Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

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.

SO ORDERED.

Fernan (Chairman), Feliciano, Bidin and Cortes, JJ., concur.

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

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 Rein-Del 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

Alignment 2

(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 Lots Improvement Lots

Residential

Commercial

Industrial

Church

Educational

TOTAL

(2) Relative value of properties affected:

Lots Improvements Total

Alignment 1 P9,300,136 P5,928,680 P15,228,816

Alignment 2 8,314,890 6,644,130 14,959,020

Difference P269,796

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 soul-searching 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.

SO ORDERED.

Teehankee, Acting C.J., Makasiar, Guerrero, and Melencio-Herrera Herrera, JJ., concur.

 

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

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.

SO ORDERED.

Narvasa, Griño-Aquino and Medialdea, JJ., concur.

 

 

Separate Opinions

 

CRUZ, J., concurring:

While the ponencia is plain enough, I wish to make it even plainer that B.P. Blg. 340 is not a legislative reversal of our finding in De Knecht v. Bautista, 100 SCRA 660, that the expropriation of the petitioner's property was arbitrary. As Justice Gancayco clearly points out, supervening events have changed the factual basis of that decision to justify the subsequent enactment of the statute. If we are sustaining that legislation, it is not because we concede that the lawmakers can nullify the findings of the Court in the exercise of its discretion. It is simply because we ourselves have found that under the changed situation, the present expropriation is no longer arbitrary.

I must add that this decision is not a reversal either of the original De Knecht case, which was decided under a different set of facts.

 

Separate Opinions

CRUZ, J., concurring:

While the ponencia is plain enough, I wish to make it even plainer that B.P. Blg. 340 is not a legislative reversal of our finding in De Knecht v. Bautista, 100 SCRA 660, that the expropriation of the petitioner's property was arbitrary. As Justice Gancayco clearly points out, supervening events have changed the factual basis of that decision to justify the subsequent enactment of the statute. If we are sustaining that legislation, it is not because we concede that the lawmakers can nullify the findings of the Court in the exercise of its discretion. It is simply because we ourselves

have found that under the changed situation, the present expropriation is no longer arbitrary.

I must add that this decision is not a reversal either of the original De Knecht case, which was decided under a different set of facts.

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 136349             January 23, 2006

LOURDES DE LA PAZ MASIKIP, Petitioner, vs.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 APPEALS, Respondents.

 

D E C I S I O N

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 Decision1 of the Court of Appeals dated October 31, 1997 in CA-G.R. SP No. 41860 affirming the Order2 of the Regional Trial Court, Branch 165, Pasig City, dated May 7, 1996 in S.C.A. No. 873. Likewise assailed is the Resolution3 of the same court dated November 20, 1998 denying petitioner’s 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 petitioner’s 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 DEFENDANT’S 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

PLAINTIFF’S 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. Petitioner’s 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 PETITIONER’S 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 QUO’S ORDER DATED 07 MAY 1996 AND 31 JULY 1996, WHICH WERE AFFIRMED BY THE COURT OF APPEALS, EFFECTIVELY AMOUNT TO THE TAKING OF PETITIONER’S 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 PASIG’S COMPLAINT DATED 07 APRIL 1995 TO JUSTIFY THE COURT A QUO’S DENIAL OF PETITIONER’S 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 plaintiff’s 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 defendant’s property for the use specified in the complaint. All that the law requires is that a copy of the said motion be served on plaintiff’s 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 petitioner’s 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 petitioner’s property. Our scrutiny of the records shows that the Certification14 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. Petitioner’s 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 one’s 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.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

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.

MENDOZA, J.:

This is a petition for review of the decision1 of the Court of Appeals which affirmed the decision of the Regional Trial Court, Branch 26, Surallah, South Cotabato, ordering the National Irrigation Administration (NIA for brevity) to pay respondent the amount of P107,517.60 as just compensation for the taking of the latter’s property.

The facts are as follows:

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

Sometime in 1983, a Right-of-Way agreement was executed between respondent and the NIA (Exh. 1). The NIA then paid respondent the amount of P4,180.00 as Right-of-Way damages. Respondent subsequently executed an Affidavit of Waiver of Rights and Fees whereby she waived any compensation for damages to crops and improvements which she suffered as a result of the construction of a right-of-way on her property (Exh. 2). The same year, petitioner offered respondent the sum of P35,000.00 by way of amicable settlement pursuant to Executive Order No. 1035, §18, which provides in part that ―

Financial assistance may also be given to owners of lands acquired under C.A. 141, as amended, for the area or portion subject to the reservation under Section 12 thereof in such amounts as may be determined by the implementing agency/instrumentality concerned in consultation with the Commission on Audit and the assessor’s office concerned.

