CONSTITUTIONAL LAW 2 |

LIST OF CASES:
7. NPC vs De la Cruz, G.R. No. 156093
POLICE POWER
8. Eslaban vs de Onorio, G.R. No. 146062, June 28, 2001
9. NPC vs Henson, G.R. No. 129998, December 29, 1998
1. Amelia Cabrera vs Manuel Lapid, GR No. 129098, December 6, 2006 10. City of Cebu vs Dedamo, G.R. No. 142971, May 2, 2002
2. Carlos Superdrug Corp. vs DSWD, GR No. 166494, June 29, 2007
3. City of Manila vs Hon. Perfecto Laguio, GR. No. 118127, August 12, 2005 11. Republic vs Vicente Lim, G.R. No. 61656, June 29, 2005
4.
5.
Pollution Adjudication Board vs Court of Appeals, G.R. No. 93981, March 11, 1991
Metropolitan Manila Development Authority vs Dante O. Garin, G.R. No. 130230, April 15 2009
12. Mactan Cebu International Airport Authority vs Court of
6. Ortigas & Co., Ltd. vs Court of Appeals, G.R. No. 126102, December 4, 2000 Appeals, G.R. No. 139495, Nov. 27, 2000
7. Philippine Press Institute vs COMELEC, G.R. No. 119694, May 22, 1995
8. PRC vs Arlene de Guzman, G.R. No. 144681, June 21, 2004 13. City of Mandaluyong vs Francisco, G.R. No. 137152
9. JMM Promotion & Management, Inc. vs Court of Appeals, G.R. No. 120095, August 5, 1996 14. Mactan Cebu International Airport Authority vs Bernardo
Lozada, G.R. No. 176625, Feb. 25, 2010
15. Reyes vs NHA, G.R. No. 147511, January 20, 2003
IMMINENT DOMAIN 16. Republic vs Salem Investment, G.R. No. 137569, June 23,
2000
1. PLDT vs NTC, 190 SCRA 717
2. NPC vs Pobre, G.R. No. 106804, August 12, 2004
17. Spouses Campos vs NPC, G.R. No. 143643, June 27,
3. Lagcao vs Labra, G.R. No. 155746, October 13, 2004 2003
4. Republic vs Castellvi, 58 SCRA 336
5. Emiliano de los Santos vs Intermediate Appellate Court, G.R. No. 71998-99
6. Moday vs Court of Appeals, G.R. No. 107916.

[G.R. No. 129098. December 6, 2006.] Lapid, Fernando Baltazar, Reynaldo F. Cabrera and Superintendent
Diony Ventura, respectively, in their capacities as Governor of
AMELIA CABRERA, petitioner, vs. MANUEL LAPID, Pampanga, Mayor of Sasmuan, Pampanga, Vice-Mayor of Sasmuan,
FERNANDO BALTAZAR, REYNALDO F. CABRERA and Pampanga and Superintendent of the Philippine National Police
DIONY VENTURA, respondents. (PNP)-Region 3, Pampanga. In her three(3)-page affidavit, petitioner
accused respondents of violating Section 3(e) of the Anti-Graft and
DECISION Corrupt Practices Act and Article 324 of the Revised Penal Code.

TINGA, J p: In her Complaint-Affidavit, petitioner stated that she entered into a

The instant petition for review on certiorari seeks the reversal of the
Resolution 1 dated 13 May 1996 and the Order 2 dated 21 March
1997, both issued by the Office of the Ombudsman. The Resolution
dismissed the complaint-affidavit filed by petitioner against
respondents and the Order denied her motion for reconsideration.
The instant petition originated from a Complaint-Affidavit 3 filed in
November 1995 by petitioner Amelia M. Cabrera with the Office of
the Ombudsman ("Ombudsman"). Named respondents were Manuel
lease agreement with the Municipality of Sasmuan over a tract of land
for the purpose of devoting it to fishpond operations. According to
petitioner, she had spent approximately P5,000,000.00 for its
construction before the fishpond operations commenced in August
1995. A month later, petitioner learned from newspaper reports of the
impending demolition of her fishpond as it was purportedly illegal and
blocked the flow of the Pasak River. Thus, petitioner sent the fishpond
administrator to dissuade respondents from destroying her property. 4
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CONSTITUTIONAL LAW 2 |
Despite pleas from petitioner, respondents ordered the destruction of
petitioner's fishpond. The property was demolished on 10 October
1995 by dynamite blasting. Petitioner alleged that the demolition was
purposely carried out in the presence of media representatives and
other government officials to gain media mileage. Petitioner imputed
evident bad faith on respondents Mayor Baltazar and Vice-Mayor
Cabrera in allowing the destruction of the fishpond despite their prior
knowledge of the existence of the lease agreement. She also charged
respondents Governor Lapid and Senior Superintendent Ventura with
gross inexcusable negligence for ordering the destruction of the
fishpond without first verifying its legality. 5
At the preliminary investigation, respondents, except Senior
Superintendent Ventura, submitted counter-affidavits, denying the
accusations against them. In the counter-affidavit jointly filed by
Mayor Baltazar and Vice-Mayor Cabrera, they insisted that contrary
to petitioner's claim, the fishpond was an illegal structure because it
was erected on the seashore, at the mouth of the Pasak River, and sat
on an inalienable land. They claimed that the demolition was done by
the Task Force Bilis Daloy upon the directive of then President Fidel
V. Ramos. 6
declaration that the fishpond was a nuisance per se and, thus, may be
abated by respondents in the exercise of the police power of the
State. 9
Petitioner sought reconsideration of the Resolution, arguing that under
Sec. 149 of Republic Act (R.A.) No. 7160, otherwise known as
the Local Government Code of 1991, the exclusive authority to grant
fishery privileges is vested in the municipalities. Petitioner also
questioned the certification by the Municipal Health Officer, alleging
that the same was issued before the ocular inspection of the property
which took place only on the day of the demolition. Petitioner also
contended that a judicial proceeding was necessary to determine
whether the property indeed had caused the flooding. 10 Respondents
filed separate oppositions to petitioner's motion for
reconsideration. 11 Petitioner filed a reply to the opposition 12 and
respondent Governor Lapid filed a rejoinder to the reply. 13

In his Counter-Affidavit, 7 Governor Lapid averred that the contract

of lease between petitioner and the Municipality of Sasmuan,
represented by then Mayor Abelardo Panlaqui, was executed two
weeks before respondent Mayor Baltazar took his oath of office in
1995. Governor Lapid also argued that under the law, the Department
of Agriculture (DA) is the government agency authorized to enter into
licensing agreements for fishpond operations, and as per certification
by the DA Regional Director, petitioner's fishpond operation was not
covered by a fishpond lease agreement or application. Governor Lapid
also referred to the certification by the Municipal Health Officer of
Sasmuan issued before the actual demolition of the fishpond,
describing it as a nuisance per se and recommending its abatement. 8

On 13 May 1996, the Ombudsman issued the assailed Resolution,

dismissing petitioner's complaint. The dismissal was based on the
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CONSTITUTIONAL LAW 2 |
In the Order dated 21 March 1997, the Ombudsman affirmed its 13 LEASE CONTRACT BETWEEN THE MUNICIPALITY
May 1996 Resolution. It ruled that the repealing clause of R.A. No. OF SASMUAN AND PETITIONER IS NULL AND VOID.
7160 expressly repealed only Sec. 2, 6 and 29 of Presidential Decree
(P.D.) No. 704 so that in harmonizing the remaining provisions of P.D. II.
No. 704 and the provisions of R.A. No. 7160 applicable to the grant of
fishery privileges, the Bureau of Fisheries and Aquatic Resources THE OFFICE OF THE OMBUDSMAN ERRED IN
(BFAR) is the government agency authorized to grant fishpond license RULING THAT THE DEMOLITION OF THE FISHPOND
or permit in areas not identified as municipal waters or not declared as WAS VALIDLY MADE BY VIRTUE OF THE
alienable or disposable by the Department of Environment and DECLARATION BY THE HEALTH OFFICER THAT IT
Natural Resources (DENR). Since it appears from DENR records that WAS A NUISANCE PER SE.
the subject property has not been declared disposable or included in
areas devoted for fishpond development, the Ombudsman concluded III.
that the lease agreement entered into by petitioner was void ab initio.
In view of the illegality of the lease agreement, the Ombudsman ruled THE OFFICE OF THE OMBUDSMAN ERRED IN
that its demolition was justified. The Ombudsman described the RULING THAT THE DEMOLITION IS PART OF THE
demolition as a valid exercise of police power and in accordance with PROPER EXERCISE OF THE POLICE POWER OF THE
the provision of Sec. 28 of P.D. No. 704 directing the removal of any STATE.
fishpen or fishpond that obstructed the free navigation of a stream or
lake. It also upheld the authority of the district health officer to IV.
determine the abatement of a nuisance without need of judicial
proceedings. 14 THE OFFICE OF THE OMBUDSMAN ERRED IN
RULING THAT PETITIONER WAS GIVEN DUE
Petitioner elevated the matter to this Court via a petition for review NOTICE AND HEARING BEFORE THE FISHPOND
on certiorari under Rule 45 of the Rules of Court to assail the 13 May WAS BLASTED.
1996 Resolution and 21 March 1997 Order of the Ombudsman.
Petitioner subsequently filed an amended petition for review V.
on certiorari to implead the Ombudsman as respondent, although in a
petition for review on certiorari, the tribunal whose issuance is THE OFFICE OF THE OMBUDSMAN ERRED IN
assailed need not be impleaded as respondent. RULING THAT PROBABLE CAUSE DOES NOT EXIST
TO INDICT RESPONDENTS FOR VIOLATION OF THE
The petition imputes the following errors on the Ombudsman: SUBJECT OFFENSES. 15

I. Clearly, this is an appeal from the questioned issuances of the

Ombudsman. However, such direct resort to this Court from a
THE OFFICE OF THE OMBUDSMAN ERRED AND resolution or order of the Ombudsman is not sanctioned by any rule of
EXCEEDED ITS AUTHORITY IN RULING THAT THE procedure.

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CONSTITUTIONAL LAW 2 |
Neither can petitioner avail of Sec. 27 16 of R.A. No. 6770, otherwise
known as The Ombudsman Act of 1989. The provision allowed direct
appeals in administrative disciplinary cases from the Office of the
Ombudsman to the Supreme Court. The right to appeal is granted only
in respect to orders or decisions of the Ombudsman in administrative
cases. 17 The provision does not cover resolutions of the Ombudsman
in criminal cases. More importantly, Sec. 27 of R.A. No. 6770 insofar
as it allowed a direct appeal to this Court was declared
unconstitutional in Fabian v. Hon. Desierto. 18
However, an aggrieved party in criminal actions is not without any
recourse. Where grave abuse of discretion amounting to lack or excess
of jurisdiction taints the findings of the Ombudsman on the existence
of probable cause, the aggrieved party may file a petition
for certiorari under Rule 65. 19 The remedy from resolutions of the
Ombudsman in preliminary investigations of criminal cases is a
petition for certiorari under Rule 65, not a petition for review
on certiorari under Rule 45. 20
But in this case, petitioner has taken the position that the Ombudsman
has decided questions of substance contrary to law and the applicable
decisions of the Supreme Court. That is a ground under a Rule 45
petition. Indeed, from a reading of the assignment of errors, it is clear
that petitioner does not impute grave abuse of discretion to the
Ombudsman in issuing the assailed Resolution and Order. Rather, she
merely questions his findings and conclusions. As stated earlier, direct
appeal to the Supreme Court via a petition for review on certiorari is
not sanctioned by any rule of procedure. By availing of a wrong
remedy, the petition should be dismissed outright.
Even if the Court treats the instant appeal as a petition
for certiorari under Rule 65, its dismissal is nevertheless warranted
because petitioner failed to present, much more substantiate, any
grave abuse of discretion on the part of the Ombudsman.
A careful reading of the questioned Resolution reveals that the
Ombudsman dismissed petitioner's criminal complaint because
respondents had validly resorted to the police power of the State when
they effected the demolition of the illegal fishpond in question
following the declaration thereof as a nuisance per se. Thus, the
Ombudsman was of the opinion that no violation of Section 3(e) 21 of
the Anti-Graft and Corrupt Practices Act or of Article 324 22 of the
Revised Penal Code was committed by respondents. In the words of
the Ombudsman, "those who participated in the blasting of the subject
fishpond were only impelled by their desire to serve the best interest
of the general public; for the good and the highest good." 23
By grave abuse of discretion is meant capricious and whimsical
exercise of judgment as is equivalent to lack of jurisdiction. Mere
abuse of discretion is not enough. It must be grave abuse of discretion
as when the power is exercised in an arbitrary or despotic manner by
reason of passion or personal hostility, and must be so patent and so
gross as to amount to an evasion of a positive duty or to a virtual
refusal to perform the duty enjoined or to act at all in contemplation of
law. 24
Grave abuse of discretion should be differentiated from an error in
judgment. An error of judgment is one which the court may commit in
the exercise of its jurisdiction, and which error is reversible only by an
appeal. As long as the court acts within its jurisdiction, any alleged
errors committed in the exercise of its discretion will amount to
nothing more than mere errors of judgment, correctible by an appeal
or a petition for review under Rule 45 of the Rules of Court. An error
of jurisdiction is one where the act complained of was issued by the
court without or in excess of jurisdiction and which error is correctible
only by the extraordinary writ of certiorari. 25
The other errors raised by petitioner pertain to the Ombudsman's
opinion on the lack of probable cause to indict respondents. These are
purported errors in judgment which can be corrected by an appeal,
although not via a direct appeal to this Court. Direct resort to this
Court may be had only through the extraordinary writ
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CONSTITUTIONAL LAW 2 |
of certiorari and upon showing that the Ombudsman committed grave and style "City Pharmacy", MELVIN S. DELA SERNA,
abuse of discretion, which petitioner failed to demonstrate. doing business under the name and style "Botica dela
Serna", and LEYTE SERV-WELL CORP., doing business
Absent any grave abuse of discretion tainting it, the courts will not under the name and style "Leyte Serv-Well
interfere with the Ombudsman's supervision and control over the Drugstore", petitioners, vs. DEPARTMENT OF SOCIAL
preliminary investigation conducted by him. 26 It is beyond the ambit WELFARE and DEVELOPMENT (DSWD),
of this Court to review the exercise of discretion of the Ombudsman in DEPARTMENT OF HEALTH (DOH), DEPARTMENT OF
prosecuting or dismissing a complaint filed before it. 27 The rule is FINANCE (DOF), DEPARTMENT OF JUSTICE (DOJ), and
based not only upon respect for the investigatory and prosecutory DEPARTMENT OF INTERIOR and LOCAL
powers granted by the Constitution to the Office of the Ombudsman GOVERNMENT (DILG), respondents.
but upon practicality as well. Otherwise, the functions of the courts
will be grievously hampered by innumerable petitions assailing the DECISION
dismissal of investigatory proceedings conducted by the Office of the
Ombudsman with regard to complaints filed before it, in much the AZCUNA, J p:
same way that the courts would be extremely swamped if they would
be compelled to review the exercise of discretion on the part of the This is a petition 1 for Prohibition with Prayer for Preliminary
fiscals or prosecuting attorneys each time they decide to file an Injunction assailing the constitutionality of Section 4 (a) of Republic
information in court or dismiss a complaint by a private Act (R.A.) No. 9257, 2 otherwise known as the "Expanded Senior
complainant. 28 Citizens Act of 2003".

WHEREFORE, the instant petition for review on certiorari is Petitioners are domestic corporations and proprietors operating
DENIED. No costs. drugstores in the Philippines.

