership and profits. xxx xxx xxx Section 12, Article XIV provides: See. 12. The State shall formulate and implement an agrarian reform program aimed at emancipating the tenant from the bondage of the soil and achieving the goals enunciated in this Constitution.

The equitable diffusion of property ownership in the promotion of social justice implies the exercise, whenever necessary, of the power to expropriate private property. Likewise there can be no meaningful agrarian reform program unless the power to expropriate is utilized. We cite all the above provisions on the power to expropriate because of the petitioners' insistence on a restrictive view of the eminent domain provision. The thrust of all constitutional provisions on expropriation is in the opposite direction. As early as 1919, this Court in Visayan Refining Co. v. Samus (40 Phil. 550) categorized the restrictive view as wholly erroneous and based on a misconception of fundamentals. The petitioners look for the word "tourism" in the Constitution. Understandably the search would be in vain. The policy objectives of the framers can be expressed only in general terms such as social justice, local autonomy, conservation and development of the national patrimony, public interest, and general welfare, among others. The programs to achieve these objectives vary from time to time and according to place, To freeze specific programs like Tourism into express constitutional provisions would make the Constitution more prolix than a bulky code and require of the framers a prescience beyond Delphic proportions. The particular mention in the Constitution of agrarian reform and the transfer of utilities and other private enterprises to public ownership merely underscores the magnitude of the problems sought to be remedied by these programs. They do not preclude nor limit the exercise of the power of eminent domain for such purposes like tourism and other development programs. In the leading case of Visayan Refining Co. v. Camus (supra), this Court emphasized that the power of eminent domain is inseparable from sovereignty being essential to the existence of the State and inherent in government even in its most primitive forms. The only purpose of the provision in the Bill of Rights is to provide some form of restraint on the sovereign power. It is not a grant of authority The power of eminent domain does not depend for its existence on a specific grant in the constitution. It is inherent in sovereignty and exists in a sovereign state without any recognition of it in the constitution. The provision found in most of the state constitutions relating to the taking of property for the public use do not by implication grant the power to the government of the state, but limit a power which would otherwise be without limit. The constitutional restraints are public use and just compensation. Do the purposes of the taking in this case constitute "public use"? The petitioners ask us to adopt a strict construction and declare that "public use" means literally use by the public and that "public use" is not synonymous with "public interest", "public benefit", or "public welfare" and much less "public convenience. " The petitioners face two major obstacles. First, their contention which is rather sweeping in its call for a retreat from the public welfare orientation is unduly restrictive and outmoded. Second, no less than the lawmaker has made a policy determination that the power of eminent domain may be exercised in the promotion and development of Philippine tourism.

The restrictive view of public use may be appropriate for a nation which circumscribes the scope of government activities and public concerns and which possesses big and correctly located public lands that obviate the need to take private property for public purposes. Neither circumstance applies to the Philippines. We have never been a laissez faire State, And the necessities which impel the exertion of sovereign power are all too often found in areas of scarce public land or limited government resources. Certain aspects of parliamentary government were introduced by the 1973 amendments to the Constitution with further modifications in the 1976 and 1981 amendments. Insofar as the executive and legislative departments are concerned, the traditional concept of checks and balances in a presidential form was considerably modified to remove some roadblocks in the expeditious implementation of national policies. There was no such change for the judiciary. We remain as a checking and balancing department even as all strive to maintain respect for constitutional boundaries. At the same time, the philosophy of coordination in the pursuit of developmental goals implicit in the amendments also constrains in the judiciary to defer to legislative discretion iii the judicial review of programs for economic development and social progress unless a clear case of constitutional infirmity is established. We cannot stop the legitimate exercise of power on an invocation of grounds better left interred in a bygone age and time.* As we review the efforts of the political departments to bring about self-sufficiency, if not eventual abundance, we continue to maintain the liberal approach because the primary responsibility and the discretion belong to them. There can be no doubt that expropriation for such traditions' purposes as the construction of roads, bridges, ports, waterworks, schools, electric and telecommunications systems, hydroelectric power plants, markets and slaughterhouses, parks, hospitals, government office buildings, and flood control or irrigation systems is valid. However, the concept of public use is not limited to traditional purposes. Here as elsewhere the Idea that "public use" is strictly limited to clear cases of "use by the public" has been discarded. In the United States, the rule was enunciated in Berman v. Parker (348 U.S. 25; 99 L. ed. 27) as follows: We do not sit to determine whether a particular housing project is or is not desirable. The concept of the public welfare is broad and inclusive. See DayBrite Lighting, Inc. v. Missouri, 342 US 421, 424, 96 L ed 469, 472, 72 S Ct 405. The values it represents are spiritual as well as physical, aesthetic as well as monetary. It is within the power of the legislature to determine that the community should be beautiful as well as healthy, spacious as well as clean, well-balanced as well as carefully patrolled. In the present case, the Congress and its authorized agencies have made determinations that take into account a wide variety of values. It is not for us to reappraise them. If those who govern the District of Columbia decide that the Nation's Capital should be beautiful as well as sanitary, there is nothing in the Fifth Amendment that stands in the way. Once the object is within the authority of Congress, the right to realize it through the exercise of eminent domain is clear. For the power of eminent domain is merely the means to the end. See Luxton v. North River Bridge Co. 153 US 525, 529, 530, 38 L ed 808, 810, 14 S Ct 891; United States v. Gettysburg Electric R. Co. 160 US 668, 679, 40 L ed 576, 580, 16 S Ct 427.

In an earlier American case, where a village was isolated from the rest of North Carolina because of the flooding of the reservoir of a dam thus making the provision of police, school, and health services unjustifiably expensive, the government decided to expropriate the private properties in the village and the entire area was made part of an adjoining national park. The district court and the appellate court ruled against the expropriation or excess condemnation. The Court of Appeals applied the "use by the public" test and stated that the only land needed for public use was the area directly flooded by the reservoir. The village may have been cut off by the dam but to also condemn it was excess condemnation not valid under the "Public use" requirement. The U.S. Supreme Court in United States ex rel TVA v. Welch (327 U.S, 546; 90 L. ed 843) unanimously reversed the lower courts. It stated: The Circuit Court of Appeals, without expressly relying on a compelling rule of construction that would give the restrictive scope to the T.V.A. Act given it by the district court, also interpreted the statute narrowly. It first analyzed the facts by segregating the total problem into distinct parts, and thus came to the conclusion that T.V.A.'s purpose in condemning the land in question was only one to reduce its liability arising from the destruction of the highway. The Court held that use of the lands for that purpose is a "private" and not a "public use" or, at best, a "public use" not authorized by the statute. we are unable to agree with the reasoning and conclusion of the Circuit Court of Appeals. We think that it is the function of Congress to decide what type of taking is for a public use and that the agency authorized to do the taking may do so to the still extent of its statutory authority, United States v. Gettysburg Electric R. Co. 160 US 668, 679, 40 L ed 576, 580, 16 S Ct 427. ... xxx xxx xxx ... But whatever may be the scope of the judicial power to determine what is a "public use" in Fourteenth Amendment controversies, this Court has said that when Congress has spoken on this subject "Its decision is entitled to deference until it is shown to involve an impossibility." Old Dominion Land Co. v. United States, 269, US 55, 66, 70 L ed 162, 46 S Ct 39. Any departure from this judicial restraint would result in courts deciding on what is and is not a governmental function and in their invalidating legislation on the basis of their view on that question at the moment of decision, a practice which has proved impracticable in other fields. See Case v. Bowles decided February 4, 1946, 437 US 92, 101, ante, 552, 559, 66 S Ct 438. New York v. United States, 326 US 572 ante 326, 66 S Ct 310). We hold that the T.V.A. took the tracts here involved for a public purpose, if, as we think is the case, Congress authorized the Authority to acquire, hold, and use the lands to carry out the purposes of the T.V.A. Act. In the Philippines, Chief Justice Enrique M. Fernando has aptly summarized the statutory and judicial trend as follows: The taking to be valid must be for public use. There was a time when it was felt that a literal meaning should be attached to such a requirement. Whatever project is undertaken must be for the public to enjoy, as in the case of streets or parks. Otherwise, expropriation is not allowable. It is not any more. As long as the purpose of the taking is public, then the power of eminent domain comes into

play. As just noted, the constitution in at least two cases, to remove any doubt, determines what is public use. One is the expropriation of lands to be subdivided into small lots for resale at cost to individuals. The other is in the transfer, through the exercise of this power, of utilities and other private enterprise to the government. It is accurate to state then that at present whatever may be beneficially employed for the general welfare satisfies the requirement of public use. (Fernando, The Constitution of the Philippines, 2nd ed., pp. 523-524) The petitioners' contention that the promotion of tourism is not "public use" because private concessioners would be allowed to maintain various facilities such as restaurants, hotels, stores, etc. inside the tourist complex is impressed with even less merit. Private bus firms, taxicab fleets, roadside restaurants, and other private businesses using public streets end highways do not diminish in the least bit the public character of expropriations for roads and streets. The lease of store spaces in underpasses of streets built on expropriated land does not make the taking for a private purpose. Airports and piers catering exclusively to private airlines and shipping companies are still for public use. The expropriation of private land for slum clearance and urban development is for a public purpose even if the developed area is later sold to private homeowners, commercial firms, entertainment and service companies, and other private concerns. The petitioners have also failed to overcome the deference that is appropriately accorded to formulations of national policy expressed in legislation. The rule in Berman u. Parker (supra) of deference to legislative policy even if such policy might mean taking from one private person and conferring on another private person applies as well as in the Philippines. ... Once the object is within the authority of Congress, the means by which it will be attained is also for Congress to determine. Here one of the means chosen is the use of private enterprise for redevelopment of the area. Appellants argue that this makes the project a taking from one businessman for the benefit of another businessman. But the means of executing the project are for Congress and Congress alone to determine, once the public purpose has been established. Selb Luxton v. North River Bridge Co. (US) supra; cf. Highland v. Russel Car & Snow Plow Co. 279 US 253, 73 L ed 688, 49 S Ct 314. The public end may be as well or better served through an agency of private enterprise than through a department of government-or so the Congress might conclude. We cannot say that public ownership is the sole method of promoting the public purposes of community redevelopment projects. What we have said also disposes of any contention concerning the fact that certain property owners in the area may be permitted to repurchase their properties for redevelopment in harmony with the over-all plan. That, too, is a legitimate means which Congress and its agencies may adopt, if they choose. (Berman v. Parker, 99 L ed 38, 348 US 33, 34) An examination of the language in the 1919 cases of City of Manila v. Chinese Community of Manila (40 Phil, 349) and Visayan Refining Co. vs. Camus, earlier cited, shows that from the very start of constitutional government in our country judicial deference to legislative policy has been clear and manifest in eminent domain proceedings. The expressions of national policy are found in the revised charter of the Philippine Tourism Authority, Presidential Decree No. 564:

WHEREAS, it is the avowed aim of the government to promote Philippine tourism and work for its accelerated and balanced growth as well as for economy and expediency in the development of the tourism plant of the country; xxx xxx xxx SECTION 1. Declaration of Policy. - It is hereby declared to be the policy of the State to promote, encourage, and develop Philippine tourism as an instrument in accelerating the development of the country, of strengthening the country's foreign exchange reserve position, and of protecting Philippine culture, history, traditions and natural beauty, internationally as well as domestically. The power of eminent domain is expressly provided for under Section 5 B(2) as follows: xxx xxx xxx 2. Acquisition of Private Lands, Power of Eminent Domain. — To acquire by purchase, by negotiation or by condemnation proceedings any private land within and without the tourist zones for any of the following reasons: (a) consolidation of lands for tourist zone development purposes, (b) prevention of land speculation in areas declared as tourist zones, (c) acquisition of right of way to the zones, (d) protection of water shed areas and natural assets with tourism value, and (e) for any other purpose expressly authorized under this Decree and accordingly, to exercise the power of eminent domain under its own name, which shall proceed in the manner prescribed by law and/or the Rules of Court on condemnation proceedings. The Authority may use any mode of payment which it may deem expedient and acceptable to the land owners: Provided, That in case bonds are used as payment, the conditions and restrictions set forth in Chapter III, Section 8 to 13 inclusively, of this Decree shall apply. xxx xxx xxx The petitioners rely on the Land Reform Program of the government in raising their second argument. According to them, assuming that PTA has the right to expropriate, the properties subject of expropriation may not be taken for the purposes intended since they are within the coverage of "operation land transfer" under the land reform program. Petitioners claim that certificates of land transfer (CLT'S) and emancipation patents have already been issued to them thereby making the lands expropriated within the coverage of the land reform area under Presidential Decree No. 2; that the agrarian reform program occupies a higher level in the order of priorities than other State policies like those relating to the health and physical well- being of the people; and that property already taken for public use may not be taken for another public use. We have considered the above arguments with scrupulous and thorough circumspection. For indeed any claim of rights under the social justice and land reform provisions of the Constitution deserves the most serious consideration. The Petitioners, however, have failed to show that the area being developed is indeed a land reform area and that the affected persons have emancipation patents and certificates of land transfer.

The records show that the area being developed into a tourism complex consists of more than 808 hectares, almost all of which is not affected by the land reform program. The portion being expropriated is 282 hectares of hilly and unproductive land where even subsistence farming of crops other than rice and corn can hardly survive. And of the 282 disputed hectares, only 8,970 square meters-less than one hectare-is affected by Operation Land Transfer. Of the 40 defendants, only two have emancipation patents for the less than one hectare of land affected. And this 8,970 square meters parcel of land is not even within the sports complex proper but forms part of the 32 hectares resettlement area where the petitioners and others similarly situated would be provided with proper housing, subsidiary employment, community centers, schools, and essential services like water and electricity-which are non-existent in the expropriated lands. We see no need under the facts of this petition to rule on whether one public purpose is superior or inferior to another purpose or engage in a balancing of competing public interests. The petitioners have also failed to overcome the showing that the taking of the 8,970 square meters covered by Operation Land Transfer forms a necessary part of an inseparable transaction involving the development of the 808 hectares tourism complex. And certainly, the human settlement needs of the many beneficiaries of the 32 hectares resettlement area should prevail over the property rights of two of their compatriots. The invocation of the contracts clause has no merit. The non-impairment clause has never been a barrier to the exercise of police power and likewise eminent domain. As stated in Manigault v. Springs (199 U.S. 473) "parties by entering into contracts may not stop the legislature from enacting laws intended for the public good." The applicable doctrine is expressed in Arce v. Genato (69 SCRA 544) which involved the expropriation of land for a public plaza. The Court stated: xxx xxx xxx ... What is claimed is that there must be a showing of necessity for such condemnation and that it was not done in this case in support of such a view, reliance is placed on City of Manila v. Arenano Law Colleges. (85 Phil. 663 [1950]) That doctrine itself is based on the earlier case of City of Manila v. Chinese Community of Manila, (50 Phil. 349) also, like Camus, a 1919 decision. As could be discerned, however, in the Arellano Law Colleges decision. it was the antiquarian view of Blackstone with its sanctification of the right to one's estate on which such an observation was based. As did appear in his Commentaries: "So great is the regard of the law for private property that it will not, authorize the least violation of it, even for the public good, unless there exists a very great necessity thereof." Even the most , cursory glance at such well-nigh absolutist concept of property would show its obsolete character at least for Philippine constitutional law. It cannot survive the test of the 1935 Constitution with its mandates on social justice and protection to labor. (Article II, Section 5 of the 1935 Constitution reads: "The promotion of social justice to unsure the well-being and economic security of all the people should be the concern of the State." Article XI, Section 6 of the same Constitution provides: "The State shall afford protection to labor, especially to working women and minors, and shall regulate the relation between landowner and tenant, and between labor and capital in industry and in agriculture. The State may provide for compulsory arbitration.") What is more, the present Constitution pays even less heed to the claims of property and rightly so. After stating that the State shall

promote social justice, it continues: "Towards this end, the State shall regulate the acquisition, ownership, use, enjoyment, and disposition of private property, and equitably diffuse property ownership and profits." (That is the second sentence of Article II, Section 6 of the Constitution) If there is any need for explicit confirmation of what was set forth in Presidential Decree No. 42, the above provision supplies it. Moreover, that is merely to accord to what of late has been the consistent course of decisions of this Court whenever property rights are pressed unduly. (Cf. Alalayan v. National Power Corporation, L-24396, July 29, 1968, 24 SCRA 172; Agricultural Credit and Cooperative Financing Administration v. Confederation of Unions, L-21484, Nov. 29, 1969, 30 SCRA 649; Edu v. Ericta, L-32096, Oct. 24, 1970, 35 SCRA 481; Phil. Virginia Tobacco Administration v. Court of Industrial Relations, L-32052, July 25, 1975, 65 SCRA 416) The statement therefore, that there could be discerned a constitutional objection to a lower court applying a Presidential Decree, when it leaves no doubt that a grantee of the power of eminent domain need not prove the necessity for the expropriation, carries its own refutation. xxx xxx xxx The issue of prematurity is also raised by the petitioners. They claim that since the necessity for the taking has not been previously established, the issuance of the orders authorizing the PTA to take immediate possession of the premises, as well as the corresponding writs of possession was premature. Under Presidential Decree No. 42, as amended by Presidential Decree No. 1533, the government, its agency or instrumentality, as plaintiff in an expropriation proceedings is authorized to take immediate possession, control and disposition of the property and the improvements, with power of demolition, notwithstanding the pendency of the issues before the court, upon deposit with the Philippine National Bank of an amount equivalent to 10% of the value of the property expropriated. The issue of immediate possession has been settled in Arce v. Genato (supra). In answer to the issue: ... whether the order of respondent Judge in an expropriation case allowing the other respondent, ... to take immediate possession of the parcel of land sought to be condemned for the beautification of its public plaza, without a prior hearing to determine the necessity for the exercise of the power of eminent domain, is vitiated by jurisdictional defect, ... this Court held that: ... It is not disputed that in issuing such order, respondent Judge relied on Presidential Decree No. 42 issued on the 9th of November, 1972. (Presidential Decree No. 42 is entitled "Authorizing the Plaintiff in Eminent Domain Proceedings to Take Possession of the Property involved Upon Depositing the Assessed Value for Purposes of Taxation.") The question as thus posed does not occasion any difficulty as to the answer to be given. This petition for certiorari must fail, there being no showing that compliance with the Presidential Decree, which under the Transitory Provisions is deemed a part of the law of the land, (According to Article XVII, Section 3 par. (2) of the Constitution: "All proclamations, orders, decrees, instructions and acts promulgated, issued, or

done by the incumbent President shall be part of the law of the land, and shall remain valid, legal, binding, and effective even after lifting of martial law or the ratification of this Constitution, unless modified, revoked, or superseded by subsequent proclamations. orders, decrees instructions, or other acts of the incumbent President, or unless expressly and explicitly modified or repealed by the regular National Assembly") would be characterized as either an act in excess of jurisdiction or a grave abuse of discretion. So we rule. Likewise in Ramos v. Philippine Tourism Authority (G.R. Nos. 52449-50, June 9, 1980), this Court held: ... condemnation or expropriation proceedings is in the nature of one that is quasi-in-rem wherein the fact that the owner of the property is made a party is not essentially indispensable insofar was least as it conncerns is the immediate taking of possession of the property and the preliminary determination of its value, including the amount to be deposited. In their last argument, the petitioners claim that a consequence of the expropriation proceedings would be their forcible ejectment. They contend that such forcible ejectment is a criminal act under Presidential Decree No. 583. This contention is not valid. Presidential Decree No. 583 prohibits the taking cognizance or implementation of orders designed to obstruct the land reform program. It refers to the harassment of tenant- farmers who try to enforce emancipation rights. It has nothing to do with the expropriation by the State of lands needed for public purposes. As a matter of fact, the expropriated area does not appear in the master lists of the Ministry of Agrarian Reforms as a teranted area. The petitioners' bare allegations have not been supported with particulars pointing to specific parcels which are subject of tenancy contracts. The petitioners may be owner-tillers or may have some form of possessory or ownership rights but there has been no showing of their being tenants on the disputed lands. The petitioners have failed to overcome the burden of anyone trying to strike down a statute or decree whose avowed purpose is the legislative perception is the public good. A statute has in its favor the presumption of validity. All reasonable doubts should be resolved in favor of the constitutionality of a law. The courts will not set aside a law as violative of the Constitution except in a clear case (People v. Vera, 65 Phil. 56). And in the absence of factual findings or evidence to rebut the presumption of validity, the presumption prevails (Ermita-Malate Hotel, etc. v. Mayor of Manila, 20 SCRA 849; Morfe v. Mutuc, 22 SCRA 424). The public respondents have stressed that the development of the 808 hectares includes plans that would give the petitioners and other displaced persons productive employment, higher incomes, decent housing, water and electric facilities, and better living standards. Our dismissing this petition is, in part, predicated on those assurances. The right of the PTA to proceed with the expropriation of the 282 hectares already Identified as fit for the establishment of a resort complex to promote tourism is, therefore, sustained. WHEREFORE, the instant petition for certiorari is hereby DISMISSE D for lack of merit. G.R. No. L-48685 September 30, 1987

LORENZO SUMULONG and EMILIA VIDANES-BALAOING, petitioners, vs. HON. BUENAVENTURA GUERRERO and NATIONAL HOUSING AUTHORITY, respondents.

CORTES, J.: On December 5, 1977 the National Housing Authority (NIIA) filed a complaint for expropriation of parcels of land covering approximately twenty five (25) hectares, (in Antipolo, Rizal) including the lots of petitioners Lorenzo Sumulong and Emilia Vidanes-Balaoing with an area of 6,667 square meters and 3,333 square meters respectively. The land sought to be expropriated were valued by the NHA at one peso (P1.00) per square meter adopting the market value fixed by the provincial assessor in accordance with presidential decrees prescribing the valuation of property in expropriation proceedings. Together with the complaint was a motion for immediate possession of the properties. The NHA deposited the amount of P158,980.00 with the Philippine National Bank, representing the "total market value" of the subject twenty five hectares of land, pursuant to Presidential Decree No. 1224 which defines "the policy on the expropriation of private property for socialized housing upon payment of just compensation." On January 17, 1978, respondent Judge issued the following Order: Plaintiff having deposited with the Philippine National Bank, Heart Center Extension Office, Diliman, Quezon City, Metro Manila, the amount of P158,980.00 representing the total market value of the subject parcels of land, let a writ of possession be issued. SO ORDERED. Pasig, Metro Manila, January 17, 1978. (SGD) BUENAVENTURA S. GUERRERO J u d g e Petitioners filed a motion for reconsideration on the ground that they had been deprived of the possession of their property without due process of law. This was however, denied. Hence, this petition challenging the orders of respondent Judge and assailing the constitutionality of Pres. Decree No. 1224, as amended. Petitioners argue that:

1) Respondent Judge acted without or in excess of his jurisdiction or with grave abuse of discretion by issuing the Order of January 17, 1978 without notice and without hearing and in issuing the Order dated June 28, 1978 denying the motion for reconsideration. 2) Pres. Decree l224, as amended, is unconstitutional for being violative of the due process clause, specifically: a) The Decree would allow the taking of property regardless of size and no matter how small the area to be expropriated; b) "Socialized housing" for the purpose of condemnation proceeding, as defined in said Decree, is not really for a public purpose; c) The Decree violates procedural due process as it allows immediate taking of possession, control and disposition of property without giving the owner his day in court; d) The Decree would allow the taking of private property upon payment of unjust and unfair valuations arbitrarily fixed by government assessors; e) The Decree would deprive the courts of their judicial discretion to determine what would be the "just compensation" in each and every raise of expropriation. Indeed, the exercise of the power of eminent domain is subject to certain limitations imposed by the constitution, to wit: Private property shall not be taken for public use without just compensation (Art. IV, Sec. 9); 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 (Art. IV, sec. 1). Nevertheless, a clear case of constitutional infirmity has to be established for this Court to nullify legislative or executive measures adopted to implement specific constitutional provisions aimed at promoting the general welfare. Petitioners' objections to the taking of their property subsumed under the headings of public use, just compensation, and due process have to be balanced against competing interests of the public recognized and sought to be served under declared policies of the constitution as implemented by legislation. 1. Public use a) Socialized Housing

Petitioners contend that "socialized housing" as defined in Pres. Decree No. 1224, as amended, for the purpose of condemnation proceedings is not "public use" since it will benefit only "a handful of people, bereft of public character." "Socialized housing" is defined as, "the construction of dwelling units for the middle and lower class members of our society, including the construction of the supporting infrastructure and other facilities" (Pres. Decree No. 1224, par. 1). This definition was later expanded to include among others: a) The construction and/or improvement of dwelling units for the middle and lower income groups of the society, including the construction of the supporting infrastructure and other facilities; b) Slum clearance, relocation and resettlement of squatters and slum dwellers as well as the provision of related facilities and services; c) Slum improvement which consists basically of allocating homelots to the dwellers in the area or property involved, rearrangemeant and re-alignment of existing houses and other dwelling structures and the construction and provision of basic community facilities and services, where there are none, such as roads, footpaths, drainage, sewerage, water and power system schools, barangay centers, community centers, clinics, open spaces, parks, playgrounds and other recreational facilities; d) The provision of economic opportunities, including the development of commercial and industrial estates and such other facilities to enhance the total community growth; and e) Such other activities undertaken in pursuance of the objective to provide and maintain housing for the greatest number of people under Presidential Decree No, 757, (Pres. Decree No. 1259, sec. 1) The "public use" requirement for a and exercise of the power of eminent domain is a flexible and evolving concept influenced by changing conditions. In this jurisdiction, the statutory and judicial trend has been summarized as follows: The taking to be valid must be for public use. There was a time when it was felt that a literal meaning should be attached to such a requirement. Whatever project is undertaken must be for the public to enjoy, as in the case of streets or parks. Otherwise, expropriation is not allowable. It is not 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 [Heirs of Juancho Ardona v. Reyes, G.R. Nos. 60549, 60553-60555 October 26, 1983, 125 SCRA 220 (1983) at 234-5 quoting E. FERNANDO, THE

CONSTITUTION OF THE PHILIPPINES 523-4, (2nd ed., 1977) Emphasis supplied]. The term "public use" has acquired a more comprehensive coverage. To the literal import of the term signifying strict use or employment by the public has been added the broader notion of indirect public benefit or advantage. As discussed in the above cited case of Heirs of Juancho Ardona: 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. (p. 231) Specifically, urban renewal or redevelopment and the construction of low-cost housing is recognized as a public purpose, not only because of the expanded concept of public use but also because of specific provisions in the Constitution. The 1973 Constitution made it incumbent upon the State to establish, maintain and ensure adequate social services including housing [Art. 11, sec. 7]. The 1987 Constitution goes even further by providing that: The State shall promote a just and dynamic social order that will ensure the prosperity and independence of the nation and free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living and an improved quality of life for all. [Art. II, sec. 9] The state shall by law, and for the common good, undertake, in cooperation with the private sector, a continuing program of urban land reform and housing which will make available at affordable cost decent housing and basic services to underprivileged and homeless citizens in urban centers and resettlement areas. It shall also promote adequate employment opportunities to such citizens. In the implementation of such program the State shall respect the rights of small property owners. (Art. XIII, sec. 9, Emphaisis supplied) 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. The public character of housing measures does not change because units in housing projects cannot be occupied by all but only by those who satisfy prescribed qualifications. A beginning has to be made, for it is not possible to provide housing for are who need it, all at once. Population growth, the migration to urban areas and the mushrooming of crowded makeshift dwellings is a worldwide development particularly in developing countries. So basic and urgent are housing problems that the United Nations General Assembly proclaimed 1987 as the "International Year of Shelter for the Homeless" "to focus the attention of the international community on those problems". The General Assembly is Seriously concerned that, despite the efforts of Governments at the national and local levels and of international organizations, the driving conditions of the majority of the people in slums and squatter areas and rural

settlements, especially in developing countries, continue to deteriorate in both relative and absolute terms." [G.A. Res. 37/221, Yearbook of the United Nations 1982, Vol. 36, p. 1043-4] In the light of the foregoing, this Court is satisfied that "socialized housing" fans within the confines of "public use". It is, particularly important to draw attention to paragraph (d) of Pres. Dec. No. 1224 which opportunities inextricably linked with low-cost housing, or slum clearance, relocation and resettlement, or slum improvement emphasize the public purpose of the project. In the case at bar, the use to which it is proposed to put the subject parcels of land meets the requisites of "public use". The lands in question are being expropriated by the NHA for the expansion of Bagong Nayon Housing Project to provide housing facilities to low-salaried government employees. Quoting respondents: 1. The Bagong Nayong Project is a housing and community development undertaking of the National Housing Authority. Phase I covers about 60 hectares of GSIS property in Antipolo, Rizal; Phase II includes about 30 hectares for industrial development and the rest are for residential housing development. It is intended for low-salaried government employees and aims to provide housing and community services for about 2,000 families in Phase I and about 4,000 families in Phase II. It is situated on rugged terrain 7.5 kms. from Marikina Town proper; 22 Kms. east of Manila; and is within the Lungs Silangan Townsite Reservation (created by Presidential Proclamation No. 1637 on April 18, 1977). The lands involved in the present petitions are parts of the expanded/additional areas for the Bagong Nayon Project totalling 25.9725 hectares. They likewise include raw, rolling hills. (Rollo, pp. 266-7) The acute shortage of housing units in the country is of public knowledge. Official data indicate that more than one third of the households nationwide do not own their dwelling places. A significant number live in dwellings of unacceptable standards, such as shanties, natural shelters, and structures intended for commercial, industrial, or agricultural purposes. Of these unacceptable dwelling units, more than one third is located within the National Capital Region (NCR) alone which lies proximate to and is expected to be the most benefited by the housing project involved in the case at bar [See, National Census and Statistics Office, 1980 Census of Population and Housing]. According to the National Economic and Development Authority at the time of the expropriation in question, about "50 per cent of urban families, cannot afford adequate shelter even at reduced rates and will need government support to provide them with social housing, subsidized either partially or totally" [NEDA, FOUR YEAR DEVELOPMENT PLAN For 1974-1977, p. 357]. Up to the present, housing some remains to be out of the reach of a sizable proportion of the population" [NEDA, MEDIUM-TERM PHILIPPINE DEVELOPMENT PLAN 1987-1992, p. 240]. The mushrooming of squatter colonies in the Metropolitan Manila area as well as in other cities and centers of population throughout the country, and, the efforts of the government to initiate housing and other projects are matters of public knowledge [See NEDA, FOUR YEAR DEVELOPMENT PLAN For 1974-1977, pp. 357-361; NEDA, FIVE-YEAR PHILIPPINE

DEVELOPMENT PLAN 1978-1982, pp. 215-228 NEDA, FIVE YEAR PHILIPPINE DEVELOPMENT PLAN 1983-1987, pp. 109-117; NEDA, MEDIUM TERM PHILIPPINE DEVELOPMENT PLAN 1987-1992, pp. 240-254]. b) Size of Property Petitioners further contend that Pres. Decree 1224, as amended, would allow the taking of "any private land" regardless of the size and no matter how small the area of the land to be expropriated. Petitioners claim that "there are vast areas of lands in Mayamot, Cupang, and San Isidro, Antipolo, Rizal hundred of hectares of which are owned by a few landowners only. It is surprising [therefore] why respondent National Housing Authority [would] include [their] two man lots ..." In J.M. Tuason Co., Inc. vs. Land Tenure Administration [G. R. No. L-21064, February 18, 1970, 31 SCRA 413 (1970) at 428] this Court earlier ruled that expropriation is not confined to landed estates. This Court, quoting the dissenting opinion of Justice J.B.L. Reyes in Republic vs. Baylosis, [96 Phil. 461 (1955)], held that: The propriety of exercising the power of eminent domain under Article XIII, section 4 of our Constitution cannot be determined on a purely quantitative or area basis. Not only does the constitutional provision speak of lands instead of landed estates, but I see no cogent reason why the government, in its quest for social justice and peace, should exclusively devote attention to conflicts of large proportions, involving a considerable number of individuals, and eschew small controversies and wait until they grow into a major problem before taking remedial action. The said case of J.M. Tuason Co., Inc. departed from the ruling in Guido vs. Rural Progress Administration [84 Phil. 847 (1949)] which held that the test to be applied for a valid expropriation of private lands was the area of the land and not the number of people who stood to be benefited. Since then "there has evolved a clear pattern of adherence to the "number of people to be benefited test" " [Mataas na Lupa Tenants Association, Inc. v. Dimayuga, G.R. No. 32049, June 25,1984, 130 SCRA 30 (1984) at 39]. Thus, in Pulido vs. Court of Appeals [G.R. No. 57625, May 3, 1983, 122 SCRA 63 (1983) at 73], this Court stated that, "[i]t is unfortunate that the petitioner would be deprived of his landholdings, but his interest and that of his family should not stand in the way of progress and the benefit of the greater may only of the inhabitants of the country." The State acting through the NHA is vested with broad discretion to designate the particular property/properties to be taken for socialized housing purposes and how much thereof may be expropriated. Absent a clear showing of fraud, bad faith, or gross abuse of discretion, which petitioners herein failed to demonstrate, the Court will give due weight to and leave undisturbed the NHA's choice and the size of the site for the project. The property owner may not interpose objections merely because in their judgment some other property would have been more suitable, or just as suitable, for the purpose. The right to the use, enjoyment and disposal of private property is tempered by and has to yield to the demands of the common good. The Constitutional provisions on the subject are clear: The State shall promote social justice in all phases of national development. (Art. II, sec. 10)

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 regulate the acquisition, ownership, use and disposition of property and its increments. (Art, XIII, sec. 1) Indeed, the foregoing provisions, which are restatements of the provisions in the 1935 and 1973 Constitutions, emphasize: ...the stewardship concept, under which private property is supposed to be held by the individual only as a trustee for the people in general, who are its real owners. As a mere steward, the individual must exercise his rights to the property not for his own exclusive and selfish benefit but for the good of the entire community or nation [Mataas na Lupa Tenants Association, Inc. supra at 42-3 citing I. CRUZ, PHILIPPINE POLITICAL LAW, 70 (1983 ed.)]. 2. Just Compensation Petitioners maintain that Pres. Decree No. 1224, as amended, would allow the taking of private property upon payment of unjust and unfair valuations arbitrarily fixed by government assessors. In addition, they assert that the Decree would deprive the courts of their judicial discretion to determine what would be "just compensation". The foregoing contentions have already been ruled upon by this Court in the case of Ignacio vs. Guerrero (G.R. No. L-49088, May 29, 1987) which, incidentally, arose from the same expropriation complaint that led to this instant petition. The provisions on just compensation found in Presidential Decree Nos. 1224, 1259 and 1313 are the same provisions found in Presidential Decree Nos. 76, 464, 794 and 1533 which were declared unconstitutional in Export Processing Zone All thirty vs. Dulay (G.R. No. 5960 April 29, 1987) for being encroachments on prerogatives. This Court abandoned the ruling in National Housing Authority vs. Reyes [G.R. No. 49439, June 29,1983, 123 SCRA 245 (1983)] which upheld Pres. Decree No. 464, as amended by Presidential Decree Nos. 794, 1224 and 1259. In said case of Export Processing Zone Authority, this Court pointed out that: 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. xxx xxx xxx 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 total 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 directional 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 landowners 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. (pp. 12-3) 3. Due Process Petitioners assert that Pres. Decree 1224, as amended, violates procedural due process as it allows immediate taking of possession, control and disposition of property without giving the owner his day in court. Respondent Judge ordered the issuance of a writ of possession without notice and without hearing. The constitutionality of this procedure has also been ruled upon in the Export Processing Zone Authority case, viz: 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 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. (p. 13) On the matter of the issuance of a writ of possession, the ruling in the Ignacio case is reiterated, thus: [I]t is imperative that before a writ of possession is issued by the Court in expropriation proceedings, the following requisites must be met: (1) There must be a Complaint for expropriation sufficient in form and in substance; (2) A provisional determination of just compensation for the properties sought to be expropriated must be made by the trial court on the basis of judicial (not legislative or executive) discretion; and (3) The deposit requirement under Section 2, Rule 67 must be complied with. (p. 14) This Court holds that "socialized housing" defined in Pres. Decree No. 1224, as amended by Pres. Decree Nos. 1259 and 1313, constitutes "public use" for purposes of expropriation. However, as previously held by this Court, the provisions of such decrees on just compensation are unconstitutional; and in the instant case the Court finds that the Orders issued pursuant to

the corollary provisions of those decrees authorizing immediate taking without notice and hearing are violative of due process. WHEREFORE, the Orders of the lower court dated January 17, 1978 and June 28, 1978 issuing the writ of possession on the basis of the market value appearing therein are annulled for having been issued in excess of jurisdiction. Let this case be remanded to the court of origin for further proceedings to determine the compensation the petitioners are entitled to be paid. No costs. G.R. No. 103125 May 17, 1993 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. The Provincial Attorney for petitioners. Reynaldo L. Herrera for Ernesto San Joaquin.

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 implementator 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 o:f 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 nontraditional 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 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 January18, 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 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 SC.RA 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 nonagricultural 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, 28l US 439, 74 L.ed. 950, 50 SCt. 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. 129, 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 conferring 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 Philippines, as sovereign, or its political subdivisions, as holders of delegated sovereign powers, cannot be bound by provisions of law couched in general term. 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 v. Ramirez, 183 SCRA 528 [1990], 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. [Synopsis/Syllabi] FIRST DIVISION

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

ALEJANDRO MANOSCA, ASUNCION MANOSCA and LEONICA MANOSCA, petitioners, vs. HON. COURT OF APPEALS, HON. BENJAMIN V. PELAYO, Presiding Judge, RTC-Pasig, Metro Manila, Branch 168, HON. GRADUACION A. REYES CLARAVAL, Presiding Judge, RTC-Pasig, Metro Manila, Branch 71, and REPUBLIC OF THE PHILIPPINES, respondents. DECISION VITUG, J.: In this appeal, via a petition for review on certiorari, from the decision[1] of the Court of Appeals, dated 15 January 1992, in CA-G.R. SP No. 24969 (entitled Alejandro Manosca, et al. v. Hon. Benjamin V. Pelayo, et al.), this Court is asked to resolve whether or not the public use requirement of Eminent Domain is extant in the attempted expropriation by the Republic of a 492-square-meter parcel of land so declared by the National Historical Institute (NHI) as a national historical landmark. The facts of the case are not in dispute. Petitioners inherited a piece of land located at P. Burgos Street, Calzada, Taguig, Metro Manila, with an area of about four hundred ninety-two (492) square meters. When the parcel was ascertained by the NHI to have been the birthsite of Felix Y. Manalo, the founder of Iglesia Ni Cristo, it passed Resolution No. 1, Series of 1986, pursuant to Section 4[2]of Presidential Decree No. 260, declaring the land to be a national historical landmark. The resolution was, on 06 January 1986, approved by the Minister of Education, Culture and Sports. Later, the opinion of the Secretary of Justice was asked on the legality of the measure. In his Opinion No. 133, Series of 1987, the Secretary of Justice replied in the affirmative; he explained: According to your guidelines, national landmarks are places or objects that are associated with an event, achievement, characteristic, or modification that makes a turning point or stage in Philippine history. Thus, the birthsite of the founder of the Iglesia ni Cristo, the late Felix Y. Manalo, who, admittedly, had made contributions to Philippine history and culture has been declared as a national landmark. It has been held that places invested with unusual historical interest is a public use for which the power of eminent domain may be authorized x x x.

