1

SECOND BATCH
Case no. 1

Republicof
SUPREME
Manila

the

Philippines
COURT

EN BANC
G.R. No. 88404 October 18, 1990
PHILIPPINE
LONG
DISTANCE
TELEPHONE
CO.
[PLDT], petitioner,
vs.
THE NATIONAL TELECOMMUNICATIONS COMMISSION AND CELLCOM, INC., (EXPRESS
TELECOMMUNICATIONS CO., INC. [ETCI]), respondents.
Alampan & Manhit Law Offices for petitioner.
Gozon, Fernandez, Defensor & Parel for private respondent.

MELENCIO-HERRERA, J.:
Petitioner Philippine Long Distance Telephone Company (PLDT) assails, by way of certiorari and
Prohibition under Rule 65, two (2) Orders of public respondent National Telecommunications
Commission (NTC), namely, the Order of 12 December 1988 granting private respondent
Express Telecommunications Co., Inc. (ETCI) provisional authority to install, operate and
maintain a Cellular Mobile Telephone System in Metro-Manila (Phase A) in accordance with
specified conditions, and the Order, dated 8 May 1988, denying reconsideration.
On 22 June 1958, Rep. Act No. 2090, was enacted, otherwise known as "An Act Granting Felix
Alberto and Company, Incorporated, a Franchise to Establish Radio Stations for Domestic and
Transoceanic Telecommunications." Felix Alberto & Co., Inc. (FACI) was the original corporate
name, which was changed to ETCI with the amendment of the Articles of Incorporation in 1964.
Much later, "CELLCOM, Inc." was the name sought to be adopted before the Securities and
Exchange Commission, but this was withdrawn and abandoned.
On 13 May 1987, alleging urgent public need, ETCI filed an application with public respondent
NTC (docketed as NTC Case No. 87-89) for the issuance of a Certificate of Public Convenience
and Necessity (CPCN) to construct, install, establish, operate and maintain a Cellular Mobile
Telephone System and an Alpha Numeric Paging System in Metro Manila and in the Southern
Luzon regions, with a prayer for provisional authority to operate Phase A of its proposal within
Metro Manila.
PLDT filed an Opposition with a Motion to Dismiss, based primarily on the following grounds: (1)
ETCI is not capacitated or qualified under its legislative franchise to operate a systemwide

telephone or network of telephone service such as the one proposed in its application; (2) ETCI
lacks the facilities needed and indispensable to the successful operation of the proposed cellular
mobile telephone system; (3) PLDT has itself a pending application with NTC, Case No. 86-86,
to install and operate a Cellular Mobile Telephone System for domestic and international service
not only in Manila but also in the provinces and that under the "prior operator" or "protection of
investment" doctrine, PLDT has the priority or preference in the operation of such service; and
(4) the provisional authority, if granted, will result in needless, uneconomical and harmful
duplication, among others.
In an Order, dated 12 November 1987, NTC overruled PLDT's Opposition and declared that
Rep. Act No. 2090 (1958) should be liberally construed as to include among the services under
said franchise the operation of a cellular mobile telephone service.
In the same Order, ETCI was required to submit the certificate of registration of its Articles of
Incorporation with the Securities and Exchange Commission, the present capital and ownership
structure of the company and such other evidence, oral or documentary, as may be necessary to
prove its legal, financial and technical capabilities as well as the economic justifications to
warrant the setting up of cellular mobile telephone and paging systems. The continuance of the
hearings was also directed.
After evaluating the reconsideration sought by PLDT, the NTC, in October 1988, maintained its
ruling that liberally construed, applicant's franchise carries with it the privilege to operate and
maintain a cellular mobile telephone service.
On 12 December 1988, NTC issued the first challenged Order. Opining that "public interest,
convenience and necessity further demand a second cellular mobile telephone service provider
and finds PRIMA FACIE evidence showing applicant's legal, financial and technical capabilities
to provide a cellular mobile service using the AMPS system," NTC granted ETCI provisional
authority to install, operate and maintain a cellular mobile telephone system initially in Metro
Manila, Phase A only, subject to the terms and conditions set forth in the same Order. One of the
conditions prescribed (Condition No. 5) was that, within ninety (90) days from date of the
acceptance by ETCI of the terms and conditions of the provisional authority, ETCI and PLDT
"shall enter into an interconnection agreement for the provision of adequate interconnection
facilities between applicant's cellular mobile telephone switch and the public switched telephone
network and shall jointly submit such interconnection agreement to the Commission for
approval."
In a "Motion to Set Aside the Order" granting provisional authority, PLDT alleged essentially that
the interconnection ordered was in violation of due process and that the grant of provisional
authority was jurisdictionally and procedurally infirm. On 8 May 1989, NTC denied
reconsideration and set the date for continuation of the hearings on the main proceedings. This
is the second questioned Order.
PLDT urges us now to annul the NTC Orders of 12 December 1988 and 8 May 1989 and to
order ETCI to desist from, suspend, and/or discontinue any and all acts intended for its
implementation.
On 15 June 1989, we resolved to dismiss the petition for its failure to comply fully with the
requirements of Circular No. 1-88. Upon satisfactory showing, however, that there was, in fact,
such compliance, we reconsidered the order, reinstated the Petition, and required the
respondents NTC and ETCI to submit their respective Comments.

2
On 27 February 1990, we issued a Temporary Restraining Order enjoining NTC to "Cease and
Desist from all or any of its on-going proceedings and ETCI from continuing any and all acts
intended or related to or which will amount to the implementation/execution of its provisional
authority." This was upon PLDT's urgent manifestation that it had been served an NTC Order,
dated 14 February 1990, directing immediate compliance with its Order of 12 December 1988,
"otherwise the Commission shall be constrained to take the necessary measures and bring to
bear upon PLDT the full sanctions provided by law."
We required PLDT to post a bond of P 5M. It has complied, with the statement that it was
"post(ing) the same on its agreement and/or consent to have the same forfeited in favor of
Private Respondent ETCI/CELLCOM should the instant Petition be dismissed for lack of merit."
ETCI took exception to the sufficiency of the bond considering its initial investment of
approximately P 225M, but accepted the forfeiture proferred.
ETCI moved to have the TRO lifted, which we denied on 6 March 1990. We stated, however,
that the inaugural ceremony ETCI had scheduled for that day could proceed, as the same was
not covered by the TRO.
PLDT relies on the following grounds for the issuance of the Writs prayed for:
1. Respondent NTC's subject order effectively licensed and/or authorized a corporate entity
without any franchise to operate a public utility, legislative or otherwise, to establish and operate
a telecommunications system.
2. The same order validated stock transactions of a public service enterprise contrary to and/or
in direct violation of Section 20(h) of the Public Service Act.
3. Respondent NTC adjudicated in the same order a controverted matter that was not heard at
all in the proceedings under which it was promulgated.
As correctly pointed out by respondents, this being a special civil action for certiorari and
Prohibition, we only need determine if NTC acted without jurisdiction or with grave abuse of
discretion amounting to lack or excess of jurisdiction in granting provisional authority to ETCI
under the NTC questioned Orders of 12 December 1988 and 8 May 1989.
The case was set for oral argument on 21 August 1990 with the parties directed to address, but
not limited to, the following issues: (1) the status and coverage of Rep. Act No. 2090 as a
franchise; (2) the transfer of shares of stock of a corporation holding a CPCN; and (3) the
principle and procedure of interconnection. The parties were thereafter required to submit their
respective Memoranda, with which they have complied.
We find no grave abuse of discretion on the part of NTC, upon the following considerations:
1. NTC Jurisdiction
There can be no question that the NTC is the regulatory agency of the national government with
jurisdiction over all telecommunications entities. It is legally clothed with authority and given
ample discretion to grant a provisional permit or authority. In fact, NTC may, on its own initiative,
grant such relief even in the absence of a motion from an applicant.
Sec. 3. Provisional Relief. Upon the filing of an application, complaint or petition or at any
stage thereafter, the Board may grant on motion of the pleaders or on its own initiative, the relief

prayed for, based on the pleading, together with the affidavits and supporting documents
attached thereto, without prejudice to a final decision after completion of the hearing which shall
be called within thirty (30) days from grant of authority asked for. (Rule 15, Rules of Practice and
Procedure Before the Board of Communications (now NTC).
What the NTC granted was such a provisional authority, with a definite expiry period of eighteen
(18) months unless sooner renewed, and which may be revoked, amended or revised by the
NTC. It is also limited to Metro Manila only. What is more, the main proceedings are clearly to
continue as stated in the NTC Order of 8 May 1989.
The provisional authority was issued after due hearing, reception of evidence and evaluation
thereof, with the hearings attended by various oppositors, including PLDT. It was granted only
after a prima facie showing that ETCI has the necessary legal, financial and technical
capabilities and that public interest, convenience and necessity so demanded.
PLDT argues, however, that a provisional authority is nothing short of a Certificate of Public
Convenience and Necessity (CPCN) and that it is merely a "distinction without a difference."
That is not so. Basic differences do exist, which need not be elaborated on. What should be
borne in mind is that provisional authority would be meaningless if the grantee were not allowed
to operate. Moreover, it is clear from the very Order of 12 December 1988 itself that its scope is
limited only to the first phase, out of four, of the proposed nationwide telephone system. The
installation and operation of an alpha numeric paging system was not authorized. The
provisional authority is not exclusive. Its lifetime is limited and may be revoked by the NTC at
any time in accordance with law. The initial expenditure of P130M more or less, is rendered
necessary even under a provisional authority to enable ETCI to prove its capability. And as
pointed out by the Solicitor General, on behalf of the NTC, if what had been granted were a
CPCN, it would constitute a final order or award reviewable only by ordinary appeal to the Court
of Appeals pursuant to Section 9(3) of BP Blg. 129, and not by certiorari before this Court.
The final outcome of the application rests within the exclusive prerogative of the NTC. Whether
or not a CPCN would eventually issue would depend on the evidence to be presented during the
hearings still to be conducted, and only after a full evaluation of the proof thus presented.
2. The Coverage of ETCI's Franchise
Rep. Act No. 2090 grants ETCI (formerly FACI) "the right and privilege of constructing, installing,
establishing and operating in the entire Philippines radio stations for reception and transmission
of messages on radio stations in the foreign and domestic public fixed point-to-point and public
base, aeronautical and land mobile stations, ... with the corresponding relay stations for the
reception and transmission of wireless messages on radiotelegraphy and/or radiotelephony ...."
PLDT maintains that the scope of the franchise is limited to "radio stations" and excludes
telephone services such as the establishment of the proposed Cellular Mobile Telephone
System (CMTS). However, in its Order of 12 November 1987, the NTC construed the technical
term "radiotelephony" liberally as to include the operation of a cellular mobile telephone system.
It said:
In resolving the said issue, the Commission takes into consideration the different definitions of
the term "radiotelephony." As defined by the New International Webster Dictionary the term
"radiotelephony" is defined as a telephone carried on by aid of radiowaves without connecting
wires. The International Telecommunications Union (ITU) defines a "radiotelephone call" as a
"telephone call, originating in or intended on all or part of its route over the radio communications

3
channels of the mobile service or of the mobile satellite service." From the above definitions,
while under Republic Act 2090 a system-wide telephone or network of telephone service by
means of connecting wires may not have been contemplated, it can be construed liberally that
the operation of a cellular mobile telephone service which carries messages, either voice or
record, with the aid of radiowaves or a part of its route carried over radio communication
channels, is one included among the services under said franchise for which a certificate of
public convenience and necessity may be applied for.
The foregoing is the construction given by an administrative agency possessed of the necessary
special knowledge, expertise and experience and deserves great weight and respect (Asturias
Sugar Central, Inc. v. Commissioner of Customs, et al., L-19337, September 30, 1969, 29 SCRA
617). It can only be set aside on proof of gross abuse of discretion, fraud, or error of law (Tupas
Local Chapter No. 979 v. NLRC, et al., L-60532-33, November 5, 1985, 139 SCRA 478). We
discern none of those considerations sufficient to warrant judicial intervention.
3. The Status of ETCI Franchise
PLDT alleges that the ETCI franchise had lapsed into nonexistence for failure of the franchise
holder to begin and complete construction of the radio system authorized under the franchise as
explicitly required in Section 4 of its franchise, Rep. Act No. 2090. 1 PLDT also invokes Pres.
Decree No. 36, enacted on 2 November 1972, which legislates the mandatory cancellation or
invalidation of all franchises for the operation of communications services, which have not been
availed of or used by the party or parties in whose name they were issued.
However, whether or not ETCI, and before it FACI, in contravention of its franchise, started the
first of its radio telecommunication stations within (2) years from the grant of its franchise and
completed the construction within ten (10) years from said date; and whether or not its franchise
had remained unused from the time of its issuance, are questions of fact beyond the province of
this Court, besides the well-settled procedural consideration that factual issues are not subjects
of a special civil action for certiorari (Central Bank of the Philippines vs. Court of Appeals, G.R.
No. 41859, 8 March 1989, 171 SCRA 49; Ygay vs. Escareal, G.R. No. 44189, 8 February 1985,
135 SCRA 78; Filipino Merchant's Insurance Co., Inc. vs. Intermediate Appellate Court, G.R. No.
71640, 27 June 1988, 162 SCRA 669). Moreover, neither Section 4, Rep. Act No. 2090 nor Pres.
Decree No. 36 should be construed as self-executing in working a forfeiture. Franchise holders
should be given an opportunity to be heard, particularly so, where, as in this case, ETCI does
not admit any breach, in consonance with the rudiments of fair play. Thus, the factual situation of
this case differs from that in Angeles Ry Co. vs. City of Los Angeles (92 Pacific Reporter 490)
cited by PLDT, where the grantee therein admitted its failure to complete the conditions of its
franchise and yet insisted on a decree of forfeiture.
More importantly, PLDT's allegation partakes of a Collateral attack on a franchise Rep. Act No.
2090), which is not allowed. A franchise is a property right and cannot be revoked or forfeited
without due process of law. The determination of the right to the exercise of a franchise, or
whether the right to enjoy such privilege has been forfeited by non-user, is more properly the
subject of the prerogative writ of quo warranto, the right to assert which, as a rule, belongs to the
State "upon complaint or otherwise" (Sections 1, 2 and 3, Rule 66, Rules of Court), 2 the reason
being that the abuse of a franchise is a public wrong and not a private injury. A forfeiture of a
franchise will have to be declared in a direct proceeding for the purpose brought by the State
because a franchise is granted by law and its unlawful exercise is primarily a concern of
Government.

A ... franchise is ... granted by law, and its ... unlawful exercise is the concern primarily of the
Government. Hence, the latter as a rule is the party called upon to bring the action for such ...
unlawful exercise of franchise. (IV-B V. FRANCISCO, 298 [1963 ed.], citing Cruz vs. Ramos, 84
Phil. 226).
4. ETCI's Stock Transactions
ETCI admits that in 1964, the Albertos, as original owners of more than 40% of the outstanding
capital stock sold their holdings to the Orbes. In 1968, the Albertos re-acquired the shares they
had sold to the Orbes. In 1987, the Albertos sold more than 40% of their shares to Horacio
Yalung. Thereafter, the present stockholders acquired their ETCI shares. Moreover, in 1964,
ETCI had increased its capital stock from P40,000.00 to P360,000.00; and in 1987, from
P360,000.00 to P40M.
PLDT contends that the transfers in 1987 of the shares of stock to the new stockholders amount
to a transfer of ETCI's franchise, which needs Congressional approval pursuant to Rep. Act No.
2090, and since such approval had not been obtained, ETCI's franchise had been invalidated.
The provision relied on reads, in part, as follows:
SECTION 10. The grantee shall not lease, transfer, grant the usufruct of, sell or assign this
franchise nor the rights and privileges acquired thereunder to any person, firm, company,
corporation or other commercial or legal entity nor merge with any other person, company or
corporation organized for the same purpose, without the approval of the Congress of the
Philippines first had. ...
It should be noted, however, that the foregoing provision is, directed to the "grantee" of the
franchise, which is the corporation itself and refers to a sale, lease, or assignment of that
franchise. It does not include the transfer or sale of shares of stock of a corporation by the
latter's stockholders.
The sale of shares of stock of a public utility is governed by another law, i.e., Section 20(h) of the
Public Service Act (Commonwealth Act No. 146). Pursuant thereto, the Public Service
Commission (now the NTC) is the government agency vested with the authority to approve the
transfer of more than 40% of the subscribed capital stock of a telecommunications company to a
single transferee, thus:
SEC. 20. Acts requiring the approval of the Commission. Subject to established stations and
exceptions and saving provisions to the contrary, it shall be unlawful for any public service or for
the owner, lessee or operator thereof, without the approval and authorization of the Commission
previously had
xxx xxx xxx
(h) To sell or register in its books the transfer or sale of shares of its capital stock, if the result of
that sale in itself or in connection with another previous sale, shall be to vest in the transferee
more than forty per centum of the subscribed capital of said public service. Any transfer made in
violation of this provision shall be void and of no effect and shall not be registered in the books of
the public service corporation. Nothing herein contained shall be construed to prevent the
holding of shares lawfully acquired. (As amended by Com. Act No. 454).
In other words, transfers of shares of a public utility corporation need only NTC approval, not
Congressional authorization. What transpired in ETCI were a series of transfers of shares

4
starting in 1964 until 1987. The approval of the NTC may be deemed to have been met when it
authorized the issuance of the provisional authority to ETCI. There was full disclosure before the
NTC of the transfers. In fact, the NTC Order of 12 November 1987 required ETCI to submit its
"present capital and ownership structure." Further, ETCI even filed a Motion before the NTC,
dated 8 December 1987, or more than a year prior to the grant of provisional authority, seeking
approval of the increase in its capital stock from P360,000.00 to P40M, and the stock transfers
made by its stockholders.
A distinction should be made between shares of stock, which are owned by stockholders, the
sale of which requires only NTC approval, and the franchise itself which is owned by the
corporation as the grantee thereof, the sale or transfer of which requires Congressional
sanction. Since stockholders own the shares of stock, they may dispose of the same as they see
fit. They may not, however, transfer or assign the property of a corporation, like its franchise. In
other words, even if the original stockholders had transferred their shares to another group of
shareholders, the franchise granted to the corporation subsists as long as the corporation, as an
entity, continues to exist The franchise is not thereby invalidated by the transfer of the shares. A
corporation has a personality separate and distinct from that of each stockholder. It has the right
of continuity or perpetual succession (Corporation Code, Sec. 2).
To all appearances, the stock transfers were not just for the purpose of acquiring the ETCI
franchise, considering that, as heretofore stated, a series of transfers was involved from 1964 to
1987. And, contrary to PLDT's assertion, the franchise was not the only property of ETCI of
meaningful value. The "zero" book value of ETCI assets, as reflected in its balance sheet, was
plausibly explained as due to the accumulated depreciation over the years entered for
accounting purposes and was not reflective of the actual value that those assets would
command in the market.
But again, whether ETCI has offended against a provision of its franchise, or has subjected it to
misuse or abuse, may more properly be inquired into in quo warranto proceedings instituted by
the State. It is the condition of every franchise that it is subject to amendment, alteration, or
repeal when the common good so requires (1987 Constitution, Article XII, Section 11).
5. The NTC Interconnection Order
In the provisional authority granted by NTC to ETCI, one of the conditions imposed was that the
latter and PLDT were to enter into an interconnection agreement to be jointly submitted to NTC
for approval.
PLDT vehemently opposes interconnection with its own public switched telephone network. It
contends: that while PLDT welcomes interconnections in the furtherance of public interest, only
parties who can establish that they have valid and subsisting legislative franchises are entitled to
apply for a CPCN or provisional authority, absent which, NTC has no jurisdiction to grant them
the CPCN or interconnection with PLDT; that the 73 telephone systems operating all over the
Philippines have a viability and feasibility independent of any interconnection with PLDT; that
"the NTC is not empowered to compel such a private raid on PLDT's legitimate income arising
out of its gigantic investment;" that "it is not public interest, but purely a private and selfish
interest which will be served by an interconnection under ETCI's terms;" and that "to compel
PLDT to interconnect merely to give viability to a prospective competitor, which cannot stand on
its own feet, cannot be justified in the name of a non-existent public need" (PLDT Memorandum,
pp. 48 and 50).

PLDT cannot justifiably refuse to interconnect.

Rep. Act No. 6849, or the Municipal Telephone Act of 1989, approved on 8 February 1990,
mandates interconnection providing as it does that "all domestic telecommunications carriers or
utilities ... shall be interconnected to the public switch telephone network." Such regulation of the
use and ownership of telecommunications systems is in the exercise of the plenary police power
of the State for the promotion of the general welfare. The 1987 Constitution recognizes the
existence of that power when it provides.
SEC. 6. The use of property bears a social function, and all economic agents shall contribute to
the common good. Individuals and private groups, including corporations, cooperatives, and
similar collective organizations, shall have the right to own, establish, and operate economic
enterprises, subject to the duty of the State to promote distributive justice and to intervene when
the common good so demands (Article XII).
The interconnection which has been required of PLDT is a form of "intervention" with property
rights dictated by "the objective of government to promote the rapid expansion of
telecommunications services in all areas of the Philippines, ... to maximize the use of
telecommunications facilities available, ... in recognition of the vital role of communications in
nation building ... and to ensure that all users of the public telecommunications service have
access to all other users of the service wherever they may be within the Philippines at an
acceptable standard of service and at reasonable cost" (DOTC Circular No. 90-248).
Undoubtedly, the encompassing objective is the common good. The NTC, as the regulatory
agency of the State, merely exercised its delegated authority to regulate the use of
telecommunications networks when it decreed interconnection.
The importance and emphasis given to interconnection dates back to Ministry Circular No. 8281, dated 6 December 1982, providing:
Sec. 1. That the government encourages the provision and operation of public mobile telephone
service within local sub-base stations, particularly, in the highly commercialized areas;
Sec. 5. That, in the event the authority to operate said service be granted to other applicants,
other than the franchise holder, the franchise operator shall be under obligation to enter into an
agreement with the domestic telephone network, under an interconnection agreement;
Department of Transportation and Communication (DOTC) Circular No. 87-188, issued in 1987,
also decrees:
12. All public communications carriers shall interconnect their facilities pursuant to comparatively
efficient interconnection (CEI) as defined by the NTC in the interest of economic efficiency.
The sharing of revenue was an additional feature considered in DOTC Circular No. 90-248,
dated 14 June 1990, laying down the "Policy on Interconnection and Revenue Sharing by Public
Communications Carriers," thus:
WHEREAS, it is the objective of government to promote the rapid expansion of
telecommunications services in all areas of the Philippines;
WHEREAS, there is a need to maximize the use of telecommunications facilities available and
encourage investment in telecommunications infrastructure by suitably qualified service
providers;

5
WHEREAS, in recognition of the vital role of communications in nation building, there is a need
to ensure that all users of the public telecommunications service have access to all other users
of the service wherever they may be within the Philippines at an acceptable standard of service
and at reasonable cost.
WHEREFORE, ... the following Department policies on interconnection and revenue sharing are
hereby promulgated:
1. All facilities offering public telecommunication services shall be interconnected into the
nationwide telecommunications network/s.
xxx xxx xxx
4. The interconnection of networks shall be effected in a fair and non-discriminatory manner and
within the shortest time-frame practicable.
5. The precise points of interface between service operators shall be as defined by the NTC; and
the apportionment of costs and division of revenues resulting from interconnection of
telecommunications networks shall be as approved and/or prescribed by the NTC.
xxx xxx xxx
Since then, the NTC, on 12 July 1990, issued Memorandum Circular No. 7-13-90 prescribing the
"Rules and Regulations Governing the Interconnection of Local Telephone Exchanges and
Public Calling Offices with the Nationwide Telecommunications Network/s, the Sharing of
Revenue Derived Therefrom, and for Other Purposes."
The NTC order to interconnect allows the parties themselves to discuss and agree upon the
specific terms and conditions of the interconnection agreement instead of the NTC itself laying
down the standards of interconnection which it can very well impose. Thus it is that PLDT cannot
justifiably claim denial of clue process. It has been heard. It will continue to be heard in the main
proceedings. It will surely heard in the negotiations concerning the interconnection agreement.
As disclosed during the hearing, the interconnection sought by ETCI is by no means a "parasitic
dependence" on PLDT. The ETCI system can operate on its own even without interconnection,
but it will be limited to its own subscribers. What interconnection seeks to accomplish is to
enable the system to reach out to the greatest number of people possible in line with
governmental policies laid down. Cellular phones can access PLDT units and vice versa in as
wide an area as attainable. With the broader reach, public interest and convenience will be
better served. To be sure, ETCI could provide no mean competition (although PLDT maintains
that it has nothing to fear from the "innocuous interconnection"), and eat into PLDT's own toll
revenue cream PLDT revenue," in its own words), but all for the eventual benefit of all that the
system can reach.

rendering efficient and reasonably priced services is also indispensable for accelerated
economic recovery and development. To these public and national interests, public utility
companies must bow and yield.
Despite the fact that there is a virtual monopoly of the telephone system in the country at
present. service is sadly inadequate. Customer demands are hardly met, whether fixed or
mobile. There is a unanimous cry to hasten the development of a modern, efficient, satisfactory
and continuous telecommunications service not only in Metro Manila but throughout the
archipelago. The need therefor was dramatically emphasized by the destructive earthquake of
16 July 1990. It may be that users of the cellular mobile telephone would initially be limited to a
few and to highly commercialized areas. However, it is a step in the right direction towards the
enhancement of the telecommunications infrastructure, the expansion of telecommunications
services in, hopefully, all areas of the country, with chances of complete disruption of
communications minimized. It will thus impact on, the total development of the country's
telecommunications systems and redound to the benefit of even those who may not be able to
subscribe to ETCI.
Free competition in the industry may also provide the answer to a much-desired improvement in
the quality and delivery of this type of public utility, to improved technology, fast and handy
mobile service, and reduced user dissatisfaction. After all, neither PLDT nor any other public
utility has a constitutional right to a monopoly position in view of the Constitutional proscription
that no franchise certificate or authorization shall be exclusive in character or shall last longer
than fifty (50) years (ibid., Section 11; Article XIV Section 5, 1973 Constitution; Article XIV,
Section 8, 1935 Constitution). Additionally, the State is empowered to decide whether public
interest demands that monopolies be regulated or prohibited (1987 Constitution. Article XII,
Section 19).
WHEREFORE, finding no grave abuse of discretion, tantamount to lack of or excess of
jurisdiction, on the part of the National Telecommunications Commission in issuing its challenged
Orders of 12 December 1988 and 8 May 1989 in NTC Case No. 87-39, this Petition is
DISMISSED for lack of merit. The Temporary Restraining Order heretofore issued is LIFTED.
The bond issued as a condition for the issuance of said restraining Order is declared forfeited in
favor of private respondent Express Telecommunications Co., Inc. Costs against petitioner.
SO ORDERED.
Paras, Feliciano, Padilla, Sarmiento, Cortes, Grio-Aquino and Regalado, JJ., concur.

Separate Opinions

6. Ultimate Considerations
The decisive consideration are public need, public interest, and the common good. Those were
the overriding factors which motivated NTC in granting provisional authority to ETCI. Article II,
Section 24 of the 1987 Constitution, recognizes the vital role of communication and information
in nation building. It is likewise a State policy to provide the environment for the emergence of
communications structures suitable to the balanced flow of information into, out of, and across
the country (Article XVI, Section 10, Ibid.). A modern and dependable communications network

GUTIERREZ, JR., J., dissenting:

I share with the rest of the Court the desire to have a "modern, efficient, satisfactory, and
continuous telecommunications service" in the Philippines. I register this dissent, however,
because I believe that any frustrations over the present state of telephone services do not justify
our affirming an illegal and inequitable order of the National Telecommunications Commission

6
(NTC). More so when it appears that the questioned order is not really a solution to the problems
bugging our telephone industry.
My dissent is based on three primary considerations, namely:
(1) The Court has sustained nothing less than the desire of respondent ETCI to set-up a
profitable business catering to an affluent clientele through the use of billions of pesos worth of
another company's properties. No issues of public welfare, breaking up of monopolies, or other
high sounding principles are involved. The core question is purely and simply whether or not to
grant ETCI's desire for economic gains through riding on another firm's investments.
(2) The Court has permitted respondent ETCI to operate a telephone system without a valid
legislative franchise. It strains the imagination too much to interpret a legislative franchise
authorizing "radio stations" as including the provisional permit for a sophisticated telephone
system which has absolutely nothing to do with radio broadcasts and transmissions. The Court
subverts the legislative will when it validates a provisional permit on the basis of authority which
never envisioned much less intended its use for a regular telephone system catering to
thousands of individual receiver units. There is nothing in Rep. Act No. 2090 which remotely
suggests a cellular mobile telephone system.
(3) The authority given by Rep. Act No. 2090 has expired. ETCI is not only riding on another
company's investments and using legislative authority for a purpose never dreamed of by the
legislators but is also trying to extract life from and resurrect an unused and dead franchise.
My principal objection to the disputed NTC order arises from the fact that respondent Express
Telecommunications Co. Inc. (ETCI) cannot exist without using the facilities of Philippine Long
Distance Telephone Co. (PLDT). Practically all of its business will be conducted through another
company's property.
While pretending to set up a separate phone company, ETCI's cellular phones would be useless
most of the time, if not all the time, unless they use PLDT lines. It would be different if ETCI
phone owners would primarily communicate with one another and tap into PLDT lines only rarely
or occasionally.

Under the disputed order, ETCI will be completely dependent upon its use of the P16 billions
worth of infrastructure which PLDT has built over several decades. The vaunted payment of
compensation everytime an ETCI phone taps into a PLDT line is illusory. There can be no
adequate payment for the use of billions of pesos of investments built up over 60 years.
Moreover, it is actually the phone owner or consumer who pays the fee. The rate will be fixed by
Government and will be based on the consumer's best interests and capacity, ignoring or
subordinating the petitioner's investments. Payment will depend on how much the phone user
should be charged for making a single phone call and will disregard the millions of pesos that
ETCI will earn through its use of billions of pesos worth of another company's investments and
properties.
The "hated monopoly" and "improved services" arguments are not only misleading but also
illusory.
To sustain the questioned NTC order will not in any way improve telephone services nor would
any monopoly be dismantled. The answer to inadequate telephone facilities is better
administrative supervision. The NTC should pay attention to its work and compel PLDT to
improve its services instead of saddling with the burden of carrying another company's system.
For better services, what the country needs is to improve the existing system and provide
enough telephone lines for all who really need them. The proposed ETCI cellular phones will
serve mostly those who can afford to tide in expensive cars and who already have two or three
telephones in their offices and residences. Cellular phones should legally and fairly be provided
by PLDT as just another facet of its expansion program.
The mass of applicants for new telephones will not benefit from cellular phones. In fact, if PLDT
is required by NTC to open up new exchanges or interconnections for the rich ETCI consumers,
this will mean an equivalent number of low income or middle income applicants who will have to
wait longer for their own PLDT lines. The Court's resolution favors the conveniences of the rich
at the expense of the necessities of the poor. *
I agree with the petitioner that what NTC granted is not merely provisional authority but what is
in effect a regular certificate of public convenience and necessity or "CPCN".

To compare ETCI with the Government Telephone System (GTS) or with an independent phone
company serving a province or city is misleading. The defunct GTS was set up to connect
government offices and personnel with one another. It could exist independently and was not
primarily or wholly dependent on PLDT connections. A provincial or city system serves the
residents of a province or city. It primarily relies on its own investments and infrastructure. It asks
for PLDT services only when long distance calls to another country, city, or province have to be
made.

Starting with seven cell sites for 3,000 subscribers in Metro Manila, the cellular mobile system
will establish 67 cell sites beginning October 1991. The initial expenses alone will amount to
P130 million. At page 8 of its Comment, ETCI admits that that "the provisional authority to
operate will be useless to ETCI if it does not put up the system and interconnnect said system
with the existing PLDT network."(Emphasis supplied) The completion of interconnection
arrangements, the setting up of expensive installations, the requirements as to maintenance and
operation, and other conditions found in the NTC order are anything but provisional.

I can, therefore, understand PLDT's reluctance Since it has its own franchise to operate exactly
the same services which ETCI is endeavoring to establish. PLDT would be using its own existing
lines. Under the Court's decision, it would be compelled to allow another company to use those
same lines in direct competition with the lines owner. The cellular system is actually only an
adjunct to a regular telephone system, not a separate and independent system. As an adjunct
and component unit or as a parasite (if a foreign body) it must be fed by the mother organism or
unit if it is to survive.

The authority given to ETCI is entirely different from the provisional authority given to MERALCO
or oil companies to increase the price of oil or electricity or to bus and jeepney operators to raise
fares a few centavos. In these cases the need for increases is not only urgent but is usually a
foregone conclusion dictated by pressing circumstances. Further hearings are needed only to fix
the amount which will be finally authorized. The NTC orders can also be easily revoked.
Increased prices of oil or rates of transportation services can be lowered or struck down if the
preliminary determinations are wrong. In the instant case, NTC has authorized a new company
to start operations even if the issues have not been thoroughly threshed out. There is no urgent
need which warrants operations before a final permit is granted. Once in operation, there can be

7
no cancelling or revocation of the authority to operate, no dismantling of thousands of cellular
phones and throwing to waste of over P100 million worth of investments in fixed facilities.
Theoretically, it can be done but it is clear from the records that what was granted is really a
CPCN.
There is no dispute that a legislative franchise is necessary for the operation of a telephone
system. The NTC has no jurisdiction to grant the authority. The fact that ETCI has to rely on a
1958 legislative franchise shows that only Congress can give the franchise which will empower
NTC to issue the certificate or CPCN.
Rep. Act No. 2090 is a franchise for the construction and operation of radio stations. Felix
Alberto and Co. Inc. (FACI) was authorized in the operation of those radio stations to acquire
and handle transmitters, receivers, electrical machinery and other related devises. The use of
radio telephone was never intended or envisioned for a regular telephone company. "Radio
telephony" is governed and circumscribed by the basic purpose of operating radio stations.
Telephony may be used only to enable communications between the stations, to transmit a radio
message to a station where it would be transcribed into a form suitable for delivery to the
intended recipient. FACI was authorized to communicate to, between, and among its radio
stations. There is no authority for thousands of customers to be talking to PLDT subscribers
directly. FACI was never given authority by Rep. Act 2090 to operate switching facilities, wire-line
transmissions, and telecommunication stations of a telephone company. The entire records can
be scrutinized and they will show that ETCI has all but ignored and kept silent about the purpose
of its alleged franchise-which is for the real operation of radio stations. There can be no equating
of "radio stations" with a complete cellular mobile telephone system. The two are poles apart.
The most liberal interpretation can not possibly read in a 1958 franchise for radio stations, the
authority for a mobile cellular system vintage 1990. No amount of liberal interpretation can
supply the missing requirement. And besides, we are not interpreting a Constitution which is
intended to cover changing situations and must be read liberally. Legislative franchises are
always construed strictly against the franchise.
The remedy is for ETCI to go to Congress. I regret that in dismissing this petition, we may be
withholding from Congress the courtesy we owe to it as a co-equal body and denigrating its
power to examine whether or not ETCI really deserves a legislative franchise.
My third point has to do with the sudden resurrection of a dead franchise and its coming to life in
an entirely different form-no longer a radio station but a modern telephone company.
I have searched the records in vain for any plan of ETCI to operate radio stations. It has not
operated and does not plan to operate radio stations. Its sole objective is to set up a telephone
company. For that purpose, it should go to Congress and get a franchise for a telephone
company. NTC cannot give it such a franchise.
Section 10 of Rep. Act No. 2090 prohibits the transfer of the franchise and the rights and
privileges under that franchise without the express approval of Congress. No amount of legal
niceties can cloak the fact that ETCI is not FACI, that the franchise was sold by FACI to ETCI,
and that the permit given by NTC to ETCI is based on a purchased franchise.
When the owners of FACI sold out their stocks, the 3,900 shares were on paper worth only 35
centavos each. The company had no assets and physical properties. All it had was the
franchise, for whatever it was worth. The buyers paid P4,618,185.00 for the company's stocks,

almost all of the amount intended for the franchise. It was, therefore, a sale or transfer of the
franchise in violation of the express terms of Rep. Act No. 2090 which call for approval by
Congress.
ETCI tried to show a series of transactions involving the sales of almost all of its stocks. Not only
are the circumstances surrounding the transfers quite suspicious, but they were effected without
the approval and authorization of the Commission as required by law.
Sec. 4 of Rep. Act No. 2090 also provides that the franchise shall be void unless the
construction of radio stations is begun within two years or June 22, 1960 and completed within
ten years or June 22, 1968.
As of April 14, 1987, ETCI formally admitted that it was still in the pre-operating stage. Almost 30
years later, it had not even started the business authorized by the franchise. It is only now that it
proposes to construct, not radio stations, but a telephone system.
During the oral arguments and in its memorandum, ETCI presented proof of several radio
station construction permits. A construction permit authorizes a construction but does not prove
it. There is no proof that the entire construction of all stations was completed within ten years. In
fact, there is not the slightest intimation that ETCI, today, is operating radio stations. What it
wants is to set up a telephone system.
In addition to the franchise being void under its own charter, P.D. 36 on November 2, 1972,
cancelled all unused or dormant legislative franchises. Rep. Act No. 2090, having been voided
by its own Section 4, suffered a second death if that is at all possible.
The violations of law-(1) the giving of life to an already dead franchise, (2) the transfer of
ownership against an express statutory provision, and (3) the use of a franchise for radio
stations to justify the setting up of a cellular mobile telephone system are too glaring for us to
ignore on the basis of "respect" for a questionable NTC order and other purely technical
considerations. We should not force PLDT to open its lines to enable a competitor to operate a
system which cannot survive unless it uses PLDT properties.
The NTC bases its order on alleged grounds of public need, public interest, and the common
good. There is no showing that these considerations will be satisfied, at least sufficient to
warrant a strained interpretation of legal provisions. Any slight improvement which the expensive
ETCI project will accomplish cannot offset its violation of law and fair dealing.
I, THEREFORE, VOTE to GRANT the petition.
Fernan, C.J., Narvasa, Gancayco, Bidin and Medialdea, JJ., concur.

CRUZ, J., concurring and dissenting:

As one of the many dissatisfied customers of PLDT, I should have no objection to the grant of
the provisional authority to ETCI. I have none. Its admission will improve communication facilities
in the country conformably to the constitutional objective. It will also keep PLDT on its toes and
encourage it to correct its deficient service in view of the competition.

8
I fully agree with all the rulings in the ponencia except the approval of the requirement for PLDT
to interconnect with ETCI. I think it violates due process. It reminds me of the story of the little
red hen who found some rice and asked who would help her plant it. None of the animals in the
farm was willing and neither did they help in watering, harvesting and finally cooking it. But when
she asked, "Who will help me eat the rice?" everyone wanted to join in. The little red hen is like
PLDT.
If ETCI wants to operate its own telephone system, it should rely on its own resources instead of
riding piggy-back on PLDT. It seems to me rather unfair for the Government to require PLDT to
share with a newcomer and potential rival what it took PLDT tremendous effort and long years
and billions of pesos to build .
The case of Republic of the Philippines v. PLDT, 26 SCRA 620, is not applicable because it was
the Government itself that was there seeking interconnection of its own telephone system, with
PLDT. The Court recognized the obvious public purpose that justified the special exercise (by
the Government of the power of eminent domain. But in the case before us, the intended
beneficiary is a private enterprise primarily organized for profit and, indeed, to compete with
PLDT. In effect, the Government is forcing PLDT to surrender its competitive advantage and
share its resources with ETCI, which may not only supplement but, possibly, even ultimately
supplant PLDT. I do not think government authority extends that far.
The majority disposes of the question of due process by simply saying that PLDT will have frill
opportunity to be heard in the ascertainment of the just compensation ETCI will have to pay for
the interconnection. That is not the issue. What PLDT is objecting to is not the amount of the just
compensation but the interconnection itself that is being forced upon it.
I feel there is no due process where private property is taken by the Government from one
private person and given to another private person for the latter's direct benefit. The fact that
compensation is paid is immaterial; the flaw lies in the taking itself (Davidson v. New Orleans, 90
U.S. 97). The circumstance that PLDT is a public utility is no warrant for taking undue liberties
with its property, which is protected by the Bill of Rights. "Public need" cannot be a blanket
justification for favoring one investor against another in contravention of the system of free
enterprise. If PLDT has misused its franchise, I should think the solution is to revoke its authority,
not to force it to share its resources with its private competitors.
The rule is that where it is the legislature itself that directly calls for the expropriation of private
property, its determination of the thing to be condemned and the purpose of the taking is
conclusive on the courts (City of Manila v. Chinese Community, 40 Phil. 349). But where the
power of eminent domain is exercised only by a delegate of the legislature, like ETCI, the courts
may inquire into the necessity or propriety of the expropriation and, when warranted, pronounce
its invalidity (Republic of the Philippines v. La Orden de PO Benedictinos de Filipinas, 1 SCRA
649). I think this is what the Court should do in the case at bar.
A final point. It is argued that requiring ETCI to start from scratch (as PLDT did) and import its
own equipment would entail a tremendous outflow of foreign currency we can ill afford at this
time. Perhaps so. But we must remember that the Bill of Rights is not a marketable commodity,
like a piece of machinery. Due process is an indispensable requirement that cannot be assessed
in dollar and cents.
Fernan, C.J., and Narvasa, J., concur.

Separate Opinions
GUTIERREZ, JR., J., dissenting:
I share with the rest of the Court the desire to have a "modern, efficient, satisfactory, and
continuous telecommunications service" in the Philippines. I register this dissent, however,
because I believe that any frustrations over the present state of telephone services do not justify
our affirming an illegal and inequitable order of the National Telecommunications Commission
(NTC). More so when it appears that the questioned order is not really a solution to the problems
bugging our telephone industry.
My dissent is based on three primary considerations, namely:
(1) The Court has sustained nothing less than the desire of respondent ETCI to set-up a
profitable business catering to an affluent clientele through the use of billions of pesos worth of
another company's properties. No issues of public welfare, breaking up of monopolies, or other
high sounding principles are involved. The core question is purely and simply whether or not to
grant ETCI's desire for economic gains through riding on another firm's investments.
(2) The Court has permitted respondent ETCI to operate a telephone system without a valid
legislative franchise. It strains the imagination too much to interpret a legislative franchise
authorizing "radio stations" as including the provisional permit for a sophisticated telephone
system which has absolutely nothing to do with radio broadcasts and transmissions. The Court
subverts the legislative will when it validates a provisional permit on the basis of authority which
never envisioned much less intended its use for a regular telephone system catering to
thousands of individual receiver units. There is nothing in Rep. Act No. 2090 which remotely
suggests a cellular mobile telephone system.
(3) The authority given by Rep. Act No. 2090 has expired. ETCI is not only riding on another
company's investments and using legislative authority for a purpose never dreamed of by the
legislators but is also trying to extract life from and resurrect an unused and dead franchise.
My principal objection to the disputed NTC order arises from the fact that respondent Express
Telecommunications Co. Inc. (ETCI) cannot exist without using the facilities of Philippine Long
Distance Telephone Co. (PLDT). Practically all of its business will be conducted through another
company's property.
While pretending to set up a separate phone company, ETCI's cellular phones would be useless
most of the time, if not all the time, unless they use PLDT lines. It would be different if ETCI
phone owners would primarily communicate with one another and tap into PLDT lines only rarely
or occasionally.
To compare ETCI with the Government Telephone System (GTS) or with an independent phone
company serving a province or city is misleading. The defunct GTS was set up to connect
government offices and personnel with one another. It could exist independently and was not
primarily or wholly dependent on PLDT connections. A provincial or city system serves the
residents of a province or city. It primarily relies on its own investments and infrastructure. It asks

9
for PLDT services only when long distance calls to another country, city, or province have to be
made.

arrangements, the setting up of expensive installations, the requirements as to maintenance and

operation, and other conditions found in the NTC order are anything but provisional.

I can, therefore, understand PLDT's reluctance Since it has its own franchise to operate exactly
the same services which ETCI is endeavoring to establish. PLDT would be using its own existing
lines. Under the Court's decision, it would be compelled to allow another company to use those
same lines in direct competition with the lines owner. The cellular system is actually only an
adjunct to a regular telephone system, not a separate and independent system. As an adjunct
and component unit or as a parasite (if a foreign body) it must be fed by the mother organism or
unit if it is to survive.

The authority given to ETCI is entirely different from the provisional authority given to MERALCO
or oil companies to increase the price of oil or electricity or to bus and jeepney operators to raise
fares a few centavos. In these cases the need for increases is not only urgent but is usually a
foregone conclusion dictated by pressing circumstances. Further hearings are needed only to fix
the amount which will be finally authorized. The NTC orders can also be easily revoked.
Increased prices of oil or rates of transportation services can be lowered or struck down if the
preliminary determinations are wrong. In the instant case, NTC has authorized a new company
to start operations even if the issues have not been thoroughly threshed out. There is no urgent
need which warrants operations before a final permit is granted. Once in operation, there can be
no cancelling or revocation of the authority to operate, no dismantling of thousands of cellular
phones and throwing to waste of over P100 million worth of investments in fixed facilities.
Theoretically, it can be done but it is clear from the records that what was granted is really a
CPCN.