SO ORDERED. Public respondents, on the other hand, include the Department of

||| (Cabrera v. Lapid, G.R. No. 129098, [December 6, 2006], 539
PHIL 114-125)
[G.R. No. 166494. June 29, 2007.]
CARLOS SUPERDRUG CORP., doing business under the
name and style "Carlos Superdrug", ELSIE M. CANO,
doing business under the name and style "Advance Drug",
Dr. SIMPLICIO L. YAP, JR., doing business under the name
Social Welfare and Development (DSWD), the Department of Health
(DOH), the Department of Finance (DOF), the Department of Justice
(DOJ), and the Department of Interior and Local Government (DILG)
which have been specifically tasked to monitor the drugstores'
compliance with the law; promulgate the implementing rules and
regulations for the effective implementation of the law; and prosecute
and revoke the licenses of erring drugstore establishments.
The antecedents are as follows:
On February 26, 2004, R.A. No. 9257, amending R.A. No.
7432, 3 was signed into law by President Gloria Macapagal-Arroyo
5
CONSTITUTIONAL LAW 2 |
and it became effective on March 21, 2004. Section 4 (a) of the Act
states:
SEC. 4. Privileges for the Senior Citizens. — The senior
citizens shall be entitled to the following:
(a) the grant of twenty percent (20%) discount from all
establishments relative to the utilization of services in hotels
and similar lodging establishments, restaurants and recreation
centers, and purchase of medicines in all establishments for the
exclusive use or enjoyment of senior citizens, including
funeral and burial services for the death of senior citizens;
xxx xxx xxx
The establishment may claim the discounts granted under (a),
(f), (g) and (h) as tax deduction based on the net cost of the
goods sold or services rendered: Provided, That the cost of the
discount shall be allowed as deduction from gross income for
the same taxable year that the discount is granted. Provided,
further, That the total amount of the claimed tax deduction net
of value added tax if applicable, shall be included in their
gross sales receipts for tax purposes and shall be subject to
proper documentation and to the provisions of the National
Internal Revenue Code, as amended. 4
On May 28, 2004, the DSWD approved and adopted the
Implementing Rules and Regulations of R.A. No. 9257, Rule VI,
Article 8 of which states:
Article 8. Tax Deduction of Establishments. — The
establishment may claim the discounts granted under Rule V,
Section 4 — Discounts for Establishments; 5 Section 9,
Medical and Dental Services in Private Facilities[,] 6 and
Sections 10 7 and 11 8 — Air, Sea and Land Transportation as
tax deduction based on the net cost of the goods sold or
services rendered. Provided, That the cost of the discount shall
be allowed as deduction from gross income for the same
taxable year that the discount is granted; Provided, further,
That the total amount of the claimed tax deduction net of value
added tax if applicable, shall be included in their gross sales
receipts for tax purposes and shall be subject to proper
documentation and to the provisions of the National Internal
Revenue Code, as amended; Provided, finally, that the
implementation of the tax deduction shall be subject to the
Revenue Regulations to be issued by the Bureau of Internal
Revenue (BIR) and approved by the Department of Finance
(DOF). 9 DSITEH
On July 10, 2004, in reference to the query of the Drug Stores
Association of the Philippines (DSAP) concerning the meaning of
a tax deduction under the Expanded Senior Citizens Act, the DOF,
through Director IV Ma. Lourdes B. Recente, clarified as follows:
1) The difference between the Tax Credit (under the Old
Senior Citizens Act) and Tax Deduction (under the Expanded
Senior Citizens Act).
1.1. The provision of Section 4 of R.A. No. 7432 (the
old Senior Citizens Act) grants twenty percent (20%)
discount from all establishments relative to the
utilization of transportation services, hotels and similar
lodging establishment, restaurants and recreation
centers and purchase of medicines anywhere in the
country, the costs of which may be claimed by the
private establishments concerned as tax credit.
Effectively, a tax credit is a peso-for-peso deduction
from a taxpayer's tax liability due to the government of
the amount of discounts such establishment has granted
to a senior citizen. The establishment recovers the full
amount of discount given to a senior citizen and hence,
the government shoulders 100% of the discounts
granted.
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CONSTITUTIONAL LAW 2 |
It must be noted, however, that conceptually, a tax
credit scheme under the Philippine tax system,
necessitates that prior payments of taxes have been
made and the taxpayer is attempting to recover this tax
payment from his/her income tax due. The tax credit
scheme under R.A. No. 7432 is, therefore, inapplicable
since no tax payments have previously occurred.
1.2. The provision under R.A. No. 9257, on the other
hand, provides that the establishment concerned may
claim the discounts under Section 4 (a), (f), (g) and (h)
as tax deduction from gross income, based on the net
cost of goods sold or services rendered.
Under this scheme, the establishment concerned is
allowed to deduct from gross income, in computing for
its tax liability, the amount of discounts granted to
senior citizens. Effectively, the government loses in
terms of foregone revenues an amount equivalent to the
marginal tax rate the said establishment is liable to pay
the government. This will be an amount equivalent to
32% of the twenty percent (20%) discounts so granted.
The establishment shoulders the remaining portion of
the granted discounts.
It may be necessary to note that while the burden on
[the] government is slightly diminished in terms of its
percentage share on the discounts granted to senior
citizens, the number of potential establishments that
may claim tax deductions, have however, been
broadened. Aside from the establishments that may
claim tax credits under the old law, more
establishments were added under the new law such as:
establishments providing medical and dental services,
diagnostic and laboratory services, including
professional fees of attending doctors in all private
hospitals and medical facilities, operators of domestic
air and sea transport services, public railways and
skyways and bus transport services.
A simple illustration might help amplify the points
discussed above, as follows:
Tax Deduction Tax Credit
Gross Sales x x x x x x x x x x x x
Less: Cost of goods sold x x x x x x x x x x
————— —————
Net Sales x x x x x x x x x x x x
Less: Operating Expenses:
Tax Deduction on Discounts x x x x --
Other deductions: x x x x x x x x
———— ————
Net Taxable Income x x x x x x x x x x
Tax Due x x x x x x
Less: Tax Credit -- x x
————
Net Tax Due -- x x
As shown above, under a tax deduction scheme,
the tax deduction on discounts was subtracted from
Net Sales together with other deductions which are
considered as operating expenses before the Tax Due
was computed based on the Net Taxable Income. On
the other hand, under a tax credit scheme, the amount
of discounts which is the tax credit item, was deducted
directly from the tax due amount. 10
Meanwhile, on October 1, 2004, Administrative Order (A.O.) No. 171
or the Policies and Guidelines to Implement the Relevant Provisions
of Republic Act 9257, otherwise known as the "Expanded Senior
Citizens Act of 2003" 11was issued by the DOH, providing the grant
of twenty percent (20%) discount in the purchase of unbranded
generic medicines from all establishments dispensing medicines for
the exclusive use of the senior citizens.
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CONSTITUTIONAL LAW 2 |
On November 12, 2004, the DOH issued Administrative Order No.
177 12 amending A.O. No. 171. Under A.O. No. 177, the twenty
percent discount shall not be limited to the purchase of unbranded
generic medicines only, but shall extend to both prescription and non-
prescription medicines whether branded or generic. Thus, it stated that
"[t]he grant of twenty percent (20%) discount shall be provided in the
purchase of medicines from all establishments dispensing medicines
for the exclusive use of the senior citizens".
Petitioners assail the constitutionality of Section 4 (a) of the Expanded
Senior Citizens Act based on the following grounds: 13
1) The law is confiscatory because it infringes Art. III, Sec. 9
of the Constitution which provides that private property
shall not be taken for public use without just compensation;
2) It violates the equal protection clause (Art. III, Sec. 1)
enshrined in our Constitution which states that "no person
shall be deprived of life, liberty or property without due
process of law, nor shall any person be denied of the equal
protection of the laws;" and
3) The 20% discount on medicines violates the constitutional
guarantee in Article XIII, Section 11 that makes "essential
goods, health and other social services available to all
people at affordable cost." 14
Petitioners assert that Section 4 (a) of the law is unconstitutional
because it constitutes deprivation of private property. Compelling
drugstore owners and establishments to grant the discount will result
in a loss of profit and capital because 1) drugstores impose a mark-up
of only 5% to 10% on branded medicines; and 2) the law failed to
provide a scheme whereby drugstores will be justly compensated for
the discount.
Examining petitioners' arguments, it is apparent that what petitioners
are ultimately questioning is the validity of the tax deduction scheme
as a reimbursement mechanism for the twenty percent (20%) discount
that they extend to senior citizens.
Based on the afore-stated DOF Opinion, the tax deduction scheme
does not fully reimburse petitioners for the discount privilege
accorded to senior citizens. This is because the discount is treated as a
deduction, a tax-deductible expense that is subtracted from the gross
income and results in a lower taxable income. Stated otherwise, it is
an amount that is allowed by law 15 to reduce the income prior to the
application of the tax rate to compute the amount of tax which is
due. 16 Being a tax deduction, the discount does not reduce taxes
owed on a peso for peso basis but merely offers a fractional reduction
in taxes owed.
Theoretically, the treatment of the discount as a deduction reduces the
net income of the private establishments concerned. The discounts
given would have entered the coffers and formed part of the gross
sales of the private establishments, were it not for R.A. No. 9257.
The permanent reduction in their total revenues is a forced subsidy
corresponding to the taking of private property for public use or
benefit. 17 This constitutes compensable taking for which petitioners
would ordinarily become entitled to a just compensation.
Just compensation is defined as the full and fair equivalent of the
property taken from its owner by the expropriator. The measure is not
the taker's gain but the owner's loss. The word just is used to intensify
the meaning of the word compensation, and to convey the idea that
the equivalent to be rendered for the property to be taken shall be real,
substantial, full and ample. 18
A tax deduction does not offer full reimbursement of the senior citizen
discount. As such, it would not meet the definition of just
compensation. 19
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CONSTITUTIONAL LAW 2 |
Having said that, this raises the question of whether the State, in
promoting the health and welfare of a special group of citizens, can
impose upon private establishments the burden of partly subsidizing a
government program.
The Court believes so.
The Senior Citizens Act was enacted primarily to maximize the
contribution of senior citizens to nation-building, and to grant benefits
and privileges to them for their improvement and well-being as the
State considers them an integral part of our society. 20
The priority given to senior citizens finds its basis in the Constitution
as set forth in the law itself. Thus, the Act provides:
SEC. 2. Republic Act No. 7432 is hereby amended to read as
follows:
SECTION 1. Declaration of Policies and Objectives. —
Pursuant to Article XV, Section 4 of the Constitution, it is the
duty of the family to take care of its elderly members while the
State may design programs of social security for them. In
addition to this, Section 10 in the Declaration of Principles and
State Policies provides: "The State shall provide social justice
in all phases of national development." Further, Article XIII,
Section 11, provides: "The State shall adopt an integrated and
comprehensive approach to health development which shall
endeavor to make essential goods, health and other social
services available to all the people at affordable cost. There
shall be priority for the needs of the underprivileged sick,
elderly, disabled, women and children." Consonant with these
constitutional principles the following are the declared policies
of this Act:
xxx xxx xxx
(f) To recognize the important role of the private sector in
the improvement of the welfare of senior citizens and to
actively seek their partnership. 21 DAEIHT
To implement the above policy, the law grants a twenty percent
discount to senior citizens for medical and dental services, and
diagnostic and laboratory fees; admission fees charged by theaters,
concert halls, circuses, carnivals, and other similar places of culture,
leisure and amusement; fares for domestic land, air and sea travel;
utilization of services in hotels and similar lodging establishments,
restaurants and recreation centers; and purchases of medicines for the
exclusive use or enjoyment of senior citizens. As a form of
reimbursement, the law provides that business establishments
extending the twenty percent discount to senior citizens may claim the
discount as a tax deduction.
The law is a legitimate exercise of police power which, similar to the
power of eminent domain, has general welfare for its object. Police
power is not capable of an exact definition, but has been purposely
veiled in general terms to underscore its comprehensiveness to meet
all exigencies and provide enough room for an efficient and flexible
response to conditions and circumstances, thus assuring the greatest
benefits. 22 Accordingly, it has been described as "the most essential,
insistent and the least limitable of powers, extending as it does to all
the great public needs." 23 It is "[t]he power vested in the legislature
by the constitution to make, ordain, and establish all manner of
wholesome and reasonable laws, statutes, and ordinances, either with
penalties or without, not repugnant to the constitution, as they shall
judge to be for the good and welfare of the commonwealth, and of the
subjects of the same." 24
For this reason, when the conditions so demand as determined by the
legislature, property rights must bow to the primacy of police power
because property rights, though sheltered by due process, must yield
to general welfare. 25
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CONSTITUTIONAL LAW 2 |
Police power as an attribute to promote the common good would be
diluted considerably if on the mere plea of petitioners that they will
suffer loss of earnings and capital, the questioned provision is
invalidated. Moreover, in the absence of evidence demonstrating the
alleged confiscatory effect of the provision in question, there is no
basis for its nullification in view of the presumption of validity which
every law has in its favor. 26
Given these, it is incorrect for petitioners to insist that the grant of the
senior citizen discount is unduly oppressive to their business, because
petitioners have not taken time to calculate correctly and come up
with a financial report, so that they have not been able to show
properly whether or not the tax deduction scheme really works greatly
to their disadvantage. 27
In treating the discount as a tax deduction, petitioners insist that they
will incur losses because, referring to the DOF Opinion, for every
P1.00 senior citizen discount that petitioners would give, P0.68 will
be shouldered by them as only P0.32 will be refunded by the
government by way of a tax deduction.
To illustrate this point, petitioner Carlos Super Drug cited the anti-
hypertensive maintenance drug Norvasc as an example. According to
the latter, it acquires Norvasc from the distributors at P37.57 per
tablet, and retails it at P39.60 (or at a margin of 5%). If it grants a 20%
discount to senior citizens or an amount equivalent to P7.92, then it
would have to sell Norvasc at P31.68 which translates to a loss from
capital of P5.89 per tablet. Even if the government will allow a tax
deduction, only P2.53 per tablet will be refunded and not the full
amount of the discount which is P7.92. In short, only 32% of the 20%
discount will be reimbursed to the drugstores. 28
Petitioners' computation is flawed. For purposes of reimbursement,
the law states that the cost of the discount shall be deducted from
gross income, 29 the amount of income derived from all sources
before deducting allowable expenses, which will result in net income.
Here, petitioners tried to show a loss on a per transaction basis, which
should not be the case. An income statement, showing an accounting
of petitioners' sales, expenses, and net profit (or loss) for a given
period could have accurately reflected the effect of the discount on
their income. Absent any financial statement, petitioners cannot
substantiate their claim that they will be operating at a loss should
they give the discount. In addition, the computation was erroneously
based on the assumption that their customers consisted wholly of
senior citizens. Lastly, the 32% tax rate is to be imposed on income,
not on the amount of the discount.
Furthermore, it is unfair for petitioners to criticize the law because
they cannot raise the prices of their medicines given the cutthroat
nature of the players in the industry. It is a business decision on the
part of petitioners to peg the mark-up at 5%. Selling the medicines
below acquisition cost, as alleged by petitioners, is merely a result of
this decision. Inasmuch as pricing is a property right, petitioners
cannot reproach the law for being oppressive, simply because they
cannot afford to raise their prices for fear of losing their customers to
competition.
The Court is not oblivious of the retail side of the pharmaceutical
industry and the competitive pricing component of the business.
While the Constitution protects property rights, petitioners must
accept the realities of business and the State, in the exercise of police
power, can intervene in the operations of a business which may result
in an impairment of property rights in the process.
Moreover, the right to property has a social dimension. While Article
XIII of the Constitution provides the precept for the protection of
property, various laws and jurisprudence, particularly on agrarian
reform and the regulation of contracts and public utilities,
continuously serve as a reminder that the right to property can be
relinquished upon the command of the State for the promotion of
public good. 30
Undeniably, the success of the senior citizens program rests largely on
the support imparted by petitioners and the other private
10
CONSTITUTIONAL LAW 2 |
establishments concerned. This being the case, the means employed in
invoking the active participation of the private sector, in order to
achieve the purpose or objective of the law, is reasonably and directly
related. Without sufficient proof that Section 4 (a) of R.A. No. 9257 is
arbitrary, and that the continued implementation of the same would be
unconscionably detrimental to petitioners, the Court will refrain from
quashing a legislative act. 31
WHEREFORE, the petition is DISMISSED for lack of merit.
||| (Carlos Superdrug Corp. v. DSWD, G.R. No. 166494, [June 29,
2007], 553 PHIL 120-135)
[G.R. No. 118127. April 12, 2005.]
CITY OF MANILA, HON. ALFREDO S. LIM as the Mayor
of the City of Manila HON. JOSELITO L. ATIENZA, in his
capacity as Vice-Mayor of the City of Manila and Presiding
Officer of the City Council of Manila, HON. ERNESTO A.
NIEVA, HON. GONZALO P. GONZALES, HON. AVELINO
S. CAILIAN, HON. ROBERTO C. OCAMPO, HON.
ALBERTO DOMINGO, HON. HONORIO U. LOPEZ,
HON. FRANCISCO G. VARONA, JR., HON. ROMUALDO
S. MARANAN, HON. NESTOR C. PONCE, JR., HON.
HUMBERTO B. BASCO, HON. FLAVIANO F.
CONCEPCION, JR., HON. ROMEO G. RIVERA, HON.
MANUEL M. ZARCAL, HON. PEDRO S. DE JESUS, HON.
BERNARDITO C. ANG, HON. MANUEL L. QUIN, HON.
JHOSEP Y. LOPEZ, HON. CHIKA G. GO, HON.
VICTORIANO A. MELENDEZ, HON. ERNESTO V.P.
MACEDA, JR., HON. ROLANDO P. NIETO, HON.
DANILO V. ROLEDA, HON. GERINO A. TOLENTINO,
JR., HON. MA. PAZ E. HERRERA, HON. JOEY D. HIZON,
HON. FELIXBERTO D. ESPIRITU, HON. KARLO Q.
BUTIONG, HON. ROGELIO P. DELA PAZ, HON.
BERNARDO D. RAGAZA, HON. MA. CORAZON R.
CABALLES, HON. CASIMIRO C. SISON, HON.
BIENVENIDO M. ABANTE, JR., HON. MA. LOURDES M.
ISIP, HON. ALEXANDER S. RICAFORT, HON. ERNESTO
F. RIVERA, HON. LEONARDO L. ANGAT, and HON.
JOCELYN B. DAWIS, in their capacity as councilors of the
City of Manila, petitioners, vs. HON. PERFECTO A.S.
LAGUIO, JR., as Presiding Judge, RTC, Manila and
MALATE TOURIST DEVELOPMENT
CORPORATION, respondents.
DECISION
TINGA, J p:
I know only that what is moral is what you feel good after and
what is immoral is what you feel bad after.
Ernest Hemingway Death in the Afternoon, Ch. 1
It is a moral and political axiom that any dishonorable act, if
performed by oneself, is less immoral than if performed by
someone else, who would be well-intentioned in his dishonesty.
J. Christopher Gerald Bonaparte in Egypt, Ch. I
The Court's commitment to the protection of morals is secondary to its
fealty to the fundamental law of the land. It is foremost a guardian of
the Constitution but not the conscience of individuals. And if it need
be, the Court will not hesitate to "make the hammer fall, and heavily"
in the words of Justice Laurel, and uphold the constitutional
guarantees when faced with laws that, though not lacking in zeal to
promote morality, nevertheless fail to pass the test of constitutionality.
11
CONSTITUTIONAL LAW 2 |
The pivotal issue in this Petition 1 under Rule 45 (then Rule 42) of the
Revised Rules on Civil Procedure seeking the reversal of
the Decision 2 in Civil Case No. 93-66511 of the Regional Trial Court
(RTC) of Manila, Branch 18 (lower court), 3 is the validity of
Ordinance No. 7783 (the Ordinance) of the City of Manila. 4
The antecedents are as follows:
Private respondent Malate Tourist Development Corporation (MTDC)
is a corporation engaged in the business of operating hotels, motels,
hostels and lodging houses. 5 It built and opened Victoria Court in
Malate which was licensed as a motel although duly accredited with
the Department of Tourism as a hotel. 6 On 28 June 1993, MTDC
filed a Petition for Declaratory Relief with Prayer for a Writ of
Preliminary Injunction and/or Temporary Restraining Order 7 (RTC
Petition) with the lower court impleading as defendants, herein
petitioners City of Manila, Hon. Alfredo S. Lim (Lim), Hon. Joselito
L. Atienza, and the members of the City Council of Manila (City
Council). MTDC prayed that the Ordinance, insofar as it includes
motels and inns as among its prohibited establishments, be declared
invalid and unconstitutional. 8
Enacted by the City Council 9 on 9 March 1993 and approved by
petitioner City Mayor on 30 March 1993, the said Ordinance is
entitled —
AN ORDINANCE PROHIBITING THE ESTABLISHMENT
OR OPERATION OF BUSINESSES PROVIDING CERTAIN
FORMS OF AMUSEMENT, ENTERTAINMENT, SERVICES
AND FACILITIES IN THE ERMITA-MALATE AREA,
PRESCRIBING PENALTIES FOR VIOLATION THEREOF,
AND FOR OTHER PURPOSES. 10
The Ordinance is reproduced in full, hereunder:
SECTION 1.Any provision of existing laws and ordinances to
the contrary notwithstanding, no person, partnership,
corporation or entity shall, in the Ermita-Malate area bounded
by Teodoro M. Kalaw Sr. Street in the North, Taft Avenue in the
East, Vito Cruz Street in the South and Roxas Boulevard in the
West, pursuant to P.D. 499 be allowed or authorized to contract
and engage in, any business providing certain forms of
amusement, entertainment, services and facilities where women
are used as tools in entertainment and which tend to disturb the
community, annoy the inhabitants, and adversely affect the social
and moral welfare of the community, such as but not limited to:
1.Sauna Parlors
2.Massage Parlors
3.Karaoke Bars
4.Beerhouses
5.Night Clubs
6.Day Clubs
7.Super Clubs
8.Discotheques
9.Cabarets
10.Dance Halls
11.Motels
12.Inns
SEC. 2.The City Mayor, the City Treasurer or any person acting
in behalf of the said officials are prohibited from issuing permits,
temporary or otherwise, or from granting licenses and accepting
payments for the operation of business enumerated in the
preceding section.
SEC. 3.Owners and/or operator of establishments engaged in, or
devoted to, the businesses enumerated in Section 1 hereof are
hereby given three (3) months from the date of approval of this
ordinance within which to wind up business operations or to
transfer to any place outside of the Ermita-Malate area or
convert said businesses to other kinds of business allowable
within the area, such as but not limited to:
12
CONSTITUTIONAL LAW 2 |
1.Curio or antique shop
2.Souvenir Shops
3.Handicrafts display centers
4.Art galleries
5.Records and music shops
6.Restaurants
7.Coffee shops
8.Flower shops
9.Music lounge and sing-along restaurants, with well-
defined activities for wholesome family entertainment
that cater to both local and foreign clientele.
10.Theaters engaged in the exhibition, not only of motion
pictures but also of cultural shows, stage and theatrical
plays, art exhibitions, concerts and the like.
11.Businesses allowable within the law and medium
intensity districts as provided for in the zoning ordinances
for Metropolitan Manila, except new warehouse or open-
storage depot, dock or yard, motor repair shop, gasoline
service station, light industry with any machinery, or
funeral establishments.
SEC. 4.Any person violating any provisions of this ordinance,
shall upon conviction, be punished by imprisonment of one (1)
year or fine of FIVE THOUSAND (P5,000.00) PESOS, or both,
at the discretion of the Court, PROVIDED, that in case of
juridical person, the President, the General Manager, or person-
in-charge of operation shall be liable thereof; PROVIDED
FURTHER, that in case of subsequent violation and conviction,
the premises of the erring establishment shall be closed and
padlocked permanently.
SEC. 5.This ordinance shall take effect upon approval.
Enacted by the City Council of Manila at its regular session
today, March 9, 1993.
Approved by His Honor, the Mayor on March 30, 1993.
(Emphasis supplied)
In the RTC Petition, MTDC argued that the Ordinance erroneously
and improperly included in its enumeration of prohibited
establishments, motels and inns such as MTDC's Victoria Court
considering that these were not establishments for "amusement" or
"entertainment" and they were not "services or facilities for
entertainment," nor did they use women as "tools for entertainment,"
and neither did they "disturb the community," "annoy the inhabitants"
or "adversely affect the social and moral welfare of the
community." 11
MTDC further advanced that the Ordinance was invalid and
unconstitutional for the following reasons: (1) The City Council has
no power to prohibit the operation of motels as Section 458 (a) 4
(iv) 12 of the Local Government Code of 1991 (the Code) grants to
the City Council only the power to regulate the establishment,
operation and maintenance of hotels, motels, inns, pension houses,
lodging houses and other similar establishments; (2) TheOrdinance is
void as it is violative of Presidential Decree (P.D.) No. 499 13 which
specifically declared portions of the Ermita-Malate area as a
commercial zone with certain restrictions; (3) The Ordinance does not
constitute a proper exercise of police power as the compulsory closure
of the motel business has no reasonable relation to the legitimate
municipal interests sought to be protected; (4) The Ordinance
constitutes an ex post facto law by punishing the operation of Victoria
Court which was a legitimate business prior to its enactment; (5)
The Ordinance violates MTDC's constitutional rights in that: (a) it is
confiscatory and constitutes an invasion of plaintiff's property rights;
(b) the City Council has no power to find as a fact that a particular
thing is a nuisance per se nor does it have the power to extrajudicially
destroy it; and (6) The Ordinance constitutes a denial of equal
protection under the law as no reasonable basis exists for prohibiting
13
CONSTITUTIONAL LAW 2 |
the operation of motels and inns, but not pension houses, hotels,
lodging houses or other similar establishments, and for prohibiting
said business in the Ermita-Malate area but not outside of this area. 14
In their Answer 15 dated 23 July 1993, petitioners City of Manila and
Lim maintained that the City Council had the power to "prohibit
certain forms of entertainment in order to protect the social and moral
welfare of the community" as provided for in Section 458 (a) 4 (vii) of
the Local Government Code, 16 which reads, thus:
Section 458.Powers, Duties, Functions and Compensation. —
(a) The sangguniang panlungsod, as the legislative body of the
city, shall enact ordinances, approve resolutions and
appropriate funds for the general welfare of the city and its
inhabitants pursuant to Section 16 of this Code and in the
proper exercise of the corporate powers of the city as provided
for under Section 22 of this Code, and shall:
xxx xxx xxx
(4)Regulate activities relative to the use of land, buildings and
structures within the city in order to promote the general
welfare and for said purpose shall:
xxx xxx xxx
(vii)Regulate the establishment, operation, and
maintenance of any entertainment or amusement
facilities, including theatrical performances, circuses,
billiard pools, public dancing schools, public dance halls,
sauna baths, massage parlors, and other places for
entertainment or amusement; regulate such other events
or activities for amusement or entertainment, particularly
those which tend to disturb the community or annoy the
inhabitants, or require the suspension or suppression of
the same; or, prohibit certain forms of amusement or
entertainment in order to protect the social and moral
welfare of the community.
Citing Kwong Sing v. City of Manila, 17 petitioners insisted that the
power of regulation spoken of in the above-quoted provision included
the power to control, to govern and to restrain places of exhibition and
amusement. 18
Petitioners likewise asserted that the Ordinance was enacted by the
City Council of Manila to protect the social and moral welfare of the
community in conjunction with its police power as found in Article
III, Section 18(kk) ofRepublic Act No. 409, 19 otherwise known as
the Revised Charter of the City of Manila (Revised Charter of
Manila) 20 which reads, thus:
ARTICLE III THE MUNICIPAL BOARD
xxx xxx xxx
Section 18.Legislative powers. — The Municipal Board shall
have the following legislative powers:
xxx xxx xxx
(kk)To enact all ordinances it may deem necessary and proper
for the sanitation and safety, the furtherance of the prosperity,
and the promotion of the morality, peace, good order, comfort,
convenience, and general welfare of the city and its
inhabitants, and such others as may be necessary to carry into
effect and discharge the powers and duties conferred by this
chapter; and to fix penalties for the violation of ordinances
which shall not exceed two hundred pesos fine or six months'
imprisonment, or both such fine and imprisonment, for a
single offense.
14
CONSTITUTIONAL LAW 2 |
Further, the petitioners noted, the Ordinance had the presumption of
validity; hence, private respondent had the burden to prove its
illegality or unconstitutionality. 21
Petitioners also maintained that there was no inconsistency
between P.D. 499 and the Ordinance as the latter simply disauthorized
certain forms of businesses and allowed the Ermita-Malate area to
remain a commercial zone. 22 The Ordinance, the petitioners likewise
claimed, cannot be assailed as ex post facto as it was prospective in
operation.23 The Ordinance also did not infringe the equal protection
clause and cannot be denounced as class legislation as there existed
substantial and real differences between the Ermita-Malate area and
other places in the City of Manila. 24
On 28 June 1993, respondent Judge Perfecto A.S. Laguio, Jr. (Judge
Laguio) issued an ex-parte temporary restraining order against the
enforcement of the Ordinance. 25 And on 16 July 1993, again in an
intrepid gesture, he granted the writ of preliminary injunction prayed
for by MTDC. 26
After trial, on 25 November 1994, Judge Laguio rendered the
assailed Decision, enjoining the petitioners from implementing
the Ordinance. The dispositive portion of said Decision reads: 27
WHEREFORE, judgment is hereby rendered declaring
Ordinance No. 778[3], Series of 1993, of the City of Manila
null and void, and making permanent the writ of preliminary
injunction that had been issued by this Court against the
defendant. No costs.
SO ORDERED. 28
Petitioners filed with the lower court a Notice of Appeal 29 on 12
December 1994, manifesting that they are elevating the case to this
Court under then Rule 42 on pure questions of law. 30
On 11 January 1995, petitioners filed the present Petition, alleging
that the following errors were committed by the lower court in its
ruling: (1) It erred in concluding that the subject ordinance is ultra
vires, or otherwise, unfair, unreasonable and oppressive exercise of
police power; (2) It erred in holding that the
questioned Ordinance contravenes P.D. 499 31 which allows operators
of all kinds of commercial establishments, except those specified
therein; and (3) It erred in declaring the Ordinance void and
unconstitutional. 32
In the Petition and in its Memorandum, 33 petitioners in essence
repeat the assertions they made before the lower court. They contend
that the assailed Ordinance was enacted in the exercise of the inherent
and plenary power of the State and the general welfare clause
exercised by local government units provided for in Art. 3, Sec. 18
(kk) of the Revised Charter of Manila and conjunctively, Section 458
(a) 4 (vii) of the Code. 34 They allege that the Ordinance is a valid
exercise of police power; it does not contravene P.D. 499; and that it
enjoys the presumption of validity. 35
In its Memorandum 36 dated 27 May 1996, private respondent
maintains that the Ordinance is ultra vires and that it is void for being
repugnant to the general law. It reiterates that the
questioned Ordinance is not a valid exercise of police power; that it is
violative of due process, confiscatory and amounts to an arbitrary
interference with its lawful business; that it is violative of the equal
protection clause; and that it confers on petitioner City Mayor or any
officer unregulated discretion in the execution of the Ordinance absent
rules to guide and control his actions.
This is an opportune time to express the Court's deep sentiment and
tenderness for the Ermita-Malate area being its home for several
decades. A long-time resident, the Court witnessed the area's many
turn of events. It relished its glory days and endured its days of
infamy. Much as the Court harks back to the resplendant era of the
Old Manila and yearns to restore its lost grandeur, it believes that
the Ordinance is not the fitting means to that end. The Court is of the
15
CONSTITUTIONAL LAW 2 |
opinion, and so holds, that the lower court did not err in declaring
the Ordinance, as it did, ultra vires and therefore null and void.
The Ordinance is so replete with constitutional infirmities that almost
every sentence thereof violates a constitutional provision. The
prohibitions and sanctions therein transgress the cardinal rights of
persons enshrined by the Constitution. The Court is called upon to
shelter these rights from attempts at rendering them worthless.
The tests of a valid ordinance are well established. A long line of
decisions has held that for an ordinance to be valid, it must not only
be within the corporate powers of the local government unit to enact
and must be passed according to the procedure prescribed by law, it
must also conform to the following substantive requirements: (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. 37
Anent the first criterion, ordinances shall only be valid when they are
not contrary to the Constitution and to the
laws. 38 The Ordinance must satisfy two requirements: it must pass
muster under the test of constitutionality and the test of consistency
with the prevailing laws. That ordinances should be constitutional
uphold the principle of the supremacy of the Constitution. The
requirement that the enactment must not violate existing law gives
stress to the precept that local government units are able to legislate
only by virtue of their derivative legislative power, a delegation of
legislative power from the national legislature. The delegate cannot be
superior to the principal or exercise powers higher than those of the
latter. 39
This relationship between the national legislature and the local
government units has not been enfeebled by the new provisions in the
Constitution strengthening the policy of local autonomy. The national
legislature is still the principal of the local government units, which
cannot defy its will or modify or violate it. 40
The Ordinance was passed by the City Council in the exercise of its
police power, an enactment of the City Council acting as agent of
Congress. Local government units, as agencies of the State, are
endowed with police power in order to effectively accomplish and
carry out the declared objects of their creation. 41 This delegated
police power is found in Section 16 of the Code, known as the general
welfare clause, viz:
SECTION 16.General Welfare. — Every local government
unit shall exercise the powers expressly granted, those
necessarily implied therefrom, as well as powers necessary,
appropriate, or incidental for its efficient and effective
governance, and those which are essential to the promotion of
the general welfare. Within their respective territorial
jurisdictions, local government units shall ensure and support,
among other things, the preservation and enrichment of
culture, promote health and safety, enhance the right of the
people to a balanced ecology, encourage and support the
development of appropriate and self-reliant scientific and
technological capabilities, improve public morals, enhance
economic prosperity and social justice, promote full
employment among their residents, maintain peace and order,
and preserve the comfort and convenience of their inhabitants.
Local government units exercise police power through their respective
legislative bodies; in this case, the sangguniang panlungsod or the
city council. The Code empowers the legislative bodies to "enact
ordinances, approve resolutions and appropriate funds for the general
welfare of the province/city/municipality and its inhabitants pursuant
to Section 16 of the Code and in the proper exercise of the corporate
powers of the province/city/municipality provided under the
Code." 42 The inquiry in this Petition is concerned with the validity of
the exercise of such delegated power.
The Ordinance contravenes the Constitution
16
CONSTITUTIONAL LAW 2 |
The police power of the City Council, however broad and far-
reaching, is subordinate to the constitutional limitations thereon; and
is subject to the limitation that its exercise must be reasonable and for
the public good. 43 In the case at bar, the enactment of
the Ordinance was an invalid exercise of delegated power as it is
unconstitutional and repugnant to general laws.
The relevant constitutional provisions are the following:
SEC. 5.The maintenance of peace and order, the protection of
life, liberty, and property, and the promotion of the general
welfare are essential for the enjoyment by all the people of the
blessings of democracy. 44
SEC. 14.The State recognizes the role of women in nation-
building, and shall ensure the fundamental equality before the
law of women and men. 45
SEC. 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 laws. 46
SEC. 9.Private property shall not be taken for public use
without just compensation. 47
A.The Ordinance infringes the Due Process Clause
The constitutional safeguard of due process is embodied in the fiat
"(N)o person shall be deprived of life, liberty or property without due
process of law. . . ." 48
There is no controlling and precise definition of due process. It
furnishes though a standard to which governmental action should
conform in order that deprivation of life, liberty or property, in each
appropriate case, be valid. This standard is aptly described as a
responsiveness to the supremacy of reason, obedience to the dictates
of justice, 49 and as such it is a limitation upon the exercise of the
police power. 50
The purpose of the guaranty is to prevent governmental encroachment
against the life, liberty and property of individuals; to secure the
individual from the arbitrary exercise of the powers of the
government, unrestrained by the established principles of private
rights and distributive justice; to protect property from confiscation by
legislative enactments, from seizure, forfeiture, and destruction
without a trial and conviction by the ordinary mode of judicial
procedure; and to secure to all persons equal and impartial justice and
the benefit of the general law. 51
The guaranty serves as a protection against arbitrary regulation, and
private corporations and partnerships are "persons" within the scope
of the guaranty insofar as their property is concerned. 52
This clause has been interpreted as imposing two separate limits on
government, usually called "procedural due process" and "substantive
due process."
Procedural due process, as the phrase implies, refers to the procedures
that the government must follow before it deprives a person of life,
liberty, or property. Classic procedural due process issues are
concerned with what kind of notice and what form of hearing the
government must provide when it takes a particular action. 53