In view thereof, it is believed that the National Historical Institute as an agency of the Government charged with the maintenance and care of national shrines, monuments and landmarks and the development of historical sites that may be declared as national shrines, monuments and/or landmarks, may initiate the institution of condemnation proceedings for the purpose of acquiring the lot in question in accordance with the procedure provided for in Rule 67 of the Revised Rules of Court. The proceedings should be instituted by the Office of the Solicitor General in behalf of the Republic. Accordingly, on 29 May 1989, the Republic, through the Office of the Solicitor-General, instituted a complaint for expropriation[3] before the Regional Trial Court of Pasig for and in behalf of the NHI alleging, inter alia, that: Pursuant to Section 4 of Presidential Decree No. 260, the National Historical Institute issued Resolution No. 1, Series of 1986, which was approved on January, 1986 by the then Minister of Education, Culture and Sports, declaring the above described parcel of land which is the birthsite of Felix Y. Manalo, founder of the Iglesia ni Cristo, as a National Historical Landmark. The plaintiff perforce needs the land as such national historical landmark which is a public purpose. At the same time, respondent Republic filed an urgent motion for the issuance of an order to permit it to take immediate possession of the property. The motion was opposed by petitioners. After a hearing, the trial court issued, on 03 August 1989,[4] an order fixing the provisional market (P54,120.00) and assessed (P16,236.00) values of the property and authorizing the Republic to take over the property once the required sum would have been deposited with the Municipal Treasurer of Taguig, Metro Manila. Petitioners moved to dismiss the complaint on the main thesis that the intended expropriation was not for a public purpose and, incidentally, that the act would constitute an application of public funds, directly or indirectly, for the use, benefit, or support of Iglesia ni Cristo, a religious entity, contrary to the provision of Section 29(2), Article VI, of the 1987 Constitution.[5] Petitioners sought, in the meanwhile, a suspension in the implementation of the 03rd August 1989 order of the trial court. On 15 February 1990, following the filing by respondent Republic of its reply to petitioners motion seeking the dismissal of the case, the trial court issued its denial of said motion to dismiss.[6] Five (5) days later, or on 20 February 1990,[7] another order was issued by the trial court, declaring moot and academic the motion for reconsideration and/or suspension of the order of 03 August 1989 with the rejection of petitioners motion to dismiss. Petitioners motion for the reconsideration of the 20th February 1990 order was likewise denied by the trial court in its 16th April 1991 order.[8] Petitioners then lodged a petition for certiorari and prohibition with the Court of Appeals. In its now disputed 15th January 1992 decision, the appellate court dismissed the petition on the ground that the remedy of appeal in the ordinary course of law was an adequate remedy and that the petition itself, in any case, had failed to show any grave abuse of discretion or lack of jurisdictional competence on the part of the trial court. A motion for the reconsideration of the decision was denied in the 23rd July 1992 resolution of the appellate court. We begin, in this present recourse of petitioners, with a few known postulates. Eminent domain, also often referred to as expropriation and, with less frequency, as condemnation, is, like police power and taxation, an inherent power of sovereignty. It need not be clothed with any constitutional gear to exist; instead, provisions in our Constitution on the

subject are meant more to regulate, rather than to grant, the exercise of the power.Eminent domain is generally so described as the highest and most exact idea of property remaining in the government that may be acquired for some public purpose through a method in the nature of a forced purchase by the State.[9] It is a right to take or reassert dominion over property within the state for public use or to meet a public exigency. It is said to be an essential part of governance even in its most primitive form and thus inseparable from sovereignty. [10] The only direct constitutional qualification is that private property shall not be taken for public use without just compensation.[11] This proscription is intended to provide a safeguard against possible abuse and so to protect as well the individual against whose property the power is sought to be enforced. Petitioners assert that the expropriation has failed to meet the guidelines set by this Court in the case of Guido v. Rural Progress Administration,[12] to wit: (a) the size of the land expropriated; (b) the large number of people benefited; and, (c) the extent of social and economic reform.[13] Petitioners suggest that we confine the concept of expropriation only to the following public uses,[14] i.e., the x x x taking of property for military posts, roads, streets, sidewalks, bridges, ferries, levees, wharves, piers, public buildings including schoolhouses, parks, playgrounds, plazas, market places, artesian wells, water supply and sewerage systems, cemeteries, crematories, and railroads. This view of petitioners is much too limitative and restrictive. The court, in Guido, merely passed upon the issue of the extent of the Presidents power under Commonwealth Act No. 539 to, specifically, acquire private lands for subdivision into smaller home lots or farms for resale to bona fide tenants or occupants. It was in this particular context of the statute that the Court had made the pronouncement. The guidelines in Guido were not meant to be preclusive in nature and, most certainly, the power of eminent domain should not now be understood as being confined only to the expropriation of vast tracts of land and landed estates.[15] The term public use, not having been otherwise defined by the constitution, must be considered in its general concept of meeting a public need or a public exigency.[16] Black summarizes the characterization given by various courts to the term; thus: Public Use. Eminent domain. The constitutional and statutory basis for taking property by eminent domain. For condemnation purposes, public use is one which confers same benefit or advantage to the public; it is not confined to actual use by public. It is measured in terms of right of public to use proposed facilities for which condemnation is sought and, as long as public has right of use, whether exercised by one or many members of public, a public advantage or public benefit accrues sufficient to constitute a public use. Montana Power Co. vs. Bokma, Mont. 457 P. 2d 769, 772, 773. Public use, in constitutional provisions restricting the exercise of the right to take private property in virtue of eminent domain, means a use concerning the whole community as distinguished from particular individuals. But each and every member of society need not be equally interested in such use, or be personally and directly affected by it; if the object is to satisfy a great public want or exigency, that is sufficient. Rindge Co. vs. Los Angeles County, 262 U.S. 700, 43 S.Ct. 689, 692, 67 L.Ed. 1186. The term may be said to mean public usefulness, utility, or advantage, or what is productive of general benefit. It may be limited to the inhabitants of a small or restricted locality, but must be in common, and not for a particular

individual. The use must be a needful one for the public, which cannot be surrendered without obvious general loss and inconvenience. A public use for which land may be taken defies absolute definition for it changes with varying conditions of society, new appliances in the sciences, changing conceptions of scope and functions of government, and other differing circumstances brought about by an increase in population and new modes of communication and transportation. Katz v. Brandon, 156 Conn., 521, 245 A.2d 579,586.[17] The validity of the exercise of the power of eminent domain for traditional purposes is beyond question; it is not at all to be said, however, that public use should thereby be restricted to such traditional uses. The idea that public use is strictly limited to clear cases of use by the public has long been discarded. This Court in Heirs of Juancho Ardona v. Reyes,[18] quoting from Berman v. Parker (348 U.S. 25; 99 L. ed. 27), held: We do not sit to determine whether a particular housing project is or is not desirable. The concept of the public welfare is broad and inclusive. See DayBrite Lighting, Inc. v. Missouri, 342 US 421, 424, 96 L. Ed. 469, 472, 72 S Ct 405. The values it represents are spiritual as well as physical, aesthetic as well as monetary. It is within the power of the legislature to determine that the community should be beautiful as well as healthy, spacious as well as clean, wellbalanced as well as carefully patrolled. In the present case, the Congress and its authorized agencies have made determinations that take into account a wide variety of values. It is not for us to reappraise them. If those who govern the District of Columbia decide that the Nations Capital should be beautiful as well as sanitary, there is nothing in the Fifth Amendment that stands in the way. Once the object is within the authority of Congress, the right to realize it through the exercise of eminent domain is clear. For the power of eminent domain is merely the means to the end. See Luxton v. North River Bridge Co. 153 US 525, 529, 530, 38 L. ed. 808, 810, 14 S Ct 891; United States v. Gettysburg Electric R. Co. 160 US 668, 679, 40 L. ed. 576, 580, 16 S Ct 427. It has been explained as early as Sea v. Manila Railroad Co.,[19] that: x x x A historical research discloses the meaning of the term public use to be one of constant growth. As society advances, its demands upon the individual increase and each demand is a new use to which the resources of the individual may be devoted. x x x for whatever is beneficially employed for the community is a public use. Chief Justice Enrique M. Fernando states: The taking to be valid must be for public use. There was a time when it was felt that a literal meaning should be attached to such a requirement. Whatever project is undertaken must be for the public to enjoy, as in the case of streets or parks. Otherwise, expropriation is not allowable. It is not so any more. As long as the purpose of the taking is public, then the power of eminent domain comes into play. As just noted, the constitution in at least two cases, to remove any doubt, determines what is public use. One is the expropriation of lands to be subdivided into small lots for resale at cost to individuals. The other is the transfer, through the exercise of this power, of utilities and other private enterprise to the government. It is accurate to state then that at present whatever may be beneficially employed for the general welfare satisfies the requirement of public use.[20]

Chief Justice Fernando, writing the ponencia in J.M. Tuason & Co. vs. Land Tenure Administration,[21] has viewed the Constitution a dynamic instrument and one that is not to be construed narrowly or pedantically so as to enable it to meet adequately whatever problems the future has in store. Fr. Joaquin Bernas, a noted constitutionalist himself, has aptly observed that what, in fact, has ultimately emerged is a concept of public use which is just as broad as public welfare.[22] Petitioners ask: But (w)hat is the so-called unusual interest that the expropriation of (Felix Manalos) birthplace become so vital as to be a public use appropriate for the exercise of the power of eminent domain when only members of the Iglesia ni Cristo would benefit? This attempt to give some religious perspective to the case deserves little consideration, for what should be significant is the principal objective of, not the casual consequences that might follow from, the exercise of the power. The purpose in setting up the marker is essentially to recognize the distinctive contribution of the late Felix Manalo to the culture of the Philippines, rather than to commemorate his founding and leadership of the Iglesia ni Cristo. The practical reality that greater benefit may be derived by members of the Iglesia ni Cristo than by most others could well be true but such a peculiar advantage still remains to be merely incidental and secondary in nature. Indeed, that only a few would actually benefit from the expropriation of property does not necessarily diminish the essence and character of public use.[23] Petitioners contend that they have been denied due process in the fixing of the provisional value of their property. Petitioners need merely to be reminded that what the law prohibits is the lack of opportunity to be heard;[24] contrary to petitioners argument, the records of this case are replete with pleadings[25] that could have dealt, directly or indirectly, with the provisional value of the property. Petitioners, finally, would fault respondent appellate court in sustaining the trial courts order which considered inapplicable the case of Noble v. City of Manila.[26] Both courts held correctly. The Republic was not a party to the alleged contract of exchange between the Iglesia ni Cristo and petitioners which (the contracting parties) alone, not the Republic, could properly be bound. All considered, the Court finds the assailed decision to be in accord with law and jurisprudence. WHEREFORE, the petition is DENIED. No costs. SECOND DIVISION

[G.R. No. 137285. January 16, 2001]

ESTATE OF SALUD JIMENEZ, petitioner, vs. PHILIPPINE EXPORT PROCESSING ZONE, respondent. DECISION DE LEON, JR., J.: Before us is a petition for review on certiorari of the Decision[1] and the Resolution[2]of the Court of Appeals[3] dated March 25, 1998 and January 14, 1999, respectively, which ordered the

Presiding Judge of the Regional Trial Court of Cavite City, Branch 17, to proceed with the hearing of the expropriation proceedings regarding the determination of just compensation for Lot 1406-B while setting aside the Orders dated August 4, 1997[4] and November 3, 1997 of the said Regional Trial Court which ordered the peaceful turnover to petitioner Estate of Salud Jimenez of said Lot 1406-B. The facts are as follows: On May 15, 1981, private respondent Philippine Export Processing Zone (PEZA), then called as the Export Processing Zone Authority (EPZA), initiated before the Regional Trial Court of Cavite expropriation proceedings[5] on three (3) parcels of irrigated riceland in Rosario, Cavite. One of the lots, Lot 1406 (A and B) of the San Francisco de Malabon Estate, with an approximate area of 29,008 square meters, is registered in the name of Salud Jimenez under TCT No. T-113498 of the Registry of Deeds of Cavite. More than ten (10) years later[6], the said trial court in an Order[7] dated July 11, 1991 upheld the right of private respondent PEZA to expropriate, among others, Lot 1406 (A and B). Reconsideration of the said order was sought by petitioner contending that said lot would only be transferred to a private corporation, Philippine Vinyl Corp., and hence would not be utilized for a public purpose. In an Order[8] dated October 25, 1991, the trial court reconsidered the Order dated July 11, 1991 and released Lot 1406-A from expropriation while the expropriation of Lot 1406-B was maintained. Finding the said order unacceptable, private respondent PEZA interposed an appeal to the Court of Appeals. Meanwhile, petitioner wrote a letter to private respondent offering two (2) proposals, namely: 1. Withdrawal of private respondents appeal with respect to Lot 1406-A in consideration of the waiver of claim for damages and loss of income for the possession of said lot by private respondent. 2. The swap of Lot 1406-B with Lot 434 covered by TCT No. T-14772 since private respondent has no money yet to pay for the lot. Private respondents Board approved the proposal and the compromise agreement was signed by private respondent through its then administrator Tagumpay Jardiniano assisted by Government Corporate Counsel Oscar I. Garcia. Said compromise agreement[9] dated January 4, 1993 is quoted hereunder: 1. That plaintiff agrees to withdraw its appeal from the Order of the Honorable Court dated October 25, 1991 which released lot 1406-A from the expropriation proceedings. On the other hand, defendant Estate of Salud Jimenez agrees to waive, quitclaim and forfeit its claim for damages and loss of income which it sustained by reason of the possession of said lot by plaintiff from 1981 up to the present. 2. That the parties agree that defendant Estate of Salud Jimenez shall transfer lot 1406-B with an area of 13,118 square meters which forms part of the lot registered under TCT No. 113498 of the Registry of Deeds of Cavite to the name of the plaintiff and the same shall be swapped and exchanged with lot 434 with an area of 14,167 square meters and covered by Transfer Certificate of Title No. 14772 of the Registry of Deeds of Cavite which lot will be transferred to the name of Estate of Salud Jimenez.

3. That the swap arrangement recognizes the fact that the lot 1406-B covered by TCT No. T-113498 of the estate of defendant Salud Jimenez is considered expropriated in favor of the government based on Order of the Honorable Court dated July 11, 1991. However, instead of being paid the just compensation for said lot, the estate of said defendant shall be paid with lot 434 covered by TCT No. T-14772. 4. That the parties agree that they will abide by the terms of the foregoing agreement in good faith and the Decision to be rendered based on this Compromise Agreement is immediately final and executory. The Court of Appeals remanded the case to the trial court for the approval of the said compromise agreement entered into between the parties, consequent with the withdrawal of the appeal with the Court of Appeals. In the Order[10] dated August 23, 1993, the trial court approved the compromise agreement. However, private respondent failed to transfer the title of Lot 434 to petitioner inasmuch as it was not the registered owner of the covering TCT No. T-14772 but Progressive Realty Estate, Inc.Thus, on March 13, 1997, petitioner Estate filed a Motion to Partially Annul the Order dated August 23, 1993.[11] In the Order[12] dated August 4, 1997, the trial court annulled the said compromise agreement entered into between the parties and directed private respondent to peacefully turn over Lot 1406-A to the petitioner. Disagreeing with the said Order of the trial court, respondent PEZA moved[13] for its reconsideration. The same proved futile since the trial court denied reconsideration in its Order[14] dated November 3, 1997. On December 4, 1997, the trial court, at the instance[15] of petitioner, corrected the Orders dated August 4, 1997 and November 3, 1997 by declaring that it is Lot 1406-B and not Lot 1406-A that should be surrendered and returned to petitioner. On November 27, 1997, respondent interposed before the Court of Appeals a petition for certiorari and prohibition[16] seeking to nullify the Orders dated August 4, 1997 and November 3, 1997 of the trial court. Petitioner filed its Comment[17]on January 16, 1998. Acting on the petition, the Court of Appeals in a Decision[18]dated March 25, 1998 upheld the rescission of the compromise agreement, ratiocinating thus: A judicial compromise may be enforced by a writ of execution, and if a party fails or refuses to abide by the compromise, the other party may regard it as rescinded and insist upon his original demand. This is in accordance with Article 2041 of the Civil Code which provides: If one of the parties fails or refuses to abide by the compromise, the other party may either enforce the compromise or regard it as rescinded and insist upon his original demand. The Supreme Court had the occasion to explain this provision of law in the case of Leonor v. Sycip (1 SCRA 1215). It ruled that the language of the abovementioned provision denotes that no action for rescission is required and that the aggrieved party by the breach of compromise agreement, may regard the compromise agreement already rescinded, to wit: It is worthy of notice, in this connection, that, unlike Article 2039 of the same Code, which speaks of a cause of annulment or rescission of the compromise and provides that the compromise may be annulled or rescinded for the cause therein specified, thus suggesting an action for annulment or rescission, said Article 2041 confers upon the party concerned not a

cause for rescission, or the right to demand rescission, of a compromise, but the authority, not only to regard it as rescinded, but, also, to insist upon his original demand. The language of this Article 2041, particularly when contrasted with that of Article 2039, denotes that no action for rescission is required in said Article 2041, and that the party aggrieved by the breach of a compromise agreement may, if he chooses, bring the suit contemplated or involved in his original demand, as if there had never been any compromise agreement, without bringing an action for rescission thereof. He need not seek a judicial declaration of rescission, for he may regard the compromise agreement already, rescinded. Nonetheless, it held that: Having upheld the rescission of the compromise agreement, what is then the status of the expropriation proceedings? As succinctly discussed in the case of Leonor v. Sycip, the aggrieved party may insist on his original demand as if there had never been any compromise agreement. This means that the situation of the parties will revert back to status before the execution of the compromise agreement, that is, the second stage of the expropriation proceedings which is the determination of the just compensation.[19] xxx Thus, the appellate court partially granted the petition by setting aside the order of the trial court regarding the peaceful turn over to the Estate of Salud Jimenez of Lot No. 1406-B and instead ordered the trial judge to proceed with the hearing of the expropriation proceedings regarding the determination of just compensation over Lot 1406-B.[20] Petitioner sought[21] reconsideration of the Decision dated March 25, 1998. However, public respondent in a Resolution[22] dated January 14, 1999 denied petitioners motion for reconsideration. Hence, this petition anchored on the following assignment of errors, to wit:

I

THE COURT OF APPEALS COMMITTED GRAVE AND REVERSIBLE ERROR IN GIVING DUE COURSE TO THE SPECIAL CIVIL ACTION FILED BY RESPONDENT PEZA IN CAG.R. SP. NO. 46112 WHEN IT WAS MADE A SUBSTITUTE FOR LOST APPEAL IN CLEAR CONTRAVENTION OF THE HONORABLE COURTS RULING IN SEMPIO VS. COURT OF APPEALS (263 SCRA 617) AND ONGSITCO VS. COURT OF APPEALS (255 SCRA 703) AND DESPITE THE FACT THAT THE ORDER OF THE CAVITE REGIONAL TRIAL COURT IS ALREADY FINAL AND EXECUTORY. II GRANTING IN GRATIA ARGUMENTI THAT THE SPECIAL CIVIL ACTION OF CERTIORARI IS PROPER, THE COURT OF APPEALS NEVERTHELESS WRONGLY INTERPRETED THE PHRASE ORIGINAL DEMAND CONTAINED IN ARTICLE 2041 OF THE CIVIL CODE. THE ORIGINAL DEMAND OF PETITIONER ESTATE IS THE RETURN OF THE SUBJECT LOT (LOT 1406-B) WHICH IS SOUGHT TO BE EXPROPRIATED AND NOT THE DETERMINATION OF JUST COMPENSATION FOR THE LOT.FURTHERMORE, EVEN IF THE INTERPRETATION OF THE COURT OF APPEALS OR THE IMPORT OF THE PHRASE

IN QUESTION IS CORRECT, IT IS ARTICLE 2039 OF THE CIVIL CODE AND NOT ARTICLE 2041 WHICH IS APPLICABLE TO COMPROMISE AGREEMENTS APPROVED BY THE COURTS.[23] We rule in favor of the respondent. Petitioner contends that the Court of Appeals erred in entertaining the petition for certiorari filed by respondent under Rule 65 of the Rules of Court, the same being actually a substitute for lost appeal. It appeared that on August 11, 1997, respondent received the Order of the trial court dated August 4, 1997 annulling the compromise agreement. On August 26, 1997, the last day for the filing of a notice of appeal, respondent filed instead a motion for reconsideration. The Order of the trial court denying the motion for reconsideration was received by respondent on November 23, 1997. The reglementary period to appeal therefore lapsed on November 24, 1997. On November 27, 1997, however, respondent filed with the Court of Appeals a petition for certiorari docketed as CA-G.R. SP. No. 46112. Petitioner claims that appeal is the proper remedy inasmuch as the Order dated August 4, 1997 of the Regional Trial Court is a final order that completely disposes of the case. Besides, according to petitioner, respondent is estopped in asserting that certiorari is the proper remedy inasmuch as it invoked the fifteen (15) day reglementary period for appeal when it filed a motion for reconsideration on August 26, 1997 and not the sixty (60) day period for filing a petition for certiorari under Rule 65 of the Rules of Court. The Court of Appeals did not err in entertaining the petition for certiorari under Rule 65 of The Rules of Court. A petition for certiorari is the proper remedy when any tribunal, board, or officer exercising judicial or quasi-judicial functions has acted without or in excess of its jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction and there is no appeal, nor any plain, speedy, and adequate remedy at law.[24] Grave abuse of discretion is defined as the capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. An error of judgment committed in the exercise of its legitimate jurisdiction is not the same as grave abuse of discretion. An abuse of discretion is not sufficient by itself to justify the issuance of a writ of certiorari. The abuse must be grave and patent, and it must be shown that the discretion was exercised arbitrarily and despotically.[25] As a general rule, a petition for certiorari will not lie if an appeal is the proper remedy thereto such as when an error of judgment as well as of procedure are involved. As long as a court acts within its jurisdiction and does not gravely abuse its discretion in the exercise thereof, any supposed error committed by it will amount to nothing more than an error of judgment reviewable by a timely appeal and not assailable by a special civil action of certiorari. However, in certain exceptional cases, where the rigid application of such rule will result in a manifest failure or miscarriage of justice, the provisions of the Rules of Court which are technical rules may be relaxed. Certiorari has been deemed to be justified, for instance, in order to prevent irreparable damage and injury to a party where the trial judge has capriciously and whimsically exercised his judgment, or where there may be danger of clear failure of justice, or where an ordinary appeal would simply be inadequate to relieve a party from the injurious effects of the judgment complained of.[26] Expropriation proceedings involve two (2) phases. The first phase ends either with an order of expropriation (where the right of plaintiff to take the land and the public purpose to which they are to be devoted are upheld) or an order of dismissal. Either order would be a final one since it finally disposes of the case. The second phase concerns the determination of just compensation to be ascertained by three (3) commissioners. It ends with an order fixing the amount to be paid

to the defendant. Inasmuch as it leaves nothing more to be done, this order finally disposes of the second stage. To both orders the remedy therefrom is an appeal.[27] In the case at bar, the first phase was terminated when the July 11, 1991 order of expropriation became final and the parties subsequently entered into a compromise agreement regarding the mode of payment of just compensation. When respondent failed to abide by the terms of the compromise agreement, petitioner filed an action to partially rescind the same. Obviously, the trial could only validly order the rescission of the compromise agreement anent the payment of just compensation inasmuch as that was the subject of the compromise. However, on August 4, 1991, the trial court gravely abused its discretion when it ordered the return of Lot 1406-B. It, in effect, annulled the Order of Expropriation dated July 11, 1991 which was already final and executory. We affirm the appellate courts reliance on the cases of Aguilar v. Tan[28] and Bautista v. Sarmiento[29] wherein it was ruled that the remedies of certiorari and appeal are not mutually exclusive remedies in certain exceptional cases, such as when there is grave abuse of discretion, or when public welfare so requires. The trial court gravely abused its discretion by setting aside the order of expropriation which has long become final and executory and by ordering the return of Lot 1406-B to the petitioner. Its action was clearly beyond its jurisdiction for it cannot modify a final and executory order. A final and executory order can only be annulled by a petition to annul the same on the ground of extrinsic fraud and lack of jurisdiction [30] or a petition for relief from a final order or judgment under Rule 38 of the Rules of Court. However, no petition to that effect was filed. Hence, though an order completely and finally disposes of the case, if appeal is not a plain, speedy and adequate remedy at law or the interest of substantial justice requires, a petition for certiorari may be availed of upon showing of lack or excess of jurisdiction or grave abuse of discretion on the part of the trial court. According to petitioner the rule that a petition for certiorari can be availed of despite the fact that the proper remedy is an appeal only applies in cases where the petition is filed within the reglementary period for appeal. Inasmuch as the petition in the case at bar was filed after the fifteen (15) day regulatory period to appeal, said exceptional rule as enshrined in the cases of Aguilar v. Tan[31] and Bautista v. Sarmiento[32] is not applicable. We find this interpretation too restrictive. The said cases do not set as a condition sine qua non the filing of a petition for certiorari within the fifteen (15) day period to appeal in order for the said petition to be entertained by the court. To espouse petitioners contention would render inutile the sixty (60) day period to file a petition for certiorari under Rule 65. In Republic v. Court of Appeals[33], which also involved an expropriation case where the parties entered into a compromise agreement on just compensation, this Court entertained the petition for certiorari despite the existence of an appeal and despite its being filed after the lapse of the fifteen (15) day period to appeal the same. We ruled that the Court has not too infrequently given due course to a petition for certiorari, even when the proper remedy would have been an appeal, where valid and compelling considerations would warrant such a recourse.[34] If compelled to return the subject parcel of land, the respondent would divert its budget already allocated for economic development in order to pay petitioner the rental payments from the lessee banks. Re-adjusting its budget would hamper and disrupt the operation of the economic zone. We believe that the grave abuse of discretion committed by the trial court and the consequent disruption in the operation of the economic zone constitutes valid and compelling reasons to entertain the petition. Petitioner next argues that the instances cited under Section 1 of Rule 41 of the Rules of Court[35] whereby an appeal is not allowed are exclusive grounds for a petition for certiorari. Inasmuch as the August 4 1997 Order rescinding the compromise agreement does not fall

under any of the instances enumerated therein, a petition for certiorari will not prosper. This reasoning is severely flawed. The said section is not phrased to make the instances mentioned therein the sole grounds for a petition for certiorari. It only states that Rule 65 may be availed of under the grounds mentioned therein, but it never intended said enumeration to be exclusive. It must be remembered that a wide breadth of discretion is granted a court of justice in certiorari proceedings.[36] In the second assignment of error, petitioner assails the interpretation by the Court of Appeals of the phrase original demand in Article 2041 of the New Civil Code vis-a-vis the case at bar. Article 2041 provides that, If one of the parties fails or refuses to abide by the compromise, the other party may either enforce the compromise or regard it as rescinded and insist upon his original demand. According to petitioner, the appellate court erred in interpreting original demand as the fixing of just compensation. Petitioner claims that the original demand is the return of Lot 1406-B as stated in petitioners motion to dismiss[37] the complaint for expropriation inasmuch as the incorporation of the expropriation order in the compromise agreement subjected the said order to rescission. Since the order of expropriation was rescinded, the authority of respondent to expropriate and the purpose of expropriation have again become subject to dispute. Petitioner cites cases[38] which provide that upon the failure to pay by the lessee, the lessor can ask for the return of the lot and the ejectment of the former, this being the lessors original demand in the complaint. We find said cases to be inapplicable to this instant case for the reason that the case at bar is not a simple ejectment case. This is an expropriation case which involves two (2) orders: an expropriation order and an order fixing just compensation. Once the first order becomes final and no appeal thereto is taken, the authority to expropriate and its public use cannot anymore be questioned. Contrary to petitioners contention, the incorporation of the expropriation order in the compromise agreement did not subject said order to rescission but instead constituted an admission by petitioner of respondents authority to expropriate the subject parcel of land and the public purpose for which it was expropriated. This is evident from paragraph three (3) of the compromise agreement which states that the swap arrangement recognizes the fact that Lot 1406-B covered by TCT No. T-113498 of the estate of defendant Salud Jimenez is considered expropriated in favor of the government based on the Order of the Honorable Court dated July 11, 1991. It is crystal clear from the contents of the agreement that the parties limited the compromise agreement to the matter of just compensation to petitioner. Said expropriation order is not closely intertwined with the issue of payment such that failure to pay by respondent will also nullify the right of respondent to expropriate. No statement to this effect was mentioned in the agreement. The Order was mentioned in the agreement only to clarify what was subject to payment. This Court therefore finds that the Court of Appeals did not err in interpreting original demand to mean the fixing of just compensation. The authority of respondent and the nature of the purpose thereof have been put to rest when the Expropriation Order dated July 11, 1991 became final and was duly admitted by petitioner in the compromise agreement. The only issue for consideration is the manner and amount of payment due to petitioner. In fact, aside from the withdrawal of private respondents appeal to the Court of Appeals concerning Lot 1406-A, the matter of payment of just compensation was the only subject of the compromise agreement dated January 4, 1993. Under the compromise agreement, petitioner was supposed to receive respondents Lot No. 434 in exchange for Lot 1406-B. When respondent failed to fulfill its obligation to deliver Lot 434, petitioner can again demand for the payment but not the return of

the expropriated Lot 1406-B. This interpretation by the Court of Appeals is in accordance with Sections 4 to 8, Rule 67 of the Rules of Court. We also find as inapplicable the ruling in Gatchalian v. Arlegui[39], a case cited by petitioner, where we held that even a final judgment can still be compromised so long as it is not fully satisfied. As already stated, the expropriation order was not the subject of the compromise agreement. It was only the mode of payment which was the subject of the compromise agreement. Hence, the Order of Expropriation dated July 11, 1991 can no longer be annulled. After having invoked the provisions of Article 2041, petitioner inconsistently contends that said article does not apply to the case at bar inasmuch as it is only applicable to cases where a compromise has not been approved by a court. In the case at bar, the trial court approved the compromise agreement. Petitioner insists that Articles 2038, 2039 and 1330 of the New Civil Code should apply. Said articles provide that: Article 2038. A compromise in which there is mistake, fraud, violence, intimidation, undue influence, or falsity of documents, is subject to the provisions of Article 1330 of this Code. However, one of the parties cannot set up a mistake of fact as against the other if the latter, by virtue of the compromise, has withdrawn from a litigation already commenced. Article 2039. When the parties compromise generally on all differences which they might have with each other, the discovery of documents referring to one or more but not to all of the questions settled shall not itself be a cause for annulment or rescission of the compromise, unless said documents have been concealed by one of the parties. But the compromise may be annulled or rescinded if it refers only to one thing to which one of the parties has no right, as shown by the newly discovered documents.(n) Article 1330. A contract where consent is given through mistake, violence, intimidation, undue influence, or fraud is voidable.[40] The applicability of the above-quoted legal provisions will not change the outcome of the subject of the rescission. Since the compromise agreement was only about the mode of payment by swapping of lots and not about the right and purpose to expropriate the subject Lot 1406-B, only the originally agreed form of compensation that is by cash payment, was rescinded. This Court holds that respondent has the legal authority to expropriate the subject Lot 1406B and that the same was for a valid public purpose. In Sumulong v. Guerrero[41], this Court has ruled that, the public use requirement for a valid exercise of the power of eminent domain is a flexible and evolving concept influenced by changing conditions. In this jurisdiction, the statutory and judicial trend has been summarized as follows: this Court has ruled that 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 It is accurate to state then that at present

whatever may be beneficially employed for the general welfare satisfies the requirement of public use. [Heirs of Juancho Ardona v. Reyes, 125 SCRA 220 (1983) at 234-235 quoting E. Fernando, the Constitution of the Philippines 523-4 (2nd Ed. 1977) The term public use has acquired a more comprehensive coverage. To the literal import of the term signifying strict use or employment by the public has been added the broader notion of indirect public benefit or advantage. In Manosca v. Court of Appeals, this Court has also held that what ultimately emerged is a concept of public use which is just as broad as public welfare.[42] Respondent PEZA expropriated the subject parcel of land pursuant to Proclamation No. 1980 dated May 30, 1980 issued by former President Ferdinand Marcos. Meanwhile, the power of eminent domain of respondent is contained in its original charter, Presidential Decree No. 66, which provides that: Section 23. Eminent Domain. For the acquisition of rights of way, or of any property for the establishment of export processing zones, or of low-cost housing projects for the employees working in such zones, or for the protection of watershed areas, or for the construction of dams, reservoirs, wharves, piers, docks, quays, warehouses and other terminal facilities, structures and approachesthereto, the Authority shall have the right and power to acquire the same by purchase, by negotiation, or by condemnation proceedings. Should the authority elect to exercise the right of eminent domain, condemnation proceedings shall be maintained by and in the name of the Authority and it may proceed in the manner provided for by law. (italics supplied) Accordingly, subject Lot 1406-B was expropriated for the construction of terminal facilities, structures and approaches thereto. The authority is broad enough to give the respondent substantial leeway in deciding for what public use the expropriated property would be utilized. Pursuant to this broad authority, respondent leased a portion of the lot to commercial banks while the rest was made a transportation terminal. Said public purposes were even reaffirmed by Republic Act No. 7916, a law amending respondent PEZAs original charter, which provides that: Sec. 7. ECOZONE to be a Decentralized Agro-Industrial, Industrial, Commercial/Trading, Tourist, Investment and Financial Community. Within the framework of the Constitution, the interest of national sovereignty and territorial integrity of the Republic, ECOZONE shall be developed, as much as possible, into a decentralized, self-reliant and self-sustaining industrial, commercial/trading, agro-industrial, tourist, banking, financial and investment center with minimum government intervention. Each ECOZONE shall be provided with transportation, telecommunications and other facilities needed to generate linkage with industries and employment opportunities for its own habitants and those of nearby towns and cities. The ECOZONE shall administer itself on economic, financial, industrial, tourism development and such other matters within the exclusive competence of the national government. (italics supplied) Among the powers of PEZA enumerated by the same law are:

Sec. 12. Functions and Powers of PEZA Board. ---- The Philippine Economic Zone Authority (PEZA) Board shall have the following function and powers: (a) Set the general policies on the establishment and operations of the ECOZONE, Industrial estate, exports processing zones, free trade zones, and the like; xxx (c) Regulate and undertake the establishment, operation and maintenance of utilities, other services and infrastructure in the ECOZONE, such as heat, light and power, water supply, telecommunications, transport, toll roads and bridges, port services, etc. and to fix just, reasonable and competitive rates, fares, charges and fees thereof.[43] In Manila Railroad Co. v. Mitchel[44], this Court has ruled that in the exercise of eminent domain, only as much land can be taken as is necessary for the legitimate purpose of the condemnation.The term necessary, in this connection, does not mean absolutely indispensable but requires only a reasonable necessity of the taking for the stated purpose, growth and future needs of the enterprise.The respondent cannot attain a self-sustaining and viable ECOZONE if inevitable needs in the expansion in the surrounding areas are hampered by the mere refusal of the private landowners to part with their properties. The purpose of creating an ECOZONE and other facilities is better served if respondent directly owns the areas subject of the expansion program. The contention of petitioner that the leasing of the subject lot to banks and building terminals was not expressly mentioned in the original charter of respondent PEZA and that it was only after PEZA devoted the lot to said purpose that Republic Act No. 7916 took effect, is not impressed with merit. It should be pointed out that Presidential Decree No. 66 created the respondent PEZA to be a viable commercial, industrial and investment area. According to the comprehensive wording of Presidential Decree No. 66, the said decree did not intend to limit respondent PEZA to the establishment of an export processing zone but it was also bestowed with authority to expropriate parcels of land for the construction of terminal facilities, structures and approaches thereto. Republic Act No. 7916 simply particularized the broad language employed by Presidential Decree No. 66 by specifying the purposes for which PEZA shall devote the condemned lots, that is, for the construction and operation of an industrial estate, an export processing zone, free trade zones, and the like. The expropriation of Lot 1406-B for the purpose of being leased to banks and for the construction of a terminal has the purpose of making banking and transportation facilities easily accessible to the persons working at the industries located in PEZA. The expropriation of adjacent areas therefore comes as a matter of necessity to bring life to the purpose of the law. In such a manner, PEZAs goal of being a major force in the economic development of the country would be realized. Furthermore, this Court has already ruled that: (T)he Legislature 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 existence of the public necessity for its construction, the expediency of constructing it, the suitableness of the location selected, 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.