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

Petitioner, through the Office of the Solicitor-General, filed an Answer, in which he admitted that NIA constructed an irrigation canal over the property of the plaintiff and that NIA paid a certain landowner whose property had been taken for irrigation purposes, but petitioner interposed the defense that: (1) the government had not consented to be sued; (2) the total area used by the NIA for its irrigation canal was only 2.27

hectares, not 24,600 square meters; and (3) respondent was not entitled to compensation for the taking of her property considering that she secured title over the property by virtue of a homestead patent under C.A. No. 141.

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

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

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

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

The issues in this case are:

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

2. WHETHER OR NOT LAND GRANTED BY VIRTUE OF A HOMESTEAD PATENT AND SUBSEQUENTLY REGISTERED UNDER PRESIDENTIAL DECREE 1529 CEASES TO BE PART OF THE PUBLIC DOMAIN.

3. WHETHER OR NOT THE VALUE OF JUST COMPENSATION SHALL BE DETERMINED FROM THE TIME OF THE TAKING OR FROM THE TIME OF THE FINALITY OF THE DECISION.

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

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

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

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

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

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

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

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

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

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

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

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

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

. . . .

Third. Any public highway, way, private way established by law, or any government irrigation canal or lateral thereof, where the certificate of title does not state that the boundaries of such highway, way, irrigation canal or lateral thereof, have been determined.

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

In this case, the irrigation canal constructed by the NIA on the contested property was built only on October 6, 1981, several years after the

property had been registered on May 13, 1976. Accordingly, prior expropriation proceedings should have been filed and just compensation paid to the owner thereof before it could be taken for public use.

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

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

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

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

It is now provided that ―

SEC. 4. Order of expropriation. ― 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. Burgos11 that the price of the land at the time of taking, not its value after the passage of time, represents the true value to be paid as just compensation. It was, therefore, error for the Court of Appeals to rule that the just compensation to be paid to respondent should be determined as of the filing of the complaint in 1990, and not the time of its taking by the NIA in 1981, because petitioner was allegedly remiss in its obligation to pay respondent, and it was respondent who filed the complaint. In the case of Burgos,12 it was also the property owner who brought the action for compensation against the government after 25 years since the taking of his property for the construction of a road.

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

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

In this case, the proper valuation for the property in question is P16,047.61 per hectare, the price level for 1982, based on the appraisal report submitted by the commission (composed of the provincial treasurer, assessor, and auditor of South Cotabato) constituted by the

trial court to make an assessment of the expropriated land and fix the price thereof on a per hectare basis.14

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

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

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

WHEREFORE, premises considered, the assailed decision of the Court of Appeals is hereby AFFIRMED with MODIFICATION to the extent that the just compensation for the contested property be paid to respondent in the amount of P16,047.61 per hectare, with interest at the legal rate of six percent (6%) per annum from the time of taking until full payment is made. Costs against petitioner.1âwphi1.nêt

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

 

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 P2,300,0005, 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 world-wide 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.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

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),

x x x           x x x          x x x

"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),

x x x           x x x          x x x

"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:

x x x           x x x          x x x

"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.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

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 1 and 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. 4 The 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.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. 170846             February 6, 2007

NATIONAL POWER CORPORATION, Petitioner, vs.AURELLANO S. TIANGCO, LOURDES S. TIANGCO and NESTOR S. TIANGCO, Respondents.

D E C I S I O N

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 P81,204.00, 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 P21,000.00 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 P30.00 per square meter or P582,690.005 in the aggregate; and for the improvements thereon, Afuang placed a valuation of P2,093,950.00. The figures are in contrast with the respondents’ own valuation of P600,600.00, for the area, and P4,935,500.00, 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 P2.09 per square meter, or P40,594.07 for the entire 19,423 square meters needed by NPC, and not the P30.00 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 ofP324,750.00 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 atP30.00 per square meter; for the year 1992, at P80.00 per square meter; and for year 1994, at P100.00 per square meter. Respondents maintain that the price of P30.00 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 P2.09 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 P913,122.00 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 P116,538.00, 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 theamount 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 P325,025.00 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 ofP325,025.00 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 P116,538.00, 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 P325,025.00 for the improvements, with legal interest from the time of actual possession by the petitioner.