Under the disputed order, ETCI will be completely dependent upon its use of the P16 billions
worth of infrastructure which PLDT has built over several decades. The vaunted payment of
compensation everytime an ETCI phone taps into a PLDT line is illusory. There can be no
adequate payment for the use of billions of pesos of investments built up over 60 years.
Moreover, it is actually the phone owner or consumer who pays the fee. The rate will be fixed by
Government and will be based on the consumer's best interests and capacity, ignoring or
subordinating the petitioner's investments. Payment will depend on how much the phone user
should be charged for making a single phone call and will disregard the millions of pesos that
ETCI will earn through its use of billions of pesos worth of another company's investments and
properties.
The "hated monopoly" and "improved services" arguments are not only misleading but also
illusory.
To sustain the questioned NTC order will not in any way improve telephone services nor would
any monopoly be dismantled. The answer to inadequate telephone facilities is better
administrative supervision. The NTC should pay attention to its work and compel PLDT to
improve its services instead of saddling with the burden of carrying another company's system.
For better services, what the country needs is to improve the existing system and provide
enough telephone lines for all who really need them. The proposed ETCI cellular phones will
serve mostly those who can afford to tide in expensive cars and who already have two or three
telephones in their offices and residences. Cellular phones should legally and fairly be provided
by PLDT as just another facet of its expansion program.
The mass of applicants for new telephones will not benefit from cellular phones. In fact, if PLDT
is required by NTC to open up new exchanges or interconnections for the rich ETCI consumers,
this will mean an equivalent number of low income or middle income applicants who will have to
wait longer for their own PLDT lines. The Court's resolution favors the conveniences of the rich
at the expense of the necessities of the poor. *
I agree with the petitioner that what NTC granted is not merely provisional authority but what is
in effect a regular certificate of public convenience and necessity or "CPCN".
Starting with seven cell sites for 3,000 subscribers in Metro Manila, the cellular mobile system
will establish 67 cell sites beginning October 1991. The initial expenses alone will amount to
P130 million. At page 8 of its Comment, ETCI admits that that "the provisional authority to
operate will be useless to ETCI if it does not put up the system and interconnnect said system
with the existing PLDT network."(Emphasis supplied) The completion of interconnection

There is no dispute that a legislative franchise is necessary for the operation of a telephone
system. The NTC has no jurisdiction to grant the authority. The fact that ETCI has to rely on a
1958 legislative franchise shows that only Congress can give the franchise which will empower
NTC to issue the certificate or CPCN.
Rep. Act No. 2090 is a franchise for the construction and operation of radio stations. Felix
Alberto and Co. Inc. (FACI) was authorized in the operation of those radio stations to acquire
and handle transmitters, receivers, electrical machinery and other related devises. The use of
radio telephone was never intended or envisioned for a regular telephone company. "Radio
telephony" is governed and circumscribed by the basic purpose of operating radio stations.
Telephony may be used only to enable communications between the stations, to transmit a radio
message to a station where it would be transcribed into a form suitable for delivery to the
intended recipient. FACI was authorized to communicate to, between, and among its radio
stations. There is no authority for thousands of customers to be talking to PLDT subscribers
directly. FACI was never given authority by Rep. Act 2090 to operate switching facilities, wire-line
transmissions, and telecommunication stations of a telephone company. The entire records can
be scrutinized and they will show that ETCI has all but ignored and kept silent about the purpose
of its alleged franchise-which is for the real operation of radio stations. There can be no equating
of "radio stations" with a complete cellular mobile telephone system. The two are poles apart.
The most liberal interpretation can not possibly read in a 1958 franchise for radio stations, the
authority for a mobile cellular system vintage 1990. No amount of liberal interpretation can
supply the missing requirement. And besides, we are not interpreting a Constitution which is
intended to cover changing situations and must be read liberally. Legislative franchises are
always construed strictly against the franchise.
The remedy is for ETCI to go to Congress. I regret that in dismissing this petition, we may be
withholding from Congress the courtesy we owe to it as a co-equal body and denigrating its
power to examine whether or not ETCI really deserves a legislative franchise.
My third point has to do with the sudden resurrection of a dead franchise and its coming to life in
an entirely different form-no longer a radio station but a modern telephone company.

10
I have searched the records in vain for any plan of ETCI to operate radio stations. It has not
operated and does not plan to operate radio stations. Its sole objective is to set up a telephone
company. For that purpose, it should go to Congress and get a franchise for a telephone
company. NTC cannot give it such a franchise.
Section 10 of Rep. Act No. 2090 prohibits the transfer of the franchise and the rights and
privileges under that franchise without the express approval of Congress. No amount of legal
niceties can cloak the fact that ETCI is not FACI, that the franchise was sold by FACI to ETCI,
and that the permit given by NTC to ETCI is based on a purchased franchise.
When the owners of FACI sold out their stocks, the 3,900 shares were on paper worth only 35
centavos each. The company had no assets and physical properties. All it had was the
franchise, for whatever it was worth. The buyers paid P4,618,185.00 for the company's stocks,
almost all of the amount intended for the franchise. It was, therefore, a sale or transfer of the
franchise in violation of the express terms of Rep. Act No. 2090 which call for approval by
Congress.
ETCI tried to show a series of transactions involving the sales of almost all of its stocks. Not only
are the circumstances surrounding the transfers quite suspicious, but they were effected without
the approval and authorization of the Commission as required by law.
Sec. 4 of Rep. Act No. 2090 also provides that the franchise shall be void unless the
construction of radio stations is begun within two years or June 22, 1960 and completed within
ten years or June 22, 1968.
As of April 14, 1987, ETCI formally admitted that it was still in the pre-operating stage. Almost 30
years later, it had not even started the business authorized by the franchise. It is only now that it
proposes to construct, not radio stations, but a telephone system.
During the oral arguments and in its memorandum, ETCI presented proof of several radio
station construction permits. A construction permit authorizes a construction but does not prove
it. There is no proof that the entire construction of all stations was completed within ten years. In
fact, there is not the slightest intimation that ETCI, today, is operating radio stations. What it
wants is to set up a telephone system.
In addition to the franchise being void under its own charter, P.D. 36 on November 2, 1972,
cancelled all unused or dormant legislative franchises. Rep. Act No. 2090, having been voided
by its own Section 4, suffered a second death if that is at all possible.
The violations of law-(1) the giving of life to an already dead franchise, (2) the transfer of
ownership against an express statutory provision, and (3) the use of a franchise for radio
stations to justify the setting up of a cellular mobile telephone system are too glaring for us to
ignore on the basis of "respect" for a questionable NTC order and other purely technical
considerations. We should not force PLDT to open its lines to enable a competitor to operate a
system which cannot survive unless it uses PLDT properties.
The NTC bases its order on alleged grounds of public need, public interest, and the common
good. There is no showing that these considerations will be satisfied, at least sufficient to
warrant a strained interpretation of legal provisions. Any slight improvement which the expensive
ETCI project will accomplish cannot offset its violation of law and fair dealing.
I, THEREFORE, VOTE to GRANT the petition.

Fernan, C.J., Narvasa, Gancayco, Bidin and Medialdea, JJ., concur.

CRUZ, J., concurring and dissenting:

As one of the many dissatisfied customers of PLDT, I should have no objection to the grant of
the provisional authority to ETCI. I have none. Its admission will improve communication facilities
in the country conformably to the constitutional objective. It will also keep PLDT on its toes and
encourage it to correct its deficient service in view of the competition.
I fully agree with all the rulings in the ponencia except the approval of the requirement for PLDT
to interconnect with ETCI. I think it violates due process. It reminds me of the story of the little
red hen who found some rice and asked who would help her plant it. None of the animals in the
farm was willing and neither did they help in watering, harvesting and finally cooking it. But when
she asked, "Who will help me eat the rice?" everyone wanted to join in. The little red hen is like
PLDT.
If ETCI wants to operate its own telephone system, it should rely on its own resources instead of
riding piggy-back on PLDT. It seems to me rather unfair for the Government to require PLDT to
share with a newcomer and potential rival what it took PLDT tremendous effort and long years
and billions of pesos to build .
The case of Republic of the Philippines v. PLDT, 26 SCRA 620, is not applicable because it was
the Government itself that was there seeking interconnection of its own telephone system, with
PLDT. The Court recognized the obvious public purpose that justified the special exercise (by
the Government of the power of eminent domain. But in the case before us, the intended
beneficiary is a private enterprise primarily organized for profit and, indeed, to compete with
PLDT. In effect, the Government is forcing PLDT to surrender its competitive advantage and
share its resources with ETCI, which may not only supplement but, possibly, even ultimately
supplant PLDT. I do not think government authority extends that far.
The majority disposes of the question of due process by simply saying that PLDT will have frill
opportunity to be heard in the ascertainment of the just compensation ETCI will have to pay for
the interconnection. That is not the issue. What PLDT is objecting to is not the amount of the just
compensation but the interconnection itself that is being forced upon it.
I feel there is no due process where private property is taken by the Government from one
private person and given to another private person for the latter's direct benefit. The fact that
compensation is paid is immaterial; the flaw lies in the taking itself (Davidson v. New Orleans, 90
U.S. 97). The circumstance that PLDT is a public utility is no warrant for taking undue liberties
with its property, which is protected by the Bill of Rights. "Public need" cannot be a blanket
justification for favoring one investor against another in contravention of the system of free
enterprise. If PLDT has misused its franchise, I should think the solution is to revoke its authority,
not to force it to share its resources with its private competitors.
The rule is that where it is the legislature itself that directly calls for the expropriation of private
property, its determination of the thing to be condemned and the purpose of the taking is
conclusive on the courts (City of Manila v. Chinese Community, 40 Phil. 349). But where the
power of eminent domain is exercised only by a delegate of the legislature, like ETCI, the courts
may inquire into the necessity or propriety of the expropriation and, when warranted, pronounce

11
its invalidity (Republic of the Philippines v. La Orden de PO Benedictinos de Filipinas, 1 SCRA
649). I think this is what the Court should do in the case at bar.
A final point. It is argued that requiring ETCI to start from scratch (as PLDT did) and import its
own equipment would entail a tremendous outflow of foreign currency we can ill afford at this
time. Perhaps so. But we must remember that the Bill of Rights is not a marketable commodity,
like a piece of machinery. Due process is an indispensable requirement that cannot be assessed
in dollar and cents.
Fernan, C.J., and Narvasa, J., concur

Case no. 2

Republic
SUPREME
Manila

of

the

Philippines
COURT

12
SECOND DIVISION
G.R. No. 106804

first expropriation case was pending, NPC dumped waste materials beyond the site agreed upon
by NPC with Pobre. The dumping of waste materials altered the topography of some portions of
the Property. NPC did not act on Pobre's complaints and NPC continued with its dumping.

August 12, 2004

NATIONAL
POWER
vs.
COURT OF APPEALS and ANTONINO POBRE, respondents.

CORPORATION, petitioner,

DECISION

Third was on 1 September 1979, when NPC filed its second expropriation case against Pobre to
acquire an additional 5,554 square meters of the Property. This is the subject of this petition.
NPC needed the lot for the construction and maintenance of Naglagbong Well Site F-20,
pursuant to Proclamation No. 7396 and Republic Act No. 5092.7 NPC immediately
deposited P5,546.36 with the Philippine National Bank. The deposit represented 10% of the total
market value of the lots covered by the second expropriation. On 6 September 1979, NPC
entered the 5,554 square-meter lot upon the trial court's issuance of a writ of possession to
NPC.

The Case

On 10 December 1984, Pobre filed a motion to dismiss the second complaint for expropriation.
Pobre claimed that NPC damaged his Property. Pobre prayed for just compensation of all the
lots affected by NPC's actions and for the payment of damages.

Before us is a petition for review 1 of the 30 March 1992 Decision 2 and 14 August 1992
Resolution of the Court of Appeals in CA-G.R. CV No. 16930. The Court of Appeals affirmed the
Decision3 of the Regional Trial Court, Branch 17, Tabaco, Albay in Civil Case No. T-552.

On 2 January 1985, NPC filed a motion to dismiss the second expropriation case on the ground
that NPC had found an alternative site and that NPC had already abandoned in 1981 the project
within the Property due to Pobre's opposition.

The Antecedents

On 8 January 1985, the trial court granted NPC's motion to dismiss but the trial court allowed
Pobre to adduce evidence on his claim for damages. The trial court admitted Pobre's exhibits on
the damages because NPC failed to object.

CARPIO, J.:

Petitioner National Power Corporation ("NPC") is a public corporation created to generate

geothermal, hydroelectric, nuclear and other power and to transmit electric power
nationwide.4 NPC is authorized by law to acquire property and exercise the right of eminent
domain.
Private respondent Antonino Pobre ("Pobre") is the owner of a 68,969 square-meter land
("Property") located in Barangay Bano, Municipality of Tiwi, Albay. The Property is covered by
TCT No. 4067 and Subdivision Plan 11-9709.
In 1963, Pobre began developing the Property as a resort-subdivision, which he named as "Tiwi
Hot Springs Resort Subdivision." On 12 January 1966, the then Court of First Instance of Albay
approved the subdivision plan of the Property. The Register of Deeds thus cancelled TCT No.
4067 and issued independent titles for the approved lots. In 1969, Pobre started advertising and
selling the lots.
On 4 August 1965, the Commission on Volcanology certified that thermal mineral water and
steam were present beneath the Property. The Commission on Volcanology found the thermal
mineral water and steam suitable for domestic use and potentially for commercial or industrial
use.
NPC then became involved with Pobre's Property in three instances.
First was on 18 February 1972 when Pobre leased to NPC for one year eleven lots from the
approved subdivision plan.
Second was sometime in 1977, the first time that NPC filed its expropriation case against Pobre
to acquire an 8,311.60 square-meter portion of the Property.5 On 23 October 1979, the trial court
ordered the expropriation of the lots upon NPC's payment of P25 per square meter or a total
amount of P207,790. NPC began drilling operations and construction of steam wells. While this

On 30 August 1985, the trial court ordered the case submitted for decision since NPC failed to
appear to present its evidence. The trial court denied NPC's motion to reconsider the submission
of the case for decision.
NPC filed a petition for certiorari 8 with the then Intermediate Appellate Court, questioning the 30
August 1985 Order of the trial court. On 12 February 1987, the Intermediate Appellate Court
dismissed NPC's petition but directed the lower court to rule on NPC's objections to Pobre's
documentary exhibits.
On 27 March 1987, the trial court admitted all of Pobre's exhibits and upheld its Order dated 30
August 1985. The trial court considered the case submitted for decision.
On 29 April 1987, the trial court issued its Decision in favor of Pobre. The dispositive portion of
the decision reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the defendant and
against the plaintiff, ordering the plaintiff to pay unto the defendant:
(1) The sum of THREE MILLION FOUR HUNDRED FORTY EIGHT THOUSAND FOUR
HUNDRED FIFTY (P3,448,450.00) PESOS which is the fair market value of the subdivision of
defendant with an area of sixty eight thousand nine hundred sixty nine (68,969) square meters,
plus legal rate of interest per annum from September 6, 1979 until the whole amount is paid, and
upon payment thereof by the plaintiff the defendant is hereby ordered to execute the necessary
Deed of Conveyance or Absolute Sale of the property in favor of the plaintiff;
(2) The sum of ONE HUNDRED FIFTY THOUSAND (P150,000.00) PESOS for and as
attorney's fees.

13
Costs against the plaintiff.
SO ORDERED.9
On 13 July 1987, NPC filed its motion for reconsideration of the decision. On 30 October 1987,
the trial court issued its Order denying NPC's motion for reconsideration.
NPC appealed to the Court of Appeals. On 30 March 1992, the Court of Appeals upheld the
decision of the trial court but deleted the award of attorney's fees. The dispositive portion of the
decision reads:

NPC claims that the Court of Appeals committed the following errors that warrant reversal of the
appellate court's decision:
1. In not annulling the appealed Decision for having been rendered by the trial court with grave
abuse of discretion and without jurisdiction;
2. In holding that NPC had "taken" the entire Property of Pobre;
3. Assuming arguendo that there was "taking" of the entire Property, in not excluding from the
Property the 8,311.60 square-meter portion NPC had previously expropriated and paid for;

WHEREFORE, by reason of the foregoing, the Decision appealed from is AFFIRMED with the
modification that the award of attorney's fees is deleted. No pronouncement as to costs.

4. In holding that the amount of just compensation fixed by the trial court at P3,448,450.00 with
interest from September 6, 1979 until fully paid, is just and fair;

SO ORDERED.10

5. In not holding that the just compensation should be fixed at P25.00 per square meter only as
what NPC and Pobre had previously mutually agreed upon; and

The Court of Appeals denied NPC's motion for reconsideration in a Resolution dated 14 August
1992.

6. In not totally setting aside the appealed Decision of the trial court.11

The Ruling of the Trial Court

Procedural Issues

In its 69-page decision, the trial court recounted in great detail the scale and scope of the
damage NPC inflicted on the Property that Pobre had developed into a resort-subdivision.
Pobre's Property suffered "permanent injury" because of the noise, water, air and land pollution
generated by NPC's geothermal plants. The construction and operation of the geothermal plants
drastically changed the topography of the Property making it no longer viable as a resortsubdivision. The chemicals emitted by the geothermal plants damaged the natural resources in
the Property and endangered the lives of the residents.

NPC, represented by the Office of the Solicitor General, insists that at the time that it moved for
the dismissal of its complaint, Pobre had yet to serve an answer or a motion for summary
judgment on NPC. Thus, NPC as plaintiff had the right to move for the automatic dismissal of its
complaint. NPC relies on Section 1, Rule 17 of the 1964 Rules of Court, the Rules then in effect.
NPC argues that the dismissal of the complaint should have carried with it the dismissal of the
entire case including Pobre's counterclaim.

NPC did not only take the 8,311.60 square-meter portion of the Property, but also the remaining
area of the 68,969 square-meter Property. NPC had rendered Pobre's entire Property useless as
a resort-subdivision. The Property has become useful only to NPC. NPC must therefore take
Pobre's entire Property and pay for it.
The trial court found the following badges of NPC's bad faith: (1) NPC allowed five years to pass
before it moved for the dismissal of the second expropriation case; (2) NPC did not act on
Pobre's plea for NPC to eliminate or at least reduce the damage to the Property; and (3) NPC
singled out Pobre's Property for piecemeal expropriation when NPC could have expropriated
other properties which were not affected in their entirety by NPC's operation.
The trial court found the just compensation to be P50 per square meter or a total of P3,448,450
for Pobre's 68,969 square-meter Property. NPC failed to contest this valuation. Since NPC was
in bad faith and it employed dilatory tactics to prolong this case, the trial court imposed legal
interest on the P3,448,450 from 6 September 1979 until full payment. The trial court awarded
Pobre attorney's fees of P150,000.
The Ruling of the Court of Appeals
The Court of Appeals affirmed the decision of the trial court. However, the appellate court
deleted the award of attorney's fees because Pobre did not properly plead for it.
The Issues

NPC's belated attack on Pobre's claim for damages must fail. The trial court's reservation of
Pobre's right to recover damages in the same case is already beyond review. The 8 January
1985 Order of the trial court attained finality when NPC failed to move for its reconsideration
within the 15-day reglementary period. NPC opposed the order only on 27 May 1985 or more
than four months from the issuance of the order.
We cannot fault the Court of Appeals for not considering NPC's objections against the
subsistence of Pobre's claim for damages. NPC neither included this issue in its assignment of
errors nor discussed it in its appellant's brief. NPC also failed to question the trial court's 8
January 1985 Order in the petition for certiorari 12 it had earlier filed with the Court of Appeals. It
is only before this Court that NPC now vigorously assails the preservation of Pobre's claim for
damages. Clearly, NPC's opposition to the existence of Pobre's claim for damages is a mere
afterthought. Rules of fair play, justice and due process dictate that parties cannot raise an issue
for the first time on appeal.13
We must correct NPC's claim that it filed the notice of dismissal just "shortly" after it had filed the
complaint for expropriation. While NPC had intimated several times to the trial court its desire to
dismiss the expropriation case it filed on 5 September 1979, 14 it was only on 2 January 1985 that
NPC filed its notice of dismissal. 15 It took NPC more than five years to actually file the notice of
dismissal. Five years is definitely not a short period of time. NPC obviously dilly-dallied in filing
its notice of dismissal while NPC meanwhile burdened Pobre's property rights.
Even a timely opposition against Pobre's claim for damages would not yield a favorable ruling for
NPC. It is not Section 1, Rule 17 of the 1964 Rules of Court that is applicable to this case but

14
Rule 67 of the same Rules, as well as jurisprudence on expropriation cases. Rule 17 referred to
dismissal of civil actions in general while Rule 67 specifically governed eminent domain cases.
Eminent domain is the authority and right of the state, as sovereign, to take private property for
public use upon observance of due process of law and payment of just compensation. 16 The
power of eminent domain may be validly delegated to the local governments, other public
entities and public utilities17 such as NPC. Expropriation is the procedure for enforcing the right
of eminent domain.18 "Eminent Domain" was the former title of Rule 67 of the 1964 Rules of
Court. In the 1997 Rules of Civil Procedure, which took effect on 1 July 1997, the prescribed
method of expropriation is still found in Rule 67, but its title is now "Expropriation."
Section 1, Rule 17 of the 1964 Rules of Court provided the exception to the general rule that the
dismissal of the complaint is addressed to the sound discretion of the court. 19 For as long as all
of the elements of Section 1, Rule 17 were present the dismissal of the complaint rested
exclusively on the plaintiff's will.20 The defending party and even the courts were powerless to
prevent the dismissal.21 The courts could only accept and record the dismissal.22
A plain reading of Section 1, Rule 17 of the 1964 Rules of Court makes it obvious that this rule
was not intended to supplement Rule 67 of the same Rules. Section 1, Rule 17 of the 1964
Rules of Court, provided that:
SECTION 1. Dismissal by the plaintiff. An action may be dismissed by the plaintiff without
order of court by filing a notice of dismissal at any time before service of the answer or of a
motion for summary judgment. Unless otherwise stated in the notice, the dismissal is without
prejudice, except that a notice operates as an adjudication upon the merits when filed by a
plaintiff who has once dismissed in a competent court an action based on or including the same
claim. A class suit shall not be dismissed or compromised without approval of the court.
While Section 1, Rule 17 spoke of the "service of answer or summary judgment," the Rules then
did not require the filing of an answer or summary judgment in eminent domain cases. 23 In lieu of
an answer, Section 3 of Rule 67 required the defendant to file a single motion to dismiss where
he should present all of his objections and defenses to the taking of his property for the purpose
specified in the complaint.24 In short, in expropriation cases under Section 3 of Rule 67, the
motion to dismiss took the place of the answer.
The records show that Pobre had already filed and served on NPC his "motion to
dismiss/answer"25 even before NPC filed its own motion to dismiss. NPC filed its notice of
dismissal of the complaint on 2 January 1985. However, as early as 10 December 1984, Pobre
had already filed with the trial court and served on NPC his "motion to dismiss/answer." A
certain Divina Cerela received Pobre's pleading on behalf of NPC. 26 Unfortunately for NPC, even
Section 1, Rule 17 of the 1964 Rules of Court could not save its cause.
NPC is in no position to invoke Section 1, Rule 17 of the 1964 Rules of Court. A plaintiff loses his
right under this rule to move for the immediate dismissal of the complaint once the defendant
had served on the plaintiff the answer or a motion for summary judgment before the plaintiff
could file his notice of dismissal of the complaint. 27Pobre's "motion to dismiss/answer," filed and
served way ahead of NPC's motion to dismiss, takes the case out of Section 1, Rule 17
assuming the same applies.
In expropriation cases, there is no such thing as the plaintiff's matter of right to dismiss the
complaint precisely because the landowner may have already suffered damages at the start of

the taking. The plaintiff's right in expropriation cases to dismiss the complaint has always been
subject to court approval and to certain conditions. 28 The exceptional right that Section 1, Rule
17 of the 1964 Rules of Court conferred on the plaintiff must be understood to have applied only
to other civil actions. The 1997 Rules of Civil Procedure abrogated this exceptional right. 29
The power of eminent domain is subject to limitations. A landowner cannot be deprived of his
right over his land until expropriation proceedings are instituted in court. 30 The court must then
see to it that the taking is for public use, there is payment of just compensation and there is due
process of law.31
If the propriety of the taking of private property through eminent domain is subject to judicial
scrutiny, the dismissal of the complaint must also pass judicial inquiry because private rights
may have suffered in the meantime. The dismissal, withdrawal or abandonment of the
expropriation case cannot be made arbitrarily. If it appears to the court that the expropriation is
not for some public use,32 then it becomes the duty of the court to dismiss the action. 33 However,
when the defendant claims that his land suffered damage because of the expropriation, the
dismissal of the action should not foreclose the defendant's right to have his damages
ascertained either in the same case or in a separate action.34
Thus, NPC's theory that the dismissal of its complaint carried with it the dismissal of Pobre's
claim for damages is baseless. There is nothing in Rule 67 of the 1964 Rules of Court that
provided for the dismissal of the defendant's claim for damages, upon the dismissal of the
expropriation case. Case law holds that in the event of dismissal of the expropriation case, the
claim for damages may be made either in a separate or in the same action, for all damages
occasioned by the institution of the expropriation case. 35 The dismissal of the complaint can be
made under certain conditions, such as the reservation of the defendant's right to recover
damages either in the same or in another action. 36 The trial court in this case reserved Pobre's
right to prove his claim in the same case, a reservation that has become final due to NPC's own
fault.
Factual Findings of the Trial and Appellate Courts Bind the Court
The trial and appellate courts held that even before the first expropriation case, Pobre had
already established his Property as a resort-subdivision. NPC had wrought so much damage to
the Property that NPC had made the Property uninhabitable as a resort-subdivision. NPC's
facilities such as steam wells, nag wells, power plants, power lines, and canals had hemmed in
Pobre's Property. NPC's operations of its geothermal project also posed a risk to lives and
properties.
We uphold the factual findings of the trial and appellate courts. Questions of facts are beyond
the pale of Rule 45 of the Rules of Court as a petition for review may only raise questions of
law.37 Moreover, factual findings of the trial court, particularly when affirmed by the Court of
Appeals, are generally binding on this Court. 38 We thus find no reason to set aside the two
courts' factual findings.
NPC points out that it did not take Pobre's 68,969 square-meter Property. NPC argues that
assuming that it is liable for damages, the 8,311.60 square-meter portion that it had successfully
expropriated and fully paid for should have been excluded from the 68,969 square-meter
Property that Pobre claims NPC had damaged.
We are not persuaded.

15
In its 30 October 1987 Order denying NPC's motion for reconsideration, the trial court pointed
out that the Property originally had a total area of 141,300 square meters.39 Pobre converted the
Property into a resort-subdivision and sold lots to the public. What remained of the lots are the
68,969 square meters of land.40 Pobre no longer claimed damages for the other lots that he had
before the expropriation.

We have held that the usual procedure in the determination of just compensation is waived when
the government itself initially violates procedural requirements. 48 NPC's taking of Pobre's
property without filing the appropriate expropriation proceedings and paying him just
compensation is a transgression of procedural due process.

NPC must Pay Just Compensation for the Entire Property

From the beginning, NPC should have initiated expropriation proceedings for Pobre's entire
68,969 square-meter Property. NPC did not. Instead, NPC embarked on a piecemeal
expropriation of the Property. Even as the second expropriation case was still pending, NPC was
well aware of the damage that it had unleashed on the entire Property. NPC, however, remained
impervious to Pobre's repeated demands for NPC to abate the damage that it had wrought on
his Property.

Ordinarily, the dismissal of the expropriation case restores possession of the expropriated land
to the landowner.42 However, when possession of the land cannot be turned over to the
landowner because it is neither convenient nor feasible anymore to do so, the only remedy
available to the aggrieved landowner is to demand payment of just compensation. 43

NPC moved for the dismissal of the complaint for the second expropriation on the ground that it
had found an alternative site and there was stiff opposition from Pobre. 49 NPC abandoned the
second expropriation case five years after it had already deprived the Property virtually of all its
value. NPC has demonstrated its utter disregard for Pobre's property rights.

In this case, we agree with the trial and appellate courts that it is no longer possible and practical
to restore possession of the Property to Pobre. The Property is no longer habitable as a resortsubdivision. The Property is worthless to Pobre and is now useful only to NPC. Pobre has
completely lost the Property as if NPC had physically taken over the entire 68,969 square-meter
Property.

Thus, it would now be futile to compel NPC to institute expropriation proceedings to determine
the just compensation for Pobre's 68,969 square-meter Property. Pobre must be spared any
further delay in his pursuit to receive just compensation from NPC.

Pobre identified in court the lots forming the 68,969 square-meter Property. NPC had the
opportunity to object to the identification of the lots. 41 NPC, however, failed to do so. Thus, we do
not disturb the trial and appellate courts' finding on the total land area NPC had damaged.

In United States v. Causby,44 the U.S. Supreme Court ruled that when private property is
rendered uninhabitable by an entity with the power to exercise eminent domain, the taking is
deemed complete. Such taking is thus compensable.
In this jurisdiction, the Court has ruled that if the government takes property without
expropriation and devotes the property to public use, after many years the property owner may
demand payment of just compensation.45 This principle is in accord with the constitutional
mandate that private property shall not be taken for public use without just compensation. 46
In the recent case of National Housing Authority v. Heirs of Isidro Guivelondo,47 the Court
compelled the National Housing Authority ("NHA") to pay just compensation to the landowners
even after the NHA had already abandoned the expropriation case. The Court pointed out that a
government agency could not initiate expropriation proceedings, seize a person's property, and
then just decide not to proceed with the expropriation. Such a complete turn-around is arbitrary
and capricious and was condemned by the Court in the strongest possible terms. NHA was held
liable to the landowners for the prejudice that they had suffered.
In this case, NPC appropriated Pobre's Property without resort to expropriation proceedings.
NPC dismissed its own complaint for the second expropriation. At no point did NPC institute
expropriation proceedings for the lots outside the 5,554 square-meter portion subject of the
second expropriation. The only issues that the trial court had to settle were the amount of just
compensation and damages that NPC had to pay Pobre.
This case ceased to be an action for expropriation when NPC dismissed its complaint for
expropriation. Since this case has been reduced to a simple case of recovery of damages, the
provisions of the Rules of Court on the ascertainment of the just compensation to be paid were
no longer applicable. A trial before commissioners, for instance, was dispensable.

Just compensation is the fair and full equivalent of the loss.50 The trial and appellate courts
endeavored to meet this standard. The P50 per square meter valuation of the 68,969 squaremeter Property is reasonable considering that the Property was already an established resortsubdivision. NPC has itself to blame for not contesting the valuation before the trial court. Based
on the P50 per square meter valuation, the total amount of just compensation that NPC must
pay Pobre is P3,448,450.
The landowner is entitled to legal interest on the price of the land from the time of the taking up
to the time of full payment by the government. 51 In accord with jurisprudence, we fix the legal
interest at six per cent (6%) per annum.52 The legal interest should accrue from 6 September
1979, the date when the trial court issued the writ of possession to NPC, up to the time that NPC
fully pays Pobre.53
NPC's abuse of its eminent domain authority is appalling. However, we cannot award moral
damages because Pobre did not assert his right to it. 54 We also cannot award attorney's fees in
Pobre's favor since he did not appeal from the decision of the Court of Appeals denying recovery
of attorney's fees.55
Nonetheless, we find it proper to award P50,000 in temperate damages to Pobre. The court may
award temperate or moderate damages, which are more than nominal but less than
compensatory damages, if the court finds that a party has suffered some pecuniary loss but its
amount cannot be proved with certainty from the nature of the case. 56 As the trial and appellate
courts noted, Pobre's resort-subdivision was no longer just a dream because Pobre had already
established the resort-subdivision and the prospect for it was initially encouraging. That is, until
NPC permanently damaged Pobre's Property. NPC did not just destroy the property. NPC
dashed Pobre's hope of seeing his Property achieve its full potential as a resort-subdivision.
The lesson in this case must not be lost on entities with eminent domain authority. Such entities
cannot trifle with a citizen's property rights. The power of eminent domain is an extraordinary
power they must wield with circumspection and utmost regard for procedural requirements.

16
Thus, we hold NPC liable for exemplary damages of P100,000. Exemplary damages or
corrective damages are imposed, by way of example or correction for the public good, in
addition to the moral, temperate, liquidated or compensatory damages.57
WHEREFORE, we DENY the petition for lack of merit. The appealed Decision of the Court of
Appeals dated 30 March 1992 in CA-G.R. CV No. 16930 is AFFIRMED with MODIFICATION.
National Power Corporation is ordered to pay Antonino Pobre P3,448,450 as just compensation
for the 68,969 square-meter Property at P50 per square meter. National Power Corporation is
directed to pay legal interest at 6% per annum on the amount adjudged from 6 September 1979
until fully paid. Upon National Power Corporation's payment of the full amount, Antonino Pobre is
ordered to execute a Deed of Conveyance of the Property in National Power Corporation's favor.
National Power Corporation is further ordered to pay temperate and exemplary damages
of P50,000 andP100,000, respectively. No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Quisumbing, Ynares-Santiago, and Azcuna, JJ., concur

Case no. 3

Republic
SUPREME
Manila

of

the

Philippines
COURT

EN BANC
G.R. No. 155746
DIOSDADO
vs.

October 13, 2004

LAGCAO,

DOROTEO

LAGCAO

and

URSULA

LAGCAO, petitioners,

17
JUDGE GENEROSA G. LABRA, Branch 23, Regional Trial Court, Cebu, and the CITY OF
CEBU, respondent.
DECISION
CORONA, J.:
Before us is a petition for review of the decision dated July 1, 2002 of the Regional Trial Court,
Branch 23, Cebu City1 upholding the validity of the City of Cebus Ordinance No. 1843, as well
as the lower courts order dated August 26, 2002 denying petitioners motion for reconsideration.
In 1964, the Province of Cebu donated 210 lots to the City of Cebu. One of these lots was Lot
1029, situated in Capitol Hills, Cebu City, with an area of 4,048 square meters. In 1965,
petitioners purchased Lot 1029 on installment basis. But then, in late 1965, the 210 lots,
including Lot 1029, reverted to the Province of Cebu.2Consequently, the province tried to annul
the sale of Lot 1029 by the City of Cebu to the petitioners. This prompted the latter to sue the
province for specific performance and damages in the then Court of First Instance.
On July 9, 1986, the court a quo ruled in favor of petitioners and ordered the Province of Cebu to
execute the final deed of sale in favor of petitioners. On June 11, 1992, the Court of Appeals
affirmed the decision of the trial court. Pursuant to the ruling of the appellate court, the Province
of Cebu executed on June 17, 1994 a deed of absolute sale over Lot 1029 in favor of petitioners.
Thereafter, Transfer Certificate of Title (TCT) No. 129306 was issued in the name of petitioners
and Crispina Lagcao.3
After acquiring title, petitioners tried to take possession of the lot only to discover that it was
already occupied by squatters. Thus, on June 15, 1997, petitioners instituted ejectment
proceedings against the squatters. The Municipal Trial Court in Cities (MTCC), Branch 1, Cebu
City, rendered a decision on April 1, 1998, ordering the squatters to vacate the lot. On appeal,
the RTC affirmed the MTCCs decision and issued a writ of execution and order of
demolition.1avvphi1
However, when the demolition order was about to be implemented, Cebu City Mayor Alvin
Garcia wrote two letters4 to the MTCC, requesting the deferment of the demolition on the ground
that the City was still looking for a relocation site for the squatters. Acting on the mayors
request, the MTCC issued two orders suspending the demolition for a period of 120 days from
February 22, 1999. Unfortunately for petitioners, during the suspension period, the Sangguniang
Panlungsod (SP) of Cebu City passed a resolution which identified Lot 1029 as a socialized
housing site pursuant to RA 7279.5 Then, on June 30, 1999, the SP of Cebu City passed
Ordinance No. 17726 which included Lot 1029 among the identified sites for socialized housing.
On July, 19, 2000, Ordinance No. 1843 7 was enacted by the SP of Cebu City authorizing the
mayor of Cebu City to initiate expropriation proceedings for the acquisition of Lot 1029 which
was registered in the name of petitioners. The intended acquisition was to be used for the
benefit of the homeless after its subdivision and sale to the actual occupants thereof. For this
purpose, the ordinance appropriated the amount of P6,881,600 for the payment of the subject
lot. This ordinance was approved by Mayor Garcia on August 2, 2000.
On August 29, 2000, petitioners filed with the RTC an action for declaration of nullity of
Ordinance No. 1843 for being unconstitutional. The trial court rendered its decision on July 1,
2002 dismissing the complaint filed by petitioners whose subsequent motion for reconsideration
was likewise denied on August 26, 2002.

In this appeal, petitioners argue that Ordinance No. 1843 is unconstitutional as it sanctions the
expropriation of their property for the purpose of selling it to the squatters, an endeavor contrary
to the concept of "public use" contemplated in the Constitution.8 They allege that it will benefit
only a handful of people. The ordinance, according to petitioners, was obviously passed for
politicking, the squatters undeniably being a big source of votes.1avvphi1
In sum, this Court is being asked to resolve whether or not the intended expropriation by the City
of Cebu of a 4,048-square-meter parcel of land owned by petitioners contravenes the
Constitution and applicable laws.
Under Section 48 of RA 7160, 9 otherwise known as the Local Government Code of 1991, 10 local
legislative power shall be exercised by the Sangguniang Panlungsod of the city. The legislative
acts of the Sangguniang Panlungsod in the exercise of its lawmaking authority are denominated
ordinances.
Local government units have no inherent power of eminent domain and can exercise it only
when expressly authorized by the legislature. 11 By virtue of RA 7160, Congress conferred upon
local government units the power to expropriate. Ordinance No. 1843 was enacted pursuant to
Section 19 of RA 7160:
SEC. 19. Eminent Domain. A local government unit may, through its chief executive and acting
pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose, or
welfare for the benefit of the poor and the landless, upon payment of just
compensation, pursuant to the provisions of the Constitution and pertinent laws xxx. (italics
supplied).
Ordinance No. 1843 which authorized the expropriation of petitioners lot was enacted by the SP
of Cebu City to provide socialized housing for the homeless and low-income residents of the
City.
However, while we recognize that housing is one of the most serious social problems of the
country, local government units do not possess unbridled authority to exercise their power of
eminent domain in seeking solutions to this problem.
There are two legal provisions which limit the exercise of this power: (1) no person shall be
deprived of life, liberty, or property without due process of law, nor shall any person be denied
the equal protection of the laws; 12 and (2) private property shall not be taken for public use
without just compensation.13 Thus, the exercise by local government units of the power of
eminent domain is not absolute. In fact, Section 19 of RA 7160 itself explicitly states that such
exercise must comply with the provisions of the Constitution and pertinent laws.
The exercise of the power of eminent domain drastically affects a landowners right to private
property, which is as much a constitutionally-protected right necessary for the preservation and
enhancement of personal dignity and intimately connected with the rights to life and
liberty.14 Whether directly exercised by the State or by its authorized agents, the exercise of
eminent domain is necessarily in derogation of private rights. 15 For this reason, the need for a
painstaking scrutiny cannot be overemphasized.
The due process clause cannot be trampled upon each time an ordinance orders the
expropriation of a private individuals property. The courts cannot even adopt a hands-off policy

18
simply because public use or public purpose is invoked by an ordinance, or just compensation
has been fixed and determined. In De Knecht vs. Bautista,16 we said:
It is obvious then that a land-owner is covered by the mantle of protection due process affords. It
is a mandate of reason. It frowns on arbitrariness, it is the antithesis of any governmental act
that smacks of whim or caprice. It negates state power to act in an oppressive manner. It is, as
had been stressed so often, the embodiment of the sporting idea of fair play. In that sense, it
stands as a guaranty of justice. That is the standard that must be met by any governmental
agency in the exercise of whatever competence is entrusted to it. As was so emphatically
stressed by the present Chief Justice, "Acts of Congress, as well as those of the Executive, can
deny due process only under pain of nullity. xxx.
The foundation of the right to exercise eminent domain is genuine necessity and that necessity
must be of public character.17 Government may not capriciously or arbitrarily choose which
private property should be expropriated. In this case, there was no showing at all why
petitioners property was singled out for expropriation by the city ordinance or what necessity
impelled the particular choice or selection. Ordinance No. 1843 stated no reason for the choice
of petitioners property as the site of a socialized housing project.
Condemnation of private lands in an irrational or piecemeal fashion or the random expropriation
of small lots to accommodate no more than a few tenants or squatters is certainly not the
condemnation for public use contemplated by the Constitution. This is depriving a citizen of his
property for the convenience of a few without perceptible benefit to the public.18
RA 7279 is the law that governs the local expropriation of property for purposes of urban land
reform and housing. Sections 9 and 10 thereof provide:
SEC 9. Priorities in the Acquisition of Land. Lands for socialized housing shall be acquired in
the following order:
(a) Those owned by the Government or any of its subdivisions, instrumentalities, or agencies,
including government-owned or controlled corporations and their subsidiaries;
(b) Alienable lands of the public domain;
(c) Unregistered or abandoned and idle lands;

purchase, and expropriation: Provided, however, That expropriation shall be resorted to only
when other modes of acquisition have been exhausted: Provided further, That where
expropriation is resorted to, parcels of land owned by small property owners shall be exempted
for purposes of this Act: xxx. (Emphasis supplied).
In the recent case of Estate or Heirs of the Late Ex-Justice Jose B.L. Reyes et al. vs. City of
Manila,19 we ruled that the above-quoted provisions are strict limitations on the exercise of the
power of eminent domain by local government units, especially with respect to (1) the order of
priority in acquiring land for socialized housing and (2) the resort to expropriation proceedings as
a means to acquiring it. Private lands rank last in the order of priority for purposes of socialized
housing. In the same vein, expropriation proceedings may be resorted to only after the other
modes of acquisition are exhausted. Compliance with these conditions is mandatory because
these are the only safeguards of oftentimes helpless owners of private property against what
may be a tyrannical violation of due process when their property is forcibly taken from them
allegedly for public use.
We have found nothing in the records indicating that the City of Cebu complied strictly with
Sections 9 and 10 of RA 7279. Ordinance No. 1843 sought to expropriate petitioners property
without any attempt to first acquire the lands listed in (a) to (e) of Section 9 of RA 7279.
Likewise, Cebu City failed to establish that the other modes of acquisition in Section 10 of RA
7279 were first exhausted. Moreover, prior to the passage of Ordinance No. 1843, there was no
evidence of a valid and definite offer to buy petitioners property as required by Section 19 of RA
7160.20 We therefore find Ordinance No. 1843 to be constitutionally infirm for being violative of
the petitioners right to due process.
It should also be noted that, as early as 1998, petitioners had already obtained a favorable
judgment of eviction against the illegal occupants of their property. The judgment in this
ejectment case had, in fact, already attained finality, with a writ of execution and an order of
demolition. But Mayor Garcia requested the trial court to suspend the demolition on the pretext
that the City was still searching for a relocation site for the squatters. However, instead of
looking for a relocation site during the suspension period, the city council suddenly enacted
Ordinance No. 1843 for the expropriation of petitioners lot. It was trickery and bad faith, pure
and simple. The unconscionable manner in which the questioned ordinance was passed clearly
indicated that respondent City transgressed the Constitution, RA 7160 and RA 7279.

(f) Privately-owned lands.

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

Where on-site development is found more practicable and advantageous to the beneficiaries,
the priorities mentioned in this section shall not apply. The local government units shall give
budgetary priority to on-site development of government lands. (Emphasis supplied).

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

SEC. 10. Modes of Land Acquisition. The modes of acquiring lands for purposes of this Act
shall include, among others, community mortgage, land swapping, land assembly or
consolidation, land banking, donation to the Government, joint venture agreement, negotiated

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

(d) Those within the declared Areas or Priority Development, Zonal Improvement Program sites,
and Slum Improvement and Resettlement Program sites which have not yet been acquired;
(e) Bagong Lipunan Improvement of Sites and Services or BLISS which have not yet been
acquired; and

19
second, the precipitate manner in which it was enacted was plain oppression masquerading as a
pro-poor ordinance;
third, the fact that petitioners small property was singled out for expropriation for the purpose of
awarding it to no more than a few squatters indicated manifest partiality against petitioners, and
fourth, the ordinance failed to show that there was a reasonable relation between the end sought
and the means adopted. While the objective of the City of Cebu was to provide adequate
housing to slum dwellers, the means it employed in pursuit of such objective fell short of what
was legal, sensible and called for by the circumstances.
Indeed, experience has shown that the disregard of basic liberties and the use of short-sighted
methods in expropriation proceedings have not achieved the desired results. Over the years, the
government has tried to remedy the worsening squatter problem. Far from solving it, however,
governments kid-glove approach has only resulted in the multiplication and proliferation of
squatter colonies and blighted areas. A pro-poor program that is well-studied, adequately
funded, genuinely sincere and truly respectful of everyones basic rights is what this problem
calls for, not the improvident enactment of politics-based ordinances targeting small private lots
in no rational fashion.
WHEREFORE, the petition is hereby GRANTED. The July 1, 2002 decision of Branch 23 of the
Regional Trial Court of Cebu City is REVERSED and SET ASIDE.
SO ORDERED.

Case no. 4

Republic
SUPREME
Manila
EN BANC

of

the

Philippines
COURT

20
G.R. No. L-20620 August 15, 1974
REPUBLIC
OF
THE
PHILIPPINES, plaintiff-appellant,
vs.
CARMEN M. VDA. DE CASTELLVI, ET AL., defendants-appellees.
Office of the Solicitor General for plaintiff-appellant.
C.A. Mendoza & A. V. Raquiza and Alberto Cacnio & Associates for defendant-appellees.