In the absence of some constitutional or statutory provision to the contrary, the necessity and expediency of exercising the right of eminent domain are questions essentially political and not judicial in their character.[45] Inasmuch as both Presidential Decree No. 66 and Republic Act No. 7916, bestow respondent with authority to develop terminal facilities and banking centers, this Court will not question the respondents lease of certain portions of the expropriated lot to banks, as well as the construction of terminal facilities. Petitioner contends that respondent is bound by the representations of its Chief Civil Engineer when the latter testified before the trial court that the lot was to be devoted for the construction of government offices. Anent this issue, suffice it to say that PEZA can vary the purpose for which a condemned lot will be devoted to, provided that the same is for public use. Petitioner cannot impose or dictate on the respondent what facilities to establish for as long as the same are for public purpose. Lastly, petitioner appeals to the sense of justice and equity to this Court in restoring the said lot to its possession. From the time of the filing of the expropriation case in 1981 up to the present, respondent has not yet remunerated the petitioner although respondent has already received earnings from the rental payments by lessees of the subject property. We have ruled that the concept of just compensation embraces not only the correct determination of the amount to be paid to the owners of the land, but also the payment of the land within a reasonable time from its taking. Without prompt payment, compensation cannot be considered just inasmuch as the property owner is made to suffer the consequences 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.[46] Payment of just compensation should follow as a matter of right immediately after the order of expropriation is issued. Any delay in payment must be counted from said order. However, the delay to constitute a violation of due process must be unreasonable and inexcusable; it must be deliberately done by a party in order to defeat the ends of justice. We find that respondent capriciously evaded its duty of giving what is due to petitioner. In the case at bar, the expropriation order was issued by the trial court in 1991. The compromise agreement between the parties was approved by the trial court in 1993. However, from 1993 up to the present, respondent has failed in its obligation to pay petitioner to the prejudice of the latter.Respondent caused damage to petitioner in making the latter to expect that it had a good title to the property to be swapped with Lot 1406-B; and meanwhile, respondent has been reaping benefits from the lease or rental income of the said expropriated lot. We cannot tolerate this oppressive exercise of the power of eminent domain by respondent. As we have ruled in Cosculluela vs. Court of Appeals:[47] In the present case, the irrigation project was completed and has been in operation since 1976. The project is benefiting the farmers specifically and the community in general. Obviously, the petitioners land cannot be returned to him. However, it is high time that the petitioner be paid what was due him eleven years ago. It is arbitrary and capricious for a government agency to initiate expropriation proceedings, seize a persons property, allow the judgment of the court to become final and executory and then refuse to pay on the ground that there are no appropriations for the property earlier taken and profitably used. We condemn in the strongest possible terms the cavalier attitude of government officials who adopt such a despotic and irresponsible stance.

Though the respondent has committed a misdeed to petitioner, we cannot, however, grant the petitioners prayer for the return of the expropriated Lot No. 1406-B. The Order of expropriation dated July 11, 1991, has long become final and executory. Petitioner cited Provincial Government of Sorsogon v. Rosa E. Vda. De Villaroya[48] to support its contention that it is entitled to a return of the lot where this Court ruled that under ordinary circumstances, immediate return to the owners of the unpaid property is the obvious remedy. However, the said statement was not the ruling in that case. As in other cases where there was no prompt payment by the government, this Court declared in Sorsogon that the Provincial Government of Sorsogon is expected to immediately pay as directed. Should any further delay be encountered, the trial court is directed to seize any patrimonial property or cash savings of the province in the amount necessary to implement this decision. However, this Court also stressed and declared in that case that In cases where land is taken for public use, public interest, however, must be considered. In view of all the foregoing, justice and equity dictate that this case be remanded to the trial court for hearing of the expropriation proceedings on the determination of just compensation for Lot 1406-B and for its prompt payment to the petitioner. WHEREFORE, the instant petition is hereby denied. The Regional Trial Court of Cavite City is hereby ordered to proceed with the hearing of the expropriation proceedings, docketed as Civil Case No. N-4029, regarding the determination of just compensation for Lot 1406-B, covered and described in TCT No. T-113498-Cavite, and to resolve the same with dispatch. SECOND DIVISION

[G.R. No. 158563. June 30, 2005]

AIR TRANSPORTATION OFFICE (ATO) and MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY (MCIAA), petitioners, vs. APOLONIO GOPUCO, JR., respondent. DECISION CHICO-NAZARIO, J.: When private land is expropriated for a particular public use, and that particular public use is abandoned, does its former owner acquire a cause of action for recovery of the property? The trial courts ruling in the negative was reversed by the Court of Appeals in its Decision[1] of 28 February 2001. Hence this petition for review under Rule 45 of the 1997 Rules of Civil Procedure of the said Decision of the court a quo, and its Resolution[2] of 22 May 2003 dismissing petitioners motion for reconsideration. The facts, as adduced from the records, are as follows: Respondent Apolonio Gopuco, Jr. was the owner of Cadastral Lot No. 72 consisting of 995 square meters located in the vicinity of the Lahug Airport in Cebu City covered by Transfer Certificate of Title (TCT) No. 13061-T. The Lahug Airport had been turned over by the Unites States Army to the Republic of the Philippines sometime in 1947 through the Surplus Property Commission, which accepted it in

behalf of the Philippine Government. In 1947, the Surplus Property Commission was succeeded by the Bureau of Aeronautics, which office was supplanted by the National Airport Corporation (NAC). The NAC was in turn dissolved and replaced with the Civil Aeronautics Administration (CAA).[3] Sometime in 1949, the NAC informed the owners of the various lots surrounding the Lahug Airport, including the herein respondent, that the government was acquiring their lands for purposes of expansion. Some landowners were convinced to sell their properties on the assurance that they would be able to repurchase the same when these would no longer be used by the airport. Others, including Gopuco, refused to do so. Thus, on 16 April 1952, the CAA filed a complaint with the Court of First Instance (CFI) of Cebu for the expropriation of Lot No. 72 and its neighboring realties, docketed as Civil Case No. R-1881. On 29 December 1961, the CFI promulgated a Decision, 1. Declaring the expropriation of [the subject lots, including Lot No. 72] justified and in lawful exercise of the right of eminent domain; 2. Declaring . a balance of P1,990 in favor of Apolonio Go Puco, Jr. with legal interest from November 16, 1947 until fully paid. ; 3. After the payment of the foregoing financial obligation to the landowners, directing the latter to deliver to the plaintiff the corresponding Transfer Certificates of Title to their respective lots; and upon the presentation of the said titles to the Register of Deeds, ordering the latter to cancel the same and to issue, in lieu thereof, new Transfer Certificates of Title in the name of the plaintiff.[4] No appeal was taken from the above Decision on Lot No. 72, and the judgment of condemnation became final and executory. Thereafter, on 23 May 1962, absolute title to Lot No. 72 was transferred to the Republic of the Philippines under TCT No. 25030.[5] Subsequently, when the Mactan International Airport commenced operations, the Lahug Airport was ordered closed by then President Corazon C. Aquino in a Memorandum of 29 November 1989.[6] Lot No. 72 was thus virtually abandoned.[7] On 16 March 1990, Gopuco wrote[8] the Bureau of Air Transportation, through the manager of the Lahug Airport, seeking the return of his lot and offering to return the money previously received by him as payment for the expropriation. This letter was ignored.[9] In the same year, Congress passed Republic Act No. 6958 creating the Mactan-Cebu International Airport Authority (MCIAA) and in part providing for the transfer of the assets of the Lahug Airport thereto. Consequently, on 08 May 1992, ownership of Lot No. 72 was transferred to MCIAA under TCT No. 120356.[10] On 06 August 1992, Apolonio Gopuco, Jr. filed an amended complaint[11] for recovery of ownership of Lot No. 72 against the Air Transportation Office[12] and the Province of Cebu with the Regional Trial Court (RTC) of Cebu, Branch X, docketed as Civil Case No. CEB-11914. He maintained that by virtue of the closure of the Lahug Airport, the original purpose for which the property was expropriated had ceased or otherwise been abandoned, and title to the property had therefore reverted to him. Gopuco further alleged that when the original judgment of expropriation had been handed down, and before they could file an appeal thereto, the CAA offered them a compromise

settlement whereby they were assured that the expropriated lots would be resold to them for the same price as when it was expropriated in the event that the Lahug Airport would be abandoned. Gopuco claims to have accepted this offer.[13] However, he failed to present any proof on this matter, and later admitted that insofar as the said lot was concerned, no compromise agreement was entered into by the government and the previous owners.[14] Lastly, Gopuco asserted that he had come across several announcements in the papers that the Lahug Airport was soon to be developed into a commercial complex, which he took to be a scheme of the Province of Cebu to make permanent the deprivation of his property. On 20 May 1994, the trial court rendered a Decision[15] dismissing the complaint and directing the herein respondent to pay the MCIAA exemplary damages, litigation expenses and costs. Aggrieved by the holding of the trial court, Gopuco appealed to the Court of Appeals, which overturned the RTC decision, ordered the herein petitioners to reconvey Lot No. 72 to Gopuco upon payment of the reasonable price as determined by it, and deleted the award to the petitioners of exemplary damages, litigation expenses and costs. The Motion for Reconsideration was denied[16] on 22 May 2003, hence this petition, which raises the following issues: WHETHER THE COURT OF APPEALS ERRED IN HOLDING THAT RESPONDENT HAS THE RIGHT TO RECLAIM OWNERSHIP OVER THE SUBJECT EXPROPRIATED LOT BASED ON THE IMPORT OF THE DECEMBER 29, 1961 DECISION IN CIVIL CASE NO. 1881. WHETHER THE COURT OF APPEALS ERRED IN DELETING THE AWARD OF LITIGATION EXPENSES AND COSTS IN FAVOR OF PETITIONERS. In deciding the original expropriation case that gave rise to the present controversy, Civil Case No. R-1881, the CFI reasoned that the planned expansion of the airport justified the exercise of eminent domain, thus: As for the public purpose of the expropriation proceeding, it cannot be doubted. Although the Mactan Airport is being constructed, it does not take away the actual usefulness and importance of the Lahug Airport; it is handling the air traffic both civilian and military. From it aircrafts fly to Mindanao and Visayas and pass thru it on their return flights to the North and Manila. Then, no evidence was adduced to show how soon is the Mactan Airport to be placed in operation and whether the Lahug Airport will be closed immediately thereafter. It is for the other departments of the Government to determine said matters. The Court cannot substitute its judgment for those of the said departments or agencies. In the absence of such a showing, the Court will presume that the Lahug Airport will continue to be in operation.[17] (emphasis supplied) By the time Gopuco had filed his action for recovery of ownership of Lot No. 72, Lahug Airport had indeed ceased to operate. Nevertheless, the trial court held: The fact of abandonment or closure of the Lahug Airport admitted by the defendant did not by itself, result in the reversion of the subject property back to the plaintiff. Nor did it vest in the plaintiff the right to demand reconveyance of said property. When real property has been acquired for public use unconditionally, either by eminent domain or by purchase, the abandonment or non-use of the real property, does not ipso facto give to the

previous owner of said property any right to recover the same (Fery vs. Municipality of Cabanatuan, 42 Phil. 28).[18] In reversing the trial court, the Court of Appeals called attention to the fact that both parties cited Fery v. Municipality of Cabanatuan,[19] which the trial court also relied on in its Decision. The court a quo agreed in Gopucos interpretation of Fery that when the CFI in Civil Case No. R1881 held that, . . . [T]hen, no evidence was adduced to show how soon is the Mactan Airport to be placed in operation and whether the Lahug Airport will be closed immediately thereafter.In the absence of such a showing, the Court will presume that the Lahug Airport will continue to be in operation, . . . .[20] the expropriation of the property was conditioned on its continued devotion to its public purpose. Thus, although the MCIAA stressed that nothing in the judgment of expropriation expressly stated that the lands would revert to their previous owners should the public use be terminated or abandoned, the Court of Appeals nevertheless ruled that, . . . [W]hile, there is no explicit statement that the land is expropriated with the condition that when the purpose is ended the property shall return to its owner, the full import of the decision (in Civil Case No. R-1881) suggests that the expropriation was granted because there is no clear showing that Lahug Airport will be closed, the moment Mactan International Airport is put to operation. It stands to reason that should that public use be abandoned, then the expropriated property should revert back to its former owner. Moreover, the foundation of the right to exercise the power of eminent domain is genuine necessity. Condemnation is justified only if it is for the public good and there is genuine necessity of a public character. Thus, when such genuine necessity no longer exists as when the State abandons the property expropriated, government interest must yield to the private right of the former land owner, whose property right was disturbed as a consequence of the exercise of eminent domain. Justice, equity and fair play demand that the property should revert back to plaintiff-appellant upon paying the reasonable value of the land to be based on the prevailing market value at the time of judicial demand to recover the property. If the State expects landowners to cooperate in its bid to take private property for its public use, so must it apply also the same standard, to allow the landowner to reclaim the property, now that the public use has been abandoned.[21] In this petition, the MCIAA reiterates that the Republic of the Philippines validly expropriated Lot No. 72 through the proceedings in Civil Case No. R-1881, the judgment of which had long become final and executory. It further asserts that said judgment vested absolute and unconditional title in the government, specifically on the petitioners, there having been no condition whatsoever that the property should revert to its owners in case the Lahug Airport should be abandoned. On the other hand, the respondent would have us sustain the appellate courts interpretation of Fery as applied to the original judgment of expropriation, to the effect that this was subject to the condition that the Lahug Airport will continue to be in operation. We resolve to grant the petition.

In Fery, the Court asked and answered the same question confronting us now: When private land is expropriated for a particular public use, and that particular public use is abandoned, does the land so expropriated return to its former owner?[22] The answer to that question depends upon the character of the title acquired by the expropriator, whether it be the State, a province, a municipality, or a corporation which has the right to acquire property under the power of eminent domain. If, for example, land is expropriated for a particular purpose, with the condition that when that purpose is ended or abandoned the property shall return to its former owner, then, of course, when the purpose is terminated or abandoned the former owner reacquires the property so expropriated. If, for example, land is expropriated for a public street and the expropriation is granted upon condition that the city can only use it for a public street, then, of course, when the city abandons its use as a public street, it returns to the former owner, unless there is some statutory provision to the contrary. . . If upon the contrary, however, the decree of expropriation gives to the entity a fee simple title, then of course, the land becomes the absolute property of the expropriator, whether it be the State, a province, or municipality, and in that case the nonuser does not have the effect of defeating the title acquired by the expropriation proceedings. (10 R.C.L., 240, sec. 202; 20 C.J. 1234, secs. 593-599 and numerous cases cited; Reichling vs. Covington Lumber Co., 57 Wash., 225; 135 Am. St. Rep., 976; McConihay vs. Wright, 121 U.S., 201.) 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. (Fort Wayne vs. Lake Shore, etc. Ry. Co., 132 Ind., 558; 18 L.R.A., 367.) (Emphases Supplied)[23] Did the judgment of expropriation in Civil Case No. R-1881 vest absolute and unconditional title in the government? We have already had occasion to rule on this matter in Mactan-Cebu International Airport Authority v. Court of Appeals,[24] which is a related action for reconveyance of a parcel of land also subject of the expropriation proceedings in Civil Case No. R-1881. One of the landowners affected by the said proceeding was Virginia Chiongbian, to whom the CFI ordered the Republic of the Philippines to pay P34,415.00, with legal interest computed from the time the government began using her land. Like the herein respondent, she did not appeal from the CFIs judgment. Also like Gopuco, she eventually filed for the reconveyance of her property when the airport closed. Although she was upheld by both the RTC of Cebu and the Court of Appeals, on appeal we held that the terms of the judgment (in Civil Case No. R-1881) are clear and unequivocal and granted title to Lot No. 941 in fee simple to the Republic of the Philippines. There was no condition imposed to the effect that the lot would return to CHIONGBIAN or that CHIONGBIAN had a right to repurchase the same if the purpose for which it was expropriated is ended or abandoned or if the property was to be used other than as the Lahug Airport.[25] Moreover, we held that although other lot owners were able to successfully reacquire their lands by virtue of a compromise agreement, since CHIONGBIAN was not a party to any such agreement, she could not validly invoke the same. The respondent would have us revisit this ruling for three reasons. First, because he claims there is no showing that the government benefited from entering into compromise agreements with the other lot owners; second, because such a doctrine supposedly discriminates against those who have neither the werewithal nor the savvy to contest the expropriation, or agree to modify the judgment; and third, because there exists between the government and the owners

of expropriated realty an implied contract that the properties involved will be used only for the public purpose for which they were acquired in the first place. As to respondents first and second arguments, we have time and again ruled that a compromise agreement, when not contrary to law, public order, public policy, morals, or good customs, is a valid contract which is the law between the parties.[26] It is a contract perfected by mere consent,[27] whereby the parties, making reciprocal concessions, avoid litigation or put an end to one already commenced. It has the force of law and is conclusive between the parties,[28] and courts will not relieve parties from obligations voluntarily assumed, simply because their contracts turned out to be unwise.[29] Note that respondent has not shown that any of the compromise agreements were in any way tainted with illegality, irregularity or imprudence. Indeed, anyone who is not a party to a contract or agreement cannot be bound by its terms, and cannot be affected by it.[30] Since Gopuco was not a party to the compromise agreements, he cannot legally invoke the same.[31] Lastly, Gopuco argues that there is present, in cases of expropriation, an implied contract that the properties will be used only for the public purpose for which they were acquired. No such contract exists. Eminent domain is generally described as the highest and most exact idea of property remaining in the government that may be acquired for some public purpose through a method in the nature of a forced purchase by the State.[32] Also often referred to as expropriation and, with less frequency, as condemnation, it is, like police power and taxation, an inherent power of sovereignty and need not be clothed with any constitutional gear to exist; instead, provisions in our Constitution on the subject are meant more to regulate, rather than to grant, the exercise of the power. It is a right to take or reassert dominion over property within the state for public use or to meet a public exigency and is said to be an essential part of governance even in its most primitive form and thus inseparable from sovereignty.[33] In fact, all separate interests of individuals in property are held of the government under this tacit agreement or implied reservation. Notwithstanding the grant to individuals, the eminent domain, the highest and most exact idea of property, remains in the government, or in the aggregate body of people in their sovereign capacity; and they have the right to resume the possession of the property whenever the public interest so requires it.[34] The ubiquitous character of eminent domain is manifest in the nature of the expropriation proceedings. Expropriation proceedings are not adversarial in the conventional sense, for the condemning authority is not required to assert any conflicting interest in the property. Thus, by filing the action, the condemnor in effect merely serves notice that it is taking title and possession of the property, and the defendant asserts title or interest in the property, not to prove a right to possession, but to prove a right to compensation for the taking. [35] The only direct constitutional qualification is thus that private property shall not be taken for public use without just compensation.[36] This prescription is intended to provide a safeguard against possible abuse and so to protect as well the individual against whose property the power is sought to be enforced.[37] In this case, the judgment on the propriety of the taking and the adequacy of the compensation received have long become final. We have also already held that the terms of that judgment granted title in fee simple to the Republic of the Philippines. Therefore, pursuant to our ruling in Fery, as recently cited in Reyes v. National Housing Authority,[38] no rights to Lot No. 72, either express or implied, have been retained by the herein respondent. We are not unaware of the ruling in Heirs of Timoteo Moreno v. Mactan-Cebu International Airport Authority,[39] concerning still another set of owners of lots declared expropriated in the

judgment in Civil Case No. R-1881. As with Chiongbian and the herein respondent, the owners of the lots therein did not appeal the judgment of expropriation, but subsequently filed a complaint for reconveyance. In ordering MCIAA to reconvey the said lots in their favor, we held that the predicament of petitioners therein involved a constructive trust akin to the implied trust referred to in Art. 1454[40] of the Civil Code.[41] However, we qualified our Decision in that case, to the effect that, We adhere to the principles enunciated in Fery and in Mactan-Cebu International Airport Authority, and do not overrule them. Nonetheless the weight of their import, particularly our ruling as regards the properties of respondent Chiongbian in Mactan-Cebu International Airport Authority, must be commensurate to the facts that were established therein as distinguished from those extant in the case at bar. Chiongbian put forth inadmissible and inconclusive evidence, while in the instant case we have preponderant proof as found by the trial court of the existence of the right of repurchase in favor of petitioners. Neither has Gopuco, in the present case, adduced any evidence at all concerning a right of repurchase in his favor. Heirs of Moreno is thus not in point. The trial court was thus correct in denying Gopucos claim for the reconveyance of Lot No. 72 in his favor. However, for failure of the petitioners to present any proof that this case was clearly unfounded or filed for purposes of harassment, or that the herein respondent acted in gross and evident bad faith, the reimposition of litigation expenses and costs has no basis. It is not sound public policy to set a premium upon the right to litigate where such right is exercised in good faith, as in the present case.[42] WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 49898 dated 28 February 2001, and its Resolution of 22 May 2003 are hereby REVERSED and SET ASIDE. The Decision of RTC-Branch X of Cebu dated 20 May 1994 in Civil Case No. CEB-11914 is REINSTATED with the modification that the award of exemplary damages, litigation expenses and costs are DELETED. EN BANC

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

REPUBLIC OF THE PHILIPPINES, GENERAL ROMEO ZULUETA, COMMODORE EDGARDO GALEOS, ANTONIO CABALUNA, DOROTEO MANTOS & FLORENCIO BELOTINDOS, petitioners, vs. VICENTE G. LIM, respondent. RESOLUTION SANDOVAL-GUTIERREZ, J.: Justice is the first virtue of social institutions.[1] When the state wields its power of eminent domain, there arises a correlative obligation on its part to pay the owner of the expropriated property a just compensation. If it fails, there is a clear case of injustice that must be redressed. In the present case, fifty-seven (57) years have lapsed from the time the Decision in the subject expropriation proceedings became final, but still the Republic of the Philippines, herein

petitioner, has not compensated the owner of the property. To tolerate such prolonged inaction on its part is to encourage distrust and resentment among our people the very vices that corrode the ties of civility and tempt men to act in ways they would otherwise shun. A revisit of the pertinent facts in the instant case is imperative. On September 5, 1938, the Republic of the Philippines (Republic) instituted a special civil action for expropriation with the Court of First Instance (CFI) of Cebu, docketed as Civil Case No. 781, involving Lots 932 and 939 of the Banilad Friar Land Estate, Lahug, Cebu City, for the purpose of establishing a military reservation for the Philippine Army. Lot 932 was registered in the name of Gervasia Denzon under Transfer Certificate of Title (TCT) No. 14921 with an area of 25,137 square meters, while Lot 939 was in the name of Eulalia Denzon and covered by TCT No. 12560 consisting of 13,164 square meters. After depositing P9,500.00 with the Philippine National Bank, pursuant to the Order of the CFI dated October 19, 1938, the Republic took possession of the lots. Thereafter, or on May 14, 1940, the CFI rendered its Decision ordering the Republic to pay the Denzons the sum of P4,062.10 as just compensation. The Denzons interposed an appeal to the Court of Appeals but it was dismissed on March 11, 1948. An entry of judgment was made on April 5, 1948. In 1950, Jose Galeos, one of the heirs of the Denzons, filed with the National Airports Corporation a claim for rentals for the two lots, but it denied knowledge of the matter. Another heir, Nestor Belocura, brought the claim to the Office of then President Carlos Garcia who wrote the Civil Aeronautics Administration and the Secretary of National Defense to expedite action on said claim. On September 6, 1961, Lt. Manuel Cabal rejected the claim but expressed willingness to pay the appraised value of the lots within a reasonable time. For failure of the Republic to pay for the lots, on September 20, 1961, the Denzons successors-in-interest, Francisca Galeos-Valdehueza and Josefina Galeos-Panerio,[2]filed with the same CFI an action for recovery of possession with damages against the Republic and officers of the Armed Forces of the Philippines in possession of the property. The case was docketed as Civil Case No. R-7208. In the interim or on November 9, 1961, TCT Nos. 23934 and 23935 covering Lots 932 and 939 were issued in the names of Francisca Valdehueza and Josefina Panerio, respectively. Annotated thereon was the phrase subject to the priority of the National Airports Corporation to acquire said parcels of land, Lots 932 and 939 upon previous payment of a reasonable market value. On July 31, 1962, the CFI promulgated its Decision in favor of Valdehueza and Panerio, holding that they are the owners and have retained their right as such over Lots 932 and 939 because of the Republics failure to pay the amount of P4,062.10, adjudged in the expropriation proceedings. However, in view of the annotation on their land titles, they were ordered to execute a deed of sale in favor of the Republic. In view of the differences in money value from 1940 up to the present, the court adjusted the market value at P16,248.40, to be paid with 6% interest per annum from April 5, 1948, date of entry in the expropriation proceedings, until full payment. After their motion for reconsideration was denied, Valdehueza and Panerio appealed from the CFI Decision, in view of the amount in controversy, directly to this Court. The case was docketed as No. L-21032.[3] On May 19, 1966, this Court rendered its Decision affirming the CFI Decision. It held that Valdehueza and Panerio are still the registered owners of Lots 932 and 939, there having been no payment of just compensation by the Republic. Apparently, this Court

found nothing in the records to show that the Republic paid the owners or their successors-ininterest according to the CFI decision. While it deposited the amount of P9,500,00, and said deposit was allegedly disbursed, however, the payees could not be ascertained. Notwithstanding the above finding, this Court still ruled that Valdehueza and Panerio are not entitled to recover possession of the lots but may only demand the payment of their fair market value, ratiocinating as follows: Appellants would contend that: (1) possession of Lots 932 and 939 should be restored to them as owners of the same; (2) the Republic should be ordered to pay rentals for the use of said lots, plus attorneys fees; and (3) the court a quo in the present suit had no power to fix the value of the lots and order the execution of the deed of sale after payment. It is true that plaintiffs are still the registered owners of the land, there not having been a transfer of said lots in favor of the Government. The records do not show that the Government paid the owners or their successors-in-interest according to the 1940 CFI decision although, as stated, P9,500.00 was deposited by it, and said deposit had been disbursed. With the records lost, however, it cannot be known who received the money (Exh. 14 says: It is further certified that the corresponding Vouchers and pertinent Journal and Cash Book were destroyed during the last World War, and therefore the names of the payees concerned cannot be ascertained.) And the Government now admits that there is no available record showing that payment for the value of the lots in question has been made (Stipulation of Facts, par. 9, Rec. on Appeal, p. 28). The points in dispute are whether such payment can still be made and, if so, in what amount. Said lots have been the subject of expropriation proceedings. By final and executory judgment in said proceedings, they were condemned for public use, as part of an airport, and ordered sold to the Government. In fact, the abovementioned title certificates secured by plaintiffs over said lots contained annotations of the right of the National Airports Corporation (now CAA) to pay for and acquire them. It follows that both by virtue of the judgment, long final, in the expropriation suit, as well as the annotations upon their title certificates, plaintiffs are not entitled to recover possession of their expropriated lots which are still devoted to the public use for which they were expropriated but only to demand the fair market value of the same. Meanwhile, in 1964, Valdehueza and Panerio mortgaged Lot 932 to Vicente Lim, herein respondent,[4] as security for their loans. For their failure to pay Lim despite demand, he had the mortgage foreclosed in 1976. Thus, TCT No. 23934 was cancelled, and in lieu thereof, TCT No. 63894 was issued in his name. On August 20, 1992, respondent Lim filed a complaint for quieting of title with the Regional Trial Court (RTC), Branch 10, Cebu City, against General Romeo Zulueta, as Commander of the Armed Forces of the Philippines, Commodore Edgardo Galeos, as Commander of Naval District V of the Philippine Navy, Antonio Cabaluna, Doroteo Mantos and Florencio Belotindos, herein petitioners. Subsequently, he amended the complaint to implead the Republic. On May 4, 2001, the RTC rendered a decision in favor of respondent, thus: WHEREFORE, judgment is hereby rendered in favor of plaintiff Vicente Lim and against all defendants, public and private, declaring plaintiff Vicente Lim the absolute and exclusive

owner of Lot No. 932 with all the rights of an absolute owner including the right to possession. The monetary claims in the complaint and in the counter claims contained in the answer of defendants are ordered Dismissed. Petitioners elevated the case to the Court of Appeals, docketed therein as CA-G.R. CV No. 72915. In its Decision[5] dated September 18, 2003, the Appellate Court sustained the RTC Decision, thus: Obviously, defendant-appellant Republic evaded its duty of paying what was due to the landowners. The expropriation proceedings had already become final in the late 1940s and yet, up to now, or more than fifty (50) years after, the Republic had not yet paid the compensation fixed by the court while continuously reaping benefits from the expropriated property to the prejudice of the landowner. x x x. This is contrary to the rules of fair play because the concept of just compensation embraces not only the correct determination of the amount to be paid to the owners of the land, but also the payment for the land within a reasonable time from its taking. Without prompt payment, compensation cannot be considered just for the property owner is made to suffer the consequence of being immediately deprived of his land while being made to wait for a decade or more, in this case more than 50 years, before actually receiving the amount necessary to cope with the loss. To allow the taking of the landowners properties, and in the meantime leave them empty-handed by withholding payment of compensation while the government speculates on whether or not it will pursue expropriation, or worse, for government to subsequently decide to abandon the property and return it to the landowners, is undoubtedly an oppressive exercise of eminent domain that must never be sanctioned. (Land Bank of the Philippines vs. Court of Appeals, 258 SCRA 404). xxxxxx An action to quiet title is a common law remedy for the removal of any cloud or doubt or uncertainty on the title to real property. It is essential for the plaintiff or complainant to have a legal or equitable title or interest in the real property, which is the subject matter of the action. Also the deed, claim, encumbrance or proceeding that is being alleged as cloud on plaintiffs title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy (Robles vs. Court of Appeals, 328 SCRA 97). In view of the foregoing discussion, clearly, the claim of defendant-appellant Republic constitutes a cloud, doubt or uncertainty on the title of plaintiff-appellee Vicente Lim that can be removed by an action to quiet title. WHEREFORE, in view of the foregoing, and finding no reversible error in the appealed May 4, 2001 Decision of Branch 9, Regional Trial Court of Cebu City, in Civil Case No. CEB-12701, the said decision is UPHELD AND AFFIRMED. Accordingly, the appeal is DISMISSED for lack of merit. Undaunted, petitioners, through the Office of the Solicitor General, filed with this Court a petition for review on certiorari alleging that the Republic has remained the owner of Lot 932 as held by this Court in Valdehueza vs. Republic.[6] In our Resolution dated March 1, 2004, we denied the petition outright on the ground that the Court of Appeals did not commit a reversible error. Petitioners filed an urgent motion for reconsideration but we denied the same with finality in our Resolution of May 17, 2004.

On May 18, 2004, respondent filed an ex-parte motion for the issuance of an entry of judgment. We only noted the motion in our Resolution of July 12, 2004. On July 7, 2004, petitioners filed an urgent plea/motion for clarification, which is actually a second motion for reconsideration. Thus, in our Resolution of September 6, 2004, we simply noted without action the motion considering that the instant petition was already denied with finality in our Resolution of May 17, 2004. On October 29, 2004, petitioners filed a very urgent motion for leave to file a motion for reconsideration of our Resolution dated September 6, 2004 (with prayer to refer the case to the En Banc). They maintain that the Republics right of ownership has been settled in Valdehueza. The basic issue for our resolution is whether the Republic has retained ownership of Lot 932 despite its failure to pay respondents predecessors-in-interest the just compensation therefor pursuant to the judgment of the CFI rendered as early as May 14, 1940. Initially, we must rule on the procedural obstacle. While we commend the Republic for the zeal with which it pursues the present case, we reiterate that its urgent motion for clarification filed on July 7, 2004 is actually a second motion for reconsideration. This motion is prohibited under Section 2, Rule 52, of the 1997 Rules of Civil Procedure, as amended, which provides: Sec. 2. Second motion for reconsideration. No second motion for reconsideration of a judgment or final resolution by the same party shall be entertained. Consequently, as mentioned earlier, we simply noted without action the motion since petitioners petition was already denied with finality. Considering the Republics urgent and serious insistence that it is still the owner of Lot 932 and in the interest of justice, we take another hard look at the controversial issue in order to determine the veracity of petitioners stance. One of the basic principles enshrined in our Constitution is that no person shall be deprived of his private property without due process of law; and in expropriation cases, an essential element of due process is that there must be just compensation whenever private property is taken for public use.[7] Accordingly, Section 9, Article III, of our Constitution mandates: Private property shall not be taken for public use without just compensation. The Republic disregarded the foregoing provision when it failed and refused to pay respondents predecessors-in-interest the just compensation for Lots 932 and 939. The length of time and the manner with which it evaded payment demonstrate its arbitrary high-handedness and confiscatory attitude. The final judgment in the expropriation proceedings (Civil Case No. 781) was entered on April 5, 1948. More than half of a century has passed, yet, to this day, the landowner, now respondent, has remained empty-handed. Undoubtedly, over 50 years of delayed payment cannot, in any way, be viewed as fair. This is more so when such delay is accompanied by bureaucratic hassles. Apparent from Valdehueza is the fact that respondents predecessors-in-interest were given a run around by the Republics officials and agents. In 1950, despite the benefits it derived from the use of the two lots, the National Airports Corporation denied knowledge of the claim of respondents predecessors-in-interest. Even President Garcia, who sent a letter to the Civil Aeronautics Administration and the Secretary of National Defense to expedite the payment, failed in granting relief to them. And, on September

6, 1961, while the Chief of Staff of the Armed Forces expressed willingness to pay the appraised value of the lots, nothing happened. The Court of Appeals is correct in saying that Republics delay is contrary to the rules of fair play, as just compensation embraces not only the correct determination of the amount to be paid to the owners of the land, but also the payment for the land within a reasonable time from its taking. Without prompt payment, compensation cannot be considered just. In jurisdictions similar to ours, where an entry to the expropriated property precedes the payment of compensation, it has been held that if the compensation is not paid in a reasonable time, the party may be treated as a trespasser ab initio.[8] Corollarily, in Provincial Government of Sorsogon vs. Vda. De Villaroya,[9] similar to the present case, this Court expressed its disgust over the governments vexatious delay in the payment of just compensation, thus: The petitioners have been waiting for more than thirty years to be paid for their land which was taken for use as a public high school. As a matter of fair procedure, it is the duty of the Government, whenever it takes property from private persons against their will, to supply all required documentation and facilitate payment of just compensation. The imposition of unreasonable requirements and vexatious delays before effecting payment is not only galling and arbitrary but a rich source of discontent with government. There should be some kind of swift and effective recourse against unfeeling and uncaring acts of middle or lower level bureaucrats. We feel the same way in the instant case. More than anything else, however, it is the obstinacy of the Republic that prompted us to dismiss its petition outright. As early as May 19, 1966, in Valdehueza, this Court mandated the Republic to pay respondents predecessors-in-interest the sum of P16,248.40 as reasonable market value of the two lots in question. Unfortunately, it did not comply and allowed several decades to pass without obeying this Courts mandate. Such prolonged obstinacy bespeaks of lack of respect to private rights and to the rule of law, which we cannot countenance. It is tantamount to confiscation of private property. While it is true that all private properties are subject to the need of government, and the government may take them whenever the necessity or the exigency of the occasion demands, however, the Constitution guarantees that when this governmental right of expropriation is exercised, it shall be attended by compensation. [10] From the taking of private property by the government under the power of eminent domain, there arises an implied promise to compensate the owner for his loss.[11] Significantly, the above-mentioned provision of Section 9, Article III of the Constitution is not a grant but a limitation of power. This limiting function is in keeping with the philosophy of the Bill of Rights against the arbitrary exercise of governmental powers to the detriment of the individuals rights. Given this function, the provision should therefore be strictly interpreted against the expropriator, the government, and liberally in favor of the property owner.[12] Ironically, in opposing respondents claim, the Republic is invoking this Courts Decision in Valdehueza, a Decision it utterly defied. How could the Republic acquire ownership over Lot 932 when it has not paid its owner the just compensation, required by law, for more than 50 years? The recognized rule is that title to the property expropriated shall pass from the owner to the expropriator only upon full payment of the just compensation. Jurisprudence on this settled principle is consistent both here and in other democratic jurisdictions. In Association of Small Landowners in the Philippines, Inc. et al., vs. Secretary of Agrarian Reform,[13] thus:

Title to property which is the subject of condemnation proceedings does not vest the condemnor until the judgment fixing just compensation is entered and paid, but the condemnors title relates back to the date on which the petition under the Eminent Domain Act, or the commissioners report under the Local Improvement Act, is filed. x x x Although the right to appropriate and use land taken for a canal is complete at the time of entry, title to the property taken remains in the owner until payment is actually made.(Emphasis supplied.) In Kennedy v. Indianapolis, the US Supreme Court cited several cases holding that title to property does not pass to the condemnor until just compensation had actually been made. In fact, the decisions appear to be uniform to this effect. As early as 1838, in Rubottom v. McLure, it was held that actual payment to the owner of the condemned property was a condition precedent to the investment of the title to the property in the State albeit not to the appropriation of it to public use. In Rexford v. Knight, the Court of Appeals of New York said that the construction upon the statutes was that the fee did not vest in the State until the payment of the compensation although the authority to enter upon and appropriate the land was complete prior to the payment. Kennedy further said that both on principle and authority the rule is . . . that the right to enter on and use the property is complete, as soon as the property is actually appropriated under the authority of law for a public use, but that the title does not pass from the owner without his consent, until just compensation has been made to him. Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes, that: If the laws which we have exhibited or cited in the preceding discussion are attentively examined it will be apparent that the method of expropriation adopted in this jurisdiction is such as to afford absolute reassurance that no piece of land can be finally and irrevocably taken from an unwilling owner until compensation is paid...(Emphasis supplied.) Clearly, without full payment of just compensation, there can be no transfer of title from the landowner to the expropriator. Otherwise stated, the Republics acquisition of ownership is conditioned upon the full payment of just compensation within a reasonable time.[14] Significantly, in Municipality of Bian v. Garcia[15] this Court ruled that the expropriation of lands consists of two stages, to wit: x x x The first is concerned with the determination of the authority of the plaintiff to exercise the power of eminent domain and the propriety of its exercise in the context of the facts involved in the suit. It ends with an order, if not of dismissal of the action, of condemnation declaring that the plaintiff has a lawful right to take the property sought to be condemned, for the public use or purpose described in the complaint, upon the payment of just compensation to be determined as of the date of the filing of the complaint x x x. The second phase of the eminent domain action is concerned with the determination by the court of the just compensation for the property sought to be taken. This is done by the court with the assistance of not more than three (3) commissioners. x x x.