Substantive due process, as that phrase connotes, asks whether the
government has an adequate reason for taking away a person's life,
liberty, or property. In other words, substantive due process looks to
whether there is a sufficient justification for the government's
action. 54 Case law in the United States (U.S.) tells us that whether
there is such a justification depends very much on the level of scrutiny
used. 55 For example, if a law is in an area where only rational basis
review is applied, substantive due process is met so long as the law is
rationally related to a legitimate government purpose. But if it is an
area where strict scrutiny is used, such as for protecting fundamental
17
CONSTITUTIONAL LAW 2 |
rights, then the government will meet substantive due process only if
it can prove that the law is necessary to achieve a compelling
government purpose. 56
The police power granted to local government units must always be
exercised with utmost observance of the rights of the people to due
process and equal protection of the law. Such power cannot be
exercised whimsically, arbitrarily or despotically 57 as its exercise is
subject to a qualification, limitation or restriction demanded by the
respect and regard due to the prescription of the fundamental law,
particularly those forming part of the Bill of Rights. Individual rights,
it bears emphasis, may be adversely affected only to the extent that
may fairly be required by the legitimate demands of public interest or
public welfare. 58 Due process requires the intrinsic validity of the
law in interfering with the rights of the person to his life, liberty and
property. 59
Requisites for the valid exercise of Police Power are not met
To successfully invoke the exercise of police power as the rationale
for the enactment of the Ordinance, and to free it from the imputation
of constitutional infirmity, not only must it appear that the interests of
the public generally, as distinguished from those of a particular class,
require an interference with private rights, but the means adopted
must be reasonably necessary for the accomplishment of the purpose
and not unduly oppressive upon individuals. 60 It must be evident that
no other alternative for the accomplishment of the purpose less
intrusive of private rights can work. A reasonable relation must exist
between the purposes of the police measure and the means employed
for its accomplishment, for even under the guise of protecting the
public interest, personal rights and those pertaining to private property
will not be permitted to be arbitrarily invaded. 61
Lacking a concurrence of these two requisites, the police measure
shall be struck down as an arbitrary intrusion into private rights 62 —
a violation of the due process clause.
The Ordinance was enacted to address and arrest the social ills
purportedly spawned by the establishments in the Ermita-Malate area
which are allegedly operated under the deceptive veneer of legitimate,
licensed and tax-paying nightclubs, bars, karaoke bars, girlie houses,
cocktail lounges, hotels and motels. Petitioners insist that even the
Court in the case of Ermita-Malate Hotel and Motel Operators
Association, Inc. v. City Mayor of Manila 63had already taken judicial
notice of the "alarming increase in the rate of prostitution, adultery
and fornication in Manila traceable in great part to existence of
motels, which provide a necessary atmosphere for clandestine entry,
presence and exit and thus become the ideal haven for prostitutes and
thrill-seekers." 64
The object of the Ordinance was, accordingly, the promotion and
protection of the social and moral values of the community. Granting
for the sake of argument that the objectives of the Ordinance are
within the scope of the City Council's police powers, the means
employed for the accomplishment thereof were unreasonable and
unduly oppressive.
It is undoubtedly one of the fundamental duties of the City of Manila
to make all reasonable regulations looking to the promotion of the
moral and social values of the community. However, the worthy aim
of fostering public morals and the eradication of the community's
social ills can be achieved through means less restrictive of private
rights; it can be attained by reasonable restrictions rather than by an
absolute prohibition. The closing down and transfer of businesses or
their conversion into businesses "allowed" under the Ordinance have
no reasonable relation to the accomplishment of its purposes.
Otherwise stated, the prohibition of the enumerated establishments
will not per se protect and promote the social and moral welfare of the
community; it will not in itself eradicate the alluded social ills of
prostitution, adultery, fornication nor will it arrest the spread of sexual
disease in Manila.
Conceding for the nonce that the Ermita-Malate area teems with
houses of ill-repute and establishments of the like which the City
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CONSTITUTIONAL LAW 2 |
Council may lawfully prohibit, 65 it is baseless and insupportable to
bring within that classification sauna parlors, massage parlors,
karaoke bars, night clubs, day clubs, super clubs, discotheques,
cabarets, dance halls, motels and inns. This is not warranted under the
accepted definitions of these terms. The enumerated establishments
are lawful pursuits which are not per se offensive to the moral welfare
of the community.
That these are used as arenas to consummate illicit sexual
affairs and as venues to further the illegal prostitution is of no
moment. We lay stress on the acrid truth that sexual immorality,
being a human frailty, may take place in the most innocent of places
that it may even take place in the substitute establishments
enumerated under Section 3 of the Ordinance. If the flawed logic of
the Ordinance were to be followed, in the remote instance that an
immoral sexual act transpires in a church cloister or a court
chamber, we would behold the spectacle of the City of Manila
ordering the closure of the church or court concerned. Every house,
building, park, curb, street or even vehicles for that matter will not
be exempt from the prohibition. Simply because there are no "pure"
places where there are impure men. Indeed, even the Scripture and
the Tradition of Christians churches continually recall the presence
and universality of sin in man's history. (Catechism of the Catholic
Church, Definitive Edition, p. 101; ECCE and Word & Life
Publications, Don Bosco Compound, Makati)
The problem, it needs to be pointed out, is not the establishment,
which by its nature cannot be said to be injurious to the health or
comfort of the community and which in itself is amoral, but the
deplorable human activity that may occur within its premises. While a
motel may be used as a venue for immoral sexual activity, it cannot
for that reason alone be punished. It cannot be classified as a house of
ill-repute or as a nuisance per se on a mere likelihood or a naked
assumption. If that were so and if that were allowed, then the Ermita-
Malate area would not only be purged of its supposed social ills, it
would be extinguished of its soul as well as every human activity,
reprehensible or not, in its every nook and cranny would be laid bare
to the estimation of the authorities.
The Ordinance seeks to legislate morality but fails to address the core
issues of morality. Try as the Ordinance may to shape morality, it
should not foster the illusion that it can make a moral man out of it
because immorality is not a thing, a building or establishment; it is in
the hearts of men. The City Council instead should regulate human
conduct that occurs inside the establishments, but not to the detriment
of liberty and privacy which are covenants, premiums and blessings of
democracy.
While petitioners' earnestness at curbing clearly objectionable social
ills is commendable, they unwittingly punish even the proprietors and
operators of "wholesome," "innocent" establishments. In the instant
case, there is a clear invasion of personal or property rights, personal
in the case of those individuals desirous of owning, operating and
patronizing those motels and property in terms of the investments
made and the salaries to be paid to those therein employed. If the City
of Manila so desires to put an end to prostitution, fornication and
other social ills, it can instead impose reasonable regulations such as
daily inspections of the establishments for any violation of the
conditions of their licenses or permits; it may exercise its authority to
suspend or revoke their licenses for these violations; 66 and it may
even impose increased license fees. In other words, there are other
means to reasonably accomplish the desired end.
Means employed are constitutionally infirm
The Ordinance disallows the operation of sauna parlors, massage
parlors, karaoke bars, beerhouses, night clubs, day clubs, super clubs,
discotheques, cabarets, dance halls, motels and inns in the Ermita-
Malate area. In Section 3 thereof, owners and/or operators of the
enumerated establishments are given three (3) months from the date of
approval of the Ordinance within which "to wind up business
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CONSTITUTIONAL LAW 2 |
operations or to transfer to any place outside the Ermita-Malate area
or convert said businesses to other kinds of business allowable within
the area." Further, it states in Section 4 that in cases of subsequent
violations of the provisions of the Ordinance, the "premises of the
erring establishment shall be closed and padlocked permanently."
It is readily apparent that the means employed by the Ordinance for
the achievement of its purposes, the governmental interference itself,
infringes on the constitutional guarantees of a person's fundamental
right to liberty and property.
Liberty as guaranteed by the Constitution was defined by Justice
Malcolm to include "the right to exist and the right to be free from
arbitrary restraint or servitude. The term cannot be dwarfed into mere
freedom from physical restraint of the person of the citizen, but is
deemed to embrace the right of man to enjoy the faculties with which
he has been endowed by his Creator, subject only to such restraint as
are necessary for the common welfare." 67 In accordance with this
case, the rights of the citizen to be free to use his faculties in all lawful
ways; to live and work where he will; to earn his livelihood by any
lawful calling; and to pursue any avocation are all deemed embraced
in the concept of liberty. 68
The U.S. Supreme Court in the case of Roth v. Board of
Regents, 69 sought to clarify the meaning of "liberty." It said:
While the Court has not attempted to define with exactness the
liberty . . . guaranteed [by the Fifth and Fourteenth
Amendments], the term denotes not merely freedom from
bodily restraint but also the right of the individual to contract,
to engage in any of the common occupations of life, to acquire
useful knowledge, to marry, establish a home and bring up
children, to worship God according to the dictates of his own
conscience, and generally to enjoy those privileges long
recognized . . . as essential to the orderly pursuit of happiness
by free men. In a Constitution for a free people, there can be
no doubt that the meaning of "liberty" must be broad indeed.
In another case, it also confirmed that liberty protected by the due
process clause includes personal decisions relating to marriage,
procreation, contraception, family relationships, child rearing, and
education. In explaining the respect the Constitution demands for the
autonomy of the person in making these choices, the U.S. Supreme
Court explained:
These matters, involving the most intimate and personal
choices a person may make in a lifetime, choices central to
personal dignity and autonomy, are central to the liberty
protected by the Fourteenth Amendment. At the heart of liberty
is the right to define one's own concept of existence, of
meaning, of universe, and of the mystery of human life.
Beliefs about these matters could not define the attributes of
personhood where they formed under compulsion of the
State. 70
Persons desirous to own, operate and patronize the enumerated
establishments under Section 1 of the Ordinance may seek autonomy
for these purposes.
Motel patrons who are single and unmarried may invoke this right to
autonomy to consummate their bonds in intimate sexual conduct
within the motel's premises — be it stressed that their consensual
sexual behavior does not contravene any fundamental state policy as
contained in the Constitution. 71 Adults have a right to choose to
forge such relationships with others in the confines of their own
private lives and still retain their dignity as free persons. The liberty
protected by the Constitution allows persons the right to make this
choice. 72 Their right to liberty under the due process clause gives
them the full right to engage in their conduct without intervention of
the government, as long as they do not run afoul of the law. Liberty
should be the rule and restraint the exception.
Liberty in the constitutional sense not only means freedom from
unlawful government restraint; it must include privacy as well, if it is
to be a repository of freedom. The right to be let alone is the
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CONSTITUTIONAL LAW 2 |
beginning of all freedom — it is the most comprehensive of rights and
the right most valued by civilized men. 73
The concept of liberty compels respect for the individual whose claim
to privacy and interference demands respect. As the case of Morfe
v. Mutuc, 74 borrowing the words of Laski, so very aptly stated:
Man is one among many, obstinately refusing reduction to
unity. His separateness, his isolation, are indefeasible; indeed,
they are so fundamental that they are the basis on which his
civic obligations are built. He cannot abandon the
consequences of his isolation, which are, broadly speaking,
that his experience is private, and the will built out of that
experience personal to himself. If he surrenders his will to
others, he surrenders himself. If his will is set by the will of
others, he ceases to be a master of himself. I cannot believe
that a man no longer a master of himself is in any real sense
free.
Indeed, the right to privacy as a constitutional right was recognized
in Morfe, the invasion of which should be justified by a compelling
state interest. Morfe accorded recognition to the right to privacy
independently of its identification with liberty; in itself it is fully
deserving of constitutional protection. Governmental powers should
stop short of certain intrusions into the personal life of the citizen. 75
There is a great temptation to have an extended discussion on these
civil liberties but the Court chooses to exercise restraint and restrict
itself to the issues presented when it should. The previous
pronouncements of the Court are not to be interpreted as a license for
adults to engage in criminal conduct. The reprehensibility of such
conduct is not diminished. The Court only reaffirms and guarantees
their right to make this choice. Should they be prosecuted for their
illegal conduct, they should suffer the consequences of the choice they
have made. That, ultimately, is their choice.
Modality employed is unlawful taking
In addition, the Ordinance is unreasonable and oppressive as it
substantially divests the respondent of the beneficial use of its
property. 76 The Ordinance in Section 1 thereof forbids the running of
the enumerated businesses in the Ermita-Malate area and in Section 3
instructs its owners/operators to wind up business operations or to
transfer outside the area or convert said businesses into allowed
businesses. An ordinance which permanently restricts the use of
property that it can not be used for any reasonable purpose goes
beyond regulation and must be recognized as a taking of the property
without just compensation. 77 It is intrusive and violative of the
private property rights of individuals.
The Constitution expressly provides in Article III, Section 9, that
"private property shall not be taken for public use without just
compensation." The provision is the most important protection of
property rights in the Constitution. This is a restriction on the general
power of the government to take property. The constitutional
provision is about ensuring that the government does not confiscate
the property of some to give it to others. In part too, it is about loss
spreading. If the government takes away a person's property to benefit
society, then society should pay. The principal purpose of the
guarantee is "to bar the Government from forcing some people alone
to bear public burdens which, in all fairness and justice, should be
borne by the public as a whole. 78
There are two different types of taking that can be identified. A
"possessory" taking occurs when the government confiscates or
physically occupies property. A "regulatory" taking occurs when the
government's regulation leaves no reasonable economically viable use
of the property. 79
In the landmark case of Pennsylvania Coal v. Mahon, 80 it was held
that a taking also could be found if government regulation of the use
of property went "too far." When regulation reaches a certain
magnitude, in most if not in all cases there must be an exercise of
eminent domain and compensation to support the act. While property
21
CONSTITUTIONAL LAW 2 |
may be regulated to a certain extent, if regulation goes too far it will
be recognized as a taking. 81
No formula or rule can be devised to answer the questions of what is
too far and when regulation becomes a taking. In Mahon, Justice
Holmes recognized that it was "a question of degree and therefore
cannot be disposed of by general propositions." On many other
occasions as well, the U.S. Supreme Court has said that the issue of
when regulation constitutes a taking is a matter of considering the
facts in each case. The Court asks whether justice and fairness require
that the economic loss caused by public action must be compensated
by the government and thus borne by the public as a whole, or
whether the loss should remain concentrated on those few persons
subject to the public action. 82
What is crucial in judicial consideration of regulatory takings is that
government regulation is a taking if it leaves no reasonable
economically viable use of property in a manner that interferes with
reasonable expectations for use. 83 A regulation that permanently
denies all economically beneficial or productive use of land is, from
the owner's point of view, equivalent to a "taking" unless principles of
nuisance or property law that existed when the owner acquired the
land make the use prohibitable. 84 When the owner of real property
has been called upon to sacrifice all economically beneficial uses in
the name of the common good, that is, to leave his property
economically idle, he has suffered a taking. 85
A regulation which denies all economically beneficial or productive
use of land will require compensation under the takings clause. Where
a regulation places limitations on land that fall short of eliminating all
economically beneficial use, a taking nonetheless may have occurred,
depending on a complex of factors including the regulation's
economic effect on the landowner, the extent to which the regulation
interferes with reasonable investment-backed expectations and the
character of government action. These inquiries are informed by the
purpose of the takings clause which is to prevent the government from
forcing some people alone to bear public burdens which, in all
fairness and justice, should be borne by the public as a whole. 86
A restriction on use of property may also constitute a "taking" if not
reasonably necessary to the effectuation of a substantial public
purpose or if it has an unduly harsh impact on the distinct investment-
backed expectations of the owner. 87
The Ordinance gives the owners and operators of the "prohibited"
establishments three (3) months from its approval within which to
"wind up business operations or to transfer to any place outside of the
Ermita-Malate area or convert said businesses to other kinds of
business allowable within the area." The directive to "wind up
business operations" amounts to a closure of the establishment, a
permanent deprivation of property, and is practically confiscatory.
Unless the owner converts his establishment to accommodate an
"allowed" business, the structure which housed the previous business
will be left empty and gathering dust. Suppose he transfers it to
another area, he will likewise leave the entire establishment idle.
Consideration must be given to the substantial amount of money
invested to build the edifices which the owner reasonably expects to
be returned within a period of time. It is apparent that
the Ordinance leaves no reasonable economically viable use of
property in a manner that interferes with reasonable expectations for
use.
The second and third options — to transfer to any place outside of the
Ermita-Malate area or to convert into allowed businesses — are
confiscatory as well. The penalty of permanent closure in cases of
subsequent violations found in Section 4 of the Ordinance is also
equivalent to a "taking" of private property.
The second option instructs the owners to abandon their property and
build another one outside the Ermita-Malate area. In every sense, it
qualifies as a taking without just compensation with an additional
burden imposed on the owner to build another establishment solely
22
CONSTITUTIONAL LAW 2 |
from his coffers. The proffered solution does not put an end to the
"problem," it merely relocates it. Not only is this impractical, it is
unreasonable, onerous and oppressive. The conversion into allowed
enterprises is just as ridiculous. How may the respondent convert a
motel into a restaurant or a coffee shop, art gallery or music lounge
without essentially destroying its property? This is a taking of private
property without due process of law, nay, even without compensation.
The penalty of closure likewise constitutes unlawful taking that
should be compensated by the government. The burden on the owner
to convert or transfer his business, otherwise it will be closed
permanently after a subsequent violation should be borne by the
public as this end benefits them as a whole.
Petitioners cannot take refuge in classifying the measure as a zoning
ordinance. A zoning ordinance, although a valid exercise of police
power, which limits a "wholesome" property to a use which can not
reasonably be made of it constitutes the taking of such property
without just compensation. Private property which is not noxious nor
intended for noxious purposes may not, by zoning, be destroyed
without compensation. Such principle finds no support in the
principles of justice as we know them. The police powers of local
government units which have always received broad and liberal
interpretation cannot be stretched to cover this particular taking.
Distinction should be made between destruction from necessity and
eminent domain. It needs restating that the property taken in the
exercise of police power is destroyed because it is noxious or intended
for a noxious purpose while the property taken under the power of
eminent domain is intended for a public use or purpose and is
therefore "wholesome." 88 If it be of public benefit that a
"wholesome" property remain unused or relegated to a particular
purpose, then certainly the public should bear the cost of reasonable
compensation for the condemnation of private property for public
use. 89
Further, the Ordinance fails to set up any standard to guide or limit the
petitioners' actions. It in no way controls or guides the discretion
vested in them. It provides no definition of the establishments covered
by it and it fails to set forth the conditions when the establishments
come within its ambit of prohibition. The Ordinance confers upon the
mayor arbitrary and unrestricted power to close down establishments.
Ordinances such as this, which make possible abuses in its execution,
depending upon no conditions or qualifications whatsoever other than
the unregulated arbitrary will of the city authorities as the touchstone
by which its validity is to be tested, are unreasonable and invalid.
The Ordinance should have established a rule by which its impartial
enforcement could be secured. 90
Ordinances placing restrictions upon the lawful use of property must,
in order to be valid and constitutional, specify the rules and conditions
to be observed and conduct to avoid; and must not admit of the
exercise, or of an opportunity for the exercise, of unbridled discretion
by the law enforcers in carrying out its provisions. 91
Thus, in Coates v. City of Cincinnati, 92 as cited in People
v. Nazario, 93 the U.S. Supreme Court struck down an ordinance that
had made it illegal for "three or more persons to assemble on any
sidewalk and there conduct themselves in a manner annoying to
persons passing by." The ordinance was nullified as it imposed no
standard at all "because one may never know in advance what 'annoys
some people but does not annoy others.'"
Similarly, the Ordinance does not specify the standards to ascertain
which establishments "tend to disturb the community," "annoy the
inhabitants," and "adversely affect the social and moral welfare of the
community." The cited case supports the nullification of
the Ordinance for lack of comprehensible standards to guide the law
enforcers in carrying out its provisions.
Petitioners cannot therefore order the closure of the enumerated
establishments without infringing the due process clause. These lawful
establishments may be regulated, but not prevented from carrying on
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CONSTITUTIONAL LAW 2 |
their business. This is a sweeping exercise of police power that is a
result of a lack of imagination on the part of the City Council and
which amounts to an interference into personal and private rights
which the Court will not countenance. In this regard, we take a
resolute stand to uphold the constitutional guarantee of the right to
liberty and property.
Worthy of note is an example derived from the U.S. of a reasonable
regulation which is a far cry from the ill-
considered Ordinance enacted by the City Council.
In FW/PBS, INC. v. Dallas, 94 the city of Dallas adopted a
comprehensive ordinance regulating "sexually oriented businesses,"
which are defined to include adult arcades, bookstores, video stores,
cabarets, motels, and theaters as well as escort agencies, nude model
studio and sexual encounter centers. Among other things, the
ordinance required that such businesses be licensed. A group of motel
owners were among the three groups of businesses that filed separate
suits challenging the ordinance. The motel owners asserted that the
city violated the due process clause by failing to produce adequate
support for its supposition that renting room for fewer than ten (10)
hours resulted in increased crime and other secondary effects. They
likewise argued than the ten (10)-hour limitation on the rental of motel
rooms placed an unconstitutional burden on the right to freedom of
association. Anent the first contention, the U.S. Supreme Court held
that the reasonableness of the legislative judgment combined with a
study which the city considered, was adequate to support the city's
determination that motels permitting room rentals for fewer than ten
(10) hours should be included within the licensing scheme. As regards
the second point, the Court held that limiting motel room rentals to ten
(10) hours will have no discernible effect on personal bonds as those
bonds that are formed from the use of a motel room for fewer than ten
(10) hours are not those that have played a critical role in the culture
and traditions of the nation by cultivating and transmitting shared
ideals and beliefs.
The ordinance challenged in the above-cited case merely regulated the
targeted businesses. It imposed reasonable restrictions; hence, its
validity was upheld.
The case of Ermita Malate Hotel and Motel Operators Association,
Inc. v. City Mayor of Manila, 95 it needs pointing out, is also different
from this case in that what was involved therein was a measure which
regulated the mode in which motels may conduct business in order to
put an end to practices which could encourage vice and immorality.
Necessarily, there was no valid objection on due process or equal
protection grounds as the ordinance did not prohibit motels.
The Ordinance in this case however is not a regulatory measure but is
an exercise of an assumed power to prohibit. 96
The foregoing premises show that the Ordinance is an unwarranted
and unlawful curtailment of property and personal rights of citizens.
For being unreasonable and an undue restraint of trade, it cannot, even
under the guise of exercising police power, be upheld as valid.
B.The Ordinance violates Equal Protection Clause
Equal protection requires that all persons or things similarly situated
should be treated alike, both as to rights conferred and responsibilities
imposed. Similar subjects, in other words, should not be treated
differently, so as to give undue favor to some and unjustly
discriminate against others. 97 The guarantee means that no person or
class of persons shall be denied the same protection of laws which is
enjoyed by other persons or other classes in like
circumstances. 98 The "equal protection of the laws is a pledge of the
protection of equal laws." 99 It limits governmental discrimination.
The equal protection clause extends to artificial persons but only
insofar as their property is concerned. 100
The Court has explained the scope of the equal protection clause in
this wise:
24
CONSTITUTIONAL LAW 2 |
. . . What does it signify? To quote from J.M. Tuason &
Co. v. Land Tenure Administration: "The ideal situation is for
the law's benefits to be available to all, that none be placed
outside the sphere of its coverage. Only thus could chance and
favor be excluded and the affairs of men governed by that
serene and impartial uniformity, which is of the very essence
of the idea of law." There is recognition, however, in the
opinion that what in fact exists "cannot approximate the ideal.
Nor is the law susceptible to the reproach that it does not take
into account the realities of the situation. The constitutional
guarantee then is not to be given a meaning that disregards
what is, what does in fact exist. To assure that the general
welfare be promoted, which is the end of law, a regulatory
measure may cut into the rights to liberty and property. Those
adversely affected may under such circumstances invoke the
equal protection clause only if they can show that the
governmental act assailed, far from being inspired by the
attainment of the common weal was prompted by the spirit of
hostility, or at the very least, discrimination that finds no
support in reason." Classification is thus not ruled out, it being
sufficient to quote from the Tuason decision anew "that the
laws operate equally and uniformly on all persons under
similar circumstances or that all persons must be treated in the
same manner, the conditions not being different, both in the
privileges conferred and the liabilities imposed. Favoritism
and undue preference cannot be allowed. For the principle is
that equal protection and security shall be given to every
person under circumstances which, if not identical, are
analogous. If law be looked upon in terms of burden or
charges, those that fall within a class should be treated in the
same fashion, whatever restrictions cast on some in the group
equally binding on the rest. 101
Legislative bodies are allowed to classify the subjects of legislation. If
the classification is reasonable, the law may operate only on some and
not all of the people without violating the equal protection
clause. 102 The classification must, as an indispensable requisite, not
be arbitrary. To be valid, it must conform to the following
requirements:
1)It must be based on substantial distinctions.
2)It must be germane to the purposes of the law.
3)It must not be limited to existing conditions only.
4)It must apply equally to all members of the class. 103
In the Court's view, there are no substantial distinctions between
motels, inns, pension houses, hotels, lodging houses or other similar
establishments. By definition, all are commercial establishments
providing lodging and usually meals and other services for the public.
No reason exists for prohibiting motels and inns but not pension
houses, hotels, lodging houses or other similar establishments. The
classification in the instant case is invalid as similar subjects are not
similarly treated, both as to rights conferred and obligations imposed.
It is arbitrary as it does not rest on substantial distinctions bearing a
just and fair relation to the purpose of the Ordinance.
The Court likewise cannot see the logic for prohibiting the business
and operation of motels in the Ermita-Malate area but not outside of
this area. A noxious establishment does not become any less noxious
if located outside the area.
The standard "where women are used as tools for entertainment" is
also discriminatory as prostitution — one of the hinted ills
the Ordinance aims to banish — is not a profession exclusive to
women. Both men and women have an equal propensity to engage in
prostitution. It is not any less grave a sin when men engage in it. And
why would the assumption that there is an ongoing immoral activity
apply only when women are employed and be inapposite when men
are in harness? This discrimination based on gender violates equal
protection as it is not substantially related to important government
objectives. 104 Thus, the discrimination is invalid.
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CONSTITUTIONAL LAW 2 |
Failing the test of constitutionality, the Ordinance likewise failed to
pass the test of consistency with prevailing laws.
C.The Ordinance is repugnant to general laws; it is ultra
vires
The Ordinance is in contravention of the Code as the latter merely
empowers local government units to regulate, and not prohibit, the
establishments enumerated in Section 1 thereof.
The power of the City Council to regulate by ordinances the
establishment, operation, and maintenance of motels, hotels and other
similar establishments is found in Section 458 (a) 4 (iv), which
provides that:
Section 458.Powers, Duties, Functions and Compensation. —
(a) The sangguniang panlungsod, as the legislative body of the
city, shall enact ordinances, approve resolutions and
appropriate funds for the general welfare of the city and its
inhabitants pursuant to Section 16 of this Code and in the
proper exercise of the corporate powers of the city as provided
for under Section 22 of this Code, and shall:
xxx xxx xxx
(4)Regulate activities relative to the use of land, buildings and
structures within the city in order to promote the general
welfare and for said purpose shall:
xxx xxx xxx
(iv)Regulate the establishment, operation and
maintenance of cafes, restaurants, beerhouses, hotels,
motels, inns, pension houses, lodging houses, and other
similar establishments, including tourist guides and
transports. . . .
While its power to regulate the establishment, operation and
maintenance of any entertainment or amusement facilities, and to
prohibit certain forms of amusement or entertainment is provided
under Section 458 (a) 4 (vii) of the Code, which reads as follows:
Section 458.Powers, Duties, Functions and Compensation. —
(a) The sangguniang panlungsod, as the legislative body of the
city, shall enact ordinances, approve resolutions and
appropriate funds for the general welfare of the city and its
inhabitants pursuant to Section 16 of this Code and in the
proper exercise of the corporate powers of the city as provided
for under Section 22 of this Code, and shall:
xxx xxx xxx
(4)Regulate activities relative to the use of land, buildings and
structures within the city in order to promote the general
welfare and for said purpose shall:
xxx xxx xxx
(vii)Regulate the establishment, operation, and
maintenance of any entertainment or amusement
facilities, including theatrical performances, circuses,
billiard pools, public dancing schools, public dance
halls, sauna baths, massage parlors, and other places
for entertainment or amusement; regulate such other
events or activities for amusement or entertainment,
particularly those which tend to disturb the community
or annoy the inhabitants, or require the suspension or
suppression of the same; or, prohibit certain forms of
amusement or entertainment in order to protect the
social and moral welfare of the community.
Clearly, with respect to cafes, restaurants, beerhouses, hotels, motels,
inns, pension houses, lodging houses, and other similar
establishments, the only power of the City Council to legislate relative
26
CONSTITUTIONAL LAW 2 |
thereto is to regulate them to promote the general welfare. The Code
still withholds from cities the power to suppress and prohibit
altogether the establishment, operation and maintenance of such
establishments. It is well to recall the rulings of the Court in Kwong
Sing v. City of Manila 105 that:
The word "regulate," as used in subsection (l), section 2444 of
the Administrative Code, means and includes the power to
control, to govern, and to restrain; but "regulate" should not be
construed as synonymous with "suppress" or "prohibit."
Consequently, under the power to regulate laundries, the
municipal authorities could make proper police regulations as
to the mode in which the employment or business shall be
exercised. 106
And in People v. Esguerra, 107 wherein the Court nullified an
ordinance of the Municipality of Tacloban which prohibited the
selling, giving and dispensing of liquor ratiocinating that the
municipality is empowered only to regulate the same and not prohibit.
The Court therein declared that:
(A)s a general rule when a municipal corporation is
specifically given authority or power to regulate or to license
and regulate the liquor traffic, power to prohibit is impliedly
withheld. 108
These doctrines still hold contrary to petitioners' assertion 109 that
they were modified by the Code vesting upon City Councils
prohibitory powers.
Similarly, the City Council exercises regulatory powers over public
dancing schools, public dance halls, sauna baths, massage parlors, and
other places for entertainment or amusement as found in the first
clause of Section 458 (a) 4 (vii). Its powers to regulate, suppress and
suspend "such other events or activities for amusement or
entertainment, particularly those which tend to disturb the community
or annoy the inhabitants" and to "prohibit certain forms of amusement
or entertainment in order to protect the social and moral welfare of the
community" are stated in the second and third clauses, respectively of
the same Section. The several powers of the City Council as provided
in Section 458 (a) 4 (vii) of the Code, it is pertinent to emphasize, are
separated by semi-colons (;), the use of which indicates that the
clauses in which these powers are set forth are independent of each
other albeit closely related to justify being put together in a single
enumeration or paragraph. 110 These powers, therefore, should not be
confused, commingled or consolidated as to create a conglomerated
and unified power of regulation, suppression and prohibition. 111
The Congress unequivocably specified the establishments and forms
of amusement or entertainment subject to regulation among which are
beerhouses, hotels, motels, inns, pension houses, lodging houses, and
other similar establishments (Section 458 (a) 4 (iv)), public dancing
schools, public dance halls, sauna baths, massage parlors, and other
places for entertainment or amusement (Section 458 (a) 4 (vii)). This
enumeration therefore cannot be included as among "other events or
activities for amusement or entertainment, particularly those which
tend to disturb the community or annoy the inhabitants" or "certain
forms of amusement or entertainment" which the City Council may
suspend, suppress or prohibit.
The rule is that the City Council has only such powers as are
expressly granted to it and those which are necessarily implied or
incidental to the exercise thereof. By reason of its limited powers and
the nature thereof, said powers are to be construed strictissimi
juris and any doubt or ambiguity arising out of the terms used in
granting said powers must be construed against the City
Council. 112 Moreover, it is a general rule in statutory construction
that the express mention of one person, thing, or consequence is
tantamount to an express exclusion of all others. Expressio unius est
exclusio alterium. This maxim is based upon the rules of logic and the
natural workings of human mind. It is particularly applicable in the
construction of such statutes as create new rights or remedies, impose
27
CONSTITUTIONAL LAW 2 |
penalties or punishments, or otherwise come under the rule of strict
construction. 113
The argument that the City Council is empowered to enact
the Ordinance by virtue of the general welfare clause of the Code and
of Art. 3, Sec. 18 (kk) of the Revised Charter of Manila is likewise
without merit. On the first point, the ruling of the Court in People
v. Esguerra, 114 is instructive. It held that:
The powers conferred upon a municipal council in the general
welfare clause, or section 2238 of the Revised Administrative
Code, refers to matters not covered by the other provisions of
the same Code, and therefore it can not be applied to
intoxicating liquors, for the power to regulate the selling,
giving away and dispensing thereof is granted specifically by
section 2242 (g) to municipal councils. To hold that, under the
general power granted by section 2238, a municipal council
may enact the ordinance in question, notwithstanding the
provision of section 2242 (g), would be to make the latter
superfluous and nugatory, because the power to prohibit,
includes the power to regulate, the selling, giving away and
dispensing of intoxicating liquors.
On the second point, it suffices to say that the Code being a later
expression of the legislative will must necessarily prevail and override
the earlier law, the Revised Charter of Manila. Legis posteriores