No pronouncement as to costs.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

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 5and Manotok v. National Food Authority. 6 Moreover, the just compensation contemplated by the Bill of Rights is payable in money or in cash and not in the form of bonds or other things of value.

In considering the rentals as advance payment on the land, the executive order also deprives the petitioners of their property rights as protected by due process. The equal protection clause is also violated because the order places the burden of solving the agrarian problems on the owners only of agricultural lands. No similar obligation is imposed on the owners of other properties.

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

In his Comment, the Solicitor General stresses that P.D. No. 27 has already been upheld in the earlier cases 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, 24 for example, where a law required the transfer of all municipal waterworks systems to the NAWASA in exchange for its assets of equivalent value, the Court held that the power being exercised was eminent domain because the property involved was wholesome and intended for a public use. Property condemned under the police power is noxious or intended for a noxious purpose, such as a building on the verge of collapse, which should be demolished for the public safety, or obscene materials, which should be destroyed in the interest of public morals. The confiscation of such property is not compensable, unlike the taking of property under the power of expropriation, which requires the payment of just compensation to the owner.

In the case of Pennsylvania Coal Co. v. Mahon, 25 Justice Holmes laid down the limits of the police power in a famous aphorism: "The general rule at least is that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking." The regulation that went "too far" was a law prohibiting mining which might cause the subsidence of structures for human habitation constructed on the land surface. This was resisted by a coal company which had earlier granted a deed to the land over its mine but reserved all mining rights thereunder, with the grantee assuming all risks and waiving any damage claim. The Court held the law could not be sustained without compensating the grantor. Justice Brandeis filed a lone dissent in which he argued that there was a valid exercise of the police power. He said:

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

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

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

The Berman case sustained a redevelopment project and the improvement of blighted areas in the District of Columbia as a proper exercise of the police power. On the role of eminent domain in the attainment of this purpose, Justice Douglas declared:

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

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

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

In Penn Central Transportation Co. v. New York City, 29 decided by a 6-3 vote in 1978, the U.S Supreme Court sustained the respondent's Landmarks Preservation Law under which the owners of the Grand Central Terminal had not been allowed to construct a multi-story office building over the Terminal, which had been designated a historic landmark. Preservation of the landmark was held to be a valid objective of the police power. The problem, however, was that the owners of the Terminal would

be deprived of the right to use the airspace above it although other landowners in the area could do so over their respective properties. While insisting that there was here no taking, the Court nonetheless recognized certain compensatory rights accruing to Grand Central Terminal which it said would "undoubtedly mitigate" the loss caused by the regulation. This "fair compensation," as he called it, was explained by Prof. Costonis in this wise:

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

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

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

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

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

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

Equal protection simply means that all persons or things similarly situated must be treated alike both as to the rights conferred and the liabilities imposed. 33 The petitioners have not shown that they belong to a different class and entitled to a different treatment. The argument that not only landowners but also owners of other properties must be made to share the burden of implementing land reform must be rejected. There is a substantial distinction between these two classes of owners that is clearly visible except to those who will not see. There is no need to elaborate on this matter. In any event, the Congress is allowed a wide leeway in providing for a valid classification. Its decision is accorded recognition and respect by the courts of justice except only where its discretion is abused to the detriment of the Bill of Rights.

It is worth remarking at this juncture that a statute may be sustained under the police power only if there is a concurrence of the lawful subject and the lawful method. Put otherwise, the interests of the public generally as distinguished from those of a particular class require the interference of the State and, no less important, the means employed are reasonably necessary for the attainment of the purpose sought to be achieved and not unduly oppressive upon individuals. 34 As the subject and purpose of agrarian reform have been laid down by the Constitution itself, we may say that the first requirement has been satisfied. What remains to be examined is the validity of the method employed to achieve the constitutional goal.

One of the basic principles of the democratic system is that where the rights of the individual are concerned, the end does not justify the means. It is not enough that there be a valid objective; it is also necessary that the means employed to pursue it be in keeping with the Constitution.