It is only upon the completion of these two stages that expropriation is said to have been completed. In Republic v. Salem Investment Corporation,[16] we ruled that, the process is not completed until payment of just compensation. Thus, here, the failure of the Republic to pay respondent and his predecessors-in-interest for a period of 57 years rendered the expropriation process incomplete. The Republic now argues that under Valdehueza, respondent is not entitled to recover possession of Lot 932 but only to demand payment of its fair market value. Of course, we are aware of the doctrine that non-payment of just compensation (in an expropriation proceedings) does not entitle the private landowners to recover possession of the expropriated lots. This is our ruling in the recent cases of Republic of the Philippines vs. Court of Appeals, et al.,[17] and Reyes vs. National Housing Authority.[18] However, the facts of the present case do not justify its application. It bears stressing that the Republic was ordered to pay just compensation twice, the first was in the expropriation proceedings and the second, in Valdehueza. Fifty-seven (57) years have passed since then. We cannot but construe the Republics failure to pay just compensation as a deliberate refusal on its part. Under such circumstance, recovery of possession is in order. In several jurisdictions, the courts held that recovery of possession may be had when property has been wrongfully taken or is wrongfully retained by one claiming to act under the power of eminent domain[19] or where a rightful entry is made and the party condemning refuses to pay the compensation which has been assessed or agreed upon;[20] or fails or refuses to have the compensation assessed and paid.[21] The Republic also contends that where there have been constructions being used by the military, as in this case, public interest demands that the present suit should not be sustained. It must be emphasized that an individual cannot be deprived of his property for the public convenience.[22] In Association of Small Landowners in the Philippines, Inc. vs. Secretary of Agrarian Reform,[23] we ruled: One of the basic principles of the democratic system is that where the rights of the individual are concerned, the end does not justify the means. It is not enough that there be a valid objective; it is also necessary that the means employed to pursue it be in keeping with the Constitution. Mere expediency will not excuse constitutional shortcuts. There is no question that not even the strongest moral conviction or the most urgent public need, subject only to a few notable exceptions, will excuse the bypassing of an individual's rights. It is no exaggeration to say that a person invoking a right guaranteed under Article III of the Constitution is a majority of one even as against the rest of the nation who would deny him that right. The right covers the persons life, his liberty and his property under Section 1 of Article III of the Constitution. With regard to his property, the owner enjoys the added protection of Section 9, which reaffirms the familiar rule that private property shall not be taken for public use without just compensation. The Republics assertion that the defense of the State will be in grave danger if we shall order the reversion of Lot 932 to respondent is an overstatement. First, Lot 932 had ceased to operate as an airport. What remains in the site is just the National Historical Institutes marking stating that Lot 932 is the former location of Lahug Airport. And second, there are only thirteen (13) structures located on Lot 932, eight (8) of which are residence apartments of military personnel. Only two (2) buildings are actually used as training centers. Thus, practically speaking, the reversion of Lot 932 to respondent will only affect a handful of military personnel.

It will not result to irreparable damage or damage beyond pecuniary estimation, as what the Republic vehemently claims. We thus rule that the special circumstances prevailing in this case entitle respondent to recover possession of the expropriated lot from the Republic. Unless this form of swift and effective relief is granted to him, the grave injustice committed against his predecessors-ininterest, though no fault or negligence on their part, will be perpetuated. Let this case, therefore, serve as a wake-up call to the Republic that in the exercise of its power of eminent domain, necessarily in derogation of private rights, it must comply with the Constitutional limitations. This Court, as the guardian of the peoples right, will not stand still in the face of the Republics oppressive and confiscatory taking of private property, as in this case. At this point, it may be argued that respondent Vicente Lim acted in bad faith in entering into a contract of mortgage with Valdehueza and Panerio despite the clear annotation in TCT No. 23934 that Lot 932 is subject to the priority of the National Airports Corporation [to acquire said parcels of land] x x x upon previous payment of a reasonable market value. The issue of whether or not respondent acted in bad faith is immaterial considering that the Republic did not complete the expropriation process. In short, it failed to perfect its title over Lot 932 by its failure to pay just compensation. The issue of bad faith would have assumed relevance if the Republic actually acquired title over Lot 932. In such a case, even if respondents title was registered first, it would be the Republics title or right of ownership that shall be upheld. But now, assuming that respondent was in bad faith, can such fact vest upon the Republic a better title over Lot 932? We believe not. This is because in the first place, the Republic has no title to speak of. At any rate, assuming that respondent had indeed knowledge of the annotation, still nothing would have prevented him from entering into a mortgage contract involving Lot 932 while the expropriation proceeding was pending. Any person who deals with a property subject of an expropriation does so at his own risk, taking into account the ultimate possibility of losing the property in favor of the government. Here, the annotation merely served as a caveat that the Republic had a preferential right to acquire Lot 932 upon its payment of a reasonable market value. It did not proscribe Valdehueza and Panerio from exercising their rights of ownership including their right to mortgage or even to dispose of their property. In Republic vs. Salem Investment Corporation,[24] we recognized the owners absolute right over his property pending completion of the expropriation proceeding, thus: It is only upon the completion of these two stages that expropriation is said to have been completed. Moreover, it is only upon payment of just compensation that title over the property passes to the government. Therefore, until the action for expropriation has been completed and terminated, ownership over the property being expropriated remains with the registered owner. Consequently, the latter can exercise all rights pertaining to an owner, including the right to dispose of his property subject to the power of the State ultimately to acquire it through expropriation. It bears emphasis that when Valdehueza and Panerio mortgaged Lot 932 to respondent in 1964, they were still the owners thereof and their title had not yet passed to the petitioner Republic. In fact, it never did. Such title or ownership was rendered conclusive when we categorically ruled in Valdehueza that: It is true that plaintiffs are still the registered owners of the land, there not having been a transfer of said lots in favor of the Government. For respondents part, it is reasonable to conclude that he entered into the contract of mortgage with Valdehueza and Panerio fully aware of the extent of his right as a mortgagee. A

mortgage is merely an accessory contract intended to secure the performance of the principal obligation. One of its characteristics is that it is inseparable from the property. It adheres to the property regardless of who its owner may subsequently be.[25] Respondent must have known that even if Lot 932 is ultimately expropriated by the Republic, still, his right as a mortgagee is protected. In this regard, Article 2127 of the Civil Code provides: Art. 2127. The mortgage extends to the natural accessions, to the improvements, growing fruits, and the rents or income not yet received when the obligation becomes due, and to the amount of the indemnity granted or owing to the proprietor from the insurers of the property mortgaged, or in virtue of expropriation for public use, with the declarations, amplifications, and limitations established by law, whether the estate remains in the possession of the mortgagor or it passes in the hands of a third person. In summation, while the prevailing doctrine is that the non-payment of just compensation does not entitle the private landowner to recover possession of the expropriated lots,[26] however, in cases where the government failed to pay just compensation within five (5)[27] years from the finality of the judgment in the expropriation proceedings, the owners concerned shall have the right to recover possession of their property. This is in consonance with the principle that the government cannot keep the property and dishonor the judgment.[28] To be sure, the five-year period limitation will encourage the government to pay just compensation punctually. This is in keeping with justice and equity. After all, it is the duty of the government, whenever it takes property from private persons against their will, to facilitate the payment of just compensation. In Cosculluela v. Court of Appeals,[29] we defined just compensation as not only the correct determination of the amount to be paid to the property owner but also the payment of the property within a reasonable time. Without prompt payment, compensation cannot be considered just. WHEREFORE, the assailed Decision of the Court of Appeals in CA-G.R. CV No. 72915 is AFFIRMED in toto. The Republics motion for reconsideration of our Resolution dated March 1, 2004 is DENIED with FINALITY. No further pleadings will be allowed. Let an entry of judgment be made in this case. G.R. No. 72126 January 29, 1988 MUNICIPALITY OF MEYCAUAYAN, BULACAN, HON. ADRIANO D. DAEZ, MUNICIPAL MAYOR, MEYCAUAYAN, BULACAN, petitioners, vs. INTERMEDIATE APPELLATE COURT and PHILIPPINE PIPES & MERCHANDIZING CORPORATION, respondents.

GUTIERREZ, JR., J.: This is a petition for review on certiorari of the resolution dated April 24,1985 by the former Intermediate Appellate Court, now Court of Appeals, setting aside its earlier decision dated January 10, 1985 and dismissing the special civil action for expropriation filed by the petitioner.

In 1975, respondent Philippine Pipes and Merchandising Corporation filed with the Office of the Municipal Mayor of Meycauayan, Bulacan, an application for a permit to fence a parcel of land with a width of 26.8 meters and a length of 184.37 meters covered by Transfer Certificates of Title Nos. 215165 and 37879. The fencing of said property was allegedly to enable the storage of the respondent's heavy equipment and various finished products such as large diameter steel pipes, pontoon pipes for ports, wharves, and harbors, bridge components, pre-stressed girders and piles, large diameter concrete pipes, and parts for low cost housing. In the same year, the Municipal Council of Meycauayan, headed by then Mayor Celso R. Legaspi, passed Resolution No. 258, Series of 1975, manifesting the intention to expropriate the respondent's parcel of land covered by Transfer Certificate of Title No. 37879. An opposition to the resolution was filed by the respondent with the Office of the Provincial Governor, which, in turn, created a special committee of four members to investigate the matter. On March 10, 1976, the Special Committee recommended that the Provincial Board of Bulacan disapprove or annul the resolution in question because there was no genuine necessity for the Municipality of Meycauayan to expropriate the respondent's property for use as a public road. On the basis of this report, the Provincial Board of Bulacan passed Resolution No. 238, Series of 1976, disapproving and annulling Resolution No. 258, Series of 1975, of the Municipal Council of Meycauayan. The respondent, then, reiterated to the Office of the Mayor its petition for the approval of the permit to fence the aforesaid parcels of land. On October 21, 1983, however, the Municipal Council of Meycauayan, now headed by Mayor Adriano D. Daez, passed Resolution No. 21, Series of 1983, for the purpose of expropriating anew the respondent's land. The Provincial Board of Bulacan approved the aforesaid resolution on January 25, 1984. Thereafter, the petitioner, on February 14, 1984, filed with the Regional Trial Court of Malolos, Bulacan, Branch VI, a special civil action for expropriation. Upon deposit of the amount of P24,025.00, which is the market value of the land, with the Philippine National Bank, the trial court on March 1, 1984 issued a writ of possession in favor of the petitioner. On August 27, 1984, the trial court issued an order declaring the taking of the property as lawful and appointing the Provincial Assessor of Bulacan as court commissioner who shall hold the hearing to ascertain the just compensation for the property. The respondent went to the Intermediate Appellate Court on petition for review. On January 10, 1985, the appellate court affirmed the trial court's decision. However, upon motion for reconsideration by the respondent, the decision was re-examined and reversed. The appellate court held that there is no genuine necessity to expropriate the land for use as a public road as there were several other roads for the same purpose and another more appropriate lot for the proposed public road. The court, taking into consideration the location and size of the land, also opined that the land is more Ideal for use as storage area for respondent's heavy equipment and finished products.

After its motion for reconsideration was denied, the petitioner went to this Court on petition for review on certiorari on October 25, 1985, with the following arguments: Petitioners most respectfully submit that respondent Court has decided a question of substance not in accord with law or with applicable decisions of this Honorable Supreme Court; that the judgment is based on a misapprehension of facts and the conclusion is a finding grounded entirely on speculation, surmises, and conjectures, because: a. It concluded, that by dismissing the complaint for expropriation the existence of legal and factual circumstance of grave abuse of discretion amounting to lack of jurisdiction committed by the respondent Judge without any shred of evidence at all contrary to the law on evidence; b. It concluded, in its decision that respondent Philippine Pipes and Merchandising Corporation has no need of the property sought to be condemned on the use to which it is devoted as a private road but allegedly for storage contrary to the allegations of respondent Philippine Pipes and Merchandising Corporation itself; c. It anchored its decision on factual situations obtaining a long, long time ago without regard to the relatively present situation now obtaining. (Rollo, pp. 8-9) In refuting the petitioner's arguments, the private respondent contends that this Court may only resolve questions of law and not questions of fact such as those which the petitioner puts in issue in this case. The respondent further argues that this Court may not also interfere with an action of the Court of Appeals which involves the exercise of discretion. We agree with the respondent. The jurisdiction of this Court in cases brought to us from the Court of Appeals is limited to the review of errors of law (Rizal Cement Co., Inc. v. Villareal, 135 SCRA 15, 24), factual issues not being proper in certiorari proceedings (See Ygay et al. v. Hon. Escareal et al., 135 SCRA 78, 82). This Court reviews and rectifies the findings of fact of the Court of Appeals only under certain established exceptions such as: (1) when the conclusion is a finding grounded entirely on speculations, surmises and conjectures; (2) when the inference made is manifestly mistaken, absurd and impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; and (5) when the court, in making its finding, went beyond the issues of the case and the same is contrary to the admissions of both the appellant and the appellee (Moran, Jr. v. Court of Appeals, 133 SCRA 88). None of the exceptions warranting non-application of the rule is present in this case. On the contrary, we find that the appellate court's decision is supported by substantial evidence. The petitioner's purpose in expropriating the respondent's property is to convert the same into a public road which would provide a connecting link between Malhacan Road and Bulac Road in Valenzuela, Bulacan and thereby ease the traffic in the area of vehicles coming from MacArthur Highway.

The records, however, reveals that there are other connecting links between the aforementioned roads. The petitioner itself admits that there are four such cross roads in existence. The respondent court stated that with the proposed road, there would be seven. Appreciating the evidence presented before it, with particular emphasis on the Special Committee's report dated March 10, 1976, the Court of Appeals declared: xxx xxx xxx FACTS ESTABLISHED ON OCULAR INSPECTION In the ocular inspection, the following facts came into the limelight: (1) The property in question of the Philippine Pipes and Merchandazing Corporation intended to be expropriated by the Municipality of Meycauayan is embraced under Transfer Certificate of Title No. 37879 and is a private road of the company used in the conduct and operation of its business, with the inhabitation in nearby premises tolerated to pass the same. It extends from Bulac Road to the south, to Malhacan Road on the north, with a width of about 6 to 7 meters, more or less. (2) Adjoining this private road on the eastern side, is a vacant property also belonging to the Philippine Pipes and Merchandising Corporation and extending also from Bulac Road to Malhacan Road, with a high wall along the property line on the east side thereof serving as a fence. (3) Opposite the private road, after crossing Bulac Road, is the gate of the factory of the Philippine Pipes and Merchandising Corporation. (4) From the private road of the firm on the eastern direction about 30 to 40 meters distance are subdivision roads of an existing subdivision with a width of 6 to 7 meters, more or less, running parallel to the said private road of the firm and likewise extending from Bulac Road to Malhacan Road. Whether said subdivision roads had already been donated to the municipality is not known. (5) On the western side of the private road is a vacant lot with an area of l6,071 square meters offered for sale by its owner extending also from Bulac Road to Malhacan Road. (6) Bulac road, a municipal road with a width of about 6 to 7 meters and all the nearby subdivision roads are obviously very poorly developed and maintained, and are in dire need of repair. Like the Malhacan Road, Bulac road extends from the McArthur Highway with exit to North Diversion Road. xxx xxx xxx The Sketch Plan (Rollo, p. 26 or p. 97) clearly and conclusively shows that petitioner does not need this strip of land as a private road. The Sketch Plan clearly shows that petitioner's factory site is adjacent to Bulac Road which has a

width of about seven meters, more or less. Petitioner can use Bulac Road in reaching McArthur Highway on the west or in reaching the Manila North Expressway on the east for the purpose of transporting its products. Petitioner does not need to go to Malhacan Road via this so-called private road before going to McArthur Highway or to the Manila North Expressway. Why should petitioner go first to Malhacan Road via this so called "private road" before going to McArthur Highway or to the Manila North Expressway when taking the Bulac Road in going to McArthur Highway or to the Manila North Expressway is more direct, nearer and more advantageous. Hence, it is beyond doubt that petitioner acquired this strip of land for the storage of its heavy equipments and various finished products and for growth and expansion and never to use it as a private road. This is the very reason why petitioner filed an application with the Office of the Municipal Mayor of Meycauayan, Bulacan to fence with hollow blocks this strip of land. Third, We will determine whether there is a genuine necessity to expropriate this strip of land for use as a public road. We hereby quote a relevant part of the Special Committee's Report dated March 10, 1976, which is as follows: OBSERVATION OF COMMITTEE From the foregoing facts, it appears obvious to this Special Committee that there is no genuine necessity for the Municipality of' Meycauayan to expropriate the aforesaid property of the Philippine Pipes and Merchandising Corporation for use as a public road. Considering that in the vicinity there are other available road and vacant lot offered for sale situated similarly as the lot in question and lying Idle, unlike the lot sought to be expropriated which was found by the Committee to be badly needed by the company as a site for its heavy equipment after it is fenced together with the adjoining vacant lot, the justification to condemn the same does not appear to be very imperative and necessary and would only cause unjustified damage to the firm. The desire of the Municipality of Meycauayan to build a public road to decongest the volume of traffic can be fully and better attained by acquiring the other available roads in the vicinity maybe at lesser costs without causing harm to an establishment doing legitimate business therein. Or, the municipality may seek to expropriate a portion of the vacant lot also in the vicinity offered for sale for a wider public road to attain decongest (sic) of traffic because as observed by the Committee, the lot of the Corporation sought to be taken will only accommodate a one-way traffic lane and therefore, will not suffice to improve and decongest the flow of traffic and pedestrians in the Malhacan area. ... xxx xxx xxx It must be noted that this strip of land covered by Transfer Certificates of Titles Nos. 215165 and 37879 were acquired by petitioner from Dr. Villacorta. The lot for sale and lying Idle with an area of 16,071 square meter which is adjacent and on the western side of the aforesaid strip of land and extends likewise from Bulac Road to Malhacan Road belongs also to Dr. Villacorta. This lot for sale and lying

Idle is most Ideal for use as a public road because it is more than three (3) times wider that the said strip of land. xxx xxx xxx xxx xxx xxx Since there is another lot ready for sale and lying Idle, adjacent and on the western side of the strip of land, and extending also from Malhacan Road to Bulac Road and most Ideal for a public road because it is very much wider than the lot sought to be expropriated, it seems that it is more just, fair, and reasonable if this lot is the one to be expropriated. (Rollo, pp. 22-26) The petitioner objects to the appellate court's findings contending that they were based on facts obtaining long before the present action to expropriate took place. We note, however, that there is no evidence on record which shows a change in the factual circumstances of the case. There is no showing that some of the six other available cross roads have been closed or that the private roads in the subdivision may not be used for municipal purposes. What is more likely is that these roads have already been turned over to the government. The petitioner alleges that surely the environmental progress during the span of seven years between the first and second attempts to expropriate has brought about a change in the facts of the case. This allegation does not merit consideration absent a showing of concrete evidence attesting to it. There is no question here as to the right of the State to take private property for public use upon payment of just compensation. What is questioned is the existence of a genuine necessity therefor. As early as City of Manila v. Chinese Community of Manila (40 Phil. 349) this Court held that the foundation of the right to exercise the power of eminent domain is genuine necessity and that necessity must be of a public character. Condemnation of private property is justified only if it is for the public good and there is a genuine necessity 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 there is a genuine necessity therefor (Republic v. La Orden de PP. Benedictos de Filipinas, 1 SCRA 646; J.M. Tuason & Co., Inc. v. Land Tenure Administration, 31 SCRA 413). In the recent case of De Knecht v. Bautista, (100 SCRA 660) this court further ruled that the government may not capriciously choose what private property should be taken. Citing the case of J.M. Tuason & Co., Inc. v. Land Tenure Administration (supra), the Court held: ... With due recognition then of the power of Congress to designate the particular property to be taken and how much thereof may be condemned in the exercise of the power of expropriation, it is still a judicial question whether in the exercise of such competence, the party adversely affected is the victim of partiality and prejudice. That the equal protection clause will not allow. (At p. 436) There is absolutely no showing in the petition why the more appropriate lot for the proposed road which was offered for sale has not been the subject of the petitioner's attempt to expropriate assuming there is a real need for another connecting road.

WHEREFORE, the petition is hereby DISMISSED for lack of merit. The questioned resolution of the respondent court is AFFIRMED. G.R. No. L-51078 October 30, 1980 CRISTINA DE KNECHT, petitioner, vs. HON. PEDRO JL. BAUTISTA, as Judge presiding over Branch III of the Court of First Instance (Pasay City) and the REPUBLIC OF THE PHILIPPINES, respondents.

FERNANDEZ, J.: This is a petition for certiorari and prohibition filed by Cristina de Knecht against the Honorable Pedro JL. Bautista, as Judge presiding over Branch III of the Court of First Instance of Rizal (Pasay City), and the Republic of the Philippines pines seeking the following relief: WHEREFORE, petitioner respectfully prays that judgment be rendered annulling the order for immediate possession issued by respondent court in the expropriation proceedings and commanding respondents to desist from further proceedings in the expropriation action or the order for immediate possession issued in said action, with costs. Petitioner prays that a restraint order or writ of preliminary injunction be issued ex-parte enjoining respondents, their representative representative and agents from enforcing the here questioned order for mediate posession petitioner offering to post a bond executed to the parties enjoined in an amount to be fixed by the Court to the effect that she will pay to such parties all damages which they may sustain by reason of the injunction if the Court should finally decide she is not entitled there She prays for such other remedy as the Court may deem just and equitable in the premises. Quezon City for July 1979. 1 The petitioner alleges that than ten (10) years ago, the government through the Department of Public Workmen's and Communication (now MPH) prepared a to Epifanio de los Santos Avenue (EDSA) to Roxas Boulevard; that the proposed extension, an adjunct of building program, the Manila — Cavite Coastal Read Project, would pass through Cuneta Avenue up to Roxas Boulevard that this route would be a straight one taking into account the direction of EDSA; that preparation to the implementation of the aforesaid plan, or on December 13, 1974, then Secretary Baltazar Aquino of the Department of Public Highways directed the City Engineer of Pasay City not to issue temporary or permanent permits for the construction and/or improvement of buildings and other structures located within the proposed extension through Cuneta Avenue that shortly thereafter the Department of Public Highways decided to make the proposed extension go through Fernando Rein and Del Pan Streets which are lined with old substantial houses; that upon learning of the changed the owners of the residential houses that would be affected, the herein petitioner being one of them, filed on April 15, 1977 a formal

petition to President Ferdinand E. Marcos asking him to order the Ministry of Public Highways to adoption, the original plan of making the extension of EDSA through Araneta Avenue instead of the new plan going through Fernando Rein and Del Pan Streets; that President Marcos directed then Minister Baltazar Aquino to explain within twenty-four (24) hours why the proposed project should not be suspended; that on April 21, 1977 then Minister Aquino submitted his explanation defending the new proposed route; that the President then referred the matter to the Human Settlements Commission for investigation and recommendation; that after formal hearings to which all the parties proponents and oppositors were given full opportunity to ventilate their views and to present their evidence, the Settlements Commission submitted a report recommending the reversion of the extension of EDSA to the original plan passing through Cuneta Avenue; and that notwithstanding the said report and recommendation, the Ministry of Public Highways insisted on implementing the plan to make the extension of EDSA go through Fernando Rein and Del Pan Streets. 2 In February 1979, the government filed in the Court of First Instance of Rizal, Branch III, Pascual City presided by the respondent Judge, a complaint for expropriation against the owners of the houses standing along Fernando Rein and Del Pan Streets, among them the herein petitioner. The complaint was docketed as Civil Case No. 7001-P and entitled "Republic of the Philippines vs. Concepcion Cabarrus Vda. de Santos, etc." The herein petitioner filed a motion to dismiss dated March 19, 1979 on the following grounds: (a) court had no jurisdiction over the subject matter of the action because the complaint failed to allege that the instant project for expropriation bore the approval of the Ministry of Human Settlements and the Metro Manila Government nor pursuant to Presidential Decrees Nos. 824, 1396 and 1517; (b) The choice of properties to be expropriated made by the Ministry of Public Highways was arbitrary and erroneous; (c) The complaint was premature as the plaintiff never really had gone through serious negotiations with the defendant for the purchase of her property; and (d) The complaint relied on an arbitrary and erroneous valuation of properties and disregarded consequential damages. An urgent motion dated March 28, 1979 for preliminary junction was also filed. In June 1979 the Republic of the Philippines filed a motion for the issuance of a writ of possession of the property sought to be expropriated on the ground that said Republic had made the required deposit with the Philippine National Bank. The respondent judge issued a writ of possession dated June 14, 1979 authorizing the Republic of the Philippines to take and enter upon the possession of the properties sought be condemned. 3 The petitioner contends that "Respondent court lacked or exceeded its jurisdiction or gravely abused its discretion in issuing the order to take over and enter upon the possession of the properties sought to be expropriated-petitioner having raised a constitutional question which

respondent court must resolve before it can issue an order to take or enter upon the possession of properties sought to be expropriated." 4 The petitioner assails the choice of the Fernando Rein and Del Pan Streets route on the following grounds: The choice of property to be expropriated cannot be without rhyme or reason. The condemnor may not choose any property it wants. Where the legislature has delegated a power of eminent do-main, the question of the necessity for taking a particular fine for the intended improvement rests in the discretion of the grantee power subject however to review by the courts in case of fraud, bad faith or gross abuse of discretion. The choice of property must be examined for bad faith, arbitrariness or capriciousness and due process determination as to whether or not the proposed location was proper in terms of the public interests. Even the claim of respondent's Secretary Baltazar Aquino that there would be a saving of P2 million under his new plan must be reviewed for it bears no relation to the site of the proposed EDSA extension As envisioned by the government, the EDSA extension would be linked to the Cavite Expressway. Logically then, the proposed extension must point to the south and not detour to the north. Also, the equal protection of the law must be accorded, not on to the motel owners along Cuneta (Fisher) Avenue, but also to the owners of solid and substantial homes and quality residential lands occupied for generations. 5 The respondents maintain that the respondent court did not act without jurisdiction or exceed its jurisdiction or gravel abuse its discretion in issuing the order dated June 14, 1979 authorizing the Republic of the Philippines to take over and enter the possession of the properties sought to be appropriated because the Republic has complied with all the statutory requirements which entitled it to have immediate possession of the properties involved. 6 Defending the change of the EDSA extension to pass through Fernando Rein — Del Pan Streets, the respondents aver: 'There was no sudden change of plan in the selection of the site of the EDSA Extension to Roxas Blvd. As a matter of fact, when the Ministry of Public Highways decided to change the site of EDSA Ex- tension to Roxas Boulevard from Cuneta Avenue to the Del Pan — Fernando Item Streets the residents of Del Pan and Fernando Rein Streets who were to be adversely affected by the construction of ED — SA Extension to Roxas Boulevard along Del Pan Fernando Rein Streets were duly notified of such proposed project. Petitioner herein was one of those notified Annex 1). It be conceded that the Cuneta Avenue line goes southward and outward (from the city center while the Del Pan — Fernando Rein Streets line follows northward and inward direction. It must be stated that both lines, Cuneta Avenue and Del Pan — Fernando Rein Streets lines, meet satisfactorily planning and design criteria and therefore are both acceptable. In selecting the Del Pan — Fernando Rein Streets line the Government did not do so because it wanted to save the motel located along Cuneta Avenue but because it wanted to minimize the social impact factor or problem involved. 7

There is no question as to the right of the Republic of the Philippines to take private property for public use upon the payment of just compensation. Section 2, Article IV of the Constitution of the Philippines provides: "Private property shall not be taken for public use without just compensation." It is recognized, was, that the government may not capriciously or arbitrarily' choose what private property should be taken. In J. M. Tuazon & Co., Inc. vs. Land Tenure administration 31 SCRA, 413, 433, the Supreme Court said: For the purpose of obtaining a judicial declaration of nullity, it is enough if the respondents or defendants named be the government officials who would give operation and effect to official action allegedly tainted with unconstitutionality. Thus, where the statute assailed was sought to be enforced by the Land Tenure Administrative and the Solicitor General, the two officials may be made respondents in the action without need of including the Executive Secretary as a party in the action The failure to meet tile exacting standard of due process would likewise constitute a valid objection to the exercise of this congressional power. That was so intimated in the above leading Guido Case. There was an earlier pronouncement to that effect in a decision rendered long before the adoption of the Constitution under the previous organic law then in force, while the Philippines was still an unincorporated territory of the United States. It is obvious then that a landowner 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 impressive 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 government talk 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, ... In the same case the Supreme Court concluded: With due recognition then of the power of Congress to designate the particular property to be taken and how much thereof may be condemned in the exercise of the power of expropriation, it is still a judicial question whether in the exercise of such competence, the party adversely affected is the victim of partiality and prejudice. That the equal protection clause will not allow. (p. 436) In the instant case, it is a fact that the Department of Public Highways originally establish the extension of EDSA along Cuneta Avenue. It is to be presumed that the Department of Public Highways made studies before deciding on Cuneta Avenue. It is indeed odd why suddenly the proposed extension of EDSA to Roxas Boulevard was changed to go through Fernando ReinDel Pan Streets which the Solicitor General con- cedes "... the Del Pan — Fernando Rein Streets line follows northward and inward direction. While admit "that both lines, Cuneta Avenue and Del Pan — Fernando Rein Streets lines, meet satisfactorily planning and design criteria and therefore are both acceptable ... the Solicitor General justifies the change to Del Pan —

Fernando Rein Streets on the ground that the government "wanted to the social impact factor or problem involved." 8 It is doubtful whether the extension of EDSA along Cuneta Avenue can be objected to on the ground of social impact. The improvements and buildings along Cuneta Avenue to be affected by the extension are mostly motels. Even granting, arguendo, that more people be affected, the Human Setlements Commission has suggested coordinative efforts of said Commission with the National Housing Authority and other government agencies in the relocation and resettlement of those adversely affected. 9 The Human Settlements Commission considered conditionality social impact and cost. The pertinent portion of its report reads: Comparison of Alignment 1 (Cuneta Fisher) and Alignment 2 (Del Pan — Fernando Rein) based on the criteria of functionality, social impact and cost A. Functionality This issue has to do with the physical design of a highway, inclusive of engineering factors and management consideration From both engineering and traffic management viewpoints, it is incontestable that the straighter and shorter alignment is preferable to one which is not. Systematically and diagramatically, alignment 1 is straighter than alignment 2. In fact, Director Antonio Goco of the Department of Public Highways admitted that alignment 2 is three (3) meters longer than alignment 1. Furthermore, alignment 1 is definitely the contour conforming alignment to EDSA whereas alignment 2 affords a greater radius of unnatural curvature as it hooks slightly northward before finally joining with Roxas Boulevard. Besides, whichever alignment is adopted, there will be a need for a grade separator or interchange at the Roxas Boulevard junction. From the of highway design, it is imperative to have interchanges as far apart as possible to avoid traffic from slow down in negotiating the slope on the interchanges. Up north would be the future Buendia Avenue- Roxas Boulevard Interchange. Consequently, alignment 1 which is farther away from Buendia Avenue than alignment 2 is the better alignment from the viewpoint of the construction of the grade separator or interchange, a necessary corollary to the extension project. Finally, the choice of alignment 2 which is longer by three (3) meters than alignment 1 could have serious repercussions on our energy conservation drive and from the larger perspective of the national economy, considering that, by ad- statistical data, no less than fifty thousand (50,000) vehicles a day will have to traverse an extra three (3) meters. B. Social Impact The following factual data which have a direct bearing on the issue of social impact were culled from the records of the case and the evidence presented during the public hearings: (1) Number of property owners:

Alignment 1

73

Alignment 2

49

(2) Incidence of non-resident owner: Alignment 1

25 (34.3%)

Alignment 2

31 (63.3%)

(3) Number of actually affected residents: Alignment 1

547

Alignment 2

290 (estimated)

(4) Average income of residents: Alignment 2: Below P350 P350 – P500 P 500 – P 800 P800 – Pl000 Over P1000 16 (28%) 24 (42%) 0 (14%) 5 (9%) 4 (7%) Alignment 2: Figures not available. It is evident from the foregoing figures that social impact is greater on the residents of alignment 1. C. Cost The resolution of the issue of right-of-way acquisition cost depends to a large extend on the nature of the properties to be affected and the relative value thereof. A comparison of alignment 1 and alignment 2 on these two points has produced the following results: (1) Nature and number of properties involved: Line I Line 2 Lots

L o t s

Impr ove ment

L o t s

Impro veme nts

Res iden tial

4 1

46

3 8

34

Co mm

2 5

24

1 1

13

erci al Indu stria l

5

3

1

1

Chu rch

1

1

1

1

Edu cati onal

_

_

_

_

TO TAL

7 2

75

5 1

49

(2) Relative value of properties affected: Lots

Improve ments

Total

Align ment 1

P9,300,1 36

P5,92 8,680

P15,22 8,816

Align ment 2

8,314,89 0

6,644, 130

14,959, 020

Differ ence

P269,7 96

It is obvious from the immediately table that the right- of-way acquisition cost difference factor of the two alignment is only P269,196 and not P2M as alleged by the Department of Public Highways and P1.2M as claimed by the oppositors. Consequently, the cost difference factor between the two alignments is so minimal as to be practically nil in the consideration of the issues involved in this case. 10 After considering all the issues and factors, the Human Setlements Commission made the following recommendations: Weighing in the balance the issues and factors of necessity, functionality, impact, cost and property valuation as basis for scheme of compensation to be adopted in the instant case, the Hearing Board takes cognizance of the following points: 1. The EDSA extension to Roxas Boulevard is necessary and desirable from the strictly technical viewpoint and the overall perspective of the Metro Manila transport system.

2. The right-of-way acquisition cost difference factor is so minimal as to influence in any way the choice of either alignment as the extension of EDSA to Roxas Boulevard. 3. The negotiated sale approach to compensation as proposed should apply to a whichever alignment is selected. 4. The factor of functionality states strongly against the selection of alignment 2 while the factor of great social and economic impact bears grieviously on the residents of alignment 1. The course of the decision in this case consequently boils down to the soulsearching and heart-rending choice between people on one hand and progress and development on the other. In deciding in favor of the latter, the Hearing Board is not unmindful that progress and development are carried out by the State precisely and ultimately for the benefit of its people and therefore, recommends the reverend of the extension project to alignment 1. However, before the Government, through its implementing agencies, particularly the Department of Public Highways, undertakes the actual step of appropriating properties on alignment I to pave the way for the extension the hearing Board recommends the following as absolute. binding and imperative preconditions: 1. The preparation, and ignore importantly, the execution of a comprehensive and detailed plan for the relocation and resettlement of the adversely and genuinely affected residents of alignment I which will necessitate the coordinative efforts of such agencies as the Human Settlements Commission, the National Housing Authority and other such governmental agencies. To be concrete, a self sufficient community or human settlement complete with infrastructure capture market, school, church and industries for employment should be set up to enable the affected residents of alignment 1 to maintain, their present social and economic standing. 2. The prompt payment of fair and just compensation through the negotiated sale approach. Finally, the Hearing Board recommends that the Department of Public Highways conduct public hearings before undertaking on future expropriations of private properties for public use. Respectfully submitted to the Human Settlements Commission Commissioners for consideration, final disposition and endorsement thereof to His Excellency, the President of the Philippines. Makati, Metro Manila, July 4, 1977. 11 ... From all the foregoing, the facts of record and recommendations of the Human Settlements Commission, it is clear that the choice of Fernando Rein — Del Pan Streets as the line through which the Epifanio de los Santos Avenue should be extended to Roxas Boulevard is arbitrary and should not receive judicial approval. The respondent judge committed a grave abuse of

discretion in allowing the Republic of the Philippines to take immediate possession of the properties sought to be expropriated. WHEREFORE, the petition for certiorari and prohibition is hereby granted. The order of June 14, 1979 authorizing the Republic of the Philippines to take or enter upon the possession of the properties sought to be condemned is set aside and the respondent Judge is permanently enjoined from taking any further action on Civil Case No. 7001-P, entitled "Republic of the Philippines vs. Concepcion Cabarrus Vda. de Santos, etc." except to dismiss said case. G.R. No. 87335 February 12, 1990 REPUBLIC OF THE PHILIPPINES, petitioner, vs. CRISTINA DE KNECHT AND THE COURT OF APPEALS, respondents. Villanueva, Talamayan, Nieva, Elegado, and Ante Law Offices for respondent Cristina de Knecht.