priores contrarias abrogant, or later statute repeals prior ones which
are repugnant thereto. As between two laws on the same subject
matter, which are irreconcilably inconsistent, that which is passed
later prevails, since it is the latest expression of legislative will. 115 If
there is an inconsistency or repugnance between two statutes, both
relating to the same subject matter, which cannot be removed by any
fair and reasonable method of interpretation, it is the latest expression
of the legislative will which must prevail and override the earlier. 116
Implied repeals are those which take place when a subsequently
enacted law contains provisions contrary to those of an existing law
but no provisions expressly repealing them. Such repeals have been
divided into two general classes: those which occur where an act is so
inconsistent or irreconcilable with an existing prior act that only one
of the two can remain in force and those which occur when an act
covers the whole subject of an earlier act and is intended to be a
substitute therefor. The validity of such a repeal is sustained on the
ground that the latest expression of the legislative will should
prevail. 117
In addition, Section 534(f) of the Code states that "All general and
special laws, acts, city charters, decrees, executive orders,
proclamations and administrative regulations, or part or parts thereof
which are inconsistent with any of the provisions of this Code are
hereby repealed or modified accordingly." Thus, submitting to
petitioners' interpretation that the Revised Charter of Manila
empowers the City Council to prohibit motels, that portion of the
Charter stating such must be considered repealed by the Code as it is
at variance with the latter's provisions granting the City Council mere
regulatory powers.
It is well to point out that petitioners also cannot seek cover under the
general welfare clause authorizing the abatement of nuisances without
judicial proceedings. That tenet applies to a nuisance per se, or one
which affects the immediate safety of persons and property and may
be summarily abated under the undefined law of necessity. It can not
be said that motels are injurious to the rights of property, health or
comfort of the community. It is a legitimate business. If it be a
nuisance per accidens it may be so proven in a hearing conducted for
that purpose. A motel is not per se a nuisance warranting its summary
abatement without judicial intervention. 118
Notably, the City Council was conferred powers to prevent and
prohibit certain activities and establishments in another section of the
Code which is reproduced as follows:
Section 458.Powers, Duties, Functions and Compensation. —
(a) The sangguniang panlungsod, as the legislative body of the
28
CONSTITUTIONAL LAW 2 |
city, shall enact ordinances, approve resolutions and
appropriate funds for the general welfare of the city and its
inhabitants pursuant to Section 16 of this Code and in the
proper exercise of the corporate powers of the city as provided
for under Section 22 of this Code, and shall:
(1)Approve ordinances and pass resolutions necessary for an
efficient and effective city government, and in this connection,
shall:
xxx xxx xxx
(v)Enact ordinances intended to prevent, suppress and impose
appropriate penalties for habitual drunkenness in public places,
vagrancy, mendicancy, prostitution, establishment and
maintenance of houses of ill repute, gambling and other
prohibited games of chance, fraudulent devices and ways to
obtain money or property, drug addiction, maintenance of drug
dens, drug pushing, juvenile delinquency, the printing,
distribution or exhibition of obscene or pornographic materials
or publications, and such other activities inimical to the
welfare and morals of the inhabitants of the city;
xxx xxx xxx
If it were the intention of Congress to confer upon the City Council
the power to prohibit the establishments enumerated in Section 1 of
the Ordinance, it would have so declared in uncertain terms by adding
them to the list of the matters it may prohibit under the above-quoted
Section. The Ordinance now vainly attempts to lump these
establishments with houses of ill-repute and expand the City Council's
powers in the second and third clauses of Section 458 (a) 4 (vii) of the
Code in an effort to overreach its prohibitory powers. It is evident that
these establishments may only be regulated in their establishment,
operation and maintenance.
It is important to distinguish the punishable activities from the
establishments themselves. That these establishments are recognized
legitimate enterprises can be gleaned from another Section of the
Code. Section 131 under the Title on Local Government Taxation
expressly mentioned proprietors or operators of massage clinics,
sauna, Turkish and Swedish baths, hotels, motels and lodging houses
as among the "contractors" defined in paragraph (h) thereof. The same
Section also defined "amusement" as a "pleasurable diversion and
entertainment," "synonymous to relaxation, avocation, pastime or
fun;" and "amusement places" to include "theaters, cinemas, concert
halls, circuses and other places of amusement where one seeks
admission to entertain oneself by seeing or viewing the show or
performances." Thus, it can be inferred that the Code considers these
establishments as legitimate enterprises and activities. It is well to
recall the maxim reddendo singula singulis which means that words in
different parts of a statute must be referred to their appropriate
connection, giving to each in its place, its proper force and effect, and,
if possible, rendering none of them useless or superfluous, even if
strict grammatical construction demands otherwise. Likewise, where
words under consideration appear in different sections or are widely
dispersed throughout an act the same principle applies. 119
Not only does the Ordinance contravene the Code, it likewise runs
counter to the provisions of P.D. 499. As correctly argued by MTDC,
the statute had already converted the residential Ermita-Malate area
into a commercial area. The decree allowed the establishment and
operation of all kinds of commercial establishments except warehouse
or open storage depot, dump or yard, motor repair shop, gasoline
service station, light industry with any machinery or funeral
establishment. The rule is that for an ordinance to be valid and to have
force and effect, it must not only be within the powers of the council
to enact but the same must not be in conflict with or repugnant to the
general law. 120 As succinctly illustrated in Solicitor General
v. Metropolitan Manila Authority: 121
29
CONSTITUTIONAL LAW 2 |
The requirement that the enactment must not violate existing
law explains itself. Local political subdivisions are able to
legislate only by virtue of a valid delegation of legislative
power from the national legislature (except only that the power
to create their own sources of revenue and to levy taxes is
conferred by the Constitution itself). They are mere agents
vested with what is called the power of subordinate legislation.
As delegates of the Congress, the local government units
cannot contravene but must obey at all times the will of their
principal. In the case before us, the enactment in question,
which are merely local in origin cannot prevail against the
decree, which has the force and effect of a statute. 122
Petitioners contend that the Ordinance enjoys the presumption of
validity. While this may be the rule, it has already been held that
although the presumption is always in favor of the validity or
reasonableness of the ordinance, such presumption must nevertheless
be set aside when the invalidity or unreasonableness appears on the
face of the ordinance itself or is established by proper evidence. The
exercise of police power by the local government is valid unless it
contravenes the fundamental law of the land, or an act of the
legislature, or unless it is against public policy or is unreasonable,
oppressive, partial, discriminating or in derogation of a common
right. 123
Conclusion
All considered, the Ordinance invades fundamental personal and
property rights and impairs personal privileges. It is constitutionally
infirm. The Ordinance contravenes statutes; it is discriminatory and
unreasonable in its operation; it is not sufficiently detailed and explicit
that abuses may attend the enforcement of its sanctions. And not to be
forgotten, the City Council under the Code had no power to enact
the Ordinance and is thereforeultra vires, null and void.
Concededly, the challenged Ordinance was enacted with the best of
motives and shares the concern of the public for the cleansing of the
Ermita-Malate area of its social sins. Police power legislation of such
character deserves the full endorsement of the judiciary — we
reiterate our support for it. But inspite of its virtuous aims, the
enactment of the Ordinance has no statutory or constitutional
authority to stand on. Local legislative bodies, in this case, the City
Council, cannot prohibit the operation of the enumerated
establishments under Section 1 thereof or order their transfer or
conversion without infringing the constitutional guarantees of due
process and equal protection of laws — not even under the guise of
police power.
WHEREFORE, the Petition is hereby DENIED and the decision of
the Regional Trial Court declaring the Ordinance void is AFFIRMED.
Costs against petitioners.
SO ORDERED.
||| (City of Manila v. Laguio, Jr., G.R. No. 118127, [April 12, 2005],
495 PHIL 289-338)
[G.R. No. 93891. March 11, 1991.]
POLLUTION ADJUDICATION BOARD, petitioner, vs.
COURT OF APPEALS and SOLAR TEXTILE
FINISHING CORPORATION, respondents.
Oscar A. Pascua and Charemon Clio L. Borre for petitioner.
Leonardo A. Aurelio for respondent Solar Textile Finishing Corp.
SYLLABUS
30
CONSTITUTIONAL LAW 2 |
1. ADMINISTRATIVE LAW; POLLUTION ADJUDICATION
BOARD; MAY ISSUE CEASE AND DESIST ORDERS EX-PARTE;
BASIS. — Section 7(a) of P.D. No. 984 authorized petitioner Board to
issue ex parte cease and desist orders. An ex parte cease and desist
order may be issued by the Board (a) whenever the wastes discharged
by an establishment pose an "immediate threat to life, public health,
safety or welfare, or to animal or plant life," or (b) whenever such
discharges or wastes exceed "the allowable standards set by the
[NPCC]." On the one hand, it is not essential that the Board prove that
an "immediate threat to life, public health, safety or welfare, or to
animal or plant life" exists before an ex parte cease and desist order
may be issued. It is enough if the Board finds that the wastes
discharged do exceed "the allowable standards set by the [NPCC]." In
respect of discharges of wastes as to which allowable standards have
been set by the Commission, the Board may issue an ex parte cease
and desist order when there is prima facie evidence of an
establishment exceeding such allowable standards. Where, however,
the effluents or discharges have not yet been the subject matter of
allowable standards set by the Commission, then the Board may act
on an ex parte basis when it finds at least prima facie proof that the
wastewater or material involved presents an "immediate threat to life,
public health, safety or welfare or to animal or plant life." Since the
applicable standards set by the Commission existing at any given time
may well not cover every possible or imaginable kind of effluent or
waste discharge, the general standard of an "immediate threat to life
public health, safety or welfare, or to animal and plant life" remains
necessary.
2. POLITICAL LAW; POLICE POWER; ENACTMENT OF
POLLUTION CONTROL STATUTES AND IMPLEMENTING
REGULATIONS, AN EXERCISE THEREOF. — The relevant
pollution control statute and implementing regulations were enacted
and promulgated in the exercise of that persuasive, sovereign power to
protect the safety, health, and general welfare and comfort of the
public, as well as the protection of plant and animal life, commonly
designated as the police power.
3. CONSTITUTIONAL LAW; DUE PROCESS; YIELDS TO THE
EXERCISE OF POLICE POWER. — It is a constitutional common
place that the ordinary requirements of procedural due process yield to
the necessities of protecting vital public interests like those here
involved, through the exercise of police power.
4. ADMINISTRATIVE LAW; POLLUTION ADJUDICATION
BOARD; DUE PROCESS; HOLDING OF PUBLIC HEARING
AFTER EX-PARTE ISSUANCE OF A CEASE AND DESIST
ORDER, SUFFICIENT COMPLIANCE WITH DUE PROCESS
CLAUSE. — Where the establishment affected by an ex parte cease
and desist order contests the correctness of the prima facie findings of
the Board, the Board must hold a public hearing where such
establishment would have an opportunity to controvert the basis of
such ex parte order. That such an opportunity is subsequently
available is really all that is required by the due process clause of the
Constitution in situations like that we have here.
5. REMEDIAL LAW; ACTIONS; APPEAL; PROPER
REMEDY WHERE QUESTIONED ORDER AND WRIT OF
EXECUTION WHERE LAWFUL. — Solar claims finally that the
petition for certiorari was the proper remedy as the questioned Order
and Writ of Execution issued by the Board were patent nullities.
Since we have concluded that Order and Writ of Execution were
entirely within the lawful authority of petitioner Board, the trial
court did not err when it dismissed Solar's petition for certiorari. It
follows that the proper remedy was an appeal from the trial court to
the Court of Appeals, as Solar did in fact appeal.
RE S O LUTI ON
FELICIANO, J p:
Petitioner Pollution Adjudication Board ("Board") asks us to review
the Decision and Resolution promulgated on 7 February 1990 and 10
May 1990, respectively, by the Court of Appeals in C.A.-G.R. No. SP
18821 entitled "Solar Textile Finishing Corporation v. Pollution
31
CONSTITUTIONAL LAW 2 |
Adjudication Board." In that Decision and Resolution, the Court of
Appeals reversed an order of the Regional Trial Court, Quezon City,
Branch 77, in Civil Case No. Q-89-2287 dismissing private
respondent Solar Textile Finishing Corporation's ("Solar") petition for
certiorari and remanded the case to the trial court for further
proceedings.
On 22 September 1988, petitioner Board issued an ex parte Order
directing Solar immediately to cease and desist from utilizing its
wastewater pollution source installations which were discharging
untreated wastewater directly into a canal leading to the adjacent
Tullahan-Tinejeros River. The Order signed by Hon. Fulgencio
Factoran, Jr., as Board Chairman, reads in full as follows:
"Respondent, Solar Textile Finishing Corporation with plant
and place of business at 999 General Pascual Avenue,
Malabon, Metro Manila is involved in bleaching, rinsing and
dyeing textiles with wastewater of about 30 gpm. being
directly discharged untreated into the sewer. Based on findings
in the Inspections conducted on 05 November 1986 and 15
November 1986, the volume of untreated wastewater
discharged in the final outfall outside of the plant's compound
was even greater. The result of inspection conducted on 06
September 1988 showed that respondent's Wastewater
Treatment Plant was noted unoperational and the combined
wastewater generated from its operation was about 30 gallons
per minute and 80% of the wastewater was being directly
discharged into a drainage canal leading to the Tullahan-
Tinejeros River by means of a by-pass and the remaining 20%
was channeled into the plant's existing Wastewater Treatment
Plant (WTP). Result of the analyses of the sample taken from
the by - pass showed that the wastewater is highly pollutive in
terms of Color units, BOD and Suspended Solids, among
others. These acts of respondent in spite of directives to
comply with the requirements are clearly in violation of
Section 8 of Presidential Decree No. 984 and Section 103 of
its Implementing Rules and Regulations and the 1982 Effluent
Regulations.
WHEREFORE, pursuant to Section 7 of P.D. 984 and Section
38 of its Implementing Rules and Regulations, respondent is
hereby ordered to cease and desist from utilizing its
wastewater pollution source installations and discharging its
untreated wastewater directly into the canal leading to the
Tullahan-Tinejeros River effective immediately upon receipt
hereof and until such time when it has fully complied with all
the requirements and until further orders from this Board.
SO ORDERED." 1
We note that the above Order was based on findings of several
inspections of Solar's plant:
a. inspections conducted on 5 November 1986 and 12
November 1986 by the National Pollution Control
Commission ("NPCC"), the predecessor of the Board; 2 and
b. the inspection conducted on 6 September 1988 by the
Department of Environment and Natural Resources ("DENR").
The findings of these two (2) inspections were that Solar's
wastewater treatment plant was non-operational and that its plant
generated about 30 gallons per minute of wastewater, 80% of which
was being directly discharged into a drainage canal leading to the
Tullahan-Tinejeros River. The remaining 20% of the wastewater was
being channeled through Solar's non-operational wastewater
treatment plant. Chemical analysis of samples of Solar's effluents
showed the presence of pollutants on a level in excess of what was
permissible under P.D. No. 984 and its Implementing Regulations.
A copy of the above Order was received by Solar on 26 September
1988. A Writ of Execution issued by the Board was received by Solar
on 31 March 1989.
32
CONSTITUTIONAL LAW 2 |
Meantime, Solar filed a motion for reconsideration appeal with prayer
for stay of execution of the Order dated 22 September 1988. Acting on
this motion, the Board issued an Order dated 24 April 1989 allowing
Solar to operate temporarily, to enable the Board to conduct another
inspection and evaluation of Solar's wastewater treatment facilities. In
the same Order, the Board directed the Regional Executive Director of
the DENR NCR to conduct the inspection and evaluation within thirty
(30) days.
On 21 April 1989, however, Solar went to the Regional Trial Court of
Quezon City, Branch 77, on petition for certiorari with preliminary
injunction against the Board, the petition being docketed as Civil Case
No. Q-89-2287.
On 21 July 1989, the Regional Trial Court dismissed Solar's petition
upon two (2) grounds, i.e., that appeal and not certiorari from the
questioned Order of the Board as well as the Writ of Execution was
the proper remedy, and that the Board's subsequent Order allowing
Solar to operate temporarily had rendered Solar's petition moot and
academic.
Dissatisfied, Solar went on appeal to the Court of Appeals which, in
the Decision here assailed, reversed the Order of dismissal of the trial
court and remanded the case to that court for further proceedings. In
addition, the Court of Appeals declared the Writ of Execution null and
void. At the same time, the Court of Appeals said in the dispositive
portion of its Decision that:
". . . Still and all, this decision is without prejudice to whatever
action the appellee [Board] may take relative to the projected
'inspection and evaluation' of appellant's [Solar's] water
treatment facilities." 3
The Court of Appeals, in so ruling, held that certiorari was a proper
remedy since the Orders of petitioner Board may result in great and
irreparable injury to Solar; and that while the case might be moot and
academic, "larger issues" demanded that the question of due process
be settled. Petitioner Board moved for reconsideration, without
success.
The Board is now before us on a Petition for Review basically arguing
that:
1. its ex parte Order dated 22 September 1988 and the Writ of
Execution were issued in accordance with law and were
not violative of the requirements of due process; and
2. the ex parte Order and the Writ of Execution are not the
proper subjects of a petition for certiorari.
The only issue before us at this time is whether or not the Court of
Appeals erred in reversing the trial court on the ground that Solar had
been denied due process by the Board.
Petitioner Board claims that under P.D. No. 984, Section 7(a), it has
legal authority to issue ex parte orders to suspend the operations of an
establishment when there is prima facie evidence that such
establishment is discharging effluents or wastewater, the pollution
level of which exceeds the maximum permissible standards set by the
NPCC (now, the Board). Petitioner Board contends that the reports
before it concerning the effluent discharges of Solar into the Tullahan-
Tinejeros River provided prima facie evidence of violation by Solar of
Section 5 of the 1982 Effluent Code.
Solar, on the other hand, contends that under the Board's own rules
and regulations, an ex parte order may issue only if the effluents
discharged pose an "immediate threat to life, public health; safety or
welfare, or to animal and plant life." In the instant case, according to
Solar, the inspection reports before the Board made no finding that
Solar's wastewater discharged posed such a threat.
33
CONSTITUTIONAL LAW 2 |
The Court is not persuaded by Solar's contention. Section 7(a) of P.D.
No. 984 authorized petitioner Board to issue ex parte cease and desist
orders under the following circumstances:
"P.D. 984, Section 7, paragraph (a), provides:
(a) Public Hearing . . . Provided, That whenever the
Commission finds prima facie evidence that the discharged
sewage or wastes are of immediate threat to life, public health,
safety or welfare, or to animal or plant life, or exceeds the
allowable standards set by the Commission, the Commissioner
may issue an ex-parte order directing the discontinuance of
the same or the temporary suspension or cessation of
operation of the establishment or person generating such
sewage or wastes without the necessity of a prior public
hearing. The said ex-parte order shall be immediately
executory and shall remain in force until said establishment or
person prevents or abates the said pollution within the
allowable standards or modified or nullified by a competent
court." (Emphasis supplied).
We note that under the above-quoted portion of Section 7(a) of P.D.
No. 984, an ex parte cease and desist order may be issued by the
Board (a) whenever the wastes discharged by an establishment pose
an "immediate threat to life, public health, safety or welfare, or to
animal or plant life," or (b) whenever such discharges or wastes
exceed "the allowable standards set by the [NPCC]." On the one hand,
it is not essential that the Board prove that an "immediate threat to
life, public health, safety or welfare, or to animal or plant life" exists
before an ex parte cease and desist order may be issued. It is enough if
the Board finds that the wastes discharged do exceed "the allowable
standards set by the [NPCC]." In respect of discharges of wastes as to
which allowable standards have been set by the Commission, the
Board may issue an ex parte cease and desist order when there
is prima facieevidence of an establishment exceeding such allowable
standards. Where, however, the effluents or discharges have not yet
been the subject matter of allowable standards set by the Commission,
then the Board may act on an ex parte basis when it finds at
least prima facie proof that the wastewater or material involved
presents an "immediate threat to life, public health, safety or welfare
or to animal or plant life." Since the applicable standards set by the
Commission existing at any given time may well not cover every
possible or imaginable kind of effluent or waste discharge, the general
standard of an "immediate threat to life public health, safety or
welfare, or to animal and plant life" remains necessary.
Upon the other hand, the Court must assume that the extant allowable
standards have been set by the Commission or Board precisely in
order to avoid or neutralize an "immediate threat to life, public health,
safety or welfare, or to animal or plant life."
Section 5 of the Effluent Regulations of 1982 4 sets out the maximum
permissible levels of physical and chemical substances which
effluents from domestic wastewater treatment plants and industrial
plants must not exceed "when discharged into bodies of water
classified as Class A, B, C, D, SB and SC in accordance with the 1978
NPCC Rules and Regulations." The waters of Tullahan-Tinejeros
River are classified as inland waters Class D underSection 68 of the
1978 NPCC Rules and Regulations, 5 which in part provides that:
"Section 68. Water Usage and Classification. — The quality of
Philippine waters shall be maintained in a safe and
satisfactory condition according to their best usages. For this
purpose, all water shall be classified according to the
following beneficial usages:
(a) Fresh Surface Water.
Classification Best usage
xxx xxx xxx
Class D For agriculture, irrigation, live stock watering and
industrial cooling and processing
34
CONSTITUTIONAL LAW 2 |
xxx xxx xxx h) Detergents 5 h) Detergents 2.93
in mg./l." mg./l. MBAS
(Emphases supplied) i) Dissolved 0
Oxygen, mg./l.
The reports on the inspections carried on Solar's wastewater treatment j) Settleable 0.4 1.5
facilities on 5 and 12 November 1986 and 6 September 1988 set forth Matter, mg./l.
the following identical finding: k) Total Dis- 800 610
solved Solids
"a. For legal action in [view of] violation of Section 103 of the mg./l.
implementing rules and regulations of P.D. No. 984 and l) Total Solids 1,400 690
Section 5 of the Effluent Regulations of 1982." 6 mg./l.
m) Turbidity
Placing the maximum allowable standards set in Section 5 of the NTU/ppm. SiO3 70
Effluent Regulations of 1982 alongside the findings of the November
1986 and September 1988 inspection reports, we get the following The November 1986 inspections report concluded that:
results:
"Records of the Commission show that the plant under its
"Inland November September previous owner, Fine Touch Finishing Corporation, was issued
Waters 1986 1988 a Notice of Violation on 20 December 1985 directing same to
(Class C & D) 7 Report 8 Report 9 cease and desist from conducting dyeing operation until such
Station 1 Station 1 time the waste treatment plant is already completed and
a) Color in 100 a) Color units 250 125 operational. The new owner Solar Textile Corporation
platinum (Apparent informed the Commission of the plant acquisition thru its letter
cobalt Color) dated March 1986 (sic).
units
b) p H 6-8.5 b) pH 9.3 8.7 The new owner was summoned to a hearing held on 13
c) Tempera- 40 c) Temperature October 1986 based on the adverse findings during the
ture in ºC (ºC) inspection/water sampling test conducted on 08 August 1986.
d) Phenols in 0.1 d) Phenols in As per instruction of the Legal Division a re-
mg./l. mg./l. inspection/sampling test should be conducted first before an
e) Suspended 75 e) Suspended 340 80 appropriate legal action is instituted; hence, this inspection.
solids in solids in
mg./l. mg./l. Based on the above findings, it is clear that the new owner
f) BOD in 80 f) BOD (5-day) 1,100 152 continuously violates the directive of the Commission by
mg./l mg./l. undertaking dyeing operation without completing first and
g) oil/Grease 10 g) Oil/Grease operating its existing WTP. The analysis of results on water
in mg./l. mg./l. samples taken showed that the untreated wastewater from the
35
CONSTITUTIONAL LAW 2 |
firm pollutes our water resources. In this connection, it is
recommended that appropriate legal action be instituted
immediately against the firm . . ." 10
The September 1988 inspection report's conclusions were:
"1. The plant was undertaking dyeing, bleaching and rinsing
operations during the inspection. The combined wastewater
generated from the said operations was estimated at about 30
gallons per minute. About 80% of the wastewater was traced
directly discharged into a drainage canal leading to the
Tullahan - Tinejeros river by means of a bypass. The
remaining 20% was channeled into the plant's existing
wastewater treatment plant (WTP).
2. The WTP was noted not yet fully operational — some
accessories were not yet installed. Only the sump pit and the
holding/collecting tank are functional but appeared seldom
used. The wastewater mentioned channeled was noted held
indefinitely into the collection tank for primary treatment.
There was no effluent discharge [from such collection tank].
3. A sample from the bypass wastewater was collected for
laboratory analyses. Result of the analyses show that the
bypass wastewater is polluted in terms of color units, BOD
and suspended solids, among others. (Please see attached
laboratory result)." 11
From the foregoing reports, it is clear to this Court that there was at
least prima facie evidence before the Board that the effluents
emanating from Solar's plant exceeded the maximum allowable levels
of physical and chemical substances set by the NPCC and that
accordingly there was adequate basis supporting the ex parte cease
and desist order issued by the Board. It is also well to note that the
previous owner of the plant facility — Fine Touch Finishing
Corporation — had been issued a Notice of Violation on 20 December
1985 directing it to cease and refrain from carrying out dyeing
operations until the water treatment plant was completed and
operational. Solar, the new owner, informed the NPCC of the
acquisition of the plant on March 1986. Solar was summoned by the
NPCC to a hearing on 13 October 1986 based on the results of the
sampling test conducted by the NPCC on 8 August 1986. Petitioner
Board refrained from issuing an ex parte cease and desist order until
after the November 1986 and September 1988 re-inspections were
conducted and the violation of applicable standards was confirmed. In
other words, petitioner Board appears to have been remarkably
forbearing in its efforts to enforce the applicable standards vis-a-vis
Solar. Solar, on the other hand, seemed very casual about its continued
discharge of untreated, pollutive effluents into the Tullahan-Tinejeros
River, presumably loath to spend the money necessary to put its
Wastewater Treatment Plant ("WTP") in an operating condition.
In this connection, we note that in Technology Developers,
Inc. v. Court of Appeals, et al., 12 the Court very recently upheld the
summary closure ordered by the Acting Mayor of Sta. Maria, Bulacan,
of a pollution-causing establishment, after finding that the records
showed that:
"1. No mayor's permit had been secured. While it is true that
the matter of determining whether there is a pollution of the
environment that requires control if not prohibition of the
operation of a business is essentially addressed to the then
National Pollution Control Commission of the Ministry of
Human Settlements, now the Environmental Management
Bureau of the Department of Environment and Natural
Resources, it must be recognized that the mayor of a town has
as much responsibility to protect its inhabitants from pollution,
and by virtue of his police power, he may deny the application
for a permit to operate a business or otherwise close the same
unless appropriate measures are taken to control and or avoid
injury to the health of the residents of the community from the
emission in the operation of the business.
36
CONSTITUTIONAL LAW 2 |
2. The Acting Mayor, in a letter of February 16, 1989, called
the attention of petitioner to the pollution emitted by the fumes
of its plant whose offensive odor "not only pollute the air in
the locality but also affect the health of the residents in the
area," so that petitioner was ordered to stop its operation until
further orders and it was required to bring the following:
xxx xxx xxx
(3) Region III-Department of Environment and
Natural Resources Anti-Pollution permit. (Annex A-2,
petition).
3. This action of the Acting Mayor was in response to the
complaint of the residents of Barangay Guyong, Sta. Maria,
Bulacan, directed to the Provincial Governor through channels
(Annex A-B, petition). . . .
4. The closure order of the Acting Mayor was issued only after
an investigation was made by Marivic Guina who in her report
of December 8, 1988 observed that the fumes emitted by the
plant of petitioner goes directly to the surrounding houses and
that no proper air pollution device has been installed. (Annex
A-9, petition).
xxx xxx xxx
6. While petitioner was able to present a temporary permit to
operate by the then National Pollution Control Commission on
December 15, 1987, the permit was good only up to May 25,
1988 (Annex A-12, petition). Petitioner had not exerted any
effort to extend or validate its permit much less to install any
device to control the pollution and prevent any hazard to the
health of the residents of the community."
In the instant case, the ex parte cease and desist Order was issued not
by a local government official but by the Pollution Adjudication
Board, the very agency of the Government charged with the task of
determining whether the effluents of a particular industrial
establishment comply with or violate applicable anti-pollution
statutory and regulatory provisions.
Ex parte cease and desist orders are permitted by law and regulations
in situations like that here presented precisely because stopping the
continuous discharge of pollutive and untreated effluents into the
rivers and other inland waters of the Philippines cannot be made to
wait until protracted litigation over the ultimate correctness or
propriety of such orders has run its full course, including multiple and
sequential appeals such as those which Solar has taken, which of
course may take several years. The relevant pollution control statute
and implementing regulations were enacted and promulgated in the
exercise of that persuasive, sovereign power to protect the safety,
health, and general welfare and comfort of the public, as well as the
protection of plant and animal life, commonly designated as the police
power. It is a constitutional common place that the ordinary
requirements of procedural due process yield to the necessities of
protecting vital public interests like those here involved, through the
exercise of police power. The Board's ex parte Order and Writ of
Execution would, of course, have compelled Solar temporarily to stop
its plant operations, a state of affairs Solar could in any case have
avoided by simply absorbing the bother and burden of putting its WTP
on an operational basis. Industrial establishments are not
constitutionally entitled to reduce their capitals costs and operating
expenses and to increase their profits by imposing upon the public
threats and risks to its safety, health, general welfare and comfort, by
disregarding the requirements of anti-pollution statutes and their
implementing regulations. cdll
It should perhaps be made clear the Court is not here saying that the
correctness of the ex parte Order and Writ of Execution may not be
contested by Solar in a hearing before the Board itself. Where the
establishment affected by an ex parte cease and desist order contests
the correctness of the prima facie findings of the Board, the Board
must hold a public hearing where such establishment would have an
37
CONSTITUTIONAL LAW 2 |
opportunity to controvert the basis of such ex parte order. That such
an opportunity is subsequently available is really all that is required
by the due process clause of the Constitution in situations like that we
have here. The Board's decision rendered after the public hearing may
then be tested judicially by an appeal to the Court of Appeals in
accordance with Section 7(c) of P.D. No. 984 and Section 42 of the
Implementing Rules and Regulations. A subsequent public hearing is
[G.R. No. 130230. April 15, 2005.]
precisely what Solar should have sought instead of going to court to
seek nullification of the Board's Order and Writ of Execution and
METROPOLITAN MANILA DEVELOPMENT
instead of appealing to the Court of Appeals. It will be recalled that
AUTHORITY, petitioner, vs. DANTE O.
the Board in fact gave Solar authority temporarily to continue
GARIN, respondent.
operations until still another inspection of its wastewater treatment
facilities and then another analysis of effluent samples could be taken
DECISION
and evaluated.
CHICO-NAZARIO, J p:
Solar claims finally that the petition for certiorari was the proper
remedy as the questioned Order and Writ of Execution issued by the
At issue in this case is the validity of Section 5(f) of Republic Act No.
Board were patent nullities. Since we have concluded that Order and
7924 creating the Metropolitan Manila Development Authority
Writ of Execution were entirely within the lawful authority of
(MMDA), which authorizes it to confiscate and suspend or revoke
petitioner Board, the trial court did not err when it dismissed Solar's
driver's licenses in the enforcement of traffic laws and regulations.
petition for certiorari. It follows that the proper remedy was an appeal
from the trial court to the Court of Appeals, as Solar did in fact appeal.
The issue arose from an incident involving the respondent Dante O.
Garin, a lawyer, who was issued a traffic violation receipt (TVR) and
ACCORDINGLY, the Petition for Review is given DUE COURSE
his driver's license confiscated for parking illegally along Gandara
and the Decision of the Court of Appeals dated 7 February 1990 and
Street, Binondo, Manila, on 05 August 1995. The following
its Resolution dated 10 May 1990 in A.C.-G.R. No. SP 18821 are
statements were printed on the TVR:
hereby SET ASIDE. The Order of petitioner Board dated 22
September 1988 and the Writ of Execution, as well as the decision of
YOU ARE HEREBY DIRECTED TO REPORT TO THE
the trial court dated 21 July 1989, are hereby REINSTATED, without
MMDA TRAFFIC OPERATIONS CENTER PORT AREA
prejudice to the right of Solar to contest the correctness of the basis of
MANILA AFTER 48 HOURS FROM DATE OF
the Board's Order and Writ of Execution at a public hearing before the
APPREHENSION FOR DISPOSITION/APPROPRIATE
Board.
ACTION THEREON. CRIMINAL CASE SHALL BE FILED
FOR FAILURE TO REDEEM LICENSE AFTER 30 DAYS.
Fernan, C.J., Gutierrez, Jr., Bidin and Davide, Jr., JJ., concur.
VALID AS TEMPORARY DRIVER'S LICENSE FOR
||| (Pollution Adjudication Board v. Court of Appeals, G.R. No. 93891
SEVEN DAYS FROM DATE OF APPREHENSION. 1
(Resolution), [March 11, 1991], 272-A PHIL 66-80)
38
CONSTITUTIONAL LAW 2 |
Shortly before the expiration of the TVR's validity, the respondent
addressed a letter 2 to then MMDA Chairman Prospero Oreta
requesting the return of his driver's license, and expressing his
preference for his case to be filed in court.
Receiving no immediate reply, Garin filed the original
complaint 3 with application for preliminary injunction in Branch 260
of the Regional Trial Court (RTC) of Parañaque, on 12 September
1995, contending that, in the absence of any implementing rules and
regulations, Sec. 5(f) of Rep. Act No. 7924 grants the MMDA
unbridled discretion to deprive erring motorists of their licenses, pre-
empting a judicial determination of the validity of the deprivation,
thereby violating the due process clause of the Constitution. The
respondent further contended that the provision violates the
constitutional prohibition against undue delegation of legislative
authority, allowing as it does the MMDA to fix and impose
unspecified — and therefore unlimited — fines and other penalties on
erring motorists.
In support of his application for a writ of preliminary injunction,
Garin alleged that he suffered and continues to suffer great and
irreparable damage because of the deprivation of his license and that,
absent any implementing rules from the Metro Manila Council, the
TVR and the confiscation of his license have no legal basis.
For its part, the MMDA, represented by the Office of the Solicitor
General, pointed out that the powers granted to it by Sec. 5(f) of Rep.
Act No. 7924 are limited to the fixing, collection and imposition of
fines and penalties for traffic violations, which powers are legislative
and executive in nature; the judiciary retains the right to determine the
validity of the penalty imposed. It further argued that the doctrine of
separation of powers does not preclude "admixture" of the three
powers of government in administrative agencies. 4
The MMDA also refuted Garin's allegation that the Metro Manila
Council, the governing board and policy making body of the
petitioner, has as yet to formulate the implementing rules for Sec. 5(f)
of Rep. Act No. 7924 and directed the court's attention to MMDA
Memorandum Circular No. TT-95-001 dated 15 April 1995.
Respondent Garin, however, questioned the validity of MMDA
Memorandum Circular No. TT-95-001, as he claims that it was passed
by the Metro Manila Council in the absence of a quorum.
Judge Helen Bautista-Ricafort issued a temporary restraining order on
26 September 1995, extending the validity of the TVR as a temporary
driver's license for twenty more days. A preliminary mandatory
injunction was granted on 23 October 1995, and the MMDA was
directed to return the respondent's driver's license.
On 14 August 1997, the trial court rendered the assailed decision 5 in
favor of the herein respondent and held that:
a. There was indeed no quorum in that First Regular Meeting
of the MMDA Council held on March 23, 1995, hence MMDA
Memorandum Circular No. TT-95-001, authorizing
confiscation of driver's licenses upon issuance of a TVR, is
void ab initio.
b. The summary confiscation of a driver's license without first
giving the driver an opportunity to be heard; depriving him of
a property right (driver's license) without DUE PROCESS; not
filling (sic) in Court the complaint of supposed traffic
infraction, cannot be justified by any legislation (and is) hence
unconstitutional.
WHEREFORE, the temporary writ of preliminary injunction is
hereby made permanent; th(e) MMDA is directed to return to
plaintiff his driver's license; th(e) MMDA is likewise ordered
to desist from confiscating driver's license without first giving
the driver the opportunity to be heard in an appropriate
proceeding.
In filing this petition, 6 the MMDA reiterates and reinforces its
argument in the court below and contends that a license to operate a
39
CONSTITUTIONAL LAW 2 |
motor vehicle is neither a contract nor a property right, but is a
privilege subject to reasonable regulation under the police power in
the interest of the public safety and welfare. The petitioner further
argues that revocation or suspension of this privilege does not