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

On June 29, 1959 the trial court issued an order fixing the provisional value of the lands at
P259,669.10.
In her "motion to dismiss" filed on July 14, 1959, Castellvi alleged, among other things, that the
land under her administration, being a residential land, had a fair market value of P15.00 per
square meter, so it had a total market value of P11,389,485.00; that the Republic, through the
Armed Forces of the Philippines, particularly the Philippine Air Force, had been, despite
repeated demands, illegally occupying her property since July 1, 1956, thereby preventing her
from using and disposing of it, thus causing her damages by way of unrealized profits. This
defendant prayed that the complaint be dismissed, or that the Republic be ordered to pay her
P15.00 per square meter, or a total of P11,389,485.00, plus interest thereon at 6% per annum
from July 1, 1956; that the Republic be ordered to pay her P5,000,000.00 as unrealized profits,
and the costs of the suit.
By order of the trial court, dated August, 1959, Amparo C. Diaz, Dolores G. viuda de Gil, Paloma
Castellvi, Carmen Castellvi, Rafael Castellvi, Luis Castellvi, Natividad Castellvi de Raquiza, Jose
Castellvi and Consuelo Castellvi were allowed to intervene as parties defendants. Subsequently,
Joaquin V. Gozun, Jr., husband of defendant Nieves Toledo Gozun, was also allowed by the
court to intervene as a party defendant.
After the Republic had deposited with the Provincial Treasurer of Pampanga the amount of
P259,669.10, the trial court ordered that the Republic be placed in possession of the lands. The
Republic was actually placed in possession of the lands on August 10,
1959. 1
In her "motion to dismiss", dated October 22, 1959, Toledo-Gozun alleged, among other things,
that her two parcels of land were residential lands, in fact a portion with an area of 343,303
square meters had already been subdivided into different lots for sale to the general public, and
the remaining portion had already been set aside for expansion sites of the already completed
subdivisions; that the fair market value of said lands was P15.00 per square meter, so they had
a total market value of P8,085,675.00; and she prayed that the complaint be dismissed, or that
she be paid the amount of P8,085,675.00, plus interest thereon at the rate of 6% per annum
from October 13, 1959, and attorney's fees in the amount of P50,000.00.
Intervenors Jose Castellvi and Consuelo Castellvi in their answer, filed on February 11, 1960,
and also intervenor Joaquin Gozun, Jr., husband of defendant Maria Nieves Toledo-Gozun, in
his motion to dismiss, dated May 27, 1960, all alleged that the value of the lands sought to be
expropriated was at the rate of P15.00 per square meter.
On November 4, 1959, the trial court authorized the Provincial Treasurer of Pampanga to pay
defendant Toledo-Gozun the sum of P107,609.00 as provisional value of her lands. 2 On May 16,
1960 the trial Court authorized the Provincial Treasurer of Pampanga to pay defendant Castellvi
the amount of P151,859.80 as provisional value of the land under her administration, and
ordered said defendant to deposit the amount with the Philippine National Bank under the
supervision of the Deputy Clerk of Court. In another order of May 16, 1960 the trial Court
entered an order of condemnation.3
The trial Court appointed three commissioners: Atty. Amadeo Yuzon, Clerk of Court, as
commissioner for the court; Atty. Felicisimo G. Pamandanan, counsel of the Philippine National
Bank Branch at Floridablanca, for the plaintiff; and Atty. Leonardo F. Lansangan, Filipino legal

21
counsel at Clark Air Base, for the defendants. The Commissioners, after having qualified
themselves, proceeded to the performance of their duties.
On March 15,1961 the Commissioners submitted their report and recommendation, wherein,
after having determined that the lands sought to be expropriated were residential lands, they
recommended unanimously that the lowest price that should be paid was P10.00 per square
meter, for both the lands of Castellvi and Toledo-Gozun; that an additional P5,000.00 be paid to
Toledo-Gozun for improvements found on her land; that legal interest on the compensation,
computed from August 10, 1959, be paid after deducting the amounts already paid to the
owners, and that no consequential damages be awarded. 4 The Commissioners' report was
objected to by all the parties in the case by defendants Castellvi and Toledo-Gozun, who
insisted that the fair market value of their lands should be fixed at P15.00 per square meter; and
by the Republic, which insisted that the price to be paid for the lands should be fixed at P0.20
per square meter. 5
After the parties-defendants and intervenors had filed their respective memoranda, and the
Republic, after several extensions of time, had adopted as its memorandum its objections to the
report of the Commissioners, the trial court, on May 26, 1961, rendered its decision 6 the
dispositive portion of which reads as follows:
WHEREFORE, taking into account all the foregoing circumstances, and that the lands are
titled, ... the rising trend of land values ..., and the lowered purchasing power of the Philippine
peso, the court finds that the unanimous recommendation of the commissioners of ten (P10.00)
pesos per square meter for the three lots of the defendants subject of this action is fair and just.
xxx xxx xxx
The plaintiff will pay 6% interest per annum on the total value of the lands of defendant ToledoGozun since (sic) the amount deposited as provisional value from August 10, 1959 until full
payment is made to said defendant or deposit therefor is made in court.
In respect to the defendant Castellvi, interest at 6% per annum will also be paid by the plaintiff to
defendant Castellvi from July 1, 1956 when plaintiff commenced its illegal possession of the
Castellvi land when the instant action had not yet been commenced to July 10, 1959 when the
provisional value thereof was actually deposited in court, on the total value of the said (Castellvi)
land as herein adjudged. The same rate of interest shall be paid from July 11, 1959 on the total
value of the land herein adjudged minus the amount deposited as provisional value, or
P151,859.80, such interest to run until full payment is made to said defendant or deposit therefor
is made in court. All the intervenors having failed to produce evidence in support of their
respective interventions, said interventions are ordered dismissed.
The costs shall be charged to the plaintiff.
On June 21, 1961 the Republic filed a motion for a new trial and/or reconsideration, upon the
grounds of newly-discovered evidence, that the decision was not supported by the evidence,
and that the decision was against the law, against which motion defendants Castellvi and
Toledo-Gozun filed their respective oppositions. On July 8, 1961 when the motion of the
Republic for new trial and/or reconsideration was called for hearing, the Republic filed a
supplemental motion for new trial upon the ground of additional newly-discovered evidence. This
motion for new trial and/or reconsideration was denied by the court on July 12, 1961.

On July 17, 1961 the Republic gave notice of its intention to appeal from the decision of May 26,
1961 and the order of July 12, 1961. Defendant Castellvi also filed, on July 17, 1961, her notice
of appeal from the decision of the trial court.
The Republic filed various ex-parte motions for extension of time within which to file its record on
appeal. The Republic's record on appeal was finally submitted on December 6, 1961.
Defendants Castellvi and Toledo-Gozun filed not only a joint opposition to the approval of the
Republic's record on appeal, but also a joint memorandum in support of their opposition. The
Republic also filed a memorandum in support of its prayer for the approval of its record on
appeal. On December 27, 1961 the trial court issued an order declaring both the record on
appeal filed by the Republic, and the record on appeal filed by defendant Castellvi as having
been filed out of time, thereby dismissing both appeals.
On January 11, 1962 the Republic filed a "motion to strike out the order of December 27, 1961
and for reconsideration", and subsequently an amended record on appeal, against which motion
the defendants Castellvi and Toledo-Gozun filed their opposition. On July 26, 1962 the trial court
issued an order, stating that "in the interest of expediency, the questions raised may be properly
and finally determined by the Supreme Court," and at the same time it ordered the Solicitor
General to submit a record on appeal containing copies of orders and pleadings specified
therein. In an order dated November 19, 1962, the trial court approved the Republic's record on
appeal as amended.
Defendant Castellvi did not insist on her appeal. Defendant Toledo-Gozun did not appeal.
The motion to dismiss the Republic's appeal was reiterated by appellees Castellvi and ToledoGozun before this Court, but this Court denied the motion.
In her motion of August 11, 1964, appellee Castellvi sought to increase the provisional value of
her land. The Republic, in its comment on Castellvi's motion, opposed the same. This Court
denied Castellvi's motion in a resolution dated October 2,1964.
The motion of appellees, Castellvi and Toledo-Gozun, dated October 6, 1969, praying that they
be authorized to mortgage the lands subject of expropriation, was denied by this Court or
October 14, 1969.
On February 14, 1972, Attys. Alberto Cacnio, and Associates, counsel for the estate of the late
Don Alfonso de Castellvi in the expropriation proceedings, filed a notice of attorney's lien, stating
that as per agreement with the administrator of the estate of Don Alfonso de Castellvi they shall
receive by way of attorney's fees, "the sum equivalent to ten per centum of whatever the court
may finally decide as the expropriated price of the property subject matter of the case."
--------Before this Court, the Republic contends that the lower court erred:
1. In finding the price of P10 per square meter of the lands subject of the instant proceedings as
just compensation;
2. In holding that the "taking" of the properties under expropriation commenced with the filing of
this action;

22
3. In ordering plaintiff-appellant to pay 6% interest on the adjudged value of the Castellvi
property to start from July of 1956;
4. In denying plaintiff-appellant's motion for new trial based on newly discovered evidence.

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

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

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

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

Above lot is
Pampanga ...

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

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

Appellee Toledo-Gozun did not comment on the Republic's argument in support of the second
error assigned, because as far as she was concerned the Republic had not taken possession of
her lands prior to August 10, 1959. 9
In order to better comprehend the issues raised in the appeal, in so far as the Castellvi property
is concerned, it should be noted that the Castellvi property had been occupied by the Philippine
Air Force since 1947 under a contract of lease, typified by the contract marked Exh. 4-Castellvi,
the pertinent portions of which read:
CONTRACT OF LEASE
This AGREEMENT OF LEASE MADE AND ENTERED into by and between INTESTATE
ESTATE OF ALFONSO DE CASTELLVI, represented by CARMEN M. DE CASTELLVI, Judicial
Administratrix ... hereinafter called the LESSOR and THE REPUBLIC OF THE PHILIPPINES
represented by MAJ. GEN. CALIXTO DUQUE, Chief of Staff of the ARMED FORCES OF THE
PHILIPPINES, hereinafter called the LESSEE,
WITNESSETH:
1. For and in consideration of the rentals hereinafter reserved and the mutual terms, covenants
and conditions of the parties, the LESSOR has, and by these presents does, lease and let unto
the LESSEE the following described land together with the improvements thereon and
appurtenances thereof, viz:

more

particularly

described

in

TCT

No.

1016,

province

of

of which premises, the LESSOR warrants that he/she/they/is/are the registered owner(s) and
with full authority to execute a contract of this nature.
2. The term of this lease shall be for the period beginning July 1, 1952 the date the premises
were occupied by the PHILIPPINE AIR FORCE, AFP until June 30, 1953, subject to renewal for
another year at the option of the LESSEE or unless sooner terminated by the LESSEE as
hereinafter provided.

4. The LESSEE shall pay to the LESSOR as monthly rentals under this lease the sum of FOUR
HUNDRED FIFTY-FIVE PESOS & 58/100 (P455.58) ...
5. The LESSEE may, at any time prior to the termination of this lease, use the property for any
purpose or purposes and, at its own costs and expense make alteration, install facilities and
fixtures and errect additions ... which facilities or fixtures ... so placed in, upon or attached to the
said premises shall be and remain property of the LESSEE and may be removed therefrom by
the LESSEE prior to the termination of this lease. The LESSEE shall surrender possession of
the premises upon the expiration or termination of this lease and if so required by the LESSOR,
shall return the premises in substantially the same condition as that existing at the time same
were first occupied by the AFP, reasonable and ordinary wear and tear and damages by the
elements or by circumstances over which the LESSEE has no control excepted: PROVIDED,
that if the LESSOR so requires the return of the premises in such condition, the LESSOR shall
give written notice thereof to the LESSEE at least twenty (20) days before the termination of the
lease and provided, further, that should the LESSOR give notice within the time specified above,
the LESSEE shall have the right and privilege to compensate the LESSOR at the fair value or
the equivalent, in lieu of performance of its obligation, if any, to restore the premises. Fair value
is to be determined as the value at the time of occupancy less fair wear and tear and
depreciation during the period of this lease.
6. The LESSEE may terminate this lease at any time during the term hereof by giving written
notice to the LESSOR at least thirty (30) days in advance ...

23
7. The LESSEE should not be responsible, except under special legislation for any damages to
the premises by reason of combat operations, acts of GOD, the elements or other acts and
deeds not due to the negligence on the part of the LESSEE.
8. This LEASE AGREEMENT supersedes and voids any and all agreements and undertakings,
oral or written, previously entered into between the parties covering the property herein leased,
the same having been merged herein. This AGREEMENT may not be modified or altered except
by instrument in writing only duly signed by the parties. 10
It was stipulated by the parties, that "the foregoing contract of lease (Exh. 4, Castellvi) is 'similar
in terms and conditions, including the date', with the annual contracts entered into from year to
year between defendant Castellvi and the Republic of the Philippines (p. 17, t.s.n., Vol. III)". 11 It
is undisputed, therefore, that the Republic occupied Castellvi's land from July 1, 1947, by virtue
of the above-mentioned contract, on a year to year basis (from July 1 of each year to June 30 of
the succeeding year) under the terms and conditions therein stated.
Before the expiration of the contract of lease on June 30, 1956 the Republic sought to renew the
same but Castellvi refused. When the AFP refused to vacate the leased premises after the
termination of the contract, on July 11, 1956, Castellvi wrote to the Chief of Staff, AFP, informing
the latter that the heirs of the property had decided not to continue leasing the property in
question because they had decided to subdivide the land for sale to the general public,
demanding that the property be vacated within 30 days from receipt of the letter, and that the
premises be returned in substantially the same condition as before occupancy (Exh. 5
Castellvi). A follow-up letter was sent on January 12, 1957, demanding the delivery and return of
the property within one month from said date (Exh. 6 Castellvi). On January 30, 1957,
Lieutenant General Alfonso Arellano, Chief of Staff, answered the letter of Castellvi, saying that it
was difficult for the army to vacate the premises in view of the permanent installations and other
facilities worth almost P500,000.00 that were erected and already established on the property,
and that, there being no other recourse, the acquisition of the property by means of
expropriation proceedings would be recommended to the President (Exhibit "7" Castellvi).
Defendant Castellvi then brought suit in the Court of First Instance of Pampanga, in Civil Case
No. 1458, to eject the Philippine Air Force from the land. While this ejectment case was pending,
the Republic instituted these expropriation proceedings, and, as stated earlier in this opinion, the
Republic was placed in possession of the lands on August 10, 1959, On November 21, 1959,
the Court of First Instance of Pampanga, dismissed Civil Case No. 1458, upon petition of the
parties, in an order which, in part, reads as follows:
1. Plaintiff has agreed, as a matter of fact has already signed an agreement with defendants,
whereby she has agreed to receive the rent of the lands, subject matter of the instant case from
June 30, 1966 up to 1959 when the Philippine Air Force was placed in possession by virtue of
an order of the Court upon depositing the provisional amount as fixed by the Provincial Appraisal
Committee with the Provincial Treasurer of Pampanga;
2. That because of the above-cited agreement wherein the administratrix decided to get the rent
corresponding to the rent from 1956 up to 1959 and considering that this action is one of illegal
detainer and/or to recover the possession of said land by virtue of non-payment of rents, the
instant case now has become moot and academic and/or by virtue of the agreement signed by
plaintiff, she has waived her cause of action in the above-entitled case. 12

The Republic urges that the "taking " of Castellvi's property should be deemed as of the year
1947 by virtue of afore-quoted lease agreement. In American Jurisprudence, Vol. 26, 2nd
edition, Section 157, on the subject of "Eminent Domain, we read the definition of "taking" (in
eminent domain) as follows:
Taking' under the power of eminent domain may be defined generally as entering upon private
property for more than a momentary period, and, under the warrant or color of legal authority,
devoting it to a public use, or otherwise informally appropriating or injuriously affecting it in such
a way as substantially to oust the owner and deprive him of all beneficial enjoyment thereof. 13
Pursuant to the aforecited authority, a number of circumstances must be present in the "taking"
of property for purposes of eminent domain.
First, the expropriator must enter a private property. This circumstance is present in the instant
case, when by virtue of the lease agreement the Republic, through the AFP, took possession of
the property of Castellvi.
Second, the entrance into private property must be for more than a momentary period.
"Momentary" means, "lasting but a moment; of but a moment's duration" (The Oxford English
Dictionary, Volume VI, page 596); "lasting a very short time; transitory; having a very brief life;
operative or recurring at every moment" (Webster's Third International Dictionary, 1963 edition.)
The word "momentary" when applied to possession or occupancy of (real) property should be
construed to mean "a limited period" not indefinite or permanent. The aforecited lease
contract was for a period of one year, renewable from year to year. The entry on the property,
under the lease, is temporary, and considered transitory. The fact that the Republic, through the
AFP, constructed some installations of a permanent nature does not alter the fact that the entry
into the land was transitory, or intended to last a year, although renewable from year to year by
consent of 'The owner of the land. By express provision of the lease agreement the Republic, as
lessee, undertook to return the premises in substantially the same condition as at the time the
property was first occupied by the AFP. It is claimed that the intention of the lessee was to
occupy the land permanently, as may be inferred from the construction of permanent
improvements. But this "intention" cannot prevail over the clear and express terms of the lease
contract. Intent is to be deduced from the language employed by the parties, and the terms 'of
the contract, when unambiguous, as in the instant case, are conclusive in the absence of
averment and proof of mistake or fraud the question being not what the intention was, but
what is expressed in the language used. (City of Manila v. Rizal Park Co., Inc., 53 Phil. 515,
525); Magdalena Estate, Inc. v. Myrick, 71 Phil. 344, 348). Moreover, in order to judge the
intention of the contracting parties, their contemporaneous and subsequent acts shall be
principally considered (Art. 1371, Civil Code). If the intention of the lessee (Republic) in 1947
was really to occupy permanently Castellvi's property, why was the contract of lease entered into
on year to year basis? Why was the lease agreement renewed from year to year? Why did not
the Republic expropriate this land of Castellvi in 1949 when, according to the Republic itself, it
expropriated the other parcels of land that it occupied at the same time as the Castellvi land, for
the purpose of converting them into a jet air base? 14 It might really have been the intention of
the Republic to expropriate the lands in question at some future time, but certainly mere notice much less an implied notice of such intention on the part of the Republic to expropriate the
lands in the future did not, and could not, bind the landowner, nor bind the land itself. The
expropriation must be actually commenced in court (Republic vs. Baylosis, et al., 96 Phil. 461,
484).

24
Third, the entry into the property should be under warrant or color of legal authority. This
circumstance in the "taking" may be considered as present in the instant case, because the
Republic entered the Castellvi property as lessee.
Fourth, the property must be devoted to a public use or otherwise informally appropriated or
injuriously affected. It may be conceded that the circumstance of the property being devoted to
public use is present because the property was used by the air force of the AFP.
Fifth, the utilization of the property for public use must be in such a way as to oust the owner and
deprive him of all beneficial enjoyment of the property. In the instant case, the entry of the
Republic into the property and its utilization of the same for public use did not oust Castellvi and
deprive her of all beneficial enjoyment of the property. Castellvi remained as owner, and was
continuously recognized as owner by the Republic, as shown by the renewal of the lease
contract from year to year, and by the provision in the lease contract whereby the Republic
undertook to return the property to Castellvi when the lease was terminated. Neither was
Castellvi deprived of all the beneficial enjoyment of the property, because the Republic was
bound to pay, and had been paying, Castellvi the agreed monthly rentals until the time when it
filed the complaint for eminent domain on June 26, 1959.
It is clear, therefore, that the "taking" of Catellvi's property for purposes of eminent domain
cannot be considered to have taken place in 1947 when the Republic commenced to occupy the
property as lessee thereof. We find merit in the contention of Castellvi that two essential
elements in the "taking" of property under the power of eminent domain, namely: (1) that the
entrance and occupation by the condemnor must be for a permanent, or indefinite period, and
(2) that in devoting the property to public use the owner was ousted from the property and
deprived of its beneficial use, were not present when the Republic entered and occupied the
Castellvi property in 1947.
Untenable also is the Republic's contention that although the contract between the parties was
one of lease on a year to year basis, it was "in reality a more or less permanent right to occupy
the premises under the guise of lease with the 'right and privilege' to buy the property should the
lessor wish to terminate the lease," and "the right to buy the property is merged as an integral
part of the lease relationship ... so much so that the fair market value has been agreed upon,
not, as of the time of purchase, but as of the time of occupancy" 15 We cannot accept the
Republic's contention that a lease on a year to year basis can give rise to a permanent right to
occupy, since by express legal provision a lease made for a determinate time, as was the lease
of Castellvi's land in the instant case, ceases upon the day fixed, without need of a demand
(Article 1669, Civil Code). Neither can it be said that the right of eminent domain may be
exercised by simply leasing the premises to be expropriated (Rule 67, Section 1, Rules of
Court). Nor can it be accepted that the Republic would enter into a contract of lease where its
real intention was to buy, or why the Republic should enter into a simulated contract of lease
("under the guise of lease", as expressed by counsel for the Republic) when all the time the
Republic had the right of eminent domain, and could expropriate Castellvi's land if it wanted to
without resorting to any guise whatsoever. Neither can we see how a right to buy could be
merged in a contract of lease in the absence of any agreement between the parties to that
effect. To sustain the contention of the Republic is to sanction a practice whereby in order to
secure a low price for a land which the government intends to expropriate (or would eventually
expropriate) it would first negotiate with the owner of the land to lease the land (for say ten or
twenty years) then expropriate the same when the lease is about to terminate, then claim that
the "taking" of the property for the purposes of the expropriation be reckoned as of the date

when the Government started to occupy the property under the lease, and then assert that the
value of the property being expropriated be reckoned as of the start of the lease, in spite of the
fact that the value of the property, for many good reasons, had in the meantime increased during
the period of the lease. This would be sanctioning what obviously is a deceptive scheme, which
would have the effect of depriving the owner of the property of its true and fair market value at
the time when the expropriation proceedings were actually instituted in court. The Republic's
claim that it had the "right and privilege" to buy the property at the value that it had at the time
when it first occupied the property as lessee nowhere appears in the lease contract. What was
agreed expressly in paragraph No. 5 of the lease agreement was that, should the lessor require
the lessee to return the premises in the same condition as at the time the same was first
occupied by the AFP, the lessee would have the "right and privilege" (or option) of paying the
lessor what it would fairly cost to put the premises in the same condition as it was at the
commencement of the lease, in lieu of the lessee's performance of the undertaking to put the
land in said condition. The "fair value" at the time of occupancy, mentioned in the lease
agreement, does not refer to the value of the property if bought by the lessee, but refers to the
cost of restoring the property in the same condition as of the time when the lessee took
possession of the property. Such fair value cannot refer to the purchase price, for purchase was
never intended by the parties to the lease contract. It is a rule in the interpretation of contracts
that "However general the terms of a contract may be, they shall not be understood to
comprehend things that are distinct and cases that are different from those upon which the
parties intended to agree" (Art. 1372, Civil Code).
We hold, therefore, that the "taking" of the Castellvi property should not be reckoned as of the
year 1947 when the Republic first occupied the same pursuant to the contract of lease, and that
the just compensation to be paid for the Castellvi property should not be determined on the
basis of the value of the property as of that year. The lower court did not commit an error when it
held that the "taking" of the property under expropriation commenced with the filing of the
complaint in this case.
Under Section 4 of Rule 67 of the Rules of Court, 16 the "just compensation" is to be determined
as of the date of the filing of the complaint. This Court has ruled that when the taking of the
property sought to be expropriated coincides with the commencement of the expropriation
proceedings, or takes place subsequent to the filing of the complaint for eminent domain, the
just compensation should be determined as of the date of the filing of the complaint. (Republic
vs. Philippine National Bank, L-14158, April 12, 1961, 1 SCRA 957, 961-962). In the instant
case, it is undisputed that the Republic was placed in possession of the Castellvi property, by
authority of the court, on August 10, 1959. The "taking" of the Castellvi property for the purposes
of determining the just compensation to be paid must, therefore, be reckoned as of June 26,
1959 when the complaint for eminent domain was filed.
Regarding the two parcels of land of Toledo-Gozun, also sought to be expropriated, which had
never been under lease to the Republic, the Republic was placed in possession of said lands,
also by authority of the court, on August 10, 1959, The taking of those lands, therefore, must
also be reckoned as of June 26, 1959, the date of the filing of the complaint for eminent domain.
2. Regarding the first assigned error discussed as the second issue the Republic
maintains that, even assuming that the value of the expropriated lands is to be determined as of
June 26, 1959, the price of P10.00 per square meter fixed by the lower court "is not only
exhorbitant but also unconscionable, and almost fantastic". On the other hand, both Castellvi

25
and Toledo-Gozun maintain that their lands are residential lands with a fair market value of not
less than P15.00 per square meter.
The lower court found, and declared, that the lands of Castellvi and Toledo-Gozun are residential
lands. The finding of the lower court is in consonance with the unanimous opinion of the three
commissioners who, in their report to the court, declared that the lands are residential lands.
The Republic assails the finding that the lands are residential, contending that the plans of the
appellees to convert the lands into subdivision for residential purposes were only on paper, there
being no overt acts on the part of the appellees which indicated that the subdivision project had
been commenced, so that any compensation to be awarded on the basis of the plans would be
speculative. The Republic's contention is not well taken. We find evidence showing that the
lands in question had ceased to be devoted to the production of agricultural crops, that they had
become adaptable for residential purposes, and that the appellees had actually taken steps to
convert their lands into residential subdivisions even before the Republic filed the complaint for
eminent domain. In the case of City of Manila vs. Corrales (32 Phil. 82, 98) this Court laid down
basic guidelines in determining the value of the property expropriated for public purposes. This
Court said:
In determining the value of land appropriated for public purposes, the same consideration are to
be regarded as in a sale of property between private parties. The inquiry, in such cases, must be
what is the property worth in the market, viewed not merely with reference to the uses to which it
is at the time applied, but with reference to the uses to which it is plainly adapted, that is to say,
What is it worth from its availability for valuable uses?
So many and varied are the circumstances to be taken into account in determining the value of
property condemned for public purposes, that it is practically impossible to formulate a rule to
govern its appraisement in all cases. Exceptional circumstances will modify the most carefully
guarded rule, but, as a general thing, we should say that the compensation of the owner is to be
estimated by reference to the use for which the property is suitable, having regard to the existing
business or wants of the community, or such as may be reasonably expected in the immediate
future. (Miss. and Rum River Boom Co. vs. Patterson, 98 U.S., 403).
In expropriation proceedings, therefore, the owner of the land has the right to its value for the
use for which it would bring the most in the market. 17 The owner may thus show every
advantage that his property possesses, present and prospective, in order that the price it could
be sold for in the market may be satisfactorily determined. 18 The owner may also show that the
property is suitable for division into village or town lots. 19
The trial court, therefore, correctly considered, among other circumstances, the proposed
subdivision plans of the lands sought to be expropriated in finding that those lands are
residential lots. This finding of the lower court is supported not only by the unanimous opinion of
the commissioners, as embodied in their report, but also by the Provincial Appraisal Committee
of the province of Pampanga composed of the Provincial Treasurer, the Provincial Auditor and
the District Engineer. In the minutes of the meeting of the Provincial Appraisal Committee, held
on May 14, 1959 (Exh. 13-Castellvi) We read in its Resolution No. 10 the following:
3. Since 1957 the land has been classified as residential in view of its proximity to the air base
and due to the fact that it was not being devoted to agriculture. In fact, there is a plan to convert
it into a subdivision for residential purposes. The taxes due on the property have been paid
based on its classification as residential land;

The evidence shows that Castellvi broached the idea of subdividing her land into residential lots
as early as July 11, 1956 in her letter to the Chief of Staff of the Armed Forces of the Philippines.
(Exh. 5-Castellvi) As a matter of fact, the layout of the subdivision plan was tentatively approved
by the National Planning Commission on September 7, 1956. (Exh. 8-Castellvi). The land of
Castellvi had not been devoted to agriculture since 1947 when it was leased to the Philippine
Army. In 1957 said land was classified as residential, and taxes based on its classification as
residential had been paid since then (Exh. 13-Castellvi). The location of the Castellvi land
justifies its suitability for a residential subdivision. As found by the trial court, "It is at the left side
of the entrance of the Basa Air Base and bounded on two sides by roads (Exh. 13-Castellvi),
paragraphs 1 and 2, Exh. 12-Castellvi), the poblacion, (of Floridablanca) the municipal building,
and the Pampanga Sugar Mills are closed by. The barrio schoolhouse and chapel are also near
(T.S.N. November 23,1960, p. 68)." 20
The lands of Toledo-Gozun (Lot 1-B and Lot 3) are practically of the same condition as the land
of Castellvi. The lands of Toledo-Gozun adjoin the land of Castellvi. They are also contiguous to
the Basa Air Base, and are along the road. These lands are near the barrio schoolhouse, the
barrio chapel, the Pampanga Sugar Mills, and the poblacion of Floridablanca (Exhs. 1, 3 and 4Toledo-Gozun). As a matter of fact, regarding lot 1-B it had already been surveyed and
subdivided, and its conversion into a residential subdivision was tentatively approved by the
National Planning Commission on July 8, 1959 (Exhs. 5 and 6 Toledo-Gozun). As early as June,
1958, no less than 32 man connected with the Philippine Air Force among them commissioned
officers, non-commission officers, and enlisted men had requested Mr. and Mrs. Joaquin D.
Gozun to open a subdivision on their lands in question (Exhs. 8, 8-A to 8-ZZ-Toledo-Gozun). 21
We agree with the findings, and the conclusions, of the lower court that the lands that are the
subject of expropriation in the present case, as of August 10, 1959 when the same were taken
possession of by the Republic, were residential lands and were adaptable for use as residential
subdivisions. Indeed, the owners of these lands have the right to their value for the use for which
they would bring the most in the market at the time the same were taken from them. The most
important issue to be resolved in the present case relates to the question of what is the just
compensation that should be paid to the appellees.
The Republic asserts that the fair market value of the lands of the appellees is P.20 per square
meter. The Republic cites the case of Republic vs. Narciso, et al., L-6594, which this Court
decided on May 18, 1956. The Narciso case involved lands that belonged to Castellvi and
Toledo-Gozun, and to one Donata Montemayor, which were expropriated by the Republic in
1949 and which are now the site of the Basa Air Base. In the Narciso case this Court fixed the
fair market value at P.20 per square meter. The lands that are sought to be expropriated in the
present case being contiguous to the lands involved in the Narciso case, it is the stand of the
Republic that the price that should be fixed for the lands now in question should also be at P.20
per square meter.
We can not sustain the stand of the Republic. We find that the price of P.20 per square meter, as
fixed by this Court in the Narciso case, was based on the allegation of the defendants (owners)
in their answer to the complaint for eminent domain in that case that the price of their lands was
P2,000.00 per hectare and that was the price that they asked the court to pay them. This Court
said, then, that the owners of the land could not be given more than what they had asked,
notwithstanding the recommendation of the majority of the Commission on Appraisal which
was adopted by the trial court that the fair market value of the lands was P3,000.00 per
hectare. We also find that the price of P.20 per square meter in the Narciso case was considered

26
the fair market value of the lands as of the year 1949 when the expropriation proceedings were
instituted, and at that time the lands were classified as sugar lands, and assessed for taxation
purposes at around P400.00 per hectare, or P.04 per square meter. 22 While the lands involved
in the present case, like the lands involved in the Narciso case, might have a fair market value of
P.20 per square meter in 1949, it can not be denied that ten years later, in 1959, when the
present proceedings were instituted, the value of those lands had increased considerably. The
evidence shows that since 1949 those lands were no longer cultivated as sugar lands, and in
1959 those lands were already classified, and assessed for taxation purposes, as residential
lands. In 1959 the land of Castellvi was assessed at P1.00 per square meter. 23
The Republic also points out that the Provincial Appraisal Committee of Pampanga, in its
resolution No. 5 of February 15, 1957 (Exhibit D), recommended the sum of P.20 per square
meter as the fair valuation of the Castellvi property. We find that this resolution was made by the
Republic the basis in asking the court to fix the provisional value of the lands sought to be
expropriated at P259,669.10, which was approved by the court. 24 It must be considered,
however, that the amount fixed as the provisional value of the lands that are being expropriated
does not necessarily represent the true and correct value of the land. The value is only
"provisional" or "tentative", to serve as the basis for the immediate occupancy of the property
being expropriated by the condemnor. The records show that this resolution No. 5 was repealed
by the same Provincial Committee on Appraisal in its resolution No. 10 of May 14, 1959 (Exhibit
13-Castellvi). In that resolution No. 10, the appraisal committee stated that "The Committee has
observed that the value of the land in this locality has increased since 1957 ...", and
recommended the price of P1.50 per square meter. It follows, therefore, that, contrary to the
stand of the Republic, that resolution No. 5 of the Provincial Appraisal Committee can not be
made the basis for fixing the fair market value of the lands of Castellvi and Toledo-Gozun.
The Republic further relied on the certification of the Acting Assistant Provincial Assessor of
Pampanga, dated February 8, 1961 (Exhibit K), to the effect that in 1950 the lands of ToledoGozun were classified partly as sugar land and partly as urban land, and that the sugar land was
assessed at P.40 per square meter, while part of the urban land was assessed at P.40 per
square meter and part at P.20 per square meter; and that in 1956 the Castellvi land was
classified as sugar land and was assessed at P450.00 per hectare, or P.045 per square meter.
We can not also consider this certification of the Acting Assistant Provincial Assessor as a basis
for fixing the fair market value of the lands of Castellvi and Toledo-Gozun because, as the
evidence shows, the lands in question, in 1957, were already classified and assessed for
taxation purposes as residential lands. The certification of the assessor refers to the year 1950
as far as the lands of Toledo-Gozun are concerned, and to the year 1956 as far as the land of
Castellvi is concerned. Moreover, this Court has held that the valuation fixed for the purposes of
the assessment of the land for taxation purposes can not bind the landowner where the latter did
not intervene in fixing it. 25
On the other hand, the Commissioners, appointed by the court to appraise the lands that were
being expropriated, recommended to the court that the price of P10.00 per square meter would
be the fair market value of the lands. The commissioners made their recommendation on the
basis of their observation after several ocular inspections of the lands, of their own personal
knowledge of land values in the province of Pampanga, of the testimonies of the owners of the
land, and other witnesses, and of documentary evidence presented by the appellees. Both
Castellvi and Toledo-Gozun testified that the fair market value of their respective land was at
P15.00 per square meter. The documentary evidence considered by the commissioners
consisted of deeds of sale of residential lands in the town of San Fernando and in Angeles City,

in the province of Pampanga, which were sold at prices ranging from P8.00 to P20.00 per
square meter (Exhibits 15, 16, 17, 18, 19, 20, 21, 22, 23-Castellvi). The commissioners also
considered the decision in Civil Case No. 1531 of the Court of First Instance of Pampanga,
entitled Republic vs. Sabina Tablante, which was expropriation case filed on January 13, 1959,
involving a parcel of land adjacent to the Clark Air Base in Angeles City, where the court fixed
the price at P18.00 per square meter (Exhibit 14-Castellvi). In their report, the commissioners,
among other things, said:
... This expropriation case is specially pointed out, because the circumstances and factors
involved therein are similar in many respects to the defendants' lands in this case. The land in
Civil Case No. 1531 of this Court and the lands in the present case (Civil Case No. 1623) are
both near the air bases, the Clark Air Base and the Basa Air Base respectively. There is a
national road fronting them and are situated in a first-class municipality. As added advantage it
may be said that the Basa Air Base land is very near the sugar mill at Del Carmen,
Floridablanca, Pampanga, owned by the Pampanga Sugar Mills. Also just stone's throw away
from the same lands is a beautiful vacation spot at Palacol, a sitio of the town of Floridablanca,
which counts with a natural swimming pool for vacationists on weekends. These advantages are
not found in the case of the Clark Air Base. The defendants' lands are nearer to the poblacion of
Floridablanca then Clark Air Base is nearer (sic) to the poblacion of Angeles, Pampanga.
The deeds of absolute sale, according to the undersigned commissioners, as well as the land in
Civil Case No. 1531 are competent evidence, because they were executed during the year 1959
and before August 10 of the same year. More specifically so the land at Clark Air Base which
coincidentally is the subject matter in the complaint in said Civil Case No. 1531, it having been
filed on January 13, 1959 and the taking of the land involved therein was ordered by the Court of
First Instance of Pampanga on January 15, 1959, several months before the lands in this case
were taken by the plaintiffs ....
From the above and considering further that the lowest as well as the highest price per square
meter obtainable in the market of Pampanga relative to subdivision lots within its jurisdiction in
the year 1959 is very well known by the Commissioners, the Commission finds that the lowest
price that can be awarded to the lands in question is P10.00 per square meter. 26
The lower court did not altogether accept the findings of the Commissioners based on the
documentary evidence, but it considered the documentary evidence as basis for comparison in
determining land values. The lower court arrived at the conclusion that "the unanimous
recommendation of the commissioners of ten (P10.00) pesos per square meter for the three lots
of the defendants subject of this action is fair and just". 27 In arriving at its conclusion, the lower
court took into consideration, among other circumstances, that the lands are titled, that there is a
rising trend of land values, and the lowered purchasing power of the Philippine peso.
In the case of Manila Railroad Co. vs. Caligsihan, 40 Phil. 326, 328, this Court said:
A court of first instance or, on appeal, the Supreme Court, may change or modify the report of
the commissioners by increasing or reducing the amount of the award if the facts of the case so
justify. While great weight is attached to the report of the commissioners, yet a court may
substitute therefor its estimate of the value of the property as gathered from the record in certain
cases, as, where the commissioners have applied illegal principles to the evidence submitted to
them, or where they have disregarded a clear preponderance of evidence, or where the amount
allowed is either palpably inadequate or excessive. 28

27
The report of the commissioners of appraisal in condemnation proceedings are not binding, but
merely advisory in character, as far as the court is concerned. 29 In our analysis of the report of
the commissioners, We find points that merit serious consideration in the determination of the
just compensation that should be paid to Castellvi and Toledo-Gozun for their lands. It should be
noted that the commissioners had made ocular inspections of the lands and had considered the
nature and similarities of said lands in relation to the lands in other places in the province of
Pampanga, like San Fernando and Angeles City. We cannot disregard the observations of the
commissioners regarding the circumstances that make the lands in question suited for
residential purposes their location near the Basa Air Base, just like the lands in Angeles City
that are near the Clark Air Base, and the facilities that obtain because of their nearness to the
big sugar central of the Pampanga Sugar mills, and to the flourishing first class town of
Floridablanca. It is true that the lands in question are not in the territory of San Fernando and
Angeles City, but, considering the facilities of modern communications, the town of Floridablanca
may be considered practically adjacent to San Fernando and Angeles City. It is not out of place,
therefore, to compare the land values in Floridablanca to the land values in San Fernando and
Angeles City, and form an idea of the value of the lands in Floridablanca with reference to the
land values in those two other communities.
The important factor in expropriation proceeding is that the owner is awarded the just
compensation for his property. We have carefully studied the record, and the evidence, in this
case, and after considering the circumstances attending the lands in question We have arrived
at the conclusion that the price of P10.00 per square meter, as recommended by the
commissioners and adopted by the lower court, is quite high. It is Our considered view that the
price of P5.00 per square meter would be a fair valuation of the lands in question and would
constitute a just compensation to the owners thereof. In arriving at this conclusion We have
particularly taken into consideration the resolution of the Provincial Committee on Appraisal of
the province of Pampanga informing, among others, that in the year 1959 the land of Castellvi
could be sold for from P3.00 to P4.00 per square meter, while the land of Toledo-Gozun could be
sold for from P2.50 to P3.00 per square meter. The Court has weighed all the circumstances
relating to this expropriations proceedings, and in fixing the price of the lands that are being
expropriated the Court arrived at a happy medium between the price as recommended by the
commissioners and approved by the court, and the price advocated by the Republic. This Court
has also taken judicial notice of the fact that the value of the Philippine peso has considerably
gone down since the year 1959. 30Considering that the lands of Castellvi and Toledo-Gozun are
adjoining each other, and are of the same nature, the Court has deemed it proper to fix the same
price for all these lands.
3. The third issue raised by the Republic relates to the payment of interest. The Republic
maintains that the lower court erred when it ordered the Republic to pay Castellvi interest at the
rate of 6% per annum on the total amount adjudged as the value of the land of Castellvi, from
July 1, 1956 to July 10, 1959. We find merit in this assignment of error.
In ordering the Republic to pay 6% interest on the total value of the land of Castellvi from July 1,
1956 to July 10, 1959, the lower court held that the Republic had illegally possessed the land of
Castellvi from July 1, 1956, after its lease of the land had expired on June 30, 1956, until August
10, 1959 when the Republic was placed in possession of the land pursuant to the writ of
possession issued by the court. What really happened was that the Republic continued to
occupy the land of Castellvi after the expiration of its lease on June 30, 1956, so much so that
Castellvi filed an ejectment case against the Republic in the Court of First Instance of
Pampanga. 31 However, while that ejectment case was pending, the Republic filed the complaint

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

28
immaterial and irrelevant, because those sales covered sugarlands with sugar quotas, while the
lands sought to be expropriated in the instant case are residential lands. The lower court also
concluded that the land sold by the spouses Laird to the spouses Aguas was a sugar land.
We agree with the trial court. In eminent domain proceedings, in order that evidence as to the
sale price of other lands may be admitted in evidence to prove the fair market value of the land
sought to be expropriated, the lands must, among other things, be shown to be similar.
But even assuming, gratia argumenti, that the lands mentioned in those deeds of sale were
residential, the evidence would still not warrant the grant of a new trial, for said evidence could
have been discovered and produced at the trial, and they cannot be considered newly
discovered evidence as contemplated in Section 1(b) of Rule 37 of the Rules of Court.
Regarding this point, the trial court said:
The Court will now show that there was no reasonable diligence employed.
The land described in the deed of sale executed by Serafin Francisco, copy of which is attached
to the original motion, is covered by a Certificate of Title issued by the Office of the Register of
Deeds of Pampanga. There is no question in the mind of the court but this document passed
through the Office of the Register of Deeds for the purpose of transferring the title or annotating
the sale on the certificate of title. It is true that Fiscal Lagman went to the Office of the Register
of Deeds to check conveyances which may be presented in the evidence in this case as it is
now sought to be done by virtue of the motions at bar, Fiscal Lagman, one of the lawyers of the
plaintiff, did not exercise reasonable diligence as required by the rules. The assertion that he
only went to the office of the Register of Deeds 'now and then' to check the records in that office
only shows the half-hazard [sic] manner by which the plaintiff looked for evidence to be
presented during the hearing before the Commissioners, if it is at all true that Fiscal Lagman did
what he is supposed to have done according to Solicitor Padua. It would have been the easiest
matter for plaintiff to move for the issuance of a subpoena duces tecum directing the Register of
Deeds of Pampanga to come to testify and to bring with him all documents found in his office
pertaining to sales of land in Floridablanca adjacent to or near the lands in question executed or
recorded from 1958 to the present. Even this elementary precaution was not done by plaintiff's
numerous attorneys.
The same can be said of the deeds of sale attached to the supplementary motion. They refer to
lands covered by certificate of title issued by the Register of Deeds of Pampanga. For the same
reason they could have been easily discovered if reasonable diligence has been exerted by the
numerous lawyers of the plaintiff in this case. It is noteworthy that all these deeds of sale could
be found in several government offices, namely, in the Office of the Register of Deeds of
Pampanga, the Office of the Provincial Assessor of Pampanga, the Office of the Clerk of Court
as a part of notarial reports of notaries public that acknowledged these documents, or in the
archives of the National Library. In respect to Annex 'B' of the supplementary motion copy of the
document could also be found in the Office of the Land Tenure Administration, another
government entity. Any lawyer with a modicum of ability handling this expropriation case would
have right away though [sic] of digging up documents diligently showing conveyances of lands
near or around the parcels of land sought to be expropriated in this case in the offices that would
have naturally come to his mind such as the offices mentioned above, and had counsel for the
movant really exercised the reasonable diligence required by the Rule' undoubtedly they would
have been able to find these documents and/or caused the issuance of subpoena duces
tecum. ...

It is also recalled that during the hearing before the Court of the Report and Recommendation of
the Commissioners and objection thereto, Solicitor Padua made the observation:
I understand, Your Honor, that there was a sale that took place in this place of land recently
where the land was sold for P0.20 which is contiguous to this land.
The Court gave him permission to submit said document subject to the approval of the Court. ...
This was before the decision was rendered, and later promulgated on May 26, 1961 or more
than one month after Solicitor Padua made the above observation. He could have, therefore,
checked up the alleged sale and moved for a reopening to adduce further evidence. He did not
do so. He forgot to present the evidence at a more propitious time. Now, he seeks to introduce
said evidence under the guise of newly-discovered evidence. Unfortunately the Court cannot
classify it as newly-discovered evidence, because tinder the circumstances, the correct
qualification that can be given is 'forgotten evidence'. Forgotten however, is not newlydiscovered
evidence. 33
The granting or denial of a motion for new trial is, as a general rule, discretionary with the trial
court, whose judgment should not be disturbed unless there is a clear showing of abuse of
discretion. 34 We do not see any abuse of discretion on the part of the lower court when it denied
the motions for a new trial.
WHEREFORE, the decision appealed from is modified, as follows:
(a) the lands of appellees Carmen Vda. de Castellvi and Maria Nieves Toledo-Gozun, as
described in the complaint, are declared expropriated for public use;
(b) the fair market value of the lands of the appellees is fixed at P5.00 per square meter;
(c) the Republic must pay appellee Castellvi the sum of P3,796,495.00 as just compensation for
her one parcel of land that has an area of 759,299 square meters, minus the sum of
P151,859.80 that she withdrew out of the amount that was deposited in court as the provisional
value of the land, with interest at the rate of 6% per annum from July 10, 1959 until the day full
payment is made or deposited in court;
(d) the Republic must pay appellee Toledo-Gozun the sum of P2,695,225.00 as the just
compensation for her two parcels of land that have a total area of 539,045 square meters, minus
the sum of P107,809.00 that she withdrew out of the amount that was deposited in court as the
provisional value of her lands, with interest at the rate of 6%, per annum from July 10, 1959 until
the day full payment is made or deposited in court; (e) the attorney's lien of Atty. Alberto Cacnio
is enforced; and
(f) the costs should be paid by appellant Republic of the Philippines, as provided in Section 12,
Rule 67, and in Section 13, Rule 141, of the Rules of Court.
IT IS SO ORDERED.
Makalintal, C.J., Barredo, Antonio, Esguerra, Fernandez, Muoz Palma and Aquino, JJ., concur.
Castro, Fernando, Teehankee and Makasiar, JJ., took no part.

29

Case no. 5

Republic
SUPREME
Manila

of

THIRD DIVISION

G.R. Nos. L-71998-99 June 2, 1993

the

Philippines
COURT

30
EMILIANO R. DE LOS SANTOS, SPOUSES NORMA A. PADILLA and ISIDORO L. PADILLA
and
the
HEIRS
OF
FRANCISCO
DAYRIT, petitioners,
vs.
THE HON. INTERMEDIATE APPELLATE COURT, HON. JUDGE CICERRO C. JURADO and
EDILBERTO CADIENTE, respondents.
Isidoro L. Padilla for petitioners.
Joaquin G. Mendoza for E. Cadiente.