GANCAYCO, J.: The issue posed in this case is whether an expropriation proceeding that was determined by a final judgment of this Court may be the subject of a subsequent legislation for expropriation. On February 20, 1979 the Republic of the Philippines filed in the Court of First Instance (CFI) of Rizal in Pasay City an expropriation proceedings against the owners of the houses standing along Fernando Rein-Del Pan streets among them Cristina De Knecht (de Knecht for short) together with Concepcion Cabarrus, and some fifteen other defendants, docketed as Civil Case No. 7001-P. On March 19, 1979 de Knecht filed a motion to dismiss alleging lack of jurisdiction, pendency of appeal with the President of the Philippines, prematureness of complaint and arbitrary and erroneous valuation of the properties. On March 29, 1979 de Knecht filed an ex parte urgent motion for the issuance by the trial court of a restraining order to restrain the Republic from proceeding with the taking of immediate possession and control of the property sought to be condemned. In June, 1979 the Republic filed a motion for the issuance of a writ of possession of the property to be expropriated on the ground that it had made the required deposit with the Philippine National Bank (PNB) of 10% of the amount of compensation stated in the complaint. In an order dated June 14, 1979 the lower court issued a writ of possession authorizing the Republic to enter into and take possession of the properties sought to be condemned, and created a Committee of three to determine the just compensation for the lands involved in the proceedings. On July 16, 1979 de Knecht filed with this Court a petition for certiorari and prohibition docketed as G.R. No. L-51078 and directed against the order of the lower court dated June 14, 1979 praying that the respondent be commanded to desist from further proceeding in the expropriation action and from implementing said order. On October 30, 1980 this Court rendered a decision, the dispositive part of which reads as follows:

WHEREFORE, the petition for certiorari and prohibition is hereby granted. The order of June 14, 1979 authorizing the Republic of the Philippines to take c enter upon the possession of the properties sought to be condemned is set aside and the respondent Judge is permanently enjoined from taking any further action on Civil Case No. 7001-P, entitled 'Republic of the Philippines vs. Concepcion Cabarrus Vda. de Santos, et al.' except to dismiss said case. 1 On August 8, 1981 defendants Maria Del Carmen Roxas Vda. de Elizalde, Francisco Elizalde and Antonio Roxas moved to dismiss the expropriation action in compliance with the dispositive portion of the aforesaid decision of this Court which had become final and in order to avoid further damage to same defendants who were denied possession of their properties. The Republic filed a manifestation on September 7, 1981 stating, among others, that it had no objection to the said motion to dismiss as it was in accordance with the aforestated decision. On September 2, 1983, the Republic filed a motion to dismiss said case due to the enactment of the Batas Pambansa Blg. 340 expropriating the same properties and for the same purpose. The lower court in an order of September 2, 1983 dismissed the case by reason of the enactment of the said law. The motion for reconsideration thereof was denied in the order of the lower court dated December 18, 1986. De Knecht appealed from said order to the Court of Appeals wherein in due course a decision was rendered on December 28, 1988, 2 the dispositive part of which reads as follows: PREMISES CONSIDERED, the order appealed from is hereby SET ASIDE. As prayed for in the appellant's brief another Order is hereby issued dismissing the expropriation proceedings (Civil Case No. 51078) before the lower court on the ground that the choice of Fernando Rein-Del Pan Streets as the line through which the Epifanio de los Santos Avenue should be extended is arbitrary and should not receive judicial approval. No pronouncement as to Costs. 3 Hence the Republic filed that herein petition for review of the A aforestated decision whereby the following issues were raised: I WHETHER OR NOT THE ENACTMENT OF BATAS PAMBANSA BLG. 340 IS THE PROPER GROUND FOR THE DISMISSAL OF THE EXPROPRIATION CASE. (PROPERLY PUT, WHETHER OR NOT THE LOWER COURT COMMITTED GRAVE ABUSE OF DIS CRETION IN DISMISSING CIVIL CASE NO. 7001-P UPON JUDICIAL NOTICE OF B.P. BLG. 340). II WHETHER OR NOT THE DPWH'S "CHOICE" OF LAND TO BE EXPROPRIATED IS STILL AN ISSUE UNDER THE CIRCUMSTANCES, SAID "CHOICE" HAVING BEEN SUPPLANTED BY THE LEGISLATURE'S CHOICE. III

WHETHER OR NOT THE LAW OF THE CASE THEORY SHOULD BE APPLIED TO THE CASE AT BAR. 4 The petition is impressed with merit. There is no question that as early as 1977, pursuant to the Revised Administrative Code, the national government, through the Department of Public Works and Highways began work on what was to be the westward extension of Epifanio de los Santos Avenue (EDSA) outfall (or outlet) of the Manila and suburbs flood control and drainage project and the Estero Tripa de Gallina. These projects were aimed at: (1) easing traffic congestion in the Baclaran and outlying areas; (2) controlling flood by the construction of the outlet for the Estero Tripa de Gallina (which drains the area of Marikina, Pasay, Manila and Paranaque); and (3) thus completing the Manila Flood and Control and Drainage Project. So the petitioner acquired the needed properties through negotiated purchase starting with the lands from Taft Avenue up to Roxas Boulevard including the lands in Fernando Rein-Del Pan streets. It acquired through negotiated purchases about 80 to 85 percent of the lands involved in the project whose owners did not raise any objection as to arbitrariness on the choice of the project and of the route. It is only with respect to the remaining 10 to 15 percent along the route that the petitioner cannot negotiate through a sales agreement with a few land owners, including de Knecht whose holding is hardly 5% of the whole route area. Thus, as above related on February 20, 1979 the petitioner filed the expropriation proceedings in the Court of First Instance. There is no question that in the decision of this Court dated October 30, 1980 in De Knecht vs. Bautista, G.R. No. L-51078, this Court held that the "choice of the Fernando Rein-Del Pan streets as the line through which the EDSA should be extended to Roxas Boulevard is arbitrary and should not receive judicial approval." 5 It is based on the recommendation of the Human Settlements Commission that the choice of Cuneta street as the line of the extension will minimize the social impact factor as the buildings and improvement therein are mostly motels. 6 In view of the said finding, this Court set aside the order of the trial court dated June 14, 1979 authorizing the Republic of the Philippines to take possession of the properties sought to be condemned and enjoined the respondent judge from taking any further action in the case except to dismiss the same. Said decision having become final no action was taken by the lower court on the said directive of this Court to dismiss the case. Subsequently B.P. Blg. 340 was enacted by the Batasang Pambansa on February 17, 1983. On the basis of said law petitioner filed a motion to dismiss the case before the trial court and this was granted. On appeal by de Knecht to the Court of Appeals the appellate court held that the decision of the Supreme Court having become final, the petitioner's right as determined therein should no longer be disturbed and that the same has become the law of the case between the parties involved. Thus, the appellate court set aside the questioned order of the trial court and issued another order dismissing the expropriation proceedings before the lower court pursuant to the ruling in De Knecht case. While it is true that said final judgment of this Court on the subject becomes the law of the case between the parties, it is equally true that the right of the petitioner to take private properties for public use upon the payment of the just compensation is so provided in the Constitution and our laws. 7 Such expropriation proceedings may be undertaken by the petitioner not only by

voluntary negotiation with the land owners but also by taking appropriate court action or by legislation. 8 When on February 17, 1983 the Batasang Pambansa passed B.P. Blg. 340 expropriating the very properties subject of the present proceedings, and for the same purpose, it appears that it was based on supervening events that occurred after the decision of this Court was rendered in De Knecht in 1980 justifying the expropriation through the Fernando Rein-Del Pan Streets. The social impact factor which persuaded the Court to consider this extension to be arbitrary had disappeared. All residents in the area have been relocated and duly compensated. Eighty percent of the EDSA outfall and 30% of the EDSA extension had been completed. Only private respondent remains as the solitary obstacle to this project that will solve not only the drainage and flood control problem but also minimize the traffic bottleneck in the area. The Solicitor General summarizing the situation said — The construction and completion of the Metro Manila Flood Control and Drainage Project and the EDSA extension are essential to alleviate the worsening traffic problem in the Baclaran and Pasay City areas and the perennial flood problems. Judicial notice may be taken that these problems bedevil life and property not only in the areas directly affected but also in areas much beyond. Batas Pambansa Blg. 340 was enacted to hasten 'The Project' and thus solve these problems, and its implementation has resulted so far in an 80% completion of the EDSA outfall and a 30% completion of the EDSA extension, all part of 'The Project'. This instant case stands in the way of the final solution of the above-mentioned problems, solely because the single piece of property I occupied' by De Knecht, although already expropriated under B.P. Blg. 340, is the only parcel of land where Government engineers could not enter due to the 'armed' resistance offered by De Knecht, guarded and surrounded as the lot is perennially by De Knecht's fierce private security guards. It may thus be said that De Knecht, without any more legal interest in the land, single-handedly stands in the way of the completion of 'The Project' essential to the progress of Metro Manila and surrounding areas. Without the property she persists in occupying and without any bloodletting, the EDSA outfall construction on both sides of the said property cannot be joined together,and the flood waters of Pasay, Parañaque and Marikina — which flow through the Estero Tripa de Gallina will continue to have no way or outlet that could drain into Manila Bay. Without said property, the EDSA extension, already 30% completed, can in no way be finished, and traffic will continue to clog and jam the intersections of EDSA and Taft Avenue in Baclaran and pile up along the airport roads. In sum, even in the face of BP340, De Knecht holds the Legislative sovereign will and choice inutile. 9 The Court finds justification in proceeding with the said expropriation proceedings through the Fernando Rein-Del Pan streets from ESDA to Roxas Boulevard due to the aforestated supervening events after the rendition of the decision of this Court in De Knecht.

B.P. Blg. 340 therefore effectively superseded the aforesaid final and executory decision of this Court. And the trial court committed no grave abuse of discretion in dismissing the case pending before it on the ground of the enactment of B.P. Blg. 340. Moreover, the said decision, is no obstacle to the legislative arm of the Government in thereafter (over two years later in this case) making its own independent assessment of the circumstances then prevailing as to the propriety of undertaking the expropriation of the properties in question and thereafter by enacting the corresponding legislation as it did in this case. The Court agrees in the wisdom and necessity of enacting B.P. Blg. 340. Thus the anterior decision of this Court must yield to this subsequent legislative flat. WHEREFORE, the petition is hereby GRANTED and the questioned decision of the Court of Appeals dated December 28, 1988 and its resolution dated March 9, 1989 are hereby REVERSED and SET ASIDE and the order of Branch III of the then Court of First Instance of Rizal in Pasay City in Civil Case No. 7001-P dated September 2, 1983 is hereby reinstated without pronouncement as to costs. S E C O N D

D I V I S I O N

LOURDES DE LA PAZ MASIKIP, Petitioner,

G.R. No. 136349

Present: - versus PUNO, J., Chairman, SANDOVAL-GUTIERREZ, CORONA, AZCUNA, and GARCIA, JJ.

THE CITY OF PASIG, HON. MARIETTA A. LEGASPI, in her capacity as Presiding Judge of the Regional Trial Court of Pasig City, Branch 165 and THE COURT OF Promulgated: APPEALS, Respondents. January 23, 2006 x-----------------------------------------------------------------------------------------x

DECISION

SANDOVAL GUTIERREZ, J.:

Where the taking by the State of private property is done for the benefit of a small community which seeks to have its own sports and recreational facility, notwithstanding that there is such a

recreational facility only a short distance away, such taking cannot be considered to be for public use. Its expropriation is not valid. In this case, the Court defines what constitutes a genuine necessity for public use. This petition for review on certiorari assails the Decision[1] of the Court of Appeals dated October 31, 1997 in CA-G.R. SP No. 41860 affirming the Order[2] of the Regional Trial Court, Branch 165, Pasig City, dated May 7, 1996 in S.C.A. No. 873. Likewise assailed is the Resolution[3] of the same court dated November 20, 1998 denying petitioners Motion for Reconsideration. The facts of the case are: Petitioner Lourdes Dela Paz Masikip is the registered owner of a parcel of land with an area of 4,521 square meters located at Pag-Asa, Caniogan, Pasig City, Metro Manila. In a letter dated January 6, 1994, the then Municipality of Pasig, now City of Pasig, respondent, notified petitioner of its intention to expropriate a 1,500 square meter portion of her property to be used for the sports development and recreational activities of the residents of Barangay Caniogan. This was pursuant to Ordinance No. 42, Series of 1993 enacted by the then Sangguniang Bayan of Pasig. Again, on March 23, 1994, respondent wrote another letter to petitioner, but this time the purpose was allegedly in line with the program of the Municipal Government to provide land opportunities to deserving poor sectors of our community. On May 2, 1994, petitioner sent a reply to respondent stating that the intended expropriation of her property is unconstitutional, invalid, and oppressive, as the area of her lot is neither sufficient nor suitable to provide land opportunities to deserving poor sectors of our community. In its letter of December 20, 1994, respondent reiterated that the purpose of the expropriation of petitioners property is to provide sports and recreational facilities to its poor residents. Subsequently, on February 21, 1995, respondent filed with the trial court a complaint for expropriation, docketed as SCA No. 873. Respondent prayed that the trial court, after due notice and hearing, issue an order for the condemnation of the property; that commissioners be appointed for the purpose of determining the just compensation; and that judgment be rendered based on the report of the commissioners. On April 25, 1995, petitioner filed a Motion to Dismiss the complaint on the following grounds: I PLAINTIFF HAS NO CAUSE OF ACTION FOR THE EXERCISE OF THE POWER OF EMINENT DOMAIN, CONSIDERING THAT:

(A) THERE IS NO GENUINE NECESSITY FOR THE TAKING OF THE PROPERTY SOUGHT TO BE EXPROPRIATED. (B) PLAINTIFF HAS ARBITRARILY AND CAPRICIOUSLY CHOSEN THE PROPERTY SOUGHT TO BE EXPROPRIATED. (C) EVEN ASSUMING ARGUENDO THAT DEFENDANTS PROPERTY MAY BE EXPROPRIATED BY PLAINTIFF, THE FAIR MARKET VALUE OF THE PROPERTY TO BE EXPROPRIATED FAR EXCEEDS SEVENTY-EIGHT THOUSAND PESOS (P78,000.00)

II PLAINTIFFS COMPLAINT IS DEFECTIVE IN FORM AND SUBSTANCE, CONSIDERING THAT: (A) PLAINTIFF FAILS TO ALLEGE WITH CERTAINTY THE PURPOSE OF THE EXPROPRIATION. (B) PLAINTIFF HAS FAILED TO COMPLY WITH THE PREREQUISITES LAID DOWN IN SECTION 34, RULE VI OF THE RULES AND REGULATIONS IMPLEMENTING THE LOCAL GOVERNMENT CODE; THUS, THE INSTANT EXPROPRIATION PROCEEDING IS PREMATURE. III THE GRANTING OF THE EXPROPRIATION WOULD VIOLATE SECTION 261 (V) OF THE OMNIBUS ELECTION CODE. IV PLAINTIFF CANNOT TAKE POSSESSION OF THE SUBJECT PROPERTY BY MERELY DEPOSITING AN AMOUNT EQUAL TO FIFTEEN PERCENT (15%) OF THE VALUE OF THE PROPERTY BASED ON THE CURRENT TAX DECLARATION OF THE SUBJECT PROPERTY.[4]

On May 7, 1996, the trial court issued an Order denying the Motion to Dismiss, [5] on the ground that there is a genuine necessity to expropriate the property for the sports and recreational activities of the residents of Pasig. As to the issue of just compensation, the trial court held that the same is to be determined in accordance with the Revised Rules of Court.

Petitioner filed a motion for reconsideration but it was denied by the trial court in its Order of July 31, 1996. Forthwith, it appointed the City Assessor and City Treasurer of Pasig City as commissioners to ascertain the just compensation. This prompted petitioner to file with the Court of Appeals a special civil action for certiorari, docketed as CA-G.R. SP No. 41860. On October 31, 1997, the Appellate Court dismissed the petition for lack of merit. Petitioners Motion for Reconsideration was denied in a Resolution dated November 20, 1998. Hence, this petition anchored on the following grounds: THE QUESTIONED DECISION DATED 31 OCTOBER 1997 (ATTACHMENT A) AND RESOLUTION DATED 20 NOVEMBER 1998 (ATTACHMENT B) ARE CONTRARY TO LAW, THE RULES OF COURT AND JURISPRUDENCE CONSIDERING THAT: I A. THERE IS NO EVIDENCE TO PROVE THAT THERE IS GENUINE NECESSITY FOR THE TAKING OF THE PETITIONERS PROPERTY. B. THERE IS NO EVIDENCE TO PROVE THAT THE PUBLIC USE REQUIREMENT FOR THE EXERCISE OF THE POWER OF EMINENT DOMAIN HAS BEEN COMPLIED WITH. C. THERE IS NO EVIDENCE TO PROVE THAT RESPONDENT CITY OF PASIG HAS COMPLIED WITH ALL CONDITIONS PRECEDENT FOR THE EXERCISE OF THE POWER OF EMINENT DOMAIN. THE COURT A QUOS ORDER DATED 07 MAY 1996 AND 31 JULY 1996, WHICH WERE AFFIRMED BY THE COURT OF APPEALS, EFFECTIVELY AMOUNT TO THE TAKING OF PETITIONERS PROPERTY WITHOUT DUE PROCESS OF LAW:

II THE COURT OF APPEALS GRAVELY ERRED IN APPLYING OF RULE ON ACTIONABLE DOCUMENTS TO THE DOCUMENTS ATTACHED TO RESPONDENT CITY OF PASIGS COMPLAINT DATED 07 APRIL 1995 TO JUSTIFY THE COURT A QUOS DENIAL OF PETITIONERS RESPONSIVE PLEADING TO THE COMPLAINT FOR EXPROPRIATION (THE MOTION TO DISMISS DATED 21 APRIL 1995).

III THE COURT OF APPEALS GRAVELY ERRED IN APPLYING THE RULE ON HYPOTHETICAL ADMISSION OF FACTS ALLEGED IN A COMPLAINT CONSIDERING THAT THE MOTION TO DISMISS FILED BY PETITIONER IN THE EXPROPRIATION CASE BELOW WAS THE RESPONSIVE PLEADING REQUIRED TO BE FILED UNDER THE THEN RULE 67 OF THE RULES OF COURT AND NOT AN ORIDNARY MOTION TO DISMISS UNDER RULE 16 OF THE RULES OF COURT.

The foregoing arguments may be synthesized into two main issues one substantive and one procedural. We will first address the procedural issue. Petitioner filed her Motion to Dismiss the complaint for expropriation on April 25, 1995. It was denied by the trial court on May 7, 1996. At that time, the rule on expropriation was governed by Section 3, Rule 67 of the Revised Rules of Court which provides: SEC. 3. Defenses and objections. Within the time specified in the summons, each defendant, in lieu of an answer, shall present in a single motion to dismiss or for other appropriate relief, all his objections and defenses to the right of the plaintiff to take his property for the use or purpose specified in the complaint. All such objections and defenses not so presented are waived. A copy of the motion shall be served on the plaintiffs attorney of record and filed with the court with proof of service.

The motion to dismiss contemplated in the above Rule clearly constitutes the responsive pleading which takes the place of an answer to the complaint for expropriation. Such motion is the pleading that puts in issue the right of the plaintiff to expropriate the defendants property for the use specified in the complaint. All that the law requires is that a copy of the said motion be served on plaintiffs attorney of record. It is the court that at its convenience will set the case for trial after the filing of the said pleading.[6] The Court of Appeals therefore erred in holding that the motion to dismiss filed by petitioner hypothetically admitted the truth of the facts alleged in the complaint, specifically that there is a genuine necessity to expropriate petitioners property for public use. Pursuant to the above Rule, the motion is a responsive pleading joining the issues. What the trial court should have done was to set the case for the reception of evidence to determine whether there is indeed a genuine necessity for the taking of the property, instead of summarily making a finding that the taking is for public use and appointing commissioners to fix just compensation. This is especially so considering that the purpose of the expropriation was squarely challenged and put in issue by petitioner in her motion to dismiss.

Significantly, the above Rule allowing a defendant in an expropriation case to file a motion to dismiss in lieu of an answer was amended by the 1997 Rules of Civil Procedure, which took effect on July 1, 1997. Section 3, Rule 67 now expressly mandates that any objection or defense to the taking of the property of a defendant must be set forth in an answer. The fact that the Court of Appeals rendered its Decision in CA-G.R. SP No. 41860 on October 31, after the 1997 Rules of Civil Procedure took effect, is of no moment. It is only fair that the Rule at the time petitioner filed her motion to dismiss should govern. The new provision cannot be applied retroactively to her prejudice. We now proceed to address the substantive issue. In the early case of US v. Toribio,[7] this Court defined the power of eminent domain as the right of a government to take and appropriate private property to public use, whenever the public exigency requires it, which can be done only on condition of providing a reasonable compensation therefor. It has also been described as the power of the State or its instrumentalities to take private property for public use and is inseparable from sovereignty and inherent in government.[8] The power of eminent domain is lodged in the legislative branch of the government. It delegates the exercise thereof to local government units, other public entities and public utility corporations,[9] subject only to Constitutional limitations. Local governments have no inherent power of eminent domain and may exercise it only when expressly authorized by statute.[10] Section 19 of the Local Government Code of 1991 (Republic Act No. 7160) prescribes the delegation by Congress of the power of eminent domain to local government units and lays down the parameters for its exercise, thus: 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, purpose or welfare for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws: Provided, however, That, the power of eminent domain may not be exercised unless a valid and definite offer has been previously made to the owner and such offer was not accepted: Provided, further, That, the local government unit may immediately take possession of the property upon the filing of expropriation proceedings and upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market value of the property based on the current tax declaration of the property to be expropriated: Provided, finally, That, the amount to be paid for expropriated property shall be determined by the proper court, based on the fair market value at the time of the taking of the property.

Judicial review of the exercise of eminent domain is limited to the following areas of concern: (a) the adequacy of the compensation, (b) the necessity of the taking, and (c) the public use character of the purpose of the taking.[11] In this case, petitioner contends that respondent City of Pasig failed to establish a genuine necessity which justifies the condemnation of her property. While she does not dispute the intended public purpose, nonetheless, she insists that there must be a genuine necessity for the proposed use and purposes. According to petitioner, there is already an established sports development and recreational activity center at Rainforest Park in Pasig City, fully operational and being utilized by its residents, including those from Barangay Caniogan. Respondent does not dispute this. Evidently, there is no genuine necessity to justify the expropriation. The right to take private property for public purposes necessarily originates from the necessity and the taking must be limited to such necessity. In City of Manila v. Chinese Community of Manila,[12] we held that the very foundation of the right to exercise eminent domain is a genuine necessity and that necessity must be of a public character. Moreover, the ascertainment of the necessity must precede or accompany and not follow, the taking of the land. In City of Manila v. Arellano Law College,[13] we ruled that necessity within the rule that the particular property to be expropriated must be necessary, does not mean an absolute but only a reasonable or practical necessity, such as would combine the greatest benefit to the public with the least inconvenience and expense to the condemning party and the property owner consistent with such benefit. Applying this standard, we hold that respondent City of Pasig has failed to establish that there is a genuine necessity to expropriate petitioners property. Our scrutiny of the records shows that the Certification[14] issued by the Caniogan Barangay Council dated November 20, 1994, the basis for the passage of Ordinance No. 42 s. 1993 authorizing the expropriation, indicates that the intended beneficiary is the Melendres Compound Homeowners Association, a private, non-profit organization, not the residents of Caniogan. It can be gleaned that the members of the said Association are desirous of having their own private playground and recreational facility. Petitioners lot is the nearest vacant space available. The purpose is, therefore, not clearly and categorically public. The necessity has not been shown, especially considering that there exists an alternative facility for sports development and community recreation in the area, which is the Rainforest Park, available to all residents of Pasig City, including those of Caniogan. The right to own and possess property is one of the most cherished rights of men. It is so fundamental that it has been written into organic law of every nation where the rule of law prevails. Unless the requisite of genuine necessity for the expropriation of ones property is clearly established, it shall be the duty of the courts to protect the rights of individuals to their private property. Important as the power of eminent domain may be, the inviolable sanctity which the Constitution attaches to the property of the individual requires not only that the

purpose for the taking of private property be specified. The genuine necessity for the taking, which must be of a public character, must also be shown to exist. WHEREFORE, the petition for review is GRANTED. The challenged Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 41860 are REVERSED. The complaint for expropriation filed before the trial court by respondent City of Pasig, docketed as SCA No. 873, is ordered DISMISSED.

SECOND DIVISION

[G.R. No. 146062. June 28, 2001]

SANTIAGO ESLABAN, JR., in his capacity as Project Manager of the National Irrigation Administration, petitioner, vs. CLARITA VDA. DE ONORIO, respondent. 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 latters property. The facts are as follows: Respondent Clarita Vda. de Enorio is the owner of a lot in Barangay M. Roxas, Sto. Nio, South Cotabato with an area of 39,512 square meters. The lot, known as Lot 1210-A-Pad-11000586, 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. Respondents 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 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 assessors 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

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 owners 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 thatSEC. 4. Order of expropriation. If the objections to and the defense against the right of the plaintiff to expropriate the property are overruled, or when no party appears to defend as required by this Rule, the court may issue an order of expropriation declaring that the plaintiff has a lawful right to take the property sought to be expropriated, for the public use or purpose described in the complaint, upon the payment of just compensation to be determined as of the date of the taking of the property or the filing of the complaint, whichever came first. A final order sustaining the right to expropriate the property may be appealed by any party aggrieved thereby. Such appeal, however, shall not prevent the court from determining the just compensation to be paid. After the rendition of such an order, the plaintiff shall not be permitted to dismiss or discontinue the proceeding except on such terms as the court deems just and equitable. (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. Nio, 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 appellees 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 appellees 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. G.R. No. 71176 May 21, 1990 REPUBLIC OF THE PHILIPPINES (Ministry of Education and Culture), petitioner, vs. INTERMEDIATE APPELLATE COURT and AMEREX ELECTRONICS, PHILS. CORPORATION, respondents. Siguion Reyna, Montecillo and Ongsiako for private respondents.

FERNAN, C.J.: The government, in the exercise of its power of eminent domain, expropriated property owned by Amerex Electronics, Phils. Corporation. The amount of just compensation for such property is now the subject of this petition for review on certiorari. The property involved consists of four (4) parcels of land with a total area of 9,650 square meters located at No. 2090 Dr. Manuel L. Carreon Street, Manila, a short walking distance from Herran (now Pedro Gil) Street. Its previous owner, Avegon Inc., offered it for sale to the City School Board of Manila on July 21, 1973 at P2,300,000. The school board was willing to buy at P1,800,000 but the then Mayor of Manila intervened and volunteered to negotiate with Avegon Inc. for a better price.

Inasmuch as the alleged negotiation did not materialize, on June 3, 1974, Avegon Inc. sold the property and its improvements to Amerex Electronics, Phils. Corporation (Amerex for brevity) for P1,800,000. Thereafter, Transfer Certificates of Title Nos. 115571, 115572, 115573 and 115574 were issued in favor of Amerex. On August 29, 1975, the Solicitor General filed for the Department of Education and Culture (DEC) a complaint against Amerex for the expropriation of said property before the Court of First Instance of Manila (Civil Case No. 99190). The complaint stated that the property was needed by the government as a permanent site for the Manuel de la Fuente High School (later renamed Don Mariano Marcos Memorial High School); that the fair market value of the property had been declared by Amerex as P2,435,000, and that the assessor had determined its market value as P2,432,042 and assessed it for taxation purposes in the amount of P1,303,470.1 In a motion praying that the plaintiff be authorized to take immediate possession of the property, the then Acting Solicitor General Hugo E. Gutierrez, Jr., invoking Presidential Decree No. 42, informed the court that said assessed value of the property for taxation purposes had been deposited with the Philippine National Bank (PNB) in Escolta, Manila on September 30, 1975. Consequently, on October 9, 1975, the court issued an order directing the sheriff to place the plaintiff in possession of the property. The plaintiff took actual possession thereof on October 13, 1975. Amerex filed a motion to dismiss the complaint stating that while it was not contesting the merits of the complaint, the same failed to categorically state the amount of just compensation for the property. It therefore prayed that in consonance with P.D. No. 794, the just compensation be fixed at P2,432,042, the market value of the property determined by the assessor which was lower than Amerex's own declaration. The motion to dismiss was opposed by the plaintiff reasoning that while indeed the market value as determined by the assessor was lower than that declared by Amerex, the plaintiff intended to present evidence of a much lower market value. Alleging that its motion to dismiss merely sought a clarification on the just compensation for the property, Amerex filed a motion to withdraw the plaintiffs deposit of P1,303,470 with the PNB without prejudice to its entitlement to the amount of P1,128,572, the balance of the just compensation of P2,432,042 insisted upon. The plaintiff interposed no objection to the motion provided that an order of condemnation be issued by the court and that the plaintiff be allowed to present its evidence on the matter of just compensation. On December 3, 1975, the lower court issued an order vesting the plaintiff with the lawful light to take the property upon payment of just compensation as provided by law. On December 19, 1975, after the parties had submitted the names of their respective recommendees to the appraisal committee, the lower court appointed Atty. Narciso Peña, Aurelio V. Aquino and Atty. Higinio Sunico as commissioners. Thereafter, the lower court ordered Amerex to submit an audited financial statement on the acquisition cost of the property including expenses for its improvement. Amerex was also allowed by the court, after it had filed a second motion therefor, to withdraw the P1,303,470 deposit with the PNB.

On March 12, 1976, the plaintiff filed a motion for leave of court to amend its complaint stating that after it had filed the same, P.D. No. 464 2 was amended by P.D. No. 794; that Section 92 of said Code, as amended, provided that when private property is acquired for public use, its just compensation "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"; and that the amended complaint would state that the fair market value of the property could not be in excess of P1,800,000, the amount for which defendant's predecessor-in-interest had offered to sell said properties to the Division of Public Schools of Manila and which amount was also the purchase price paid by Amerex to Avegon Inc. In due course, plaintiff filed an amended complaint. Amerex, however, opposed the motion for leave to amend the complaint contending that the plaintiff was insisting on a valuation given by neither the owner nor the assessor as mandated by P.D. No. 794 but by another person in August 1973 when the peso value was much higher. The lower court denied the motion to amend the complaint; but after the plaintiff had filed a motion for reconsideration, the lower court admitted the amended complaint on April 27, 1976. In the meantime, Amerex submitted to the court "audited financial statements' consisting of an account stating that the cost of its land and buildings was P2,107,479.48, and another account stating that it incurred total expenses of P150,539 for their maintenance. 3 These statements yielded the amount of P2,258,018.48 as the total value of the property. The commissioners conducted an ocular inspection and hearing on the value of the property. On October 18, 1976, the plaintiff filed a motion seeking the disqualification of Engineer Aurelio B. Aquino as commissioner on the ground that he could not be expected to be unbiased inasmuch as in the three appraisal reports submitted by Amerex, Aquino had indicated as fair market value of the property amounts much more than the plaintiffs fair market value determination of P1,800,000. Said appraisal reports were made by Ampil Realty and Appraisal Co., Inc. with Aquino signing thereon as real estate appraiser. One report, dated February 15, 1974 and submitted to Commonwealth Insurance Company indicated P2,100,000 as the fair market value of the property. 4 Two other reports were made at the behest of Amerex with one, dated November 15, 1974, fixing the fair market value at P2,300,000 5, and the other, dated June 5, 1975, with P2,400,000 as the fair market value. 6 Amerex opposed the motion to disqualify Aquino as commissioner, and the court, in its order of November 5, 1976, denied it. Hence, on January 24, 1977, the commissioners submitted their appraisal report finding that the fair market value of the property was P2,763,400. The commissioners, however added: Under the provision of Presidential Decree No. 464, as amended by Presidential Decree No. 794, abovequoted, we could have safely adopted the valuation of the City Assessor in the sum of P2,432,042.00, this being lower than that declared by the owner in the sum of P2,435,000.00, although by actual appraisal of the undersigned Commissioners the property could command a fair market value of P2,763,400.00 as of the date of our ocular inspection. Considering, however, that according to the audited statement submitted by defendant, the acquisition costs and other legal expenses incurred on the subject property by AMEREX, the grand total of P2,258,018.57, are (sic) lower than the findings of the undersigned Commissioners, the explanation being the fact that

the price of the sale was a real bargain possibly due to dire necessities of the seller Avegon, it is respectfully submitted that the said sum of P2,258,018.57 be adopted for purposes of determining just compensation payable to defendant AMEREX, which sum does not exceed, but is even lower than, the fair market value was determined by the City Assessor and as declared by said defendant. 7 Both parties objected to the report of the commissioners. The plaintiff contended that the commissioners' conclusion that the fair market value of the property was P2,763,400 was unsupported by evidence and that their recommended just compensation of P2,258,018.57 was excessive. It reiterated its stand that the just compensation should only be P1,800,000 it being the price had the sale between the city school board and Avegon Inc. materialized and also the actual price of the sale between Avegon Inc. and Amerex. On the other hand, Amerex averred that the recommended just compensation was unjustified in view of the commissioners' finding that the fair market value of the property was P2,763,400. On March 15, 1977, the lower court 8 rendered a decision based on the following findings: The court believes that the findings of the commissioners are supported by the evidence adduced during the hearings and that their recommendation is reasonable. The property was originaly owned by Avegon Inc. and was assessed at P1,079,370.00 by the City of Manila for the year 1974 (Exh. A-4). Avegon Inc. offered to sell it to the City School Board on July 21, 1973 at P2,300,000.00 but it accepted the counter-offer of P1,800,000. The negotiations, however, fell through when the city failed to act (Exhs. C, C-1, C-2, C-3 and C-4). The property was appraised on February 15, 1974 at P2,100,000.00 at the Instance of Commonwealth Insurance Company, an affiliate of Warner, Barnes & Co., Inc. (Exh. G). The defendant company introduced improvements on the property in the middle part of 1974 worth P260,690.50 (Exhs. 4, 4-A to 4-J; 11, 13, 14 to 19). After the renovation, the property was again appraised at the instance of the defendant at P2,300,000.00 on November 15, 1974 (Exh. 2). Due to the worldwide recession, there followed a slump in the demand for electronic products. On June 4, 1975, the Traders Commodities Corporation offered to buy the property at P2,750,000.00 with a deposit of P50,000.00 as earnest money. The offer was formally made by the law firm Salonga, Ordoñez, Yap, Africano and Associates (Exch. 6). The offer was accepted on June 9, 1975 (Exhs. 7 and 8). The sale was not consummated, however, when the government notified the defendant in a conference held in Malacanang on June 15, 1975 that it wanted to buy the property for the use of the Manuel de la Fuente High School (Exh. 9). Because of the failure of the parties to agree on the price and other conditions of the purchase, the government filed this action on August 2, 1975. It is apparent that the commissioners were influenced by the fact that the city assessors fixed the market value of the property at P2,432,042.00 for the year 1975 pursuant to Presidential Decree No. 464 and that there was a perfected contract to buy it at P2,750,000.00. No evidence was presented nor even an allegation made, to show that the government valuation is fraudulent or erroneous. It must therefore be regular (Rule 131, sec. m) and in view of the reliance of the Presidential Decree upon it as a standard to be followed by the courts in arriving at the just compensation of the property when it is acquired by the government, it has great evidentiary weight. The offer to buy at

P2,750,000.00 was made by one of the most reputable law firms in the country. It is not likely that it would have lent itself to any fraudulent device or scheme to inflate the value of the property. Commissioner Peña is a renowned authority on land registration, and has been a realtor for many years. Atty. Higinio Sunico is the chief of the Land Management Division, Bureau of Lands, who was recommended by the plaintiff. Both are well-known for their probability Although it appears that Mr. Aquino, the commissioner recommended by the defendant, had occasion in the past to participate in transactions involving the same property, the court believes that the concurrence of the other commissioners is a safe guaranty of the correctness of their appraisal and recommendation. Accordingly, the dispositive portion of the decision reads as follows: WHEREFORE, judgment is hereby rendered funding the amount of P2,258.018.57 as just compensation for the property of the defendant and declaring the plaintiff entitled to possess and approximate it to the public use alleged in the complaint and to retain it upon payment of the said amount, after deducting the amount of P1,303,470.00, with legal interest from October 13, 1975 when the plaintiff was placed in possession of the real property, and upon payment to each of the commissioners of the sum of P35.00 for their attendance during the hearings held on January 23, February 16, May 11, July 23, September 17, October 12 and December 10, 1976, plus P500.00 each for the preparation of the report, and the costs. The plaintiff elevated the case to the then Intermediate Appellate Court (IAC) for review. On October 29, 1984, it affirmed the appealed decision with the modification that the plaintiff Republic of the Philippines be exempted from the payment of the commissioners' fees, the P500.00 granted each of them for the preparation of the report and the costs. Its motion for the reconsideration of said decision having been denied, petitioner filed the instant petition submitting the following issues for resolution: 1. Whether or not respondent Court erred in not disqualifying Commissioner Aurelio B. Aquino from membership in the Committee of Appraisal. 2. Whether or not respondent Court erred in not totally disregarding the audited statement by the defendant, which is hearsay in nature and was not formally offered in evidence. 3. Whether or not respondent Court erred in totally disregarding petitioner's evidence showing that the award of just compensation should be only P1,800,000.00 and not P2,258.018.57 as awarded by said respondent Court. The issue of the disqualification of Aquino as commissioner deserves scant attention. Under Section 8, Rule 67 of the Rules of Court, the court may take the following actions on the report submitted by commissioners: it may "accept the report and render judgment in accordance therewith; or for cause shown, it may recommit the same to the commissioners for further report of facts, or it may set aside the report and appoint new commissioners, or it may accept the

report in part and reject it in part; . . . ." In other words, the report of the commissioners is merely advisory and recommendatory in character as far as the court is concerned. 9 Hence, it hardly matters that one of the three commissioners had a preconceived and biased valuation of the condemned property. The veracity or exactitude of the estimate arrived at by the commissioners may not be adversely affected thereby. In fact, the report of only two commissioners may suffice if the third commissioner dissents from the former's valuation. 10 Indeed, the participation of an allegedly biased commissioner may not result in the total disregard of an appraisal report in the absence of proof that the two other commissioners were unduly influenced by their allegedly partial colleague. The determination of just compensation for a condemned property is basically a judicial function. As 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 its right of condemnation, and to the defendant just compensation for the property expropriated. For that matter, this Court may even substitute its own estimate of the value as gathered from the record. 11 Hence, although the determination of just compensation appears to be a factual matter which is ordinarily outside the ambit of its jurisdiction, this Court may disturb the lower court's factual finding on appeal when there is clear error or grave abuse of discretion. 12 We hold that the courts below made an erroneous determination of just compensation in this case. In the first place, the just compensation prescribed herein is based on the commissioners' recommendation which in turn is founded on the "audited" statements of Amerex that the property is worth P2,258,018.57. As earlier pointed out, while the court may accept the commissioners' report and render judgment in accordance therewith, it may not do so without considering whether the report is supported by evidence. The court is also duty-bound to determine whether the commissioners had discharged the trust reposed in them according to well-established rules and formed their judgment upon correct legal principles for they are not supposed to act ad libitum .13 Amerex's "audited" statement on the acquisition cost, cost of painting and major repairs, taxes, and insurance premiums which totals P2,107,479.48, contains the following certification: We have checked the details of the transactions indicated in the foregoing schedule of Land and Building Account as at January 31, 1976 with the books and records of Amerex Electronics (Philippines) Corporation which were presented to us for examination and have found the details to be in accordance therewith. We have not made an audit of the books of accounts of Amerex Electronics (Philippines) Corporation. Sycip, Gorres Velayo & Co. PTR No. 4709791 January 23, 1976 Makati, Rizal

(Emphasis supplied).14 Amerex's other "audited" statement on the maintenance expenses of the property wherein it allegedly incurred the amount of P150,539.09 contains a similar certification by the same accounting firm specifically stating that the auditor did not make an audit of the books of accounts of Amerex. 15 It is clear from these certifications that the accounting firm which issued them merely compared the figures in the schedules or "audited" statements with those of the records and books of accounts of Amerex. As no investigation was made as to the veracity of the figures in the account, there was no audit in the real sense of the term. To audit is to examine an account, compare it with the vouchers, adjust the same, and to state the balance, by persons legally authorized for the purpose. 16 While the word "audit" is sometimes restricted to a mere mathematical process, it generally includes investigation, the weighing of evidence, and deciding whether items should or should not be included in the account .17 Audit involves the exercise of discretion; it is a quasi-judicial function.18 The accuracy of the "audited" statements herein is therefore suspect. Besides the fact that the petitioner was not furnished a copy of the audited statements which were also not introduced in evidence, Enrique P. Esteban, vice-president and treasurer of Amerex, and even a representative of the accounting firm, were likewise not presented during the trial thereby depriving petitioner herein of the opportunity to cross-examine them. It would therefore be unfair to the petitioner to hold it bound by the "audited" statements of Amerex which may have been premised on false or mistaken data. 19 This Court having declared as unconstitutional the mode of fixing just compensation under P.D. No. 794 20 just compensation should be determined either at the time of the actual taking of the government or at the time of the judgment of the court, whichever comes first. 21 In this case, the issuance of the condemnation order and the actual taking of the property both occurred in October, 1975. Accordingly, the appraisal made by Ampil Realty and Appraisal Co., Inc. on June 5, 1975, which date is nearest to that of the actual taking of the property, should be the basis for the determination of just compensation the record being bereft of any indications of anomaly appertaining thereto. It should be added that Wenceslao Ampil, the president of said appraisal firm, testified at the trial and therefore petitioner had the opportunity to confront him and to question his report. The reasonableness of the June 5,1975 appraisal fixing at P2,400,000 the fair market value of the property, is bolstered by the fact that on June 4, 1975, Traders Commodities Corporation, through its lawyer, Sedfrey A. Ordoñez offered to buy the property at P2,750,000. 22 It must be emphasized, however, that legal interest on the balance of the just compensation of P2,400,000 after deducting the amount of P1,303,470 which had been delivered to Amerex, should be paid by petitioner from the time the government actually took over the propert y. 23 Much as we realize the need of the government, under these trying times, to get the best possible price for the expropriated property considering the ceaseless and continuing necessity for schools, we cannot agree with the petitioner that the just compensation for the property should be the price it commanded when it was first offered for sale to the City School Board of Manila. Petitioner failed to substantiate its claim that the property is worth the lower amount of P1,800,000. In contrast, Amerex submitted evidence consisting of the aforesaid June 5, 1975 appraisal report which fixed the fair market value of the property at P2,400,000.