constitute a taking without due process as long as the licensee is given
the right to appeal the revocation.
To buttress its argument that a licensee may indeed appeal the taking
and the judiciary retains the power to determine the validity of the
confiscation, suspension or revocation of the license, the petitioner
points out that under the terms of the confiscation, the licensee has
three options:
1. To voluntarily pay the imposable fine,
2. To protest the apprehension by filing a protest with the
MMDA Adjudication Committee, or
3. To request the referral of the TVR to the Public Prosecutor's
Office.
The MMDA likewise argues that Memorandum Circular No. TT-95-
001 was validly passed in the presence of a quorum, and that the
lower court's finding that it had not was based on a "misapprehension
of facts," which the petitioner would have us review. Moreover, it
asserts that though the circular is the basis for the issuance of TVRs,
the basis for the summary confiscation of licenses is Sec. 5(f) of Rep.
Act No. 7924 itself, and that such power is self-executory and does
not require the issuance of any implementing regulation or circular.
Meanwhile, on 12 August 2004, the MMDA, through its Chairman
Bayani Fernando, implemented Memorandum Circular No. 04, Series
of 2004, outlining the procedures for the use of the Metropolitan
Traffic Ticket (MTT) scheme. Under the circular, erring motorists are
issued an MTT, which can be paid at any Metrobank branch. Traffic
enforcers may no longer confiscate drivers' licenses as a matter of
course in cases of traffic violations. All motorists with unredeemed
TVRs were given seven days from the date of implementation of the
new system to pay their fines and redeem their license or vehicle
plates. 7
It would seem, therefore, that insofar as the absence of a prima
facie case to enjoin the petitioner from confiscating drivers' licenses is
concerned, recent events have overtaken the Court's need to decide
this case, which has been rendered moot and academic by the
implementation of Memorandum Circular No. 04, Series of 2004.
The petitioner, however, is not precluded from re-implementing
Memorandum Circular No. TT-95-001, or any other scheme, for that
matter, that would entail confiscating drivers' licenses. For the proper
implementation, therefore, of the petitioner's future programs, this
Court deems it appropriate to make the following observations:
1. A license to operate a motor vehicle is a privilege that the state
may withhold in the exercise of its police power.
The petitioner correctly points out that a license to operate a motor
vehicle is not a property right, but a privilege granted by the state,
which may be suspended or revoked by the state in the exercise of its
police power, in the interest of the public safety and welfare, subject
to the procedural due process requirements. This is consistent with our
rulings in Pedro v. Provincial Board of Rizal 8 on the license to
operate a cockpit, Tan v. Director of Forestry 9 and Oposa v.
Factoran 10 on timber licensing agreements, and Surigao Electric
Co., Inc. v. Municipality of Surigao 11 on a legislative franchise to
operate an electric plant.
Petitioner cites a long list of American cases to prove this point, such
as State ex. Rel. Sullivan, 12 which states in part that, "the legislative
power to regulate travel over the highways and thoroughfares of the
state for the general welfare is extensive. It may be exercised in any
reasonable manner to conserve the safety of travelers and pedestrians.
Since motor vehicles are instruments of potential danger, their
registration and the licensing of their operators have been required
40
CONSTITUTIONAL LAW 2 |
almost from their first appearance. The right to operate them in public
places is not a natural and unrestrained right, but a privilege subject to
reasonable regulation, under the police power, in the interest of the
public safety and welfare. The power to license imports further power
to withhold or to revoke such license upon noncompliance with
prescribed conditions."
Likewise, the petitioner quotes the Pennsylvania Supreme Court
in Commonwealth v. Funk, 13 to the effect that: "Automobiles are
vehicles of great speed and power. The use of them constitutes an
element of danger to persons and property upon the highways.
Carefully operated, an automobile is still a dangerous instrumentality,
but, when operated by careless or incompetent persons, it becomes an
engine of destruction. The Legislature, in the exercise of the police
power of the commonwealth, not only may, but must, prescribe how
and by whom motor vehicles shall be operated on the highways. One
of the primary purposes of a system of general regulation of the
subject matter, as here by the Vehicle Code, is to insure the
competency of the operator of motor vehicles. Such a general law is
manifestly directed to the promotion of public safety and is well
within the police power."
The common thread running through the cited cases is that it is the
legislature, in the exercise of police power, which has the power and
responsibility to regulate how and by whom motor vehicles may be
operated on the state highways.
2. The MMDA is not vested with police power.
In Metro Manila Development Authority v. Bel-Air Village
Association, Inc., 14 we categorically stated that Rep. Act No.
7924 does not grant the MMDA with police power, let alone
legislative power, and that all its functions are administrative in
nature.
The said case also involved the herein petitioner MMDA which
claimed that it had the authority to open a subdivision street owned by
the Bel-Air Village Association, Inc. to public traffic because it is an
agent of the state endowed with police power in the delivery of basic
services in Metro Manila. From this premise, the MMDA argued that
there was no need for the City of Makati to enact an ordinance
opening Neptune Street to the public.
Tracing the legislative history of Rep. Act No. 7924 creating the
MMDA, we concluded that the MMDA is not a local government unit
or a public corporation endowed with legislative power, and, unlike its
predecessor, the Metro Manila Commission, it has no power to enact
ordinances for the welfare of the community. Thus, in the absence of
an ordinance from the City of Makati, its own order to open the street
was invalid.
We restate here the doctrine in the said decision as it applies to the
case at bar: police power, as an inherent attribute of sovereignty, is the
power vested by the Constitution in the legislature to make, ordain,
and establish all manner of wholesome and reasonable laws, statutes
and ordinances, either with penalties or without, not repugnant to
the Constitution, as they shall judge to be for the good and welfare of
the commonwealth, and for the subjects of the same.
Having been lodged primarily in the National Legislature, it cannot be
exercised by any group or body of individuals not possessing
legislative power. The National Legislature, however, may delegate
this power to the president and administrative boards as well as the
lawmaking bodies of municipal corporations or local government
units (LGUs). Once delegated, the agents can exercise only such
legislative powers as are conferred on them by the national lawmaking
body.
Our Congress delegated police power to the LGUs in the Local
Government Code of 1991. 15 A local government is a "political
subdivision of a nation or state which is constituted by law and has
substantial control of local affairs." 16 Local government units are the
41
CONSTITUTIONAL LAW 2 |
provinces, cities, municipalities and barangays, which exercise police
power through their respective legislative bodies.
Metropolitan or Metro Manila is a body composed of several local
government units. With the passage of Rep. Act No. 7924 in 1995,
Metropolitan Manila was declared as a "special development and
administrative region" and the administration of "metro-wide" basic
services affecting the region placed under "a development authority"
referred to as the MMDA. Thus:
. . . [T]he powers of the MMDA are limited to the following
acts: formulation, coordination, regulation, implementation,
preparation, management, monitoring, setting of policies,
installation of a system and administration. There is no
syllable in R. A. No. 7924 that grants the MMDA police
power, let alone legislative power. Even the Metro Manila
Council has not been delegated any legislative power.
Unlike the legislative bodies of the local government
units, there is no provision in R. A. No. 7924 that empowers
the MMDA or its Council to "enact ordinances, approve
resolutions and appropriate funds for the general welfare"
of the inhabitants of Metro Manila. The MMDA is, as
termed in the charter itself, a "development authority." It is an
agency created for the purpose of laying down policies and
coordinating with the various national government
agencies, people's organizations, non-governmental
organizations and the private sector for the efficient and
expeditious delivery of basic services in the vast
metropolitan area. All its functions are administrative in
nature and these are actually summed up in the charter itself,
viz:
"Sec. 2. Creation of the Metropolitan Manila
Development Authority. — . . .
The MMDA shall perform planning, monitoring and
coordinative functions, and in the process exercise
regulatory and supervisory authority over the delivery
of metro-wide services within Metro Manila, without
diminution of the autonomy of the local government
units concerning purely local matters."
xxx xxx xxx
Clearly, the MMDA is not a political unit of government. The
power delegated to the MMDA is that given to the Metro
Manila Council to promulgate administrative rules and
regulations in the implementation of the MMDA's
functions. There is no grant of authority to enact ordinances
and regulations for the general welfare of the inhabitants of
the metropolis. 17 (footnotes omitted, emphasis supplied)
Therefore, insofar as Sec. 5(f) of Rep. Act No. 7924 is understood by
the lower court and by the petitioner to grant the MMDA the power to
confiscate and suspend or revoke drivers' licenses without need of any
other legislative enactment, such is an unauthorized exercise of police
power.
3. Sec. 5(f) grants the MMDA with the duty to enforce existing
traffic rules and regulations.
Section 5 of Rep. Act No. 7924 enumerates the "Functions and
Powers of the Metro Manila Development Authority." The contested
clause in Sec. 5(f) states that the petitioner shall "install and
administer a single ticketing system, fix, impose and collect fines and
penalties for all kinds of violations of traffic rules and regulations,
whether moving or nonmoving in nature, and confiscate and suspend
or revoke drivers' licenses in the enforcement of such traffic laws and
regulations, the provisions of Rep. Act No. 4136 18 and P.D. No.
1605 19 to the contrary notwithstanding," and that "(f)or this purpose,
the Authority shall enforce all traffic laws and regulations in Metro
Manila, through its traffic operation center, and may deputize
members of the PNP, traffic enforcers of local government units, duly
licensed security guards, or members of non-governmental
42
CONSTITUTIONAL LAW 2 |
organizations to whom may be delegated certain authority, subject to
such conditions and requirements as the Authority may impose."
Thus, where there is a traffic law or regulation validly enacted by the
legislature or those agencies to whom legislative powers have been
delegated (the City of Manila in this case), the petitioner is not
precluded — and in fact is duty-bound — to confiscate and suspend or
revoke drivers' licenses in the exercise of its mandate of transport and
traffic management, as well as the administration and implementation
of all traffic enforcement operations, traffic engineering services and
traffic education programs. 20
This is consistent with our ruling in Bel-Air that the MMDA is a
development authority created for the purpose of laying down policies
and coordinating with the various national government agencies,
people's organizations, non-governmental organizations and the
private sector, which may enforce, but not enact, ordinances.
This is also consistent with the fundamental rule of statutory
construction that a statute is to be read in a manner that would breathe
life into it, rather than defeat it, 21 and is supported by the criteria in
cases of this nature that all reasonable doubts should be resolved in
favor of the constitutionality of a statute. 22
A last word. The MMDA was intended to coordinate services with
metro-wide impact that transcend local political boundaries or would
entail huge expenditures if provided by the individual LGUs,
especially with regard to transport and traffic management, 23 and we
are aware of the valiant efforts of the petitioner to untangle the
increasingly traffic-snarled roads of Metro Manila. But these laudable
intentions are limited by the MMDA's enabling law, which we can but
interpret, and petitioner must be reminded that its efforts in this
respect must be authorized by a valid law, or ordinance, or regulation
arising from a legitimate source. AEDISC
WHEREFORE, the petition is dismissed.
SO ORDERED.
||| (MMDA v. Garin, G.R. No. 130230, [April 15, 2005], 496 PHIL 82-
97)
[G.R. No. 126102. December 4, 2000.]
ORTIGAS & CO. LTD., petitioner, vs. THE COURT OF
APPEALS and ISMAEL G. MATHAY III, respondents.
Atty. Eulogio R. Rodriguez for petitioner.
Puhawan Aldon & Associates Law Offices for private respondent.
SYNOPSIS
Petitioner Ortigas sold to the Hermosos a parcel of land in Greenhills
Subdivision. The contract of sale provided that the lot will be used for
single-family residential building only and this was annotated at the
back of the title of the lot. In 1981, the Metropolitan Commission
enacted MMC Ordinance No. 81-01 reclassifying as a commercial
zone the stretch of Ortigas Avenue from Roosevelt Street to Madison
Street. Subsequently in 1984, private respondent Mathay III leased the
lot from Hermoso and constructed a commercial building for
Greenhills Autohaus, Inc., a car sales company.
Petitioner filed Civil Case No. 4 seeking to enjoin the building by
respondent of structure on the lot and sought the demolition of the
commercial structure for having violated the terms and conditions of
the Deed of Sale. The trial court issued the injunctive order ruling that
the ordinance should be given prospective application. On certiorari,
however, the CA granted the petition, ruling that the trial court gravely
43
CONSTITUTIONAL LAW 2 |
abused its discretion in refusing to treat MMC Ordinance No. 81-01 as
applicable to Civil Case No. 64931. CA held that the ordinance
effectively nullified the restrictions allowing only residential use of
the property in question.
In this petition, petitioner claims that even with the zoning ordinance,
the seller and buyer of the re-classified lot can voluntarily agree to an
exclusive residential use thereof; and that respondent Mathay III as a
mere lessee of the lot in question, is a total stranger to the deed of sale
and is thus barred from questioning the condition of said deed.
The Supreme Court denied the petition, ruling: that while as a rule,
laws are to be construed as having only prospective operation, one
exception is a law which involves police power, which could be given
retroactive effect and may reasonably impair vested rights or
contracts; that the MMC Ordinance No. 81-01 has been held to be a
legitimate police power measure to which the non-impairment of
contracts or vested rights clauses will have to yield; and that Mathay
III in this case is clearly a real party in interest because he holds the
lot pursuant to a valid lease and it is his building of a commercial
structure which petitioner seeks to enjoin.
SYLLABUS
1. STATUTORY CONSTRUCTION; LAWS ARE GENERALLY
GIVEN PROSPECTIVE APPLICATION; LAW WHICH INVOLVES
POLICE POWER IS AN EXCEPTION. — In general, we agree that
laws are to be construed as having only prospective operation. Lex
prospicit, non respicit. Equally settled, only laws existing at the time
of the execution of a contract are applicable thereto and are not later
statutes, unless the latter are specifically intended to have a retroactive
effect. A later law which enlarges, abridges, or in any manner changes
the intent of the parties to the contract necessarily impairs the contract
itself and cannot be given retroactive effect without violating the
constitutional prohibition against impairment of contracts. But, the
foregoing principles do admit of certain exceptions. One involves
police power. A law enacted in the exercise of police power to
regulate or govern certain activities or transactions could be given
retroactive effect and may reasonably impair vested rights or
contracts. Police power legislation is applicable not only to future
contracts, but equally to those already in existence. Nonimpairment of
contracts or vested rights clauses will have to yield to the superior and
legitimate exercise by the State of police power to promote the health,
morals, peace, education, good order, safety, and general welfare of
the people. Moreover, statutes in exercise of valid police power must
be read into every contract.
2. CONSTITUTIONAL LAW; POLICE POWER; CONTRACTUAL
STIPULATIONS AND VESTED RIGHTS MUST YIELD TO
POLICE POWER; CASE AT BAR. — Noteworthy, in Sangalang vs.
Intermediate Appellate Court, we already upheld MMC Ordinance
No. 81-01 as a legitimate police power measure. Following our ruling
in Ortigas & Co., Ltd. vs. Feati Bank & Trust Co., 94 SCRA 533
(1979), the contractual stipulations annotated on the Torrens Title, on
which Ortigas relies, must yield to the ordinance. When that stretch of
Ortigas Avenue from Roosevelt Street to Madison Street was
reclassified as a commercial zone by the Metropolitan Manila
Commission in March 1981, the restrictions in the contract of sale
between Ortigas and Hermoso, limiting all construction on the
disputed lot to single-family residential buildings, were deemed
extinguished by the retroactive operation of the zoning ordinance and
could no longer be enforced. While our legal system upholds the
sanctity of contract so that a contract is deemed law between the
contracting parties, nonetheless, stipulations in a contract cannot
contravene "law, morals, good customs, public order, or public
policy." Otherwise such stipulations would be deemed null and void.
3. REMEDIAL LAW; CIVIL PROCEDURE; REAL PARTY IN
INTEREST; LESSEE WHO BUILT COMMERCIAL STRUCTURE
SOUGHT TO BE DEMOLISHED IS A REAL PARTY IN
INTEREST. — By real interest is meant a present substantial interest,
as distinguished from a mere expectancy or a future, contingent,
subordinate, or consequential interest. Tested by the foregoing
definition, private respondent in this case is clearly a real party in
44
CONSTITUTIONAL LAW 2 |
interest. It is not disputed that he is in possession of the lot pursuant to
valid lease. He is a possessor in the concept of a "holder of the thing"
under Article 525 of the Civil Code. He was impleaded as a defendant
in the amended complaint in Civil Case No. 64931. Further, what
petitioner seeks to enjoin is the building by respondent of a
commercial structure on the lot. Clearly, it is private respondent's acts
which are in issue, and his interest in said issue cannot be a mere
incidental interest. In its amended complaint, petitioner prayed for,
among others, judgment "ordering the demolition of all improvements
illegally built on the lot in question." These show that it is petitioner
Mathay III, doing business as "Greenhills Autohaus, Inc.," and not
only the Hermosos, who will be adversely affected by the court's
decree.
DECISION
QUISUMBING, J p:
This petition seeks to reverse the decision of the Court of Appeals,
dated March 25, 1996, in CA-G.R. SP No. 39193, which nullified the
writ of preliminary injunction issued by the Regional Trial Court of
Pasig City, Branch 261, in Civil Case No. 64931. It also assails the
resolution of the appellate court, dated August 13, 1996, denying
petitioner's motion for reconsideration.
The facts of this case, as culled from the records, are as follows:
On August 25, 1976, petitioner Ortigas & Company sold to Emilia
Hermoso, a parcel of land known as Lot 1, Block 21, Psd-66759, with
an area of 1,508 square meters, located in Greenhills Subdivision IV,
San Juan, Metro Manila, and covered by Transfer Certificate of Title
No. 0737. The contract of sale provided that the lot:
1. . . . (1) be used exclusively . . . for residential purposes only,
and not more than one single-family residential building
will be constructed thereon, . . .
xxx xxx xxx
6. The BUYER shall not erect . . . any sign or billboard on the
roof . . . for advertising purposes . . .
xxx xxx xxx
11. No single-family residential building shall be erected . . .
until the building plans, specification . . . have been
approved by the SELLER . . .
xxx xxx xxx
14. . . . restrictions shall run with the land and shall be
construed as real covenants until December 31, 2025
when they shall cease and terminate . . . 1
These and the other conditions were duly annotated on the certificate
of title issued to Emilia.
In 1981, the Metropolitan Manila Commission (now Metropolitan
Manila Development Authority) enacted MMC Ordinance No. 81-01,
also known as the Comprehensive Zoning Area for the National
Capital Region. The ordinance reclassified as a commercial area a
portion of Ortigas Avenue from Madison to Roosevelt Streets of
Greenhills Subdivision where the lot is located.
On June 8, 1984, private respondent Ismael Mathay III leased the lot
from Emilia Hermoso and J.P. Hermoso Realty Corp.. The lease
contract did not specify the purposes of the lease. Thereupon, private
respondent constructed a single story commercial building for
Greenhills Autohaus, Inc., a car sales company.
On January 18, 1995, petitioner filed a complaint against Emilia
Hermoso with the Regional Trial Court of Pasig, Branch 261.
Docketed as Civil Case No. 64931, the complaint sought the
demolition of the said commercial structure for having violated the
45
CONSTITUTIONAL LAW 2 |
terms and conditions of the Deed of Sale. Complainant prayed for the
issuance of a temporary restraining order and a writ of preliminary
injunction to prohibit petitioner from constructing the commercial
building and/or engaging in commercial activity on the lot. The
complaint was later amended to implead Ismael G. Mathay III and J.P.
Hermoso Realty Corp., which has a ten percent (10%) interest in the
lot.
In his answer, Mathay III denied any knowledge of the restrictions on
the use of the lot and filed a cross-claim against the Hermosos.
On June 16, 1995, the trial court issued the writ of preliminary
injunction. On June 29, 1995, Mathay III moved to set aside the
injunctive order, but the trial court denied the motion.
Mathay III then filed with the Court of Appeals a special civil action
for certiorari, docketed as CA-G.R. SP No. 39193, ascribing to the
trial court grave abuse of discretion in issuing the writ of preliminary
injunction. He claimed that MMC Ordinance No. 81-01 classified the
area where the lot was located as commercial area and said ordinance
must be read into the August 25, 1976 Deed of Sale as a concrete
exercise of police power.
Ortigas and Company averred that inasmuch as the restrictions on the
use of the lot were duly annotated on the title it issued to Emilia
Hermoso, said restrictions must prevail over the ordinance, specially
since these restrictions were agreed upon before the passage of MMC
Ordinance No. 81-01.
On March 25, 1996, the appellate court disposed of the case as
follows:
WHEREFORE, in light of the foregoing, the petition is hereby
GRANTED. The assailed orders are hereby nullified and set
aside.
SO ORDERED. 2
In finding for Mathay III, the Court of Appeals held that the MMC
Ordinance No. 81-01 effectively nullified the restrictions allowing
only residential use of the property in question.
Ortigas seasonably moved for reconsideration, but the appellate court
denied it on August 13, 1996.
Hence, the instant petition.
In its Memorandum, petitioner now submits that the "principal issue
in this case is whether respondent Court of Appeals correctly set aside
the Order dated June 16, 1995 of the trial court which issued the writ
of preliminary injunction on the sole ground that MMC Ordinance
No. 81-01 nullified the building restriction imposing exclusive
residential use on the property in question." 3 It also asserts that
"Mathay III lacks legal capacity to question the validity of conditions
of the deed of sale; and he is barred by estoppel or waiver to raise the
same question like his principals, the owners." 4 Lastly, it avers that
the appellate court "unaccountably failed to address" several questions
of fact.
Principally, we must resolve the issue of whether the Court of Appeals
erred in holding that the trial court committed grave abuse of
discretion when it refused to apply MMC Ordinance No. 81-01 to
Civil Case No. 64931.
But first, we must address petitioner's allegation that the Court of
Appeals "unaccountably failed to address" questions of fact. For basic
is the rule that factual issues may not be raised before this Court in a
petition for review and this Court is not duty-bound to consider said
questions. 5 CA-G.R. SP No. 39193 was a special civil action
for certiorari, and the appellate court only had to determine if the trial
court committed grave abuse of discretion amounting to want or
excess of jurisdiction in issuing the writ of preliminary injunction.
46
CONSTITUTIONAL LAW 2 |
Thus, unless vital to our determination of the issue at hand, we shall
refrain from further consideration of factual questions.
Petitioner contends that the appellate court erred in limiting its
decision to the cited zoning ordinance. It avers that a contractual right
is not automatically discarded once a claim is made that it conflicts
with police power. Petitioner submits that the restrictive clauses in the
questioned contract is not in conflict with the zoning ordinance. For
one, according to petitioner, the MMC Ordinance No. 81-01 did not
prohibit the construction of residential buildings. Petitioner argues that
even with the zoning ordinance, the seller and buyer of the re-
classified lot can voluntarily agree to an exclusive residential use
thereof. Hence, petitioner concludes that the Court of Appeals erred in
holding that the condition imposing exclusive residential use was
effectively nullified by the zoning ordinance.
In its turn, private respondent argues that the appellate court correctly
ruled that the trial court had acted with grave abuse of discretion in
refusing to subject the contract to the MMC Ordinance No. 81-01. He
avers that the appellate court properly held the police power superior
to the non-impairment of contract clause in the Constitution. He
concludes that the appellate court did not err in dissolving the writ of
preliminary injunction issued by the trial court in excess of its
jurisdiction.
We note that in issuing the disputed writ of preliminary injunction, the
trial court observed that the contract of sale was entered into in August
1976, while the zoning ordinance was enacted only in March 1981.
The trial court reasoned that since private respondent had failed to
show that MMC Ordinance No. 81-01 had retroactive effect, said
ordinance should be given prospective application only, 6 citing Co
vs. Intermediate Appellate Court, 162 SCRA 390 (1988).
In general, we agree that laws are to be construed as having only
prospective operation. Lex prospicit, non respicit. Equally settled,
only laws existing at the time of the execution of a contract are
applicable thereto and not later statutes, unless the latter are
specifically intended to have retroactive effect. 7 A later law which
enlarges, abridges, or in any manner changes the intent of the parties
to the contract necessarily impairs the contract itself8 and cannot be
given retroactive effect without violating the constitutional prohibition
against impairment of contracts. 9
But, the foregoing principles do admit of certain exceptions. One
involves police power. A law enacted in the exercise of police power
to regulate or govern certain activities or transactions could be given
retroactive effect and may reasonably impair vested rights or
contracts. Police power legislation is applicable not only to future
contracts, but equally to those already in existence. 10 Non-
impairment of contracts or vested rights clauses will have to yield to
the superior and legitimate exercise by the State of police power to
promote the health, morals, peace, education, good order, safety, and
general welfare of the people. 11 Moreover, statutes in exercise of
valid police power must be read into every contract. 12 Noteworthy,
in Sangalang vs. Intermediate Appellate Court, 13 we already upheld
MMC Ordinance No. 81-01 as a legitimate police power measure.
The trial court's reliance on the Co vs. IAC, 14 is misplaced. In Co, the
disputed area was agricultural and Ordinance No. 81-01 did not
specifically provide that "it shall have retroactive effect so as to
discontinue all rights previously acquired over lands located within
the zone which are neither residential nor light industrial in
nature," 15 and stated with respect to agricultural areas covered that
"the zoning ordinance should be given prospective operation
only." 16 The area in this case involves not agricultural but urban
residential land. Ordinance No. 81-01 retroactively affected the
operation of the zoning ordinance in Greenhills by reclassifying
certain locations therein as commercial.
Following our ruling in Ortigas & Co., Ltd. vs. Feati Bank & Trust
Co., 94 SCRA 533 (1979), the contractual stipulations annotated on
the Torrens Title, on which Ortigas relies, must yield to the ordinance.
When that stretch of Ortigas Avenue from Roosevelt Street to
Madison Street was reclassified as a commercial zone by the
47
CONSTITUTIONAL LAW 2 |
Metropolitan Manila Commission in March 1981, the restrictions in
the contract of sale between Ortigas and Hermoso, limiting all
construction on the disputed lot to single-family residential buildings,
were deemed extinguished by the retroactive operation of the zoning
ordinance and could no longer be enforced. While our legal system
upholds the sanctity of contract so that a contract is deemed law
between the contracting parties, 17 nonetheless, stipulations in a
contract cannot contravene "law, morals, good customs, public order,
or public policy." 18Otherwise such stipulations would be deemed
null and void. Respondent court correctly found that the trial court
committed in this case a grave abuse of discretion amounting to want
of or excess of jurisdiction in refusing to treat Ordinance No. 81-01 as
applicable to Civil Case No. 64931. In resolving matters in litigation,
judges are not only duty-bound to ascertain the facts and the
applicable laws, 19 they are also bound by their oath of office to apply
the applicable law. 20
As a secondary issue, petitioner contends that respondent Mathay III,
as a mere lessee of the lot in question, is a total stranger to the deed of
sale and is thus barred from questioning the conditions of said deed.
Petitioner points out that the owners of the lot voluntarily agreed to
the restrictions on the use of the lot and do not question the validity of
these restrictions. Petitioner argues that Mathay III as a lessee is
merely an agent of the owners, and could not override and rise above
the status of his principals. Petitioner submits that he could not have a
higher interest than those of the owners, the Hermosos, and thus had
no locus standi to file CA-G.R. SP No. 39193 to dissolve the
injunctive writ issued by the RTC of Pasig City.
For his part, private respondent argues that as the lessee who built the
commercial structure, it is he and he alone who stands to be either
benefited or injured by the results of the judgment in Civil Case No.
64931. He avers he is the party with real interest in the subject matter
of the action, as it would be his business, not the Hermosos', which
would suffer had not the respondent court dissolved the writ of
preliminary injunction.
A real party in interest is defined as "the party who stands to be
benefited or injured by the judgment or the party entitled to the avails
of the suit." "Interest" within the meaning of the rule means material
interest, an interest in issue and to be affected by the decree, as
distinguished from mere interest in the question involved, or a mere
incidental interest. 21 By real interest is meant a present substantial
interest, as distinguished from a mere expectancy or a future,
contingent, subordinate, or consequential interest. 22
Tested by the foregoing definition, private respondent in this case is
clearly a real party in interest. It is not disputed that he is in
possession of the lot pursuant to a valid lease. He is a possessor in the
concept of a "holder of the thing" under Article 525 of the Civil
Code. 23 He was impleaded as a defendant in the amended complaint
in Civil Case No. 64931. Further, what petitioner seeks to enjoin is the
building by respondent of a commercial structure on the lot. Clearly, it
is private respondent's acts which are in issue, and his interest in said
issue cannot be a mere incidental interest. In its amended complaint,
petitioner prayed for, among others, judgment "ordering the
demolition of all improvements illegally built on the lot in
question." 24 These show that it is petitioner Mathay III, doing
business as "Greenhills Autohaus, Inc.," and not only the Hermosos,
who will be adversely affected by the court's decree.
Petitioner also cites the rule that a stranger to a contract has no rights
or obligations under it, 25 and thus has no standing to challenge its
validity. 26 But in seeking to enforce the stipulations in the deed of
sale, petitioner impleaded private respondent as a defendant. Thus
petitioner must recognize that where a plaintiff has impleaded a party
as a defendant, he cannot subsequently question the latter's standing in
court. 27
WHEREFORE, the instant petition is DENIED. The challenged
decision of the Court of Appeals dated March 25, 1996, as well as the
48
CONSTITUTIONAL LAW 2 |
assailed resolution of August 13, 1996, in CA-G.R. SP No. 39193 is
AFFIRMED. Costs against petitioner.
SO ORDERED.
||| (Ortigas & Co. Ltd. v. Court of Appeals, G.R. No. 126102,
[December 4, 2000], 400 PHIL 615-626)
[G.R. No. 119694. May 22, 1995.]
PHILIPPINE PRESS INSTITUTE, INC., for and in behalf
of 139 members, represented by its President Amado P.
Macasaet and its Executive Director Ermin F. Garcia, Jr.,
petitioner, vs. COMMISSION ON ELECTIONS,
respondent.
SYLLABUS
1. CONSTITUTIONAL LAW; BILL OF RIGHTS; PROHIBITION
AGAINST TAKING OF PRIVATE PROPERTY FOR PUBLIC USE
WITHOUT JUST COMPENSATION; COMPELLING
PUBLISHERS TO "DONATE" COMELEC SPACE, A VIOLATION
OF. — To compel print media companies to donate "Comelec space"
of the dimensions specified in Section 2 of Resolution No. 2722 (not
less than one-half page), amounts to "taking" of private personal
property for public use or purposes. Section 2 failed to specify the
intended frequency of such compulsory "donation": only once during
the period from 6 March 1995 (or 21 March 1995) until 12 May
1995? or everyday or once a week? or as often as Comelec may direct
during the same period? The extent of the taking or deprivation is not
insubstantial; this is not a case of a de minimis temporary limitation or
restraint upon the use of private property. The monetary value of the
compulsory "donation," measured by the advertising rates ordinarily
charged by newspaper publishers whether in cities or in non-urban
areas, may be very substantial indeed. The taking of private property
for public use is, of course, authorized by the Constitution, but not
without payment of "just compensation" (Article III, Section 9). And
apparently the necessity of paying compensation for "Comelec space"
is precisely what is sought to be avoided by respondent Commission,
whether Section 2 of Resolution No. 2772 is read as petitioner PPI
reads it, as an assertion of authority to require newspaper publishers to
"donate" free print space for Comelec purposes, or as an exhortation,
or perhaps an appeal, to publishers to donate free print space, as
Section 1 of Resolution No. 2772-A attempts to suggest. The
threshold requisites for a lawful taking of private property for public
use need to be examined here: one is the necessity for the taking;
another is the legal authority to effect the taking. The element of
necessity for the taking has not been shown by respondent Comelec. It
has not been suggested that the members of PPI are unwilling
to sell print space at their normal rates to Comelec for election
purposes. Indeed, the unwillingness or reluctance of Comelec to
buy print space lies at the heart of the problem. Similarly, it has not
been suggested, let alone demonstrated, that Comelec has been
granted the power of eminent domain either by the Constitution or by
the legislative authority. A reasonable relationship between that power
and the enforcement and administration of election laws by Comelec
must be shown; it is not casually to be assumed. . . . Section 2 does
not constitute a valid exercise of the power of eminent domain.
2. ID.; ID.; ID.; ID.; PUBLIC FUNDS, NOT PUBLISHERS
SOLELY, SHOULD BEAR COSTS FOR PUBLIC INFORMATION
OF ELECTORAL PROCESSES. — The ruling here laid down by the
Court is entirely in line with the theory of democratic representative
government. The economic costs of informing the general public
about the qualifications and programs of those seeking elective office
are most appropriately distributed as widely as possible throughout
our society by the utilization of public funds, especially funds raised
by taxation, rather than cast solely on one small sector of society, i.e.,
print media enterprises. The benefits which flow from a heightened
level of information on and the awareness of the electoral process are
49
CONSTITUTIONAL LAW 2 |
commonly thought to be community-wide; the burdens should be
allocated on the same basis.
3. ID.; POLICE POWER; REQUISITES FOR A VALID EXERCISE
THEREOF NOT COMPLIED WITH IN CASE AT BAR. — As
earlier noted, the Solicitor General also contended that Section 2 of
Resolution No. 2772, even if read as compelling publishers to
"donate" "Comelec space," may be sustained as a valid exercise of the
police power of the state. This argument was, however, made too
casually to require prolonged consideration on our part. Firstly, there
was no effort (and apparently no inclination on the part of Comelec)
to show that the police power — essentially a power of legislation —
has been constitutionally delegated to respondent Commission.
Secondly, while private property may indeed be validly taken in the
legitimate exercise of the police power of the state, there was no
attempt to show compliance in the instant case with the requisites of a
lawful taking under the police power. Section 2 of Resolution No.
2772 is a blunt and heavy instrument that purports, without a showing
of existence of a national emergency or other imperious public
necessity, indiscriminately and without regard to the individual
business condition of particular newspapers or magazines located in
differing parts of the country, to take private property of newspaper or
magazine publishers. No attempt was made to demonstrate that a real
and palpable or urgent necessity for the taking of print space
confronted the Comelec and that Section 2 of Resolution No. 2772
was itself the only reasonable and calibrated response to such
necessity available to the Comelec. Section 2 does not constitute a
valid exercise of the police power of the State.
4. ID.; SUPREME COURT; POWER OF JUDICIAL REVIEW;
CONSTITUTIONALITY OF SEC. 8 COMELEC RESOLUTION
NO. 2772, WITHOUT ACTUAL CONTROVERSY, IS NOT RIPE
FOR JUDICIAL REVIEW; CASE AT BAR. — Section 8 of
Resolution No. 2772 should be viewed in the context of our decision
in National Press Club v. Commission on Elections. There the Court
sustained the constitutionality of Section 11 (b) of R.A. No. 6646,
known as the Electoral Reforms Law of 1987, which prohibits the sale
or donation of print space and airtime for campaign or other political
purposes, except to the Comelec. In doing so, the Court carefully
distinguished (a) paid political advertisements which are reached by
the prohibition of Section 11 (b), from (b) the reporting of news,
commentaries and expressions of belief or opinion by reporters,
broadcasters, editors, commentators or columnists whichfall
outside the scope of Section 11 (b) and which are protected by the
constitutional guarantees of freedom of speech and of the press. . . .
Section 8 of Resolution No. 2772 appears to represent the effort of the
Comelec to establish a guideline for implementation of the above-
quoted distinction and doctrine in National Press Club, an effort not
blessed with evident success. Section 2 of Resolution No. 2772-A
while possibly helpful, does not add substantially to the utility of
Section 8 of Resolution No. 2772. The distinction between paid
political advertisements on the one hand and news reports,
commentaries and expressions of belief or opinion by reporters,
broadcasters, editors, etc. on the other hand, can realistically be given
operative meaning only in actual cases or controversies, on a case-to-
case basis, in terms of very specific sets of facts. At all events, the
Court is bound to note that PPI has failed to allege any specific
affirmative action on the part of Comelec designed to enforce or
implement Section 8. PPI has not claimed that it or any of its members
has sustained actual or imminent injury by reason of Comelec action
under Section 8. Put a little differently, the Court considers that the
precise constitutional issue here sought to be raised — whether or not
Section 8 of Resolution No. 2772 constitutes a permissible exercise of
the Comelec's power under Article IX, Section 4 of the Constitution . .
. is not ripe for judicial review for lack of an actual case or
controversy involving, as the very lis mota thereof, the
constitutionality of Section 8.
RE S O LUTI ON
FELICIANO, J p:
The Philippine Press Institute, Inc. ("PPI") is before this