ROMERO, J.:
Questioned in the instant petition for review on certiorari is the Decision of the then Intermediate
Appellate Court 1affirming the December 1, 1982 order of the then Court of First Instance of
Rizal, Branch XXII at Pasig 2 in civil Cases Nos. 46800 which states in toto:
It appearing that the construction of the road and creek in question was a project undertaken
under the authority of the Minister of Public Works, the funding of which was the responsibility of
the National Government and that the defendants impleaded herein are Edilberto Cadiente and
Nestor Agustin and not the Republic of the Philippines which cannot be sued without its consent,
this court hereby resolves to dismiss these two (2) cases without pronouncement as to costs.
SO ORDERED.
Civil Cases Nos. 46800 and 46801 were both filed on July 13, 1982 by petitioners who are coowners under TCT No. 329945 of a parcel of land located in Barrio Wawa, Binangonan, Rizal
with an area of nineteen thousand sixty-one (19,061) square meters. In Civil Case No. 46800,
petitioners alleged in the petition for prohibition that in October 1981, without their knowledge or
consent, Lorenzo Cadiente, a private contractor and the Provincial Engineer of Rizal constructed
a road nine (9) meters wide and one hundred twenty-eight meters and seventy centimeters
(128.70) long occupying a total area of one thousand one hundred sixty-five (1,165) square
meters of their land.
Petitioners added that aside from the road, the said respondents also constructed, without their
knowledge and consent, an artificial creek twenty three meters and twenty centimeters (23.20)
wide and one hundred twenty-eight meters and sixty-nine centimeters long (128.69) occupying
an area of two thousand nine hundred six (2,906) square meters of their property. Constructed in
a zig-zag manner, the creek meandered through their property.
Alleging that it completed, the road and the creek would "serve no public profitable and
practicable purpose but for respondents' personal profit, to the great damage and prejudice of
the taxpayers and the petitioners," the same petitioners invoked their rights under Art. IV Secs. 1
and 2, of the Bill of Rights of the 1973 Constitution and prayed for the issuance of restraining
order or a writ of preliminary injunction to stop the construction. They also prayed that after
hearing on the merits, judgment be rendered: (1) declaring illegal the construction of the road
and artificial creek which was made without their knowledge and consent, "without due process
and without just compensation and in violation of the provision of statute law and of the
Philippine Constitution;" (2) issuing a permanent prohibition; (3) ordering respondents to pay
petitioners "jointly and collectively" P15,00.00 as attorney's fees and P600.00 for each
appearance, and (4) ordering the respondents to pay the costs of the suit. 3

An action for damages, Civil Case No. 46801 on the other hand, was founded on Art. 32,
paragraphs 6 and 7 of the Civil Code and the constitutional provisions on the right against
deprivation of property without due process of law and without just compensation.
Thereafter, the two cases were consolidated. On November 11, 1982, the Solicitor General filed
a motion to dismiss both cases on the following grounds: (a) with respect to Civil Case No.
46800, the pendency of Civil Case No. 46801 which involved the same parties and cause of
action; (b) both cases were in reality suits against the state which could not be maintained
without the State's consent; and (c) lack of cause of action.
Consequently, the lower court issued the aforequoted Order of December 1, 1982. Their motion
for the reconsideration of said Order having been denied, petitioners elevated (to) the cases to
this Court through an "appeal by certiorari" which was docketed as G. R. No. 63610. The
Second Division of this Court, however, referred the cases to the then Intermediate Appellate
Court pursuant to Sec. 16 of the Interim Rules. 4 In due course, the Appellate court rendered a
Decision on May 22, 1985 which disposed of the cases thus:
Accordingly, the two actions cannot be maintained. They are in reality suits against the state
which has not given its consent to be sued (Minister [sic] vs. CFI, 40 SCRA 464; Isberto vs.
Raquiza, 67 SCRA 116; Begosa v. Chairman, PVA, 32 SCRA 466). Appellants' remedy lies
elsewhere.
Appellants assert that the taking of their property in the manner alleged in these two cases was
without due process of law. This is not correct. The appealed order has not closed the door to
appellants right, if any, to just compensation for the alleged area of their land which was
expropriated. The court below dismissed the cases for lack of consent on the part of the state to
be sued herein. We repeat appellants' remedy for just compensation lies elsewhere.
WHEREFORE, the order appealed from is in full accord with the evidence and the law and is
hereby therefore affirmed in all its parts. Costs against appellants.
SO ORDERED. 5
Consequently, petitioners elevated the cases to this Court through a petition for review
on certiorari. The petition is anchored on the ruling of the Court in Amigable v. Cuenca 6 which
states: ". . . . where the government takes away property from a private landowner for public use
without going through the legal process of expropriation or negotiated sale," a suit may properly
be maintained against the government.
We hold for the petitioners.
That the principle of state immunity from suit cannot be invoked to defeat petitioners' claim has
long been settled. In Ministerio v. Court of First Instance of Cebu, 7 the Court held:
. . . . The doctrine of governmental immunity from suit cannot serve as an instrument for
perpetrating an injustice on a citizen. Had the government followed the procedure indicated by
the governing law at the time, a complaint would have been filed by it, and only upon payment of
the compensation fixed by the judgment, or after tender to the party entitled to such payment of
the amount fixed, may it "have the right to enter in and upon the land so condemned" to
appropriate the same to the public use defined in the judgment. If there were an observance of
procedural regularity, petitioners would not be in the said plaint they are now. It is unthinkable
then that precisely because there was a failure to abide by what the law requires, the

31
government would stand to benefit. It just as important, if not more so, that there be fidelity to
legal norms on the part of the officialdom if the rule of law were to be maintained. It is not too
much to say that when the government takes any property for public use, which is conditioned
upon the payment of just compensation, to be judicially ascertained, it makes manifest that it
submits to the jurisdiction of a court. There is no thought then that the doctrine of immunity from
suit could still be appropriately invoked.
We find the facts of the Ministerio case on all fours with the instant cases insofar as the fact that
the respondent government officials executed a shortcut in appropriating petitioners' property for
public use is concerned. As in the Amigable case, no expropriation proceedings were initiated
before construction of the projects began. In like manner, nowhere in his pleadings in the cases
at bar does the Solicitor General mention that the fact that expropriation proceedings had in fact
been undertaken before the road and artificial creek were constructed. Thus, quoting the answer
of the defendants in Civil Case No. 46801, the Solicitor General summarized the facts which
defendants considered as constituting justification for the construction as follows:
10. The construction of the road and creek in question on the property which at the time was
said to be public property, was initiated, and construction effected, through the usual and
ordinary course, as shown by the following:
a. November 5, 1979 Engr. Data who was the incumbent District Engineer submitted (thru
channels) plans, program of works and detailed estimates for approval of higher authorities, thru
the initiation of Mayor Ynares and Assemblyman Gilberto Duavit;
b. February 18, 1980 Regional Director Eduardo L. Lagunilla, MPW Region IV, EDSA,
Quezon City endorsed said request to the Minister of Public Works;.
c. February 13, 1981 Assemblyman Gilberto Duavit sent a hand-written follow-up note
regarding the project;
d. June 17, 1981 The undersigned defendant Nestor Agustin was designated Chief Civil
Engineer of the Rizal Engineer District, Vice Engr. Cresencio Data who reached his compulsory
retirement age;
e. September 23, 1981 Funds in the amount of P588,000.00 was released for partial
implementation of the project. The total amount requested was P1,200,000. 00;
f. October 19, 1981 The undersigned submitted a request to the MPWH Central Office
seeking authority to effect implementation of the project;
g. October 29, 1981 The Regional Director approved the plans and program of works for the
project in the amount of P588,000.00;
h. November 11, 1981 The Honorable Minister Jesus S. Hipolito granted the request to
undertake the implementation of the project;

l. April 9, 1982 Implementation was started. Contract for this project was approved by the
Regional Director in favor of EDILBERTO CADIENTE CONSTRUCTION;
m. May 21, 1982 Deepening slightly of the adjacent portion of the rock bulkhead was
completed.
11. The construction of the structures was done in good faith;
The construction of the roadway and deepening of the creek was designated to generate for the
municipality of Binangonan, Rizal more benefits in the form of substantial revenue from fishing
industry, parking area, market rentals, development site, and road system improvements. The
area covered by said public improvements is part of the Laguna Lake area which is submerged
in water even during dry season. The municipal mayor of Binangonan, Rizal stated that said
area is public property. 8
Public respondents' belief that the property involved is public, even if buttressed by statements
of other public officials, is no reason for the unjust taking of petitioners' property. As TCT No.
329945 shows, the property was registered under the Torrens system in the names of "Emiliano
R. de los Santos, married to Corazon Dayrit; and Norma Alabastro, married to Isidro L. Padilla"
as early as March 29, 1971. Had the public respondents, including the other officials involved in
the construction, performed their functions by exercising even the ordinary diligence expected of
them as public officials, they would not have failed to note that the property is a private one. A
public infrastructure losses its laudability if, in the process of undertaking it, private rights are
disregarded. In this connection, the Court said in Republic v. Sandiganbayan: 9
It can hardly be doubted that in exercising the right of eminent domain, the State exercises
its jus imperii, as distinguished from its proprietary rights of jus gestionis. Yet, even in that area,
it has been held that where private property has been taken in expropriation without just
compensation being paid, the defense of immunity from suit cannot be set up by the State
against an action for payment by the owner.
Public respondents' assertion that the project had been completed on May 21, 1982 meets
strong opposition from the petitioners who insist that the project "until now is not yet
finished." 10 This factual issue needs determination which only the trial court can undertake.
Thus, the need for a full blown trial on the merits. We do not subscribe to the appellate court's
suggestion that the remedy of the petitioners "lies elsewhere."
The filing of another case to determine just compensation is superfluous. The issue may be
threshed out below for practical reasons in the event that it is shown later that it is no longer
possible to prohibit the public respondents from continuing with the public work. As held in
the Amigable case, damages may be awarded the petitioners in the form of legal interest on the
price of the land to be reckoned from the time of the unlawful taking.

i. November 25, 1981 Project implementation was started;

WHEREFORE, the petition is hereby GRANTED and Civil Cases Nos. 46800 and 46801 shall
be REMANDED to the lower court for trial on the merits after the Republic of the Philippines
shall have been impleaded as defendant in both cases.

j. March 3, 1982 Construction of rock bulkhead was completed;

Feliciano, Davide, Jr., Romero, and Melo, JJ. concur.

k. November 23, 1982 P249,000.00 was released for improvement (deepening and diverting
of flow) of Binangonan River which was a complimentary structure of Binangonan port system;

Bidin, J. took no part.

32

Case no. 6

Republic
SUPREME
Manila

of

the

Philippines
COURT

SECOND DIVISION

G.R. No. 107916 February 20, 1997

PERCIVAL MODAY, ZOTICO MODAY (deceased) and LEONORA MODAY, petitioners,
vs.
COURT OF APPEALS, JUDGE EVANGELINE S. YUIPCO OF BRANCH 6, REGIONAL TRIAL
COURT, AGUSAN DEL SUR AND MUNICIPALITY OF BUNAWAN, respondents.

33
SO ORDERED. 6
ROMERO, J.:

Petitioners' motion for reconsideration was denied by the trial court on October 31, 1991.

The main issue presented in this case is whether a municipality may expropriate private property
by virtue of a municipal resolution which was disapproved by the Sangguniang Panlalawigan.
Petitioner seeks the reversal of the Court of Appeals decision and resolution, promulgated on
July 15, 1992 and October 22, 1992 respectively, 1and a declaration that Municipal Resolution
No. 43-89 of the Bunawan Sangguniang Bayan is null and void.

Petitioners elevated the case in a petition for certiorari alleging grave abuse of discretion on the
part of the trial court, but the same was dismissed by respondent appellate court on July 15,
1992. 7 The Court of Appeals held that the public purpose for the expropriation is clear from
Resolution No. 43-89 and that since the Sangguniang Panlalawigan of Agusan del Sur did not
declare Resolution No. 43-89 invalid, expropriation of petitioners' property could proceed.

On July 23, 1989, the Sangguniang Bayan of the Municipality of Bunawan in Agusan del Sur
passed Resolution No. 43-89, "Authorizing the Municipal Mayor to Initiate the Petition for
Expropriation of a One (1) Hectare Portion of Lot No. 6138-Pls-4 Along the National Highway
Owned by Percival Moday for the Site of Bunawan Farmers Center and Other Government
Sports Facilities." 2

Respondent appellate court also denied petitioners' motion for reconsideration on October 22,
1992. 8

In due time, Resolution No. 43-89 was approved by then Municipal Mayor Anuncio C. Bustillo
and transmitted to the Sangguniang Panlalawigan for its approval. On September 11, 1989, the
Sangguniang Panlalawigan disapproved said Resolution and returned it with the comment that
"expropriation is unnecessary considering that there are still available lots in Bunawan for the
establishment of the government center." 3
The Municipality of Bunawan, herein public respondent, subsequently filed a petition for Eminent
Domain against petitioner Percival Moday before the Regional Trial Court at Prosperidad,
Agusan del Sur. 4 The complaint was later amended to include the registered owners, Percival
Moday's parents, Zotico and Leonora Moday, as party defendants.
On March 6, 1991, public respondent municipality filed a Motion to Take or Enter Upon the
Possession of Subject Matter of This Case stating that it had already deposited with the
municipal treasurer the necessary amount in accordance with Section 2, Rule 67 of the Revised
Rules of Court and that it would be in the government's best interest for public respondent to be
allowed to take possession of the property.
Despite petitioners' opposition and after a hearing on the merits, the Regional Trial Court
granted respondent municipality's motion to take possession of the land. The lower court held
that the Sangguniang Panlalawigan's failure to declare the resolution invalid leaves it effective. It
added that the duty of the Sangguniang Panlalawigan is merely to review the ordinances and
resolutions passed by the Sangguniang Bayan under Section 208 (1) of B.P. Blg. 337, old Local
Government Code and that the exercise of eminent domain is not one of the two acts
enumerated in Section 19 thereof requiring the approval of the Sangguniang
Panlalawigan. 5 The dispositive portion of the lower court's Order dated July 2, 1991 reads:
WHEREFORE, it appearing that the amount of P632.39 had been deposited as per Official
Receipt No. 5379647 on December 12, 1989 which this Court now determines as the provisional
value of the land, the Motion to Take or Enter Upon the Possession of the Property filed by
petitioner through counsel is hereby GRANTED. The Sheriff of this Court is ordered to forthwith
place the plaintiff in possession of the property involved.
Let the hearing be set on August 9, 1991 at 8:30 o'clock in the morning for the purpose of
ascertaining the just compensation or fair market value of the property sought to be taken, with
notice to all the parties concerned.

Meanwhile, the Municipality of Bunawan had erected three buildings on the subject property: the
Association of Barangay Councils (ABC) Hall, the Municipal Motorpool, both wooden structures,
and the Bunawan Municipal Gymnasium, which is made of concrete.
In the instant petition for review filed on November 23, 1992, petitioner seeks the reversal of the
decision and resolution of the Court of Appeals and a declaration that Resolution No. 43-89 of
the Municipality of Bunawan is null and void.
On December 8, 1993, the Court issued a temporary restraining order enjoining and restraining
public respondent Judge Evangeline Yuipco from enforcing her July 2, 1991 Order and
respondent municipality from using and occupying all the buildings constructed and from further
constructing any building on the land subject of this petition. 9
Acting on petitioners' Omnibus Motion for Enforcement of Restraining Order and for Contempt,
the Court issued a Resolution on March 15, 1995, citing incumbent municipal mayor Anuncio C.
Bustillo for contempt, ordering him to pay the fine and to demolish the "blocktiendas" which were
built in violation of the restraining order. 10
Former Mayor Anuncio C. Bustillo paid the fine and manifested that he lost in the May 8, 1995
election. 11 The incumbent Mayor Leonardo Barrios, filed a Manifestation, Motion to Resolve
"Urgent Motion for Immediate Dissolution of the Temporary Restraining Order" and
Memorandum on June 11, 1996 for the Municipality of Bunawan. 12
Petitioners contend that the Court of Appeals erred in upholding the legality of the condemnation
proceedings initiated by the municipality. According to petitioners, the expropriation was
politically motivated and Resolution No. 43-89 was correctly disapproved by the Sangguniang
Panlalawigan, there being other municipal properties available for the purpose. Petitioners also
pray that the former Mayor Anuncio C. Bustillo be ordered to pay damages for insisting on the
enforcement of a void municipal resolution.
The Court of Appeals declared that the Sangguniang Panlalawigan's reason for disapproving the
resolution "could be baseless, because it failed to point out which and where are those available
lots.'" Respondent court also concluded that since the Sangguniang Panlalawigan did not
declare the municipal board's resolution as invalid, expropriation of petitioners' property could
proceed. 13
The Court finds no merit in the petition and affirms the decision of the Court of Appeals.

34
Eminent domain, the power which the Municipality of Bunawan exercised in the instant case, is
a fundamental State power that is inseparable from sovereignty. 14 It is government's right to
appropriate, in the nature of a compulsory sale to the State, private property for public use or
purpose. 15 Inherently possessed by the national legislature, the power of eminent domain may
be validly delegated to local governments, other public entities and public utilities. 16 For the
taking of private property by the government to be valid, the taking must be for public use and
there must be just compensation. 17
The Municipality of Bunawan's power to exercise the right of eminent domain is not disputed as
it is expressly provided for in Batas Pambansa Blg. 337, the local Government Code 18 in force
at the time expropriation proceedings were initiated. Section 9 of said law states:
Sec. 9. Eminent Domain. A local government unit may, through its head and acting pursuant
to a resolution of its sanggunian, exercise the right of eminent domain and institute
condemnation proceedings for public use or purpose.
What petitioners question is the lack of authority of the municipality to exercise this right since
the Sangguniang Panlalawigan disapproved Resolution No. 43-89.
Section 153 of B.P. Blg. 337 provides:
Sec. 153. Sangguniang Panlalawigan Review. (1) Within thirty days after receiving copies of
approved ordinances, resolutions and executive orders promulgated by the municipal mayor, the
sangguniang panlalawigan shall examine the documents or transmit them to the provincial
attorney, or if there be none, to the provincial fiscal, who shall examine them promptly and inform
the sangguniang panlalawigan in writing of any defect or impropriety which he may discover
therein and make such comments or recommendations as shall appear to him proper.
(2) If the sangguniang panlalawigan shall find that any municipal ordinance, resolution or
executive order is beyond the power conferred upon the sangguniang bayan or the mayor, it
shall declare such ordinance, resolution or executive order invalid in whole or in part, entering its
actions upon the minutes and advising the proper municipal authorities thereof. The effect of
such an action shall be to annul the ordinance, resolution or executive order in question in whole
or in part. The action of the sangguniang panlalawigan shall be final.
xxx xxx xxx (Emphasis supplied.)
The Sangguniang Panlalawigan's disapproval of Municipal Resolution No. 43-89 is an infirm
action which does not render said resolution null and void. The law, as expressed in Section 153
of B.P. Blg. 337, grants the Sangguniang Panlalawigan the power to declare a municipal
resolution invalid on the sole ground that it is beyond the power of the Sangguniang Bayan or
the Mayor to issue. Although pertaining to a similar provision of law but different factual milieu
then obtaining, the Court's pronouncements in Velazco v. Blas, 19 where we cited significant
early jurisprudence, are applicable to the case at bar.
The only ground upon which a provincial board may declare any municipal resolution, ordinance,
or order invalid is when such resolution, ordinance, or order is "beyond the powers conferred
upon the council or president making the same." Absolutely no other ground is recognized by the
law. A strictly legal question is before the provincial board in its consideration of a municipal
resolution, ordinance, or order. The provincial (board's) disapproval of any resolution, ordinance,
or order must be premised specifically upon the fact that such resolution, ordinance, or order is

outside the scope of the legal powers conferred by law. If a provincial board passes these limits,
it usurps the legislative function of the municipal council or president. Such has been the
consistent course of executive authority. 20
Thus, the Sangguniang Panlalawigan was without the authority to disapprove Municipal
Resolution No. 43-89 for the Municipality of Bunawan clearly has the power to exercise the right
of eminent domain and its Sangguniang Bayan the capacity to promulgate said resolution,
pursuant to the earlier-quoted Section 9 of B.P. Blg. 337. Perforce, it follows that Resolution No.
43-89 is valid and binding and could be used as lawful authority to petition for the condemnation
of petitioners' property.
As regards the accusation of political oppression, it is alleged that Percival Moday incurred the
ire of then Mayor Anuncio C. Bustillo when he refused to support the latter's candidacy for mayor
in previous elections. Petitioners claim that then incumbent Mayor C. Bustillo used the
expropriation to retaliate by expropriating their land even if there were other properties belonging
to the municipality and available for the purpose. Specifically, they allege that the municipality
owns a vacant seven-hectare property adjacent to petitioners' land, evidenced by a sketch
plan. 21
The limitations on the power of eminent domain are that the use must be public, compensation
must
be
made
and
due
process
of
law
must
be
observed. 22 The Supreme Court, taking cognizance of such issues as the adequacy of
compensation, necessity of the taking and the public use character or the purpose of the
taking, 23 has ruled that the necessity of exercising eminent domain must be genuine and of a
public character. 24 Government may not capriciously choose what private property should be
taken.
After a careful study of the records of the case, however, we find no evidentiary support for
petitioners' allegations. The uncertified photocopy of the sketch plan does not conclusively prove
that the municipality does own vacant land adjacent to petitioners' property suited to the purpose
of the expropriation. In the questioned decision, respondent appellate court similarly held that
the pleadings and documents on record have not pointed out any of respondent municipality's
"other available properties available for the same purpose." 25 The accusations of political
reprisal are likewise unsupported by competent evidence. Consequently, the Court holds that
petitioners' demand that the former municipal mayor be personally liable for damages is without
basis.
WHEREFORE, the instant petition is hereby DENIED. The questioned Decision and Resolution
of the Court of Appeals in the case of "Percival Moday." et al. v. Municipality of Bunawan, et al."
(CA G.R. SP No. 26712) are AFFIRMED. The Temporary Restraining Order issued by the Court
on December 8, 1993 is LIFTED.
SO ORDERED.
Regalado, Puno, Mendoza and Torres, Jr., JJ., concur.

35

Case no. 7

Republic
SUPREME
Manila

of

the

Philippines
COURT

SECOND DIVISION
G.R. No. 156093

February 2, 2007

NATIONAL
POWER
CORP., Petitioner,
vs.
SPOUSES NORBERTO AND JOSEFINA DELA CRUZ, METROBANK, Dasmarias, Cavite
Branch,
REYNALDO
FERRER,
and
S.K.
DYNAMICS
MANUFACTURER
CORP., Respondents.
DECISION

36
VELASCO, JR., J.:

I. PROPERTY LOCATION

The Case

As shown to us on-site during our ocular inspection, the appraised property is land only,
identified as the area affected by the construction of the National Power Corporation (NPC)
Dasmarias-Zapote 230KV Transmission Lines Project, located within Barangay Salitran,
Dasmarias, Cavite registered in the name of S.K. Dynamic[s] Manufacture[r], Corp., under
Transfer Certificate of Title No. T-454278.

In this petition for review under Rule 45 of the Rules of Court, petitioner National Power
Corporation (NAPOCOR) seeks to annul and set aside the November 18, 2002 Decision 1 of the
Court of Appeals (CA) in CA-G.R. CV No. 67446, which affirmed the December 28, 1999
Order2 of the Imus, Cavite Regional Trial Court (RTC), Branch XX in Civil Case No. 1816-98,
which fixed the fair market value of the expropriated lots at PhP 10,000.00 per square meter.
The Facts
Petitioner NAPOCOR is a government-owned and controlled corporation created under Republic
Act No. 6395, as amended, with the mandate of developing hydroelectric power, producing
transmission lines, and developing hydroelectric power throughout the Philippines. NAPOCOR
decided to acquire an easement of right-of-way over portions of land within the areas of
Dasmarias and Imus, Cavite for the construction and maintenance of the proposed
Dasmarias-Zapote 230 kV Transmission Line Project.3
On November 27, 1998, petitioner filed a Complaint 4 for eminent domain and expropriation of an
easement of right-of-way against respondents as registered owners of the parcels of land sought
to be expropriated, which were covered by Transfer Certificates of Title (TCT) Nos. T-313327, T671864, and T-454278. The affected areas were 51.55, 18.25, and 14.625 square meters,
respectively, or a total of 84.425 square meters.
After respondents filed their respective answers to petitioners Complaint, petitioner deposited
PhP 5,788.50 to cover the provisional value of the land in accordance with Section 2, Rule 67 of
the Rules of Court.5 Then, on February 25, 1999, petitioner filed an Urgent Ex-Parte Motion for
the Issuance of a Writ of Possession, which the trial court granted in its March 9, 1999 Order.
The trial court issued a Writ of Possession over the lots owned by respondents spouses de la
Cruz and respondent Ferrer on March 10, 1999 and April 12, 1999, respectively.
However, the trial court dropped the Dela Cruz spouses and their mortgagee, Metrobank, as
parties-defendants in its May 11, 1999 Order,6 in view of the Motion to Intervene filed by
respondent/intervenor Virgilio M. Saulog, who claimed ownership of the land sought to be
expropriated from respondents spouses Dela Cruz.
On June 24, 1999, the trial court terminated the pre-trial in so far as respondent Ferrer was
concerned, considering that the sole issue was the amount of just compensation, and issued an
Order directing the constitution of a Board of Commissioners with respect to the property of
respondent S.K. Dynamics. The trial court designated Mr. Lamberto C. Parra, Cavite Provincial
Assessor, as chairman, while petitioner nominated the Municipal Assessor of Dasmarias, Mr.
Regalado T. Andaya, as member. Respondent S.K. Dynamics did not nominate any
commissioner.
As to the just compensation for the property of Saulog, successor-in-interest of the Dela Cruz
spouses, the trial court ordered the latter and petitioner to submit their compromise agreement.
The commissioners conducted an ocular inspection of S.K. Dynamics property, and on October
8, 1999, they submitted a report to the trial court, with the following pertinent findings:
In arriving our [sic] estimate of values our studies and analysis include the following:

II. NEIGHBORHOOD DESCRIPTION

The neighborhood particularly in the immediate vicinity is within a mixed residential and
commercial area, situated in the northern section of the Municipality of Dasmarias which was
transversed [sic] by Gen. Emilio Aguinaldo Highway [where] several residential subdivisions and
commercial establishment[s] are located.
Considered as some of the important improvements [on] the vicinity are (within 1.5 radius)
Orchard Golf and Country Club
Golden City Subdivision
Southfield Subdivisions
Arcontica Sports Complex
Maxs Restaurant
Waltermart Shopping Mall
UMC Medical Center
Several savings and Commercial Banks as well as several Gasoline stations.
Community centers such as, [sic] churches, public markets, shopping malls, banks and gasoline
stations are easily accessible from the subject real properties.
Convenience facilities such as electricity, telephone service as well as pipe potable water supply
system are all available along Gen. Emilio Aguinaldo Highway.
Public transportation consisting of passenger jeepneys and buses as well taxicabs are [sic]
regularly available along Gen. E. Emilio Aguinaldo Highway [sic].
xxxx
IV. HIGHEST AND MOST PROFITABLE USE
xxxx
The subject property is situated within the residential/commercial zone and considering the area
affected and taking into consideration, their location, shape, lot topography, accessibility and the
predominant uses of properties in the neighborhood, as well as the trend of land developments
in the vicinity, we are on the opinion that the highest and most profitable use of the property is
good for residential and commercial purposes.

37
V. VALUATION OF LAND MARKET DATA
xxxx
Based on the analysis of data gathered and making the proper adjustments with respect to the
location, area, shape, accessibility, and the highest and best use of the subject properties, it is
the opinion of the herein commissioners that the fair market value of the subject real properties
is P10,000.00 per square meter, as of this date, October 05, 1999.7

the opinion of herein commissioners that the fair market value of the subject real properties is
10,000.00 per square meter, as of this date, October 05, 1999."
Finding the opinion of the Commissioners to be in order, this Court approves the same.
Accordingly, the Motion filed by [respondent] Reynaldo Ferrer adopting said valuation report is
granted.
SO ORDERED. 9

Thus, both commissioners recommended that the property of S.K. Dynamics to be expropriated
by petitioner be valued at PhP 10,000.00 per square meter.

On January 20, 2000, petitioner filed a Motion for Reconsideration of the abovementioned Order,
but said motion was denied in the trial courts March 23, 2000 Order, which states that:

The records show that the commissioners did not afford the parties the opportunity to introduce
evidence in their favor, nor did they conduct hearings before them. In fact, the commissioners
did not issue notices to the parties to attend hearings nor provide the concerned parties the
opportunity to argue their respective causes.

The basis of [petitioner] in seeking to set aside the Order dated December 28, 1999 is its claim
that the Commissioners Report fixing the just compensation at P10,000.00 per square meter is
exorbitant, unjust and unreasonable. To support its contention, [petitioner] invoked Provincial
Appraisal Committee Report No. 08-95 dated October 25, 1995 which set the just compensation
of lots along Gen. Aguinaldo Highway at P3,000.00 per sq.m. only.

Upon the submission of the commissioners report, petitioner was not notified of the completion
or filing of it nor given any opportunity to file its objections to it.
On December 1, 1999, respondent Ferrer filed a motion adopting in toto the commissioners
report with respect to the valuation of his property.8 On December 28, 1999, the trial court
consequently issued the Order approving the commissioners report, and granted respondent
Ferrers motion to adopt the subject report. Subsequently, the just compensation for the
disparate properties to be expropriated by petitioner for its project was uniformly pegged at PhP
10,000.00 per square meter.
Incidentally, on February 11, 2000, respondent S.K. Dynamics filed a motion informing the trial
court that in addition to the portion of its property covered by TCT No. T-454278 sought to be
expropriated by petitioner, the latter also took possession of an 8.55-square meter portion of
S.K. Dynamics property covered by TCT No. 503484 for the same purposeto acquire an
easement of right-of-way for the construction and maintenance of the proposed DasmariasZapote 230 kV Transmission Line Project. Respondent S.K. Dynamics prayed that said portion
be included in the computation of the just compensation to be paid by petitioner.
On the same date, the Imus, Cavite RTC granted S.K. Dynamics motion to have the 8.55square meter portion of its property included in the computation of just
compensation.1awphi1.net
The Ruling of the Regional Trial Court
As previously stated, in its December 28, 1999 Order, the trial court fixed the just compensation
to be paid by petitioner at PhP 10,000.00 per square meter. The relevant portion of the said
Order reads as follows:
On October 8, 1999, a Commissioners Valuation Report was submitted in Court by the
Provincial Assessor of Cavite and by the Municipal Assessor of Dasmarias, Cavite. Quoting
from said Report, thus:
"Based on the analysis of data gathered and making the proper adjustments with respect to
location, area, shape, accessibility, and the highest and best use of the subject properties, it is

By way of opposition, [respondent] Dynamics countered that the valuation of a lot under
expropriation is reckoned at the time of its taking by the government. And since in the case at
bar, the writ of possession was issued on March 10, 1999, the price or value for 1999 must be
the one to be considered.
We find for the defendant.
The PAR Resolution alluded to by [petitioner] was passed in 1995 or four (4) years [before] the
lot in question was taken over by the government. This explains why the price or cost of the land
has considerably increased. Besides, the valuation of P10,000.00 per sq.m. was the one
recommended by the commissioner designated by [petitioner] itself and concurred in by the
Provincial Assessor of Cavite.
Be that as it may, the Motion for Reconsideration is denied.
SO ORDERED.10
The Ruling of the Court of Appeals
Unsatisfied with the amount of just compensation, petitioner filed an appeal before the CA. In
resolving the appeal, the CA made the following findings:
We find nothing on record which would warrant the reversal of the Order dated December 28,
1999 of the court a quo.
[Petitioner] submits that the order of the court a quo adopting the Commissioners [sic] Valuation
Report, fixing the just compensation for the subject lots in the amount of P10,000.00 per square
meter is exhorbitant [sic], highly speculative and without any basis. In support thereto,
[petitioner] presented before the court a quo the Provincial Appraisal Committee of Cavite
Resolution No. 08-95 x x x which fixed the fair market value of lots located along Gen. Aguinaldo
Highway, Dasmarias, Cavite, which incidentally includes the lots subject of this proceedings
[sic], in the amount of P3,000.00 per square meter.
We do not agree.

38
"The nature and character of the land at the time of its taking is the principal criterion to
determine just compensation to the land owner." (National Power Corporation vs. Henson, 300
SCRA 751-756).
The CA then cited Section 4, Rule 67 of the 1997 Rules of Civil Procedure 11 to explain why
Resolution No. 08-95 could not "be used as [a] basis for determining the just compensation of
the subject lots, which by reason of the changed commercial conditions in the vicinity, could
have increased its value greater than its value three (3) years ago." The said resolution, which
fixed the fair market value of the lots, including that of the disputed lots along Gen. Aguinaldo
Highway, was approved on October 25, 1995, while petitioner filed the Complaint for the
expropriation of the disputed lots on November 27, 1998, or more than three (3) years had
elapsed after said resolution was approved. Reflecting on the commissioners report, the CA
noted that since the property underwent important changes and improvements, "the highest and
most profitable use of the property is good for residential and commercial purposes."
As regards the commissioners failure to conduct a hearing "to give the parties the opportunity to
present their respective evidence," as alleged by petitioner, the CA opined that "[t]he filing by
[petitioner] of a motion for reconsideration accorded it ample opportunity to dispute the findings
of the commissioners, so that [petitioner] was as fully heard as there might have been hearing
actually taken place x x x."
The CA ultimately rendered its judgment, as follows:
WHEREFORE, premises considered, the present appeal is hereby DISMISSED for lack of merit.
The Order dated December 28, 1999 and March 23, 2000 of the court a quo are hereby
AFFIRMED by this Court.
SO ORDERED.12
Significantly, petitioner did not file a Motion for Reconsideration of the CA November 18, 2002
Decision, but it directly filed a petition for review before us.
The Issues
In this petition for review, the issues are the following:
PETITIONER WAS DENIED DUE PROCESS WHEN IT WAS NOT ALLOWED TO PRESENT
EVIDENCE ON THE REASONABLE VALUE OF THE EXPROPRIATED PROPERTY BEFORE
THE BOARD OF COMMISSIONERS.
THE VALUATION OF JUST COMPENSATION HEREIN WAS NOT BASED FROM THE
EVIDENCE ON RECORD AND OTHER AUTHENTIC DOCUMENTS. 13
The Courts Ruling
We find this petition meritorious.
It is beyond question that petitions for review may only raise questions of law which must be
distinctly set forth;14thus, this Court is mandated to only consider purely legal questions in this
petition, unless called for by extraordinary circumstances.

In this case, petitioner raises the issue of denial of due process because it was allegedly
deprived of the opportunity to present its evidence on the just compensation of properties it
wanted to expropriate, and the sufficiency of the legal basis or bases for the trial courts Order
on the matter of just compensation. Unquestionably, a petition for review under Rule 45 of the
Rules of Court is the proper vehicle to raise the issues in question before this Court.
In view of the significance of the issues raised in this petition, because this case involves the
expenditure of public funds for a clear public purpose, this Court will overlook the fact that
petitioner did not file a Motion for Reconsideration of the CA November 18, 2002 Decision, and
brush aside this technicality in favor of resolving this case on the merits.
First Issue: Petitioner was deprived of due process when it was not given the opportunity to
present evidence before the commissioners
It is undisputed that the commissioners failed to afford the parties the opportunity to introduce
evidence in their favor, conduct hearings before them, issue notices to the parties to attend
hearings, and provide the opportunity for the parties to argue their respective causes. It is also
undisputed that petitioner was not notified of the completion or filing of the commissioners
report, and that petitioner was also not given any opportunity to file its objections to the said
report.
A re-examination of the pertinent provisions on expropriation, under Rule 67 of the Rules of
Court, reveals the following:
SEC. 6. Proceedings by commissioners.Before entering upon the performance of their duties,
the commissioners shall take and subscribe an oath that they will faithfully perform their duties
as commissioners, which oath shall be filed in court with the other proceedings in the case.
Evidence may be introduced by either party before the commissioners who are authorized to
administer oaths on hearings before them, and the commissioners shall, unless the parties
consent to the contrary, after due notice to the parties to attend, view and examine the property
sought to be expropriated and its surroundings, and may measure the same, after which either
party may, by himself or counsel, argue the case. The commissioners shall assess the
consequential damages to the property not taken and deduct from such consequential damages
the consequential benefits to be derived by the owner from the public use or purpose of the
property taken, the operation of its franchise by the corporation or the carrying on of the
business of the corporation or person taking the property. But in no case shall the consequential
benefits assessed exceed the consequential damages assessed, or the owner be deprived of
the actual value of his property so taken.
SEC. 7. Report by commissioners and judgment thereupon.The court may order the
commissioners to report when any particular portion of the real estate shall have been passed
upon by them, and may render judgment upon such partial report, and direct the commissioners
to proceed with their work as to subsequent portions of the property sought to be expropriated,
and may from time to time so deal with such property. The commissioners shall make a full and
accurate report to the court of all their proceedings, and such proceedings shall not be effectual
until the court shall have accepted their report and rendered judgment in accordance with their
recommendations. Except as otherwise expressly ordered by the court, such report shall be filed
within sixty (60) days from the date the commissioners were notified of their appointment, which
time may be extended in the discretion of the court. Upon the filing of such report, the clerk of
the court shall serve copies thereof on all interested parties, with notice that they are allowed ten
(10) days within which to file objections to the findings of the report, if they so desire.

39
SEC. 8. Action upon commissioners report.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 expropriation, and to
the defendant just compensation for the property so taken.
Based on these provisions, it is clear that in addition to the ocular inspection performed by the
two (2) appointed commissioners in this case, they are also required to conduct a hearing or
hearings to determine just compensation; and to provide the parties the following: (1) notice of
the said hearings and the opportunity to attend them; (2) the opportunity to introduce evidence in
their favor during the said hearings; and (3) the opportunity for the parties to argue their
respective causes during the said hearings.
The appointment of commissioners to ascertain just compensation for the property sought to be
taken is a mandatory requirement in expropriation cases. In the instant expropriation case,
where the principal issue is the determination of just compensation, a hearing before the
commissioners is indispensable to allow the parties to present evidence on the issue of just
compensation. While it is true that the findings of commissioners may be disregarded and the
trial court may substitute its own estimate of the value, the latter may only do so for valid
reasons, that is, where the commissioners have applied illegal principles to the evidence
submitted to them, where they have disregarded a clear preponderance of evidence, or where
the amount allowed is either grossly inadequate or excessive. 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."15
In this case, the fact that no trial or hearing was conducted to afford the parties the opportunity to
present their own evidence should have impelled the trial court to disregard the commissioners
findings. The absence of such trial or hearing constitutes reversible error on the part of the trial
court because the parties (in particular, petitioners) right to due process was violated.
The Court of Appeals erred in ruling that the petitioner was not deprived of due process when it
was able to file a motion for reconsideration
In ruling that petitioner was not deprived of due process because it was able to file a Motion for
Reconsideration, the CA had this to say:
[Petitioner], further, asserts that "the appointed commissioners failed to conduct a hearing to
give the parties the opportunity to present their respective evidence. According to [petitioner], the
Commissioners Valuation Report was submitted on October 8, 1999 in violation of the
appellants right to due process as it was deprived of the opportunity to present evidence on the
determination of the just compensation."
We are not persuaded.
The filing by [petitioner] of a motion for reconsideration accorded it ample opportunity to dispute
the findings of the commissioners, so that [petitioner] was as fully heard as there might have
been hearing actually taken place. "Denial of due process cannot be successfully invoked by a

party who has had the opportunity to be heard on his motion for reconsideration." (Vda. De Chua
vs. Court of Appeals, 287 SCRA 33, 50).16
In this respect, we are constrained to disagree with the CA ruling, and therefore, set it aside.
While it is true that there is jurisprudence supporting the rule that the filing of a Motion for
Reconsideration negates allegations of denial of due process, it is equally true that there are
very specific rules for expropriation cases that require the strict observance of procedural and
substantive due process,17 because expropriation cases involve the admittedly painful
deprivation of private property for public purposes and the disbursement of public funds as just
compensation for the private property taken. Therefore, it is insufficient to hold that a Motion for
Reconsideration in an expropriation case cures the defect in due process.
As a corollary, the CAs ruling that "denial of due process cannot be successfully invoked by a
party who has had the opportunity to be heard on his motion for reconsideration," citing Vda. de
Chua v. Court of Appeals, is not applicable to the instant case considering that the cited case
involved a lack of notice of the orders of the trial court in granting letters of administration. It was
essentially a private dispute and therefore, no public funds were involved. It is distinct from this
expropriation case where grave consequences attached to the orders of the trial court when it
determined the just compensation.
The Court takes this opportunity to elucidate the ruling that the opportunity to present evidence
incidental to a Motion for Reconsideration will suffice if there was no chance to do so during the
trial. We find such situation to be the exception and not the general rule. The opportunity to
present evidence during the trial remains a vital requirement in the observance of due process.
The trial is materially and substantially different from a hearing on a Motion for Reconsideration.
At the trial stage, the party is usually allowed several hearing dates depending on the number of
witnesses who will be presented. At the hearing of said motion, the trial court may not be more
accommodating with the grant of hearing dates even if the movant has many available
witnesses. Before the decision is rendered, a trial court has an open mind on the merits of the
parties positions. After the decision has been issued, the trial courts view of these positions
might be inclined to the side of the winning party and might treat the Motion for Reconsideration
and the evidence adduced during the hearing of said motion perfunctorily and in a cavalier
fashion. The incident might not receive the evaluation and judgment of an impartial or neutral
judge. In sum, the constitutional guarantee of due process still requires that a party should be
given the fullest and widest opportunity to adduce evidence during trial, and the availment of a
motion for reconsideration will not satisfy a partys right to procedural due process, unless
his/her inability to adduce evidence during trial was due to his/her own fault or negligence.
Second Issue: The legal basis for the determination of just compensation was insufficient
In this case, it is not disputed that the commissioners recommended that the just compensation
be pegged at PhP 10,000.00 per square meter. The commissioners arrived at the figure in
question after their ocular inspection of the property, wherein they considered the surrounding
structures, the propertys location and, allegedly, the prices of the other, contiguous real
properties in the area. Furthermore, based on the commissioners report, the recommended just
compensation was determined as of the time of the preparation of said report on October 5,
1999.
In B.H. Berkenkotter & Co. v. Court of Appeals, we held, thus:

40
Just compensation is defined as the full and fair equivalent of the property sought to be
expropriated. The measure is not the takers gain but the owners loss. The compensation, to be
just, must be fair not only to the owner but also to the taker. Even as undervaluation would
deprive the owner of his property without due process, so too would its overvaluation unduly
favor him to the prejudice of the public.
To determine just compensation, the trial court should first ascertain the market value of the
property, to which should be added the consequential damages after deducting therefrom the
consequential benefits which may arise from the expropriation. If the consequential benefits
exceed the consequential damages, these items should be disregarded altogether as the basic
value of the property should be paid in every case.
The market value of the property is the price that may be agreed upon by parties willing but not
compelled to enter into the contract of sale. Not unlikely, a buyer desperate to acquire a piece of
property would agree to pay more, and a seller in urgent need of funds would agree to accept
less, than what it is actually worth. x x x
Among the factors to be considered in arriving at the fair market value of the property are the
cost of acquisition, the current value of like properties, its actual or potential uses, and in the
particular case of lands, their size, shape, location, and the tax declarations thereon.

of the fact that after the crisis hit the real estate market, there was a downward trend in the
prices of real estate in the country.
Furthermore, the commissioners report itself is flawed considering that its recommended just
compensation was pegged as of October 5, 1999, or the date when the said report was issued,
and not the just compensation as of the date of the filing of the complaint for expropriation, or as
of November 27, 1998. The period between the time of the filing of the complaint (when just
compensation should have been determined), and the time when the commissioners report
recommending the just compensation was issued (or almost one [1] year after the filing of the
complaint), may have distorted the correct amount of just compensation.
Clearly, the legal basis for the determination of just compensation in this case is insufficient as
earlier enunciated. This being so, the trial courts ruling in this respect should be set aside.
WHEREFORE, the petition is GRANTED. The December 28, 1999 and March 23, 2000 Orders
of the Imus, Cavite RTC and the November 18, 2002 Decision of the CA are hereby SET ASIDE.
This case is remanded to the said trial court for the proper determination of just compensation in
conformity with this Decision. No costs.
SO ORDERED

It is settled that just compensation is to be ascertained as of the time of the taking, which usually
coincides with the commencement of the expropriation proceedings. 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.18
We note that in this case, the filing of the complaint for expropriation preceded the petitioners
entry into the property.
Therefore, it is clear that in this case, the sole basis for the determination of just compensation
was the commissioners ocular inspection of the properties in question, as gleaned from the
commissioners October 5, 1999 report. The trial courts reliance on the said report is a serious
error considering that the recommended compensation was highly speculative and had no
strong factual moorings. For one, the report did not indicate the fair market value of the lots
occupied by the Orchard Golf and Country Club, Golden City Subdivision, Arcontica Sports
Complex, and other business establishments cited. Also, the report did not show how
convenience facilities, public transportation, and the residential and commercial zoning could
have added value to the lots being expropriated.

Case no. 8

Republic
SUPREME
Manila

Moreover, the trial court did not amply explain the nature and application of the "highest and best
use" method to determine the just compensation in expropriation cases. No attempt was made
to justify the recommended "just price" in the subject report through other sufficient and reliable
means such as the holding of a trial or hearing at which the parties could have had adequate
opportunity to adduce their own evidence, the testimony of realtors in the area concerned, the
fair market value and tax declaration, actual sales of lots in the vicinity of the lot being
expropriated on or about the date of the filing of the complaint for expropriation, the pertinent
zonal valuation derived from the Bureau of Internal Revenue, among others.

SECOND DIVISION

More so, the commissioners did not take into account that the Asian financial crisis in the second
semester of 1997 affected the fair market value of the subject lots. Judicial notice can be taken

MENDOZA, J.:

G.R. No. 146062

of

the

Philippines
COURT

June 28, 2001

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

41
This is a petition for review of the decision 1 of the Court of Appeals which affirmed the decision
of the Regional Trial Court, Branch 26, Surallah, South Cotabato, ordering the National Irrigation
Administration (NIA for brevity) to pay respondent the amount of P107,517.60 as just
compensation for the taking of the latters property.
The facts are as follows:
Respondent Clarita Vda. de Enorio is the owner of a lot in Barangay M. Roxas, Sto. Nio, South
Cotabato with an area of 39,512 square meters. The lot, known as Lot 1210-A-Pad-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.
Respondents husband agreed to the construction of the NIA canal provided that they be paid by
the government for the area taken after the processing of documents by the Commission on
Audit.
Sometime in 1983, a Right-of-Way agreement was executed between respondent and the NIA
(Exh. 1). The NIA then paid respondent the amount of P4,180.00 as Right-of-Way damages.
Respondent subsequently executed an Affidavit of Waiver of Rights and Fees whereby she
waived any compensation for damages to crops and improvements which she suffered as a
result of the construction of a right-of-way on her property (Exh. 2). The same year, petitioner
offered respondent the sum of P35,000.00 by way of amicable settlement pursuant to Executive
Order No. 1035, 18, which provides in part that
Financial assistance may also be given to owners of lands acquired under C.A. 141, as
amended, for the area or portion subject to the reservation under Section 12 thereof in such
amounts as may be determined by the implementing agency/instrumentality concerned in
consultation with the Commission on Audit and the assessors office concerned.
Respondent demanded payment for the taking of her property, but petitioner refused to pay.
Accordingly, respondent filed on December 10, 1990 a complaint against petitioner before the
Regional Trial Court, praying that petitioner be ordered to pay the sum of P111,299.55 as
compensation for the portion of her property used in the construction of the canal constructed by
the NIA, litigation expenses, and the costs.
Petitioner, through the Office of the Solicitor-General, filed an Answer, in which he admitted that
NIA constructed an irrigation canal over the property of the plaintiff and that NIA paid a certain
landowner whose property had been taken for irrigation purposes, but petitioner interposed the
defense that: (1) the government had not consented to be sued; (2) the total area used by the
NIA for its irrigation canal was only 2.27 hectares, not 24,600 square meters; and (3) respondent
was not entitled to compensation for the taking of her property considering that she secured title
over the property by virtue of a homestead patent under C.A. No. 141.

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 . . . .

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

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.

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

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."