WHEREFORE, the just compensation of the property expropriated for the use of the Manuel de la Fuente High School Don Mariano Marcos Memorial High School) is hereby fixed at Two Million Four Hundred Thousand Pesos (P2,400,000.00). After deducting the amount of P1,303,470.00 therefrom, the petitioner shall pay the balance with legal interest from October 13, 1975. G.R. No. L-59603

April 29, 1987

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. Elena M. Cuevas for respondents. 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 acccordance 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 flied 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 Med 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 flied 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 fundametal 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 onjust 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 ofappeals (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 ihat 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, 351; 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 ubrupt 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. G.R. No. L-50147 August 3, 1990 JOSE MA. ANSALDO, for himself and as attorney-in-fact of Maria Angela Ansaldo, petitioners vs. FRANCISCO S. TANTUICO, JR., Acting Chairman, Commission on Audit, and BALTAZAR AQUINO, Minister of Public Highways, respondents. Misa & LozadaBito for petitioners.

NARVASA, J.:

This expropriation case is quite unique. Two lots of private ownership were taken by the Government and used for the widening of a road more than forty-three years ago, without benefit of an action of eminent domain or agreement with its owners, albeit without protest by the latter. The lots belong to the petitioners, Jose Ma. Ansaldo and Maria Angela Ansaldo, are covered by title in their names 1and have an aggregate area of 1,041 square meters. These lots were taken from the Ansaldos sometime in 1947 by the Department of Public Work Transportation and Communication and made part of what used to be Sta. Mesa Street and is now Ramon Magsaysay Avenue at San Juan, Metro Manila. This, to repeat, without demur on the part of the owners. Said owners made no move whatever until twenty-six years later. They wrote to ask for compensation for their land on January 22, 1973. 2 Their claim was referred to the Secretary of Justice who in due course rendered an opinion dated February 22, 1973, 3 that just compensation should be paid in accordance with Presidential Decree No. 76. 4The Decree provided that the basis for the payment of just compensation of property taken for public use should be the current and fair market value thereof as declared by the owner or administrator, or such market value as determined by the assessor, whichever was lower. 5 The Secretary of Justice thus advised that the corresponding expropriation suit be forthwith instituted to fix the just compensation to be paid to the Ansaldos. Pursuant to this opinion, the Commissioner of Public Highways requested the Provincial Assessor of Rizal to make a redetermination of the market value of the Ansaldos' property in accordance with PD 76. 6 The new valuation was made, after which the Auditor of the Bureau of Public Highways forwarded the Ansaldos' claim to the Auditor General with the recommendation that payment be made on the basis of the "current and fair market value, . . . and not on the fair market value at the time of taking. 7 The Commission on Audit, however, declined to adopt the recommendation. In a decision handed down on September 26, 1973, the Acting Chairman ruled that "the amount of compensation to be paid to the claimants is to be determined as of the time of the taking of the subject lots, 8 i.e. 1947. The ruling was reiterated by the Commission on September 8, 1978, and again on January 25, 1979 when it denied the Ansaldos' motion for reconsideration. 9 It is these rulings of the Commission on Audit that the Ansaldos have appealed to this Court. While not decisive of this case, it may be stressed that the provisions of Presidential Decree No. 76 and its related or successor decrees (Numbered 464, 794 and 1533) no longer determine the just compensation payable to owners of expropriated property. Said provisions were, it may be recalled, struck down as unconstitutional and void in 1988, in Export Processing Zone Authority v. Dulay, 10 which declared that the mode therein prescribed for determining just compensation, i. e., on the basis of the value declared by the owner or administrator or on that determined by the assessor, whichever is lower, constituted an impermissible encroachment on the judicial prerogative to resolve the issue in an appropriate proceeding of eminent domain. Now, nothing in the record even remotely suggests that the land was taken from the Ansaldos against their will. Indeed, all indications, not the least of which is their silence for more than two decades, are that they consented to such a taking although they knew that no expropriation case had been commenced at all. There is therefore no reason, as regards the Ansaldos'

property, to impugn the existence of the power to expropriate, or the public purpose for which that power was exercised. The sole question thus confronting the Court involves the precise time at which just compensation should be fixed, whether as of the time of actual taking of possession by the expropriating entity or, as the Ansaldos maintain, only after conveyance of title to the expropriator pursuant to expropriation proceedings duly instituted since it is only at such a time that the constitutional requirements of due process aside from those of just compensation may be fully met. Normally, of course, where the institution of an expropriation action precedes the taking of the property subject thereof, the just compensation is fixed as of the time of the filing of the complaint. This is so provided by the Rules of Court, 11 the assumption of possession by the expropriator ordinarily being conditioned on its deposits with the National or Provincial Treasurer of the value of the property as provisionally ascertained by the court having jurisdiction of the proceedings. There are instances, however, where the expropriating agency takes over the property prior to the expropriation suit, as in this case although, to repeat, the case at bar is quite extraordinary in that possession was taken by the expropriator more than 40 years prior to suit. In these instances, this Court has ruled that the just compensation shall be determined as of the time of taking, not as of the time of filing of the action of eminent domain. In the context of the State's inherent power of eminent domain, there is a "taking" when the owner is actually deprived or dispossessed of his property; when there is a practical destruction or a material impairment of the value of his property or when he is deprived of the ordinary use thereof. 12 There is a "taking" in this sense when the expropriator enters private property not only for a momentary period but for a more permanent duration, for the purpose of devoting the property to a public use in such a manner as to oust the owner and deprive him of all beneficial enjoyment thereof. 13 For ownership, after all, "is nothing without the inherent rights of possession, control and enjoyment. Where the owner is deprived of the ordinary and beneficial use of his property or of its value by its being diverted to public use, there is taking within the Constitutional sense. 14 Under these norms, there was undoubtedly a taking of the Ansaldos' property when the Government obtained possession thereof and converted it into a part of a thoroughfare for public use. It is as of the time of such a taking, to repeat, that the just compensation for the property is to be established. As stated in Republic v. Philippine National Bank, 15 . . . (W)hen plaintiff takes possession before the institution of the condemnation proceedings, the value should be fixed as of the time of the taking of said possession, not of filing of the complaint and the latter should be the basis for the determination of the value, when the taking of the property involved coincides with or is subsequent to, the commencement of the proceedings. Indeed, otherwise, the provision of Rule 69, Section 3, directing that compensation be determined as of the date of the filing of the complaint' would never be operative. As intimated in Republic v. Lara (supra), said provision contemplates normal circumstances, under which the complaint coincides or even precedes the taking of the property by the plaintiff.

The reason for the rule, as pointed out in Rpublic v. Larae, 16 is that — . . . (W)here property is taken ahead of the filing of the condemnation proceedings, the value thereof may be enchanced 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 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. Clearly, then, the value of the Ansaldos' property must be ascertained as of the year 1947, when it was actually taken, and not at the time of the filing of the expropriation suit, which, by the way, still has to be done. It is as of that time that the real measure of their loss may fairly be adjudged. The value, once fixed, shall earn interest at the legal rate until full payment is effected, conformably with other principles laid down by case law. 17 WHEREFORE, the petition is DENIED, the challenged decision of the Commission on Audit is AFFIRMED, and the Department of Public Works and Highways is DIRECTED to forthwith institute the appropriate expropriation action over the land in question so that the just compensation due its owners may be determined in accordance with the Rules of Court, with interest at the legal rate of six percent (6%) per annum from the time of taking until full payment is made. No costs. G.R. No. 170846

February 6, 2007

NATIONAL POWER vs. AURELLANO S. TIANGCO, LOURDES TIANGCO, Respondents.

CORPORATION, Petitioner, S.

TIANGCO

and

NESTOR

S.

DECISION GARCIA, J.: In this petition for review on certiorari under Rule 45 of the Rules of Court, petitioner National Power Corporation (NPC) seeks the annulment and setting aside of the Decision1 dated March 14, 2005 of the Court of Appeals (CA) in CA-G.R. CV No. 53576, as reiterated in its Resolution2 of December 2, 2005 which denied the petitioner’s motion for reconsideration. The assailed decision modified that of the Regional Trial Court (RTC) of Tanay, Rizal, Branch 80, by increasing the amount of just compensation due the respondents in an expropriation case filed against them by the petitioner. The facts:

Herein respondents Aurellano, Lourdes and Nestor, all surnamed Tiangco, are the owners of a parcel of land with an area of 152,187 square meters at Barangay Sampaloc, Tanay, Rizal and registered in their names under TCT No. M-17865 of the Registry of Deeds of Rizal. On the other hand, petitioner NPC is a government-owned and controlled corporation created for the purpose of undertaking the development and generation of power from whatever source. NPC’s charter (Republic Act No. 6395) authorizes the corporation to acquire private property and exercise the right of eminent domain.1awphi1.net NPC requires 19,423 square meters of the respondents’ aforementioned property, across which its 500Kv Kalayaan-San Jose Transmission Line Project will traverse. NPC’s Segregation Plan3 for the purpose shows that the desired right-of-way will cut through the respondents’ land, in such a manner that 33,392 square meters thereof will be left separated from 99,372 square meters of the property. Within the portion sought to be expropriated stand fruit-bearing tress, such as mango, avocado, jackfruit, casuy, santol, calamansi, sintones and coconut trees. On November 20, 1990, after repeated unsuccessful negotiations with the respondents, NPC filed with the RTC of Tanay, Rizal a complaint for expropriation4 against them. In time, the respondents filed their answer. On March 14, 1991, the trial court issued a Condemnation Order, granting NPC the right to take possession of the area sought to be expropriated. In the same Order, the court directed the parties to nominate their respective commissioners, with a third member to be nominated and appointed by the court itself, to determine the proper amount of just compensation to be paid to the respondents. As constituted in the manner thus indicated, the board of commissioners was composed of the following: for NPC, Atty. Restituto Mallo of its Legal Department; for the respondents, Mr. Basilio Afuang, a geodetic engineer and a real estate broker by profession; and for the court, Clerk of Court V Ms. Amelia de Guzman Carbonell. On April 5, 1991, the trial court issued an order directing NPC to pay and deposit with the Rizal Provincial Treasurer the amount of ₱81,204.00, representing the temporary provisional value of the area subject of the expropriation prior to the taking of possession thereof. On April 22, 1991, with NPC having complied with the deposit requirement, a writ of possession was issued in its favor. Thereafter, an ocular inspection of the premises was conducted and hearings before the board of commissioners were held, during which the Municipal Assessor of Tanay, Rizal was presented. He submitted a record of the Schedule of Values for taxation purposes and a certification to the effect that the unit value of the respondents’ property is ₱21,000.00 per hectare. On August 7, 1993, commissioner Basilio Afuang for the respondents filed his report. He pegged the price of the area sought to be expropriated at ₱30.00 per square meter or ₱582,690.005 in the aggregate; and for the improvements thereon, Afuang placed a valuation of ₱2,093,950.00. The figures are in contrast with the respondents’ own valuation of ₱600,600.00, for the area, and ₱4,935,500.00, for the improvements. On September 14, 1993, NPC filed an amended complaint to acquire only 19,423 square meters of the respondents’ property. The original area of 20,220 square meters initially sought to be expropriated under the original complaint turned out to be in excess of the area required.

For its part, NPC made it clear that it is interested only in acquiring an easement of right-of-way over the respondents’ property and that ownership of the area over which the right-of-way will be established shall remain with the respondents. For this reason, NPC claims that it should pay, in addition to the agreed or adjudged value of the improvements on the area, only an easement fee in an amount equivalent to ten per cent (10%) of the market value of the property as declared by the respondents or by the Municipal Assessor, whichever is lower, as provided for under Section 3-A of Republic Act No. 6395, as amended by Presidential Decree 938.6 The court-appointed commissioner, Ms. Amelia de Guzman Carbonell, found that the risk and dangerous nature of the transmission line project essentially deprive the respondents of the use of the area. Nonetheless, she recommended that the determination of just compensation should be relegated to "expert appraisers."7 From the evidence before it, the trial court made a determination that the market value of the property is ₱2.09 per square meter, or ₱40,594.07 for the entire 19,423 square meters needed by NPC, and not the ₱30.00 per square meter claimed by the respondents. Neither did the trial court consider NPC’s reliance on Section 3-A of Republic Act No. 6395, as amended by Presidential Decree 938, the court placing more weight on the respondents’ argument that expropriation would result in the substantial impairment of the use of the area needed, even though what is sought is a mere aerial right-of-way. The court found as reasonable the amount of ₱324,750.00 offered by NPC for the improvements, as the same is based on the official current schedule of values as determined by the Municipal Assessor of Tanay, Rizal. Hence, in its decision8 of February 19, 1996, the trial court rendered judgment as follows: WHEREFORE, in view of the foregoing, judgment is hereby rendered: 1. Expropriating in favor of [NPC] a parcel of land covering a total area of 19,423 sq.m. covered by TCT No. M-17860 owned by the [respondents]; 2. Ordering the amount of P40,594.07 as just compensation for the 19,423 square meters of land affected by the expropriations; and the amount of P324,750.00 as reasonable compensation for the improvements on the land expropriated with legal interest from the time of possession by the plaintiff. No pronouncement as to costs. SO ORDERED. (Words in brackets supplied.) The respondents moved for reconsideration, presenting for the first time a document entitled "Bureau of Internal Revenue Circular of Appraisal," which shows that for the year 1985, lands in Barangay Sampaloc were valued at ₱30.00 per square meter; for the year 1992, at ₱80.00 per square meter; and for year 1994, at ₱100.00 per square meter. Respondents maintain that the price of ₱30.00 per square meter for the needed area of 19,423 square meters is the reasonable amount and should be the basis for fixing the amount of just compensation due them. The trial court denied the motion, stating that the BIR circular in question was belatedly filed and therefore NPC could not have opposed its presentation. From the aforesaid decision of the trial court, both NPC and the respondents went on appeal to the CA whereat the separate appeals were consolidated and docketed as CA-G.R. CV No. 53576. The appellate court found merit in the respondents’ appeal, and disregarded the ₱2.09 per square meter valuation of the trial court, which was based on a 1984 tax declaration.

Instead, the CA placed reliance upon a 1993 tax declaration, "being only two years removed from the time of taking."9 The appellate court determined the time of taking to be in 1991. Thus, the greater value of ₱913,122.00 as declared in Tax Declaration No. 011-2667 dated July 23, 1993 should be the basis for determining just compensation. With regard to the value of improvements, the appellate court found NPC’s valuation more favorable, being based on the current (1991) schedule of values for trees in the provinces of Rizal and Laguna. Hence, in its decision10 of March 14, 2005, the CA rendered judgment, to wit: WHEREFORE, the instant Appeal is GRANTED. The decision of the Regional Trial Court of Tanay, Rizal, Branch 80 dated February 19, 1996 is hereby MODIFIED and the compensation awarded for the 19,423 square meters of land affected is increased to ₱116,538.00, and the reasonable compensation for the improvements thereon is likewise increased to P325,025.00, with legal interest from the time of possession by the plaintiff-appellee NAPOCOR. No pronouncement as to costs. SO ORDERED. NPC moved for reconsideration, but its motion was denied by the appellate court in its resolution11 of December 2, 2005. Hence, NPC’s instant petition for review, submitting for our resolution only the following issues with respect to the amount of just compensation that must be paid the respondents for the expropriated portion (19,423 square meters) of their property: 1. Is it to be based on the 1984 or the 1993 valuation? 2. Should NPC pay for the value of the land being taken, or should it be limited to what is provided for under P.D. 938, that is, ten per cent (10%) of its market value as declared by the owner or the assessor (whichever is lower), considering that the purpose for which the property is being taken is merely for the establishment of a safe and free passage for its overhead transmission lines? There is no issue as to the improvements. Since the ₱325,025.00 valuation therefor is the very price set by the NPC commissioner, to which the corporation did not object but otherwise adopts, the Court fixes the amount of ₱325,025.00 as just compensation for the improvements. We now come to the more weighty question of what amount is just by way of compensation for the 19,423 square-meter portion of the respondents’ property. In eminent domain cases, the time of taking is the filing of the complaint, if there was no actual taking prior thereto. Hence, in this case, the value of the property at the time of the filing of the complaint on November 20, 1990 should be considered in determining the just compensation due the respondents. So it is that in National Power Corporation v. Court of Appeals, et al., 12 we ruled: Normally, the time of the taking coincides with the filing of the complaint for expropriation. Hence, many rulings of this Court have equated just compensation with the value of the property as of the time of filing of the complaint consistent with the above provision of the Rules. So too, where the institution of the action precedes entry into the property, the just compensation is to be ascertained as of the time of the filing of the complaint.

The trial court fixed the value of the property at its 1984 value, while the CA, at its 1993 worth. Neither of the two determinations is correct. For purposes of just compensation, the respondents should be paid the value of the property as of the time of the filing of the complaint which is deemed to be the time of taking the property. It was certainly unfair for the trial court to have considered a property value several years behind its worth at the time the complaint in this case was filed on November 20, 1990. The landowners are necessarily shortchanged, considering that, as a rule, land values enjoy steady upward movement. It was likewise erroneous for the appellate court to have fixed the value of the property on the basis of a 1993 assessment. NPC would be paying too much. Petitioner corporation is correct in arguing that the respondents should not profit from an assessment made years after the taking. The expropriation proceedings in this case having been initiated by NPC on November 20, 1990, property values on such month and year should lay the basis for the proper determination of just compensation. In Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform,13 the Court ruled that the equivalent to be rendered for the property to be taken shall be substantial, full, ample and, as must apply to this case, real. This must be taken to mean, among others, that the value as of the time of taking should be the price to be paid the property owner. Just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator. In this case, this simply means the property’s fair market value at the time of the filing of the complaint, 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."14 The measure is not the taker’s gain, but the owner’s loss. In the determination of such value, the court is not limited to the assessed value of the property or to the schedule of market values determined by the provincial or city appraisal committee; these values consist but one factor in the judicial valuation of the property. 15 The nature and character of the land at the time of its taking is the principal criterion for determining how much just compensation should be given to the landowner16 All the facts as to the condition of the property and its surroundings, as well as its improvements and capabilities, should be considered.17 Neither of the two determinations made by the courts below is therefore correct. A new one must be arrived at, taking into consideration the foregoing pronouncements. Now, to the second issue raised by petitioner NPC. In several cases, the Court struck down NPC’s consistent reliance on Section 3-A of Republic Act No. 6395, as amended by Presidential Decree 938.18 True, an easement of a right-of-way transmits no rights except the easement itself, and the respondents would retain full ownership of the property taken. Nonetheless, the acquisition of such easement is not gratis. The limitations on the use of the property taken for an indefinite period would deprive its owner of the normal use thereof. For this reason, the latter is entitled to payment of a just compensation, which must be neither more nor less than the monetary equivalent of the land taken. 19 While the power of eminent domain results in the taking or appropriation of title to, and possession of, the expropriated property, no cogent reason appears why said power may not be

availed of to impose only a burden upon the owner of the condemned property, without loss of title and possession.20 However, if the easement is intended to perpetually or indefinitely deprive the owner of his proprietary rights through the imposition of conditions that affect the ordinary use, free enjoyment and disposal of the property or through restrictions and limitations that are inconsistent with the exercise of the attributes of ownership, or when the introduction of structures or objects which, by their nature, create or increase the probability of injury, death upon or destruction of life and property found on the land is necessary, then the owner should be compensated for the monetary equivalent of the land, in accordance with our ruling in NPC v. Manubay Agro-Industrial: As correctly observed by the CA, considering the nature and the effect of the installation power lines, the limitations on the use of the land for an indefinite period would deprive respondent of normal use of the property. For this reason, the latter is entitled to payment of a just compensation, which must be neither more nor less than the monetary equivalent of the land.21 The evidence suggests that NPC’s transmission line project that traverses the respondents’ property is perpetual, or at least indefinite, in nature. Moreover, not to be discounted is the fact that the high-tension current to be conveyed through said transmission lines evidently poses a danger to life and limb; injury, death or destruction to life and property within the vicinity. As the Court held in NPC v. Chiong,22 it is not improper to assume that NPC will erect structures for its transmission lines within the property. What is sought to be expropriated in this case is, at its longest extent, 326.34 meters, and through it may be built several structures, not simply one. Finally, if NPC were to have its way, respondents will continue to pay the realty taxes due on the affected portion of their property, an imposition that, among others, merits the rejection of NPC’s thesis of payment of a mere percentage of the property’s actual value. WHEREFORE, the instant petition is GRANTED in part in that the decision of the Court of Appeals dated March 14, 2005 vis a vis the award of ₱116,538.00, as and by way of just compensation for the 19,423 square meters of the respondents’ property, is SET ASIDE, and the case is ordered REMANDED to the court of origin for the proper determination of the amount of just compensation for the portion thus taken, based on our pronouncements hereon. The same decision, however, is AFFIRMED, insofar as it pertains to the award of ₱325,025.00 for the improvements, with legal interest from the time of actual possession by the petitioner. No pronouncement as to costs. G.R. No. 78742 July 14, 1989 ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, INC., JUANITO D. GOMEZ, GERARDO B. ALARCIO, FELIPE 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. ARRESTO, CONSUELO M. MORALES, BENJAMIN R. SEGISMUNDO, CIRILA A. JOSE & NAPOLEON S. FERRER, petitioners, vs. HONORABLE SECRETARY OF AGRARIAN REFORM, respondent. G.R. No. 79310 July 14, 1989

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. G.R. No. 79744 July 14, 1989 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. G.R. No. 79777 July 14, 1989 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.

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 battle-cry 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 first 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 andManotok 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 ofChavez 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, 1588, 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.0. 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 Tanada 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. I 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 Tanada 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, 24for 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 apace 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 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 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 governmentowned 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 hospitals; 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 excercise 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 categorical 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 counter-balance 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. V 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. G.R. No. 118712 October 6, 1995 LAND BANK OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO, AGRICULTURAL MANAGEMENT & DEVELOPMENT CORP., respondents. G.R. No. 118745 October 6, 1995 DEPARTMENT OF AGRARIAN REFORM, represented by the Secretary of Agrarian Reform, petitioner, vs. COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO, AGRICULTURAL MANAGEMENT & DEVELOPMENT CORP., ET AL., respondents.

FRANCISCO, R., J.: It has been declared that the duty of the court to protect the weak and the underprivileged should not be carried out to such an extent as deny justice to the landowner whenever truth and justice happen to be on his side.1 As eloquently stated by Justice Isagani Cruz:

. . . social justice — or any justice for that matter — is for the deserving, whether he be a millionaire in his mansion or a pauper in his hovel. It is true that, in case of reasonable doubt, we are called upon to tilt the balance in favor of the poor, to whom the Constitution fittingly extends its sympathy and compassion. But never is it justified to prefer the poor simply because they are poor, or to reject the rich simply because they are rich, for justice must always be served, for poor and rich alike, according to the mandate of the law.2 In this agrarian dispute, it is once more imperative that the aforestated principles be applied in its resolution. Separate petitions for review were filed by petitioners Department of Agrarian Reform (DAR) (G.R. No. 118745) and Land Bank of the Philippines (G.R. No. 118712) following the adverse ruling by the Court of Appeals in CA-G.R. SP No. 33465. However, upon motion filed by private respondents, the petitions were ordered consolidated.3 Petitioners assail the decision of the Court of Appeals promulgated on October 20, 1994, which granted private respondents' Petition for Certiorari and Mandamus and ruled as follows: WHEREFORE, premises considered, the Petition for Certiorari and Mandamus is hereby GRANTED: a) DAR Administrative Order No. 9, Series of 1990 is declared null and void insofar as it provides for the opening of trust accounts in lieu of deposits in cash or bonds; b) Respondent Landbank is ordered to immediately deposit — not merely "earmark", "reserve" or "deposit in trust" — with an accessible bank designated by respondent DAR in the names of the following petitioners the following amounts in cash and in government financial instruments — within the parameters of Sec. 18 (1) of RA 6657: P 1,455,207.31 Pedro L. Yap P 135,482.12 Heirs of Emiliano Santiago P 15,914,127.77 AMADCOR; c) The DAR-designated bank is ordered to allow the petitioners to withdraw the above-deposited amounts without prejudice to the final determination of just compensation by the proper authorities; and d) Respondent DAR is ordered to 1) immediately conduct summary administrative proceedings to determine the just compensation for the lands of the petitioners giving the petitioners 15 days from notice within which to submit evidence and to 2) decide the cases within 30 days after they are submitted for decision.4

Likewise, petitioners seek the reversal of the Resolution dated January 18, 1995,5 denying their motion for reconsideration. Private respondents are landowners whose landholdings were acquired by the DAR and subjected to transfer schemes to qualified beneficiaries under the Comprehensive Agrarian Reform Law (CARL, Republic Act No. 6657). Aggrieved by the alleged lapses of the DAR and the Landbank with respect to the valuation and payment of compensation for their land pursuant to the provisions of RA 6657, private respondents filed with this Court a Petition for Certiorari and Mandamus with prayer for preliminary mandatory injunction. Private respondents questioned the validity of DAR Administrative Order No. 6, Series of 19926 and DAR Administrative Order No. 9, Series of 1990,7 and sought to compel the DAR to expedite the pending summary administrative proceedings to finally determine the just compensation of their properties, and the Landbank to deposit in cash and bonds the amounts respectively "earmarked", "reserved" and "deposited in trust accounts" for private respondents, and to allow them to withdraw the same. Through a Resolution of the Second Division dated February 9, 1994, this Court referred the petition to respondent Court of Appeals for proper determination and disposition. As found by respondent court , the following are undisputed: Petitioner Pedro Yap alleges that "(o)n 4 September 1992 the transfer certificates of title (TCTs) of petitioner Yap were totally cancelled by the Registrar of Deeds of Leyte and were transferred in the names of farmer beneficiaries collectively, based on the request of the DAR together with a certification of the Landbank that the sum of P735,337.77 and P719,869.54 have been earmarked for Landowner Pedro L. Yap for the parcels of lands covered by TCT Nos. 6282 and 6283, respectively, and issued in lieu thereof TC-563 and TC-562, respectively, in the names of listed beneficiaries (ANNEXES "C" & "D") without notice to petitioner Yap and without complying with the requirement of Section 16 (e) of RA 6657 to deposit the compensation in cash and Landbank bonds in an accessible bank. (Rollo, p. 6). The above allegations are not disputed by any of the respondents. Petitioner Heirs of Emiliano Santiago allege that the heirs of Emiliano F. Santiago are the owners of a parcel of land located at Laur, NUEVA ECIJA with an area of 18.5615 hectares covered by TCT No. NT-60359 of the registry of Deeds of Nueva Ecija, registered in the name of the late Emiliano F. Santiago; that in November and December 1990, without notice to the petitioners, the Landbank required and the beneficiaries executed Actual tillers Deed of Undertaking (ANNEX "B") to pay rentals to the LandBank for the use of their farmlots equivalent to at least 25% of the net harvest; that on 24 October 1991 the DAR Regional Director issued an order directing the Landbank to pay the landowner directly or through the establishment of a trust fund in the amount of P135,482.12, that on 24 February 1992, the Landbank reserved in trust P135,482.12 in the name of Emiliano F. Santiago. (ANNEX "E"; Rollo, p. 7); that the beneficiaries stopped paying rentals to the landowners after they

signed the Actual Tiller's Deed of Undertaking committing themselves to pay rentals to the LandBank (Rollo, p. 133). The above allegations are not disputed by the respondents except that respondent Landbank claims 1) that it was respondent DAR, not Landbank which required the execution of Actual Tillers Deed of Undertaking (ATDU, for brevity); and 2) that respondent Landbank, although armed with the ATDU, did not collect any amount as rental from the substituting beneficiaries (Rollo, p. 99). Petitioner Agricultural Management and Development Corporation (AMADCOR, for brevity) alleges — with respect to its properties located in San Francisco, Quezon — that the properties of AMADCOR in San Francisco, Quezon consist of a parcel of land covered by TCT No. 34314 with an area of 209.9215 hectares and another parcel covered by TCT No. 10832 with an area of 163.6189 hectares; that a summary administrative proceeding to determine compensation of the property covered by TCT No. 34314 was conducted by the DARAB in Quezon City without notice to the landowner; that a decision was rendered on 24 November 1992 (ANNEX "F") fixing the compensation for the parcel of land covered by TCT No. 34314 with an area of 209.9215 hectares at P2,768,326.34 and ordering the Landbank to pay or establish a trust account for said amount in the name of AMADCOR; and that the trust account in the amount of P2,768,326.34 fixed in the decision was established by adding P1,986,489.73 to the first trust account established on 19 December 1991 (ANNEX "G"). With respect to petitioner AMADCOR's property in Tabaco, Albay, it is alleged that the property of AMADCOR in Tabaco, Albay is covered by TCT No. T-2466 of the Register of Deeds of Albay with an area of 1,629.4578 hectares'; that emancipation patents were issued covering an area of 701.8999 hectares which were registered on 15 February 1988 but no action was taken thereafter by the DAR to fix the compensation for said land; that on 21 April 1993, a trust account in the name of AMADCOR was established in the amount of P12,247,217.83', three notices of acquisition having been previously rejected by AMADCOR. (Rollo, pp. 8-9) The above allegations are not disputed by the respondents except that respondent Landbank claims that petitioner failed to participate in the DARAB proceedings (land valuation case) despite due notice to it (Rollo, p. 100).8 Private respondents argued that Administrative Order No. 9, Series of 1990 was issued without jurisdiction and with grave abuse of discretion because it permits the opening of trust accounts by the Landbank, in lieu of depositing in cash or bonds in an accessible bank designated by the DAR, the compensation for the land before it is taken and the titles are cancelled as provided under Section 16(e) of RA 6657.9 Private respondents also assail the fact that the DAR and the Landbank merely "earmarked", "deposited in trust" or "reserved" the compensation in their names as landowners despite the clear mandate that before taking possession of the property, the compensation must be deposited in cash or in bonds. 10 Petitioner DAR, however, maintained that Administrative Order No. 9 is a valid exercise of its rule-making power pursuant to Section 49 of RA 6657.11 Moreover, the DAR maintained that the issuance of the "Certificate of Deposit" by the Landbank was a substantial compliance with Section 16(e) of RA 6657 and the ruling in the case of Association of Small Landowners in the

Philippines, Inc., et al. vs. Hon. Secretary of Agrarian Reform, G.R. No. 78742, July 14, 1989 (175 SCRA 343).12 For its part, petitioner Landbank declared that the issuance of the Certificates of Deposits was in consonance with Circular Nos. 29, 29-A and 54 of the Land Registration Authority where the words "reserved/deposited" were also used.13 On October 20, 1994, the respondent court rendered the assailed decision in favor of private respondents.14Petitioners filed a motion for reconsideration but respondent court denied the same.15 Hence, the instant petitions. On March 20, 1995, private respondents filed a motion to dismiss the petition in G.R. No. 118745 alleging that the appeal has no merit and is merely intended to delay the finality of the appealed decision.16 The Court, however, denied the motion and instead required the respondents to file their comments.17 Petitioners submit that respondent court erred in (1) declaring as null and void DAR Administrative Order No. 9, Series of 1990, insofar as it provides for the opening of trust accounts in lieu of deposit in cash or in bonds, and (2) in holding that private respondents are entitled as a matter of right to the immediate and provisional release of the amounts deposited in trust pending the final resolution of the cases it has filed for just compensation. Anent the first assignment of error, petitioners maintain that the word "deposit" as used in Section 16(e) of RA 6657 referred merely to the act of depositing and in no way excluded the opening of a trust account as a form of deposit. Thus, in opting for the opening of a trust account as the acceptable form of deposit through Administrative Circular No. 9, petitioner DAR did not commit any grave abuse of discretion since it merely exercised its power to promulgate rules and regulations in implementing the declared policies of RA 6657. The contention is untenable. Section 16(e) of RA 6657 provides as follows: Sec. 16. Procedure for Acquisition of Private Lands — xxx xxx xxx (e) 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. . . . (emphasis supplied) It is very explicit therefrom that the deposit must be made only in "cash" or in "LBP bonds". Nowhere does it appear nor can it be inferred that the deposit can be made in any other form. If it were the intention to include a "trust account" among the valid modes of deposit, that should have been made express, or at least, qualifying words ought to have appeared from which it can

be fairly deduced that a "trust account" is allowed. In sum, there is no ambiguity in Section 16(e) of RA 6657 to warrant an expanded construction of the term "deposit". The conclusive effect of administrative construction is not absolute. Action of an administrative agency may be disturbed or set aside by the judicial department if there is an error of law, a grave abuse of power or lack of jurisdiction or grave abuse of discretion clearly conflicting with either the letter or the spirit of a legislative enactment. 18 In this regard, it must be stressed that the function of promulgating rules and regulations may be legitimately exercised only for the purpose of carrying the provisions of the law into effect. The power of administrative agencies is thus confined to implementing the law or putting it into effect. Corollary to this is that administrative regulations cannot extend the law and amend a legislative enactment,19 for settled is the rule that administrative regulations must be in harmony with the provisions of the law. And in case there is a discrepancy between the basic law and an implementing rule or regulation, it is the former that prevails.20 In the present suit, the DAR clearly overstepped the limits of its power to enact rules and regulations when it issued Administrative Circular No. 9. There is no basis in allowing the opening of a trust account in behalf of the landowner as compensation for his property because, as heretofore discussed, Section 16(e) of RA 6657 is very specific that the deposit must be made only in "cash" or in "LBP bonds". In the same vein, petitioners cannot invoke LRA Circular Nos. 29, 29-A and 54 because these implementing regulations cannot outweigh the clear provision of the law. Respondent court therefore did not commit any error in striking down Administrative Circular No. 9 for being null and void. Proceeding to the crucial issue of whether or not private respondents are entitled to withdraw the amounts deposited in trust in their behalf pending the final resolution of the cases involving the final valuation of their properties, petitioners assert the negative. The contention is premised on the alleged distinction between the deposit of compensation under Section 16(e) of RA 6657 and payment of final compensation as provided under Section 1821 of the same law. According to petitioners, the right of the landowner to withdraw the amount deposited in his behalf pertains only to the final valuation as agreed upon by the landowner, the DAR and the LBP or that adjudged by the court. It has no reference to amount deposited in the trust account pursuant to Section 16(e) in case of rejection by the landowner because the latter amount is only provisional and intended merely to secure possession of the property pending final valuation. To further bolster the contention petitioners cite the following pronouncements in the case of "Association of Small Landowners in the Phil. Inc. vs. Secretary of Agrarian Reform".22 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. xxx xxx xxx 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. No outright change of ownership is contemplated either. xxx xxx xxx 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. Notably, however, the aforecited case was used by respondent court in discarding petitioners' assertion as it found that: . . . despite the "revolutionary" character of the expropriation envisioned under RA 6657 which led the Supreme Court, in the case of Association of Small Landowners in the Phil. Inc. vs. Secretary of Agrarian Reform (175 SCRA 343), to conclude that "payments of the just compensation is not always required to be made fully in money" — even as the Supreme Court admits in the same case "that the traditional medium for the payment of just compensation is money and no other" — the Supreme Court in said case did not abandon the "recognized rule . . . that title to the property expropriated shall pass from the owner to the expropriator only upon full payment of the just compensation." 23 (Emphasis supplied) We agree with the observations of respondent court. The ruling in the "Association" case merely recognized the extraordinary nature of the expropriation to be undertaken under RA 6657 thereby allowing a deviation from the traditional mode of payment of compensation and recognized payment other than in cash. It did not, however, dispense with the settled rule that there must be full payment of just compensation before the title to the expropriated property is transferred. The attempt to make a distinction between the deposit of compensation under Section 16(e) of RA 6657 and determination of just compensation under Section 18 is unacceptable. To withhold the right of the landowners to appropriate the amounts already deposited in their behalf as compensation for their properties simply because they rejected the DAR's valuation, and notwithstanding that they have already been deprived of the possession and use of such properties, is an oppressive exercise of eminent domain. The irresistible expropriation of private respondents' properties was painful enough for them. But petitioner DAR rubbed it in all the more by withholding that which rightfully belongs to private respondents in exchange for the taking, under an authority (the "Association" case) that is, however, misplaced. This is misery twice bestowed on private respondents, which the Court must rectify. Hence, we find it unnecessary to distinguish between provisional compensation under Section 16(e) and final compensation under Section 18 for purposes of exercising the landowners' right to appropriate the same. The immediate effect in both situations is the same, the landowner is deprived of the use and possession of his property for which he should be fairly and immediately compensated. Fittingly, we reiterate the cardinal rule that: . . . within the context of the State's inherent power of eminent domain, just compensation means not only the correct determination of the 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 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. 24 (Emphasis supplied) The promulgation of the "Association" decision endeavored to remove all legal obstacles in the implementation of the Comprehensive Agrarian Reform Program and clear the way for the true freedom of the farmer.25 But despite this, cases involving its implementation continue to multiply and clog the courts' dockets. Nevertheless, we are still optimistic that the goal of totally emancipating the farmers from their bondage will be attained in due time. It must be stressed, however, that in the pursuit of this objective, vigilance over the rights of the landowners is equally important because social justice cannot be invoked to trample on the rights of property owners, who under our Constitution and laws are also entitled to protection.26 WHEREFORE, the foregoing premises considered, the petition is hereby DENIED for lack of merit and the appealed decision is AFFIRMED in toto. G.R. No. L-59791 February 13, 1992 MANILA ELECTRIC COMPANY, petitioner, vs. THE HONORABLE GREGORIO G. PINEDA, Presiding Judge, Court of First Instance of Rizal, Branch XXI, Pasig, Metro Manila, TEOFILO ARAYON, SR., GIL DE GUZMAN, LUCITO SANTIAGO and TERESA BAUTISTA, respondents. Quiason, Makalintal & Barot for petitioner. Gil P. De Guzman Law Offices for private respondents.