Court assailing the constitutional validity of Resolution No. 2772
50
CONSTITUTIONAL LAW 2 |
issued by respondent Commission on Elections ("Comelec") and its
corresponding Comelec directive dated 22 March 1995, through a
Petition for Certiorari and Prohibition. Petitioner PPI is a non-stock,
non-profit organization of newspaper and magazine publishers.
On 2 March 1995, Comelec promulgated Resolution No.
2772, which reads in part:
xxx xxx xxx
Sec. 2. Comelec Space. — The Commission shall procure free
print space of not less than one half (1/2) page in at least one
newspaper of general circulation in every province or city for
use as 'Comelec Space' from March 6, 1995 in the case of
candidates for senators and from March 21, 1995 until May
12, 1995. In the absence of said newspaper, 'Comelec Space'
shall be obtained from any magazine or periodical of said
province or city.
Sec. 3. Uses of Comelec Space. — 'Comelec Space' shall be
allocated by the Commission, free of charge, among all
candidates within the area in which the newspaper, magazine
or periodical is circulated to enable the candidates to make
known their qualifications, their stand on public issues and
their platforms and programs of government.
'Comelec Space' shall also be used by the Commission for
dissemination of vital election information.
Sec. 4. Allocation of Comelec Space. — (a) 'Comelec Space'
shall be available to all candidates during the periods stated in
Section 2 hereof. Its allocation shall be equal and impartial
among all candidates for the same office. All candidates
concerned shall be furnished a copy of the allocation of
'Comelec Space' for their information, guidance and
compliance.
(b) Any candidate desiring to avail himself of 'Comelec Space'
from newspapers or publications based in the Metropolitan
Manila Area shall submit an application therefor, in writing, to
the Committee on Mass Media of the Commission. Any
candidate desiring to avail himself of 'Comelec Space' in
newspapers or publications based in the provinces shall submit
his application therefor, in writing, to the Provincial Election
Supervisor concerned. Applications for availment of 'Comelec
Space' may be filed at any time from the date of effectivity of
this Resolution.
(c) The Committee on Mass Media and the Provincial Election
Supervisors shall allocate available 'Comelec Space' among
the candidates concerned by lottery of which said candidates
shall be notified in advance, in writing, to be present
personally or by representative to witness the lottery at the
date, time and place specified in the notice. Any party
objecting to the result of the lottery may appeal to the
Commission.
(d) The candidates concerned shall be notified by the
Committee on Mass Media or the Provincial Election
Supervisor, as the case may be, sufficiently in advance and in
writing of the date of issue and the newspaper or publication
allocated to him, and the time within which he must submit the
written material for publication in the 'Comelec Space'.
xxx xxx xxx
Sec. 8. Undue Reference to Candidates/Political Parties in
Newspapers. — No newspaper or publication shall allow to be
printed or published in the news, opinion, features, or other
sections of the newspaper or publication accounts or
comments which manifestly favor or oppose any candidate or
political party by unduly or repeatedly referring to or including
51
CONSTITUTIONAL LAW 2 |
therein said candidate or political party. However, unless the
facts and circumstances clearly indicate otherwise, the
Commission will respect the determination by the publisher
and/or editors of the newspapers or publication that the
accounts or views published are significant, newsworthy and
of public interest." (Emphasis supplied)
Apparently in implementation of this Resolution, Comelec
through Commissioner Regalado E. Maambong sent identical
letters, dated 22 March 1995, to various publishers of newspapers
like the Business World, thePhilippine Star, the Malaya and
the Philippine Times Journal, all members of PPI. These letters read
as follows:
"This is to advise you that pursuant to Resolution No. 2772 of
the Commission on Elections, you are directed to provide free
print space of not less than one half (½) page for use as
'Comelec Space' or similar to the print support which you have
extended during the May 11, 1992 synchronized elections
which was 2 full pages for each political party fielding
senatorial candidates, from March 6, 1995 to May 6, 1995, to
make known to their qualifications, their stand on public issues
and their platforms and programs of government.
We shall be informing the political parties and candidates to
submit directly to you their pictures, biographical data, stand
on key public issues and platforms of government, either as
raw data or in the form of positives or camera-ready
materials.
Please be reminded that the political parties/candidates may be
accommodated in your publications any day upon receipt of
their materials until May 6, 1995 which is the day for
campaigning.
We trust you to extend your full support and cooperation in
this regard." (Emphasis supplied)
In this Petition for Certiorari and Prohibition with prayer for
the issuance of a Temporary restraining order, PPI asks us to declare
Comelec Resolution No. 2772 unconstitutional and void on the
ground that it violates the prohibition imposed by
the Constitution upon the government, and any of its agencies,
against the taking of private property for public use without just
compensation. Petitioner also contends that the 22 March 1995 letter
directives of Comelec requiring publishers to give free "Comelec
Space" and at the same time process raw data to make it camera-
ready, constitute impositions of involuntary servitude, contrary to
the provisions of Section 18 (2), Article III of the 1987 Constitution.
Finally, PPI argues that Section 8 of Comelec Resolution No. 2772
is violative of the constitutionally guaranteed freedom of speech, of
the press and of expression. 1
On 20 April 1995, this Court issued a Temporary Restraining
Order enjoining Comelec from enforcing and implementing Section
2 of Resolution No. 2772, as well as the Comelec directives
addressed to various print media enterprises all dated 22 March
1995. The Court also required the respondent to file a Comment on
the Petition.
The Office of the Solicitor General filed its Comment on
behalf of respondent Comelec alleging that Comelec Resolution No.
2772 does not impose upon the publishers any obligation to provide
free print space in the newspapers as it does not provide any
criminal or administrative sanction for non-compliance with that
Resolution. According to the Solicitor General, the questioned
Resolution merely established guidelines to be followed in
connection with the procurement of "Comelec space," the procedure
for and mode of allocation of such space to candidates and the
conditions or requirements for the candidate's utilization of the
"Comelec space" procured. At the same time, however, the Solicitor
General argues that even if the questioned Resolution and its
implementing letter directives are viewed as mandatory, the same
would nevertheless be valid as an exercise of the police power of the
State. The Solicitor general also maintains that Section 8 of
52
CONSTITUTIONAL LAW 2 |
Resolution No. 2772 is a permissible exercise of the power of
supervisor or regulation of the Comelec over the communication
and information operations of print media enterprises during the
election period to safeguard and ensure a fair, impartial and credible
election. 2
At the oral hearing of this case held on 28 April 1995,
respondent Comelec through its Chairman, Hon. Bernardo Pardo, in
response to inquiries from the Chief Justice and other Members of
the Court, stated that Resolution No. 2772, particularly Section 2
thereof and the 22 March 1995 letters dispatched to various
members of petitioner PPI, were not intended to compel those
members to supply Comelec with free print space. Chairman Pardo
represented to the Court that that Resolution and the related letter-
directives were merely designed to solicit from the publishers the
same free print space which many publishers had voluntarily given
to Comelec during the election period relating to the 11 May 1992
elections. Indeed, the Chairman stated that the Comelec would, that
very afternoon, meet and adopt an appropriate amending or
clarifying resolution, a certified true copy of which would forthwith
be filed with the Court.
On 5 May 1995, the Court received from the Office of the
Solicitor general a manifestation which attached a copy of Comelec
resolution No. 2772-A dated 4 May 1995. The operative portion of
this Resolution follows:
NOW THEREFORE, pursuant to the powers vested in it by
the Constitution, the Omnibus Election Code, Republic Acts
No. 6646 and 7166 and other election laws, the Commission
on Elections RESOLVED to clarify Sections 2 and 8 of Res.
No. 2772 as follows:
1. Section 2 of Res. No. 2772 shall not be construed to
mean as requiring publishers of the different mass
media print publications to provide print space
under pain of prosecution, whether administrative,
civil or criminal, there being no sanction or
penalty for violation of said Section provided for
either in said Resolution or in Section 90 of Batas
Pambansa Blg. 881, otherwise known as
the Omnibus Election Code, on the grant of
'Comelec Space.'
2. Section 8 of Res. No. 2772 shall not be construed to
mean as constituting prior restraint on the part of
the publishers with respect to the printing or
publication of materials in the news, opinion,
features or other sections of their respective
publications or other accounts or comments, it
being clear from the last sentence of said Section
8 that the Commission shall, 'unless the facts and
circumstances clearly indicate
otherwise . . . respect the determination by the
publishers and/or editors of the newspapers or
publications that the accounts or views published
are significant, newsworthy and of public interest.'
This Resolution shall take effect upon approval." (Emphasis in
the original)
While, at this point, the Court could perhaps simply dismiss
the petition for Certiorari and Prohibition as having become moot
and academic, we consider it not inappropriate to pass upon the first
constitutional issue raised in this case. Our hope is to put this issue
to rest and prevent its resurrection.
Section 2 of Resolution No. 2772 is not a model of clarity in
expression. Section 1 of Resolution No. 2772-A did not try to redraft
Section 2; accordingly, Section 2 of resolution No. 2772 persists in
its original form. Thus, we must point out that, as presently worded,
and in particular as interpreted and applied by the Comelec itself in
its 22 March 1995 letter-directives to newspaper publishers, Section
2 of Resolution No. 2772 is clearly susceptible of the reading that
53
CONSTITUTIONAL LAW 2 |
petitioner PPI has given it. That Resolution No. 2772 does not, in
express terms, threaten publishers who would disregard it or its
implementing letters with some criminal or other sanction,
does not by itself demonstrate that the Comelec's original intention
was simply to solicit or request voluntary donations of print space
from publishers. A written communication officially directing a print
media company tosupply free print space, dispatched by government
(here a constitutional) agency and signed by member of the
Commission presumably legally authorized to do so, is bound to
produce a coercive effect upon the company so addressed. That the
agency may not be legally authorized to impose, or cause the
imposition of, criminal or other sanctions for disregard of such
direction, only aggravates the constitutional difficulties inhering in
the present situation. The enactment or addition of such sanctions by
the legislative authority itself would be open to serious
constitutional objection.
To compel print media companies to donate "Comelec
space" of the dimensions specified in Section 2 of Resolution No.
2772 (not less than one-half Page), amounts to "taking" of private
personal property for public use or purposes. Section 2 failed to
specify the intended frequency of such compulsory "donation:" only
once during the period from 6 March 1995 (or 21 March 1995) until
12 May 1995? or everyday or once a week? or has often as Comelec
may direct during the same period? the extent of the taking or
deprivation is not insubstantial; this is not a case of a de
minimis temporary limitation or restraint upon the use of private
property. The monetary value of the compulsory "donation,"
measured by the advertising rates ordinarily charged by newspaper
publishers whether in cities or in non-urban areas, may be very
substantial indeed.
The taking of print space here sought to be effected may first
be appraised under the rubric of expropriation of private personal
property for public use. The threshold requisites for a lawful taking
of private property for public use need to be examined here: one is
the necessity for the taking; another is the legal authority to effect
the taking. The element of necessity for the taking has not been
shown by respondent Comelec. It has not been suggested that the
members of PPI are unwilling to sell print space at their normal
rates to Comelec for election purposes. Indeed, the unwillingness or
reluctance of Comelec to buy print space lies at the heart of the
problem. 3 Similarly, it has not been suggested, let alone
demonstrated, that Comelec has been granted the power of imminent
domain either by the Constitution or by the legislative authority. A
reasonable relationship between that power and the enforcement and
administration of election laws by Comelec must be shown; it is not
casually to be assumed.
That the taking is designed to subserve "public use" is not
contested by petitioner PPI. We note only that, under Section 3 of
Resolution No. 2772, the free "Comelec space" sought by the
respondent Commission would be used not only for informing the
public about the identities, qualifications and programs of
government of candidates for elective office but also for
"dissemination of vital election information" (including,
presumably, circulars, regulations, notices, directives, etc. issued by
Comelec). It seems to the Court a matter of judicial notice that
government offices and agencies (including the Supreme Court)
simply purchase print space, in the ordinary course of events, when
their rules and regulations, circulars, notices and so forth need
officially to be brought to the attention of the general public.
The taking of private property for public use is, of course,
authorized by the Constitution, but not without payment of "just
compensation" (Article III, Section 9). And apparently the necessity
of paying compensation for "Comelec space" is precisely what is
sought to be avoided by respondent Commission, whether Section 2
of Resolution No. 2772 is read as petitioner PPI reads it, as an
assertion of authority to require newspaper publishers to "donate"
free print space for Comelec purposes, or as an exhortion, or
perhaps an appeal, to publishers to donate free print space, as
54
CONSTITUTIONAL LAW 2 |
Section 1 of Resolution No. 2772-A attempts to suggest. There is
nothing at all to prevent newspaper and magazine publishers from
voluntarily giving free print space to Comelec for the purposes
contemplated in Resolution No. 2772. Section 2 of Resolution No.
2772 does not, however, provide a constitutional basis for
compelling publishers, against their will, in the kind of factual
context here present, to provide free print space for Comelec
purposes. Section 2 does not constitute a valid exercise of the power
of eminent domain.
We would note that the ruling here laid down by the Court is
entirely in line with the theory of democratic representative
government. The economic costs of informing the general public
about the qualifications and programs of those seeking elective
office are most appropriately distributed as widely as possible
throughout our society by the utilization of public funds, especially
funds raised by taxation, rather than cast solely on one small sector
of society, i.e., print media enterprises. The benefits which flow
from a heightened level of information on and the awareness of the
electoral process are commonly thought to be community-wide; the
burdens should be allocated on the same basis.
As earlier noted, the Solicitor General also contended that
Section 2 of Resolution No. 2772, even if read as compelling
publishers to "donate" "Comelec space," may be sustained as a valid
exercise of the police power of the state. This argument was,
however, made too casually to require prolonged consideration on
their part. Firstly, there was no effort (and apparently no inclination
on the part of Comelec) to show that the police power — essentially
a power of legislation — has been constitutionally delegated to
respondent Commission. 4 Secondly, while private property may
indeed be validly taken in the legitimate exercise of the police
power of the state, there was no attempt to show compliance in the
instant case with the requisites of a lawful taking under the police
power. 5
Section 2 of Resolution No. 2772 is a blunt and heavy
instrument that purports, without a showing of existence of a
national emergency or other imperious public necessity,
indiscriminately and without regard to the individual business
condition of particular newspapers or magazines located in different
parts of the country, to take private property of newspaper or
magazine publishers. No attempt was made to demonstrate that a
real and palpable or urgent necessity for the taking of print space
confronted the Comelec and that Section 2 of Resolution No. 2772
was itself the only reasonable and calibrated response to such
necessity available to Comelec. Section 2 does not constitute a valid
exercise of the police power of the State.
We turn to Section 8 of Resolution No. 2772, which needs to
be quoted in full again:
Sec. 8. Undue Reference to Candidates/Political
parties in Newspaper. — No newspaper or publication shall
allow to be printed or published in the news, opinion, features,
or other sections of the newspaper or publication accounts or
comments which manifest favor or oppose any candidate or
political party by unduly or repeatedly referring to or including
therein said candidate or political party. However, unless the
facts and circumstances clearly indicates otherwise, the
Commission will respect the determination by the publisher
and/or editors of the newspapers or publications that the
accounts or views published are significant, newsworthy and
of public interest."
It is not easy to understand why Section 8 was included at all
in Resolution No 2772. In any case, Section 8 should be viewed in
the context of our decision in National Press Club v. Commission on
Elections. 6 There the Court sustained the constitutionality of
Section 11 (b) of R.A. No. 6646, known as the Electoral Reforms
Law of 1987, which prohibits the sale or donation of print space and
airtime for campaign or other political purposes, except to the
Comelec. In doing so, the Court carefully distinguished (a) paid
55
CONSTITUTIONAL LAW 2 |
political advertisements which are reached by the prohibition of
Section 11 (b), from (b) the reporting of news, commentaries and
expressions of belief or opinion by reporters, broadcasters, editors,
commentators or columnists which fall outside the scope of Section
11 (b) and which are protected by the constitutional guarantees of
freedom of speech and of the press:
"Secondly, and more importantly, Section 11 (b) is limited in
its scope of application. Analysis of Section 11 (b) shows that
it purports to apply only to the purchase and sale, including
purchase and sale disguised as a donation, of print space and
air time for campaign or other political purposes. Section 11
(b) does not purport in any way to restrict the reporting by
newspapers or radio or television stations of news or news-
noteworthy events relating to candidates, their qualifications,
political parties and programs of government.
Moreover, Section 11 (b) does not reach commentaries and
expressions of belief or opinion by reporters or broadcasters
or editors or commentators or columnists in respect of
candidates, their qualifications, and programs and so forth, so
long at least as such comments, opinions and beliefs are not in
fact advertisements for particular candidates covertly paid for.
In sum Section 11 (b) is not to be read as reaching any report
or commentary or other coverage that, in responsible media, is
not paid for by candidates for political office. We read Section
11 (b) as designed to cover only paid political advertisements
of particular candidates.
The above limitation in scope of application of Section 11 (b)
— that it does not restrict either the reporting of or the
expression of belief or opinion or comment upon the
qualifications and programs and activities of any and all
candidates for office — constitutes the critical distinction
which must be made between the instant case and that
of Sanidad v. Commission on Elections. . . ."7 (Citations
omitted; emphasis supplied)
Section 8 of Resolution No. 2772 appears to represent the
effort of the Comelec to establish a guidelines for
implementation of the above-quoted distinction and doctrine
in National Press Club, an effort not blessed with evident
success. Section 2 of Resolution No. 2772-A while possibly
helpful, does not add substantially to the utility of Section 8 of
Resolution No. 2772. The distinction between paid political
advertisements on the one hand and news reports,
commentaries and expressions of belief or opinion by reporters,
broadcasters, editors, etc. on the other hand, can realistically be
given operative meaning only in actual cases or controversies, on
a case-to-case basis, in terms of very specific sets of facts.
At all events, the Court is bound to note that PPI has
failed to allege any specific affirmative action on the part of
Comelec designed to enforce or implement Section 8. PPI has
not claimed that it or any of its members has sustained actual or
imminent injury by reason of Comelec action under Section 8.
Put a little differently, the Court considers that the precise
constitutional issue here sought to be raised — whether or not
Section 8 of Resolution No. 2772 constitutes a permissible
exercise of the Comelec's power under Article IX, Section 4 of
the Constitution to
"supervise or regulate the enjoyment or utilization of all
franchise or permits for the operation of — media of
communication or information — [for the purpose of
ensuring] equal opportunity, time and space, and the right
of reply, including reasonable, equal rates therefor, for
public-information campaigns and forums among
candidates in connection with the objective of holding free,
orderly, honest, peaceful and credible elections —"
56
CONSTITUTIONAL LAW 2 |
is not ripe for judicial review for lack of an actual case or
controversy involving, as the very lis mota thereof, the
constitutionality of Section 8.
1. Section 2 of Resolution No. 2772, in its present form
and as interpreted by Comelec in its 22 March 1995 letter
directives, purports to require print media enterprises to
"donate" free print space to Comelec. As such, Section 2 suffers
from fatal constitutional vice and must be set aside and nullified.
2. To the extent it pertains to Section 8 of Resolution No.
2772, the Petition for Certiorari and Prohibition must be
dismissed for lack of an actual, justiciable case or controversy.
WHEREFORE, for all the foregoing, the Petition for
Certiorari and Prohibition is GRANTED in part and Section 2
of Resolution No. 2772 in its present from and the related letter-
directives dated 22 March 1995 are hereby SET ASIDE as null
and void, and the Temporary Restraining Order is hereby
MADE PERMANENT. The Petition is DISMISSED in part, to
the extent it relates to Section 8 of Resolution No. 2772. No
pronouncement as to costs.
||| (Philippine Press Institute, Inc. v. COMELEC, G.R. No. 119694
(Resolution), [May 22, 1995], 314 PHIL 131-149)
[G.R. No. 144681. June 21, 2004.]
PROFESSIONAL REGULATION COMMISSION (PRC),
CHAIRMAN HERMOGENES P. POBRE, ASSOCIATE
COMMISSIONER ARMANDO PASCUAL, BOARD OF
MEDICINE, CHAIRMAN RODOLFO P. DE GUZMAN,
JOSE S. RAMIREZ, JUANITO B. BILLOTE, RUBEN R.
POLICARPIO, EDGARDO T. FERNANDO and
RICARDO D. FULGENCIO II, petitioners, vs. ARLENE V.
DE GUZMAN, VIOLETA V. MENESES, CELERINA S.
NAVARRO, JOSE RAMONCITO P. NAVARRO, ARNEL
V. HERRERA and GERALDINE ELIZABETH M.
PAGILAGAN, ELNORA R. RAQUENO, MARISSA A.
REGODON, LAURA M. SANTOS, KARANGALAN D.
SERRANO, DANILO A. VILLAVER, MARIA ROSARIO
L. LEONOR, ALICIA S. LIZANO, MARITEL M.
ECHIVERRI, BERNADETTE T. MENDOZA,
FERNANDO F. MANDAPAT, ALELI A. GOLLAYAN,
ELCIN C. ARRIOLA, HERMINIGILDA E. CONEJOS,
SALLY B. BUNAGAN, ROGELIO B. ANCHETA, OSCAR
H. PADUA, JR., EVELYN D. GRAJO, EVELYN S.
ACOSTA, MARGARITA BELINDA L. VICENCIO,
VALENTINO P. ARBOLEDA, EVELYN O. RAMOS,
ACHILLES J. PERALTA, CORAZON M. CRUZ,
LEUVINA P. CHICO, JOSEPH A. JAO, MA. LUISA S.
GUTIERREZ, LYDIA C. CHAN, OPHELIA C.
HIDALGO, FERNANDO T. CRUZ, MELVIN M. USITA,
RAFAEL I. TOLENTINO, GRACE E. UY, CHERYL R.
TRIGUERO, MICHAEL L. SERRANO, FEDERICO L.
CASTILLO, MELITA J. CAÑEDO, SAMUEL B.
BANGOY, BERNARDITA B. SY, GLORIA T.
JULARBAL, FREDERICK D. FRANCISCO, CARLOS
M. BERNARDO, JR., HUBERT S. NAZARENO,
CLARISSA B. BACLIG, DAYMINDA G. BONTUYAN,
BERNADETTE H. CABUHAT, NANCY J. CHAVEZ,
MARIO D. CUARESMA, ERNESTO L. CUE, EVELYN
C. CUNDANGAN, RHONEIL R. DEVERATURDA,
DERILEEN D. DORADO, SAIBZUR N. EDDING,
VIOLETA C. FELIPE, HERMINIO V. FERNANDEZ, JR.,
MARIA VICTORIA M. LACSAMANA, NORMA G.
LAFAVILLA, RUBY B. LANTIN, MA. ELOISA Q.
MALLARI, CLARISA SJ. NICOLAS, PERCIVAL H.
PANGILINAN, ARNULFO A. SALVADOR, ROBERT B.
57
CONSTITUTIONAL LAW 2 |
SANCHEZ, MERLY D. STA. ANA and YOLANDA P.
UNICA,respondents.
DECISION
TINGA, J p:
This petition for review under Rule 45 of the 1997 Rules of Civil
Procedure seeks to nullify the Decision, 1 dated May 16, 2000, of the
Court of Appeals in CA-G.R. SP No. 37283. The appellate court
affirmed the judgment 2 dated December 19, 1994, of the Regional
Trial Court (RTC) of Manila, Branch 52, in Civil Case No. 93-66530.
The trial court allowed the respondents to take their physician's oath
and to register as duly licensed physicians. Equally challenged is
the Resolution 3 promulgated on August 25, 2000 of the Court of
Appeals, denying petitioners' Motion for Reconsideration.
The facts of this case are as follows:
The respondents are all graduates of the Fatima College of Medicine,
Valenzuela City, Metro Manila. They passed the Physician Licensure
Examination conducted in February 1993 by the Board of Medicine
(Board). Petitioner Professional Regulation Commission (PRC) then
released their names as successful examinees in the medical licensure
examination.
Shortly thereafter, the Board observed that the grades of the seventy-
nine successful examinees from Fatima College in the two most
difficult subjects in the medical licensure exam, Biochemistry (Bio-
Chem) and Obstetrics and Gynecology (OB-Gyne), were unusually
and exceptionally high. Eleven Fatima examinees scored 100% in
Bio-Chem and ten got 100% in OB-Gyne, another eleven got 99% in
Bio-Chem, and twenty-one scored 99% in OB-Gyne. The Board also
observed that many of those who passed from Fatima got marks of
95% or better in both subjects, and no one got a mark lower than 90%.
A comparison of the performances of the candidates from other
schools was made. The Board observed that strangely, the unusually
high ratings were true only for Fatima College examinees. It was a
record-breaking phenomenon in the history of the Physician Licensure
Examination.
On June 7, 1993, the Board issued Resolution No. 19, withholding the
registration as physicians of all the examinees from the Fatima
College of Medicine. 4 The PRC asked the National Bureau of
Investigation (NBI) to investigate whether any anomaly or irregularity
marred the February 1993 Physician Licensure Examination.
Prior to the NBI investigation, the Board requested Fr. Bienvenido F.
Nebres, S.J., an expert mathematician and authority in statistics, and
later president of the Ateneo de Manila University, to conduct a
statistical analysis of the results in Bio-Chem and Ob-Gyne of the said
examination.
On June 10, 1993, Fr. Nebres submitted his report. He reported that a
comparison of the scores in Bio-Chem and Ob-Gyne, of the Fatima
College examinees with those of examinees from De La Salle
University and Perpetual Help College of Medicine showed that the
scores of Fatima College examinees were not only incredibly high but
unusually clustered close to each other. He concluded that there must
be some unusual reason creating the clustering of scores in the two
subjects. It must be a cause "strong enough to eliminate the normal
variations that one should expect from the examinees [of Fatima
College] in terms of talent, effort, energy, etc." 5
For its part, the NBI found that "the questionable passing rate of
Fatima examinees in the [1993] Physician Examination leads to the
conclusion that the Fatima examinees gained early access to the test
questions." 6
On July 5, 1993, respondents Arlene V. De Guzman, Violeta V.
Meneses, Celerina S. Navarro, Jose Ramoncito P. Navarro, Arnel V.
Herrera, and Geraldine Elizabeth M. Pagilagan (Arlene V. De
Guzman et al., for brevity) filed a special civil action for mandamus,
with prayer for preliminary mandatory injunction docketed as Civil
58
CONSTITUTIONAL LAW 2 |
Case No. 93-66530 with the Regional Trial Court (RTC) of Manila,
Branch 52. Their petition was adopted by the other respondents as
intervenors.
Meanwhile, the Board issued Resolution No. 26, dated July 21, 1993,
charging respondents with "immorality, dishonest conduct, fraud, and
deceit" in connection with the Bio-Chem and Ob-Gyne examinations.
It recommended that the test results of the Fatima examinees be
nullified. The case was docketed as Adm. Case No. 1687 by the PRC.
On July 28, 1993, the RTC issued an Order in Civil Case No. 93-
66530 granting the preliminary mandatory injunction sought by the
respondents. It ordered the petitioners to administer the physician's
oath to Arlene V. De Guzman et al., and enter their names in the rolls
of the PRC.
The petitioners then filed a special civil action for certiorari with the
Court of Appeals to set aside the mandatory injunctive writ, docketed
as CA-G.R. SP No. 31701.
On October 21, 1993, the appellate court decided CA-G.R. SP No.
31701, with the dispositive portion of the Decision ordaining as
follows:
WHEREFORE, this petition is GRANTED. Accordingly, the
writ of preliminary mandatory injunction issued by the lower
court against petitioners is hereby nullified and set aside.
SO ORDERED. 7
Arlene V. de Guzman, et al., then elevated the foregoing Decision to
this Court in G.R. No. 112315. In our Resolution dated May 23, 1994,
we denied the petition for failure to show reversible error on the part
of the appellate court.
Meanwhile, on November 22, 1993, during the pendency of the
instant petition, the pre-trial conference in Civil Case No. 93-66530
was held. Then, the parties, agreed to reduce the testimonies of their
respective witnesses to sworn questions-and-answers. This was
without prejudice to cross-examination by the opposing counsel.
On December 13, 1993, petitioners' counsel failed to appear at the
trial in the mistaken belief that the trial was set for December 15. The
trial court then ruled that petitioners waived their right to cross-
examine the witnesses.
On January 27, 1994, counsel for petitioners filed a Manifestation and
Motion stating the reasons for her non-appearance and praying that the
cross-examination of the witnesses for the opposing parties be reset.
The trial court denied the motion for lack of notice to adverse counsel.
It also denied the Motion for Reconsideration that followed on the
ground that adverse counsel was notified less than three (3) days prior
to the hearing.
Meanwhile, to prevent the PRC and the Board from proceeding with
Adm. Case No. 1687, the respondents herein moved for the issuance
of a restraining order, which the lower court granted in its Order dated
April 4, 1994.
The petitioners then filed with this Court a petition
for certiorari docketed as G.R. No. 115704, to annul the Orders of the
trial court dated November 13, 1993, February 28, 1994, and April 4,
1994. We referred the petition to the Court of Appeals where it was
docketed as CA-G.R. SP No. 34506.
On August 31, 1994, the appellate court decided CA-G.R. SP No.
34506 as follows:
WHEREFORE, the present petition for certiorari with prayer
for temporary restraining order/preliminary injunction is
GRANTED and the Orders of December 13, 1993, February 7,
1994, February 28, 1994, and April 4, 1994 of the RTC-
Manila, Branch 52, and all further proceedings taken by it in
Special Civil Action No. 93-66530 are hereby DECLARED
59
CONSTITUTIONAL LAW 2 |
NULL and VOID. The said RTC-Manila is ordered to allow
petitioners' counsel to cross-examine the respondents'
witnesses, to allow petitioners to present their evidence in due
course of trial, and thereafter to decide the case on the merits
on the basis of the evidence of the parties. Costs against
respondents.
IT IS SO ORDERED. 8
The trial was then set and notices were sent to the parties.
A day before the first hearing, on September 22, 1994, the petitioners
filed an Urgent Ex-Parte Manifestation and Motion praying for the
partial reconsideration of the appellate court's decision in CA-G.R. SP
No. 34506, and for the outright dismissal of Civil Case No. 93-66530.
The petitioners asked for the suspension of the proceedings.
In its Order dated September 23, 1994, the trial court granted the
aforesaid motion, cancelled the scheduled hearing dates, and reset the
proceedings to October 21 and 28, 1994.
Meanwhile, on October 25, 1994, the Court of Appeals denied the
partial motion for reconsideration in CA-G.R. SP No. 34506. Thus,
petitioners filed with the Supreme Court a petition for review
docketed as G.R. No. 117817, entitled Professional Regulation
Commission, et al. v. Court of Appeals, et al.
On November 11, 1994, counsel for the petitioners failed to appear at
the trial of Civil Case No. 93-66530. Upon motion of the respondents
herein, the trial court ruled that herein petitioners waived their right to
cross-examine the herein respondents. Trial was reset to November
28, 1994.
On November 25, 1994, petitioners' counsel moved for the inhibition
of the trial court judge for alleged partiality. On November 28, 1994,
the day the Motion to Inhibit was to be heard, petitioners failed to
appear. Thus, the trial court denied the Motion to Inhibit and declared
Civil Case No. 93-66530 deemed submitted for decision.
On December 19, 1994, the trial court handed down its judgment in
Civil Case No. 93-66530, the fallo of which reads:
WHEREFORE, judgment is rendered ordering the respondents
to allow the petitioners and intervenors (except those with
asterisks and footnotes in pages 1 & 2 of this decision)
[sic], 9 to take the physician's oath and to register them as
physicians.
It should be made clear that this decision is without prejudice
to any administrative disciplinary action which may be taken
against any of the petitioners for such causes and in the
manner provided by law and consistent with the requirements
of the Constitution as any other professionals.
No costs.
SO ORDERED. 10
As a result of these developments, petitioners filed with this Court a
petition for review on certiorari docketed as G.R. No. 118437,
entitled Professional Regulation Commission v. Hon. David
G. Nitafan, praying inter alia, that (1) G.R. No. 118437 be
consolidated with G.R. No. 117817; (2) the decision of the Court of
Appeals dated August 31, 1994 in CA-G.R. SP No. 34506 be nullified
for its failure to decree the dismissal of Civil Case No. 93-66530, and
in the alternative, to set aside the decision of the trial court in Civil
Case No. 93-66530, order the trial court judge to inhibit himself, and
Civil Case No. 93-66530 be re-raffled to another branch.
On December 26, 1994, the petitioners herein filed their Notice of
Appeal 11 in Civil Case No. 93-66530, thereby elevating the case to
60
CONSTITUTIONAL LAW 2 |
the Court of Appeals, where it was docketed as CA-G.R. SP No.
37283.
In our Resolution of June 7, 1995, G.R. No. 118437 was consolidated
with G.R. No. 117817.
On July 9, 1998, we disposed of G.R. Nos. 117817 and 118437 in this
wise:
WHEREFORE, the petition in G.R. No. 117817 is
DISMISSED for being moot. The petition in G.R. No. 118437
is likewise DISMISSED on the ground that there is a pending
appeal before the Court of Appeals. Assistant Solicitor General
Amparo M. Cabotaje-Tang is advised to be more circumspect
in her dealings with the courts as a repetition of the same or
similar acts will be dealt with accordingly.
SO ORDERED. 12
While CA-G.R. SP No. 37283 was awaiting disposition by the
appellate court, Arnel V. Herrera, one of the original petitioners in
Civil Case No. 93-66530, joined by twenty-seven intervenors, to wit:
Fernando F. Mandapat, Ophelia C. Hidalgo, Bernadette T. Mendoza,
Ruby B. Lantin-Tan, Fernando T. Cruz, Marissa A. Regodon, Ma.
Eloisa Q. Mallari-Largoza, Cheryl R. Triguero, Joseph A. Jao,
Bernadette H. Cabuhat, Evelyn S. Acosta-Cabanes, Laura M. Santos,
Maritel M. Echiverri, Bernadette C. Escusa, Carlosito C. Domingo,
Alicia S. Lizano, Elnora R. Raqueno-Rabaino, Saibzur N. Edding,
Derileen D. Dorado-Edding, Robert B. Sanchez, Maria Rosario L.
Leonor-Lacandula, Geraldine Elizabeth M. Pagilagan-Palma,
Margarita Belinda L. Vicencio-Gamilla, Herminigilda E. Conejos,
Leuvina P. Chico-Paguio, Elcin C. Arriola-Ocampo, and Jose
Ramoncito P. Navarro, manifested that they were no longer interested
in proceeding with the case and moved for its dismissal. A similar
manifestation and motion was later filed by intervenors Mary Jean I.
Yeban-Merlan, Michael L. Serrano, Norma G. Lafavilla, Arnulfo A.
Salvador, Belinda C. Rabara, Yolanda P. Unica, Dayminda G.
Bontuyan, Clarissa B. Baclig, Ma. Luisa S. Gutierrez, Rhoneil R.
Deveraturda, Aleli A. Gollayan, Evelyn C. Cundangan, Frederick D.
Francisco, Violeta V. Meneses, Melita J. Cañedo, Clarisa SJ. Nicolas,
Federico L. Castillo, Karangalan D. Serrano, Danilo A. Villaver,
Grace E. Uy, Lydia C. Chan, and Melvin M. Usita. The Court of
Appeals ruled that its decision in CA-G.R. SP No. 37283 would not
apply to them.
On May 16, 2000, the Court of Appeals decided CA-G.R. SP No.
37283, with the following fallo, to wit:
WHEREFORE, finding no reversible error in the decision
appealed from, We hereby AFFIRM the same and DISMISS
the instant appeal.
No pronouncement as to costs.
SO ORDERED. 13
In sustaining the trial court's decision, the appellate court ratiocinated
that the respondents complied with all the statutory requirements for
admission into the licensure examination for physicians in February
1993. They all passed the said examination. Having fulfilled the
requirements of Republic Act No. 2382, 14 they should be allowed to
take their oaths as physicians and be registered in the rolls of the PRC.
Hence, this petition raising the following issues:
I
WHETHER OR NOT RESPONDENTS HAVE A VALID
CAUSE OF ACTION FOR MANDAMUS AGAINST
PETITIONERS IN THE LIGHT OF THE RESOLUTION OF
THIS HONORABLE COURT IN G.R. NO. 112315
AFFIRMING THE COURT OF APPEALS' DECISION
DECLARING THAT IF EVER THERE IS SOME DOUBT
AS TO THE MORAL FITNESS OF EXAMINEES, THE
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ISSUANCE OF LICENSE TO PRACTICE MEDICINE IS
NOT AUTOMATICALLY GRANTED TO THE
SUCCESSFUL EXAMINEES.
II
WHETHER OR NOT THE PETITION FOR MANDAMUS
COULD PROCEED DESPITE THE PENDENCY OF
ADMINISTRATIVE CASE NO. 1687, WHICH WAS
PRECISELY LODGED TO DETERMINE THE MORAL
FITNESS OF RESPONDENTS TO BECOME DOCTORS. 15
To our mind, the only issue is: Did the Court of Appeals commit a
reversible error of law in sustaining the judgment of the trial court that
respondents are entitled to a writ of mandamus?
The petitioners submit that a writ of mandamus will not lie in this
case. They point out that for a writ of mandamus to issue, the
applicant must have a well-defined, clear and certain legal right to the
thing demanded and it is the duty of the respondent to perform the act
required. Thus, mandamus may be availed of only when the duty
sought to be performed is a ministerial and not a discretionary one.
The petitioners argue that the appellate court's decision in CA-G.R. SP
No. 37283 upholding the decision of the trial court in Civil Case No.
93-66530 overlooked its own pronouncement in CA-G.R. SP No.
31701. The Court of Appeals held in CA-G.R. SP No. 31701 that the
issuance of a license to engage in the practice of medicine becomes
discretionary on the PRC if there exists some doubt that the successful
examinee has not fully met the requirements of the law. The
petitioners stress that this Court's Resolution dated May 24, 1994 in
G.R. No. 112315 held that there was no showing "that the Court of
Appeals had committed any reversible error in rendering the
questioned judgment" in CA-G.R. SP No. 31701. The petitioners point
out that our Resolution in G.R. No. 112315 has long become final and
executory.
Respondents counter that having passed the 1993 licensure
examinations for physicians, the petitioners have the obligation to
administer to them the oath as physicians and to issue their certificates
of registration as physicians pursuant to Section 20 16 of Rep. Act No.
2382. The Court of Appeals in CA-G.R. SP No. 37283, found that
respondents complied with all the requirements of Rep. Act No. 2382.
Furthermore, respondents were admitted by the Medical Board to the
licensure examinations and had passed the same. Hence, pursuant to
Section 20 of Rep. Act No. 2382, the petitioners had the obligation to
administer their oaths as physicians and register them.
Mandamus is a command issuing from a court of competent
jurisdiction, in the name of the state or the sovereign, directed to some
inferior court, tribunal, or board, or to some corporation or person
requiring the performance of a particular duty therein specified, which
duty results from the official station of the party to whom the writ is
directed, or from operation of law. 17 Section 3 of Rule 65 18 of the