42
The requirement in Rule 7, 5 that the certification should be executed by the plaintiff or the
principal means that counsel cannot sign the certificate against forum-shopping. The reason for
this is that the plaintiff or principal knows better than anyone else whether a petition has
previously been filed involving the same case or substantially the same issues. Hence, a
certification signed by counsel alone is defective and constitutes a valid cause for dismissal of
the petition.4
In this case, the petition for review was filed by Santiago Eslaban, Jr., in his capacity as Project
Manager of the NIA. However, the verification and certification against forum-shopping were
signed by Cesar E. Gonzales, the administrator of the agency. The real party-in-interest is the
NIA, which is a body corporate. Without being duly authorized by resolution of the board of the
corporation, neither Santiago Eslaban, Jr. nor Cesar E. Gonzales could sign the certificate
against forum-shopping accompanying the petition for review. Hence, on this ground alone, the
petition should be dismissed.
Second. Coming to the merits of the case, the land under litigation, as already stated, is
covered by a transfer certificate of title registered in the Registry Office of Koronadal, South
Cotabato on May 13, 1976. This land was originally covered by Original Certificate of Title No.
(P-25592) P-9800 which was issued pursuant to a homestead patent granted on February 18,
1960. We have held:
Whenever public lands are alienated, granted or conveyed to applicants thereof, and the deed
grant or instrument of conveyance [sales patent] registered with the Register of Deeds and the
corresponding certificate and owners duplicate of title issued, such lands are deemed registered
lands under the Torrens System and the certificate of title thus issued is as conclusive and
indefeasible as any other certificate of title issued to private lands in ordinary or cadastral
registration proceedings.5
The Solicitor-General contends, however, that an encumbrance is imposed on the land in
question in view of 39 of the Land Registration Act (now P.D. No. 1529, 44) which provides:
Every person receiving a certificate of title in pursuance of a decree of registration, and every
subsequent purchaser of registered land who takes a certificate of title for value in good faith
shall hold the same free from all encumbrances except those noted on said certificate, and any
of the following encumbrances which may be subsisting, namely:
....
Third. Any public highway, way, private way established by law, or any government irrigation
canal or lateral thereof, where the certificate of title does not state that the boundaries of such
highway, way, irrigation canal or lateral thereof, have been determined.
As this provision says, however, the only servitude which a private property owner is required to
recognize in favor of the government is the easement of a "public highway, way, private way
established by law, or any government canal or lateral thereof where the certificate of title does
not state that the boundaries thereof have been pre-determined." This implies that the same
should have been pre-existing at the time of the registration of the land in order that the
registered owner may be compelled to respect it. Conversely, where the easement is not preexisting 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,

43
however, it was already held in Commissioner of Public Highways v. Burgos 11 that the price of
the land at the time of taking, not its value after the passage of time, represents the true value to
be paid as just compensation. It was, therefore, error for the Court of Appeals to rule that the just
compensation to be paid to respondent should be determined as of the filing of the complaint in
1990, and not the time of its taking by the NIA in 1981, because petitioner was allegedly remiss
in its obligation to pay respondent, and it was respondent who filed the complaint. In the case
of Burgos,12 it was also the property owner who brought the action for compensation against the
government after 25 years since the taking of his property for the construction of a road.

Bellosillo, Quisumbing, Buena, De Leon, Jr., JJ., concur

Indeed, the value of the land may be affected by many factors. It may be enhanced on account
of its taking for public use, just as it may depreciate. As observed in Republic v. Lara:13
[W]here property is taken ahead of the filing of the condemnation proceedings, the value thereof
may be enhanced by the public purpose for which it is taken; the entry by the plaintiff upon the
property may have depreciated its value thereby; or there may have been a natural increase in
the value of the property from the time it is taken to the time the complaint is filed, due to general
economic conditions. The owner of private property should be compensated only for what he
actually loses; it is not intended that his compensation shall extend beyond his loss or injury. And
what he loses is only the actual value of his property at the time it is taken. This is the only way
that compensation to be paid can be truly just, i.e., "just" not only to the individual whose
property is taken, "but to the public, which is to pay for it" . . . .
In this case, the proper valuation for the property in question is P16,047.61 per hectare, the
price level for 1982, based on the appraisal report submitted by the commission (composed of
the provincial treasurer, assessor, and auditor of South Cotabato) constituted by the trial court to
make an assessment of the expropriated land and fix the price thereof on a per hectare basis.14
Fourth. Petitioner finally contends that it is exempt from paying any amount to respondent
because the latter executed an Affidavit of Waiver of Rights and Fees of any compensation due
in favor of the Municipal Treasurer of Barangay Sto. Nio, South Cotabato. However, as the
Court of Appeals correctly held:
[I]f NIA intended to bind the appellee to said affidavit, it would not even have bothered to give her
any amount for damages caused on the improvements/crops within the appellees property.
This, apparently was not the case, as can be gleaned from the disbursement voucher in the
amount of P4,180.00 (page 10 of the Folder of Exhibits in Civil Case 396) issued on September
17, 1983 in favor of the appellee, and the letter from the Office of the Solicitor General
recommending the giving of "financial assistance in the amount of P35,000.00" to the appellee.

Case no. 9

Republic
SUPREME
Manila

of

the

Philippines
COURT

THIRD DIVISION

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

G.R. No. 129998 December 29, 1998

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.1wphi1.nt

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.

SO ORDERED.

44
PARDO, J.:

Total A = 58,311 sq. m.

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.

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

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

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.

45
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.

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:

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

a. Lot 1-A, with an area of 43,532 square meters belonging to Lourdes Henson, Josefina
Henson, Jesusa Henson and Corazon Henson;

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.

d. Lot 4-A, with an area of 1,438 square meters belonging to Maria Bondoc Capili (TCT No.
7108)

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.

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)

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.

46
Romero, Kapunan and Purisima, JJ., concur

Case no. 10

Republic
SUPREME
Manila

of

the

Philippines
COURT

THE
CITY
OF
vs.
SPOUSES APOLONIO and BLASA DEDAMO, respondents.

CEBU, petitioner,

FIRST DIVISION
G.R. No. 142971

May 7, 2002

DAVIDE, JR., C.J.:

In its petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure,
petitioner City of Cebu assails the decision of 11 October 1999 of the Court of Appeals in CAG.R. CV No. 592041 affirming the judgment of 7 May 1996 of the Regional Trial Court, Branch
13, Cebu City, in Civil Case No. CEB-14632, a case for eminent domain, which fixed the
valuation of the land subject thereof on the basis of the recommendation of the commissioners
appointed by it.

47
The material operation facts are not disputed.
On 17 September 1993, petitioner City of Cebu filed in Civil Case No. CEB-14632 a complaint
for eminent domain against respondents spouses Apolonio and Blasa Dedamo. The petitioner
alleged therein that it needed the following parcels of land of respondents, to wit:
Lot No. 1527

value of P1,786.400. Petitioner deposited with the Philippine National Bank the amount of
P51,156 representing 15% of the fair market value of the property to enable the petitioner to
take immediate possession of the property pursuant to Section 19 of R.A. No. 7160.2
Respondents, filed a motion to dismiss the complaint because the purpose for which their
property was to be expropriated was not for a public purpose but for benefit of a single private
entity, the Cebu Holdings, Inc. Petitioner could simply buy directly from them the property at its
fair market value if it wanted to, just like what it did with the neighboring lots. Besides, the price
offered was very low in light of the consideration of P20,000 per square meter, more or less,
which petitioner paid to the neighboring lots. Finally, respondents alleged that they have no other
land in Cebu City.

Area------------------------------------------------

1,146 square meters

Tax Declaration----------------------------------

03472

A pre-trial was thereafter had.

Title No. ------------------------------------------

31833

On 23 August 1994, petitioner filed a motion for the issuance of a writ of possession pursuant to
Section 19 of R.A. No. 7160. The motion was granted by the trial court on 21 September 1994.3

Market value-------------------------------------

P240,660.00

Assessed Value----------------------------------

P72,200.00

On 14 December 1994, the parties executed and submitted to the trial court an
Agreement4 wherein they declared that they have partially settled the case and in consideration
thereof they agreed:
1. That the SECOND PARTY hereby conforms to the intention to [sic] the FIRST PARTY in
expropriating their parcels of land in the above-cited case as for public purpose and for the
benefit of the general public;
2. That the SECOND PARTY agrees to part with the ownership of the subject parcels of land in
favor of the FIRST PARTY provided the latter will pay just compensation for the same in the
amount determined by the court after due notice and hearing;

Lot No. 1528

Area------------------------------------------------

793 square meters

Area sought to be expropriated ----------------

478 square meters

Tax Declaration -----------------------------------

03450

Title No. --------------------------------------------

31832

Market value for the whole lot ------------------

P1,666,530.00

Market value of the Area to be expropriated --

P100,380.00

5. That the SECOND PARTY upon receipt of the aforesaid provisional amount, shall turn over to
the FIRST PARTY the title of the lot and within the lapse of the fifteen (15) days grace period will
voluntarily demolish their house and the other structure that may be located thereon at their own
expense;

Assessed Value ------------------------------------

P49,960.00

6. That the FIRST PARTY and the SECOND PARTY jointly petition the Honorable Court to
render judgment in said Civil Case No. CEB-14632 in accordance with this AGREEMENT;

for a public purpose, i.e., for the construction of a public road which shall serve as an
access/relief road of Gorordo Avenue to extend to the General Maxilum Avenue and the back of
Magellan International Hotel Roads in Cebu City. The lots are the most suitable site for the
purpose. The total area sought to be expropriated is 1,624 square meters with an assessed

3. That in the meantime the SECOND PARTY agrees to receive the amount of ONE MILLION
SEVEN HUNDRED EIGHTY SIX THOUSAND FOUR HUNDRED PESOS (1,786,400.00) as
provisional payment for the subject parcels of land, without prejudice to the final valuation as
maybe determined by the court;
4. That the FIRST PARTY in the light of the issuance of the Writ of Possession Order dated
September 21, 1994 issued by the Honorable Court, agreed to take possession over that portion
of the lot sought to be expropriated where the house of the SECOND PARTY was located only
after fifteen (15) days upon the receipt of the SECOND PARTY of the amount of P1,786,400.00;

7. That the judgment sought to be rendered under this agreement shall be followed by a
supplemental judgment fixing the just compensation for the property of the SECOND PARTY
after the Commissioners appointed by this Honorable Court to determine the same shall have
rendered their report and approved by the court.

48
Pursuant to said agreement, the trial court appointed three commissioners to determine the just
compensation of the lots sought to be expropriated. The commissioners were Palermo M. Lugo,
who was nominated by petitioner and who was designated as Chairman; Alfredo Cisneros, who
was nominated by respondents; and Herbert E. Buot, who was designated by the trial court. The
parties agreed to their appointment.
Thereafter, the commissioners submitted their report, which contained their respective
assessments of and recommendation as to the valuation of the property.1wphi1.nt
On the basis of the commissioners' report and after due deliberation thereon, the trial court
rendered its decision on 7 May 1996,5 the decretal portion o which reads:
WHEREFORE, in view of the foregoing, judgment is hereby rendered in accordance with the
report of the commissioners.
Plaintiff is directed to pay Spouses Apolonio S. Dedamo and Blasa Dedamo the sum of pesos:
TWENTY FOUR MILLION EIGHT HUNDRED SIXTY-FIVE THOUSAND AND NINE HUNDRED
THIRTY (P24,865.930.00) representing the compensation mentioned in the Complaint.
Plaintiff and defendants are directed to pay the following commissioner's fee;
1. To Palermo Lugo

- P21,000.00

2. To Herbert Buot

- P19,000.00

3. To Alfredo Cisneros

- P19,000.00

Without pronouncement as to cost.

SO ORDERED.
Petitioner filed a motion for reconsideration on the ground that the commissioners' report was
inaccurate since it included an area which was not subject to expropriation. More specifically, it
contended that Lot No. 1528 contains 793 square meters but the actual area to be expropriated
is only 478 square meters. The remaining 315 square meters is the subject of a separate
expropriation proceeding in Civil Case No. CEB-8348, then pending before Branch 9 of the
Regional Trial Court of Cebu City.
On 16 August 1996, the commissioners submitted an amended assessment for the 478 square
meters of Lot No. 1528 and fixed it at P12,824.10 per square meter, or in the amount of
P20,826,339.50. The assessment was approved as the just compensation thereof by the trial
court in its Order of 27 December 1996. 6 Accordingly, the dispositive portion of the decision was
amended to reflect the new valuation.
Petitioner elevated the case to the Court of Appeals, which docketed the case as CA-G.R. CV
No. 59204. Petitioner alleged that the lower court erred in fixing the amount of just compensation
at P20,826,339.50. The just compensation should be based on the prevailing market price of the
property at the commencement of the expropriation proceedings.

The petitioner did not convince the Court of Appeals. In its decision of 11 October 1999, 7 the
Court of Appeals affirmed in toto the decision of the trial court.
Still unsatisfied, petitioner filed with us the petition for review in the case at bar. It raises the sole
issue of whether just compensation should be determined as of the date of the filing of the
complaint. It asserts that it should be, which in this case should be 17 September 1993 and not
at the time the property was actually taken in 1994, pursuant to the decision in "National Power
Corporation vs. Court of Appeals."8
In their Comment, respondents maintain that the Court of Appeals did not err in affirming the
decision of the trial court because (1) the trial court decided the case on the basis of the
agreement of the parties that just compensation shall be fixed by commissioners appointed by
the court; (2) petitioner did not interpose any serious objection to the commissioners' report of 12
August 1996 fixing the just compensation of the 1,624-square meter lot at P20,826,339.50;
hence, it was estopped from attacking the report on which the decision was based; and (3) the
determined just compensation fixed is even lower than the actual value of the property at the
time of the actual taking in 1994.
Eminent domain is a fundamental State power that is inseparable from sovereignty. It is the
Government's right to appropriate, in the nature of a compulsory sale to the State, private
property for public use or purpose.9 However, the Government must pay the owner thereof just
compensation as consideration therefor.
In the case at bar, the applicable law as to the point of reckoning for the determination of just
compensation is Section 19 of R.A. No. 7160, which expressly provides that just compensation
shall be determined as of the time of actual taking. The Section reads as follows:
SECTION 19. Eminent Domain. A local government unit may, through its chief executive and
acting pursuant to an ordinance, exercise the power of eminent domain for public use, or
purpose or welfare for the benefit of the poor and the landless, upon payment of just
compensation, pursuant to the provisions of the Constitution and pertinent laws: Provided,
however, That the power of eminent domain may not be exercised unless a valid and definite
offer has been previously made to the owner, and such offer was not accepted: Provided,
further, That the local government unit may immediately take possession of the property upon
the filing of the expropriation proceedings and upon making a deposit with the proper court of at
least fifteen percent (15%) of the fair market value of the property based on the current tax
declaration of the property to be expropriated: Provided finally, That, the amount to be paid for
the expropriated property shall be determined by the proper court, based on the fair market
value at the time of the taking of the property.
The petitioner has misread our ruling in The National Power Corp. vs. Court of Appeals.10 We did
not categorically rule in that case that just compensation should be determined as of the filing of
the complaint. We explicitly stated therein that although the general rule in determining just
compensation in eminent domain is the value of the property as of the date of the filing of the
complaint, the rule "admits of an exception: where this Court fixed the value of the property as of
the date it was taken and not at the date of the commencement of the expropriation
proceedings."
Also, the trial court followed the then governing procedural law on the matter, which was Section
5 of Rule 67 of the Rules of Court, which provided as follows:

49
SEC. 5. Ascertainment of compensation. 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.
More than anything else, the parties, by a solemn document freely and voluntarily agreed upon
by them, agreed to be bound by the report of the commission and approved by the trial court.
The agreement is a contract between the parties. It has the force of law between them and
should be complied with in good faith. Article 1159 and 1315 of the Civil Code explicitly provides:
Art. 1159. Obligations arising from contracts have the force of law between the contracting
parties and should be complied with in good faith.
Art. 1315. Contracts are perfected by mere consent, and from that moment the parties are
bound not only to the fulfillment of what has been expressly stipulated but also to all the
consequences which, according to their nature, may be in keeping with good faith, usage and
law.
Furthermore, during the hearing on 22 November 1996, petitioner did not interpose a serious
objection.11 It is therefore too late for petitioner to question the valuation now without violating the
principle of equitable estoppel. Estoppel in pais arises when one, by his acts, representations or
admissions, or by his own silence when he ought to speak out, intentionally or through culpable
negligence, induces another to believe certain facts to exist and such other rightfully relies and
acts on such belief, so that he will be prejudiced if the former is permitted to deny the existence
of such facts.12 Records show that petitioner consented to conform with the valuation
recommended by the commissioners. It cannot detract from its agreement now and assail
correctness of the commissioners' assessment.1wphi1.nt

Case no. 11

Finally, while Section 4, Rule 67 of the Rules of Court provides that just compensation shall be
determined at the time of the filing of the complaint for expropriation, 13 such law cannot prevail
over R.A. 7160, which is a substantive law.14

EN BANC

WHEREFORE, finding no reversible error in the assailed judgment on the Court of Appeals in
CA-G.R. CV No. 59204, the petition in this case is hereby DENIED.
No pronouncement as to costs.
SO ORDERED.
Puno, Kapunan, Ynares-Santiago, De Leon, Jr., and Austria-Martinez, JJ., concur

Republic
SUPREME
Manila

G.R. No. 161656

of

the

Philippines
COURT

June 29, 2005

REPUBLIC OF THE PHILIPPINES, GENERAL ROMEO ZULUETA, COMMODORE EDGARDO

GALEOS,
ANTONIO
CABALUNA,
DOROTEO
MANTOS
&
FLORENCIO
BELOTINDOS, petitioners,
vs.
VICENTE G. LIM, respondent.
RESOLUTION
SANDOVAL-GUTIERREZ, J.:
Justice is the first virtue of social institutions. 1 When the state wields its power of eminent
domain, there arises a correlative obligation on its part to pay the owner of the expropriated
property a just compensation. If it fails, there is a clear case of injustice that must be redressed.
In the present case, fifty-seven (57) years have lapsed from the time the Decision in the subject
expropriation proceedings became final, but still the Republic of the Philippines, herein
petitioner, has not compensated the owner of the property. To tolerate such prolonged inaction

50
on its part is to encourage distrust and resentment among our people the very vices that
corrode the ties of civility and tempt men to act in ways they would otherwise shun.
A revisit of the pertinent facts in the instant case is imperative.
On September 5, 1938, the Republic of the Philippines (Republic) instituted a special civil action
for expropriation with the Court of First Instance (CFI) of Cebu, docketed as Civil Case No. 781,
involving Lots 932 and 939 of the Banilad Friar Land Estate, Lahug, Cebu City, for the purpose
of establishing a military reservation for the Philippine Army. Lot 932 was registered in the name
of Gervasia Denzon under Transfer Certificate of Title (TCT) No. 14921 with an area of 25,137
square meters, while Lot 939 was in the name of Eulalia Denzon and covered by TCT No. 12560
consisting of 13,164 square meters.
After depositing P9,500.00 with the Philippine National Bank, pursuant to the Order of the CFI
dated October 19, 1938, the Republic took possession of the lots. Thereafter, or on May 14,
1940, the CFI rendered its Decision ordering the Republic to pay the Denzons the sum
of P4,062.10 as just compensation.
The Denzons interposed an appeal to the Court of Appeals but it was dismissed on March 11,
1948. An entry of judgment was made on April 5, 1948.
In 1950, Jose Galeos, one of the heirs of the Denzons, filed with the National Airports
Corporation a claim for rentals for the two lots, but it "denied knowledge of the matter." Another
heir, Nestor Belocura, brought the claim to the Office of then President Carlos Garcia who wrote
the Civil Aeronautics Administration and the Secretary of National Defense to expedite action on
said claim. On September 6, 1961, Lt. Manuel Cabal rejected the claim but expressed
willingness to pay the appraised value of the lots within a reasonable time.
For failure of the Republic to pay for the lots, on September 20, 1961, the Denzons successorsin-interest,Francisca Galeos-Valdehueza and Josefina Galeos-Panerio,2 filed with the same
CFI an action for recovery of possession with damages against the Republic and officers of the
Armed Forces of the Philippines in possession of the property. The case was docketed as Civil
Case No. R-7208.
In the interim or on November 9, 1961, TCT Nos. 23934 and 23935 covering Lots 932 and 939
were issued in the names of Francisca Valdehueza and Josefina Panerio, respectively.
Annotated thereon was the phrase "subject to the priority of the National Airports Corporation to
acquire said parcels of land, Lots 932 and 939 upon previous payment of a reasonable market
value."
On July 31, 1962, the CFI promulgated its Decision in favor of Valdehueza and Panerio, holding
that they are the owners and have retained their right as such over Lots 932 and 939 because of
the Republics failure to pay the amount of P4,062.10, adjudged in the expropriation
proceedings. However, in view of the annotation on their land titles, they were ordered to
execute a deed of sale in favor of the Republic. In view of "the differences in money value from
1940 up to the present," the court adjusted the market value at P16,248.40, to be paid with 6%
interest per annum from April 5, 1948, date of entry in the expropriation proceedings, until full
payment.
After their motion for reconsideration was denied, Valdehueza and Panerio appealed from the
CFI Decision, in view of the amount in controversy, directly to this Court. The case was docketed

as No. L-21032.3 On May 19, 1966, this Court rendered its Decision affirming the CFI Decision.
It held that Valdehueza and Panerio are still the registered owners of Lots 932 and 939, there
having been no payment of just compensation by the Republic. Apparently, this Court found
nothing in the records to show that the Republic paid the owners or their successors-in-interest
according to the CFI decision. While it deposited the amount of P9,500,00, and said deposit was
allegedly disbursed, however, the payees could not be ascertained.
Notwithstanding the above finding, this Court still ruled that Valdehueza and Panerio are not
entitled to recover possession of the lots but may only demand the payment of their fair market
value, ratiocinating as follows:
"Appellants would contend that: (1) possession of Lots 932 and 939 should be restored to them
as owners of the same; (2) the Republic should be ordered to pay rentals for the use of said lots,
plus attorneys fees; and (3) the court a quo in the present suit had no power to fix the value of
the lots and order the execution of the deed of sale after payment.
It is true that plaintiffs are still the registered owners of the land, there not having been a transfer
of said lots in favor of the Government. The records do not show that the Government paid the
owners or their successors-in-interest according to the 1940 CFI decision although, as
stated, P9,500.00 was deposited by it, and said deposit had been disbursed. With the records
lost, however, it cannot be known who received the money (Exh. 14 says: It is further certified
that the corresponding Vouchers and pertinent Journal and Cash Book were destroyed during
the last World War, and therefore the names of the payees concerned cannot be
ascertained.) And the Government now admits that there is no available record showing
that payment for the value of the lots in question has been made (Stipulation of Facts, par.
9, Rec. on Appeal, p. 28).
The points in dispute are whether such payment can still be made and, if so, in what
amount. Said lots have been the subject of expropriation proceedings. By final and
executory judgment in said proceedings, they were condemned for public use, as part of
an airport, and ordered sold to the Government. In fact, the abovementioned title
certificates secured by plaintiffs over said lots contained annotations of the right of the
National Airports Corporation (now CAA) to pay for and acquire them. It follows that both
by virtue of the judgment, long final, in the expropriation suit, as well as the annotations
upon their title certificates, plaintiffs are not entitled to recover possession of their
expropriated lots which are still devoted to the public use for which they were
expropriated but only to demand the fair market value of the same."
Meanwhile, in 1964, Valdehueza and Panerio mortgaged Lot 932 to Vicente Lim, herein
respondent,4 as security for their loans. For their failure to pay Lim despite demand, he had the
mortgage foreclosed in 1976. Thus, TCT No. 23934 was cancelled, and in lieu thereof, TCT No.
63894 was issued in his name.
On August 20, 1992, respondent Lim filed a complaint for quieting of title with the Regional
Trial Court (RTC), Branch 10, Cebu City, against General Romeo Zulueta, as Commander of the
Armed Forces of the Philippines, Commodore Edgardo Galeos, as Commander of Naval District
V of the Philippine Navy, Antonio Cabaluna, Doroteo Mantos and Florencio Belotindos, herein
petitioners. Subsequently, he amended the complaint to implead the Republic.
On May 4, 2001, the RTC rendered a decision in favor of respondent, thus:

51
"WHEREFORE, judgment is hereby rendered in favor of plaintiff Vicente Lim and against all
defendants, public and private, declaring plaintiff Vicente Lim the absolute and exclusive
owner of Lot No. 932 with all the rights of an absolute owner including the right to
possession. The monetary claims in the complaint and in the counter claims contained in the
answer of defendants are ordered Dismissed.
Petitioners elevated the case to the Court of Appeals, docketed therein as CA-G.R. CV No.
72915. In its Decision5dated September 18, 2003, the Appellate Court sustained the RTC
Decision, thus:
"Obviously, defendant-appellant Republic evaded its duty of paying what was due to the
landowners. The expropriation proceedings had already become final in the late 1940s
and yet, up to now, or more than fifty (50) years after, the Republic had not yet paid the
compensation fixed by the court while continuously reaping benefits from the
expropriated property to the prejudice of the landowner. x x x. This is contrary to the
rules of fair play because the concept of just compensation embraces not only the
correct determination of the amount to be paid to the owners of the land, but also the
payment for the land within a reasonable time from its taking. Without prompt payment,
compensation cannot be considered "just" for the property owner is made to suffer the
consequence of being immediately deprived of his land while being made to wait for a
decade or more, in this case more than 50 years, before actually receiving the amount
necessary to cope with the loss. To allow the taking of the landowners properties, and in
the meantime leave them empty-handed by withholding payment of compensation while
the government speculates on whether or not it will pursue expropriation, or worse, for
government to subsequently decide to abandon the property and return it to the
landowners, is undoubtedly an oppressive exercise of eminent domain that must never
be sanctioned. (Land Bank of the Philippines vs. Court of Appeals, 258 SCRA 404).
xxxxxx
An action to quiet title is a common law remedy for the removal of any cloud or doubt or
uncertainty on the title to real property. It is essential for the plaintiff or complainant to have a
legal or equitable title or interest in the real property, which is the subject matter of the action.
Also the deed, claim, encumbrance or proceeding that is being alleged as cloud on plaintiffs title
must be shown to be in fact invalid or inoperative despite its prima facieappearance of validity or
legal efficacy (Robles vs. Court of Appeals, 328 SCRA 97). In view of the foregoing
discussion, clearly, the claim of defendant-appellant Republic constitutes a cloud, doubt
or uncertainty on the title of plaintiff-appellee Vicente Lim that can be removed by an
action to quiet title.
WHEREFORE, in view of the foregoing, and finding no reversible error in the appealed May 4,
2001 Decision of Branch 9, Regional Trial Court of Cebu City, in Civil Case No. CEB-12701, the
said decision is UPHELD AND AFFIRMED. Accordingly, the appeal is DISMISSED for lack of
merit."
Undaunted, petitioners, through the Office of the Solicitor General, filed with this Court a petition
for review on certiorari alleging that the Republic has remained the owner of Lot 932 as held by
this Court in Valdehueza vs. Republic.6

In our Resolution dated March 1, 2004, we denied the petition outright on the ground that the
Court of Appeals did not commit a reversible error. Petitioners filed an urgent motion for
reconsideration but we denied the samewith finality in our Resolution of May 17, 2004.
On May 18, 2004, respondent filed an ex-parte motion for the issuance of an entry of judgment.
We only noted the motion in our Resolution of July 12, 2004.
On July 7, 2004, petitioners filed an urgent plea/motion for clarification, which is actually
a second motion for reconsideration. Thus, in our Resolution of September 6, 2004, we
simply noted without action the motion considering that the instant petition was already
denied with finality in our Resolution of May 17, 2004.
On October 29, 2004, petitioners filed a very urgent motion for leave to file a motion for
reconsideration of our Resolution dated September 6, 2004 (with prayer to refer the case to
the En Banc). They maintain that the Republics right of ownership has been settled
in Valdehueza.
The basic issue for our resolution is whether the Republic has retained ownership of Lot 932
despite its failure to pay respondents predecessors-in-interest the just compensation therefor
pursuant to the judgment of the CFI rendered as early as May 14, 1940.
Initially, we must rule on the procedural obstacle.
While we commend the Republic for the zeal with which it pursues the present case, we
reiterate that its urgent motion for clarification filed on July 7, 2004 is actually a second motion
for reconsideration. This motion is prohibited under Section 2, Rule 52, of the 1997 Rules of Civil
Procedure, as amended, which provides:
"Sec. 2. Second motion for reconsideration. No second motion for reconsideration of a
judgment or final resolution by the same party shall be entertained."
Consequently, as mentioned earlier, we simply noted without action the motion since petitioners
petition was already denied with finality.
Considering the Republics urgent and serious insistence that it is still the owner of Lot 932 and
in the interest of justice, we take another hard look at the controversial issue in order to
determine the veracity of petitioners stance.
One of the basic principles enshrined in our Constitution is that no person shall be deprived of
his private property without due process of law; and in expropriation cases, an essential element
of due process is that there must be just compensation whenever private property is taken for
public use.7 Accordingly, Section 9, Article III, of our Constitution mandates: "Private property
shall not be taken for public use without just compensation."
The Republic disregarded the foregoing provision when it failed and refused to pay respondents
predecessors-in-interest the just compensation for Lots 932 and 939. The length of time and the
manner with which it evaded payment demonstrate its arbitrary high-handedness and
confiscatory attitude. The final judgment in the expropriation proceedings (Civil Case No. 781)
was entered on April 5, 1948. More than half of a century has passed, yet, to this day, the
landowner, now respondent, has remained empty-handed. Undoubtedly, over 50 years of
delayed payment cannot, in any way, be viewed as fair. This is more so when such delay is
accompanied by bureaucratic hassles. Apparent from Valdehueza is the fact that respondents

52
predecessors-in-interest were given a "run around" by the Republics officials and agents. In
1950, despite the benefits it derived from the use of the two lots, the National Airports
Corporation denied knowledge of the claim of respondents predecessors-in-interest. Even
President Garcia, who sent a letter to the Civil Aeronautics Administration and the Secretary of
National Defense to expedite the payment, failed in granting relief to them. And, on September
6, 1961, while the Chief of Staff of the Armed Forces expressed willingness to pay the appraised
value of the lots, nothing happened.lawphil.net

Ironically, in opposing respondents claim, the Republic is invoking this Courts Decision
in Valdehueza, a Decision it utterly defied. How could the Republic acquire ownership over Lot
932 when it has not paid its owner the just compensation, required by law, for more than 50
years? The recognized rule is that title to the property expropriated shall pass from the owner to
the expropriator only upon full payment of the just compensation. Jurisprudence on this
settled principle is consistent both here and in other democratic jurisdictions. In Association of
Small Landowners in the Philippines, Inc. et al., vs. Secretary of Agrarian Reform,13 thus:

The Court of Appeals is correct in saying that Republics delay is contrary to the rules of fair play,
as "just compensation embraces not only the correct determination of the amount to be
paid to the owners of the land, but also the payment for the land within a reasonable time
from its taking. Without prompt payment, compensation cannot be considered just." In
jurisdictions similar to ours, where an entry to the expropriated property precedes the payment
of compensation, it has been held that if the compensation is not paid in a reasonable time, the
party may be treated as a trespasser ab initio.8

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

Corollarily, in Provincial Government of Sorsogon vs. Vda. De Villaroya,9 similar to the present
case, this Court expressed its disgust over the governments vexatious delay in the payment of
just compensation, thus:
"The petitioners have been waiting for more than thirty years to be paid for their land
which was taken for use as a public high school. As a matter of fair procedure, it is the duty
of the Government, whenever it takes property from private persons against their will, to supply
all required documentation and facilitate payment of just compensation. The imposition of
unreasonable requirements and vexatious delays before effecting payment is not only
galling and arbitrary but a rich source of discontent with government. There should be
some kind of swift and effective recourse against unfeeling and uncaring acts of middle
or lower level bureaucrats."
We feel the same way in the instant case.
More than anything else, however, it is the obstinacy of the Republic that prompted us to dismiss
its petition outright. As early as May 19, 1966, in Valdehueza, this Court mandated the Republic
to pay respondents predecessors-in-interest the sum of P16,248.40 as "reasonable market
value of the two lots in question." Unfortunately, it did not comply and allowed several decades
to pass without obeying this Courts mandate. Such prolonged obstinacy bespeaks of lack of
respect to private rights and to the rule of law, which we cannot countenance. It is tantamount to
confiscation of private property. While it is true that all private properties are subject to the need
of government, and the government may take them whenever the necessity or the exigency of
the occasion demands, however, the Constitution guarantees that when this governmental right
of expropriation is exercised, it shall be attended by compensation.10 From the taking of private
property by the government under the power of eminent domain, there arises an implied promise
to compensate the owner for his loss.11
Significantly, the above-mentioned provision of Section 9, Article III of the Constitution is not a
grant but alimitation of power. This limiting function is in keeping with the philosophy of the Bill
of Rights against the arbitrary exercise of governmental powers to the detriment of the
individuals rights. Given this function, the provision should therefore be strictly interpreted
against the expropriator, the government, and liberally in favor of the property owner.12

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

53
purpose described in the complaint, upon the payment of just compensation to be determined as
of the date of the filing of the complaint" x x x.
The second phase of the eminent domain action is concerned with the determination by the
court of "the just compensation for the property sought to be taken." This is done by the court
with the assistance of not more than three (3) commissioners. x x x.
It is only upon the completion of these two stages that expropriation is said to have been
completed. In Republic v. Salem Investment Corporation,16 we ruled that, "the process is not
completed until payment of just compensation." Thus, here, the failure of the Republic to pay
respondent and his predecessors-in-interest for a period of 57 years rendered the expropriation
process incomplete.
The Republic now argues that under Valdehueza, respondent is not entitled to recover
possession of Lot 932 but only to demand payment of its fair market value. Of course, we are
aware of the doctrine that "non-payment of just compensation (in an expropriation proceedings)
does not entitle the private landowners to recover possession of the expropriated lots." This is
our ruling in the recent cases of Republic of the Philippines vs. Court of Appeals, et
al.,17 and Reyes vs. National Housing Authority.18 However, the facts of the present case do not
justify its application. It bears stressing that the Republic was ordered to pay just
compensation twice, the firstwas in the expropriation proceedings and the second,
in Valdehueza. Fifty-seven (57) years have passed since then. We cannot but construe the
Republics failure to pay just compensation as a deliberate refusal on its part. Under such
circumstance, recovery of possession is in order. In several jurisdictions, the courts held that
recovery of possession may be had when property has been wrongfully taken or is wrongfully
retained by one claiming to act under the power of eminent domain 19 or where a rightful entry
is made and the party condemning refuses to pay the compensation which has been
assessed or agreed upon;20 or fails or refuses to have the compensation assessed and paid.21
The Republic also contends that where there have been constructions being used by the
military, as in this case, public interest demands that the present suit should not be sustained.
It must be emphasized that an individual cannot be deprived of his property for the public
convenience.22 InAssociation of Small Landowners in the Philippines, Inc. vs. Secretary of
Agrarian Reform,23 we ruled:
"One of the basic principles of the democratic system is that where the rights of the individual
are concerned, the end does not justify the means. It is not enough that there be a valid
objective; it is also necessary that the means employed to pursue it be in keeping with the
Constitution. Mere expediency will not excuse constitutional shortcuts. There is no question
that not even the strongest moral conviction or the most urgent public need, subject only
to a few notable exceptions, will excuse the bypassing of an individual's rights. It is no
exaggeration to say that a person invoking a right guaranteed under Article III of the
Constitution is a majority of one even as against the rest of the nation who would deny
him that right.
The right covers the persons life, his liberty and his property under Section 1 of Article III
of the Constitution. With regard to his property, the owner enjoys the added protection of
Section 9, which reaffirms the familiar rule that private property shall not be taken for
public use without just compensation."

The Republics assertion that the defense of the State will be in grave danger if we shall order
the reversion of Lot 932 to respondent is an overstatement. First, Lot 932 had ceased to operate
as an airport. What remains in the site is just the National Historical Institutes marking stating
that Lot 932 is the "former location of Lahug Airport." And second, there are only thirteen (13)
structures located on Lot 932, eight (8) of which are residence apartments of military
personnel. Only two (2) buildings are actually used as training centers. Thus, practically
speaking, the reversion of Lot 932 to respondent will only affect a handful of military personnel. It
will not result to "irreparable damage" or "damage beyond pecuniary estimation," as what the
Republic vehemently claims.
We thus rule that the special circumstances prevailing in this case entitle respondent to recover
possession of the expropriated lot from the Republic. Unless this form of swift and effective relief
is granted to him, the grave injustice committed against his predecessors-in-interest, though no
fault or negligence on their part, will be perpetuated. Let this case, therefore, serve as a wake-up
call to the Republic that in the exercise of its power of eminent domain, necessarily in derogation
of private rights, it must comply with the Constitutional limitations. This Court, as the guardian of
the peoples right, will not stand still in the face of the Republics oppressive and confiscatory
taking of private property, as in this case.
At this point, it may be argued that respondent Vicente Lim acted in bad faith in entering into a
contract of mortgage with Valdehueza and Panerio despite the clear annotation in TCT No.
23934 that Lot 932 is "subject to the priority of the National Airports Corporation [to
acquire said parcels of land] x x x upon previous payment of a reasonable market value."
The issue of whether or not respondent acted in bad faith is immaterial considering that the
Republic did not complete the expropriation process. In short, it failed to perfect its title over Lot
932 by its failure to pay just compensation. The issue of bad faith would have assumed
relevance if the Republic actually acquired title over Lot 932. In such a case, even if
respondents title was registered first, it would be the Republics title or right of ownership that
shall be upheld. But now, assuming that respondent was in bad faith, can such fact vest
upon the Republic a better title over Lot 932? We believe not. This is because in the first
place, the Republic has no title to speak of.
At any rate, assuming that respondent had indeed knowledge of the annotation, still nothing
would have prevented him from entering into a mortgage contract involving Lot 932 while the
expropriation proceeding was pending. Any person who deals with a property subject of an
expropriation does so at his own risk, taking into account the ultimate possibility of losing the
property in favor of the government. Here, the annotation merely served as a caveat that the
Republic had a preferential right to acquire Lot 932 upon its payment of a "reasonable
market value." It did not proscribe Valdehueza and Panerio from exercising their rights of
ownership including their right to mortgage or even to dispose of their property. In Republic vs.
Salem Investment Corporation,24 we recognized the owners absolute right over his property
pending completion of the expropriation proceeding, thus:
"It is only upon the completion of these two stages that expropriation is said to have been
completed. Moreover, it is only upon payment of just compensation that title over the property
passes to the government. Therefore, until the action for expropriation has been completed and
terminated, ownership over the property being expropriated remains with the registered
owner. Consequently, the latter can exercise all rights pertaining to an owner,including the

54
right to dispose of his property subject to the power of the State ultimately to acquire it
through expropriation.
It bears emphasis that when Valdehueza and Panerio mortgaged Lot 932 to respondent in 1964,
they were still the owners thereof and their title had not yet passed to the petitioner Republic. In
fact, it never did. Such title or ownership was rendered conclusive when we categorically ruled
in Valdehueza that: "It is true that plaintiffs are still the registered owners of the land, there
not having been a transfer of said lots in favor of the Government."
For respondents part, it is reasonable to conclude that he entered into the contract of mortgage
with Valdehueza and Panerio fully aware of the extent of his right as a mortgagee. A mortgage is
merely an accessory contract intended to secure the performance of the principal obligation.
One of its characteristics is that it is inseparablefrom the property. It adheres to the property
regardless of who its owner may subsequently be. 25 Respondent must have known that even if
Lot 932 is ultimately expropriated by the Republic, still, his right as a mortgagee is protected. In
this regard, Article 2127 of the Civil Code provides:
"Art. 2127. The mortgage extends to the natural accessions, to the improvements, growing
fruits, and the rents or income not yet received when the obligation becomes due, and to the
amount of the indemnity granted or owing to the proprietor from the insurers of the property
mortgaged, or in virtue of expropriation for public use, with the declarations, amplifications,
and limitations established by law, whether the estate remains in the possession of the
mortgagor or it passes in the hands of a third person.
In summation, while the prevailing doctrine is that "the non-payment of just compensation does
not entitle the private landowner to recover possession of the expropriated lots, 26 however, in
cases where the government failed to pay just compensation within five (5)27 years from the
finality of the judgment in the expropriation proceedings, the owners concerned shall have
the right to recover possession of their property. This is in consonance with the principle that "the
government cannot keep the property and dishonor the judgment." 28 To be sure, the five-year
period limitation will encourage the government to pay just compensation punctually. This is in
keeping with justice and equity. After all, it is the duty of the government, whenever it takes
property from private persons against their will, to facilitate the payment of just compensation.
In Cosculluela v. Court of Appeals,29 we defined just compensation as not only the correct
determination of the amount to be paid to the property owner but also the payment of the
property within a reasonable time. Without prompt payment, compensation cannot be
considered "just."

Case no. 12

Republic
SUPREME
Manila

of

the

Philippines
COURT

THIRD DIVISION

WHEREFORE, the assailed Decision of the Court of Appeals in CA-G.R. CV No. 72915 is
AFFIRMED in toto.

G.R. No. 139495

The Republics motion for reconsideration of our Resolution dated March 1, 2004 is
DENIED with FINALITY. No further pleadings will be allowed.

MACTAN-CEBU
INTERNATIONAL
AIRPORT
AUTHORITY
(MCIAA), petitioner,
vs.
THE HON. COURT OF APPEALS and VIRGINIA CHIONGBIAN, respondents.

Let an entry of judgment be made in this case.

DECISION

SO ORDERED.

GONZAGA-REYES, J.:

Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Ynares-Santiago, Carpio, Austria-Martinez,

Corona, Carpio-Morales, Callejo, Sr., Azcuna, Tinga, Chico-Nazario, and Garcia, JJ., concur

This Petition for Review on Certiorari seeks the reversal of the Decision of the Court of
Appeals1 in CA G.R. CV No. 56495 entitled "Virginia Chiongbian vs. Mactan-Cebu International

November 27, 2000

55
Airport Authority" which affirmed the Decision of the Regional Trial Court 2 , 7th Judicial Region,
Branch 24, Cebu City.
The Court of Appeals rendered its decision based on the following facts:
"Subject of the action is Lot 941 consisting of 13,766 square meters located in Lahug, Cebu City,
adjoining the then Lahug Airport and covered by TCT No. 120366 of the Registry of Deeds of
Cebu City, in the name of MCIAA.
During the liberation, the Lahug Airport was occupied by the United States Army. Then, in 1947,
it was turned over to the Philippine Government through the Surplus Property Commission.
Subsequently, it was transferred to the Bureau of Aeronautics which was succeeded by the
National Airports Corporation. When the latter was dissolved, it was replaced by the Civil
Aeronautics Administration (CAA).
On April 16, 1952, the Republic of the Philippines, represented by the CAA, filed an
expropriation proceeding, Civil Case No. R-1881 (Court of First Instance of Cebu, Third Branch),
on several parcels of land in Lahug, Cebu City, which included Lot 941, for the expansion and
improvement of Lahug Airport.
In June 1953, appellee Virginia Chiongbian purchased Lot 941 from its original owner, Antonina
Faborada, the original defendant in the expropriation case, for P8,000.00. Subsequently, TCT
No. 9919 was issued in her name (Exh. D).
Then, on December 29, 1961, judgment was rendered in the expropriation case in favor of the
Republic of the Philippines which was made to pay Virginia Chiongbian the amount
of P34,415.00 for Lot 941, with legal interest computed from November 16, 1947, the date when
the government begun using it. Virginia Chiongbian did not appeal therefrom.
Thereafter, absolute title to Lot 941 was transferred to the Republic of the Philippines under TCT
No. 27696 (Exhs. E and 2).
Then, in 1990, Republic Act No. 6958 was passed by Congress creating the Mactan-Cebu
International Airport Authority to which the assets of the Lahug Airport was transferred. Lot 941
was then transferred in the name of MCIAA under TCT No. 120366 on May 8, 1992.
On July 24, 1995, Virginia Chiongbian filed a complaint for reconveyance of Lot 941 with the
Regional Trial Court of Cebu, Branch 9, docketed as Civil Case No. CEB-17650 alleging, that
sometime in 1949, the National Airport Corporation (NAC) ventured to expand the Cebu Lahug
Airport. As a consequence, it sought to acquire by expropriation or negotiated sale several
parcels of lands adjoining the Lahug Airport, one of which was Lot 941 owned by Virginia
Chiongbian. Since she and other landowners could not agree with the NACs offer for the
compensation of their lands, a suit for eminent domain was instituted on April 16, 1952, before
the then Court of First Instance of Cebu (Branch III), against forty-five (45) landowners, including
Virginia Chiongbian, docketed as Civil Case No. R-1881, entitled "Republic of the Philippine vs.
Damian Ouano, et al." It was finally decided on December 29, 1961 in favor of the Republic of
the Philippines.
Some of the defendants-landowners, namely, Milagros Urgello, Mamerto Escano, Inc. and Ma.
Atega Vda. de Deen, appealed the decision to the Court of Appeals under CA-G.R. No. 33045R, which rendered a modified judgment allowing them to repurchase their expropriated
properties. Virginia Chiongbian, on the other hand, did not appeal and instead, accepted the

compensation for Lot 941 in the amount of P34,415, upon the assurance of the NAC that she or
her heirs would be given the right of reconveyance for the same price once the land would no
longer be used as (sic) airport.
Consequently, TCT No. 9919 of Virginia Chiongbian was cancelled and TCT No. 27696 was
issued in the name of the Republic of the Philippines. Then, with the creation of the MCIAA, it
was cancelled and TCT No. 120366 was issued in its name.
However, no expansion of the Lahug Airport was undertaken by MCIAA and its predecessors-ininterest. In fact, when Mactan International Airport was opened for commercial flights, the Lahug
Airport was closed at the end of 1991 and all its airport activities were undertaken at and
transferred to the Mactan International Airport. Thus, the purpose for which Lot 941 was taken
ceased to exist."3
On June 3, 1997, the RTC rendered judgment in favor of the respondent Virginia Chiongbian
(CHIONGBIAN) the dispositive portion of the decision reads:
"WHEREFORE, in the light of the foregoing, the Court hereby renders judgment in favor of the
plaintiff, Virginia Chiongbian and against the defendant, Mactan Cebu International Authority
(MCIAA), ordering the latter to restore to plaintiff the possession and ownership of the property
denominated as Lot No. 941 upon reimbursement of the expropriation price paid to plaintiff.
The Register of Deeds is therefore ordered to effect the Transfer of the Certificate Title from the
defendant to the plaintiff on Lot No. 941, cancelling Transfer Certificate of Title No. 120366 in the
name of defendant MCIAA and to issue a new title on the same lot in the name of Virginia
Chiongbian.
No pronouncement as to cost.
SO ORDERED."4
Aggrieved by the holding of the trial court, the petitioner Mactan Cebu International Airport
Authority (MCIAA) appealed the decision to the Court of Appeals, which affirmed the RTC
decision. Motion for Reconsideration was denied 5 hence this petition where MCIAA raises the
following grounds in support of its petition:
"I.
THE COURT OF APPEALS ERRED IN UPHOLDING THE TRIAL COURTS JUDGMENT
THAT THERE WAS A REPURCHASE AGREEMENT AND IGNORING PETITIONERS
PROTESTATIONS THAT ADMISSION OF RESPONDENTS ORAL EVIDENCE IS NOT
ALLOWED UNDER THE STATUE OF FRAUDS.
II.
THE COURT OF APPEALS ERRED IN HOLDING THAT THE DECISION IN LIMBACO IS
MATERIAL AND APPLICABLE TO THE CASE AT BAR.
III.