MEDIALDEA, J.: This is a petition for review on certiorari on pure question of law seeking the nullification of the orders issued by the respondent Judge Gregorio G. Pineda, in his capacity as the presiding Judge of the Court of First Instance (now Regional Trial Court) of Rizal, Branch 21, Pasig, Metro Manila in Civil Case No. 20269, entitled "Manila Electric Company v. Teofilo Arayon, et al." The aforesaid orders are as follows: (1) the order dated December 4, 1981 granting the motion for payment of private respondents; (2) the order dated December 21, 1981 granting the private respondents' omnibus motion; and (3) the order dated February 9, 1982 adjudging in favor of private respondents the fair market value of their property at forty pesos (P40.00) per square meter for a total of P369,720.00 and denying the motions for contempt for being moot and academic and the motion for reconsideration of the orders dated December 4, 1981 and December 21, 1981 for lack of merit. The antecedent facts giving rise to the controversy at bar are as follows: Petitioner Manila Electric Company (MERALCO) is a domestic corporation duly organized and existing under the laws of Philippines. Respondent Honorable Judge Gregorio G. Pineda is impleaded in his official capacity as the presiding judge of the Court of First Instance (now

Regional Trial Court) of Rizal, Branch XXI, Pasig, Metro Manila. While private respondents Teofilo Arayon, Sr., Gil de Guzman, Lucito Santiago and Teresa Bautista are owners in fee simple of the expropriated property situated at Malaya, Pililla, Rizal. On October 29, 1974, a complaint for eminent domain was filed by petitioner MERALCO against forty-two (42) defendants with the Court of First Instance (now Regional Trial Court) of Rizal, Branch XXII, Pasig, Metro Manila. The complaint alleges that for the purpose of constructing a 230 KV Transmission line from Barrio Malaya to Tower No. 220 at Pililla, Rizal, petitioner needs portions of the land of the private respondents consisting of an aggregate area of 237,321 square meters. Despite petitioner's offers to pay compensation and attempts to negotiate with the respondents', the parties failed to reach an agreement. Private respondents question in their motion to dismiss dated December 27, 1974 the petitioner's legal existence and the area sought to be expropriated as too excessive. On January 7, 1975, respondents Gil de Guzman and Teresa Bautista filed a motion for contempt of court alleging, among other things that petitioner's corporate existence had expired in 1969 and therefore it no longer exists under Philippine Laws. But despite the opposition of the private respondents, the court issued an Order dated January 13, 1975 authorizing the petitioner to take or enter upon the possession of the property sought to be expropriated. On July 13, 1976, private respondents filed a motion for withdrawal of deposit claiming that they are entitled to be paid at forty pesos (P40.00) per square meter or an approximate sum of P272,000.00 and prayed that they be allowed to withdraw the sum of P71,771.50 from petitioner's deposit-account with the Philippine National Bank, Pasig Branch. However, respondents motion was denied in an order dated September 3, 1976. In the intervening period, Branch XXII became vacant when the presiding Judge Nelly Valdellon-Solis retired, so respondent Judge Pineda acted on the motions filed with Branch XXII. Pursuant to a government policy, the petitioners on October 30, 1979 sold to the National Power Corporation (Napocor) the power plants and transmission lines, including the transmission lines traversing private respondents' property. On February 11, 1980, respondent court issued an Order appointing the members of the Board of Commissioners to make an appraisal of the properties. On June 5, 1980, petitioner filed a motion to dismiss the complaint on the ground that it has lost all its interests over the transmission lines and properties under expropriation because of their sale to the Napocor. In view of this motion, the work of the Commissioners was suspended. On June 9, 1981, private respondents filed another motion for payment. But despite the opposition of the petitioner, the respondent court issued the first of the questioned Orders dated December 4, 1981 granting the motion for payment of private respondents, to wit:

As prayed for by defendants Teofilo Arayon, Lucito Santiago, Teresa Bautista and Gil de Guzman, thru counsel Gil de Guzman, in their Motion for Payment, for reasons therein stated, this Court hereby orders the plaintiff to pay the movants the amount of P20,400.00 for the expropriated area of 6,800 square meters, at P3.00 per square meter without prejudice to the just compensation that may be proved in the final adjudication of this case. The aforesaid sum of P20,400.00 having been deposited by plaintiff in the Philippine National Bank (Pasig Branch) under Savings Account No. 9204, let the Deputy Sheriff of this Branch Mr. Sofronio Villarin withdraw said amount in the names of Teofilo Arayon, Lucito Santiago, Teresa Bautista and Gil de Guzman, the said amount to be delivered to the defendant's counsel Atty. Gil de Guzman who shall sign for the receipt thereof. SO ORDERED. (Rollo, p. 108) On December 15, 1981, private respondents filed an Omnibus Motion praying that they be allowed to withdraw an additional sum of P90,125.50 from petitioner's deposit-account with the Philippine National Bank. By order dated December 21, 1981, the respondent court granted the Omnibus Motion hereunder quoted as follows: Acting on the Omnibus Motion dated December 15, 1981 filed by Atty. Gil de Guzman, counsel for Teofilo Arayon, Sr., Lucito Santiago, Teresita Bautista and for himself, and it appearing that there is deposited in the bank in trust for them the amount of P90,125.50 to guarantee just compensation of P272,000.00, thereby leaving a balance of P161,475.00 still payable to them, the same is hereby GRANTED. Mr. Nazario Nuevo and Marianita Burog, respectively the Manager and Cashier, Philippine National Bank, Pasig Branch, Pasig, Metro Manila are hereby ordered to allow Sheriff Sofronio Villarin to withdraw and collect from the bank the amount of P90,125.50 under Savings Account No. 9204 and to deliver the same to Atty. Gil de Guzman upon proper receipt, pending final determination of just compensation. SO ORDERED. (Rollo, p. 120) Private respondents filed another motion dated January 8, 1982 praying that petitioner be ordered to pay the sum of P169, 200.00. On January 12, 1982 petitioner filed a motion for reconsideration of the Orders dated December 4, 1981 and December 21, 1981 and to declare private respondents in contempt of court for forging or causing to be forged the receiving stamp of petitioner's counsel and falsifying or causing to be falsified the signature of its receiving clerk in their Omnibus Motion. In response to private respondents' motion for payment dated January 8, 1982, petitioner filed an opposition alleging that private respondents are not entitled to payment of just compensation at this stage of the proceeding because there is still no appraisal and valuation of the property.

On February 9, 1982 the respondent court denied the petitioner's motion for reconsideration and motion for contempt, the dispositive portion of which is hereunder quoted as follows: Viewed in the light of the foregoing, this Court hereby adjudges in favor of defendants Teofilo Arayon, Sr., Lucito Santiago, Teresita Bautista and Atty. Gil de Guzman the fair market value of their property taken by MERALCO at P40.00 per square meter for a total of P369,720.00, this amount to bear legal interest from February 24, 1975 until fully paid plus consequential damages in terms of attorney's fees in the sum of P10,000.00, all these sums to be paid by MERALCO to said defendants with costs of suit, minus the amount of P102,800.00 already withdrawn by defendants. For being moot and academic, the motions for contempt are DENIED; for lack of merit, the motion for reconsideration of the orders of December 4, 1981 and December 21, 1981 is also DENIED. SO ORDERED. (Rollo, p. 211-212) Furthermore, the respondent court stressed in said order that "at this stage, the Court starts to appoint commissioners to determine just compensation or dispenses with them and adopts the testimony of a credible real estate broker, or the judge himself would exercise his right to formulate an opinion of his own as to the value of the land in question. Nevertheless, if he formulates such an opinion, he must base it upon competent evidence." (Rollo, p. 211) Hence, this petition. Subsequently, the respondent court issued an Order dated March 22, 1982 granting the private respondents' motion for execution pending appeal, thus requiring petitioner to deposit P52,600.00 representing the consideration paid by Napocor for the property it bought from petitioner which includes the subject matter of this case, computed at P200.55 per square meter and to render an accounting. On March 26, 1982, petitioner filed a petition for preliminary injunction with this Court seeking to enjoin respondent judge and all persons acting under him from enforcing the Order dated March 22, 1982. This Court issued a temporary restraining order addressed to respondent judge. A motion to lift the restraining order was filed by the respondents. Despite a series of oppositions and motions to lift the said order, this Court reiterated its stand and noted that the restraining order is still effective. The petitioner strongly maintains that the respondent court's act of determining and ordering the payment of just compensation to private respondents without formal presentation of evidence by the parties on the reasonable value of the property constitutes a flagrant violation of petitioner's constitutional right to due process. It stressed that respondent court ignored the procedure laid down by the law in determining just compensation because it formulated an opinion of its own as to the value of the land in question without allowing the Board of Commissioners to hold hearings for the reception of evidence.

On the other hand, private respondents controvert the position of the petitioner and contend that the petitioner was not deprived of due process. They agreed with respondent court's ruling dispensing the need for the appointment of a Board of Commissioners to determine just compensation, thus concluding that the respondent court did not err in determining just compensation. Furthermore, petitioner argues that the respondent judge gravely abused his discretion in granting the motion for execution pending appeal and consequently denying the petitioner's motion to dismiss. Respondent judge should have ordered that Napocor be impleaded in substitution of petitioner or could have at least impleaded both the Napocor and the petitioner as party plaintiffs. The controversy boils down to the main issue of whether or not the respondent court can dispense with the assistance of a Board of Commissioners in an expropriation proceeding and determine for itself the just compensation. The applicable laws in the case at bar are Sections 5 and 8 of Rule 67 of the Revised Rules of Court. The said sections particularly deal with the ascertainment of compensation and the court's action upon commissioners' report, to wit: Sec. 5. Upon the entry of the order of condemnation, the court shall appoint not more than three (3) competent and disinterested persons as commissioners to ascertain and report to the court the just compensation for the property sought to be taken. The order of appointment shall designate the time and place of the first session of the hearing to be held by the commissioners and specify the time within which their report is to be filed with the court. xxx

xxx

xxx

Sec. 8. Upon the expiration of the period of ten (10) days referred to in the preceding section, or even before the expiration of such period but after all the interested parties have filed their objections to the report or their statement of agreement therewith, the court may, after hearing, accept the report and render judgment in accordance therewith; or, for cause shown, it may recommit the same to the commissioners for further report of facts; or it may set aside the report and appoint new commissioners, or it may accept the report in part and reject it in part; and it may make such order or render such judgment as shall secure to the plaintiff the property essential to the exercise of his right of condemnation, and to the defendant just compensation for the property so taken. We already emphasized in the case of Municipality of Biñan v. Hon. Jose Mar Garcia (G.R. No. 69260, December 22, 1989, 180 SCRA 576, 583-584) the procedure for eminent domain, to wit: 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. Respondent judge, in the case at bar, arrived at the valuation of P40.00 per square meter on a property declared for real estate tax purposes at P2.50 per hectare on the basis of a "Joint Venture Agreement on Subdivision and Housing Projects" executed by A.B.A Homes and private respondents on June 1, 1972. This agreement was merely attached to the motion to withdraw from petitioner's deposit. Respondent judge arrived at the amount of just compensation on its own, without the proper reception of evidence before the Board of Commissioners. Private respondents as landowners have not proved by competent evidence the value of their respective properties at a proper hearing. Likewise, petitioner has not been given the opportunity to rebut any evidence that would have been presented by private respondents. In an expropriation case such as this one where the principal issue is the determination of just compensation, a trial before the Commissioners is indispensable to allow the parties to present evidence on the issue of just compensation. Contrary to the submission of private respondents, the appointment of at least three (3) competent persons as commissioners to ascertain just compensation for the property sought to be taken is a mandatory requirement in expropriation cases. While it is true that the findings of commissioners may be disregarded and the court may substitute its own estimate of the value, the latter may only do so for valid reasons, i.e., 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 grossly inadequate or excessive (Manila Railroad Company v. Velasquez, 32 Phil. 286). Thus, trial with the aid of the commissioners is a substantial right that may not be done away with capriciously or for no reason at all. Moreover, in such instances, where the report of the commissioners may be disregarded, the trial court may make its own estimate of value from competent evidence that may be gathered from the record. The aforesaid joint venture agreement relied upon by the respondent judge, in the absence of any other proof of valuation of said properties, is incompetent to determine just compensation. Prior to the determination of just compensation, the property owners may rightfully demand to withdraw from the deposit made by the condemnor in eminent domain proceedings. Upon an award of a smaller amount by the court, the property owners are subject to a judgment for the excess or upon the award of a larger sum, they are entitled to a judgment for the amount awarded by the court. Thus, when the respondent court granted in the Orders dated December 4, 1981 and December 21, 1981 the motions of private respondents for withdrawal of certain

sums from the deposit of petitioner, without prejudice to the just compensation that may be proved in the final adjudication of the case, it committed no error. Records, specifically Meralco's deed of sale dated October 30, 1979, in favor of Napocor show that the latter agreed to purchase the parcels of land already acquired by Meralco, the rights, interests and easements over those parcels of land which are the subject of the expropriation proceedings under Civil Case No. 20269, (Court of First Instance of Rizal, Branch XXII), as well as those parcels of land occupied by Meralco by virtue of grant of easements of right-of-way (see Rollo, pp. 341-342). Thus, Meralco had already ceded and in fact lost all its rights and interests over the aforesaid parcels of land in favor of Napocor. In addition, the same contract reveals that the Napocor was previously advised and actually has knowledge of the pending litigation and proceedings against Meralco (see Rollo, pp. 342-343). Hence, We find the contention of the petitioner tenable. It is therefore proper for the lower court to either implead the Napocor in substitution of the petitioner or at the very least implead the former as party plaintiff. All premises considered, this Court is convinced that the respondent judge's act of determining and ordering the payment of just compensation without the assistance of a Board of Commissioners is a flagrant violation of petitioner's constitutional right to due process and is a gross violation of the mandated rule established by the Revised Rules of Court. ACCORDINGLY, the petition is GRANTED and the order dated February 9, 1982 issued by the respondent judge insofar as it finally determined the amount of just compensation is nullified. This case is hereby ordered remanded to the lower court for trial with the assistance of a Board of Commissioners. Further, the National Power Corporation is impleaded as party plaintiff therein.

[G.R. No. 129998. December 29, 1998]

NATIONAL POWER CORPORATION, petitioner, vs. LOURDES HENSON, married to Eugenio Galvez; JOSEFINA HENSON, married to Petronio Katigbak, JESUSA HENSON; CORAZON HENSON, married to Jose Ricafort; ALFREDO TANCHIATCO; BIENVENIDO DAVID; MARIA BONDOC CAPILI, married to Romeo Capili; and MIGUEL MANOLOTO, respondents. DECISION PARDO, J.: The case is an appeal via certiorari under Rule 45 of the Revised Rules of Court from the decision of the Court of Appeals, which affirmed with modification the decision of the Regional Trial Court, San Fernando, Pampanga, in a special civil action for eminent domain, ordering the National Power Corporation (NPC) to pay respondents landowners/claimants just compensation for the taking of their five (5) parcels of land, with an area of 63,220 square meters at P400.00, per square meter, with legal interest from September 11, 1990, plus costs of the proceedings.

On March 21, 1990, the National Power Corporation (NPC) originally instituted with the Regional Trial Court, Third Judicial District, Branch 46, San Fernando, Pampanga, a complaint[1] for eminent domain, later amended on October 11, 1990, for the taking for public use of five (5) parcels of land, owned or claimed by respondents, with a total aggregate area of 58,311 square meters, for the expansion of the NPC Mexico Sub-Station.[2] Respondents are the registered owners/claimants of the five (5) parcels of land sought to be expropriated, situated in San Jose Matulid, Mexico, Pampanga, more particularly described as follows: Parcels of rice land, being Lot 1, 2, 3, 4, and 5 of the subdivision plan Psd-03-017121 (OLT) and being a portion of Lot 212 of Mexico Cadastre, situated in the Barangay of San Jose Matulid,Municipality of Mexico, province of Pampanga, Island of Luzon. Bounded on the North by Barangay Road Calle San Jose; on the East by Lot 6, Psd-03-017121 (OLT) owned by the National Power Corporation; on the South by Lot 101, Psd-03-017121 (OLT) being an irrigation ditch; on the West by Lot 100, Psd-03-0017121 (OLT) being an irrigation ditch and Barrio road, containing an aggregate area of FIFTY EIGHT THOUSAND THREE HUNDRED ELEVEN (58,311) square meters, which parcels of land are broken down as follows with claimants: 1. Lot 1-A=43,532 sq. m.- Henson Family 2. Lot 2-A=6,823 sq. m.- Alfredo Tanchiatco, encumbered with Land Bank of the Phil. (LBP) 3. Lot 3-A=3,057 sq. m.-Bienvenido David, encumbered with LBP 4. Lot 4-A=1,438 sq. m.-Maria Bondoc Capili, encumbered with LBP 5. Lot 5-A=3,461 sq. m.-Miguel Manoloto and Henson Family Total A=58,311 sq. m. and covered by Transfer Certificate of Title No. 557 in the name of Henson, et al.; Transfer Certificate of Title No. 7131/Emancipation Patent No. A-277216 in the name of Alfredo Tanchiatco; Transfer Certificate of Title No. 7111/Emancipation Patent No. A-278086 in the name of Bienvenido David; Transfer Certificate of Title No. 7108/Emancipation Patent No. A278089 in the name of Maria B. Capili; Certificate of Land Transfer No. 4550 in the name of Miguel C. Manaloto, and Subdivision Plan Psd-03-017121 (OLT), which is a subdivision of Lot 212, Mexico Cadastre as surveyed for Josefina Katigbak, et al. Said five (5) parcels of land are agricultural/riceland covered by Operation Land Transfer (OLT) of the Department of Agrarian Reform.[3] Petitioner needed the entire area of the five (5) parcels of land, comprising an aggregate area of 58,311 square meters, for the expansion of its Mexico Subdivision.[4] On March 28, 1990, petitioner filed an urgent motion to fix the provisional value of the subject parcels of land.3 On April 20, 1990, respondents filed a motion to dismiss.4 They did not challenge petitioners right to condemn their property, but declared that the fair market value of their property was from P180.00 to P250.00 per square meter.[5]

On July 10, 1990, the trial court denied respondents motion to dismiss. The court did not declare that petitioner had a lawful right to take the property sought to be expropriated.[6] However, the court fixed the provisional value of the land at P100.00 per square meter, for a total area of 63,220[7] square meters of respondents property, to be deposited with the Provincial Treasurer of Pampanga. Petitioner deposited the amount on August 29, 1990.[8] On September 5, 1990, the trial court issued a writ of possession in favor of petitioner, and, on September 11, 1990, the courts deputy sheriff placed petitioner in possession of the subject land.[9] On November 22, 1990, and December 20, 1990, the trial court granted the motions of respondents to withdraw the deposit made by petitioner of the provisional value of their property amounting to P5,831,100.00, with a balance of P690,900.00, remaining with the Provincial Treasurer of Pampanga.[10] On April 5, 1991, the trial court issued an order appointing three (3) commissioners to aid the court in the reception of evidence to determine just compensation for the taking of the subject property. After receiving the evidence and conducting an ocular inspection, the commissioners submitted to the court their individual reports. Commisioner Mariano C. Tiglao, in his report dated September 10, 1992, recommended that the fair market value of the entire 63,220 square meters property be fixed at P350.00 per square meter. Commissioner Arnold P. Atienza, in his report dated February 24, 1993, recommended that the fair market value be fixed at P375.00 per square meter. Commissioner Victorino Orocio, in his report dated April 28, 1993, recommended that the fair market value be fixed at P170.00 per square meter.[11] However, the trial court did not conduct a hearing on any of the reports. On May 19, 1993, the trial court rendered judgment fixing the amount of just compensation to be paid by petitioner for the taking of the entire area of 63,220 square meters at P400.00 per square meter, with legal interest thereon computed from September 11, 1990, when petitioner was placed in possession of the land, plus attorneys fees of P20,000.00, and costs of the proceedings.[12] In due time, petitioner appealed to the Court of Appeals.[13] On July 23, 1997, the Court of Appeals rendered decision affirming that of the Regional Trial Court, except that the award of P20,000.00, as attorneys fees was deleted.[14] Hence, this petition for review.[15] By resolution adopted on October 8, 1997, the Court required respondents to comment on the petition within ten (10) days from notice.[16] On January 7, 1998, respondents filed their comment thereon.[17] By resolution adopted on February 2, 1998, the Court required petitioner to file a reply to the comment.[18] On August 25, 1990, petitioner filed a reply thereto.[19] We now resolve to give due course to the petition. We modify the appealed decision. As respondents did not challenge petitioners right to expropriate their property, the issue presented boils down to what is the just compensation for the taking of respondents property for the expansion of the NPCs Mexico Sub-station, situated in San Jose Matulid, Mexico, Pampanga.

The parcels of land sought to be expropriated are undeniably idle, undeveloped, raw agricultural land, bereft of any improvement. Except for the Henson family, all the other respondents were admittedly farmer beneficiaries under operation land transfer of the Department of Agrarian Reform. However, the land has been re-classified as residential. The nature and character of the land at the time of its taking is the principal criterion to determine just compensation to the landowner.[20] In this case, the trial court and the Court of Appeals fixed the value of the land at P400.00 per square meter, which was the selling price of lots in the adjacent fully developed subdivision, the Santo Domingo Village Subdivision. The land in question, however, was an undeveloped, idle land, principally agricultural in character, though re-classified as residential. Unfortunately, the trial court, after creating a board of commissioners to help it determine the market value of the land did not conduct a hearing on the report of the commissioners. The trial court fixed the fair market value of subject land in an amount equal to the value of lots in the adjacent fully developed subdivision. This finds no support in the evidence. The valuation was even higher than the recommendation of anyone of the commissioners. On the other hand, Commissioner Atienza recommended a fair market value at P375.00 per square meter. This appears to be the closest valuation to the market value of lots in the adjoining fully developed subdivision. Considering that the subject parcels of land are undeveloped raw land, the price of P375.00 per square meter would appear to the Court as the just compensation for the taking of such raw land. Consequently, we agree with Commissioner Atienzas report that the fair market value of subject parcels of land be fixed at P375.00 per square meter. We also agree with petitioner that the area of the communal irrigation canal consisting of 4,809 square meters must be excluded from the land to be expropriated. To begin with, it is excluded in the amended complaint. Hence, the trial court and the Court of Appeals erred in including the same in the area to be taken. The trial court erroneously ordered double payment for 3,611 square meters of lot 5 (portion) in the dispositive part of its decision, and, hence, this must be deleted. The trial court and the Court of Appeals correctly required petitioner to pay legal interest[21] on the compensation awarded from September 11, 1990, the date petitioner was placed in possession of the subject land, less the amount respondents had withdrawn from the deposit that petitioner made with the Provincial Treasurers Office. We, however, rule that petitioner is under its charter exempt from payment of costs of the proceedings. WHEREFORE, the decision of the Court of Appeals and that of the trial court subject of the appeal are hereby MODIFIED. We render judgment as follows: 1. The Court fixes the amount of P375.00, per square meter, as the just compensation to be paid to respondents for the taking of their property consisting of five (5) parcels of land, with a total area of 58,311 square meters, described in and covered by Transfer Certificates of Title Nos. 557, 7131, 7111, 7108 and Certificate of Land Transfer No. 4550, which parcels of land are broken down as follows: a. Lot 1-A, with an area of 43,532 square meters belonging to Lourdes Henson, Josefina Henson, Jesusa Henson and Corazon Henson;

b. Lot 2-A, with an area of 6,823 square meters belonging to Alfredo Tanchiatco; c. Lot 3-A, with an area of 3,057 square meters belonging to Bienvenido David (TCT No. 7111) d. Lot 4-A, with an area of 1,438 square meters belonging to Maria Bondoc Capili (TCT No. 7108) e. Lot 5-A, with an area of 3,461 square meters belonging to Miguel Manaloto (150 square meters), Certificate of Land Transfer No. 4550 and Henson Family (3,311 square meters), deducting therefrom the amounts they had withdrawn from the deposit of petitioner for the provisional value of said parcels of land.[22] 2. With legal interest thereon at 6% per annum commencing on September 11, 1990, until the finality of this decision, and at 12% per annum therefrom on the remaining unpaid amount until full payment. Let this decision be recorded in the office of the Register of Deeds of Pampanga. No costs in all instances. G.R. Nos. 60225-26

May 8, 1992

NATIONAL POWER CORPORATION, petitioner, vs. HONORABLE ZAIN B. ANGAS, District Judge of the Court of First Instance of Lanao del Sur, HADJI DALUMA KINIDAR, EBRA ALI and/or GASNARA ALI (intervenors), MANGORSI CASAN, CASNANGAN BATUGAN, PUNDAMARUG ATOCAL, PASAYOD PADO, DIMAAMPAO BAUTE, CASNANGAN BAUTE, DIMAPORO SUBANG, TAMBILAWAN OTE, MANISUN ATOCAL, MASACAL TOMIARA (In Civil Case No. 2277) and LACSAMAN BATUGAN, and/or GUIMBA SHIPPING & DEVELOPMENT CORPORATION, MAGANCONG DIGAYAN, MOCTARA LAMPACO, LAMPACO PASANDALAN, DIMAPORO SUBANG, HADJI DALUMA KINIDAR, DIMAAMPAO BAUTE, PANGONOTAN COSNA TAGOL, SALACOP DIMACALING, HADJI SITTIE SOHRA LINANG BATARA, BERTUDAN PIMPING and/or CADUROG PIMPING, BUTUAN TAGOL, DISANGCOPAN MARABONG, and HADJI SALIC SAWA (In Civil Case No. 2248),respondents. Lucio C. Badelles Dimnatang Saro for private respondents.

for

petitioner.

PARAS, J.: The basic issue in this original action for certiorari and mandamus filed by the National Power Corporation is whether or not, in the computation of the legal rate of interest on just compensation for expropriated lands, the law applicable is Article 2209 of the Civil Code which prescribes a 6% legal interest rate or Central Bank Circular No. 416 which fixed the legal interest rate at 12% per annum. Pending consideration of this code on the merits, petitioner seeks the issuance of a writ of preliminary injunction and/or restraining order to restrain or enjoin the respondent judge of the lower court from enforcing the herein assailed orders and from further acting or proceeding with Civil Case Nos. 2248 and 2277.

The following are the antecedents of the case: On April 13, 1974 and December 3, 1974, petitioner National Power Corporation, a governmentowned and controlled corporation and the agency through which the government undertakes the on-going infrastructure and development projects throughout the country, filed two complaints for eminent domain against private respondents with the Court of First Instance (now Regional Trial Court) of Lanao del Sur, docketed as Civil Case No. 2248 and Civil Case No. 2277, respectively. The complaint which sought to expropriate certain specified lots situated at Limogao, Saguiaran, Lanao del Sur was for the purpose of the development of hydro-electric power and production of electricity as well as the erection of such subsidiary works and constructions as may be necessarily connected therewith. Both cases were jointly tried upon agreement of the parties. After responsive pleadings were filed and issues joined, a series of hearings before court-designated commissioners were held. On June 15, 1979, a consolidated decision in Civil Cases Nos. 2248 and 2277 was rendered by the lower court, declaring and confirming that the lots mentioned and described in the complaints have entirely been lawfully condemned and expropriated by the petitioner, and ordering the latter to pay the private respondents certain sums of money as just compensation for their lands expropriated "with legal interest thereon . . . until fully paid." Two consecutive motions for reconsideration of the said consolidated decision were filed by the petitioner. The same were denied by the respondent court. Petitioner did not appeal the aforesaid consolidated decision, which became final and executory. Thus, on May 16, 1980, one of the private respondents (Sittie Sohra Batara) filed an exparte motion for the execution of the June 15, 1979 decision, praying that petitioner be directed to pay her the unpaid balance of P14,300.00 for the lands expropriated from her, including legal interest which she computed at 6% per annum. The said motion was granted by the lower court. Thereafter, the lower court directed the petitioner to deposit with its Clerk of Court the sums of money as adjudged in the joint decision dated June 15, 1979. Petitioner complied with said order and deposited the sums of money with interest computed at 6% per annum. On February 10, 1981, one of the private respondents (Pangonatan Cosna Tagol), through counsel, filed with the trial court an ex-parte motion in Civil Case No. 2248 praying, for the first time, that the legal interest on the just compensation awarded to her by the court be computed at 12% per annum as allegedly "authorized under and by virtue of Circular No. 416 of the Central Bank issued pursuant to Presidential Decree No. 116 and in a decision of the Supreme Court that legal interest allowed in the judgment of the courts, in the absence of express contract, shall be computed at 12% per annum." (Brief for Respondents, p. 3) On February 11, 1981, the lower court granted the said motion allowing 12% interest per annum. (Annex L, Petition). Subsequently, the other private respondents filed motions also praying that the legal interest on the just compensation awarded to them be computed at 12% per annum, on the basis of which the lower court issued on March 10, 1981 and August 28, 1981 orders bearing similar import. Petitioner moved for a reconsideration of the lower court's last order dated August 28, 1981, alleging that the main decision had already become final and executory with its compliance of depositing the sums of money as just compensation for the lands condemned, with legal interest

at 6% per annum; that the said main decision can no longer be modified or changed by the lower court; and that Presidential Decree No. 116 is not applicable to this case because it is Art. 2209 of the Civil Code which applies. On January 25, 1982, the lower court denied petitioner's, motion for reconsideration, stating that the rate of interest at the time of the promulgation of the June 15, 1981 decision is that prescribed by Central Bank Circular No. 416 issued pursuant to Presidential Decree No. 116, which is 12% per annum, and that it did not modify or change but merely amplified its order of August 28, 1981 in the determination of the legal interest. Petitioner brings the case to Us for a determination of which legal interest is applicable to the transaction in question. Central Bank Circular No. 416 reads: By virtue of the authority granted to it under Section 1 of Act No. 2655, as amended, otherwise known as the "Usury Law," the Monetary Board, in its Resolution No. 1622 dated July 29, 1974, has prescribed that the rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of express contract as to such rate of interest, shall be twelve per cent (12%) per annum. It is clear from the foregoing provision that the Central Bank circular applies only to loan or forbearance of money, goods or credits. This has already been settled in several cases decided by this Court. Private respondents, however, take exception to the inclusion of the term "judgments" in the said circular, claiming that such term refers to any judgment directing the payment of legal interest, which term includes the questioned judgment of the lower court in the case at bar. Private respondents' contention is bereft of merit. The term "judgments" as used in Section 1 of the Usury Law, as well as in Central Bank Circular No. 416, should be interpreted to mean only judgments involving loan or forbearance of money, goods or credits, following the principle of ejusdem generis. Under this doctrine, where general terms follow the designation of particular things or classes of persons or subjects, the general term will be construed to comprehend those things or persons of the same class or of the same nature as those specifically enumerated (Crawford, Statutory Construction, p. 191; Go Tiaco vs. Union Ins. Society of Canton, 40 Phil. 40; Mutuc vs. COMELEC, 36 SCRA 228) The purpose of the rule on ejusdem generis is to give effect to both the particular and general words, by treating the particular words as indicating the class and the general words as including all that is embraced in said class, although not specifically named by the particular words. This is justified on the ground that if the lawmaking body intended the general terms to be used in their unrestricted sense, it would have not made an enumeration of particular subjects but would have used only general terms (2 Sutherland, Statutory Construction, 3rd ed., pp. 395-400). Applying the said rule on statutory construction to Central Bank Circular No. 416, the general term "judgments" can refer only to judgments in cases involving loans or forbearance of any money, goods or credits. As significantly laid down by this Court in the case of Reformina vs. Tomol, 139 SCRA 260:

The judgments spoken of and referred to are judgments in litigations involving loans or forbearance of any money, goods or credits. Any other kind of monetary judgment which has nothing to do with, nor involving loans or forbearance of any money, goods or credits does not fall within the coverage of the said law for it is not within the ambit of the authority granted to the Central Bank. The Monetary Board may not tread on forbidden grounds. It cannot rewrite other laws. That function is vested solely with the legislative authority. It is axiomatic in legal hermeneutics that statutes should be construed as a whole and not as a series of disconnected articles and phrases. In the absence of a clear contrary intention, words and phrases in statutes should not be interpreted in isolation from one another. A word or phrase in a statute is always used in association with other words or phrases and its meaning may thus be modified or restricted by the latter. Obviously, therefore, Art. 2209 of the Civil Code, and not Central Bank Circular No. 416, is the law applicable to the case at bar. Said law reads: Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs a delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is six percent per annum. The Central Bank circular applies only to loan or forbearance of money, goods or credits and to judgments involving such loan or forbearance of money, goods or credits. This is evident not only from said circular but also from Presidential Decree No. 116, which amended Act No. 2655, otherwise known as the Usury Law. On the other hand, Art. 2209 of the Civil Code applies to transactions requiring the payment of indemnities as damages, in connection with any delay in the performance of the obligation arising therefrom other than those covering loan or forbearance of money, goods or credits. In the case at bar, the transaction involved is clearly not a loan or forbearance of money, goods or credits but expropriation of certain parcels of land for a public purpose, the payment of which is without stipulation regarding interest, and the interest adjudged by the trial court is in the nature of indemnity for damages. The legal interest required to be paid on the amount of just compensation for the properties expropriated is manifestly in the form of indemnity for damages for the delay in the payment thereof. Therefore, since the kind of interest involved in the joint judgment of the lower court sought to be enforced in this case is interest by way of damages, and not by way of earnings from loans, etc. Art. 2209 of the Civil Code shall apply. As for private respondents' argument that Central Bank Circular No. 416 impliedly repealed or modified Art. 2209 of the Civil Code, suffice it to state that repeals or even amendments by implication are not favored if two laws can be fairly reconciled. The Courts are slow to hold that one statute has repealed another by implication, and they will not make such an adjudication if they can refrain from doing so, or if they can arrive at another result by any construction which is just and reasonable. Besides, the courts will not enlarge the meaning of one act in order to decide that it repeals another by implication, nor will they adopt an interpretation leading to an adjudication of repeal by implication unless it is inevitable and a clear and explicit reason therefor can be adduced. (82 C.J.S. 479-486). In this case, Central Bank Circular No. 416 and Art. 2209 of the Civil Code contemplate different situations and apply to different transactions. In transactions involving loan or forbearance of money, goods or credits, as well as judgments relating to such loan or forbearance of money, goods or credits, the Central Bank circular

applies. It is only in such transactions or judgments where the Presidential Decree allowed the Monetary Board to dip its fingers into. On the other hand, in cases requiring the payment of indemnities as damages, in connection with any delay in the performance of an obligation other than those involving loan or forbearance of money, goods or credits, Art. 2209 of the Civil Code applies. For the Court, this is the most fair, reasonable, and logical interpretation of the two laws. We do not see any conflict between Central Bank Circular No. 416 and Art. 2209 of the Civil Code or any reason to hold that the former has repealed the latter by implication. WHEREFORE, the petition is GRANTED. The Orders promulgated on February 11, 1981, March 10, 1981, August 28, 1981 and January 25, 1982 (as to the recomputation of interest at 12% per annum) are ANNULLED and SET ASIDE. It is hereby declared that the computation of legal interest at 6% per annum is the correct and valid legal interest allowed in payments of just compensation for lands expropriated for public use to herein private respondents by the Government through the National Power Corporation. The injunction heretofore granted is hereby made permanent. No costs. G.R. No. L-12032

August 31, 1959

CITY OF BAGUIO, plaintiff-appelle, vs. THE NATIONAL WATERWORKS AND SEWERAGE AUTHORITY, defendant-appellant. City Attorney Sixto A. Domondom for appellee. Office of the Solicitor General Ambrosio Padilla, First Assistant Government Corporate Counsel Simeon Gopengco and Solicitor Troadio T. Quinzon, Jr. for appellant. BAUTISTA ANGELO, J.: Plaintiff, a municipal corporation, filed on April 25, 1956, in the Court of First Instance of Baguio, a complaint for declaratory relief against defendant, a public corporation created by Republic Act No. 1383, contending that said Act does not include within its preview the Baguio Workshop System; that assuming that it does, said Act is unconstitutional because it has the effect of depriving plaintiff of the ownership, control and operation of said waterworks system without compensation and without due process of law, and that it is oppressive, unreasonable and unjust to plaintiff and other cities, municipalities and municipal districts similarly situated. On My 22, 1956, defendant filed a motion to dismiss on the ground that Republic Act No. 1383 is a proper exercise of the police power of the State; that assuming that said Act contemplates an act of expropriation, it is still a constitutional exercise of the power of eliminate domain; that at any rate the Baguio Waterworks System is not a private property but "public works of public service" over which the Legislature has control; and that the provision of the said Act being clear and unambiguous, there is no necessity for construction. On June 21, 1956, the Court, acting on the motion to dismiss as well as on the answer and rejoinder filed by both parties, denied the motion and ordered defendant to file its answer to the complaint. On July 6, 1956, defendant filed its answer reiterating and amplifying the ground already advanced in this motion to dismiss, adding thereto that the action for the declaratory relief is improper for the reason that the Baguio waterworks System has already been transferred to defendant pursuant to Republic Act No. 1383 or, if such has not been done, there has already been a breach of said Act.