1997 Rules of Civil Procedure outlines two situations when a writ of
mandamus may issue, when any tribunal, corporation, board, officer
or person unlawfully (1) neglects the performance of an act which the
law specifically enjoins as a duty resulting from an office, trust, or
station; or (2) excludes another from the use and enjoyment of a right
or office to which the other is entitled.
We shall discuss the issues successively.
1. On The Existence of a Duty of the Board of Medicine To Issue
Certificates of Registration as Physicians under Rep. Act No. 2382.
For mandamus to prosper, there must be a showing that the officer,
board, or official concerned, has a clear legal duty, not involving
discretion. 19 Moreover, there must be statutory authority for the
performance of the act, 20and the performance of the duty has been
refused. 21 Thus, it must be pertinently asked now: Did petitioners
have the duty to administer the Hippocratic Oath and register
respondents as physicians under the Medical Act of 1959?
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CONSTITUTIONAL LAW 2 |
As found by the Court of Appeals, on which we agree on the basis of
the records:
It bears emphasizing herein that petitioner-appellees and
intervenor-appellees have fully complied with all the statutory
requirements for admission into the licensure examinations for
physicians conducted and administered by the respondent-
appellants on February 12, 14, 20 and 21, 1993. Stress, too,
must be made of the fact that all of them successfully passed
the same examinations. 22
The crucial query now is whether the Court of Appeals erred in
concluding that petitioners should allow the respondents to take
their oaths as physicians and register them, steps which would
enable respondents to practice the medical profession 23 pursuant to
Section 20 of the Medical Act of 1959?
The appellate court relied on a single provision, Section 20 of Rep.
Act No. 2382, in concluding that the petitioners had the ministerial
obligation to administer the Hippocratic Oath to respondents and
register them as physicians. But it is a basic rule in statutory
construction that each part of a statute should be construed in
connection with every other part to produce a harmonious whole, not
confining construction to only one section. 24The intent or meaning
of the statute should be ascertained from the statute taken as a whole,
not from an isolated part of the provision. Accordingly, Section 20,
of Rep. Act No. 2382, as amended should be read in conjunction with
the other provisions of the Act. Thus, to determine whether the
petitioners had the ministerial obligation to administer the Hippocratic
Oath to respondents and register them as physicians, recourse must be
had to the entirety of the Medical Act of 1959.
A careful reading of Section 20 of the Medical Act of 1959 discloses
that the law uses the word "shall" with respect to the issuance of
certificates of registration. Thus, the petitioners "shall sign and issue
certificates of registration to those who have satisfactorily complied
with the requirements of the Board." In statutory construction the term
"shall" is a word of command. It is given imperative meaning. Thus,
when an examinee satisfies the requirements for the grant of his
physician's license, the Board is obliged to administer to him his oath
and register him as a physician, pursuant to Section 20 and par. (1) of
Section 22 25 of the Medical Act of 1959.
However, the surrounding circumstances in this case call for serious
inquiry concerning the satisfactory compliance with the Board
requirements by the respondents. The unusually high scores in the two
most difficult subjects was phenomenal, according to Fr. Nebres, the
consultant of PRC on the matter, and raised grave doubts about the
integrity, if not validity, of the tests. These doubts have to be
appropriately resolved.
Under the second paragraph of Section 22, the Board is vested with
the power to conduct administrative investigations and "disapprove
applications for examination or registration," pursuant to the
objectives of Rep. Act No. 2382 as outlined in Section 1 26 thereof. In
this case, after the investigation, the Board filed before the PRC, Adm.
Case No. 1687 against the respondents to ascertain their moral and
mental fitness to practice medicine, as required by Section
9 27 of Rep. Act No. 2382. In its Decision dated July 1, 1997, the
Board ruled:
WHEREFORE, the BOARD hereby CANCELS the
respondents['] examination papers in the Physician Licensure
Examinations given in February 1993 and further DEBARS
them from taking any licensure examination for a period of
ONE (1) YEAR from the date of the promulgation of this
DECISION. They may, if they so desire, apply for the
scheduled examinations for physicians after the lapse of the
period imposed by the BOARD.
SO ORDERED. 28
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CONSTITUTIONAL LAW 2 |
Until the moral and mental fitness of the respondents could be
ascertained, according to petitioners, the Board has discretion to hold
in abeyance the administration of the Hippocratic Oath and the
issuance of the certificates to them. The writ of mandamus does not lie
to compel performance of an act which is not duly authorized.
The respondents nevertheless argue that under Section 20, the Board
shall not issue a certificate of registration only in the following
instances: (1) to any candidate who has been convicted by a court of
competent jurisdiction of any criminal offense involving moral
turpitude; (2) or has been found guilty of immoral or dishonorable
conduct after the investigation by the Board; or (3) has been declared
to be of unsound mind. They aver that none of these circumstances are
present in their case.
Petitioners reject respondents' argument. We are informed that in
Board Resolution No. 26, 29 dated July 21, 1993, the Board resolved
to file charges against the examinees from Fatima College of
Medicine for "immorality, dishonesty, fraud, and deceit in the
Obstetrics-Gynecology and Biochemistry examinations." It likewise
sought to cancel the examination results obtained by the examinees
from the Fatima College.
Section 8 30 of Rep. Act No. 2382 prescribes, among others, that a
person who aspires to practice medicine in the Philippines, must have
"satisfactorily passed the corresponding Board Examination." Section
22, in turn, provides that the oath may only be administered "to
physicians who qualified in the examinations." The operative word
here is "satisfactorily," defined as "sufficient to meet a condition or
obligation" or "capable of dispelling doubt or ignorance." 31 Gleaned
from Board Resolution No. 26, the licensing authority apparently did
not find that the respondents "satisfactorily passed" the licensure
examinations. The Board instead sought to nullify the examination
results obtained by the respondents.
2. On the Right Of The Respondents To Be Registered As Physicians
The function of mandamus is not to establish a right but to enforce
one that has been established by law. If no legal right has been
violated, there can be no application of a legal remedy, and the writ
of mandamus is a legal remedy for a legal right. 32 There must be a
well-defined, clear and certain legal right to the thing demanded. 33 It
is long established rule that a license to practice medicine is a
privilege or franchise granted by the government.34
It is true that this Court has upheld the constitutional right 35 of every
citizen to select a profession or course of study subject to a fair,
reasonable, and equitable admission and academic
requirements. 36 But like all rights and freedoms guaranteed by the
Charter, their exercise may be so regulated pursuant to the police
power of the State to safeguard health, morals, peace, education,
order, safety, and general welfare of the people. 37 Thus, persons who
desire to engage in the learned professions requiring scientific or
technical knowledge may be required to take an examination as a
prerequisite to engaging in their chosen careers. This regulation takes
particular pertinence in the field of medicine, to protect the public
from the potentially deadly effects of incompetence and ignorance
among those who would practice medicine. In a previous case, it may
be recalled, this Court has ordered the Board of Medical Examiners to
annul both its resolution and certificate authorizing a Spanish subject,
with the degree of Licentiate in Medicine and Surgery from the
University of Barcelona, Spain, to practice medicine in the
Philippines, without first passing the examination required by the
Philippine Medical Act. 38 In another case worth noting, we upheld
the power of the State to upgrade the selection of applicants into
medical schools through admission tests. 39
It must be stressed, nevertheless, that the power to regulate the
exercise of a profession or pursuit of an occupation cannot be
exercised by the State or its agents in an arbitrary, despotic, or
oppressive manner. A political body that regulates the exercise of a
particular privilege has the authority to both forbid and grant such
privilege in accordance with certain conditions. Such conditions may
not, however, require giving up ones constitutional rights as a
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CONSTITUTIONAL LAW 2 |
condition to acquiring the license. 40 Under the view that the
legislature cannot validly bestow an arbitrary power to grant or refuse
a license on a public agency or officer, courts will generally strike
down license legislation that vests in public officials discretion to
grant or refuse a license to carry on some ordinarily lawful business,
profession, or activity without prescribing definite rules and
conditions for the guidance of said officials in the exercise of their
power. 41
In the present case, the aforementioned guidelines are provided for
in Rep. Act No. 2382, as amended, which prescribes the requirements
for admission to the practice of medicine, the qualifications of
candidates for the board examinations, the scope and conduct of the
examinations, the grounds for denying the issuance of a physician's
license, or revoking a license that has been issued. Verily, to be
granted the privilege to practice medicine, the applicant must show
that he possesses all the qualifications and none of the
disqualifications. Furthermore, it must appear that he has fully
complied with all the conditions and requirements imposed by the law
and the licensing authority. Should doubt taint or mar the compliance
as being less than satisfactory, then the privilege will not issue. For
said privilege is distinguishable from a matter of right, which may be
demanded if denied. Thus, without a definite showing that the
aforesaid requirements and conditions have been satisfactorily met,
the courts may not grant the writ of mandamus to secure said privilege
without thwarting the legislative will.
3. On the Ripeness of the Petition for Mandamus
Lastly, the petitioners herein contend that the Court of Appeals should
have dismissed the petition for mandamus below for being premature.
They argue that the administrative remedies had not been exhausted.
The records show that this is not the first time that petitioners have
sought the dismissal of Civil Case No. 93-66530. This issue was
raised in G.R. No. 115704, which petition we referred to the Court of
Appeals, where it was docketed as CA-G.R. SP No. 34506. On motion
for reconsideration in CA-G.R. SP No. 34506, the appellate court
denied the motion to dismiss on the ground that the prayers for the
nullification of the order of the trial court and the dismissal of Civil
Case No. 93-66530 were inconsistent reliefs. In G.R. No. 118437, the
petitioners sought to nullify the decision of the Court of Appeals in
CA-G.R. SP No. 34506 insofar as it did not order the dismissal of
Civil Case No. 93-66530. In our consolidated decision, dated July 9,
1998, in G.R. Nos. 117817 & 118437, this Court speaking through
Justice Bellosillo opined that:
Indeed, the issue as to whether the Court of Appeals erred in
not ordering the dismissal of Civil Case No. 93-66530 sought
to be resolved in the instant petition has been rendered
meaningless by an event taking place prior to the filing of this
petition and denial thereof should follow as a logical
consequence. 42 There is no longer any justiciable controversy
so that any declaration thereon would be of no practical use or
value. 43 It should be recalled that in its decision of 19
December 1994 the trial court granted the writ of mandamus
prayed for by private respondents, which decision was
received by petitioners on 20 December 1994. Three (3) days
after, or on 23 December 1994, petitioners filed the instant
petition. By then, the remedy available to them was to appeal
the decision to the Court of Appeals, which they in fact did, by
filing a notice of appeal on 26 December 1994. 44
The petitioners have shown no cogent reason for us to reverse the
aforecited ruling. Nor will their reliance upon the doctrine of the
exhaustion of administrative remedies in the instant case advance their
cause any.
Section 26 45 of the Medical Act of 1959 provides for the
administrative and judicial remedies that respondents herein can avail
to question Resolution No. 26 of the Board of Medicine, namely: (a)
appeal the unfavorable judgment to the PRC; (b) should the PRC
ruling still be unfavorable, to elevate the matter on appeal to the
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CONSTITUTIONAL LAW 2 |
Office of the President; and (c) should they still be unsatisfied, to ask
for a review of the case or to bring the case to court via a special civil
action of certiorari. Thus, as a rule, mandamus will not lie when
administrative remedies are still available. 46 However, the doctrine
of exhaustion of administrative remedies does not apply where, as in
this case, a pure question of law is raised. 47 On this issue, no
reversible error may, thus, be laid at the door of the appellate court in
CA-G.R. SP No. 37283, when it refused to dismiss Civil Case No. 93-
66530.
As we earlier pointed out, herein respondents Arnel V. Herrera,
Fernando F. Mandapat, Ophelia C. Hidalgo, Bernadette T. Mendoza,
Ruby B. Lantin-Tan, Fernando T. Cruz, Marissa A. Regodon, Ma.
Eloisa Q. Mallari-Largoza, Cheryl R. Triguero, Joseph A. Jao,
Bernadette H. Cabuhat, Evelyn S. Acosta-Cabanes, Laura M. Santos,
Maritel M. Echiverri, Bernadette C. Escusa, Carlosito C. Domingo,
Alicia S. Lizano, Elnora R. Raqueno-Rabaino, Saibzur N. Edding,
Derileen D. Dorado-Edding, Robert B. Sanchez, Maria Rosario
Leonor-Lacandula, Geraldine Elizabeth M. Pagilagan-Palma,
Margarita Belinda L. Vicencio-Gamilla, Herminigilda E. Conejos,
Leuvina P. Chico-Paguio, Elcin C. Arriola-Ocampo, and Jose
Ramoncito P. Navarro manifested to the Court of Appeals during the
pendency of CA-G.R. SP No. 37283, that they were no longer
interested in proceeding with the case and moved for its dismissal
insofar as they were concerned. A similar manifestation and motion
were later filed by intervenors Mary Jean I. Yeban-Merlan, Michael L.
Serrano, Norma G. Lafavilla, Arnulfo A. Salvador, Belinda C.
Rabarra, Yolanda P. Unica, Dayminda G. Bontuyan, Clarissa B.
Baclig, Ma. Luisa S. Gutierrez, Rhoneil R. Deveraturda, Aleli A.
Gollayan, Evelyn C. Cundangan, Frederick D. Francisco, Violeta V.
Meneses, Melita J. Cañedo, Clarisa SJ. Nicolas, Federico L. Castillo,
Karangalan D. Serrano, Danilo A. Villaver, Grace E. Uy, Lydia C.
Chan, and Melvin M. Usita. Following these manifestations and
motions, the appellate court in CA-G.R. SP No. 37283 decreed that its
ruling would not apply to them. Thus, inasmuch as the instant case is a
petition for review of the appellate court's ruling in CA-G.R. SP No.
37283, a decision which is inapplicable to the aforementioned
respondents will similarly not apply to them.
As to Achilles J. Peralta, Evelyn O. Ramos, Sally B. Bunagan,
Rogelio B. Ancheta, Oscar H. Padua, Jr., Evelyn D. Grajo, Valentino
P. Arboleda, Carlos M. Bernardo, Jr., Mario D. Cuaresma, Violeta C.
Felipe, Percival H. Pangilinan, Corazon M. Cruz and Samuel B.
Bangoy, herein decision shall not apply pursuant to the Orders of the
trial court in Civil Case No. 93-66530, dropping their names from the
suit.
Consequently, this Decision is binding only on the remaining
respondents, namely: Arlene V. de Guzman, Celerina S. Navarro,
Rafael I. Tolentino, Bernardita B. Sy, Gloria T. Jularbal, Hubert S.
Nazareno, Nancy J. Chavez, Ernesto L. Cue, Herminio V. Fernandez,
Jr., Maria Victoria M. Lacsamana and Merly D. Sta. Ana, as well as
the petitioners.
WHEREFORE, the instant petition is GRANTED. Accordingly, (1)
the assailed decision dated May 16, 2000, of the Court of Appeals, in
CA-G.R. SP No. 37283, which affirmed the judgment dated
December 19, 1994, of the Regional Trial Court of Manila, Branch 52,
in Civil Case No. 93-66530, ordering petitioners to administer the
physician's oath to herein respondents as well as the resolution dated
August 25, 2000, of the appellate court, denying the petitioners'
motion for reconsideration, are REVERSED and SET ASIDE; and (2)
the writ of mandamus, issued in Civil Case No. 93-66530, and
affirmed by the appellate court in CA-G.R. SP No. 37283 is
NULLIFIED AND SET ASIDE.
SO ORDERED.
||| (Professional Regulation Commission v. De Guzman, G.R. No.
144681, [June 21, 2004], 476 PHIL 596-623)
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CONSTITUTIONAL LAW 2 |
[G.R. No. 120095. August 5, 1996.]
JMM PROMOTION AND MANAGEMENT, INC., and
KARY INTERNATIONAL, INC., petitioners, vs. HON.
COURT OF APPEALS, HON. MA. NIEVES
CONFESSOR, then Secretary of the Department of Labor
and Employment, HON. JOSE BRILLANTES, in his
capacity as acting Secretary of the Department of Labor
and Employment and HON. FELICISIMO JOSON, in his
capacity as Administrator of the Philippine Overseas
Employment Administration, respondents.
Don P. Porciuncula for petitioner.
Ma. Bezen Ringpis Liban/Solicitor General for respondents.
SYLLABUS
1. POLITICAL LAW; INHERENT POWERS OF THE STATE;
POLICE POWER; NATURE AND SCOPE. — The latin maxim salus
populi est suprema lex embodies the character of the entire spectrum
of public laws aimed at promoting the general welfare of the people
under the State's police power. As an inherent attribute of sovereignty
which virtually "extends to all public needs," this "least limitable" of
governmental powers grants a wide panoply of instruments through
which the state, as parens patriae gives effect to a host of its
regulatory powers. Describing the nature and scope of the police
power, Justice Malcolm, in the early case of Rubi v. Provincial Board
of Mindoro (89 Phil. 660, 708, [1919]) wrote: "The police power of
the State," one court has said . . . 'is a power coexistensive with self-
protection, and is not inaptly termed 'the law of overruling necessity.'
It may be said to be that inherent and plenary power in the state which
enables it to prohibit all things hurtful to the comfort, safety and
welfare of society." Carried onward by the current of legislature. the
judiciary rarely attempts to dam the onrushing power of legislative
discretion, provided the purposes of the law do not go beyond the
great principles that mean security for the public welfare or do not
arbitrarily interfere with the right of the individual."
2. ID.; ID.; ID.; EXERCISE THEREOF ENJOYS A PRESUMED
VALIDITY UNLESS IT IS SHOWN THAT IT DOES NOT
ENHANCE THE PUBLIC WELFARE OR WAS EXERCISED
ARBITRARILY OR UNREASONABLY. — Thus, police power
concerns government enactments which precisely interfere with
personal liberty or property in order to promote the general welfare or
the common good. As the assailed Department Order enjoys a
presumed validity, it follows that the burden rests upon petitioners to
demonstrate that the said order, particularly its ARB requirement, does
not enhance the public welfare or was exercised arbitrarily or
unreasonably.
3. ID.; ID.; ID.; THE PROPER REGULATION OF A PROFESSION,
CALLING, BUSINESS OR TRADE IS A VALID EXERCISE
THEREOF. — Nevertheless, no right is absolute, and the proper
regulation of a profession, calling business or trade has always been
upheld as a legitimate subject of a valid exercise of the police power
by the state particularly when their conduct affects either the
execution of legitimate governmental functions, the preservation of
the State, the public health and welfare and public morals. According
to the maxim, sic utere tuo ut alienum non laedas, it must of course be
within the legitimate range of legislative action to define the mode and
manner in which every one may so use his own property so as not to
pose injury to himself or others.
4. ID.; ID.; ID.; WHERE THE LIBERTY CURTAILED AFFECTS AT
MOST THE RIGHT TO PROPERTY, THE PERMISSIBLE SCOPE
OF REGULATORY MEASURES IS MUCH WIDER. — In any case,
where the liberty curtailed affects at most the rights of property, the
permissible scope of regulatory measures is certainly much wider. To
pretend that licensing or accreditation requirements violates the due
process clause is to ignore the settled practice, under the mantle of the
police power, of regulating entry to the practice of various trades or
professions. Professionals leaving for abroad are required to pass rigid
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CONSTITUTIONAL LAW 2 |
written and practical exams before they are deemed fit to practice their
trade. Seamen are required to take tests determining their seamanship.
Locally, the Professional Regulation Commission has began to require
previously licensed doctors and other professionals to furnish
documentary proof that they had either re-trained or had undertaken
continuing education courses as a requirement for renewal of their
licenses. It is not claimed that these requirements pose an unwarranted
deprivation of a property right under the due process clause. So long
as professionals and other workers meet reasonable regulatory
standards no such deprivation exists.
5. CONSTITUTIONAL LAW; STATE POLICIES; THE STATE
SHALL AFFORD FULL PROTECTION TO LABOR;
ELUCIDATED. — Protection to labor does not indicate promotion of
employment alone. Under the welfare and social justice provisions of
the Constitution, the promotion of full employment, while desirable,
cannot take a backseat to the government's constitutional duty to
provide mechanisms for the protection of our work-force, local or
overseas. As this Court explained in Philippine Association of Service
Exporters (PASEI) v. Drilon, in reference to the recurring problems
faced by our overseas workers: what concerns the Constitution more
paramountly is that such an employment be above all, decent, just,
and humane. It is bad enough that the country has to send its sons and
daughters to strange lands because it cannot satisfy their employment
needs at home. Under these circumstances, the Government is duty-
bound to insure that our toiling expatriates have adequate protection,
personally and economically, while away from home. A profession,
trade or calling is a property right within the meaning of our
constitutional guarantees. One cannot be deprived of the right to work
and the right to make a living because these rights are property rights,
the arbitrary and unwarranted deprivation of which normally
constitutes an actionable wrong.
6. ID.; BILL OF RIGHTS; NON-IMPAIRMENT OF OBLIGATIONS
OF CONTRACTS; MUST YIELD TO THE STATE'S POLICE
POWER. — It is a futile gesture on the part of petitioners to invoke
the non-impairment clause of theConstitution to support their
argument that the government cannot enact the assailed regulatory
measures because they abridge the freedom to contract. In Philippine
Association of Service Exporters, Inc. vs. Drilon, we held that "(t)he
non-impairment clause of the Constitution . . . must yield to the loftier
purposes targeted by the government." Equally important, into every
contract is read provisions of existing law, and always, a reservation
of the police power for so long as the agreement deals with a subject
impressed with the public welfare.
7. ID.; ID.; EQUAL PROTECTION CLAUSE; MERELY REQUIRES
THAT ALL PERSONS BE TREATED ALIKE UNDER LIKE
CONDITIONS. — The equal protection clause is directed principally
against undue favor and individual or class privilege. It is not intended
to prohibit legislation which is limited to the object to which it is
directed or by the territory in which it is to operate. It does not require
absolute equality, but merely that all persons be treated alike under
like conditions both as to privileges conferred and liabilities imposed.
We have held, time and again, that the equal protection clause of
the Constitution does not forbid classification for so long as such
classification is based on real and substantial differences having a
reasonable relation to the subject of the particular legislation. If
classification is germane to the purpose of the law, concerns all
members of the class, and applies equally to present and future
conditions, the classification does not violate the equal protection
guarantee.
DECISION
KAPUNAN, J p:
This limits of government regulation under the State's police power
are once again at the vortex of the instant controversy. Assailed is the
government's power to control deployment of female entertainers to
Japan by requiring an Artist Record Book (ARB) as a precondition to
the processing by the POEA of any contract for overseas employment.
By contending that the right to overseas employment is a property
right within the meaning of the Constitution, petitioners vigorously
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CONSTITUTIONAL LAW 2 |
aver that deprivation thereof allegedly through the onerous
requirement of an ARB violates the due process clause and constitutes
an invalid exercise of the police power.
The factual antecedents are undisputed.
Following the much-publicized death of Maricris Sioson in 1991,
former President Corazon C. Aquino ordered a total ban against the
deployment of performing artists to Japan and other foreign
destinations. The ban was, however, rescinded after leaders of the
overseas employment industry promised to extend full support for a
program aimed at removing kinks in the system of deployment. In its
place, the government, through the Secretary of Labor and
Employment, subsequently issued Department Order No. 28 creating
the Entertainment Industry Advisory Council (EIAC). which was
tasked with issuing guidelines on the training, testing certification and
deployment of performing artists abroad.
Pursuant to the EIAC's recommendations, 1 the Secretary of Labor, on
January 6, 1994, issued Department Order No. 3 establishing various
procedures and requirements for screening performing artists under a
new system of training, testing, certification and deployment of the
former. Performing artists successfully hurdling the test, training and
certification requirement were to be issued an Artist's Record Book
(ARB), a necessary prerequisite to processing of any contract of
employment by the POEA. Upon request of the industry,
implementation of the process, originally scheduled for April 1, 1994,
was moved to October 1, 1994.
Thereafter, the Department of Labor, following the EIAC's
recommendation, issued a series of orders fine-tuning and
implementing the new system. Prominent among these orders were
the following issuances:
1. Department Order No. 3-A, providing for additional
guidelines on the training, testing, certification and
deployment of performing artists.
2. Department Order No. 3-B, pertaining to the Artist Record
Book (ARB) requirement, which could be processed only after
the artist could show proof of academic and skills training and
has passed the required tests.
3. Department Order No. 3-E, providing the minimum salary a
performing artist ought to receive (not less than US$600.00 for
those bound for Japan) and the authorized deductions
therefrom.
4. Department Order No. 3-F, providing for the guidelines on
the issuance and use of the ARB by returning performing
artists who, unlike new artists, shall only undergo a Special
Orientation Program (shorter than the basic program) although
they must pass the academic test.
In Civil No. 95-72750, the Federation of Entertainment Talent
Managers of the Philippines (FETMOP), on January 27, 1995 filed a
class suit assailing these department orders, principally contending
that said orders 1) violated the constitutional right to travel; 2)
abridged existing contracts for employment; and 3) deprived
individual artists of their licenses without due process of law.
FETMOP, likewise, averred that the issuance of the Artist Record
Book (ARB) was discriminatory and illegal and "in gross violation of
the constitutional right . . . to life liberty and property." Said
Federation consequently prayed for the issuance of a writ of
preliminary injunction against the aforestated orders.
On February 2, 1992, JMM Promotion and Management, Inc. and
Kary International, Inc., herein petitioners, filed a Motion for
Intervention in said civil case, which was granted by the trial court in
an Order dated 15 February, 1995.
However, on February 21, 1995, the trial court issued an Order
denying petitioners' prayer for a writ of preliminary injunction and
dismissed the complaint.
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CONSTITUTIONAL LAW 2 |
On appeal from the trial court's Order, respondent court, in CA G.R.
SP No. 36713 dismissed the same. Tracing the circumstances which
led to the issuance of the ARB requirement and the assailed
Department Order, respondent court concluded that the issuances
constituted a valid exercise by the state of the police power.
We agree.
The latin maxim salus populi est suprema lex embodies the character
of the entire spectrum of public laws aimed at promoting the general
welfare of the people under the State's police power. As an inherent
attribute of sovereignty which virtually "extends to all public
needs," 2 this "least limitable" 3of governmental powers grants a wide
panoply of instruments through which the state, as parens
patriae gives effect to a host of its regulatory powers.
Describing the nature and scope of the police power, Justice Malcolm,
in the early case of Rubi v. Provincial Board of Mindoro 4 wrote:
"The police power of the State," one court has said . . . 'is a
power coextensive with self-protection, and is not inaptly
termed 'the law of overruling necessity.' It may be said to be
that inherent and plenary power in the state which enables it to
prohibit all things hurtful to the comfort, safety and welfare of
society." Carried onward by the current of legislature, the
judiciary rarely attempts to dam the onrushing power of
legislative discretion, provided the purposes of the law do not
go beyond the great principles that mean security for the
public welfare or do not arbitrarily interfere with the right of
the individual." 5
Thus, police power concerns government enactments which precisely
interfere with personal liberty or property in order to promote the
general welfare or the common good. As the assailed Department
Order enjoys a presumed validity, it follows that the burden rests upon
petitioners to demonstrate that the said order, particularly, its ARB
requirement, does not enhance the public welfare or was exercised
arbitrarily or unreasonably.
A through review of the facts and circumstances leading to the
issuance of the assailed orders compels us to rule that the Artist
Record Book requirement and the questioned Department Order
related to its issuance were issued by the Secretary of Labor pursuant
to a valid exercise of the police power.
In 1984, the Philippines emerged as the largest labor sending country
in Asia dwarfing the labor export of countries with mammoth
populations such as India and China. According to the National
Statistics Office, this diasporawas augmented annually by over
450,000 documented and clandestine or illegal (undocumented)
workers who left the country for various destinations abroad, lured by
higher salaries, better work opportunities and sometimes better living
conditions.
Of the hundreds of thousands of workers who left the country for
greener pastures in the last few years, women composed slightly close
to half of those deployed, constituting 47% between 1987-1991,
exceeding this proportion (58%) by the end of 1991, 6 the year former
President Aquino instituted the ban on deployment of performing
artists to Japan and other countries as a result of the gruesome death of
Filipino entertainer Maricris Sioson.
It was during the same period that this Court took judicial notice not
only of the trend, but also of the fact that most of our women, a large
number employed as domestic helpers and entertainers, worked under
exploitative conditions "marked by physical and personal
abuse." 7 Even then, we noted that "[t]he sordid tales of maltreatment
suffered by migrant Filipina workers, even rape and various forms of
torture, confirmed by testimonies of returning workers" compelled
"urgent government action." 8
Pursuant to the alarming number of reports that a significant number
of Filipina performing artists ended up as prostitutes abroad (many of
70
CONSTITUTIONAL LAW 2 |
whom were beaten, drugged and forced into prostitution), and
following the deaths of a number of these women, the government
began instituting measures aimed at deploying only those individuals
who met set standards which would qualify them as legitimate
performing artists. In spite of these measures, however, a number of
our countrymen have nonetheless fallen victim to unscrupulous
recruiters, ending up as virtual slaves controlled by foreign crime
syndicates and forced into jobs other than those indicated in their
employment contracts. Worse, some of our women have been forced
into prostitution.
Thus, after a number of inadequate and failed accreditation schemes,
the Secretary of Labor issued on August 16, 1993, D.O. No. 28,
establishing the Entertainment Industry Advisory Council (EIAC), the
policy advisory body of DOLE on entertainment industry
matters. 9 Acting on the recommendations of the said body, the
Secretary of Labor, on January 6, 1994, issued the assailed orders.
These orders embodied EIAC's Resolution No. 1, which called for
guidelines on screening, testing and accrediting performing overseas
Filipino artists. Significantly, as the respondent court noted,
petitioners were duly represented in the EIAC, 10 which gave the
recommendations on which the ARB and other requirements were
based.
Clearly, the welfare of Filipino performing artists, particularly the
women was paramount in the issuance of Department Order No. 3.
Short of a total and absolute ban against the deployment of
performing artists to "high-risk" destinations, a measure which would
only drive recruitment further underground, the new scheme at the
very least rationalizes the method of screening performing artists by
requiring reasonable educational and artistic skills from them and
limits deployment to only those individuals adequately prepared for
the unpredictable demands of employment as artists abroad. It cannot
be gainsaid that this scheme at least lessens the room for exploitation
by unscrupulous individuals and agencies.
Moreover, here or abroad, selection of performing artists is usually
accomplished by auditions, where those deemed unfit are usually
weeded out through a process which is inherently subjective and
vulnerable to bias and differences in taste. The ARB requirement goes
one step further, however, attempting to minimize the subjectivity of
the process by defining minimum skills required from entertainers and
performing artists. As the Solicitor General observed, this should be
easily met by experienced artists possessing merely basic skills. The
tests are aimed at segregating real artists or performers from those
passing themselves off as such, eager to accept any available job and
therefore exposing themselves to possible exploitation.
As to the other provisions of Department Order No. 3 questioned by
petitioners, we see nothing wrong with the requirement for document
and booking confirmation (D.O. 3-C), a minimum salary scale (D.O.
3-E), or the requirement for registration of returning performers. The
requirement for a venue certificate or other documents evidencing the
place and nature of work allows the government closer monitoring of
foreign employers and helps keep our entertainers away from
prostitution fronts and other worksites associated with unsavory,
immoral, illegal or exploitative practices. Parenthetically, none of
these issuances appear to us, by any stretch of the imagination, even
remotely unreasonable or arbitrary. They address a felt need of
according greater protection for an oft-exploited segment of our
OCW's. They respond to the industry's demand for clearer and more
practicable rules and guidelines. Many of these provisions were
fleshed out following recommendations by, and after consultations
with, the affected sectors and non-government organizations. On the
whole, they are aimed at enhancing the safety and security of
entertainers and artists bound for Japan and other destinations, without
stifling the industry's concerns for expansion and growth.
In any event, apart from the State's police power,
the Constitution itself mandates government to extend the fullest
protection to our overseas workers. The basic constitutional statement
on labor, embodied in Section 18 of Article II of
the Constitution provides:
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CONSTITUTIONAL LAW 2 |
Sec. 18. The State affirms labor as a primary social economic
force. It shall protect the rights of workers and promote their
welfare.
More emphatically, the social justice provision on labor of the
1987 Constitution in its first paragraph states:
The State shall afford full protection to labor, local and
overseas, organized and unorganized and promote full
employment and equality of employment opportunities for all.
Obviously, protection to labor does not indicate promotion of
employment alone. Under the welfare and social justice provisions of
the Constitution, the promotion of full employment, while desirable,
cannot take a backseat to the government's constitutional duty to
provide mechanisms for the protection of our workforce, local or
overseas. At this Court explained in Philippine Association of Service
Exporters (PASEI) v. Drilon, 11 in reference to the recurring problems
faced by our overseas workers:
What concerns the Constitution more paramountly is that such
an employment be above all, decent, just, and humane. It is
bad enough that the country has to send its sons and daughters
to strange lands because it cannot satisfy their employment
needs at home. Under these circumstances, the Government is
duty-bound to insure that our toiling expatriates have adequate
protection, personally and economically, while away from
home.
We now go to petitioners' assertion that the police power cannot,
nevertheless, abridge the right of our performing workers to return to
work abroad after having earlier qualified under the old process,
because, having previously been accredited, their accreditation
became a "property right," protected by the due process clause. We
find this contention untenable.
A profession, trade or calling is a property right within the meaning of
our constitutional guarantees. One cannot be deprived of the right to
work and the right to make a living because these rights are property
rights, the arbitrary and unwarranted deprivation of which normally
constitutes an actionable wrong. 12
Nevertheless, no right is absolute, and the proper regulation of a
profession, calling, business or trade has always been upheld as a
legitimate subject of a valid exercise of the police power by the state
particularly when their conduct affects either the execution of
legitimate governmental functions, the preservation of the State, the
public health and welfare and public morals. According to the
maxim, sic utere tuo ut alienum non laedas, it must of course be
within the legitimate range of legislative action to define the mode and
manner in which every one may so use his own property so as not to
pose injury to himself or others. 13
In any case, where the liberty curtailed affects at most the rights of
property, the permissible scope of regulatory measures is certainly
much wider. 14 To pretend that licensing or accreditation
requirements violates the due process clause is to ignore the settled
practice, under the mantle of the police power, of regulating entry to
the practice of various trades or professions. Professionals leaving for
abroad are required to pass rigid written and practical exams before
they are deemed fit to practice their trade. Seamen are required to take
tests determining their seamanship. Locally, the Professional
Regulation Commission has began to require previously licensed
doctors and other professionals to furnish documentary proof that they
had either re-trained or had undertaken continuing education courses
as a requirement for renewal of their licenses. It is not claimed that
these requirements pose an unwarranted deprivation of a property
right under the due process clause. So long as professionals and other
workers meet reasonable regulatory standards no such deprivation
exists.
Finally, it is a futile gesture on the part of petitioners to invoke the
non-impairment clause of the Constitution to support their argument
72
CONSTITUTIONAL LAW 2 |
that the government cannot enact the assailed regulatory measures
because they abridge the freedom to contract. In Philippine
Association of Service Exporters, Inc. vs. Drilon, we held that "[t]he
non-impairment clause of the Constitution . . . must yield to the loftier
purposes targeted by the government."15 Equally important, into
every contract is read provisions of existing law, and always, a
reservation of the police power for so long as the agreement deals
with a subject impressed with the public welfare.
right of these performers and entertainers to work abroad, the assailed
measures enable our government to assume a measure of control.
WHEREFORE, finding no reversible error in the decision sought to
be reviewed, petition is hereby DENIED.
||| (JMM Promotion and Management, Inc. v. Court of Appeals, G.R.
No. 120095, [August 5, 1996], 329 PHIL 87-102)