Mere expediency will not excuse constitutional shortcuts. There is no question that not even the strongest moral conviction or the most urgent public need, subject only to a few notable exceptions, will excuse the bypassing of an individual's rights. It is no exaggeration to say that a, person invoking a right guaranteed under Article III of the Constitution is a majority of one even as against the rest of the nation who would deny him that right.

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

This brings us now to the power of eminent domain.

IV

Eminent domain is an inherent power of the State that enables it to forcibly acquire private lands intended for public use upon payment of just compensation to the owner. Obviously, there is no need to expropriate where the owner is willing to sell under terms also acceptable to the purchaser, in which case an ordinary deed of sale may be agreed upon by the parties. 35 It is only where the owner is unwilling to sell, or cannot accept the price or other conditions offered by the vendee, that the power of eminent domain will come into play to assert the paramount authority of the State over the interests of the property owner. Private rights must then yield to the irresistible demands of the public interest on the time-honored justification, as in the case of the police power, that the welfare of the people is the supreme law.

But for all its primacy and urgency, the power of expropriation is by no means absolute (as indeed no power is absolute). The limitation is found in the constitutional injunction that "private property shall not be taken for public use without just compensation" and in the abundant jurisprudence that has evolved from the interpretation of this principle. Basically, the requirements for a proper exercise of the power are: (1) public use and (2) just compensation.

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

We are not justified in reviewing that discretion in the absence of a clear showing that it has been abused.

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

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

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

The legislature and the executive have been seen fit, in their wisdom, to include in the CARP the redistribution of private landholdings (even as the distribution of public agricultural lands is first provided for, while also continuing 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.

x x x

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.

x x x

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

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

Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction for final determination of just compensation.

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

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

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

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

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

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

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

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

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

(2) Shares of stock in government-owned or controlled corporations, LBP preferred shares, physical assets or other qualified investments in accordance with guidelines set by the PARC;

(3) Tax credits which can be used against any tax liability;

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

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

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

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

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

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

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

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

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

(vii) Payment for fees of the immediate family of the original bondholder in government 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.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

 

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 1992 6 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 18 21 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.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

 

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.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

 

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.

 

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. A-278089 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 agricultrual/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 petitioner's 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 court's 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 attorney's 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 attorney's 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 petitioner's 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 NPC's 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 Atienza's 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 Treasurer's 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.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

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 for petitioner.Dimnatang Saro for private respondents.

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 government-owned 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 ex-parte 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.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

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 government-owned 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.

x x x           x x x           x x x

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.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-24440             March 28, 1968

THE PROVINCE OF ZAMBOANGA DEL NORTE, plaintiff-appellee, vs.CITY OF ZAMBOANGA, SECRETARY OF FINANCE and COMMISSIONER OF INTERNAL REVENUE,defendants-appellants.

Fortugaleza, Lood, Sarmiento, M. T. Yap & Associates for plaintiff-appellee.Office of the Solicitor General for defendants-appellants.

BENGZON, J.P., J.:

          Prior to its incorporation as a chartered city, the Municipality of Zamboanga used to be the provincial capital of the then Zamboanga Province. On October 12, 1936, Commonwealth Act 39 was approved converting the Municipality of Zamboanga into Zamboanga City. Sec. 50 of the Act also provided that —

          Buildings and properties which the province shall abandon upon the transfer of the capital to another place will be acquired and paid for by the City of Zamboanga at a price to be fixed by the Auditor General.

          The properties and buildings referred to consisted of 50 lots and some buildings constructed thereon, located in the City of Zamboanga and covered individually by Torrens certificates of title in the name of Zamboanga Province. As far as can be gleaned from the records, 1 said properties were being utilized as follows —

No. of Lots Use

1................................................ Capitol Site3................................................ School Site3................................................ Hospital Site3................................................ Leprosarium1................................................ Curuan School1................................................ Trade School2................................................ Burleigh

School2................................................ High School

Playground9................................................ Burleighs1................................................ Hydro-Electric

Site (Magay)1................................................ San Roque

23................................................ vacant

          It appears that in 1945, the capital of Zamboanga Province was transferred to Dipolog. 2 Subsequently, or on June 16, 1948, Republic Act 286 was approved creating the municipality of Molave and making it the capital of Zamboanga Province.