On August 14, 1956, the parties submitted a written stipulation of the facts and filed written memoranda. And after allowing plaintiff to file a suplementary complaint, the Court on November 5, 1956, rendered decision the dispositive part of which reads: "This Court, . . . holds that the workshop system of the City of Baguio falls filed within the category of 'private property', as contemplated by our constitution and may not expropriated without just compensation — and that section 8 of republic act No. 1383 provides for the exchange of the NAWASA assets for the value of workshop system of Baguio is unconstitutional as this is not 'just compensation,'" Defendant filed a motion for reconsideration, and upon its denial. It took the present appeal. The issues posed in this appeal are: (1) plaintiff's action for declatory relief is improper because there has already been a breach by plaintiff of Republic Act No. 1383 (2) Republic Act No. 1383 does not contemplates the exercise of the power of eliminate domain but the exertion of the police power of the State; and (3) assuming arguendo that Republic Act No. 1383 involves the exercise of the power of eminent domain the same does not violate our Constitution. Before we proceed with the discussion of this issues, there is need to state some facts necessarily for their determination since the proper application of the principles of law that may be pertinent would greatly depend upon them. Plaintiff is a municipal corporation organized under its Charter with principal place of business in the City of Baguio, while defendant is in the public corporation created by Republic Act No. 1383 with provincial place of business in the City of manila. Under section 2553 of its Charter, plaintiffs is maintaining the Baguio Waterworks System under a certificates of public convenience, the same being financed by its own funds, the Baguio general fund, and funds advanced by the national Government. The assets of said system as of December 31, 1955 were reported to be P1,408.795.98. The system supplies only the City of Baguio, its inhabitants, and transient visitors, and, as provided for in accordance, it grants to the employees of the City one fifth (1/5) of cubic meter free from every one peso of their total salary per annum as part of their compensation. The employees of the national Government are not given this privilege but there is a provision plaintiff Charter which says: "in consideration of the exemption from the taxation to the extensive real state holdings of the national Government within the limit of the City, of the expenses of the improvements which the Government of the said City is required to make a reason for the location therein of the offenses of the national Government, and of free services in connection of the said offices, there is created a permanent and continuing appropriation from the funds in the national Treasury not otherwise appropriated, equal to fifty per centum of the expenses of the Government of the City exclusive of this accounts which appear as expenses by reason of inter-department charges and charges against the national Government for services and supplies." The purposes for which defendants was created is expressed in section 1 of republic Act No. 1383, which we quote: Creation of the national Waterworks and Sewerage Authority;' its general purposes; Zone and extends of the jurisdiction comprised by it; domicile and place of business of the corporation. — For purposes of consolidating and centralizing all waterworks, sewerage and drainage systems in the Philippines under one control, direction and general supervision, there is hereby created a public corporation to be known as the National workshop and Sewerage authority, which shall be organized within one month after the approval of this Act.

The National Waterworks and Sewerage authority shall own and/or have jurisdiction, supervision and control over all territory now embraced by the Metropolitan Water Districts as well as all areas now served by existing government-owned waterworks in the boundaries of cities, municipalities and municipality districts in the Philippines including those served by the waterworks and wells and drills sections of the national Waterworks and Sewerage authority, any from time to time extends its territory by the admission of or the inclusion of any municipal or municipal districts in the Philippines. The jurisdiction of the national waterworks and Sewerage Authority shall extend to the construction, maintenance, operation and control of non-supporting and/or non-revenue producing water systems and sanitary works, whether undertaken at the expense of the Authority or through subsidy of the national Government as provided in Section 10 of this act. And to accomplish the above purpose, the following was provided in section 8 of the same act: Dissolution of the Metropolitan Water District; transfer to the Authority of its records, assets and liabilities; transfer to the Authority of entities, waterworks and sewerage systems in the cities, municipalities, municipal district and other government waterworks and sewerage systems. The present Metropolitan Water District created Under Act Number Two Thousand eight hundred thirty-two, as amended, is hereby dissolved, and its records, assets and liabilities are transferred to the authority. All existing government owned waterworks and sewerage systems are transferred to the National waterworks and Sewerage Authority, and in turn to pledge such assets as security for the payment of the waterworks and sewerage bonded debt. The net book value of the properties and assets of the Metropolitan Water District and of government-owned waterworks and sewerage systems in cities, municipalities, or municipal districts, and other government-owned waterworks and sewerage systems shall be received by the Authority in payment for an equal value of the assets of the National Waterworks and sewerage Authority. The references made to the Metropolitan Water District or to any existing governmentowned waterworks and sewerage system in any city, municipality or municipal district and other waterworks and sewerage system under the Bureau of Public Works, in any Act or Executive Order or Proclamation of the President of the Philippines or in any city or municipal ordinance which is still in force, shall be deemed to be a reference to the National Waterworks and Sewerage Authority created by this Act. On September 19, 1955, the President of the Philippines issued Executive Order No. 127 outlining the procedure for the transfer of government-owned waterworks and sewerage systems in the provinces, cities and municipalities to defendant and provided for a time limit for such transfer, which is "at the earliest time possible but not exceeding 90 days from the date of said order." And on March 15, 1956, defendant, implementing said Executive Order, issued Office Memorandum No. 7 providing, among other things, the following: (1) Pending the establishment of the Waterworks district offices of the Authority, District and City Engineers, shall continue to be in charge of the operation and maintenance of

all existing waterworks systems, including the repair and improvement thereof and the construction of new waterworks projects in their respective districts in accordance with the Memorandum of the Secretary of Public Works and Communications dated October 25, 1955, quoted in the Memorandum of the Director of Public Works dated October 27, 1955. Likewise, they shall continue approving vouchers and payrolls for salaries and essential services chargeable against waterworks funds heretofore, provided that said expenses do not exceed the appropriations in the approved budget for the preceeding fiscal year. (2) Pending the establishment of the Waterworks district offices of the Authority which shall ultimately include an auditing force, Provincial and City auditors shall, as heretofore, audit the accounts of the different waterworks systems in their respective jurisdictions in accordance with Provincial Auditor's Memorandum No. 151 to Provincial and City Auditors dated December 7, 1955. (3) Pending the establishment of the waterworks district offices of the Authority, provincial, city and municipal treasurers shall continue to perform the work of handling the collections and disbursements of funds of the waterworks systems and artesian wells projects in their respective jurisdictions in accordance with provincial circular of the Secretary of Finance to all provincial and City Treasurers dated November 23, 1955. (4) Provincial Waterworks Boards, provincial Boards, Municipal Boards, or City councils of cities and municipal councils of Municipalities and municipal districts ipso facto ceased to have control and supervision over waterworks systems within their respective territorial jurisdictions upon the formal organization of the National Waterworks and sewerage Authority in accordance with the provisions of Republic Act No. 1383. All budgets and plantillas of personnel of said waterworks personnel, including collectors who were formerly directly under the Provincial, City or Municipal Treasurers, whether permanent, temporary or emergency, shall be effective only after their approval by the Board of directors of the Authority. Let us now discussed the issues raised.. As regards the first issue, appellant contends that appellee's action for declaratory relief is improper because there has already been a breach of the Republic Act No. 1383, invoking section 2 of rule 66 which provides; "A contract or statue may be construed before there has been a breach thereof." This contention is untenable. To begin with, the answer filed by defendant through its counsel the Solicitor General contains a express admission of the avernment in appellee's complaint that "although Republic Act No. 1383 took effect upon its approval on June 18, 1955, and notwithstanding Executive Order No. 127 of the President, there has been no breach of said law because no actual physical turn-over of the Baguio Waterworks System has so far been made." Because of such admission, it has always been assumed in the trial court that the present action is proper because there has not been such breach so much so that appellant desisted from raising the point in the rest of the proceedings in the trial court and in the long memorandum it has submitted, for which reason the trial court made in its decision the following comment: In its memorandum, however, the NAWASA has failed to argue this point. the omission is significant and this Court takes that in any objection to the declaratory relief proceedings are waived." That appellant would now take an inconsistent stand is strange in any

event, we find that such is the situation obtaining here. Republic Act No. 1383 provides that government-owned waterworks system should be transferred to appellant at the earliest time possible, and unless by administrative action this provision is actually carried out, it cannot be said that the transfer has been effected. The most that appellant did to carry out such provision is to issue its Office memorandum No. 7 which prescribes the preparatory steps for such transfer pending the establishment of the branch office of the NAWASA that would take over the waterworks concerned, but before any definite step could be taken to comply with said directive the present action was instituted. We agree with the trial court that so far there has not been a breach of the law and that the other requisites necessary for an action for declaratory relief are present. The contention that the Republic Act No. 1383 constitutes a valid exercise of police power rather than a directive to expropriate the waterworks of the appellee by the exercise of the power of eminent domain cannot also be entertained. This is far from the intent and purpose of the law. The act does not confiscate, nor destroy, nor appropriate property belonging to the appellee. It merely directs that all waterworks belonging to cities, municipalities, and municipal districts in the Philippines be transferred to the NAWASA for the purpose of placing them under the control and supervision of one agency with a view to promoting their efficient management, but in so doing it does not confiscate them because it directs that they be paid with an equal value of the assets of the NAWASA. This is clearly inferred from the context of the law (section 8, Rep. Act No. 1383). But appellant invites our attention to some authorities purporting to show the Republic Act No. 1383 could at least be considered as a legitimate exercise of police power such that Congress may in the exercise of such power enact a law transferring Government property from one agency to another, and laying stress one said authorities it contends that although Congress cannot deprive the citizens of a municipal corporation of the use of property held in trust for their benefit it may however change the trustee with or without its consent or compensation provided the citizens are not deprived of its enjoyment. In other words, appellant invokes the principle that the transfer of property and authority by an act of Congress from one class of public officer to another where the property continues devoted to its original purpose does not impair any vested right of the city owning the property. But the authorities cited are not in point. They in substance point out that the transfer, if any, of the property of municipal corporation from one agency to another is merely done for purposes of administration, its ownership and benefits being retained by the corporation. Such is not the clear intent of Republic Act No. 1383. Here, as we have already shown, its purpose is to effect a real transfer of the ownership of the waterworks to the new agency and does not merely encompass a transfer of administration. At any rate, the authorities cited do not bear out the proposition of appellant as clearly pointed out by counsel for appellee in his brief. But it is insisted that the waterworks system of Baguio City does not have the character of patrimonial property but comes under the phrase "public works for public service" mentioned in Article 424 of the New Civil Code and as such is subjected to the control of Congress. This contention is also untenable. The Baguio Waterworks System is not like any public road, park, street or any other public property held in trust by a municipal corporation held for the benefit of the public but it is rather a property owned by appellee in its proprietary character. While the cases may differ as to the public or private character of waterworks, the weight of authority as far as the legislature is concerned classes them as private affairs. (sec. 239, Vol. I, Revised, McQuillin Municipal Corporation, p. 239; Shrik vs. City of Lancaster, 313 Pa. 158, 169 Atl. 557).

And in this jurisdiction, this court has already expressed the view that the waterworks system is patrimonial property of the city that has established it.(Mendoza vs. De Leon, 33 Phil. 509). And being owned by the municipal corporation in a proprietary character, waterworks cannot be taken away without observing the safeguards set by our Constitution for the protection of private property. While the judicial opinions on this subject are more or less uncertain in expression, and court judgment apparently conflicting, perhaps it is correct to affirm that a majority of decision recognize the private rights of the municipal corporation, and hence support the view that all its property of a distinctly private character is fully protected by the constitutional provisions protecting private property of the individual or the private corporation. Accordingly the right of state as to the private property of municipal corporation is a right of regulation to be exercised in harmony with the general policy of the state, and though broader than exists in the case of individuals, or private corporations, is not a right of appropriation. xxx

xxx

xxx

The decision maintain that the property held by a municipal corporation units private capacity is not subject to the unrestricted control of the legislature, and the municipality cannot be deprived of such property against its will, except by the exercise of eminent domain with payment of full compensation. (McQuillin Municipal Corporation, 2nd Ed., Vol. I, pp. 670-681). In its private capacity a municipal corporation is wholly different. The people of a compact community usually require certain conveniences which cannot be furnished without a franchise from the State and which are either unnecessary in the rural districts, such as a system of sewers, or parks and open spaces, or which on account of the expenses it would be financially impossible to supply except where the population is reasonably dense, such as water or gas. But in so far as the municipality is thus authorized to exercise the functions of a private corporation, it is clothed with the capacities of a private corporation and may claim its rights and immunities, even as against the sovereign, and is subject to the liabilities of such a corporation, even as against third parties. (19 R.C. L. p. 698) The attempt of appellant in having waterworks considered as public property subject to the control of Congress or one which can be regulated by the exercise of police power having failed, that question that now arises is: Does Republic Act No. 1383 provide for the automatic expropriation of the waterworks in question in the light of our Constitution? In other words, does said law comply with the requirements of section 6, Article XIII, in relation to section 1(2), Article III, of our Constitution? Section 6, Article XIII of our Constitution provides: SEC. 6. The State may, in the interest of National Welfare and defense, establish and operate industries and means of transportation and communication, and, upon payment of just compensation, transfer to public ownership utilities and other private enterprises to be operated by the Government. Section 1 (2), Article III, of our Constitution provides:

(2) Private property shall not be taken for public use without just compensation. It is clear that the State may, in the interest of National welfare, transfer to public ownership any private enterprise upon payment of just compensation. At the same time, one has to bear in mind that no person can be deprived of his property except for public use and upon payment of just compensation. There is an attempt to observe this requirement in Republic Act No. 1383 when in providing for the transfer of appellee's waterworks system to a national agency it was directed that the transfer be made upon payment of an equivalent value of the property. Has this been implemented? Has appellant actually transferred to appellee any asset of the NAWASA that may be considered just compensation for the property expropriated? There is nothing in the record to show that such was done. Neither is there anything to this effect in Office Memorandum No. 7 issued by the NAWASA in implementation of the provision of the Republic Act No. 1383. The law speaks of assets of the NAWASA by they are not specified. While the Act empowers the NAWASA to contract indebtedness and issue bonds subject to the approval of the Secretary of Finance when necessary for the transaction of its business (sec. 2, par. (L), sec. 5, Act No. 1383), no such action has been taken to comply with appellant's commitment in so far as payment of compensation of appellee is concerned. As to when such action should be taken no one knows. And unless this aspect of the law is clarified and appellee is given its due compensation, appellee cannot be deprived of its property even if appellant desires to take over its administration in line with the spirit of the law. We are therefore persuaded to conclude that the law, insofar as it expropriates the waterworks in question without providing for an effective payment of just compensation, violates our Constitution. In this respect, the decision of the trial court is correct. Wherefore, the decision appealed from is affirmed, without pronouncement as to costs.

EN BANC MACTAN-CEBU INTERNATIONAL AIRPORT G.R. No. 176625 AUTHORITY and AIR TRANSPORTATION OFFICE, Present: Petitioners, PUNO, C.J., CARPIO, CORONA, CARPIO MORALES,VELASCO, versus JR., NACHURA, LEONARDO-DE CASTRO, BRION, PERALTA,* BERSAMIN, BERNARDO L. LOZADA, SR., and the DEL CASTILLO, HEIRS OF ROSARIO MERCADO, namely, ABAD, VICENTE LOZADA, MARIO M. LOZADA, MARCIA VILLARAMA, JR., L. GODINEZ, VIRGINIA L. FLORES, BERNARDO PEREZ, and LOZADA, JR., DOLORES GACASAN, SOCORRO MENDOZA, JJ. CAFARO and ROSARIO LOZADA, represented by MARCIA LOZADA GODINEZ, Promulgated: Respondents. February 25, 2010 x------------------------------------------------------------------------------------x

DECISION NACHURA, J.: This is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking to reverse, annul, and set aside the Decision[1] dated February 28, 2006 and the Resolution[2] dated February 7, 2007 of the Court of Appeals (CA) (Cebu City), Twentieth Division, in CA-G.R. CV No. 65796. The antecedent facts and proceedings are as follows: Subject of this case is Lot No. 88-SWO-25042 (Lot No. 88), with an area of 1,017 square meters, more or less, located in Lahug, Cebu City. Its original owner was Anastacio Deiparine when the same was subject to expropriation proceedings, initiated by the Republic of the Philippines (Republic), represented by the then Civil Aeronautics Administration (CAA), for the

expansion and improvement of the Lahug Airport. The case was filed with the then Court of First Instance of Cebu, Third Branch, and docketed as Civil Case No. R-1881. As early as 1947, the lots were already occupied by the U.S. Army. They were turned over to the Surplus Property Commission, the Bureau of Aeronautics, the National Airport Corporation and then to the CAA. During the pendency of the expropriation proceedings, respondent Bernardo L. Lozada, Sr. acquired Lot No. 88 from Deiparine. Consequently, Transfer Certificate of Title (TCT) No. 9045 was issued in Lozadas name. On December 29, 1961, the trial court rendered judgment in favor of the Republic and ordered the latter to pay Lozada the fair market value of Lot No. 88, adjudged at P3.00 per square meter, with consequential damages by way of legal interest computed from November 16, 1947the time when the lot was first occupied by the airport.Lozada received the amount of P3,018.00 by way of payment. The affected landowners appealed. Pending appeal, the Air Transportation Office (ATO), formerly CAA, proposed a compromise settlement whereby the owners of the lots affected by the expropriation proceedings would either not appeal or withdraw their respective appeals in consideration of a commitment that the expropriated lots would be resold at the price they were expropriated in the event that the ATO would abandon the Lahug Airport, pursuant to an established policy involving similar cases.Because of this promise, Lozada did not pursue his appeal. Thereafter, Lot No. 88 was transferred and registered in the name of the Republic under TCT No. 25057. The projected improvement and expansion plan of the old Lahug Airport, however, was not pursued. Lozada, with the other landowners, contacted then CAA Director Vicente Rivera, Jr., requesting to repurchase the lots, as per previous agreement. The CAA replied that there might still be a need for the Lahug Airport to be used as an emergency DC-3 airport. It reiterated, however, the assurance that should this Office dispose and resell the properties which may be found to be no longer necessary as an airport, then the policy of this Office is to give priority to the former owners subject to the approval of the President.

On November 29, 1989, then President Corazon C. Aquino issued a Memorandum to the Department of Transportation, directing the transfer of general aviation operations of the Lahug Airport to the Mactan International Airport before the end of 1990 and, upon such transfer, the closure of the Lahug Airport. Sometime in 1990, the Congress of the Philippines passed Republic Act (R.A.) No. 6958, entitled An Act Creating the Mactan-Cebu International Airport Authority, Transferring Existing Assets of the Mactan International Airport and the Lahug Airport to the Authority, Vesting the Authority with Power to Administer and Operate the Mactan International Airport and the Lahug Airport, and For Other Purposes. From the date of the institution of the expropriation proceedings up to the present, the public purpose of the said expropriation (expansion of the airport) was never actually initiated, realized, or implemented. Instead, the old airport was converted into a commercial complex. Lot No. 88 became the site of a jail known as Bagong Buhay Rehabilitation Complex, while a portion thereof was occupied by squatters.[3] The old airport was converted into what is now known as the Ayala I.T. Park, a commercial area. Thus, on June 4, 1996, petitioners initiated a complaint for the recovery of possession and reconveyance of ownership of Lot No. 88. The case was docketed as Civil Case No. CEB18823 and was raffled to the Regional Trial Court (RTC), Branch 57, Cebu City. The complaint substantially alleged as follows: (a) Spouses Bernardo and Rosario Lozada were the registered owners of Lot No. 88 covered by TCT No. 9045; (b) In the early 1960s, the Republic sought to acquire by expropriation Lot No. 88, among others, in connection with its program for the improvement and expansion of the LahugAirport; (c) A decision was rendered by the Court of First Instance in favor of the Government and against the land owners, among whom was Bernardo Lozada, Sr. appealed therefrom; (d) During the pendency of the appeal, the parties entered into a compromise settlement to the effect that the subject property would be resold to the original owner at the same price when it was expropriated in the event that the Government abandons the Lahug Airport; (e) Title to Lot No. 88 was subsequently transferred to the Republic of the Philippines (TCT No. 25057);

(f) The projected expansion and improvement of the Lahug Airport did not materialize; (g) Plaintiffs sought to repurchase their property from then CAA Director Vicente Rivera. The latter replied by giving as assurance that priority would be given to the previous owners, subject to the approval of the President, should CAA decide to dispose of the properties; (h) On November 29, 1989, then President Corazon C. Aquino, through a Memorandum to the Department of Transportation and Communications (DOTC), directed the transfer of general aviation operations at the Lahug Airport to the Mactan-Cebu International Airport Authority; (i) Since the public purpose for the expropriation no longer exists, the property must be returned to the plaintiffs.[4]

In their Answer, petitioners asked for the immediate dismissal of the complaint. They specifically denied that the Government had made assurances to reconvey Lot No. 88 to respondents in the event that the property would no longer be needed for airport operations. Petitioners instead asserted that the judgment of condemnation was unconditional, and respondents were, therefore, not entitled to recover the expropriated property notwithstanding non-use or abandonment thereof. After pretrial, but before trial on the merits, the parties stipulated on the following set of facts: (1) The lot involved is Lot No. 88-SWO-25042 of the Banilad Estate, situated in the City of Cebu, containing an area of One Thousand Seventeen (1,017) square meters, more or less; (2) The property was expropriated among several other properties in Lahug in favor of the Republic of the Philippines by virtue of a Decision dated December 29, 1961 of the CFI of Cebu in Civil Case No. R-1881; (3) The public purpose for which the property was expropriated was for the purpose of the Lahug Airport; (4) After the expansion, the property was transferred in the name of MCIAA; [and] (5) On November 29, 1989, then President Corazon C. Aquino directed the Department of Transportation and Communication to transfer general aviation operations of the Lahug Airport to the Mactan-Cebu International Airport Authority and to close the Lahug Airport after such transfer[.] [5]

During trial, respondents presented Bernardo Lozada, Sr. as their lone witness, while petitioners presented their own witness, Mactan-Cebu International Airport Authority legal assistant Michael Bacarisas. On October 22, 1999, the RTC rendered its Decision, disposing as follows: WHEREFORE, in the light of the foregoing, the Court hereby renders judgment in favor of the plaintiffs, Bernardo L. Lozada, Sr., and the heirs of Rosario Mercado, namely, Vicente M. Lozada, Marcia L. Godinez, Virginia L. Flores, Bernardo M. Lozada, Jr., Dolores L. Gacasan, Socorro L. Cafaro and Rosario M. Lozada, represented by their attorney-in-fact Marcia Lozada Godinez, and against defendants Cebu-Mactan International Airport Authority (MCIAA) and Air Transportation Office (ATO): 1. ordering MCIAA and ATO to restore to plaintiffs the possession and ownership of their land, Lot No. 88 Psd-821 (SWO-23803), upon payment of the expropriation price to plaintiffs; and 2. ordering the Register of Deeds to effect the transfer of the Certificate of Title from defendant[s] to plaintiffs on Lot No. [88], cancelling TCT No. 20357 in the name of defendant MCIAA and to issue a new title on the same lot in the name of Bernardo L. Lozada, Sr. and the heirs of Rosario Mercado, namely: Vicente M. Lozada, Mario M. Lozada, Marcia L. Godinez, Virginia L. Flores, Bernardo M. Lozada, Jr., Dolores L. Gacasan, Socorro L. Cafaro and Rosario M. Lozada. No pronouncement as to costs. SO ORDERED.[6]

Aggrieved, petitioners interposed an appeal to the CA. After the filing of the necessary appellate briefs, the CA rendered its assailed Decision dated February 28, 2006, denying petitioners appeal and affirming in toto the Decision of the RTC, Branch 57, Cebu City. Petitioners motion for reconsideration was, likewise, denied in the questioned CA Resolution dated February 7, 2007. Hence, this petition arguing that: (1) the respondents utterly failed to prove that there was a repurchase agreement or compromise settlement between them and the Government; (2) the judgment in Civil Case No. R-1881 was absolute and unconditional, giving title in fee simple to the Republic; and (3) the respondents claim of verbal assurances from government officials violates the Statute of Frauds.

The petition should be denied. Petitioners anchor their claim to the controverted property on the supposition that the Decision in the pertinent expropriation proceedings did not provide for the condition that should the intended use of Lot No. 88 for the expansion of the Lahug Airport be aborted or abandoned, the property would revert to respondents, being its former owners. Petitioners cite, in support of this position, Fery v. Municipality of Cabanatuan,[7] which declared that the Government acquires only such rights in expropriated parcels of land as may be allowed by the character of its title over the properties If x x x land is expropriated for a particular purpose, with the condition that when that purpose is ended or abandoned the property shall return to its former owner, then, of course, when the purpose is terminated or abandoned the former owner reacquires the property so expropriated. If x x x land is expropriated for a public street and the expropriation is granted upon condition that the city can only use it for a public street, then, of course, when the city abandons its use as a public street, it returns to the former owner, unless there is some statutory provision to the contrary. x x x. If, upon the contrary, however, the decree of expropriation gives to the entity a fee simple title, then, of course, the land becomes the absolute property of the expropriator, whether it be the State, a province, or municipality, and in that case the non-user does not have the effect of defeating the title acquired by the expropriation proceedings. x x x. When land has been acquired for public use in fee simple, unconditionally, either by the exercise of eminent domain or by purchase, the former owner retains no right in the land, and the public use may be abandoned, or the land may be devoted to a different use, without any impairment of the estate or title acquired, or any reversion to the former owner. x x x.[8]

Contrary to the stance of petitioners, this Court had ruled otherwise in Heirs of Timoteo Moreno and Maria Rotea v. Mactan-Cebu International Airport Authority,[9] thus Moreover, respondent MCIAA has brought to our attention a significant and telling portion in the Decision in Civil Case No. R-1881 validating our discernment that the expropriation by the predecessors of respondent was ordered under the running impression that Lahug Airport would continue in operation As for the public purpose of the expropriation proceeding, it cannot now be doubted. Although Mactan Airport is being constructed, it does not take away the actual usefulness and importance of the Lahug Airport: it is handling the air traffic both civilian and military. From it aircrafts fly to Mindanao and Visayas and pass thru it on their flights to the North and Manila. Then, no evidence was adduced to show how soon is the Mactan Airport to

be placed in operation and whether the Lahug Airportwill be closed immediately thereafter. It is up to the other departments of the Government to determine said matters. The Court cannot substitute its judgment for those of the said departments or agencies. In the absence of such showing, the Court will presume that the Lahug Airport will continue to be in operation (emphasis supplied). While in the trial in Civil Case No. R-1881 [we] could have simply acknowledged the presence of public purpose for the exercise of eminent domain regardless of the survival of Lahug Airport, the trial court in its Decision chose not to do so but instead prefixed its finding of public purpose upon its understanding that Lahug Airport will continue to be in operation. Verily, these meaningful statements in the body of the Decision warrant the conclusion that the expropriated properties would remain to be so until it was confirmed that Lahug Airport was no longer in operation. This inference further implies two (2) things: (a) after the Lahug Airport ceased its undertaking as such and the expropriated lots were not being used for any airport expansion project, the rights vis--vis the expropriated Lots Nos. 916 and 920 as between the State and their former owners, petitioners herein, must be equitably adjusted; and (b) the foregoing unmistakable declarations in the body of the Decision should merge with and become an intrinsic part of the fallo thereof which under the premises is clearly inadequate since the dispositive portion is not in accord with the findings as contained in the body thereof.[10]

Indeed, the Decision in Civil Case No. R-1881 should be read in its entirety, wherein it is apparent that the acquisition by the Republic of the expropriated lots was subject to the condition that the Lahug Airport would continue its operation. The condition not having materialized because the airport had been abandoned, the former owner should then be allowed to reacquire the expropriated property.[11] On this note, we take this opportunity to revisit our ruling in Fery, which involved an expropriation suit commenced upon parcels of land to be used as a site for a public market. Instead of putting up a public market, respondent Cabanatuan constructed residential houses for lease on the area. Claiming that the municipality lost its right to the property taken since it did not pursue its public purpose, petitioner Juan Fery, the former owner of the lots expropriated, sought to recover his properties. However, as he had admitted that, in 1915, respondent Cabanatuan acquired a fee simple title to the lands in question, judgment was rendered in favor of the municipality, following American jurisprudence, particularly City of Fort Wayne v. Lake Shore & M.S. RY. Co.,[12] McConihay v. Theodore Wright,[13] and Reichling v. Covington Lumber Co.,[14] all uniformly holding that the transfer to a third party of the expropriated real property, which necessarily resulted in the abandonment of the particular

public purpose for which the property was taken, is not a ground for the recovery of the same by its previous owner, the title of the expropriating agency being one of fee simple. Obviously, Fery was not decided pursuant to our now sacredly held constitutional right that private property shall not be taken for public use without just compensation.[15] It is well settled that the taking of private property by the Governments power of eminent domain is subject to two mandatory requirements: (1) that it is for a particular public purpose; and (2) that just compensation be paid to the property owner. These requirements partake of the nature of implied conditions that should be complied with to enable the condemnor to keep the property expropriated.[16] More particularly, with respect to the element of public use, the expropriator should commit to use the property pursuant to the purpose stated in the petition for expropriation filed, failing which, it should file another petition for the new purpose. If not, it is then incumbent upon the expropriator to return the said property to its private owner, if the latter desires to reacquire the same. Otherwise, the judgment of expropriation suffers an intrinsic flaw, as it would lack one indispensable element for the proper exercise of the power of eminent domain, namely, the particular public purpose for which the property will be devoted. Accordingly, the private property owner would be denied due process of law, and the judgment would violate the property owners right to justice, fairness, and equity. In light of these premises, we now expressly hold that the taking of private property, consequent to the Governments exercise of its power of eminent domain, is always subject to the condition that the property be devoted to the specific public purpose for which it was taken. Corollarily, if this particular purpose or intent is not initiated or not at all pursued, and is peremptorily abandoned, then the former owners, if they so desire, may seek the reversion of the property, subject to the return of the amount of just compensation received. In such a case, the exercise of the power of eminent domain has become improper for lack of the required factual justification.[17] Even without the foregoing declaration, in the instant case, on the question of whether respondents were able to establish the existence of an oral compromise agreement that entitled them to repurchase Lot No. 88 should the operations of the Lahug Airport be abandoned, we rule in the affirmative.

It bears stressing that both the RTC, Branch 57, Cebu and the CA have passed upon this factual issue and have declared, in no uncertain terms, that a compromise agreement was, in fact, entered into between the Government and respondents, with the former undertaking to resell Lot No. 88 to the latter if the improvement and expansion of the Lahug Airport would not be pursued. In affirming the factual finding of the RTC to this effect, the CA declared Lozadas testimony is cogent. An octogenarian widower-retiree and a resident of Moon Park, California since 1974, he testified that government representatives verbally promised him and his late wife while the expropriation proceedings were on-going that the government shall return the property if the purpose for the expropriation no longer exists. This promise was made at the premises of the airport. As far as he could remember, there were no expropriation proceedings against his property in 1952 because the first notice of expropriation he received was in 1962. Based on the promise, he did not hire a lawyer. Lozada was firm that he was promised that the lot would be reverted to him once the public use of the lot ceases.He made it clear that the verbal promise was made in Lahug with other lot owners before the 1961 decision was handed down, though he could not name the government representatives who made the promise. It was just a verbal promise; nevertheless, it is binding. The fact that he could not supply the necessary details for the establishment of his assertions during crossexamination, but that When it will not be used as intended, it will be returned back, we just believed in the government, does not dismantle the credibility and truthfulness of his allegation. This Court notes that he was 89 years old when he testified in November 1997 for an incident which happened decades ago. Still, he is a competent witness capable of perceiving and making his perception known. The minor lapses are immaterial. The decision of the competency of a witness rests primarily with the trial judge and must not be disturbed on appeal unless it is clear that it was erroneous. The objection to his competency must be made before he has given any testimony or as soon as the incompetency becomes apparent. Though Lozada is not part of the compromise agreement,[18] he nevertheless adduced sufficient evidence to support his claim.[19]

As correctly found by the CA, unlike in Mactan Cebu International Airport Authority v. Court of Appeals,[20] cited by petitioners, where respondent therein offered testimonies which were hearsay in nature, the testimony of Lozada was based on personal knowledge as the assurance from the government was personally made to him. His testimony on cross-examination destroyed neither his credibility as a witness nor the truthfulness of his words. Verily, factual findings of the trial court, especially when affirmed by the CA, are binding and conclusive on this Court and may not be reviewed. A petition for certiorari under Rule 45 of the Rules of Court contemplates only questions of law and not of fact. [21] Not one of the exceptions to this rule is present in this case to warrant a reversal of such findings.

As regards the position of petitioners that respondents testimonial evidence violates the Statute of Frauds, suffice it to state that the Statute of Frauds operates only with respect to executory contracts, and does not apply to contracts which have been completely or partially performed, the rationale thereof being as follows: In executory contracts there is a wide field for fraud because unless they be in writing there is no palpable evidence of the intention of the contracting parties. The statute has precisely been enacted to prevent fraud. However, if a contract has been totally or partially performed, the exclusion of parol evidence would promote fraud or bad faith, for it would enable the defendant to keep the benefits already delivered by him from the transaction in litigation, and, at the same time, evade the obligations, responsibilities or liabilities assumed or contracted by him thereby.[22]

In this case, the Statute of Frauds, invoked by petitioners to bar the claim of respondents for the reacquisition of Lot No. 88, cannot apply, the oral compromise settlement having been partially performed. By reason of such assurance made in their favor, respondents relied on the same by not pursuing their appeal before the CA. Moreover, contrary to the claim of petitioners, the fact of Lozadas eventual conformity to the appraisal of Lot No. 88 and his seeking the correction of a clerical error in the judgment as to the true area of Lot No. 88 do not conclusively establish that respondents absolutely parted with their property. To our mind, these acts were simply meant to cooperate with the government, particularly because of the oral promise made to them. The right of respondents to repurchase Lot No. 88 may be enforced based on a constructive trust constituted on the property held by the government in favor of the former. On this note, our ruling in Heirs of Timoteo Moreno is instructive, viz.: Mactan-Cebu International Airport Authority is correct in stating that one would not find an express statement in the Decision in Civil Case No. R-1881 to the effect that the [condemned] lot would return to [the landowner] or that [the landowner] had a right to repurchase the same if the purpose for which it was expropriated is ended or abandoned or if the property was to be used other than as the Lahug Airport. This omission notwithstanding, and while the inclusion of this pronouncement in the judgment of condemnation would have been ideal, such precision is not absolutely necessary nor is it fatal to the cause of petitioners herein. No doubt, the return or repurchase of the condemned properties of petitioners could be readily justified as the manifest legal effect or consequence of the trial courts underlying presumption that Lahug Airport will continue to be in operation when it granted the complaint for eminent domain and the airport discontinued its activities.

The predicament of petitioners involves a constructive trust, one that is akin to the implied trust referred to in Art. 1454 of the Civil Code, If an absolute conveyance of property is made in order to secure the performance of an obligation of the grantor toward the grantee, a trust by virtue of law is established. If the fulfillment of the obligation is offered by the grantor when it becomes due, he may demand the reconveyance of the property to him. In the case at bar, petitioners conveyed Lots No. 916 and 920 to the government with the latter obliging itself to use the realties for the expansion of Lahug Airport; failing to keep its bargain, the government can be compelled by petitioners to reconvey the parcels of land to them, otherwise, petitioners would be denied the use of their properties upon a state of affairs that was not conceived nor contemplated when the expropriation was authorized. Although the symmetry between the instant case and the situation contemplated by Art. 1454 is not perfect, the provision is undoubtedly applicable. For, as explained by an expert on the law of trusts: The only problem of great importance in the field of constructive trust is to decide whether in the numerous and varying fact situations presented to the courts there is a wrongful holding of property and hence a threatened unjust enrichment of the defendant. Constructive trusts are fictions of equity which are bound by no unyielding formula when they are used by courts as devices to remedy any situation in which the holder of legal title may not in good conscience retain the beneficial interest. In constructive trusts, the arrangement is temporary and passive in which the trustees sole duty is to transfer the title and possession over the property to the plaintiff-beneficiary. Of course, the wronged party seeking the aid of a court of equity in establishing a constructive trust must himself do equity. Accordingly, the court will exercise its discretion in deciding what acts are required of the plaintiffbeneficiary as conditions precedent to obtaining such decree and has the obligation to reimburse the trustee the consideration received from the latter just as the plaintiff-beneficiary would if he proceeded on the theory of rescission. In the good judgment of the court, the trustee may also be paid the necessary expenses he may have incurred in sustaining the property, his fixed costs for improvements thereon, and the monetary value of his services in managing the property to the extent that plaintiff-beneficiary will secure a benefit from his acts. The rights and obligations between the constructive trustee and the beneficiary, in this case, respondent MCIAA and petitioners over Lots Nos. 916 and 920, are echoed in Art. 1190 of the Civil Code, When the conditions have for their purpose the extinguishment of an obligation to give, the parties, upon the fulfillment of said conditions, shall return to each other what they have received x x x In case of the loss, deterioration or improvement of the thing, the provisions which, with respect to the debtor, are laid down in the preceding article shall be applied to the party who is bound to return x x x.[23]

On the matter of the repurchase price, while petitioners are obliged to reconvey Lot No. 88 to respondents, the latter must return to the former what they received as just compensation for

the expropriation of the property, plus legal interest to be computed from default, which in this case runs from the time petitioners comply with their obligation to respondents. Respondents must likewise pay petitioners the necessary expenses they may have incurred in maintaining Lot No. 88, as well as the monetary value of their services in managing it to the extent that respondents were benefited thereby. Following Article 1187[24] of the Civil Code, petitioners may keep whatever income or fruits they may have obtained from Lot No. 88, and respondents need not account for the interests that the amounts they received as just compensation may have earned in the meantime. In accordance with Article 1190[25] of the Civil Code vis--vis Article 1189, which provides that (i)f a thing is improved by its nature, or by time, the improvement shall inure to the benefit of the creditor x x x, respondents, as creditors, do not have to pay, as part of the process of restitution, the appreciation in value of Lot No. 88, which is a natural consequence of nature and time.[26] WHEREFORE, the petition is DENIED. The February 28, 2006 Decision of the Court of Appeals, affirming the October 22, 1999 Decision of the Regional Trial Court, Branch 87, Cebu City, and its February 7, 2007 Resolution are AFFIRMED with MODIFICATION as follows: 1. Respondents are ORDERED to return to petitioners the just compensation they received for the expropriation of Lot No. 88, plus legal interest, in the case of default, to be computed from the time petitioners comply with their obligation to reconvey Lot No. 88 to them; 2. Respondents are ORDERED to pay petitioners the necessary expenses the latter incurred in maintaining Lot No. 88, plus the monetary value of their services to the extent that respondents were benefited thereby; 3. Petitioners are ENTITLED to keep whatever fruits and income they may have obtained from Lot No. 88; and 4. Respondents are also ENTITLED to keep whatever interests the amounts they received as just compensation may have earned in the meantime, as well as the appreciation in value of Lot No. 88, which is a natural consequence of nature and time;

In light of the foregoing modifications, the case is REMANDED to the Regional Trial Court, Branch 57, Cebu City, only for the purpose of receiving evidence on the amounts that respondents will have to pay petitioners in accordance with this Courts decision. No costs.