56
THE COURT OF APPEALS ERRED IN HOLDING THAT THE MODIFIED JUDGMENT IN CAGR NO. 33045 SHOULD INURE TO THE BENEFIT OF CHIONGBIAN EVEN IF SHE WAS
NOT A PARTY IN SAID APPEALED CASE.
IV.
THE COURT OF APPEALS ERRED IN RULING THAT THE RIGHT OF VIRGINIA
CHIONGBIAN TO REPURCHASE SHOULD BE UNDER THE SAME TERMS AND
CONDITIONS AS THE OTHER LANDOWNERS SUCH THAT HER REPURCHASE PRICE IS
ONLY P 34, 415.00."6
MCIAA contends that the Republic of the Philippines appropriated Lot No. 941 through
expropriation proceedings in Civil Case No. R-1881. The judgment rendered therein was
unconditional and did not contain a stipulation that ownership thereof would revert to
CHIONGBIAN nor did it give CHIONGBIAN the right to repurchase the same in the event the lot
was no longer used for the purpose it was expropriated. Moreover, CHIONGBIANs claim that
there was a repurchase agreement is not supported by documentary evidence. The mere fact
that twenty six (26) other landowners repurchased their property located at the aforementioned
Lahug airport is of no consequence considering that said landowners were able to secure a rider
in their contracts entitling them to repurchase their property.
MCIAA also argues that the Court of Appeals erroneously concluded that it did not object to the
evidence presented by CHIONGBIAN to prove the alleged repurchase agreement considering
that the transcript of stenographic notes shows that it manifested its objections thereto for being
in violation of the Statute of Frauds.
MCIAA also faults the Court of Appeals for applying the ruling in the case of Limbaco vs. Court
of Appeals7 . It is the position of MCIAA that the ruling in the case of Limbaco is not squarely in
point with respect to the present case for the reason that the Limbaco case involved a contract
of sale of real property and not an expropriation.
Moreover, MCIAA alleges that the Court of Appeals erred in ruling that the case of Escao, et.
al. vs. Republic8proves the existence of the repurchase agreement. MCIAA claims that although
the parties in said case were CHIONGBIANs co-defendants in Civil Case No. R-1881,
CHIONGBIAN did not join in their appeal of the judgment of condemnation. The modified
judgment in CA G.R. No. 33045-R should not therefore redound to CHIONGBIANs benefit who
was no longer a party thereto or to the compromise agreement which Escao et. al.entered into
with the Republic of the Philippines.
Finally, assuming for the sake of argument that CHIONGBIAN has a right to repurchase Lot No.
941, MCIAA claims that the Court of Appeals erred in ruling that the right of CHIONGBIAN to
purchase said lot should be under the same terms and conditions given to the other landowners
and not at the prevailing market price. Such ruling is grossly unfair and would result in unjustly
enriching CHIONGBIAN for the reason that she received just compensation for the property at
the time of its taking by the government and that the property is now worth several hundreds of
millions of pesos due to the improvements introduced by MCIAA.9
On the other hand, aside from praying that this Court affirm the decision of the Court of Appeals,
the private respondent CHIONGBIAN prays that the petition be denied for the reason that it
violates the 1997 Rules on Civil Procedure, more specifically the requirement of a certification of
non-forum shopping. CHIONGBIAN claims that the Verification and Certification on Non-Forum

Shopping executed by the MCIAA on September 13, 1999 was signed by a Colonel Marcelino A.
Cordova whose appointment as Assistant General Manager of MCIAA was disapproved by the
Civil Service Commission as early as September 2, 1999. It is CHIONGBIANs position that
since his appointment was disapproved, the Verification attached to the petition for review
on certiorari cannot be considered as having been executed by the "plaintiff" or "principal party"
who under Section 5, Rule 7 of the Rules of Court can validly make the certification in the instant
petition. Consequently, the petition should be considered as not being verified and as such
should not be considered as having been filed at all.1wphi1
After a careful consideration of the arguments presented by the parties, we resolve to grant the
petition.
We first resolve the procedural issue.
We are not persuaded by CHIONGBIANs claim that the Verification and Certification against
forum shopping accompanying MCIAAs petition was insufficient for allegedly having been
signed by one who was not qualified to do so. As pointed out by the MCIAA, Colonel Cordova
signed the Verification and Certification against forum shopping as Acting General Manager of
the MCIAA, pursuant to Office Order No. 5322-99 dated September 10, 1999 issued by the
General Manager of MCIAA, Alfonso Allere.10 Colonel Cordova did not sign the Verification and
Certification against forum shopping pursuant to his appointment as assistant General Manager
of the MCIAA, which was later disapproved by the Commission on Appointments. This fact has
not been disputed by CHIONGBIAN.
We come now to the substantive aspects of the case wherein the issue to be resolved is
whether the abandonment of the public use for which Lot No. 941 was expropriated entitles
CHIONGBIAN to reacquire it.
In Fery vs. Municipality of Cabanatuan11 , this Court had occasion to rule on the same issue as
follows:
"The answer to that question depends upon the character of the title acquired by the
expropriator, whether it be the State, a province, a municipality, or a corporation which has the
right to acquire property under the power of eminent domain. If, for example, land is
expropriated for a particular purpose, with the condition that when that purpose is ended or
abandoned the property shall return to its former owner, then, of course, when the purpose is
terminated or abandoned the former owner reacquires the property so expropriated. If, for
example, land is expropriated for a public street and the expropriation is granted upon condition
that the city can only use it for a public street, then, of course, when the city abandons its use as
a public street, it returns to the former owner, unless there is some statutory provision to the
contrary. Many other similar examples might be given. If, upon the contrary, however, the decree
of expropriation gives to the entity a fee simple title, then, of course, the land becomes the
absolute property of the expropriator, whether it be the State, a province, or municipality, and in
that case the non-user does not have the effect of defeating the title acquired by the
expropriation proceedings.
When land has been acquired for public use in fee simple, unconditionally, either by the exercise
of eminent domain or by purchase, the former owner retains no rights in the land, and the public
use may be abandoned, or the land may be devoted to a different use, without any impairment
of the estate or title acquired, or any reversion to the former owner."12

57
In the present case, evidence reveals that Lot No. 941 was appropriated by the Republic of the
Philippines through expropriation proceedings in Civil Case No. R-1881. The dispositive portion
of the decision in said case reads insofar as pertinent as follows:
"IN VIEW OF THE FOREGOING, judgment is hereby rendered:
1. Declaring the expropriation of Lots Nos. 75, 76, 89, 90, 91, 105, 106, 107, 108, 104, 921-A,
88, 93, 913-B, 72, 77, 916, 777-A, 918, 919, 920, 764-A, 988, 744-A, 745-A, 746, 747, 752-A,
263-A, 941, 942, 740-A, 743, 985, 956, 976-A, 984, 989-A; and 947, including in the Lahug
Airport, Cebu City, justified and in lawful exercise of the right of eminent domain;
2. Declaring the fair market values of the lots thus taken and condemning the plaintiff to pay the
same to the respective owners with legal interest from the dates indicated therein, as follows:
Lots Nos. 75, 76, 89, 90, 91, 92, 105, 106, 107, 108-P31, 977 (minus P10,639 or P21,278 as
balance in favor of Mamerto Escao, Inc., with legal interest from November 16, 1947 until fully
paid; xxx Lot No. 941- P34,415.00 in favor of Virginia Chiongbian, with legal interest from
November 16, 1947 until fully paid; xxx
3. After the payment of the foregoing financial obligation to the landowners, directing the latter to
deliver to the plaintiff the corresponding Transfer Certificate of Title to their representative lots;
and upon the presentation of the said titles to the Register of Deeds, ordering the latter to cancel
the same and to issue, in lieu thereof, new Transfer Certificates of Title in the name of the
plaintiff.
NO COST.
SO ORDERED."13 (Emphasis supplied)
The terms of the judgment are clear and unequivocal and grant title to Lot No. 941 in fee simple
to the Republic of the Philippines. There was no condition imposed to the effect that the lot
would return to CHIONGBIAN or that CHIONGBIAN had a right to repurchase the same if the
purpose for which it was expropriated is ended or abandoned or if the property was to be used
other than as the Lahug airport.
CHIONGBIAN cannot rely on the ruling in Mactan Cebu International Airport vs. Court of
Appeals14 wherein the presentation of parol evidence was allowed to prove the existence of a
written agreement containing the right to repurchase. Said case did not involve expropriation
proceedings but a contract of sale. This Court consequently allowed the presentation of parol
evidence to prove the existence of an agreement allowing the right of repurchase based on the
following ratiocination:
"Under the parol evidence rule, when the terms of an agreement have been reduced into writing,
it is considered as containing all the terms agreed upon, and there can be, between the parties
and their successors-in-interest, no evidence of such terms other than the contents of the written
agreement. However, a party may present evidence to modify, explain or add to the terms of the
written agreement if he puts in issue in his pleading, the failure of the written agreement to
express the true intent of the parties thereto. In the case at bench, the fact which private
respondents seek to establish by parol evidence consists of the agreement or representation
made by the NAC that induced Inez Ouano to execute the deed of sale; that the vendors and
their heirs are given the right of repurchase should the government no longer need the property.
Where a parol contemporaneous agreement was the moving cause of the written contract, or

where the parol agreement forms part of the consideration of the written contract, and it appears
that the written contract was executed on the faith of the parol contract or representation, such
evidence is admissible. It is recognized that proof is admissible of any collateral parol agreement
that is not inconsistent with the terms of the written contract though it may relate to the same
subject matter. The rule excluding parol evidence to vary or contradict a writing does not extend
so far as to preclude the admission of existing evidence to show prior or contemporaneous
collateral parol agreements between the parties, but such evidence may be received, regardless
of whether or not the written agreement contains any reference to such collateral agreement,
and whether the action is at law or in equity.
More importantly, no objection was made by petitioner when private respondents introduced
evidence to show the right of repurchase granted by the NAC to Inez Ouano. It has been
repeatedly laid down as a rule of evidence that a protest or objection against the admission of
any evidence must be made at the proper time, and if not so made, it will be understood to have
been waived."15
This pronouncement is not applicable to the present case since the parol evidence rule which
provides that "when the terms of a written agreement have been reduced to writing, it is
considered as containing all the terms agreed upon, and there can be, between the parties and
their successors-in-interest, no evidence of such terms other than the contents of the written
agreement" applies to written agreements and has no application to a judgment of a court. To
permit CHIONGBIAN to prove the existence of a compromise settlement which she claims to
have entered into with the Republic of the Philippines prior to the rendition of judgment in the
expropriation case would result in a modification of the judgment of a court which has long
become final and executory.
And even assuming for the sake of argument that CHIONGBIAN could prove the existence of
the alleged written agreement acknowledging her right to repurchase Lot No. 941 through parol
evidence, the Court of Appeals erred in holding that the evidence presented by CHIONGBIAN
was admissible.
Under 1403 of the Civil Code, a contract for the sale of real property shall be unenforceable
unless the same, or some note or memorandum thereof, be in writing, and subscribed by the
party charged, or by his agent;evidence, therefore of the agreement cannot be received
without the writing or a secondary evidence of its contents.
Contrary to the finding of the Court of Appeals, the records reveal that MCIAA objected to the
purpose for which the testimonies of CHIONGBIAN 16 and Patrosinio Bercede17 (BERCEDE)
were offered, i.e. to prove the existence of the alleged written agreement evincing a right to
repurchase Lot No. 941 in favor of CHIONGBIAN, for being in violation of the Statute of Frauds.
MCIAA also objected to the purpose for which the testimony of Attorney Manuel Pastrana
(PASTRANA) was offered, i.e. to prove the existence of the alleged written agreement and an
alleged deed of sale, on the same ground. 18 Consequently, the testimonies of these witnesses
are inadmissible under the Statute of Frauds to prove the existence of the alleged sale.
Aside from being inadmissible under the provisions of the Statute of Frauds, CHIONGBIANs
and BERCEDEs testimonies are also inadmissible for being hearsay in nature. Evidence is
hearsay if its probative value is not based on the personal knowledge of the witness but on the
knowledge of another person who is not on the witness stand.19 CHIONGBIAN, through
deposition, testified that:

58
"ATTY. DUBLIN (To Witness)

A: Yes, sir.

Q: Mrs. Chiongbian, you said a while ago that there was an assurance by the government to
return this property to you in case Lahug Airport will be no longer used, is that correct?

Q: So, in effect, it was your lawyer, Atty. Pedro Calderon, who made the assurance to you that
the property will be returned in case Lahug Airport will be abandoned?

WITNESS:

A: Yes, sir."20

A: Yes, sir. That is true.

CHIONGBIANs testimony shows that she had no personal knowledge of the alleged assurance
made by the Republic of the Philippines that Lot No. 941 would be returned to her in the event
that the Lahug Airport was closed. She stated that she only learned of the alleged assurance of
the Republic of the Philippines through her lawyer, Attorney Calderon, who was not presented as
a witness.

ATTY. DUBLIN: (To witness)

Q: Can you recall when was this verbal assurance made?
A: I cannot remember anymore.
Q: You cannot also remember the year in which the alleged assurance was made?
A: I cannot also remember because Im very forgetful.
Q: Now, can you tell us so far as you can remember who was that person or government
authority or employee that made the alleged assurance?
A: The owner of the property.
Q: Now, how many times was this assurance being made to you to return this property in case
the Lahug Airport will no longer be used?
A: 2 or 3, I cannot recall.
Q: You cannot also remember in what particular place or places was this assurance being
made?
A: In my previous residence in Mabolo.
DEPOSITION OFFICER:
The assurance was made in my previous residence at Mabolo.
WITNESS:

BERCEDEs testimony regarding the alleged agreement is likewise inadmissible to prove the
existence of the agreement for also being hearsay in nature. Like CHIONGBIAN, BERCEDE did
not have personal knowledge of the alleged assurance made by the Republic of the Philippines
to his father that their land would be returned should the Lahug Airport cease to operate for he
only learned of the alleged assurance through his father.
PASTRANAs testimony does little to help CHIONGBIANs cause.1wphi1 He claims that
subsequent to the execution of the alleged written agreement but prior to the rendition of
judgment in the expropriation case, the Republic and CHIONGBIAN executed a Deed of Sale
over Lot No. 941 wherein CHIONGBIAN sold the aforementioned lot to the Republic of the
Philippines. However, CHIONGBIAN never mentioned the existence of a deed of sale. 21 In fact,
the records disclose that Lot No. 941 was transferred to the Republic of the Philippines pursuant
to the judgment of expropriation in Civil Case No. R-1881 which CHIONGBIAN herself enforced
by filing a motion for withdrawal of the money after the decision was rendered. 22 Moreover, since
the very terms of the judgment in Civil Case No. R-1881 are silent regarding the alleged deed of
sale or of the alleged written agreement acknowledging the right of CHIONGBIAN to repurchase
Lot No. 941, the only logical conclusion is that no sale in fact took place and that no compromise
agreement was executed prior to the rendition of the judgment. Had CHIONGBIAN and the
Republic executed a contract of sale as claimed by PASTRANA, the Republic of the Philippines
would not have needed to pursue the expropriation case inasmuch as it would be duplicitous
and would result in the Republic of the Philippines expropriating something it had already
owned. Expropriation lies only when it is made necessary by the opposition of the owner to the
sale or by the lack of agreement as to the price. 23 Consequently, CHIONGBIAN cannot compel
MCIAA to reconvey Lot No. 941 to her since she has no cause of action against MCIAA.

A: I entrusted that to my lawyer, Atty. Pedro Calderon.

ATTY. DUBLIN: (to witness)
Q: You mean the assurance was made personally to your lawyer at that time, Atty. Pedro
Calderon?
A: Yes, sir.
Q: So you are now trying to tell us that that assurance was never made to you personally. Is that
right, Mam?
A: He assured me directly that the property will be returned to me.
Q: When you said "he", are you referring to your lawyer at that time, Atty. Pedro Calderon

Finally, CHIONGBIAN cannot invoke the modified judgment of the Court of Appeals in the
case of Republic of the Philippines vs. Escao, et. al.24 where her co-defendants, Mamerto
Escao, Inc., Milagros Urgello and Maria Atega Vda. De Deen entered into separate and distinct
compromise agreements with the Republic of the Philippines wherein they agreed to sell their
land subject of the expropriation proceedings to the latter subject to the resolutory condition that
in the event the Republic of the Philippines no longer uses said property as an airport, title and
ownership of said property shall revert to its respective owners upon reimbursement of the price
paid therefor without interest. MCIAA correctly points out that since CHIONGBIAN did not appeal
the judgment of expropriation in Civil Case No. R-1881 and was not a party to the appeal of her
co-defendants, the judgment therein cannot redound to her benefit. And even assuming that
CHIONGBIAN was a party to the appeal, she was not a party to the compromise agreements
entered into by her co-defendants. A compromise is a contract whereby the parties, by making
reciprocal concessions, avoid litigation or put an end to one already commenced. 25 Essentially, it

59
is a contract perfected by mere consent, the latter being manifested by the meeting of the offer
and the acceptance upon the thing and the cause which are to constitute the contract. 26 A
judicial compromise has the force of law and is conclusive between the parties 27 and it is not
valid and binding on a party who did not sign the same. 28 Since CHIONGBIAN was not a party to
the compromise agreements, she cannot legally invoke the same.
ACCORDINGLY, the Decision of the Court of Appeals is hereby REVERSED and SET ASIDE.
The complaint of Virgina Chiongbian against the Mactan-Cebu International Airport Authority for
reconveyance of Lot No. 941 isDISMISSED.
SO ORDERED.
Melo, (Chairman), Vitug, and Panganiban, JJ., concur.

Case no. 13

Republic
SUPREME
Manila

of

the

Philippines
COURT

FIRST DIVISION
G.R. No. 137152

January 29, 2001

CITY
OF
MANDALUYONG, petitioner,
vs.
ANTONIO N., FRANCISCO N., THELMA N., EUSEBIO N., RODOLFO N., all surnamed
AGUILAR, respondents.
PUNO, J.:
This is a petition for review under Rule 45 of the Rules of Court of the Orders dated September
17, 1998 and December 29, 1998 of the Regional Trial Court, Branch 168, Pasig

60
City1 dismissing the petitioner's Amended Complaint in SCA No. 1427 for expropriation of two (2)
parcels of land in Mandaluyong City. 1wphi1.nt

adopting their "Answer with Counterclaim" and "Motion for Preliminary Hearing" as their answer
to the Amended Complaint.6

The antecedent facts are as follows:

The motion was granted. At the hearing of February 25, 1998, respondents presented Antonio
Aguilar who testified and identified several documentary evidence. Petitioner did not present any
evidence. Thereafter, both parties filed their respective memoranda.7

On August 4, 1997, petitioner filed with the Regional Trial Court, Branch 168, Pasig City a
complaint for expropriation entitled "City of Mandaluyong, plaintiff v. Antonio N., Francisco N,
Thelma N, Eusebio N, Rodolfo N., all surnamed Aguilar, defendants." Petitioner sought to
expropriate three (3) adjoining parcels of land with an aggregate area of 1,847 square meters
registered under Transfer Certificates of Title Nos. 59780, 63766 and 63767 in the names of the
defendants, herein respondents, located at 9 de Febrero Street, Barangay Mauwag, City of
Mandaluyong; on a portion of the 3 lots, respondents constructed residential houses several
decades ago which they had since leased out to tenants until the present; on the vacant portion
of the lots, other families constructed residential structures which they likewise occupied; in
1983, the lots were classified by Resolution No. 125 of the Board of the Housing and Urban
Development Coordinating Council as an Area for Priority Development for urban land reform
under Proclamation Nos. 1967 and 2284 of then President Marcos; as a result of this
classification, the tenants and occupants of the lots offered to purchase the land from
respondents, but the latter refused to sell; on November 7, 1996, the Sangguniang Panlungsod
of petitioner, upon petition of the Kapitbisig, an association of tenants and occupants of the
subject land, adopted Resolution No. 516, Series of 1996 authorizing Mayor Benjamin Abalos of
the City of Mandaluyong to initiate action for the expropriation of the subject lots and
construction of a medium-rise condominium for qualified occupants of the land; on January 10,
1996, Mayor Abalos sent a letter to respondents offering to purchase the said property at
P3,000.00 per square meter; respondents did not answer the letter. Petitioner thus prayed for
the expropriation of the said lots and the fixing of just compensation at the fair market value of
P3,000.00 per square meter.2
In their answer, respondents, except Eusebio N. Aguilar who died in 1995, denied having
received a copy of Mayor Abalos' offer to purchase their lots. They alleged that the expropriation
of their land is arbitrary and capricious, and is not for a public purpose; the subject lots are their
only real property and are too small for expropriation, while petitioner has several properties
inventoried for socialized housing; the fair market value of P3,000.00 per square meter is
arbitrary because the zonal valuation set by the Bureau of Internal Revenue is P7,000.00 per
square meter. As counterclaim, respondents prayed for damages of P21 million.3
Respondents filed a "Motion for Preliminary Hearing" claiming that the defenses alleged in their
Answer are valid grounds for dismissal of the complaint for lack of jurisdiction over the person of
the defendants and lack of cause of action. Respondents prayed that the affirmative defenses be
set for preliminary hearing and that the complaint be dismissed. 4 Petitioner replied.
On November 5, 1997, petitioner filed an Amended Complaint and named as an additional
defendant Virginia N. Aguilar and, at the same time, substituted Eusebio Aguilar with his heirs.
Petitioner also excluded from expropriation TCT No. 59870 and thereby reduced the area sought
to be expropriated from three (3) parcels of land to two (2) parcels totalling 1,636 square meters
under TCT Nos. 63766 and 63767.5
The Amended Complaint was admitted by the trial court on December 18, 1997. Respondents,
who, with the exception of Virginia Aguilar and the Heirs of Eusebio Aguilar had yet to be served
with summons and copies of the Amended Complaint, filed a "Manifestation and Motion"

On September 17, 1998, the trial court issued an order dismissing the Amended Complaint after
declaring respondents as "small property owners" whose land is exempt from expropriation
under Republic Act No. 7279. The court also found that the expropriation was not for a public
purpose for petitioner's failure to present any evidence that the intended beneficiaries of the
expropriation are landless and homeless residents of Mandaluyong. The court thus disposed of
as follows:
"WHEREFORE, the Amended Complaint is hereby ordered dismissed without pronouncement
as to cost.
SO ORDERED."8
Petitioner moved for reconsideration. On December 29, 1998, the court denied the motion.
Hence this petition.
Petitioner claims that the trial court erred
"IN UPHOLDING RESPONDENT'S CONTENTION THAT THEY QUALIFY AS SMALL
PROPERTY OWNERS AND ARE THUS EXEMPT FROM EXPROPRIATION." 9
Petitioner mainly claims that the size of the lots in litigation does not exempt the same from
expropriation in view of the fact that the said lots have been declared to be within the Area for
Priority Development (APD) No. 5 of Mandaluyong by virtue of Proclamation No. 1967, as
amended by Proclamation No. 2284 in relation to Presidential Decree No. 1517. 10 This
declaration allegedly authorizes petitioner to expropriate the property, ipso facto, regardless of
the area of the land.
Presidential Decree (P.D.) No. 1517, the Urban Land Reform Act, was issued by then President
Marcos in 1978. The decree adopted as a State policy the liberation of human communities from
blight, congestion and hazard, and promotion of their development and modernization, the
optimum use of land as a national resource for public welfare.11 Pursuant to this law,
Proclamation No. 1893 was issued in 1979 declaring the entire Metro Manila as Urban Land
Reform Zone for purposes of urban land reform. This was amended in 1980 by Proclamation No.
1967 and in 1983 by Proclamation No. 2284 which identified and specified 245 sites in Metro
Manila as Areas for Priority Development and Urban Land Reform Zones.
In 1992, the Congress of the Philippines passed Republic Act No. 7279, the "Urban
Development and Housing Act of 1992." The law lays down as a policy that the state, in
cooperation with the private sector, undertake a comprehensive and continuing Urban
Development and Housing Program; uplift the conditions of the underprivileged and homeless
citizens in urban, areas and resettlement areas by making available to them decent housing at
affordable cost, basic services and employment opportunities and provide for the rational use
and development of urban land to bring about, among others, equitable utilization of residential
lands; encourage more effective people's participation in the urban development process and
improve the capability of local government units in undertaking urban development and housing

61
programs and projects.12 Towards this end, all city and municipal governments are mandated to
conduct an inventory of all lands and improvements within their respective localities, and in
coordination with the National Housing Authority, the Housing and Land Use Regulatory Board,
the National Mapping Resource Information Authority, and the Land Management
Bureau,identify lands for socialized housing and resettlement areas for the immediate and
future needs of the underprivileged and homeless in the urban areas, acquire the lands,
and dispose of said lands to the beneficiaries of the program.13
The acquisition of lands for socialized housing is governed by several provisions in the law.
Section 9 of R.A. 7279 provides:
"Sec. 9. Priorities in the Acquisition of Land. Lands for socialized housing shall be acquired in
the following order:
(a) Those owned by the Government or any of its subdivisions, instrumentalities, or agencies,
including government-owned or controlled corporations and their subsidiaries;
(b) Alienable lands of the public domain;
(c) Unregistered or abandoned and idle lands;
(d) Those within the declared Areas for Priority Development, Zonal Improvement Program sites,
and Slum Improvement and Resettlement Program sites which have not yet been acquired;
(e) Bagong Lipunan Improvement of Sites and Services or BLISS Sites which have not yet been
acquired;
(f) Privately-owned lands.
Where on-site development is found more practicable and advantageous to the beneficiaries,
the priorities mentioned in this section shall not apply. The local government units shall give
budgetary priority to on-site development of government lands."
Lands for socialized housing are to be acquired in the following order: (1) government lands; (2)
alienable lands of the public domain; (3) unregistered or abandoned or idle lands; (4) lands
within the declared Areas for Priority Development (APD), Zonal Improvement Program (ZIP)
sites, Slum Improvement and Resettlement (SIR) sites which have not yet been acquired; (5)
BLISS sites which have not yet been acquired; and (6) privately-owned lands.
There is no dispute that the two lots in litigation are privately-owned and therefore last in the
order of priority acquisition. However, the law also provides that lands within the declared APD's
which have not yet been acquired by the government are fourth in the order of priority. According
to petitioner, since the subject lots lie within the declared APD, this fact mandates that the lots be
given priority in acquisition.14
Section 9, however, is not a single provision that can be read separate from the other provisions
of the law. It must be read together with Section 10 of R.A. 7279 which also provides:
"Section 10. Modes of Land Acquisition. The modes of acquiring lands for purposes of this
Act shall include, among others, community mortgage, land swapping, land assembly or
consolidation, land banking, donation to the Government, joint-venture agreement, negotiated
purchase, and expropriation: Provided, however, That expropriation shall be resorted to only

when other modes of acquisition have been exhausted: Provided, further, That where
expropriation is resorted to, parcels of land owned by small property owners shall be
exempted for purposes of this Act: Provided, finally, That abandoned property, as herein
defined, shall be reverted and escheated to the State in a proceeding analogous to the
procedure laid down in Rule 91 of the Rules of Court.15
For the purposes of socialized housing, government-owned and foreclosed properties shall be
acquired by the local government units, or by the National Housing Authority primarily through
negotiated purchase:Provided, That qualified beneficiaries who are actual occupants of the land
shall be given the right of first refusal."
Lands for socialized housing under R.A. 7279 are to be acquired in several modes. Among
these modes are the following: (1) community mortgage; (2) land swapping, (3) land assembly
or consolidation; (4) land banking; (5) donation to the government; (6) joint venture agreement;
(7) negotiated purchase; and (8) expropriation. The mode of expropriation is subject to two
conditions: (a) it shall be resorted to only when the other modes of acquisition have been
exhausted; (b) parcels of land owned by small property owners are exempt from such
acquisition.
Section 9 of R.A. 7279 speaks of priorities in the acquisition of lands. It enumerates the type of
lands to be acquired and the heirarchy in their acquisition. Section 10 deals with the modes of
land acquisition or the process of acquiring lands for socialized housing. These are two different
things. They mean that the type of lands that may be acquired in the order of priority in
Section 9 are to be acquired only in the modes authorized under Section 10. The
acquisition of the lands in the priority list must be made subject to the modes and conditions set
forth in the next provision. In other words, land that lies within the APD, such as in the instant
case, may be acquired only in the modes under, and subject to the conditions of, Section 10.
Petitioner claims that it had faithfully observed the different modes of land acquisition for
socialized housing under R.A. 7279 and adhered to the priorities in the acquisition for socialized
housing under said law.16 It, however, did not state with particularity whether it exhausted the
other modes of acquisition in Section 9 of the law before it decided to expropriate the subject
lots. The law states "expropriation shall be resorted to when other modes of acquisition have
been exhausted." Petitioner alleged only one mode of acquisition, i.e., by negotiated purchase.
Petitioner, through the City Mayor, tried to purchase the lots from respondents but the latter
refused to sell.17 As to the other modes of acquisition, no mention has been made. Not even
Resolution No. 516, Series of 1996 of the Sangguniang Panlungsod authorizing the Mayor of
Mandaluyong to effect the expropriation of the subject property states whether the city
government tried to acquire the same by community mortgage, land swapping, land assembly or
consolidation, land banking, donation to the government, or joint venture agreement under
Section 9 of the law.
Section 9 also exempts from expropriation parcels of land owned by small property
owners.18 Petitioner argues that the exercise of the power of eminent domain is not anymore
conditioned on the size of the land sought to be expropriated. 19 By the expanded notion of public
use, present jurisprudence has established the concept that expropriation is not anymore
confined to the vast tracts of land and landed estates, but also covers small parcels of
land.20 That only a few could actually benefit from the expropriation of the property does not
diminish its public use character.21 It simply is not possible to provide, in one instance, land and
shelter for all who need them.22

62
While we adhere to the expanded notion of public use, the passage of R.A. No. 7279, the
"Urban Development and Housing Act of 1992" introduced a limitation on the size of the land
sought to be expropriated for socialized housing. The law expressly exempted "small property
owners" from expropriation of their land for urban land reform. R.A. No. 7279 originated as
Senate Bill No. 234 authored by Senator Joey Lina23 and House Bill No. 34310. Senate Bill No.
234 then provided that one of those lands not covered by the urban land reform and housing
program was "land actually used by small property owners within the just and equitable retention
limit as provided under this Act."24 "Small property owners" were defined in Senate Bill No. 234
as:
"4. Small Property Owners are those whose rights are protected under Section 9, Article XIII
of the Constitution of the Philippines, who own small parcels of land within the fair and just
retention limit provided under this Act and which are adequate to meet the reasonable needs of
the small property owner's family and their means of livelihood.25
The exemption from expropriation of lands of small-property owners was never questioned on
the Senate floor.26This exemption, although with a modified definition, was actually retained in
the consolidation of Senate Bill No. 234 and House Bill No. 34310 which became R.A. No.
7279.27
The question now is whether respondents qualify as "small property owners" as defined in
Section 3 (q) of R.A. 7279. Section 3 (q) provides:
"Section 3 x x x (q). "Small property owners" refers to those whose only real property consists of
residential lands not exceeding three hundred square meters (300 sq.m.) in highly urbanized
cities and eight hundred square meters (800 sq.m.) in other urban areas."
"Small-property owners" are defined by two elements: (1) those owners of real property whose
property consists of residential lands with an area of not more than 300 square meters in highly
urbanized cities and 800 square meters in other urban areas; and (2) that they do not own real
property other than the same.
The case at bar involves two (2) residential lots in Mandaluyong City, a highly urbanized city. The
lot under TCT No. 63766 is 687 square meters in area and the second under TCT No. 63767 is
949 square meters, both totalling 1,636 square meters in area. TCT No. 63766 was issued in the
names of herein five (5) respondents, viz:
"FRANCISCO N. AGUILAR, widower; THELMA N. AGUILAR, single; EUSEBIO N. AGUILAR,
JR., widower; RODOLFO N. AGUILAR, single and ANTONIO N. AGUILAR, married to Teresita
Puig; all of legal age, Filipinos."28
TCT No. 63767 was issued in the names of the five (5) respondents plus Virginia Aguilar, thus:
"FRANCISCO N. AGUILAR, widower; THELMA N. AGUILAR, single; EUSEBIO N. AGUILAR,
JR., widower; RODOLFO N. AGUILAR, single and ANTONIO N. AGUILAR, married to Teresita
Puig; and VIRGINIA N. AGUILAR, single, all of legal age, Filipinos." 29
Respondent Antonio Aguilar testified that he and the other registered owners are all siblings who
inherited the subject property by intestate succession from their parents. 30 Their father died in
1945 and their mother in 1976.31 Both TCT's were issued in the siblings' names on September 2,
1987.31 In 1986, however, the siblings agreed to extrajudicially partition the lots among
themselves, but no action was taken by them to this end. It was only eleven (11) years later, on

November 28, 1997 that a survey of the two lots was made 33 and on February 10, 1998, a
consolidation subdivision plan was approved by the Lands Management Service of the
Department of Environment and Natural Resources. 34 The co-owners signed a Partition
Agreement on February 24, 199835 and on May 21, 1998, TCT Nos. 63766 and 63767 were
cancelled and new titles issued in the names of the individual owners pursuant to the Partition
Agreement.
Petitioner argues that the consolidation of the subject lots and their partition was made more
than six (6) months after the complaint for expropriation was filed on August 4, 1997, hence, the
partition was made in bad faith, for the purpose of circumventing the provisions of R.A. 7279.36
At the time of filing of the complaint for expropriation, the lots subject of this case were owned in
common by respondents; Under a co-ownership, the ownership of an undivided thing or right
belongs to different persons.37During the existence of the co-ownership, no individual can claim
title to any definite portion of the community property until the partition thereof; and prior to the
partition, all that the co-owner has is an ideal or abstract quota or proportionate share in the
entire land or thing.38 Article 493 of the Civil Code however provides that:
"Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits
pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute
another person in its enjoyment, except when personal rights are involved. But the effect of the
alienation or the mortgage, with respect to the co-owners shall be limited to the portion which
may be allotted to him in the division upon termination of the co-ownership.39
Before partition in a co-ownership, every co-owner has the absolute ownership of his undivided
interest in the common property. The co-owner is free to alienate, assign or mortgage his
interest, except as to purely personal rights. 40 He may also validly lease his undivided interest to
a third party independently of the other co-owners. 41The effect of any such transfer is limited to
the portion which may be awarded to him upon the partition of the property.42
Article 493 therefore gives the owner of an undivided interest in the property the right to freely
sell and dispose of his undivided interest.43 The co-owner, however, has no right to sell or
alienate a concrete specific or determinate part of the thing owned in common, because his right
over the thing is represented by a quota or ideal portion without any physical adjudication. 44 If
the co-owner sells a concrete portion, this, nonetheless, does not render the sale void. Such a
sale affects only his own share, subject to the results of the partition but not those of the other
co-owners who did not consent to the sale.45
In the instant case, the titles to the subject lots were issued in respondents' names as co-owners
in 1987ten (10) years before the expropriation case was filed in 1997. As co-owners, all that
the respondents had was an ideal or abstract quota or proportionate share in the lots. This,
however, did not mean that they could not separately exercise any rights over the lots. Each
respondent had the full ownership of his undivided interest in the property. He could freely sell or
dispose of his interest independently of the other co-owners. And this interest could have even
been attached by his creditors.46 The partition in 1998, six (6) months after the filing of the
expropriation case, terminated the co-ownership by converting into certain and definite parts the
respective undivided shares of the co-owners. 47 The subject property is not a thing essentially
indivisible. The rights of the co-owners to have the property partitioned and their share in the
same delivered to them cannot be questioned for "[n]o co-owner shall be obliged to remain in
the co-ownership."48 The partition was merely a necessary incident of the co-ownership; 49 and
absent any evidence to the contrary, this partition is presumed to have been done in good faith.

63
Upon partition, four (4) co-owners, namely, Francisco, Thelma, Rodolfo and Antonio Aguilar each
had a share of 300 square meters under TCT Nos. 13849, 13852, 13850, 13851. 50 Eusebio
Aguilar's share was 347 square meters under TCT No. 13853 51 while Virginia Aguilar's was 89
square meters under TCT No. 13854.52

IN VIEW WHEREOF, the petition is DENIED and the orders dated September 17. 1998 and
December 29, 1998 of the Regional Trial Court, Branch 168, Pasig City in SCA No. 1427
are AFFIRMED.
SO ORDERED.

It is noted that Virginia Aguilar, although granted 89 square meters only of the subject lots, is, at
the same time, the sole registered owner of TCT No. 59780, one of the three (3)
titles initially sought to be expropriated in the original complaint. TCT No. 59780, with a land area
of 211 square meters, was dropped in the amended complaint. Eusebio Aguilar was granted 347
square meters, which is 47 square meters more than the maximum of 300 square meters set by
R.A. 7279 for small property owners. In TCT No. 13853, Eusebio's title, however, appears the
following annotation:
"... subject to x x x, and to the prov. of Sec. 4 Rule 74 of the Rules of Court with respect to the
inheritance left by the deceased Eusebio N. Aguilar."53
Eusebio died on March 23, 1995, 54 and, according to Antonio's testimony, the former was
survived by five (5) children. 55 Where there are several co-owners, and some of them die, the
heirs of those who die, with respect to that part belonging to the deceased, become also coowners of the property together with those who survive. 56After Eusebio died, his five heirs
became co-owners of his 347 square-meter portion. Dividing the 347 square meters among the
five entitled each heir to 69.4 square meters of the land subject of litigation.
Consequently, the share of each co-owner did not exceed the 300 square meter limit set in R.A.
7279. The second question, however, is whether the subject property is the only real property of
respondents for them to comply with the second requisite for small property owners.
Antonio Aguilar testified that he and most of the original co-owners do not reside on the subject
property but in their ancestral home in Paco, Manila. 57 Respondents therefore appear to own
real property other than the lots in litigation. Nonetheless, the records do not show that the
ancestral home in Paco, Manila and the land on which it stands are owned by respondents or
anyone of them. Petitioner did not present any title or proof of this fact despite Antonio Aguilar's
testimony.
On the other hand, respondents claim that the subject lots are their only real property 58 and that
they, particularly two of the five heirs of Eusebio Aguilar, are merely renting their houses and
therefore do not own any other real property in Metro Manila.59 To prove this, they submitted
certifications from the offices of the City and Municipal Assessors in Metro Manila attesting to the
fact that they have no registered real property declared for taxation purposes in the respective
cities. Respondents were certified by the City Assessor of Manila;60 Quezon City;61Makati
City;62 Pasay City;63 Paranaque;64 Caloocan City;65 Pasig City;66 Muntinlupa;67 Marikina;68 and the
then municipality of Las Pias69 and the municipality of San Juan del Monte 70 as having no real
property registered for taxation in their individual names.1wphi1.nt
Finally, this court notes that the subject lots are now in the possession of respondents. Antonio
Aguilar testified that he and the other co-owners filed ejectment cases against the occupants of
the land before the Metropolitan Trial Court, Mandaluyong, Branches 59 and 60. Orders of
eviction were issued and executed on September 17, 1997 which resulted in the eviction of the
tenants and other occupants from the land in question.71

Case no. 14

Republic
SUPREME
Manila

of

the

Philippines
COURT

EN BANC
G.R. No. 176625
MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY and AIR TRANSPORTATION
OFFICE, Petitioners,
vs.
BERNARDO L. LOZADA, SR., and the HEIRS OF ROSARIO MERCADO, namely, VICENTE
LOZADA, MARIO M. LOZADA, MARCIA L. GODINEZ, VIRGINIA L. FLORES, BERNARDO
LOZADA, JR., DOLORES GACASAN, SOCORRO CAFARO and ROSARIO LOZADA,
represented by MARCIA LOZADA GODINEZ, Respondents.
DECISION
NACHURA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking to reverse,
annul, and set aside the Decision1 dated February 28, 2006 and the Resolution2 dated February
7, 2007 of the Court of Appeals (CA) (Cebu City), Twentieth Division, in CA-G.R. CV No. 65796.

64
The antecedent facts and proceedings are as follows:
Subject of this case is Lot No. 88-SWO-25042 (Lot No. 88), with an area of 1,017 square
meters, more or less, located in Lahug, Cebu City. Its original owner was Anastacio Deiparine
when the same was subject to expropriation proceedings, initiated by the Republic of the
Philippines (Republic), represented by the then Civil Aeronautics Administration (CAA), for the
expansion and improvement of the Lahug Airport. The case was filed with the then Court of First
Instance of Cebu, Third Branch, and docketed as Civil Case No. R-1881.
As early as 1947, the lots were already occupied by the U.S. Army. They were turned over to the
Surplus Property Commission, the Bureau of Aeronautics, the National Airport Corporation and
then to the CAA.
During the pendency of the expropriation proceedings, respondent Bernardo L. Lozada, Sr.
acquired Lot No. 88 from Deiparine. Consequently, Transfer Certificate of Title (TCT) No. 9045
was issued in Lozadas name.
On December 29, 1961, the trial court rendered judgment in favor of the Republic and ordered
the latter to pay Lozada the fair market value of Lot No. 88, adjudged at P3.00 per square meter,
with consequential damages by way of legal interest computed from November 16, 1947the
time when the lot was first occupied by the airport. Lozada received the amount of P3,018.00 by
way of payment.
The affected landowners appealed. Pending appeal, the Air Transportation Office (ATO),
formerly CAA, proposed a compromise settlement whereby the owners of the lots affected by
the expropriation proceedings would either not appeal or withdraw their respective appeals in
consideration of a commitment that the expropriated lots would be resold at the price they were
expropriated in the event that the ATO would abandon the Lahug Airport, pursuant to an
established policy involving similar cases. Because of this promise, Lozada did not pursue his
appeal. Thereafter, Lot No. 88 was transferred and registered in the name of the Republic under
TCT No. 25057.
The projected improvement and expansion plan of the old Lahug Airport, however, was not
pursued.
Lozada, with the other landowners, contacted then CAA Director Vicente Rivera, Jr., requesting
to repurchase the lots, as per previous agreement. The CAA replied that there might still be a
need for the Lahug Airport to be used as an emergency DC-3 airport. It reiterated, however, the
assurance that "should this Office dispose and resell the properties which may be found to be no
longer necessary as an airport, then the policy of this Office is to give priority to the former
owners subject to the approval of the President."
On November 29, 1989, then President Corazon C. Aquino issued a Memorandum to the
Department of Transportation, directing the transfer of general aviation operations of the Lahug
Airport to the Mactan International Airport before the end of 1990 and, upon such transfer, the
closure of the Lahug Airport.
Sometime in 1990, the Congress of the Philippines passed Republic Act (R.A.) No. 6958,
entitled "An Act Creating the Mactan-Cebu International Airport Authority, Transferring Existing
Assets of the Mactan International Airport and the Lahug Airport to the Authority, Vesting the

Authority with Power to Administer and Operate the Mactan International Airport and the Lahug
Airport, and For Other Purposes."
From the date of the institution of the expropriation proceedings up to the present, the public
purpose of the said expropriation (expansion of the airport) was never actually initiated, realized,
or implemented. Instead, the old airport was converted into a commercial complex. Lot No. 88
became the site of a jail known as Bagong Buhay Rehabilitation Complex, while a portion
thereof was occupied by squatters.3 The old airport was converted into what is now known as
the Ayala I.T. Park, a commercial area.1avvphi1
Thus, on June 4, 1996, petitioners initiated a complaint for the recovery of possession and
reconveyance of ownership of Lot No. 88. The case was docketed as Civil Case No. CEB-18823
and was raffled to the Regional Trial Court (RTC), Branch 57, Cebu City. The complaint
substantially alleged as follows:
(a) Spouses Bernardo and Rosario Lozada were the registered owners of Lot No. 88 covered by
TCT No. 9045;
(b) In the early 1960s, the Republic sought to acquire by expropriation Lot No. 88, among
others, in connection with its program for the improvement and expansion of the Lahug Airport;
(c) A decision was rendered by the Court of First Instance in favor of the Government and
against the land owners, among whom was Bernardo Lozada, Sr. appealed therefrom;
(d) During the pendency of the appeal, the parties entered into a compromise settlement to the
effect that the subject property would be resold to the original owner at the same price when it
was expropriated in the event that the Government abandons the Lahug Airport;
(e) Title to Lot No. 88 was subsequently transferred to the Republic of the Philippines (TCT No.
25057);
(f) The projected expansion and improvement of the Lahug Airport did not materialize;
(g) Plaintiffs sought to repurchase their property from then CAA Director Vicente Rivera. The
latter replied by giving as assurance that priority would be given to the previous owners, subject
to the approval of the President, should CAA decide to dispose of the properties;
(h) On November 29, 1989, then President Corazon C. Aquino, through a Memorandum to the
Department of Transportation and Communications (DOTC), directed the transfer of general
aviation operations at the Lahug Airport to the Mactan-Cebu International Airport Authority;
(i) Since the public purpose for the expropriation no longer exists, the property must be returned
to the plaintiffs.4
In their Answer, petitioners asked for the immediate dismissal of the complaint. They specifically
denied that the Government had made assurances to reconvey Lot No. 88 to respondents in the
event that the property would no longer be needed for airport operations. Petitioners instead
asserted that the judgment of condemnation was unconditional, and respondents were,
therefore, not entitled to recover the expropriated property notwithstanding non-use or
abandonment thereof.
After pretrial, but before trial on the merits, the parties stipulated on the following set of facts:

65
(1) The lot involved is Lot No. 88-SWO-25042 of the Banilad Estate, situated in the City of Cebu,
containing an area of One Thousand Seventeen (1,017) square meters, more or less;

the Republic; and (3) the respondents claim of verbal assurances from government officials
violates the Statute of Frauds.

(2) The property was expropriated among several other properties in Lahug in favor of the
Republic of the Philippines by virtue of a Decision dated December 29, 1961 of the CFI of Cebu
in Civil Case No. R-1881;

The petition should be denied.