          On May 26, 1949, the Appraisal Committee formed by the Auditor General, pursuant to Commonwealth Act 39, fixed the value of the properties and buildings in question left by Zamboanga Province in Zamboanga City at P1,294,244.00. 3

          On June 6, 1952, Republic Act 711 was approved dividing the province of Zamboanga into two (2): Zamboanga del Norte and

Zamboanga del Sur. As to how the assets and obligations of the old province were to be divided between the two new ones, Sec. 6 of that law provided:

          Upon the approval of this Act, the funds, assets and other properties and the obligations of the province of Zamboanga shall be divided equitably between the Province of Zamboanga del Norte and the Province of Zamboanga del Sur by the President of the Philippines, upon the recommendation of the Auditor General.

          Pursuant thereto, the Auditor General, on January 11, 1955, apportioned the assets and obligations of the defunct Province of Zamboanga as follows: 54.39% for Zamboanga del Norte and 45.61% for Zamboanga del Sur. Zamboanga del Norte therefore became entitled to 54.39% of P1,294,244.00, the total value of the lots and buildings in question, or P704,220.05 payable by Zamboanga City.

          On March 17, 1959, the Executive Secretary, by order of the President, issued a ruling 4 holding that Zamboanga del Norte had a vested right as owner (should be co-owner pro-indiviso) of the properties mentioned in Sec. 50 of Commonwealth Act 39, and is entitled to the price thereof, payable by Zamboanga City. This ruling revoked the previous Cabinet Resolution of July 13, 1951 conveying all the said 50 lots and buildings thereon to Zamboanga City for P1.00, effective as of 1945, when the provincial capital of the then Zamboanga Province was transferred to Dipolog.

          The Secretary of Finance then authorized the Commissioner of Internal Revenue to deduct an amount equal to 25% of the regular internal revenue allotment for the City of Zamboanga for the quarter ending March 31, 1960, then for the quarter ending June 30, 1960, and again for the first quarter of the fiscal year 1960-1961. The deductions, all aggregating P57,373.46, was credited to the province of Zamboanga del Norte, in partial payment of the P764,220.05 due it.

          However, on June 17, 1961, Republic Act 3039 was approved amending Sec. 50 of Commonwealth Act 39 by providing that —

          All buildings, properties and assets belonging to the former province of Zamboanga and located within the City of Zamboanga are hereby transferred, free of charge, in favor of the said City of Zamboanga. (Stressed for emphasis).

          Consequently, the Secretary of Finance, on July 12, 1961, ordered the Commissioner of Internal Revenue to stop from effecting further payments to Zamboanga del Norte and to return to Zamboanga City the sum of P57,373.46 taken from it out of the internal revenue allotment of

Zamboanga del Norte. Zamboanga City admits that since the enactment of Republic Act 3039, P43,030.11 of the P57,373.46 has already been returned to it.

          This constrained plaintiff-appellee Zamboanga del Norte to file on March 5, 1962, a complaint entitled "Declaratory Relief with Preliminary Mandatory Injunction" in the Court of First Instance of Zamboanga del Norte against defendants-appellants Zamboanga City, the Secretary of Finance and the Commissioner of Internal Revenue. It was prayed that: (a) Republic Act 3039 be declared unconstitutional for depriving plaintiff province of property without due process and just compensation; (b) Plaintiff's rights and obligations under said law be declared; (c) The Secretary of Finance and the Internal Revenue Commissioner be enjoined from reimbursing the sum of P57,373.46 to defendant City; and (d) The latter be ordered to continue paying the balance of P704,220.05 in quarterly installments of 25% of its internal revenue allotments.

          On June 4, 1962, the lower court ordered the issuance of preliminary injunction as prayed for. After defendants filed their respective answers, trial was held. On August 12, 1963, judgment was rendered, the dispositive portion of which reads:

          WHEREFORE, judgment is hereby rendered declaring Republic Act No. 3039 unconstitutional insofar as it deprives plaintiff Zamboanga del Norte of its private properties, consisting of 50 parcels of land and the improvements thereon under certificates of title (Exhibits "A" to "A-49") in the name of the defunct province of Zamboanga; ordering defendant City of Zamboanga to pay to the plaintiff the sum of P704,220.05 payment thereof to be deducted from its regular quarterly internal revenue allotment equivalent to 25% thereof every quarter until said amount shall have been fully paid; ordering defendant Secretary of Finance to direct defendant Commissioner of Internal Revenue to deduct 25% from the regular quarterly internal revenue allotment for defendant City of Zamboanga and to remit the same to plaintiff Zamboanga del Norte until said sum of P704,220.05 shall have been fully paid; ordering plaintiff Zamboanga del Norte to execute through its proper officials the corresponding public instrument deeding to defendant City of Zamboanga the 50 parcels of land and the improvements thereon under the certificates of title (Exhibits "A" to "A-49") upon payment by the latter of the aforesaid sum of P704,220.05 in full; dismissing the counterclaim of defendant City of Zamboanga; and declaring permanent the preliminary mandatory injunction issued on June 8, 1962, pursuant to the order of the Court dated June 4, 1962. No costs are assessed against the defendants.

          It is SO ORDERED.

          Subsequently, but prior to the perfection of defendants' appeal, plaintiff province filed a motion to reconsider praying that Zamboanga

City be ordered instead to pay the P704,220.05 in lump sum with 6% interest per annum. Over defendants' opposition, the lower court granted plaintiff province's motion.

          The defendants then brought the case before Us on appeal.

          Brushing aside the procedural point concerning the property of declaratory relief filed in the lower court on the assertion that the law had already been violated and that plaintiff sought to give it coercive effect, since assuming the same to be true, the Rules anyway authorize the conversion of the proceedings to an ordinary action, 5 We proceed to the more important and principal question of the validity of Republic Act 3039.

          The validity of the law ultimately depends on the nature of the 50 lots and buildings thereon in question. For, the matter involved here is the extent of legislative control over the properties of a municipal corporation, of which a province is one. The principle itself is simple: If the property is owned by the municipality (meaning municipal corporation) in its public and governmental capacity, the property is public and Congress has absolute control over it. But if the property is owned in its private or proprietary capacity, then it is patrimonial and Congress has no absolute control. The municipality cannot be deprived of it without due process and payment of just compensation. 6

          The capacity in which the property is held is, however, dependent on the use to which it is intended and devoted. Now, which of two norms, i.e., that of the Civil Code or that obtaining under the law of Municipal Corporations, must be used in classifying the properties in question?

          The Civil Code classification is embodied in its Arts. 423 and 424 which provide:1äwphï1.ñët

          ART. 423. The property of provinces, cities, and municipalities is divided into property for public use and patrimonial property.

          ART. 424. Property for public use, in the provinces, cities, and municipalities, consists of the provincial roads, city streets, municipal streets, the squares, fountains, public waters, promenades, and public works for public service paid for by said provinces, cities, or municipalities.

All other property possessed by any of them is patrimonial and shall be governed by this Code, without prejudice to the provisions of special laws. (Stressed for emphasis).

          Applying the above cited norm, all the properties in question, except the two (2) lots used as High School playgrounds, could be considered as patrimonial properties of the former Zamboanga province. Even the capital site, the hospital and leprosarium sites, and the school sites will be considered patrimonial for they are not for public use. They would fall under the phrase "public works for public service" for it has been held that under theejusdem generis rule, such public works must be for free and indiscriminate use by anyone, just like the preceding enumerated properties in the first paragraph of Art 424. 7 The playgrounds, however, would fit into this category.

          This was the norm applied by the lower court. And it cannot be said that its actuation was without jurisprudential precedent for in Municipality of Catbalogan v. Director of Lands, 8 and in Municipality of Tacloban v. Director of Lands, 9 it was held that the capitol site and the school sites in municipalities constitute their patrimonial properties. This result is understandable because, unlike in the classification regarding State properties, properties for public service in the municipalities are not classified as public. Assuming then the Civil Code classification to be the chosen norm, the lower court must be affirmed except with regard to the two (2) lots used as playgrounds.