(3) The public purpose for which the property was expropriated was for the purpose of the Lahug
Airport;
(4) After the expansion, the property was transferred in the name of MCIAA; [and]
(5) On November 29, 1989, then President Corazon C. Aquino directed the Department of
Transportation and Communication to transfer general aviation operations of the Lahug Airport
to the Mactan-Cebu International Airport Authority and to close the Lahug Airport after such
transfer[.]5
During trial, respondents presented Bernardo Lozada, Sr. as their lone witness, while petitioners
presented their own witness, Mactan-Cebu International Airport Authority legal assistant Michael
Bacarisas.
On October 22, 1999, the RTC rendered its Decision, disposing as follows:
WHEREFORE, in the light of the foregoing, the Court hereby renders judgment in favor of the
plaintiffs, Bernardo L. Lozada, Sr., and the heirs of Rosario Mercado, namely, Vicente M.
Lozada, Marcia L. Godinez, Virginia L. Flores, Bernardo M. Lozada, Jr., Dolores L. Gacasan,
Socorro L. Cafaro and Rosario M. Lozada, represented by their attorney-in-fact Marcia Lozada
Godinez, and against defendants Cebu-Mactan International Airport Authority (MCIAA) and Air
Transportation Office (ATO):

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

1. ordering MCIAA and ATO to restore to plaintiffs the possession and ownership of their land,
Lot No. 88 Psd-821 (SWO-23803), upon payment of the expropriation price to plaintiffs; and

Contrary to the stance of petitioners, this Court had ruled otherwise in Heirs of Timoteo Moreno
and Maria Rotea v. Mactan-Cebu International Airport Authority,9 thus

2. ordering the Register of Deeds to effect the transfer of the Certificate of Title from defendant[s]
to plaintiffs on Lot No. [88], cancelling TCT No. 20357 in the name of defendant MCIAA and to
issue a new title on the same lot in the name of Bernardo L. Lozada, Sr. and the heirs of Rosario
Mercado, namely: Vicente M. Lozada, Mario M. Lozada, Marcia L. Godinez, Virginia L. Flores,
Bernardo M. Lozada, Jr., Dolores L. Gacasan, Socorro L. Cafaro and Rosario M. Lozada.

Moreover, respondent MCIAA has brought to our attention a significant and telling portion in the
Decision in Civil Case No. R-1881 validating our discernment that the expropriation by the
predecessors of respondent was ordered under the running impression that Lahug Airport would
continue in operation

No pronouncement as to costs.
SO ORDERED.6
Aggrieved, petitioners interposed an appeal to the CA. After the filing of the necessary appellate
briefs, the CA rendered its assailed Decision dated February 28, 2006, denying petitioners
appeal and affirming in toto the Decision of the RTC, Branch 57, Cebu City. Petitioners motion
for reconsideration was, likewise, denied in the questioned CA Resolution dated February 7,
2007.
Hence, this petition arguing that: (1) the respondents utterly failed to prove that there was a
repurchase agreement or compromise settlement between them and the Government; (2) the
judgment in Civil Case No. R-1881 was absolute and unconditional, giving title in fee simple to

As for the public purpose of the expropriation proceeding, it cannot now be doubted. Although
Mactan Airport is being constructed, it does not take away the actual usefulness and importance
of the Lahug Airport: it is handling the air traffic both civilian and military. From it aircrafts fly to
Mindanao and Visayas and pass thru it on their flights to the North and Manila. Then, no
evidence was adduced to show how soon is the Mactan Airport to be placed in operation and
whether the Lahug Airport will be closed immediately thereafter. It is up to the other departments
of the Government to determine said matters. The Court cannot substitute its judgment for those
of the said departments or agencies. In the absence of such showing, the Court will presume
that the Lahug Airport will continue to be in operation (emphasis supplied).
While in the trial in Civil Case No. R-1881 [we] could have simply acknowledged the presence of
public purpose for the exercise of eminent domain regardless of the survival of Lahug Airport,
the trial court in its Decision chose not to do so but instead prefixed its finding of public purpose
upon its understanding that "Lahug Airport will continue to be in operation." Verily, these

66
meaningful statements in the body of the Decision warrant the conclusion that the expropriated
properties would remain to be so until it was confirmed that Lahug Airport was no longer "in
operation." This inference further implies two (2) things: (a) after the Lahug Airport ceased its
undertaking as such and the expropriated lots were not being used for any airport expansion
project, the rights vis--vis the expropriated Lots Nos. 916 and 920 as between the State and
their former owners, petitioners herein, must be equitably adjusted; and (b) the foregoing
unmistakable declarations in the body of the Decision should merge with and become an
intrinsic part of the fallo thereof which under the premises is clearly inadequate since the
dispositive portion is not in accord with the findings as contained in the body thereof.10
Indeed, the Decision in Civil Case No. R-1881 should be read in its entirety, wherein it is
apparent that the acquisition by the Republic of the expropriated lots was subject to the
condition that the Lahug Airport would continue its operation. The condition not having
materialized because the airport had been abandoned, the former owner should then be allowed
to reacquire the expropriated property.11
On this note, we take this opportunity to revisit our ruling in Fery, which involved an expropriation
suit commenced upon parcels of land to be used as a site for a public market. Instead of putting
up a public market, respondent Cabanatuan constructed residential houses for lease on the
area. Claiming that the municipality lost its right to the property taken since it did not pursue its
public purpose, petitioner Juan Fery, the former owner of the lots expropriated, sought to recover
his properties. However, as he had admitted that, in 1915, respondent Cabanatuan acquired a
fee simple title to the lands in question, judgment was rendered in favor of the municipality,
following American jurisprudence, particularly City of Fort Wayne v. Lake Shore & M.S. RY.
Co.,12McConihay v. Theodore Wright,13 and Reichling v. Covington Lumber Co., 14 all uniformly
holding that the transfer to a third party of the expropriated real property, which necessarily
resulted in the abandonment of the particular public purpose for which the property was taken, is
not a ground for the recovery of the same by its previous owner, the title of the expropriating
agency being one of fee simple.
Obviously, Fery was not decided pursuant to our now sacredly held constitutional right that
private property shall not be taken for public use without just compensation. 15 It is well settled
that the taking of private property by the Governments power of eminent domain is subject to
two mandatory requirements: (1) that it is for a particular public purpose; and (2) that just
compensation be paid to the property owner. These requirements partake of the nature of
implied conditions that should be complied with to enable the condemnor to keep the property
expropriated.16
More particularly, with respect to the element of public use, the expropriator should commit to
use the property pursuant to the purpose stated in the petition for expropriation filed, failing
which, it should file another petition for the new purpose. If not, it is then incumbent upon the
expropriator to return the said property to its private owner, if the latter desires to reacquire the
same. Otherwise, the judgment of expropriation suffers an intrinsic flaw, as it would lack one
indispensable element for the proper exercise of the power of eminent domain, namely, the
particular public purpose for which the property will be devoted. Accordingly, the private property
owner would be denied due process of law, and the judgment would violate the property owners
right to justice, fairness, and equity.
In light of these premises, we now expressly hold that the taking of private property, consequent
to the Governments exercise of its power of eminent domain, is always subject to the condition

that the property be devoted to the specific public purpose for which it was taken. Corollarily, if
this particular purpose or intent is not initiated or not at all pursued, and is peremptorily
abandoned, then the former owners, if they so desire, may seek the reversion of the property,
subject to the return of the amount of just compensation received. In such a case, the exercise
of the power of eminent domain has become improper for lack of the required factual
justification.17
Even without the foregoing declaration, in the instant case, on the question of whether
respondents were able to establish the existence of an oral compromise agreement that entitled
them to repurchase Lot No. 88 should the operations of the Lahug Airport be abandoned, we
rule in the affirmative.
It bears stressing that both the RTC, Branch 57, Cebu and the CA have passed upon this factual
issue and have declared, in no uncertain terms, that a compromise agreement was, in fact,
entered into between the Government and respondents, with the former undertaking to resell Lot
No. 88 to the latter if the improvement and expansion of the Lahug Airport would not be pursued.
In affirming the factual finding of the RTC to this effect, the CA declared
Lozadas testimony is cogent. An octogenarian widower-retiree and a resident of Moon Park,
California since 1974, he testified that government representatives verbally promised him and
his late wife while the expropriation proceedings were on-going that the government shall return
the property if the purpose for the expropriation no longer exists. This promise was made at the
premises of the airport. As far as he could remember, there were no expropriation proceedings
against his property in 1952 because the first notice of expropriation he received was in 1962.
Based on the promise, he did not hire a lawyer. Lozada was firm that he was promised that the
lot would be reverted to him once the public use of the lot ceases. He made it clear that the
verbal promise was made in Lahug with other lot owners before the 1961 decision was handed
down, though he could not name the government representatives who made the promise. It was
just a verbal promise; nevertheless, it is binding. The fact that he could not supply the necessary
details for the establishment of his assertions during cross-examination, but that "When it will not
be used as intended, it will be returned back, we just believed in the government," does not
dismantle the credibility and truthfulness of his allegation. This Court notes that he was 89 years
old when he testified in November 1997 for an incident which happened decades ago. Still, he is
a competent witness capable of perceiving and making his perception known. The minor lapses
are immaterial. The decision of the competency of a witness rests primarily with the trial judge
and must not be disturbed on appeal unless it is clear that it was erroneous. The objection to his
competency must be made before he has given any testimony or as soon as the incompetency
becomes apparent. Though Lozada is not part of the compromise agreement, 18 he nevertheless
adduced sufficient evidence to support his claim.19
As correctly found by the CA, unlike in Mactan Cebu International Airport Authority v. Court of
Appeals,20 cited by petitioners, where respondent therein offered testimonies which were
hearsay in nature, the testimony of Lozada was based on personal knowledge as the assurance
from the government was personally made to him. His testimony on cross-examination
destroyed neither his credibility as a witness nor the truthfulness of his words.
Verily, factual findings of the trial court, especially when affirmed by the CA, are binding and
conclusive on this Court and may not be reviewed. A petition for certiorari under Rule 45 of the
Rules of Court contemplates only questions of law and not of fact.21 Not one of the exceptions to
this rule is present in this case to warrant a reversal of such findings.

67
As regards the position of petitioners that respondents testimonial evidence violates the Statute
of Frauds, suffice it to state that the Statute of Frauds operates only with respect to executory
contracts, and does not apply to contracts which have been completely or partially performed,
the rationale thereof being as follows:
In executory contracts there is a wide field for fraud because unless they be in writing there is no
palpable evidence of the intention of the contracting parties. The statute has precisely been
enacted to prevent fraud. However, if a contract has been totally or partially performed, the
exclusion of parol evidence would promote fraud or bad faith, for it would enable the defendant
to keep the benefits already delivered by him from the transaction in litigation, and, at the same
time, evade the obligations, responsibilities or liabilities assumed or contracted by him thereby.22
In this case, the Statute of Frauds, invoked by petitioners to bar the claim of respondents for the
reacquisition of Lot No. 88, cannot apply, the oral compromise settlement having been partially
performed. By reason of such assurance made in their favor, respondents relied on the same by
not pursuing their appeal before the CA. Moreover, contrary to the claim of petitioners, the fact of
Lozadas eventual conformity to the appraisal of Lot No. 88 and his seeking the correction of a
clerical error in the judgment as to the true area of Lot No. 88 do not conclusively establish that
respondents absolutely parted with their property. To our mind, these acts were simply meant to
cooperate with the government, particularly because of the oral promise made to them.
The right of respondents to repurchase Lot No. 88 may be enforced based on a constructive
trust constituted on the property held by the government in favor of the former. On this note, our
ruling in Heirs of Timoteo Moreno is instructive, viz.:
Mactan-Cebu International Airport Authority is correct in stating that one would not find an
express statement in the Decision in Civil Case No. R-1881 to the effect that "the [condemned]
lot would return to [the landowner] or that [the landowner] had a right to repurchase the same if
the purpose for which it was expropriated is ended or abandoned or if the property was to be
used other than as the Lahug Airport." This omission notwithstanding, and while the inclusion of
this pronouncement in the judgment of condemnation would have been ideal, such precision is
not absolutely necessary nor is it fatal to the cause of petitioners herein. No doubt, the return or
repurchase of the condemned properties of petitioners could be readily justified as the manifest
legal effect or consequence of the trial courts underlying presumption that "Lahug Airport will
continue to be in operation" when it granted the complaint for eminent domain and the airport
discontinued its activities.
The predicament of petitioners involves a constructive trust, one that is akin to the implied trust
referred to in Art. 1454 of the Civil Code, "If an absolute conveyance of property is made in order
to secure the performance of an obligation of the grantor toward the grantee, a trust by virtue of
law is established. If the fulfillment of the obligation is offered by the grantor when it becomes
due, he may demand the reconveyance of the property to him." In the case at bar, petitioners
conveyed Lots No. 916 and 920 to the government with the latter obliging itself to use the
realties for the expansion of Lahug Airport; failing to keep its bargain, the government can be
compelled by petitioners to reconvey the parcels of land to them, otherwise, petitioners would be
denied the use of their properties upon a state of affairs that was not conceived nor
contemplated when the expropriation was authorized.
Although the symmetry between the instant case and the situation contemplated by Art. 1454 is
not perfect, the provision is undoubtedly applicable. For, as explained by an expert on the law of
trusts: "The only problem of great importance in the field of constructive trust is to decide

whether in the numerous and varying fact situations presented to the courts there is a wrongful
holding of property and hence a threatened unjust enrichment of the defendant." Constructive
trusts are fictions of equity which are bound by no unyielding formula when they are used by
courts as devices to remedy any situation in which the holder of legal title may not in good
conscience retain the beneficial interest.
In constructive trusts, the arrangement is temporary and passive in which the trustees sole duty
is to transfer the title and possession over the property to the plaintiff-beneficiary. Of course, the
"wronged party seeking the aid of a court of equity in establishing a constructive trust must
himself do equity." Accordingly, the court will exercise its discretion in deciding what acts are
required of the plaintiff-beneficiary as conditions precedent to obtaining such decree and has the
obligation to reimburse the trustee the consideration received from the latter just as the plaintiffbeneficiary would if he proceeded on the theory of rescission. In the good judgment of the court,
the trustee may also be paid the necessary expenses he may have incurred in sustaining the
property, his fixed costs for improvements thereon, and the monetary value of his services in
managing the property to the extent that plaintiff-beneficiary will secure a benefit from his acts.
The rights and obligations between the constructive trustee and the beneficiary, in this case,
respondent MCIAA and petitioners over Lots Nos. 916 and 920, are echoed in Art. 1190 of the
Civil Code, "When the conditions have for their purpose the extinguishment of an obligation to
give, the parties, upon the fulfillment of said conditions, shall return to each other what they have
received x x x In case of the loss, deterioration or improvement of the thing, the provisions
which, with respect to the debtor, are laid down in the preceding article shall be applied to the
party who is bound to return x x x."23
On the matter of the repurchase price, while petitioners are obliged to reconvey Lot No. 88 to
respondents, the latter must return to the former what they received as just compensation for the
expropriation of the property, plus legal interest to be computed from default, which in this case
runs from the time petitioners comply with their obligation to respondents.
Respondents must likewise pay petitioners the necessary expenses they may have incurred in
maintaining Lot No. 88, as well as the monetary value of their services in managing it to the
extent that respondents were benefited thereby.
Following Article 118724 of the Civil Code, petitioners may keep whatever income or fruits they
may have obtained from Lot No. 88, and respondents need not account for the interests that the
amounts they received as just compensation may have earned in the meantime.
In accordance with Article 119025 of the Civil Code vis--vis Article 1189, which provides that "(i)f
a thing is improved by its nature, or by time, the improvement shall inure to the benefit of the
creditor x x x," respondents, as creditors, do not have to pay, as part of the process of restitution,
the appreciation in value of Lot No. 88, which is a natural consequence of nature and time. 26
WHEREFORE, the petition is DENIED. The February 28, 2006 Decision of the Court of Appeals,
affirming the October 22, 1999 Decision of the Regional Trial Court, Branch 87, Cebu City, and
its February 7, 2007 Resolution are AFFIRMED with MODIFICATION as follows:
1. Respondents are ORDERED to return to petitioners the just compensation they received for
the expropriation of Lot No. 88, plus legal interest, in the case of default, to be computed from
the time petitioners comply with their obligation to reconvey Lot No. 88 to them;

68
2. Respondents are ORDERED to pay petitioners the necessary expenses the latter incurred in
maintaining Lot No. 88, plus the monetary value of their services to the extent that respondents
were benefited thereby;
3. Petitioners are ENTITLED to keep whatever fruits and income they may have obtained from
Lot No. 88; and
4. Respondents are also ENTITLED to keep whatever interests the amounts they received as
just compensation may have earned in the meantime, as well as the appreciation in value of Lot
No. 88, which is a natural consequence of nature and time;
In light of the foregoing modifications, the case is REMANDED to the Regional Trial Court,
Branch 57, Cebu City, only for the purpose of receiving evidence on the amounts that
respondents will have to pay petitioners in accordance with this Courts decision. No costs.
SO ORDERED.

Case no. 15

Republic
SUPREME
Manila

of

the

Philippines
COURT

THIRD DIVISION
G.R. No. 147511

January 20, 2003

MARINA Z. REYES; ALFREDO A. FRANCISCO; ANGELITA Z. GARCIA; ALFREDO Z.

FRANCISCO, JR; ARMANDO Z. FRANCISCO; ALMA C. FRANCISCO; EUGENIA Z. LUNA;
CLARITA Z. ZABALLERO, LEONARDO Z. ZABALLERO, JR, and TEODORO Z.
ZABALLERO, in substitution of LEONARDO M. ZABALLERO; AUGUSTO M. ZABALLERO;
FRINE A. ZABALLERO; ELENA FRONDA ZABALLERO; VICTOR GREGORIO F.
ZABALLERO; MARIA ELENA F. ZABALLERO; LOURDES ZABALLERO-LAVA; SOCORRO
EMILIA
ZABALLERO-YAP;
and
TERESITA
F.
ZABALLERO, petitioners,
vs.
NATIONAL HOUSING AUTHORITY, respondent.
PUNO, J.:
This is an appeal by certiorari from the decision of the Court of Appeals in CA-GR CV No. 51641
dated September 29, 20001 affirming the judgment of the Regional Trial Court of Quezon City,
Branch 79 which dismissed the complaint for forfeiture of rights filed by herein petitioners, as
well as the Resolution dated March 13, 2001 denying petitioners' motion for reconsideration.
Records show that in 1977, respondent National Housing Authority (NHA) filed separate
complaints for the expropriation of sugarcane lands, particularly Lot Nos. 6450, 6448-E, 6198-A
and 6199 of the cadastral survey of Dasmarias, Cavite belonging to the petitioners, before the

69
then Court of First Instance of Cavite, and docketed as Civil Case Nos. T.G.-392, T.G.-396 and
T.G.-417. The stated public purpose of the expropriation was the expansion of the Dasmarias
Resettlement Project to accommodate the squatters who were relocated from the Metropolitan
Manila area. The trial court rendered judgment ordering the expropriation of these lots and the
payment of just compensation. This was affirmed by the Supreme Court in a decision rendered
on October 29, 1987 in the case of NHA vs. Zaballero 2 and which became final on November 26,
1987.3
On February 24, 1989, the expropriation court (now Branch 18, Regional Trial Court of Tagaytay
City) issued an Order4 the dispositive portion of which reads:

(now Branch 18, RTC, Tagaytay City) concerning capital gains tax, registration fees and other
expenses for the transfer of title to respondent NHA, as well as the claims for attorney's fees of
Atty. Joaquin Yuseco, Jr., collaborating counsel for petitioners.
Ocular inspections7 conducted by the trial court on the subject properties show that:
"1. 80% of Lot No. 6198-A with an area of 120,146 square meters is already occupied by
relocatees whose houses are made of light materials with very few houses partly made of hollow
blocks. The relocatees were relocated only on (sic) March of 1994;

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

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

(1) The Register of Deeds of the Province of Cavite is hereby ordered to transfer, in the name of
the plaintiff National Housing Authority, the following:

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

(a) Transfer Certificate No. RT-638 containing an area of 79,167 square meters situated in Barrio
Bangkal, Dasmarias, Cavite;

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

(b) Transfer Certificate of Title No. T-55702 containing an area of 20,872 square meters situated
in Barrio Bangkal, Dasmarias, Cavite;
(c) Transfer Certificate of Title No. RT-639 and RT-4641 covering Lot Nos. 6198-A and 6199 with
an aggregate area of 159,985 square meters also situated in Barrio Bangkal, Dasmarias,
Cavite.
(2) Plaintiff National Housing Authority is likewise hereby ordered, under pain of contempt, to
immediately pay the defendants, the amounts stated in the Writ of Execution as the adjudicated
compensation of their expropriated properties, which process was received by it according to the
records, on September 26, 1988, segregating therefrom, and in separate check, the lawyer's
fees in favor of Atty. Bobby P. Yuseco, in the amount of P322,123.05, as sustained by their
contract as gleaned from the records, with no other deduction, paying on its own (NHA) account,
the necessary legal expenses incident to the registration or issuance of new certificates of title,
pursuant to the provisions of the Property Registration Law (PD 1529);
(3) Defendants, however, are directed to pay the corresponding capital gains tax on the subject
properties, directing them additionally, to coordinate with the plaintiff NHA in this regard, in order
to facilitate the termination of this case, put an end to this controversy and consign the same to
its final rest."
For the alleged failure of respondent NHA to comply with the above order, petitioners filed on
April 28, 1992 a complaint 5 for forfeiture of rights before the Regional Trial Court of Quezon City,
Branch 79, in Civil Case No. Q-92-12093. They alleged that respondent NHA had not relocated
squatters from the Metropolitan Manila area on the expropriated lands in violation of the stated
public purpose for expropriation and had not paid the just compensation fixed by the court. They
prayed that respondent NHA be enjoined from disposing and alienating the expropriated
properties and that judgment be rendered forfeiting all its rights and interests under the
expropriation judgment. In its Answer,6 respondent NHA averred that it had already paid a
substantial amount to herein petitioners and that the expropriation judgment could not be
executed in view of several issues raised by respondent NHA before the expropriation court

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

"1. The Honorable Court of Appeals had decided a question of substance not in accord with
justice and equity when it ruled that, as the judgment of the expropriation court did not contain a
condition that should the expropriated property be not used for the intended purpose it would
revert to the condemnee, the action to declare the forfeiture of rights under the expropriation
judgment can not prosper;
2. The Honorable Court of Appeals decided a question of substance not in accord with
jurisprudence, justice and equity when it ruled that the non-payment is not a ground for
forfeiture;
3. The Honorable Court of Appeals erred in not declaring the judgment of expropriation forfeited
in light of the failure of respondent to use the expropriated property for the intended purpose but
for a totally different purpose."
The petition is not impressed with merit.
Petitioners contend that respondent NHA violated the stated public purpose for the expansion of
the Dasmarias Resettlement Project when it failed to relocate the squatters from the Metro
Manila area, as borne out by the ocular inspection conducted by the trial court which showed

70
that most of the expropriated properties remain unoccupied. Petitioners likewise question the
public nature of the use by respondent NHA when it entered into a contract for the construction
of low cost housing units, which is allegedly different from the stated public purpose in the
expropriation proceedings. Hence, it is claimed that respondent NHA has forfeited its rights and
interests by virtue of the expropriation judgment and the expropriated properties should now be
returned to herein petitioners. We are not persuaded.
The 1987 Constitution explicitly provides for the exercise of the power of eminent domain over
private properties upon payment of just compensation. More specifically, section 9, Article III
states that private property shall not be taken for public use without just compensation. The
constitutional restraints are public use and just compensation.
Petitioners cannot insist on a restrictive view of the eminent domain provision of the Constitution
by contending that the contract for low cost housing is a deviation from the stated public use. It
is now settled doctrine that the concept of public use is no longer limited to traditional purposes.
Here, as elsewhere, the idea that "public use" is strictly limited to clear cases of "use by the
public" has been abandoned. The term "public use" has now been held to be synonymous with
"public interest," "public benefit," "public welfare," and "public convenience." 8 The rationale for
this new approach is well explained in the case of Heirs of Juancho Ardona, et al. vs. Reyes, et
al.,9to wit:
"The restrictive view of public use may be appropriate for a nation which circumscribes the
scope of government activities and public concerns and which possesses big and correctly
located public lands that obviate the need to take private property for public purposes. Neither
circumstance applies to the Philippines. We have never been a laissez faire State. And the
necessities which impel the exertion of sovereign power are all too often found in areas of
scarce public land or limited government resources.
xxx

xxx

xxx

The taking to be valid must be for public use. There was a time when it was felt that a literal
meaning should be attached to such a requirement. Whatever project is undertaken must be for
the public to enjoy, as in the case of streets or parks. Otherwise, expropriation is not allowable. It
is not anymore. As long as the purpose of the taking is public, then the power of eminent domain
comes into play. As just noted, the constitution in at least two cases, to remove any doubt,
determines what is public use. One is the expropriation of lands to be subdivided into small lots
for resale at cost to individuals. The other is in the transfer, through the exercise of this power, of
utilities and other private enterprise to the government. It is accurate to state then that at
present whatever may be beneficially employed for the general welfare satisfies the
requirement of public use." (emphasis supplied)
The act of respondent NHA in entering into a contract with a real estate developer for the
construction of low cost housing on the expropriated lots to be sold to qualified low income
beneficiaries cannot be taken to mean as a deviation from the stated public purpose of their
taking. Jurisprudence has it that the expropriation of private land for slum clearance and urban
development is for a public purpose even if the developed area is later sold to private
homeowners, commercials firms, entertainment and service companies, and other private
concerns.10
Moreover, the Constitution itself allows the State to undertake, for the common good and in
cooperation with the private sector, a continuing program of urban land reform and

housing which will make at affordable cost decent housing and basic services to
underprivileged and homeless citizens in urban centers and resettlement areas.11 The
expropriation of private property for the purpose of socialized housing for the marginalized
sector is in furtherance of the social justice provision under Section 1, Article XIII of the
Constitution which provides that:
"SECTION 1. The Congress shall give highest priority to the enactment of measures that protect
and enhance the right of all the people to human dignity, reduce social, economic, and political
inequalities, and remove cultural inequities by equitably diffusing wealth and political power for
the common good.
To this end, the State shall require the acquisition, ownership, use and disposition of property
and its increments."
It follows that the low cost housing project of respondent NHA on the expropriated lots is
compliant with the "public use" requirement.
We likewise do not subscribe to petitioners' contention that the stated public purpose was
abandoned when respondent NHA failed to occupy the expropriated lots by relocating squatters
from the Metro Manila area. The expropriation judgment declared that respondent NHA has a
lawful right to take petitioners properties "for the public use or purpose of expanding the
Dasmarias Resettlement Project." The taking here is absolute, without any condition, restriction
or qualification. Contrary to petitioners' submission, the ruling enunciated in the early case
of Fery vs. Municipality of Cabanatuan,12 is still good and sound doctrine, viz.:
"x x x If, for example, land is expropriated for a particular purpose, with the condition that when
that purpose is ended or abandoned the property shall return to its former owner, then, of
course, when the purpose is terminated or abandoned the former owner reacquires the property
so expropriated. x x x If, upon the contrary, however, the decree of expropriation gives to the
entity a fee simple title, then, of course, the land becomes the absolute property of the
expropriator x x x.
When land has been acquired for public use in fee simple unconditionally, either by the
exercise of eminent domain or by purchase, the former owner retains no rights in the
land, and the public use may be abandoned, or the land may be devoted to a different
use, without any impairment of the estate or title acquired, or any reversion to the former
owner."
Petitioners further aver that the continued failure of respondent NHA to pay just compensation
for a long period of time justifies the forfeiture of its rights and interests over the expropriated
lots. They demand the return of the expropriated lots. Respondent NHA justifies the delay to pay
just compensation by reason of the failure of petitioners to pay the capital gains tax and to
surrender the owners' duplicate certificates of title.
In the recent case of Republic of the Philippines vs. Court of Appeals, et al.,13 the Court ruled
that non-payment of just compensation does not entitle the private landowners to recover
possession of their expropriated lots. Thus:
"Thus, in Valdehueza vs. Republic where the private landowners had remained unpaid ten years
after the termination of the expropriation proceedings, this Court ruled

71
'The points in dispute are whether such payment can still be made and, if so, in what amount.
Said lots have been the subject of expropriation proceedings. By final and executory judgment in
said proceedings, they were condemned for public use, as part of an airport, and ordered sold to
the government. x x x. It follows that both by virtue of the judgment, long final, in the
expropriation suit, as well as the annotations upon their title certificates, plaintiffs are not entitled
to recover possession of their expropriated lots which are still devoted to the public use for
which they were expropriated but only to demand the market value of the same.
Said relief may be granted under plaintiffs' prayer for such other remedies, which may be
deemed just and equitable under the premises.'
The Court proceeded to reiterate its pronouncement in Alfonso vs. Pasay City where the
recovery of possession of property taken for public use prayed for by the unpaid landowner was
denied even while no requisite expropriation proceedings were first instituted. The landowner
was merely given the relief of recovering compensation for his property computed at its market
value at the time it was taken and appropriated by the State.
The judgment rendered by the Bulacan RTC in 1979 on the expropriation proceedings provides
not only for the payment of just compensation to herein respondents but likewise
adjudges the property condemned in favor of petitioner over which parties, as well as
their privies, are bound. Petitioner has occupied, utilized and, for all intents and
purposes, exercised dominion over the property pursuant to the judgment. The exercise
of such rights vested to it as the condemnee indeed has amounted to at least a partial
compliance or satisfaction of the 1979 judgment, thereby preempting any claim of bar by
prescription on grounds of non-execution. In arguing for the return of their property on the
basis of non-payment, respondents ignore the fact that the right of the expropriating
authority is far from that of an unpaid seller in ordinary sales, to which the remedy of
rescission might perhaps apply. An in rem proceeding, condemnation acts upon the
property. After condemnation, the paramount title is in the public under a new and independent
title; thus, by giving notice to all claimants to a disputed title, condemnation proceedings provide
a judicial process for securing better title against all the world than may be obtained by voluntary
conveyance." (emphasis supplied)
We, however, likewise find the refusal of respondent NHA to pay just compensation, allegedly for
failure of petitioners to pay capital gains tax and surrender the owners' duplicate certificates of
title, to be unfounded and unjustified.
First, under the expropriation judgment the payment of just compensation is not subject to any
condition. Second, it is a recognized rule that although the right to enter upon and appropriate
the land to public use is completed prior to payment, title to the property expropriated shall pass
from the owner to the expropriator only upon full payment of the just compensation. In the case
of Association of Small Landowners in the Phils., Inc., et al. vs. Secretary of Agrarian Reform,14 it
was held that:
"Title to property which is the subject of condemnation proceedings does not vest the
condemnor until the judgment fixing just compensation is entered and paid, but the condemnor's
title relates back to the date on which the petition under the Eminent Domain Act, or the
commissioner's report under the Local Improvement Act, is filed.

x x x Although the right to appropriate and use land taken for a canal is complete at the
time of entry, title to the property taken remains in the owner until payment is actually
made.
In Kennedy v. Indianapolis, the US Supreme Court cited several cases holding that title to
property does not pass to the condemnor until just compensation had actually been made. In
fact, the decisions appear to be uniformly to this effect. As early as 1838, in Rubottom v. McLure,
it was held that 'actual payment to the owner of the condemned property was a condition
precedent to the investment of the title to the property in the State' albeit 'not to the appropriation
of it to public use.' In Rexford v. Knight, the Court of Appeals of New York said that the
construction upon the statutes was that the fee did not vest in the State until the payment of the
compensation although the authority to enter upon and appropriate the land was complete prior
to the payment. Kennedy further said that 'both on principle and authority the rule is x x x
that the right to enter on and use the property is complete, as soon as the property is
actually appropriated under the authority of law for a public use, but that the title does
not pass from the owner without his consent, until just compensation has been made to
him.'"
Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes, that:
If the laws which we have exhibited or cited in the preceding discussion are attentively examined
it will be apparent that the method of expropriation adopted in this jurisdiction is such as to afford
absolute reassurance that no piece of land can be finally and irrevocably taken from an unwilling
owner until compensation is paid. x x x." (emphasis supplied)
With respect to the amount of the just compensation still due and demandable from respondent
NHA, the lower courts erred in not awarding interest computed from the time the property is
actually taken to the time when compensation is actually paid or deposited in court. In Republic,
et al. vs. Court of Appeals, et al.,15 the Court imposed interest at 12% per annum in order to help
eliminate the issue of the constant fluctuation and inflation of the value of the currency over time,
thus:
"The constitutional limitation of 'just compensation' is considered to be the sum equivalent to the
market value of the property, broadly described to be the price fixed by the seller in open market
in the usual and ordinary course of legal action and competition or the fair value of the property
as between one who receives, and one who desires to sell, it being fixed at the time of the actual
taking by the government. Thus, if property is taken for public use before compensation is
deposited with the court having jurisdiction over the case, the final compensation must include
interests on its just value to be computed from the time the property is taken to the time when
compensation is actually paid or deposited with the court. In fine, between the taking of the
property and the actual payment, legal interests accrue in order to place the owner in a position
as good as (but not better than) the position he was in before the taking occurred.
x x x This allowance of interest on the amount found to be the value of the property as of the
time of the taking computed, being an effective forbearance, at 12% per annum should help
eliminate the issue of the constant fluctuation and inflation of the value of the currency over time.
Article 1250 of the Civil Code, providing that, in case of extraordinary inflation or deflation, the
value of the currency at the time of the establishment of the obligation shall be the basis for the
payment when no agreement to the contrary is stipulated, has strict application only to
contractual obligations. In other words, a contractual agreement is needed for the effects of
extraordinary inflation to be taken into account to alter the value of the currency."

72
Records show that there is an outstanding balance of P1,218,574.35 that ought to be paid to
petitioners.16 It is not disputed that respondent NHA took actual possession of the expropriated
properties in 1977.17 Perforce, while petitioners are not entitled to the return of the expropriated
property, they are entitled to be paid the balance of P1,218,574.35 with legal interest thereon at
12% per annum computed from the taking of the property in 1977 until the due amount shall
have been fully paid.
WHEREFORE, the appealed judgment is modified as follows:
1. Ordering respondent National Housing Authority to pay petitioners the amount of
P1,218,574.35 with legal interest thereon at 12% per annum computed from the taking of the
expropriated properties in 1997 until the amount due shall have been fully paid;
2. Ordering petitioners to pay the capital gains tax; and
3. Ordering petitioners to surrender to respondent National Housing Authority the owners'
duplicate certificates of title of the expropriated properties upon full payment of just
compensation.

Case no. 16

SO ORDERED.
Panganiban, Sandoval-Gutierrez, Corona and Carpio-Morales, JJ., concur.

Republic
SUPREME
Manila

of

the

Philippines
COURT

SECOND DIVISION
G.R. No. 137569

June 23, 2000

REPUBLIC
OF
THE
PHILIPPINES, plaintiff-appellee,
vs.
SALEM INVESTMENT CORPORATION, MARIA DEL CARMEN ROXAS DE ELIZALDE,
CONCEPCION
CABARRUS
VDA.
DE
SANTOS, defendants-appellees,
MILAGROS
AND
INOCENTES
DE
LA
RAMA, petitioners,
ALFREDO GUERRERO, respondent.
MENDOZA, J.:
The main petition in this case is for determination of just compensation for the expropriation of
lands under B.P. Blg. 340. Alfredo Guerrero intervened in this proceeding arguing that, instead of
the De la Ramas, he should receive the just compensation for the subject land. The trial court
and the Court of Appeals declared him the rightful recipient of the amount. This is an appeal
from the decision1 of the Court of Appeals. We affirm.
The facts are as follows:
On February 17, 1983, Batas Pambansa Blg. 340 was passed authorizing the expropriation of
parcels of lands in the names of defendants in this case, including a portion of the land,
consisting of 1,380 square meters, belonging to Milagros and Inocentes De la Rama covered by
TCT No. 16213.
On December 14, 1988, or five years thereafter, Milagros and Inocentes De la Rama entered
into a contract2 with intervenor Alfredo Guerrero whereby the De la Ramas agreed to sell to

73
Guerrero the entire property covered by TCT No. 16213, consisting of 4,075 square meters for
the amount of P11,800,000.00. The De la Ramas received the sum of P2,200,000.00 as partial
payment of the purchase price, the balance thereof to be paid upon release of the title by the
Philippine Veterans Bank.
On November 3, 1989, Guerrero filed in the Regional Trial Court in Pasay City a complaint for
specific performance (Civil Case No. 6974-P) to compel the De la Ramas to proceed with the
sale.
On July 10, 1990, while this case for specific performance was pending, the Republic of the
Philippines filed the present case (Civil Case No. 7327) for expropriation pursuant to B.P. Blg.
340.3 Among the defendants named in the complaint were Milagros and Inocentes De la Rama
as registered owners of Lot 834, a portion of which (Lot 834-A) was part of the expropriated
property. Upon the deposit of P12,970,350.00 representing 10 percent of the approximate
market value of the subject lands, a writ of possession 4 was issued on August 29, 1990 in favor
of the government.
On May 2, 1991, Guerrero filed a motion for intervention 5 alleging that the De la Ramas had
agreed to sell to him the entire Lot 834 (TCT No. 16213) on December 14, l988 and that a case
for specific performance had been filed by him against the De la Ramas.
On September 9, 1991, based on the report of the committee on appraisers appointed by the
court and the submissions of defendants, the trial court approved payment to the De la Ramas
at the rate of P23,976.00 per square meter for the taking of 920 square meters out of the 1,380
square meters to be expropriated under B.P. Blg. 340.6
Meanwhile, on September 18, 1991, the trial court rendered a decision in the case for specific
performance (Civil Case No. 6974-P) 7 upholding the validity of the contract to sell and ordering
the De la Ramas to execute the corresponding deed of sale covering the subject property in
favor of Guerrero. The De la Ramas appealed to the Court of Appeals (CA-G.R. No. CV-35116)
but their petition was dismissed on July 28, 1992. They tried to appeal to this Court (G.R. No.
106488) but again they failed in their bid as their petition for review was denied on December 7,
1992.
Meanwhile, on October 2, 1991, Guerrero filed an Omnibus Motions 8 praying that the just
compensation for the land be deposited in court pursuant to Rule 67, 9 of the Rules of Court.
As his motion for intervention and omnibus motion had not yet been resolved, Guerrero filed with
the Court of Appeals a petition for mandamus,certiorari, and injunction with temporary
restraining order9 (C.A.-G.R. SP No. 28311) to enjoin the Republic from releasing or paying to
the De la Ramas any amount corresponding to the payment of the expropriated property and to
compel the trial court to resolve his two motions.
On January 12, 1993, the Court of Appeals rendered a decision granting the writ of mandamus.10
Nonetheless, the De la Ramas filed on March 17, 1993 a Motion for Authority to Withdraw 11 the
deposit made by the Republic in 1991. This motion was denied as the trial court, on May 7,
1993, allowed the intervention of Guerrero and ordered the Republic to deposit the amount of
just compensation with the Clerk of Court of RTC, Pasay City.12

On June 16, 1993, the De la Ramas filed a Motion for Execution 1 again praying that the court's
order dated September 9, 1991, approving the recommendation of the appraisal committee, be
enforced. This was duly opposed by Guerrero.14
On June 22, 1993, the trial court denied the motion of the De la Ramas holding that there had
been a change in the situation of the parties, therefore, making the execution of the September
9, 1991 Order inequitable, impossible, or unjust.15
As if to further delay the proceedings of this case, the De la Ramas then filed an Omnibus
Motion seeking clarification of the September 18, 1991 decision of the trial court in the case for
specific performance, upholding the validity of the contract to sell, insofar as the area covered by
the contract was concerned, and asking that a restraining order be issued until this motion was
granted.
In its order dated October 7, 1993, the trial court clarified that the area of land covered by the
contract to sell included the portion expropriated by the Republic. It stated:
WHEREFORE, by way of clarification, the court holds that the transfer of title to the plaintiff
under the Contract to Sell dated December 14, 1988 covers the entire Lot 834 consisting of
4,075 square meters (including the expropriated portion); that this change of owner over the
entire property is necessarily junior or subject to the superior rights of the REPUBLIC over the
expropriated portion (the meters and bounds of which are clearly defined in Section 1 '6' of B.P.
Blg. 340); that the Contract to Sell dated December 14, 1988 executed by the parties is a valid
document that authorizes the plaintiff to step into the shoes of the defendants in relation to the
property covered by TCT No. 16213; and that the transfer shall be free from all liens and
encumbrances except for the expropriated portion of 1,380 square meters.16
The decision in the action for specific performance in Civil Case No. 6974-P having become
final, an order of execution17 was issued by the Pasay City RTC, and as a result of which, a deed
of absolute sale18 was executed by the Branch Clerk of Court on March 8, 1994 in favor of
Guerrero upon payment by him of the sum of P8,808,000.00 on January 11, 1994 and the
further sum of P1,608,900.00 on February 1, 1994 as full payment for the balance of the
purchase price under the contract to sell of December 14, 1988. The entire amount was
withdrawn and duly received by the De la Ramas.19
Thereafter, the De la Ramas sought the nullification of the June 22, 1993 order of the trial court
in this case, denying their motion for execution of the order approving the recommendation of
the appraisal committee, by filing a petition for certiorari and mandamus in the Court of Appeals.
This petition was, however, dismissed in a decision dated July 29, 1994 of the appellate court. 20
On April 5, 1995, the Pasay City Regional Trial Court, Branch 111, declared Guerrero the rightful
owner of the 920-square meter expropriated property and ordered payment to him of just
compensation for the taking of the land: The dispositive portion of its decision reads:
WHEREFORE, respondent-intervenor Alfredo Guerrero is hereby declared as the rightful person
entitled to receive the just compensation of the 920-square meter portion of the property
described in TCT No. 16213 of the Register of Deeds of Pasay City and ordering the Philippine
National Bank to release and deliver to Uniland Realty and Development Corporation, the
assignee of Guerrero, the amount of P20,000,000.00 representing the deposit made by the
plaintiff through the Department of Public Works and Highways in the Philippine National Bank,

74
Escolta Branch with the check solely payable to said Uniland Realty and Development
Corporation, as assignee of Alfredo Guerrero.21

property itself was already outside the commerce of man. As a matter of fact, the property was
already part of a Government infrastructure.24

This decision was subsequently affirmed by the Court of Appeals. 22 Hence, this petition.

On the other hand, Alfredo Guerrero argues that the title to the expropriated portion of Lot 834
did not immediately pass to the government upon the enactment of B.P. Blg. 340 in 1983, as
payment of just compensation was yet to be made before ownership of the land was transferred
to the government. As a result, petitioners still owned the entire Lot 834 at the time they agreed
to sell it to Guerrero. Therefore, since Guerrero obtained ownership of Lot 834, including the 920
square meters expropriated by the government, he has the right to receive the just
compensation over the said property.

The De la Ramas contend:

I. THE COURT OF APPEALS WRONGLY INTERPRETED B.P. NO. 340 BY HOLDING THAT
BATAS PAMBANSA BLG. 340 MERELY AUTHORIZED THE EXPROPRIATION OF THE LANDS
OF THE DEFENDANTS, INCLUDING THAT PORTION BELONGING TO THE HEREIN
PETITIONERS DE LA RAMAS COVERED BY TCT NO. 16213.
II. THE COURT OF APPEALS WRONGLY INTERPRETED THE CONTRACT TO SELL BY
HOLDING THAT THE PETITIONERS DE LA RAMAS HAD CONVEYED TO THE
RESPONDENT GUERRERO THE WHOLE PROPERTY COVERED BY TCT NO. 16213,
INCLUDING THE EXPROPRIATED AREA.
III. THE HONORABLE COURT OF APPEALS WRONGLY DECLARED THAT THE
PETITIONERS DE LA RAMAS COULD STILL SELL IN 1988 THEIR PROPERTY AS TITLE
THERETO HAD NOT YET PASSED TO THE GOVERNMENT IN 1983.
IV. THE COURT OF APPEALS GRAVELY ERRED IN WRONGLY INTERPRETING THE
CONTRACT TO SELL, BY HOLDING THAT PETITIONERS DE LA RAMAS HAD CONVEYED
TO THE RESPONDENT GUERRERO THE RIGHT TO RECEIVE THE JUST COMPENSATION
FOR THE EXPROPRIATED AREA.
V. THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE RIGHT TO
RECEIVE THE JUST COMPENSATION FOR THE EXPROPRIATED AREA BECAME VESTED
UPON THE RESPONDENT GUERRERO THROUGH SUBROGATION.
VI. THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE RESPONDENT
GUERRERO HAD PAID TO PETITIONERS RAMAS THE FULL PURCHASE PRICE OF
P11,800,00.00 STIPULATED IN THE CONTRACT TO SELL OF 14 DECEMBER 1988.2
As already stated, the De la Ramas and Guerrero entered into a contract to sell with respect to
Lot 834. This lot has an area of 4,075 square meters. This contract was executed on December
14, 1988, after B.P. Blg. 340 was passed authorizing the expropriation of a portion of the land,
consisting of 1,380 square meters, of the De la Ramas. The only issue in this case is who,
between the De la Ramas and Guerrero, is/are entitled to receive payment of just compensation
for the taking of 920 square meters of the land in question?
The De la Ramas claim that they should receive the amount of just compensation because when
they agreed to sell Lot 834 in 1988 to Guerrero, it did not include the portion expropriated by the
Republic since, at that time, such portion had been expropriated by the government by virtue of
B.P. Blg. 340, which took effect on February 17, 1983. They state:
In 1988, the petitioners Ramas could no longer agree to sell to another person the expropriated
property itself. For one thing, the property was already expropriated and petitioners Ramas for
not objecting in effect conveyed the same to the Government. Secondly, the physical and
juridical possession of the property was already in the Government. Thirdly, the equitable and
beneficial title over the property was already vested in the Government, and therefore the

We find the De la Ramas' contention without merit. We hold that Guerrero is entitled to receive
payment of just compensation for the taking of the land.
The power of eminent domain
The power of eminent domain is an inherent power of the State. No constitutional conferment is
necessary to vest it in the State. The constitutional provision on eminent domain, Art. III, 9,
provides a limitation rather than a basis for the exercise of such power by the government. Thus,
it states that "Private property shall not be taken for public use without just compensation."
Expropriation may be initiated by court action or by legislation. 25 In both instances, just
compensation is determined by the courts.26
The expropriation of lands consists of two stages. As explained in Municipality of Bian v.
Garcia:27
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". . . .
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. . . .
It is only upon the completion of these two stages that expropriation is said to have been
completed. Moreover, it is only upon payment of just compensation that title over the property
passes to the government.28 Therefore, until the action for expropriation has been completed an
terminated, ownership over the property being expropriated remains with the registered owner.
Consequently, the latter can exercise all rights pertaining to an owner, including the right to
dispose of his property, subject to the power of the State ultimately to acquire it through
expropriation.
In the case at hand, the first stage of expropriation was completed when B.P. Blg. 340 was
enacted providing for the expropriation of 1,380 square meters of the land in question. The
constitutionality of this law was upheld in the case of Republic v. De Knecht.29 In 1990, the
government commenced the second stage of expropriation through the filing of a petition for the
determination of just compensation. This stage was not completed, however, because of the

75
intervention of Guerrero which gave rise to the question of ownership of the subject land.
Therefore, the title to the expropriated property of the De la Ramas remained with them and did
not at that point pass to the government.
The De la Ramas are mistaken in arguing that the two stages of expropriation cited above only
apply to judicial, and not to legislative, expropriation. Although Congress has the power, to
determine what land to take, it can not do so arbitrarily. Judicial determination of the propriety of
the exercise of the power, for instance, in view of allegations of partiality and prejudice by those
adversely affected,30 and the just compensation for the subject property is provided in our
constitutional system.
We see no point in distinguishing between judicial and legislative expropriation as far as the two
stages mentioned above are concerned. Both involve these stages and in both the process is
not completed until payment of just compensation is made. The Court of Appeals was correct in
saying that B.P. Blg. 340 did not effectively expropriate the land of the De la Ramas. As a matter
of fact, it merely commenced the expropriation of the subject property.
Thus, in 1988, the De la Ramas still had authority to transfer ownership of their land and convey
all rights, including the right to receive just compensation, to Guerrero.
The Contract to Sell and the Deed of Absolute Sale
The contract to sell between the De la Ramas and Guerrero, executed on December 14, 1988,
reads:
CONTRACT TO SELL
KNOW ALL MEN BY THESE PRESENTS:
This CONTRACT is made and executed by and between:
MILAGROS DE LA RAMA and INOCENTES DE LA RAMA, of legal age, both single, Filipinos
Citizen and with residence and postal address at 2838 F.B. Harrison St., Pasay City, Metro
Manila, hereinafter referred to as the SELLERS.
-andALFREDO S. GUERRERO, of legal age, Filipino, married to SUSANA C. PASCUAL and with
residence and postal address at No. 17 Mangyan, La Vista, Quezon City, hereinafter referred to
as the BUYER.
W I T N E S S E T H:
WHEREAS, the SELLERS are the registered owners of a parcel of land consisting of 4,075
square meters together with all the improvements thereon situated at 2838 F.B. Harrison St.,
Pasay City, covered by Transfer Certificate of Title No. 16213 of the Registry of Deeds of Pasay
City and more particularly described as follows:
A PARCEL OF LAND (Lot 834 of the Cadastral Survey of Pasay, L.R.C. Cad. Rec. No.), situated
in the City of Pasay. Bounded on the N., along line 1-2 by Lot 835; and along line 2-3 by Lot 836,
on the NE., and SE., along lines 3-4-5 by Lot 833, all of Pasay Cadastre; and on the SW., along
lines 5-6-1 by Calle F.B. Harrison. Beginning at a point marked "1" on plan, being N. 3 deg.

50'E., 100.44 m. from B.L.L.M. 5, Pasay Cadastre; thence. N. 84 deg. 19'E., 73.79 m. to point 2;
thence N. 84 deg. 19'E., 14.47 m. to point 3; thence S. 93 deg. 11'E., 45.69 m. to point 4; thence
S. 33 deg. 10'W., 87.39 m. to point 5; thence N. 10 deg. 46'W., 11.82 m. to point 6; thence N. 10
deg. 46'W., 35.70 m. to point of beginning; containing an area of FOUR THOUSAND AND
SEVENTY FIVE (4,075) SQUARE METERS. All points referred to are indicated on the plan and
marked on the ground by Old Points; bearing true date of the cadastral survey, Oct., 1928 to
Nov., 1930.
WHEREAS, the SELLERS offer to sell and the BUYER agrees to buy the above-described real
property.
NOW, THEREFORE, for and in consideration of the amount of ELEVEN MILLION EIGHT
HUNDRED THOUSAND PESOS (P11,800.000.00) the parties hereby agree to enter unto the
Contract subject to such terms and conditions as follows:
1. Upon execution of this Contract, the BUYER shall pay the SELLERS the sum of TWO
MILLION TWO HUNDRED THOUSAND PESOS (P2,200,000.00) it being understood and
agreed that this payment shall be for the purpose of liquidating in full the mortgage indebtedness
and affecting the redemption of the property subject of the sale as annotated at the back of the
title;
2. The balance of EIGHT MILLION EIGHT HUNDRED THOUSAND PESOS (P8,800,000.00)
shall be paid by the BUYER upon release of the title by the Phil. Veterans Bank and execution of
the Deed of Absolute Sale;
3. The amount of P800,000.00 shall be paid by the BUYER upon payment of Capital Gains Tax
and documentary sales stamp by the SELLERS and their vacation of the premises.
4. All existing improvements shall be assigned to the BUYER;
5. The SELLERS shall settle all realty taxes up to the end of 1988, water and electric bills;
6. The SELLERS shall pay three percent (3%) of the total consideration as broker's commission
to be computed in the purchase price of P11,000,000.00;
7. It is hereby agreed and covenanted and stipulated by and between the parties hereto that the
SELLERS shall execute and deliver to the BUYER a formal Absolute Deed of Sale free from all
liens and encumbrances;
8. That the SELLERS shall vacate the premises and or deliver the physical possession of the
property within thirty (30) days from the date of sale, that is upon complete payment by the
BUYER of the agreed purchase price and execution of Deed of Sale;
9. That the execution of all legal documents in connection with this sale transaction shall be
done thru SELLERS legal counsel;
10. The BUYER shall assume payment of transfer and registration expenses;
IN WITNESS WHEREOF, the parties have hereunto set their hands this 14th day of December
1988 at Manila, Metro Manila.31

76
The land, as described above in the Contract to Sell, includes the land expropriated under B.P.
Blg. 340, to wit:
6. A parcel of land (a portion of Lot No. 834 of the Cadastral Survey of Pasay, Cadastral Case
No. 23. G.L.R.O. Cadastral Record No. 1368), situated in the City of Pasay, bounded on the
southeast, along lines 1-2-3 by Lot No. 833, Pasay Cadastre; and on the southwest, along lines
3-4-5 by Calle F.B. Harrison; and on the north, points 5-17-17-1 by the remaining portion of Lot
834; beginning at point marked "1" on plan, being S, 32 deg. 17' 44"E., 267.187 meters from
BLLM No. 5, Pasay Cadastre; thence S.9 deg. 11'E., 11.579 m. to point "2"; thence S.82 deg.
10'W., 87.390 m. to point "3"; thence N. 10 deg. 45' 58"W., 11.82 m. to point "4"; thence N. 10
deg. 46 W., 15,568.4 m. to point "5"; thence S.15 deg. 37' 27"E., 3.287 m. to point "6"; thence
S.34 deg.. 32'27"E., 3.287 m. to point "7"; thence S. 53 deg. 26'50"E., 3.287 m. to point "8";
thence S. 72 deg. 22'51"E., 3.287 m. to point "9"; thence N. 88 deg. 40'32"E., 3.287 m. to point
"10"; thence N. 72 deg. 00'53"E., 6.480 m. to point "11"; thence N. 84 deg. 55' 05"E., 10.375 m.
to point "12"; thence N. 85 deg. 38'14"E., 10.375 m. to point "13"; thence N. 86 deg. 21' 10"E.,
10.375 m. to point "14"; thence N. 87 deg. 04' 18"E., 10.375 m. to point "15"; thence N. 87 deg.
97' 06"E., 10.375 m. to point "16"; thence N. 88 deg. 30'11"E., 10.375 m. to point "7"; thence N.
89 deg. 12'56"E., 9.422 m. to the point of beginning, containing an area of one thousand three
hundred eighty square meters (1,380.00 Sq.M.), more or less.32
As the trial court in the case for specific performance ruled, the contract to sell covered the
entire Lot 834, including the expropriated area, which was then owned by the De la Ramas.
It is true that the contract to sell did not convey to Guerrero the subject parcel of land described
therein. However, it created an obligation on the part of the De la Ramas to convey the land,
subject to the fulfillment of the suspensive conditions therein stated. The declaration of this
contract's validity, which paved the way for the subsequent execution of the Deed of Absolute
Sale on March 8, 1994, following the order of the Regional Trial Court for its execution, by the
Clerk of Court, Branch 113, Pasay City, effectively conveyed ownership of said parcel of land to
Guerrero.
The contention that the Deed of Absolute Sale excluded the portion expropriated by the
government is untenable. The Deed of Absolute Sale reads in pertinent parts:
That for and in consideration of the sum of ELEVEN MILLION PESOS (P11,000,000), Philippine
Currency, paid by the VENDEE, the VENDORS, by these presents hereby SELL, TRANSFER,
CONVEY and ASSIGN, unto the herein VENDEE, his heirs, successors-in-interest and assigns,
by way of absolute sale, a parcel of land located in 2838 F.B. Harrison Street, Pasay City,
formerly covered by Transfer Certificate of Title No. 16213 of the land records of Pasay City,
presently covered by the new Transfer Certificate of Title No. 132995; together with all
improvements thereon, free from all liens and encumbrances whatsoever except over a portion
equal to one thousand three hundred eighty (1,380) square meters expropriated by the Republic
of the Philippines under and by virtue of Batas Pambansa Blg. 340 which took effect on
February 17, 1983, the technical description of which is found therein, and which Lot 834 in its
entirety is more particularly described as follows:
A PARCEL OF LAND (Lot 834 of the Cadastral Survey of Pasay, L.R.C. Cad. Rec No.), situated
in the City of Pasay. Bounded on the N. along line 1-2 by Lot 835, and along line 2-3 by Lot 836;
on the NE., and SE., along lines 3-4-5 by Lot 833; all of Pasay Cadastre; and on the SW., along
lines 5-6-1 by Calle F.B. Harrison. Beginning at a point marked "1" on plan, being N. 3 deg, 50'
E., 100.44 from B.I.I.M. 5; Pasay Cadastre; thence N. 84 deg. 19'E, 73.79 m. to point 2; thence

N. 84 deg. 19'E., 14.47 m. to point 3; thence S. 9 deg. 11'E., 45.69 m. to point 4; thence S.53
deg. 10'W., 87.39 m. to point 5; thence N. 10 deg. 46'W., 11.82 m. to point 6; thence N. 10 deg.
46'W., 35. 70 m. to point of beginning; containing an area of FOUR THOUSAND AND SEVENTY
FIVE (4,075) SQUARE METERS. All points referred to are indicated on the plan and are marked
on the ground by Old Points; bearing true date of the Cadastral Survey, Oct. 1928 to Nov. 1,
1930.3
The underscored phrase does not say that the expropriated portion of the lot was excluded from
the sale. Rather, it states that the entire property, consisting of 4,075 square meters, was being
sold free from all liens and encumbrances except the lien in favor of the government over the
portion being expropriated by it. Stated in another way, Guerrero was buying the entire property
free from all claims of third persons except those of the government.
Evidently, Lot 834 was conveyed in 1994 to Guerrero by virtue of the Deed of Absolute Sale.
This contract was registered in the Register of Deeds and, accordingly, a new transfer certificate
of title was issued to Guerrero.34 Pursuant thereto, and by virtue of subrogation, the latter
became the rightful owner entitled to receive the just compensation from the Republic.
The De la Ramas make much of the fact that ownership of the land was transferred to the
government because the equitable and the beneficial title was already acquired by it in 1983,
leaving them with only the naked title. However, as this Court held in Association of Small
Landowners in the Phil., Inc. v. Secretary of Agrarian Reform: 35
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:
. . . . although the right to expropriate and use land taken for a canal is complete at the time of
entry, title to the property taken remains in the owner until payment is actually made. (Emphasis
supplied).
In Kennedy v. Indianapolis, the US Supreme Court cited several cases holding that title to
property does not pass to the condemnor until just compensation had actually been made. In
fact, the decisions appear to be uniformly to this effect. As early as 1838, in Rubottom v. McLure,
it was held that "actual payment to the owner of the condemned property was a condition
precedent to the investment of the title to the property in the State" albeit "not to the
appropriation of it to public use."In Rexford v. Knight, the Court of Appeals of New York said that
the construction upon the statutes was that the fee did not vest in the State until the payment of
the compensation although the authority to enter upon and appropriate the land was complete
prior to the payment. Kennedy further said that "both on principle and authority the rule is . . .
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."
The amount paid by Guerrero.
Lastly, the De la Ramas contend that Guerrero only paid P7,417,000.00 and not P8,800,000.00
as stipulated in the contract to sell. However, Guerrero explained in his comment in this case:
In making such misleading allegations, petitioners withheld the information that on January 25,
1994, Branch 114 of the Pasay City Regional Trial Court had issued an order which explained

77
very clearly why the sum of P7,417,000.00 deposited by Guerrero constitute full payment of the
agreed price, viz:
Plaintiff's motion is meritorious. The decision dated September 18, 1991 rendered in this case
has long become final and executory. Paragraph 4 of the dispositive portion of said decision
reads as follows:
4. Ordering defendants Milagros dela Rama and Inocentes dela Rama to execute the
corresponding deed of sale conveying the subject property, free from all liens and
encumbrances in favor of the plaintiff upon payment of the latter of his balance of
P8,800,000.00:
xxx

xxx

xxx

6. Ordering both defendants, jointly and severally, to pay the plaintiff the following:
a. the sum of P500,000.00 by way of moral damages;
b. the sum of P200,000.00 by way of exemplary damages;
c. the sum of P100,000.00 by way of attorney's fees;
d. legal interest of the amount of P2,200,000.00 from August 2, 1989 until the deed of absolute
sale is executed in favor of the plaintiff;
The plaintiff [Alfredo Guerrero] is therefore entitled to collect from the defendants [Milagros and
Inocentes de la Rama] the sum of P800,000.00 in damages and attorney's fees, and interest at
the legal rate. The earlier computation of the court's Branch Sheriff Edilberto Santiago is wrong.
The legal rate of interest for damages, and even for loans where interest was not stipulated, is
6% per annum (Art. 2209, Civil Code). The rate of 12% per annum was established by the
Monetary Board when, under the power vested in it by P.D. 116 to amend Act No. 2655 (more
commonly known as the Anti Usury Law), it amended Section 1 by increasing the rate of legal
interest for loans; renewals and forbearance thereof, as well as for judgments, from 6% per
annum to 12% per annum. Inasmuch as the Monetary Board may not repeal or amend the Civil
Code, in the face of the apparent conflict between Art. 2209 and Act No. 2655 as amended, it is
this court's persuasion that the ruling of the Monetary Board applies only to banks, financing
companies, pawnshops and intermediaries performing quasi-banking functions, all of which are
under the control and supervision of the Central Bank and of the Monetary Board.1wphi1.nt
The interest rate on the P2,200,000.00 paid to the defendants by the plaintiff at the inception of
the transactions should be only 6% per annum from August 2, 1989, and as of January 2, 1994
this amounts to the sum of P583,000.00 and P11,000.00 every month thereafter until the deed of
absolute sale over the property subject matter of this case is executed. The amounts payable by
the defendants to the plaintiff therefore stands at a total of P1,383,000.00. Offsetting this amount
from the balance of P8,800,000.00, the plaintiff must still pay to the defendants the sum of
P7,417,000.00. The plaintiff has already deposited with the Clerk of Court of this court the sum
of P5,808,100.00 as of January 11, 1994; he should add to this the sum of P1,608,900.00.36
The De la Ramas question this ruling of the lower court. They say:
That Petitioners do not agree with the explanation of the lower Court, which held that the
Petitioners are liable to pay legal interest on the initial payment of P2,200.000 that petitioners

received under the Contract To Sell as part of the purchase price. Why should Petitioners pay
legal interest on a sum of money that was payable to them and which they received as initial
payment of the purchase price? This ruling is absurd and preposterous. It is a legal
monstrosity.37
Petitioners can no longer question a judgment which has already become final and executory.
The order of the Regional Trial Court on the payment of legal interest was issued on September
18, 1991 in the case for specific performance against the De la Ramas (Civil Case No. 6974-P).
Hence, they are already barred from questioning it now in this proceeding.
Finally, we take note of the fact that the De la Ramas have withdrawn and appropriated for
themselves the amount paid by Guerrero. This amount represented the purchase price of the
entire 4,075 square meters of land, including the expropriated portion, which was the subject of
their agreement. The payment, therefore, to them of the value of the expropriated portion would
unjustly enrich them.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED.
SO ORDERED.
Bellosillo, Quisumbing, Buena and De Leon, Jr., JJ., concur.

78

Case no. 17

Republic
SUPREME
Manila

of

the

Philippines
COURT

SECOND DIVISION
G.R. No. 143643

June 27, 2003

NATIONAL
POWER
CORPORATION, petitioner,
vs.
SPS. JOSE C. CAMPOS, JR. and MA. CLARA LOPEZ-CAMPOS, respondents.
CALLEJO, SR., J.:
This is a petition for review of the Decision1 dated June 16, 2000 of the Court of Appeals in CAG.R. CV No. 54265. The assailed decision affirmed in toto the Decision2 of the Regional Trial
Court (RTC) of Quezon City, Branch 98, which ordered petitioner National Power Corporation to
pay, among others, actual, moral and nominal damages in the total amount of P1,980,000 to
respondents Spouses Jose C. Campos, Jr. and Ma. Clara A. Lopez-Campos.
The petition at bar stemmed from the following antecedents:
On February 2, 1996, the respondents filed with the court a quo an action for sum of money and
damages against the petitioner. In their complaint, the respondents alleged that they are the
owners of a parcel of land situated in Bo. San Agustin, Dasmarias, Cavite, consisting of 66,819
square meters ("subject property") covered by Transfer Certificate of Title (TCT) No. T-957323.
Sometime in the middle of 1970, Dr. Paulo C. Campos, who was then the President of the
Cavite Electric Cooperative and brother of respondent Jose C. Campos, Jr., verbally requested
the respondents to grant the petitioner a right-of-way over a portion of the subject property.
Wooden electrical posts and transmission lines were to be installed for the electrification of
Puerto Azul. The respondents acceded to this request upon the condition that the said
installation would only be temporary in nature. The petitioner assured the respondents that the
arrangement would be temporary and that the wooden electric posts would be relocated as soon
as permanent posts and transmission lines shall have been installed. Contrary to the verbal
agreement of the parties, however, the petitioner continued to use the subject property for its
wooden electrical posts and transmission lines without compensating the respondents therefor.3

79
The complaint likewise alleged that some time in 1994, the petitioners agents trespassed on the
subject property and conducted engineering surveys thereon. The respondents caretaker asked
these agents to leave the property. Thereafter, in 1995, a certain "Mr. Raz," who claimed to be
the petitioners agent, went to the office of respondent Jose C. Campos, Jr., then Associate
Justice of the Supreme Court, and requested permission from the latter to enter the subject
property and conduct a survey in connection with the petitioners plan to erect an all-steel
transmission line tower on a 24-square meter area inside the subject property. Respondent Jose
Campos, Jr., refused to grant the permission and expressed his preference to talk to the Chief of
the Calaca Sub-station or the head of the petitioners Quezon City office. The respondents did
not hear from "Mr. Raz" or any one from the petitioners office since then. Sometime in July or
August of 1995, the petitioners agents again trespassed on the subject property, presenting to
the respondents caretaker a letter of authority purportedly written by respondent Jose C.
Campos, Jr. When the caretaker demanded that the letter be given to him for verification with
respondent Jose C. Campos, Jr. himself, the petitioners agents refused to do so. Consequently,
the caretaker ordered the agents to leave the subject property.4
The complaint further alleged that on December 12, 1995, the petitioner instituted an
expropriation case involving the subject property before the RTC of Imus, Cavite, Branch 22.
The case was docketed as Civil Case No. 1174-95. The petitioner alleged in its complaint therein
that the subject property was selected "in a manner compatible with the greatest public good
and the least private injury" and that it (petitioner) had tried to negotiate with the respondents for
the acquisition of the right-of-way easement on the subject property but that the parties failed to
reach an amicable settlement.5
The respondents maintained that, contrary to the petitioners allegations, there were other more
suitable or appropriate sites for the petitioners all-steel transmission lines and that the petitioner
chose the subject property in a whimsical and capricious manner. The respondents averred that
the proposed right-of-way was not the least injurious to them as the system design prepared by
the petitioner could be further revised to avoid having to traverse the subject property. The
respondents vigorously denied negotiating with the petitioner in connection with the latters
acquisition of a right-of-way on the subject property.6
Finally, the complaint alleged that unaware of the petitioners intention to expropriate a portion of
the subject property, the respondents sold the same to Solar Resources, Inc. As a consequence,
the respondents stand to lose a substantial amount of money derived from the proceeds of the
sale of the subject property should the buyer (Solar Resources, Inc.) decide to annul the sale
because of the contemplated expropriation of the subject property.7
The complaint a quo thus prayed that the petitioner be adjudged liable to pay the respondents,
among others, actual, nominal and moral damages:
WHEREFORE, premises considered, it is respectfully prayed that the Honorable Court award
the plaintiffs:
a. Actual damages for the use of defendants property since middle 1970s, including legal
interest thereon, as may be established during the trial;
b. P1,000,000.00 as nominal damages;
c. P1,000,000.00 as moral damages;

d. Lost business opportunity as may be established during the trial;

e. P250,000.00 as attorneys fees;
f. Costs of suit.
Plaintiffs pray for other, further and different reliefs as may be just and equitable under the
premises.8
Upon receipt of the summons and complaint, the petitioner moved for additional time to file its
responsive pleading. However, instead of filing an answer to the complaint, the petitioner filed a
motion to dismiss on the ground that the action had prescribed and that there was another
action pending between the same parties for the same cause (litis pendencia). The respondents
opposed said motion. On May 2, 1996, the RTC issued an order denying the petitioners motion
to dismiss.
The petitioner then moved for reconsideration of the aforesaid order. The respondents opposed
the same and moved to declare the petitioner in default on the ground that its motion for
reconsideration did not have the required notice of hearing; hence, it did not toll the running of
the reglementary period to file an answer.
On July 15, 1996, the RTC issued an order denying the petitioners motion for reconsideration.
Subsequently, on July 24, 1996, it issued another order granting the respondents motion and
declared the petitioner in default for its failure to file an answer. The petitioner filed a motion to
set aside the order of default but the same was denied by the RTC.
The petitioner filed a petition for certiorari, prohibition and preliminary injunction with the Court of
Appeals, docketed as CA-G.R. SP No. 41782, assailing the May 2, 1996, July 15, 1996 and July
24, 1996 Orders issued by the RTC as having been issued with grave abuse of discretion and to
enjoin it from proceeding with the case. On February 13, 1996, the CA dismissed the petition for
certiorari, prohibition and preliminary injunction filed by the petitioner in CA-G.R. SP No. 41782.
In the meantime, the respondents adduced their evidence ex parte in the RTC. As synthesized
by the trial court, the respondents adduced evidence, thus:
From the evidence thus far submitted, it appears that the plaintiffs spouses, both of whom
professional of high standing in society, are the absolute owners of a certain parcel of land
situated in Bo. San Agustin, Dasmarias, Cavite, consisting of 66,819 square meters, more or
less, covered and embraced in TCT No. T-95732. Sometime in the mid-1970, Dr. Paulo C.
Campos, brother of Justice Jose Campos, Jr., then President of the Cavite Electric Cooperative,
approached the latter and confided to him the desire of the National Power Corporation to be
allowed to install temporary wooden electric posts on the portion of his wifes property in order
that the high-tension transmission line coming from Kaliraya passing thru that part of Cavite can
be continued to the direction of Puerto Azul.
Having heard the plea of his brother and the fact that National Power Corporation was under
pressure because at the time that Puerto Azul was being developed there was no electricity nor
was there electrical lines towards that place and acting on the belief that the installation of
wooden electric posts would be temporary in nature, plaintiffs gave oral permission for the NPC
personnel to enter the said parcel of land. Dr. Paulo C. Campos, assured him that it was just a
temporary measure to meet the emergency need of the Puerto Azul and that the wooden electric
posts will be relocated when a permanent posts and transmission lines shall have been

80
installed. Pursuant to their understanding, the National Power Corporation installed wooden
posts across a portion of plaintiffs property occupying a total area of about 2,000 square meters
more or less. To date, defendant NPC has been using the plaintiffs property for its wooden
electrical posts and transmission lines; that the latter has estimated that the aggregate rental
(which they peg at the conservative rate of P1.00 per square meter) of the 2,000 square meters
for twenty-four (24) years period, would amount to the aggregate sum of P480,000.00.
From the time National Power Corporation installed those temporary wooden posts, no notice
was ever served upon the plaintiffs of their intention to relocate the same or to install permanent
transmission line on the property. Also, there was no personal contact between them. However,
in late 1994, plaintiffs overseer found a group of persons of the defendant NPC conducting
survey inside the said property, and were asked to leave the premises upon being discovered
that they have no authority to do so from the owners thereof. Subsequently thereafter, or
sometime in 1995, a person by the name of Mr. Paz, bearing a letter from Calaca Regional
Office, went to see Justice Jose C. Campos, Jr. in his office, informing the latter that he was
authorized by the National Power Corporation to acquire private lands. In the same breath, Mr.
Paz requested his permission to let NPC men enter the subject property and to conduct a survey
in connection with its plan to erect an all steel transmission line tower on a 24 square meter area
inside plaintiffs property, but same was denied. Justice Campos, however, expressed his
preference to talk instead to the Chief of the Calaca Sub-station or the Head of the NPC,
Quezon City office. Since then, nothing however transpired.
Sometime in July or August 1995, plaintiffs learned that defendants agents again entered the
subject property. This time, they have presented to the caretaker a letter of authority supposedly
from Justice Jose C. Campos, Jr. And, when prodded to see the letter for verification,
defendants agents refused to do so. So, they were ordered out of the vicinity. Plaintiffs stressed
that defendants repeated intrusions into their property without their expressed knowledge and
consent had impugned on their constitutional right to protection over their property.
Later, on December 12, 1995, plaintiffs received copy of summons and complaint in Civil Case
No. 1174-95 filed by the defendant before the Regional Trial Court, Fourth Judicial Region,
Branch 22, Imus, Cavite for the expropriation of 5,320 square meters of plaintiffs abovedescribed property to be used as right-of-way for the all-steel transmission line tower of the
Calaca-Dasmarias 230 KV T/L Project. But what had caused plaintiffs discomfiture is the
allegation in said complaint stating that the "parcel of land sought to be expropriated has not
been applied to nor expropriated for any public use and is selected by plaintiff in a manner
compatible with the greatest good and the least private injury" and that defendant "had
negotiated with (plaintiffs) for the acquisition of the right-of-way easement over the portion of the
same for the public purpose as above-stated at a price prescribed by law, but failed to reach an
agreement with them notwithstanding the repeated negotiations between the parties".
Plaintiffs assert that at no instance was there a negotiation between them and the NPC or its
representative. The alleged "talk" initiated by Mr. Paz with Justice Campos, Jr. just ended in the
latters remonstrance and in prevailing upon the former of his preference to discuss the matter
with a more responsible officer of the National Power Corporation, such as the Chief of the
Calaca Sub-Station or the Head of NPCs Office in Quezon City. But plaintiffs plea just fell on the
deaf ear. The next thing they know was Civil Case No. Q-1174-95 already filed in court. A party
to a case shall not do falsehood nor shall mislead or misrepresent the contents of its pleading.
That gross misrepresentation had been made by the National Power Corporation in their said
pleading is irrefutable.

Plaintiffs-spouses Campos declared that there are other areas more suitable or appropriate that
can be utilized as alternative sites for the all-steel transmission line tower. Just a few meters
from the planned right-of-way is an abandoned road occupied by squatters; it is a government
property and the possession of which the NPC need not compensate. The latter had not
exercised judiciously in the proper selection of the property to be appropriated. Evidently, NPCs
choice was whimsical and capricious. Such arbitrary selection of plaintiffs property despite the
availability of another property in a manner compatible with the greatest public good and the
least private injury, constitutes an impermissible encroachment of plaintiffs proprietary rights and
their right to due process and equal protection.
Concededly, NPCs intention is to expropriate a portion of plaintiffs property. This limitation on
the right of ownership is the paramount right of the National Power Corporation granted by law.
But before a person can be deprived of his property through the exercise of the power of
eminent domain, the requisites of law must strictly be complied with. (Endencia vs. Lualhati, 9
Phil. 177) No person shall be deprived of his property except by competent authority and for
public use and always upon payment of just compensation. Should this requirement be not first
complied with, the courts shall protect and, in a proper case, restore the owner in his
possession. (Art. 433 Civil Code of the Philippines)
Records disclose that in breach of such verbal promise, defendant NPC had not withdrawn the
wooden electrical posts and transmission lines; said wooden electrical posts and transmission
lines still occupy a portion of plaintiffs property; that the NPC had benefited from them for a long
period of time already, sans compensation to the owners thereof.
Without first complying with the primordial requisites appurtenant to the exercise of the power of
eminent domain, defendant NPC again boldly intruded into plaintiffs property by conducting
engineering surveys with the end in view of expropriating 5,320 square meters thereof to be
used as right-of-way for the all-steel transmission line tower of the Calaca-Dasmarias 230 KV
T/L Project. Such acts constitute a deprivation of ones property for public use without due
compensation. It would therefore seem that the expropriation had indeed departed from its own
purpose and turns out to be an instrument to repudiate compliance with obligation legally and
validly contracted.9
On September 26, 1996, the RTC rendered a decision finding the petitioner liable for damages
to the respondents. The dispositive portion of the RTC decision reads:
WHEREFORE, in view of the foregoing consideration, justment [sic] is hereby rendered in favor
of the plaintiffs, condemning the defendant to pay
(a) Actual damages of P480,000.00 for the use of plaintiffs property;
(b) One Million Pesos (P1,000,000.00) as moral damages;
(c ) Five Hundred Thousand Pesos (P500,000.00) as nominal damages;
(d) One Hundred Fifty Thousand Pesos (P150,000.00) as attorneys fees; and
(e) Costs of suit in the amount of P11,239.00.
SO ORDERED.10

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The petitioner appealed the decision to the Court of Appeals which on June 16, 1990 rendered a
decision affirming the ruling of the RTC.
Essentially, the CA held that the respondents claim for compensation and damages had not
prescribed because Section 3(i) of the petitioners Charter, Republic Act No. 6395, as amended,
is not applicable to the case. The CA likewise gave scant consideration to the petitioners claim
that the respondents complaint should be dismissed on the ground of litis pendencia. According
to the CA, the complaint a quo was the more appropriate action considering that the venue for
the expropriation case (Civil Case No. 1174-95) was initially improperly laid. The petitioner filed
the expropriation proceedings with the RTC in Imus, Cavite, when the subject property is located
in Dasmarias, Cavite. Moreover, the parties in the two actions are not the same since the
respondents were no longer included as defendants in the petitioners amended complaint in the
expropriation case (Civil Case No. 1174-95) but were already replaced by Solar Resources, Inc.,
the buyer of the subject property, as defendant therein.
The CA likewise found the damages awarded by the RTC in favor of the respondents just and
reasonable under the circumstances obtaining in the case.
The petitioner now comes to this Court seeking to reverse and set aside the assailed decision.
The petitioner alleges as follows:
I
The Court of Appeals grievously erred and labored under a gross misapprehension of fact in
finding that the Complaint below should not be dismissed on the ground of prescription.
II
The Court of Appeals erred in affirming the award of nominal and moral damages, attorneys
fees and costs of litigation.11
Citing Article 620 of the Civil Code, the petitioner contends that it had already acquired the
easement of right-of-way over the portion of the subject property by prescription, the said
easement having been allegedly continuous and apparent for a period of about twenty-three (23)
years, i.e., from about the middle of 1970 to the early part of 1994. The petitioner further invokes
Section 3(i) of its Charter in asserting that the respondents already waived their right to institute
any action for compensation and/or damages concerning the acquisition of the easement of
right-of-way in the subject property. Accordingly, the petitioner concludes that the award of
damages in favor of the respondents is not warranted.
The petition is bereft of merit.
The petitioners claim that, under Article 620 of the Civil Code, it had already acquired by
prescription the easement of right-of-way over that portion of the subject property where its
wooden electric posts and transmission lines were erected is untenable. Article 620 of the Civil
Code provides that:
Art. 620. Continuous and apparent easements are acquired either by virtue of a title or by
prescription of ten years.
Prescription as a mode of acquisition requires the existence of the following: (1) capacity to
acquire by prescription; (2) a thing capable of acquisition by prescription; (3) possession of the

thing under certain conditions; and (4) lapse of time provided by law. 12 Acquisitive prescription
may either be ordinary, in which case the possession must be in good faith and with just title, 13 or
extraordinary, in which case there is neither good faith nor just title. In either case, there has to
be possession which must be in the concept of an owner, public, peaceful and
uninterrupted.14 As a corollary, Article 1119 of the Civil Code provides that:
Art. 1119. Acts of possessory character executed in virtue of license or by mere tolerance of the
owner shall not be available for the purposes of possession.
In this case, the records clearly reveal that the petitioners possession of that portion of the
subject property where it erected the wooden posts and transmission lines was merely upon the
tolerance of the respondents. Accordingly, this permissive use by the petitioner of that portion of
the subject property, no matter how long continued, will not create an easement of right-of-way
by prescription. The case of Cuaycong vs. Benedicto15 is particularly instructive. In that case, the
plaintiffs for more than twenty years made use of the road that passed through the hacienda
owned by the defendants, being the only road that connected the plaintiffs hacienda to the
public road. The defendants closed the road in question and refused the use of the same unless
a toll was paid. The plaintiffs therein brought an action to enjoin the defendants from interfering
with the use of the road. In support of their action, the plaintiffs presented evidence tending to
show that they have acquired the right-of-way through the road by prescription. This Court
rejected the contention, holding as follows:
Had it been shown that the road had been maintained at the public expense, with the
acquiescence of the owners of the estates crossed by it, this would indicate such adverse
possession by the government as in course of time would ripen into title or warrant the
presumption of a grant or of a dedication. But in this case there is no such evidence, and the
claims of plaintiffs, whether regarded as members of the public asserting a right to use the road
as such, or as persons claiming a private easement of way over the land of another must be
regarded as resting upon the mere fact of user.
If the owner of a tract of land, to accommodate his neighbors or the public in general, permits
them to cross his property, it is reasonable to suppose that it is not his intention, in so doing, to
divest himself of the ownership of the land so used, or to establish an easement upon it, and that
the persons to whom such permission, tacit or express, is granted, do not regard their privilege
of use as being based upon anything more than the mere tolerance of the owner. Clearly, such
permissive use is in its inception based upon an essentially revocable license. If the use
continues for a long period of time, no change being made in the relations of the parties by any
express or implied agreement, does the owner of the property affected lose his right of
revocation? Or, putting the same question in another form, does the mere permissive use ripen
into title by prescription?
It is a fundamental principle of the law in this jurisdiction concerning the possession of real
property that such possession is not affected by acts of a possessory character which are
"merely tolerated" by the possessor, which are or due to his license (Civil Code, arts. 444 and
1942). This principle is applicable not only with respect to the prescription of the dominium as a
whole, but to the prescription of right in rem. In the case of Cortes vs. Palanca Yu-Tibo (2 Phil.
Rep., 24, 38), the Court said:
The provision of article 1942 of the Civil Code to the effect that acts which are merely tolerated
produce no effect with respect to possession is applicable as much to the prescription of real
rights as to the prescription of the fee, it being a glaring and self-evident error to affirm the

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contrary, as does the appellant in his motion papers. Possession is the fundamental basis of
prescription. Without it no kind of prescription is possible, not even the extraordinary.
Consequently, if acts of mere tolerance produce no effect with respect to possession, as that
article provides, in conformity with article 444 of the same Code, it is evident that they can
produce no effect with respect to prescription, whether ordinary or extraordinary. This is true
whether the prescriptive acquisition be of a fee or of real rights, for the same reason holds in one
and the other case; that is, that there has been no true possession in the legal sense of the
word. (Citations omitted)
Possession, under the Civil Code, to constitute the foundation of a prescriptive right, must be
possession under claim of title (en concepto de dueo), or to use the common law equivalent of
the term, it must be adverse. Acts of possessory character performed by one who holds by mere
tolerance of the owner are clearly not en concepto de dueo, and such possessory acts, no
matter how long so continued, do not start the running of the period of prescription. 16
Following the foregoing disquisition, the petitioners claim that it had acquired the easement of
right-of-way by prescription must perforce fail. As intimated above, possession is the
fundamental basis of prescription, whether ordinary or extraordinary. The petitioner never
acquired the requisite possession in this case. Its use of that portion of the subject property
where it erected the wooden poles and transmission lines was due merely to the tacit license
and tolerance of the respondents. As such, it cannot be made the basis of the acquisition of an
easement of right-of-way by prescription.
Neither can the petitioner invoke Section 3(i) of its Charter (Rep. Act No. 6395, as amended) to
put up the defense of prescription against the respondents. The said provision reads in part:
Sec. 3(i). The Corporation or its representatives may also enter upon private property in the
lawful performance or prosecution of its business or purposes, including the construction of
transmission lines thereon; Provided, that the owner of such private property shall be paid the
just compensation therefor in accordance with the provisions hereinafter provided; Provided,
further, that any action by any person claiming compensation and/or damages shall be filed
within five years after the right-of-way, transmission lines, substations, plants or other facilities
shall have been established: Provided, finally, that after the said period no suit shall be brought
to question the said right-of-way, transmission lines, substations, plants or other facilities nor the
amounts of compensation and/or damages involved;
Two requisites must be complied before the above provision of law may be invoked:
1. The petitioner entered upon the private property in the lawful performance or prosecution of its
businesses or purposes; and
2.The owner of the private property shall be paid the just compensation therefor.
As correctly asserted by the respondents, Section 3(i) of Rep. Act No. 6395, as amended,
presupposes that the petitioner had already taken the property through a negotiated sale or the
exercise of the power of eminent domain, and not where, as in this case, the petitioner was
merely temporarily allowed to erect wooden electrical posts and transmission lines on the
subject property. Significantly, the provision uses the term "just compensation," implying that the
power of eminent domain must first be exercised by the petitioner in accordance with Section 9,
Article III of the Constitution, which provides that "no private property shall be taken for public
use without just compensation."

This Courts ruling in Lopez vs. Auditor General17 is likewise in point:

The petitioner brought this case to this Court on the sole issue of prescription. He cites Alfonso
vs. Pasay City in which a lot owner was allowed to bring an action to recover compensation for
the value of his land, which the Government had taken for road purposes, despite the lapse of
thirty years (1924-1954). On the other hand, the respondents base their defense of prescription
on Jaen vs. Agregado which held an action for compensation for land taken in building a road
barred by prescription because it was brought after more than ten years (i.e., thirty three years,
from 1920 to 1953). They argue that the ruling in Alfonso cannot be applied to this case
because, unlike Alfonso who made repeated demands for compensation within ten years,
thereby interrupting the running of the period of prescription, the petitioner here filed his claim
only in 1959.
It is true that in Alfonso vs. Pasay City this Court made the statement that "registered lands are
not subject to prescription and that on grounds of equity, the government should pay for private
property which it appropriates though for the benefit of the public, regardless of the passing of
time." But the rationale in that case is that where private property is taken by the Government for
public use without first acquiring title thereto either through expropriation or negotiated sale, the
owners action to recover the land or the value thereof does not prescribe. This is the point that
has been overlooked by both parties.
On the other hand, where private property is acquired by the Government and all that remains is
the payment of the price, the owners action to collect the price must be brought within ten years
otherwise it would be barred by the statue of limitations.18
Thus, the five-year period provided under Section 3(i) of Rep. Act No. 6395, as amended, within
which all claims for compensation and/or damages may be allowed against the petitioner should
be reckoned from the time that it acquired title over the private property on which the right-ofway is sought to be established. Prior thereto, the claims for compensation and/or damages do
not prescribe. In this case, the findings of the CA is apropos:
Undeniably, NPC never acquired title over the property over which its wooden electrical posts
and transmission lines were erected. It never filed expropriation proceedings against such
property. Neither did it negotiate for the sale of the same. It was merely allowed to temporarily
enter into the premises. As NPCs entry was gained through permission, it had no intention to
acquire ownership either by voluntary purchase or by the exercise of eminent domain. 19
The petitioner instituted the expropriation proceedings only on December 12, 1995. Indisputably,
the petitioner never acquired title to that portion of the subject property where it erected the
wooden electrical posts and transmission lines. Until such time, the five-year prescriptive period
within which the respondents right to file an action to claim for compensation and/or damages
for the petitioners use of their property does not even commence to run. The CA thus correctly
ruled that Section 3(i) of Rep. Act No. 6395, as amended, finds no application in this case and
that the respondents action against the petitioner has not prescribed.
With respect to the damages awarded in favor of the respondents, the petitioner avers, thus:
The Court of Appeals erred in affirming the award of nominal and moral damages, attorneys
fees and costs of litigation.

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It follows from Section 31(c) of R.A. 6395 that the award moral and nominal damages, as well as
attorneys fees and costs are baseless. The right to claim them has likewise prescribed. 20
With our ruling that the claims of the respondents had not prescribed, the petitioners contention
that the respondents are not entitled to moral and nominal damages and attorneys fees must
fail. In affixing the award for moral and nominal damages and attorneys fees, the CA
ratiocinated:
With respect to the fourth assignment of error, this Court is not persuaded to reverse much less
modify the court a quos findings.
An award of moral damages would require certain conditions to be met, to wit: (1) first, there
must be an injury, whether physical, mental or psychological, clearly sustained by the claimant;
(2) second, there must be a culpable act or omission factually established; (3) third, the wrongful
act or omission of the defendant is the proximate cause of the injury sustained by the claimant;
and (4) fourth, the award of damages is predicated on any of the cases stated in Article 2219 of
the Civil Code.
NPC made it appear that it negotiated with the appellees when no actual negotiations took
place. This allegation seriously affected the on-going sale of the property to Solar Resources,
Inc. as appellees seemed to have sold the property knowing fully well that a portion thereof was
being expropriated. Such an act falls well within Article 21 of the Civil Code. NPCs subterfuge
certainly besmirched the reputation and professional standing of Justice Jose C. Campos, Jr.
and Professor Maria Clara A. Lopez-Campos, and caused them physical suffering, mental
anguish, moral shock and wounded feelings.
The records show that Justice Campos career included, among other[s], being a Professor of
Law at the University of the Philippines; Acting Chairman of the Board of Transportation;
Presiding Judge of the Court of First Instance of Pasay City, and Associate Justice of the Court
of Appeals. Such career reached its apex when he was appointed Associate Justice of the
Supreme Court in 1992. Justice Campos was a member of the Judicial and Bar Council when
NPC filed its Civil Case No. 1174-95. Professor Maria Clara A. Lopez-Campos is a noted
authority in Corporate and Banking Laws and is a Professor Emerita of the University of the
Philippines from 1981 to the present. She had taught more than three decades at the College of
Law. Against such backdrop, it does not take too much imagination to conclude that the
oppressive and wanton manner in which NPC sought to exercise its statutory right of eminent
domain warranted the grant of moral damages.
On the award of nominal damages, such are adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be vindicated or recognized, and not
for the purpose of indemnifying the plaintiff for any loss suffered by him. As previously
discussed, it does not brood well for a government entity such as NPC to disregard the tenets of
private property enshrined in the Constitution. NPC not only intentionally trespassed on
appellees property and conducted engineering surveys thereon but also sought to fool the
appellees caretaker by claiming that such entry was authorized. Moreover, NPC even justifies
such trespass as falling under its right to expropriate the property. Under the circumstances, the
award of nominal damages is sustained.
That NPCs highhanded exercise of its right of eminent domain constrained the appellees to
engage the services of counsel is obvious. As testified upon, the appellees engaged their
counsel for an agreed fee of P250,000.00. The trial court substantially reduced this to

P150,000.00. Inasmuch as such services included not only the present action but also those for
Civil Case No. 1174-95 erroneously filed by NPC with the Regional Trial Court of Imus, Cavite,
and the Petition for Certiorari in CA-GR No. 41782, this Court finds such attorneys fees to be
reasonable and equitable.21
We agree with the CA.
The award of moral damages in favor of the respondents is proper given the circumstances
obtaining in this case. As found by the CA:
NPC made it appear that it negotiated with the appellees when no actual negotiation took place.
This allegation seriously affected the on-going sale of the property to Solar Resources, Inc. as
appellees seemed to have sold the property knowing fully well that a portion thereof was being
expropriated. Such an act falls well within Article 21 of the Civil Code. NPCs subterfuge certainly
besmirched the reputation and professionally standing of Justice Jose C. Campos, Jr. and
Professor Maria Clara A. Lopez-Campos, and caused them physical suffering, mental anguish,
moral shock and wounded feelings.
The records show that Justice Campos career included, among other[s], being a Professor of
Law at the University of the Philippines; Acting Chairman of the Board of Transportation;
Presiding Judge of the Court of First Instance of Pasay City, and Associate Justice of the Court
of Appeals. Such career reached its apex when he was appointed Associate Justice of the
Supreme Court in 1992. Justice Campos was a member of the Judicial and Bar Council when
NPC filed its Civil Case No. 1174-95. Professor Maria Clara A. Lopez-Campos is a noted
authority in Corporate and Banking Laws and is a Professor Emerita of the University of the
Philippines from 1981 to the present. She had taught more than three decades at the College of
Law. Against such backdrop, it does not take too much imagination to conclude that the
oppressive and wanton manner in which NPC sought to exercise its statutory right of eminent
domain warranted the grant of moral damages.22
Further, nominal damages are adjudicated in order that a right of the plaintiff, which has been
violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose
of indemnifying the plaintiff for any loss suffered by him. 23 Similarly, the court may award nominal
damages in every case where any property right has been invaded. 24 The petitioner, in blatant
disregard of the respondents proprietary right, trespassed the subject property and conducted
engineering surveys thereon. It even attempted to deceive the respondents caretaker by
claiming that its agents were authorized by the respondents to enter the property when in fact,
the respondents never gave such authority. Under the circumstances, the award of nominal
damages is likewise warranted.
Finally, the award of attorneys fees as part of damages is deemed just and equitable
considering that by the petitioners unjustified acts, the respondents were obviously compelled to
litigate and incur expenses to protect their interests over the subject property.25
WHEREFORE, the petition is hereby DENIED for lack of merit. The assailed Decision dated
June 16, 2000 of the Court of Appeals in CA-G.R. CV No. 54265 is AFFIRMED in toto.
SO ORDERED.
Bellosillo,
and
Austria-Martinez, J., on official leave.

Quisumbing,

JJ., concur.

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