          On the other hand, applying the norm obtaining under the principles constituting the law of Municipal Corporations, all those of the 50 properties in question which are devoted to public service are deemed public; the rest remain patrimonial. Under this norm, to be considered public, it is enough that the property be held and, devoted for governmental purposes like local administration, public education, public health, etc. 10

          Supporting jurisprudence are found in the following cases: (1) HINUNANGAN V. DIRECTOR OF LANDS, 11where it was stated that "... where the municipality has occupied lands distinctly for public purposes, such as for the municipal court house, the public school, the public market, or other necessary municipal building, we will, in the absence of proof to the contrary, presume a grant from the States in favor of the municipality; but, as indicated by the wording, that rule may be invoked only as to property which is used distinctly for public purposes...." (2) VIUDA DE TANTOCO V. MUNICIPAL COUNCIL OF ILOILO 12 held that municipal properties necessary for governmental purposes are public in nature. Thus, the auto trucks used by the municipality for street sprinkling, the police patrol automobile, police stations and concrete structures with the corresponding lots used as markets were declared exempt from execution and attachment since they were not patrimonial properties. (3) MUNICIPALITY OF BATANGAS VS. CANTOS 13 held squarely that a municipal lot which had always been devoted to school purposes is one dedicated to public use and is not patrimonial property of a municipality.

          Following this classification, Republic Act 3039 is valid insofar as it affects the lots used as capitol site, school sites and its grounds, hospital and leprosarium sites and the high school playground sites — a total of 24 lots — since these were held by the former Zamboanga province in its governmental capacity and therefore are subject to the absolute control of Congress. Said lots considered as public property are the following:

TCT Number Lot Number U s e

2200......................................

.............................

......... Capitol Site

2816......................................

.............................

......... School Site

3281...................................... 1224...................................... Hospital Site

3282...................................... 1226...................................... Hospital Site

3283...................................... 1225...................................... Hospital Site

3748...................................... 434-A-1.............................

......... School Site

5406......................................

.............................

......... School Site

5564......................................

.............................

.........High School Play-ground

5567......................................

157 & ...................................... Trade School

5583......................................

.............................

.........High School Play-ground

6181...................................... (O.C.T.).............................

......... Curuan School

11942............................................................................ Leprosarium

11943............................................................................ Leprosarium

11944............................................................................ Leprosarium

5557......................................

.............................

......... Burleigh School

5562......................................

.............................

......... Burleigh School

5565...................................... 172-B.............................

......... Burleigh

5570...................................... 171-A.............................

......... Burleigh5571.............................172-C.............................Burleigh

......... .........5572.............................

............................................... Burleigh

5573......................................

.............................

......... Burleigh

5585...................................... 171-B.............................

......... Burleigh

5586......................................

.............................

......... Burleigh

5587...................................... 172-A.............................

......... Burleigh

          We noticed that the eight Burleigh lots above described are adjoining each other and in turn are between the two lots wherein the Burleigh schools are built, as per records appearing herein and in the Bureau of Lands. Hence, there is sufficient basis for holding that said eight lots constitute the appurtenant grounds of the Burleigh schools, and partake of the nature of the same.

          Regarding the several buildings existing on the lots above-mentioned, the records do not disclose whether they were constructed at the expense of the former Province of Zamboanga. Considering however the fact that said buildings must have been erected even before 1936 when Commonwealth Act 39 was enacted and the further fact that provinces then had no power to authorize construction of buildings such as those in the case at bar at their own expense, 14 it can be assumed that said buildings were erected by the National Government, using national funds. Hence, Congress could very well dispose of said buildings in the same manner that it did with the lots in question.

          But even assuming that provincial funds were used, still the buildings constitute mere accessories to the lands, which are public in nature, and so, they follow the nature of said lands, i.e., public. Moreover, said buildings, though located in the city, will not be for the exclusive use and benefit of city residents for they could be availed of also by the provincial residents. The province then — and its successors-in-interest — are not really deprived of the benefits thereof.

          But Republic Act 3039 cannot be applied to deprive Zamboanga del Norte of its share in the value of the rest of the 26 remaining lots which are patrimonial properties since they are not being utilized for distinctly, governmental purposes. Said lots are:

TCT Number Lot Number U s e

5577......................................

.............................

.........Mydro, Magay

13198.............................127-0.............................San Roque

......... .........5569......................................

.............................

......... Burleigh 15

5558......................................

.............................

......... Vacant

5559......................................

.............................

......... "

5560......................................

.............................

......... "

5561......................................

.............................

......... "

5563......................................

.............................

......... "

5566......................................

.............................

......... "

5568......................................

.............................

......... "

5574......................................

.............................

......... "

5575...................................... 181-A.............................

......... "

5576...................................... 181-B.............................

......... "

5578......................................

.............................

......... "

5579......................................

.............................

......... "

5580......................................

.............................

......... "

5581...................................... 159-B.............................

......... "

5582......................................

.............................

......... "

5584......................................

.............................

......... "

5588......................................

.............................

......... "

5589......................................

.............................

......... "

5590......................................

.............................

......... "

5591......................................

.............................

......... "

5592......................................

.............................

......... "5593.......................................................... "

......... .........7379...................................... 4147.............................

......... "

          Moreover, the fact that these 26 lots are registered strengthens the proposition that they are truly private in nature. On the other hand, that the 24 lots used for governmental purposes are also registered is of no significance since registration cannot convert public property to private. 16

          We are more inclined to uphold this latter view. The controversy here is more along the domains of the Law of Municipal Corporations — State vs. Province — than along that of Civil Law. Moreover, this Court is not inclined to hold that municipal property held and devoted to public service is in the same category as ordinary private property. The consequences are dire. As ordinary private properties, they can be levied upon and attached. They can even be acquired thru adverse possession — all these to the detriment of the local community. Lastly, the classification of properties other than those for public use in the municipalities as patrimonial under Art. 424 of the Civil Code — is "... without prejudice to the provisions of special laws." For purpose of this article, the principles, obtaining under the Law of Municipal Corporations can be considered as "special laws". Hence, the classification of municipal property devoted for distinctly governmental purposes as public should prevail over the Civil Code classification in this particular case.

          Defendants' claim that plaintiff and its predecessor-in-interest are "guilty of laches is without merit. Under Commonwealth Act 39, Sec. 50, the cause of action in favor of the defunct Zamboanga Province arose only in 1949 after the Auditor General fixed the value of the properties in question. While in 1951, the Cabinet resolved transfer said properties practically for free to Zamboanga City, a reconsideration thereof was seasonably sought. In 1952, the old province was dissolved. As successor-in-interest to more than half of the properties involved, Zamboanga del Norte was able to get a reconsideration of the Cabinet Resolution in 1959. In fact, partial payments were effected subsequently and it was only after the passage of Republic Act 3039 in 1961 that the present controversy arose. Plaintiff brought suit in 1962. All the foregoing, negative laches.

          It results then that Zamboanga del Norte is still entitled to collect from the City of Zamboanga the former's 54.39% share in the 26 properties which are patrimonial in nature, said share to computed on the basis of the valuation of said 26 properties as contained in Resolution No. 7, dated March 26, 1949, of the Appraisal Committee formed by the Auditor General.

          Plaintiff's share, however, cannot be paid in lump sum, except as to the P43,030.11 already returned to defendant City. The return of said amount to defendant was without legal basis. Republic Act 3039 took

effect only on June 17, 1961 after a partial payment of P57,373.46 had already been made. Since the law did not provide for retroactivity, it could not have validly affected a completed act. Hence, the amount of P43,030.11 should be immediately returned by defendant City to plaintiff province. The remaining balance, if any, in the amount of plaintiff's 54.39% share in the 26 lots should then be paid by defendant City in the same manner originally adopted by the Secretary of Finance and the Commissioner of Internal Revenue, and not in lump sum. Plaintiff's prayer, particularly pars. 5 and 6, read together with pars. 10 and 11 of the first cause of action recited in the complaint 17 clearly shows that the relief sought was merely the continuance of the quarterly payments from the internal revenue allotments of defendant City. Art. 1169 of the Civil Code on reciprocal obligations invoked by plaintiff to justify lump sum payment is inapplicable since there has been so far in legal contemplation no complete delivery of the lots in question. The titles to the registered lots are not yet in the name of defendant Zamboanga City.

          WHEREFORE, the decision appealed from is hereby set aside and another judgment is hereby entered as follows:.

          (1) Defendant Zamboanga City is hereby ordered to return to plaintiff Zamboanga del Norte in lump sum the amount of P43,030.11 which the former took back from the latter out of the sum of P57,373.46 previously paid to the latter; and

          (2) Defendants are hereby ordered to effect payments in favor of plaintiff of whatever balance remains of plaintiff's 54.39% share in the 26 patrimonial properties, after deducting therefrom the sum of P57,373.46, on the basis of Resolution No. 7 dated March 26, 1949 of the Appraisal Committee formed by the Auditor General, by way of quarterly payments from the allotments of defendant City, in the manner originally adopted by the Secretary of Finance and the Commissioner of Internal Revenue. No costs. So ordered.