A last point. Petitioners suggest that the singling out of entertainers

and performing artists under the assailed department orders constitutes
class legislation which violates the equal protection clause of
the Constitution. We do not agree.

The equal protection clause is directed principally against undue favor

and individual or class privilege. It is not intended to prohibit
legislation which is limited to the object to which it is directed or by
the territory in which it is to operate. It does not require absolute
equality, but merely that all persons be treated alike under like
conditions both as to privileges conferred and liabilities
imposed. 16 We have held, time and again, that the equal protection
clause of the Constitution does not forbid classification for so long as
such classification is based on real and substantial differences having
a reasonable relation to the subject of the particular legislation. 17 If [G.R. No. 88404. October 18, 1990.]
classification is germane to the purpose of the law, concerns all
members of the class, and applies equally to present and future PHILIPPINE LONG DISTANCE TELEPHONE CO.
conditions, the classification does not violate the equal protection [PLDT], petitioner, vs. THE NATIONAL
guarantee. TELECOMMUNICATIONS COMMISSION AND
CELLCOM, INC., (EXPRESS
In the case at bar, the challenged Department Order clearly applies to TELECOMMUNICATIONS CO., INC.
all performing artists and entertainers destined for jobs abroad. These [ETCI]),respondents.
orders, we stressed hereinbefore, further the Constitutional mandate
requiring government to protect our workforce, particularly those who Alampan & Manhit Law Offices for petitioner.
may be prone to abuse and exploitation as they are beyond the
physical reach of government regulatory agencies. The tragic Gozon, Fernandez, Defensor & Parel for private respondent.
incidents must somehow stop, but short of absolutely curtailing the
DECISION
73
CONSTITUTIONAL LAW 2 |
MELENCIO-HERRERA, J p:
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
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CONSTITUTIONAL LAW 2 |
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. 188. 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.
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 P5M. 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 P225M, 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.
75
CONSTITUTIONAL LAW 2 |
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 hag 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
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CONSTITUTIONAL LAW 2 |
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 telephony
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 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's Franchise
PLDT alleges that the ETCI franchise had lapsed into non-existence
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
77
CONSTITUTIONAL LAW 2 |
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 role 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 limitations 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
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CONSTITUTIONAL LAW 2 |
(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 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 P960,000.00 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
79
CONSTITUTIONAL LAW 2 |
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 1987Constitution 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. 82-81, 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 s need to maximize the use of
telecommunications facilities available and encourage
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CONSTITUTIONAL LAW 2 |
investment in telecommunications infrastructure by suitably
qualified service providers;
"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, xxx 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 timeframe 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 due process. It has been
heard. It will continue to be heard in the main proceedings. It will
surely be 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.
6. Ultimate Considerations
The decisive considerations 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 1987Constitution, 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 rendering efficient and
reasonably priced services is also indispensable for accelerated
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CONSTITUTIONAL LAW 2 |
economic recovery and development. To these public and national Petition is DISMISSED for lack of merit. The Temporary Restraining
interests, public utility companies must bow and yield. Order heretofore issued is LIFTED. The bond issued as a condition
for the issuance of said restraining Order is declared forfeited in favor
Despite the fact that there is a virtual monopoly of the telephone of private responder Express Telecommunications Co., Inc.
system in the country at present, service is sadly inadequate. Customer
demands are hardly met, whether fixed or mobile. There is a Costs against petitioner.
unanimous cry to hasten the development of a modern, efficient,
satisfactory and continuous telecommunications service not only in ||| (PLDT Co. v. National Telecommunications Commission, G.R. No.
Metro Manila but throughout the archipelago. The need therefor was 88404, [October 18, 1990], 268 PHIL 784-815)
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 [G.R. No. 106804. August 12, 2004.]
fifty (50) years (ibid., Section 11; Article XIV, Section 5,
1973 Constitution; Article XIV, Section 8, 1935 Constitution). NATIONAL POWER CORPORATION, petitioner, vs.
Additionally, the State is empowered to decide whether public interest COURT OF APPEALS and ANTONINO
demands that monopolies be regulated or prohibited POBRE, respondents.
(1987 Constitution, Article XII, Section 19).
DECISION
WHEREFORE, finding no grave abuse of discretion, tantamount to
lack of or excess of jurisdiction, on the part of the National CARPIO, J p:
Telecommunications Commission in issuing its challenged Orders of
12 December 1988 and 8 May 1989 in NTC Case No. 87-39, this The Case
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CONSTITUTIONAL LAW 2 |
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
Decision 3 of the Regional Trial Court, Branch 17, Tabaco, Albay in
Civil Case No. T-552.
The Antecedents
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. SATDEI
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 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.
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. 739 6 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.
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.
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.
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.
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CONSTITUTIONAL LAW 2 |
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: EDIHSC
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.
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:
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.
SO ORDERED. 10
The Court of Appeals denied NPC’s motion for reconsideration in a
Resolution dated 14 August 1992.
The Ruling of the Trial Court
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 resort-subdivision. The
chemicals emitted by the geothermal plants damaged the natural
resources in the Property and endangered the lives of the residents.
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CONSTITUTIONAL LAW 2 |
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. AEIHCS
The Issues
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;
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;
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
6. In not totally setting aside the appealed Decision of the trial
court. 11
Procedural Issues
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’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.
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CONSTITUTIONAL LAW 2 |
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 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 utilities 17 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.
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CONSTITUTIONAL LAW 2 |
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. 27 Pobre’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
87
CONSTITUTIONAL LAW 2 |
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. ACTEHI
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.
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.
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.
NPC must Pay Just Compensation for the Entire 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
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 resort-subdivision. 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.
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. 45This 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.
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CONSTITUTIONAL LAW 2 |
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.
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.
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.
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.
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.
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 square-meter Property is
reasonable considering that the Property was already an established
resort-subdivision. 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. Thus, we hold NPC liable for exemplary damages of
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CONSTITUTIONAL LAW 2 |
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 and P100,000, respectively. No costs.
SO ORDERED.
||| (National Power Corp. v. Court of Appeals, G.R. No. 106804,
[August 12, 2004], 479 PHIL 850-870)
[G.R. No. 155746. October 13, 2004.]
DIOSDADO LAGCAO, DOROTEO LAGCAO and
URSULA LAGCAO, petitioners, vs. JUDGE GENEROSA
G. LABRA, Branch 23, Regional Trial Court, Cebu, and
the CITY OF CEBU, respondent.
DECISION
CORONA, J p:
Before us is a petition for review of the decision dated July 1, 2002 of
the Regional Trial Court, Branch 23, Cebu City 1 upholding the
validity of the City of Cebu's Ordinance No. 1843, as well as the
lower court's order dated August 26, 2002 denying petitioner's motion
for reconsideration.
In 1964, the Province of Cebu donated 210 lots to the City of Cebu.
One of these lots was Lot 1029, situated in Capitol Hills, Cebu City,
with an area of 4,048 square meters. In 1965, petitioners purchased
Lot 1029 on installment basis. But then, in late 1965, the 210 lots,
including Lot 1029, reverted to the Province of Cebu. 2 Consequently,
the province tried to annul the sale of Lot 1029 by the City of Cebu to
the petitioners. This prompted the latter to sue the province for
specific performance and damages in the then Court of First Instance.
On July 9, 1986, the court a quo ruled in favor of petitioners and
ordered the Province of Cebu to execute the final deed of sale in favor
of petitioners. On June 11, 1992, the Court of Appeals affirmed the
decision of the trial court. Pursuant to the ruling of the appellate court,
the Province of Cebu executed on June 17, 1994 a deed of absolute
sale over Lot 1029 in favor of petitioners. Thereafter, Transfer
Certificate of Title (TCT) No. 129306 was issued in the name of
petitioners and Crispina Lagcao. 3
After acquiring title, petitioners tried to take possession of the lot only
to discover that it was already occupied by squatters. Thus, on June
15, 1997, petitioners instituted ejectment proceedings against the
squatters. The Municipal Trial Court in Cities (MTCC), Branch 1,
Cebu City, rendered a decision on April 1, 1998, ordering the squatters
to vacate the lot. On appeal, the RTC affirmed the MTCC's decision
and issued a writ of execution and order of demolition.
However, when the demolition order was about to be implemented,
Cebu City Mayor Alvin Garcia wrote two letters 4 to the MTCC,
requesting the deferment of the demolition on the ground that the City
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CONSTITUTIONAL LAW 2 |
was still looking for a relocation site for the squatters. Acting on the
mayor's request, the MTCC issued two orders suspending the
demolition for a period of 120 days from February 22, 1999.
Unfortunately for petitioners, during the suspension period,
the Sangguniang Panlungsod (SP) of Cebu City passed a resolution
which identified Lot 1029 as a socialized housing site pursuant to RA
7279. 5 Then, on June 30, 1999, the SP of Cebu City passed
Ordinance No. 1772 6which included Lot 1029 among the identified
sites for socialized housing. On July, 19, 2000, Ordinance No.
1843 7 was enacted by the SP of Cebu City authorizing the mayor of
Cebu City to initiate expropriation proceedings for the acquisition of
Lot 1029 which was registered in the name of petitioners. The
intended acquisition was to be used for the benefit of the homeless
after its subdivision and sale to the actual occupants thereof. For this
purpose, the ordinance appropriated the amount of P6,881,600 for the
payment of the subject lot. This ordinance was approved by Mayor
Garcia on August 2, 2000.
On August 29, 2000, petitioners filed with the RTC an action for
declaration of nullity of Ordinance No. 1843 for being
unconstitutional. The trial court rendered its decision on July 1, 2002
dismissing the complaint filed by petitioners whose subsequent
motion for reconsideration was likewise denied on August 26, 2002.
In this appeal, petitioners argue that Ordinance No. 1843 is
unconstitutional as it sanctions the expropriation of their property for
the purpose of selling it to the squatters, an endeavor contrary to the
concept of "public use" contemplated in the Constitution. 8 They
allege that it will benefit only a handful of people. The ordinance,
according to petitioners, was obviously passed for politicking, the
squatters undeniably being a big source of votes.
In sum, this Court is being asked to resolve whether or not the
intended expropriation by the City of Cebu of a 4,048-square-meter
parcel of land owned by petitioners contravenes the Constitution and
applicable laws.
Under Section 48 of RA 7160, 9 otherwise known as the Local
Government Code of 1991, 10 local legislative power shall be
exercised by the Sangguniang Panlungsod of the city. The legislative
acts of the Sangguniang Panlungsod in the exercise of its lawmaking
authority are denominated ordinances.
Local government units have no inherent power of eminent domain
and can exercise it only when expressly authorized by the
legislature. 11 By virtue of RA 7160, Congress conferred upon local
government units the power to expropriate. Ordinance No. 1843 was
enacted pursuant to Section 19 of RA 7160:
SEC. 19. Eminent Domain. — A local government unit may,
through its chief executive and acting pursuant to an
ordinance, exercise the power of eminent domain for public
use, or purpose, or welfare for the benefit of the poor and the
landless, upon payment of just compensation, pursuant to the
provisions of the Constitution and pertinent laws . . .. (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; 12and (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.
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CONSTITUTIONAL LAW 2 |
The exercise of the power of eminent domain drastically affects a
landowner's right to private property, which is as much a
constitutionally-protected right necessary for the preservation and
enhancement of personal dignity and intimately connected with the
rights to life and liberty. 14 Whether directly exercised by the State or
by its authorized agents, the exercise of eminent domain is necessarily
in derogation of private rights. 15 For this reason, the need for a
painstaking scrutiny cannot be overemphasized.
The due process clause cannot be trampled upon each time an
ordinance orders the expropriation of a private individual's property.
The courts cannot even adopt hands-off policy simply because public
use or public purpose is invoked by an ordinance, or just
compensation has been fixed and determined. In De Knecht vs.
Bautista, 16 we said:
It is obvious then that a land-owner is covered by the mantle of
protection due process affords. It is a mandate of reason. It
frowns on arbitrariness, it is the antithesis of any governmental
act that smacks of whim or caprice. It negates state power to
act in an oppressive manner. It is, as had been stressed so
often, the embodiment of the sporting idea of fair play. In that
sense, it stands as a guaranty of justice. That is the standard
that must be met by any governmental agency in the exercise
of whatever competence is entrusted to it. As was so
emphatically stressed by the present Chief Justice, "Acts of
Congress, as well as those of the Executive, can deny due
process only under pain of nullity. . . ..
The foundation of the right to exercise eminent domain is genuine
necessity and that necessity must be of public
character. 17 Government may not capriciously or arbitrarily choose
which private property should be expropriated. In this case, there was
no showing at all why petitioners' property was singled out for
expropriation by the city ordinance or what necessity impelled the
particular choice or selection. Ordinance No. 1843 stated no reason
for the choice of petitioners' property as the site of a socialized
housing project.
Condemnation of private lands in an irrational or piecemeal fashion or
the random expropriation of small lots to accommodate no more than
a few tenants or squatters is certainly not the condemnation for public
use contemplated by the Constitution. This is depriving a citizen of his
property for the convenience of a few without perceptible benefit to
the public. 18
RA 7279 is the law that governs the local expropriation of property for
purposes of. urban land reform and housing. Sections 9 and 10 thereof
provide:
SEC 9. Priorities in the Acquisition of Land. — Lands for
socialized housing shall be acquired in the following order:
(a) Those owned by the Government or any of its
subdivisions, instrumentalities, or agencies,
including government-owned or controlled
corporations and their subsidiaries;
(b) Alienable lands of the public domain;
(c) Unregistered or abandoned and idle lands;
(d) Those within the declared Areas or Priority
Development, Zonal Improvement Program sites,
and Slum Improvement and Resettlement
Program sites which have not yet been acquired;
(e) Bagong Lipunan Improvement of Sites and
Services or BLISS which have not yet been
acquired; and
(f) Privately-owned lands.
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CONSTITUTIONAL LAW 2 |
Where on-site development is found more practicable and
advantageous to the beneficiaries, the priorities mentioned in
this section shall not apply. The local government units shall
give budgetary priority to on-site development of government
lands. (Emphasis supplied).
SEC. 10. Modes of Land Acquisition. — The modes of
acquiring lands for purposes of this Act shall include, among
others, community mortgage, land swapping, land assembly or
consolidation, land banking, donation to the Government, joint
venture agreement, negotiated purchase, and expropriation:
Provided, however, That expropriation shall be resorted to
only when other modes of acquisition have been exhausted:
Provided further, That where expropriation is resorted to,
parcels of land owned by small property owners shall be
exempted for purposes of this Act: . . . (Emphasis supplied).
In the recent case of Estate or Heirs of the Late Ex-Justice Jose B.L.
Reyes et al. vs. City of Manila, 19 we ruled that the above-quoted
provisions are strict limitations on the exercise of the power of
eminent domain by local government units, especially with respect to
(1) the order of priority in acquiring land for socialized housing and
(2) the resort to expropriation proceedings as a means to acquiring it.
Private lands rank last in the order of priority for purposes of
socialized housing. In the same vein, expropriation proceedings may
be resorted to only after the other modes of acquisition are exhausted.
Compliance with these conditions is mandatory because these are the
only safeguards of oftentimes helpless owners of private property
against what may be a tyrannical violation of due process when their
property is forcibly taken from them allegedly for public use.
We have found nothing in the records indicating that the City of Cebu
complied strictly with Sections 9 and 10 of RA 7279. Ordinance No.
1843 sought to expropriate petitioners' property without any attempt
to first acquire the lands listed in (a) to (e) of Section 9 of RA 7279.
Likewise, Cebu City failed to establish that the other modes of
acquisition in Section 10 of RA 7279 were first exhausted. Moreover,
prior to the passage of Ordinance No. 1843, there was no evidence of
a valid and definite offer to buy petitioners' property as required by
Section 19 of RA 7160. 20 We therefore find Ordinance No. 1843 to
be constitutionally infirm for being violative of the petitioners' right to
due process.
It should also be noted that, as early as 1998, petitioners had already
obtained a favorable judgment of eviction against the illegal occupants
of their property. The judgment in this ejectment case had, in fact,
already attained finality, with a writ of execution and an order of
demolition. But Mayor Garcia requested the trial court to suspend the
demolition on the pretext that the City was still searching for a
relocation site for the squatters. However, instead of looking for a
relocation site during the suspension period, the city council suddenly
enacted Ordinance No. 1843 for the expropriation of petitioners' lot. It
was trickery and bad faith, pure and simple. The unconscionable
manner in which the questioned ordinance was passed clearly
indicated that respondent City transgressed the Constitution, RA 7160
and RA 7279.
For an ordinance to be valid, it must not only be within the corporate
powers of the city or municipality to enact but must also be passed
according to the procedure prescribed by law. It must be in accordance
with certain well-established basic principles of a substantive nature.
These principles require that an ordinance (1) must not contravene
the Constitution or any statute (2) must not be unfair or oppressive (3)
must not be partial or discriminatory (4) must not prohibit but may
regulate trade (5) must be general and consistent with public policy,
and (6) must not be unreasonable. 21
Ordinance No. 1843 failed to comply with the foregoing substantive
requirements. A clear case of constitutional infirmity having been thus
established, this Court is constrained to nullify the subject ordinance.
We recapitulate:
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CONSTITUTIONAL LAW 2 |
first, as earlier discussed, the questioned ordinance is
repugnant to the pertinent provisions of the Constitution, RA
7279 and RA 7160;
second, the precipitate manner in which it was enacted was
plain oppression masquerading as a pro-poor ordinance;
third, the fact that petitioners' small property was singled out
for expropriation for the purpose of awarding it to no more
than a few squatters indicated manifest partiality against
petitioners, and
fourth, the ordinance failed to show that there was a
reasonable relation between the end sought and the means
adopted. While the objective of the City of Cebu was to
provide adequate housing to slum dwellers, the means it
employed in pursuit of such objective fell short of what was
legal, sensible and called for by the circumstances.
Indeed, experience has shown that the disregard of basic liberties and
the use of short-sighted methods in expropriation proceedings have
not achieved the desired results. Over the years, the government, has
tried to remedy the worsening squatter problem. Far from solving it,
however, government's kid-glove approach has only resulted in the
multiplication and proliferation of squatter colonies and blighted
areas. A pro-poor program that is well-studied, adequately funded,
genuinely sincere and truly respectful of everyone's basic rights is
what this problem calls for, not the improvident enactment of politics-
based ordinances targeting small private lots in no rational fashion.
WHEREFORE, the petition is hereby GRANTED. The July 1, 2002
decision of Branch 23 of the Regional Trial Court of Cebu City is
RESERVED and SET ASIDE.
SO ORDERED.
||| (Lagcao v. Labra, G.R. No. 155746, [October 13, 2004], 483 PHIL
303-315)
[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.
DECISION
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
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CONSTITUTIONAL LAW 2 |
on the NW by AFP reservation. Containing an area of 759,299
square meters, more or less, and registered in the name of
Alfonso Castellvi under TCT No. 13631 of the Register of
Deeds of Pampanga . . .";
and against defendant-appellee Maria Nieves Toledo Gozun
(hereinafter referred to as Toledo-Gozun), over two parcels of land
described as follows:
"A parcel of land (Portion of Lot 1-B, Blk-1, Bureau of Lands
Plan Psd, 26254. Bounded on the NE by Lot 3, on the SE by
Lot 3; on the SW by Lot 1-B, Blk. 2 (equivalent to Lot 199-B
Swo 23666; on the NW by AFP military reservation.
Containing an area of 450,273 square meters, more or less, and
registered in the name of Maria Nieves Toledo-Gozun under
TCT No. 8708 of the Register of Deeds of Pampanga. . . .",
and
"A parcel of land (Portion of Lot 3, Blk-1, Bureau of Lands
Plan Psd 26254. Bounded on the NE by Lot No. 3, on the SE
by school lot and national road, on the SW by Lot 1-B Blk 2
(equivalent to Lot 199-B Swo 23666), on the NW by Lot 1-B,
Blk-1. Containing an area of 88,772 square meters, more or
less, and registered in the name of Maria Nieves Toledo Gozun
under TCT No. 8708 of the Register of Deeds of Pampanga, . .
."
In its complaint, the Republic alleged, among other things, that the
fair market value of the above-mentioned lands, according to the
Committee on Appraisal for the Province of Pampanga, was not more
than P2,000 per hectare, or a total market value of P259,669.10; and
prayed, that the provisional value of the lands be fixed at
P259,669.10, that the court authorizes plaintiff to take immediate
possession of the lands upon deposit of that amount with the
Provincial Treasurer of Pampanga; that the court appoints three
commissioners to ascertain and report to the court the just
compensation for the property sought to be expropriated, and that the
court issues thereafter a final order of condemnation.
On June 29, 1959 the trial court issued an order fixing the provisional
value of the lands at P259,669.10.
In her "motion to dismiss" filed on July 14, 1959, Castellvi alleged,
among other things, that the land under her administration, being a
residential land, had a fair market value of P15.00 per square meter, so
it had a total market value of P11,389,485.00; that the Republic,
through the Armed Forces of the Philippines, particularly the
Philippine Air Force, had been, despite repeated demands, illegally
occupying her property since July 1, 1956, thereby preventing her
from using and disposing of it, thus causing her damages by way of
unrealized profits. This defendant prayed that the complaint be
dismissed, or that the Republic be ordered to pay her P15.00 per
square meter, or a total of P11,389,485.00, plus interest thereon at 6%
per annum from July 1, 1956; that the Republic be ordered to pay her
P5,000,000.00 as unrealized profits, and the costs of the suit.
By order of the trial court, dated August, 1959, Amparo C. Diaz,
Dolores G. viuda de Gil, Paloma Castellvi, Carmen Castellvi, Rafael
Castellvi, Luis Castellvi, Natividad Castellvi de Raquiza, Jose
Castellvi and Consuelo Castellvi were allowed to intervene as parties
defendants. Subsequently, Joaquin V. Gozun, Jr., husband of defendant
Nieves Toledo Gozun, was also allowed by the court to intervene as a
party defendant.
After the Republic had deposited with the Provincial Treasurer of
Pampanga the amount of P259,669.10, the trial court ordered that the
Republic be placed in possession of the lands. The Republic was
actually placed in possession of the lands on August 10, 1959. 1
In her "motion to dismiss", dated October 22, 1959, Toledo-Gozun
alleged, among other things, that her two parcels of land were
residential lands, in fact a portion with an area of 343,303 square
meters had already been subdivided into different lots for sale to the
95
CONSTITUTIONAL LAW 2 |
general public, and the remaining portion had already been set aside
for expansion sites of the already completed subdivisions; that the fair
market value of said lands was P15.00 per square meter, so they had a
total market value of P8,085,675.00; and she prayed that the
complaint be dismissed, or that she be paid the amount of
P8,085,675.00, plus interest thereon at the rate of 6% per annum from
October 13, 1959, and attorney's fees in the amount of P50,000.00.
Intervenors Jose Castellvi and Consuelo Castellvi in their answer,
filed on February 11, 1960, and also intervenor Joaquin Gozun, Jr.,
husband of defendant Maria Nieves Toledo-Gozun, in his motion to
dismiss, dated May 27, 1960, all alleged that the value of the lands
sought to be expropriated was at the rate of P15.00 per square meter.
On November 4, 1959, the trial court authorized the Provincial
Treasurer of Pampanga to pay defendant Toledo-Gozun the sum of
P107,609.00 as provisional value of her lands. 2 On May 16, 1960 the
trial Court authorized the Provincial Treasurer of Pampanga to pay
defendant Castellvi the amount of P151,859.80 as provisional value of
the land under her administration, and ordered said defendant to
deposit the amount with the Philippine National Bank under the
supervision of the Deputy Clerk of Court. In another order of May 16,
1960 the trial Court entered an order of condemnation. 3
The trial Court appointed three commissioners: Atty. Amadeo Yuzon,
Clerk of Court, as commissioner for the court; Atty. Felicisimo G.
Pamandanan, counsel of the Philippine National Bank Branch at
Floridablanca, for the plaintiff; and Atty. Leonardo F. Lansangan,
Filipino legal counsel at Clark Air Base, for the defendants. The
Commissioners, after having qualified themselves, proceeded to the
performance of their duties.
On March 15, 1961 the Commissioners submitted their report and
recommendation, wherein, after having determined that the lands
sought to be expropriated were residential lands, they recommended
unanimously that the lowest price that should be paid was P10.00 per
square meter, for both the lands of Castellvi and Toledo-Gozun; that
an additional P5,000.00 be paid to Toledo-Gozun for improvements
found on her land; that legal interest on the compensation, computed
from August 10, 1959, be paid after deducting the amounts already
paid to the owners, and that no consequential damages be
awarded. 4 The Commissioners' report was objected to by all the
parties in the case — by defendants Castellvi and Toledo-Gozun, who
insisted that the fair market value of their lands should be fixed at
P15.00 per square meter; and by the Republic, which insisted that the
price to be paid for the lands should be fixed at P0.20 per square
meter. 5
After the parties-defendants and intervenors had filed their respective
memoranda, and the Republic, after several extensions of time, had
adopted as its memorandum its objections to the report of the
Commissioners, the trial court, on May 26, 1961, rendered its
decision 6 the dispositive portion of which reads as follows:
"WHEREFORE, taking into account all the foregoing
circumstances, and that the lands are titled, . . . the rising trend
of land values,. . . and the lowered purchasing power of the
Philippine peso, the court finds that the unanimous
recommendation of the commissioners of ten (P10.00) pesos
per square meter for the three lots of the defendants subject of
this action is fair and just."
xxx xxx xxx
"The plaintiff will pay 6% interest per annum on the total
value of the lands of defendant Toledo-Gozun since (sic) the
amount deposited as provisional value from August 10, 1959
until full payment is made to said defendant or deposit therefor
is made in court.
"In respect to the defendant Castellvi, interest at 6% per
annum will also be paid by the plaintiff to defendant Castellvi
from July 1, 1956 when plaintiff commenced its illegal
possession of the Castellvi land when the instant action had
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CONSTITUTIONAL LAW 2 |
not yet been commenced to July 10, 1959 when the
provisional value thereof was actually deposited in court, on
the total value of the said (Castellvi) land as herein adjudged.
The same rate of interest shall be paid from July 11, 1959 on
the total value of the land herein adjudged minus the amount
deposited as provisional value, or P151,859.80, such interest to
run until full payment is made to said defendant or deposit
therefor is made in court. All the Intervenors having failed to
produce evidence in support of their respective interventions,
said interventions are ordered dismissed.
"The costs shall be charged to the plaintiff."
On June 21, 1961 the Republic filed a motion for a new trial and/or
reconsideration, upon the grounds of newly-discovered evidence, that
the decision was not supported by the evidence, and that the decision
was against the law, against which motion defendants Castellvi and
Toledo-Gozun filed their respective oppositions. On July 8, 1961
when the motion of the Republic for new trial and/or reconsideration
was called for hearing, the Republic filed a supplemental motion for
new trial upon the ground of additional newly-discovered evidence.
This motion for new trial and/or reconsideration was denied by the
court on July 12, 1961.
On July 17, 1961 the Republic gave notice of its intention to appeal
from the decision of May 26, 1961 and the order of July 12, 1961.
Defendant Castellvi also filed, on July 17, 1961, her notice of appeal
from the decision of the trial court.
The Republic filed various ex-parte motions for extension of time
within which to file its record on appeal. The Republic's record on
appeal was finally submitted on December 6, 1961.
Defendants Castellvi and Toledo-Gozun filed not only a joint
opposition to the approval of the Republic's record on appeal, but also
a joint memorandum in support of their opposition. The Republic also
filed a memorandum in support of its prayer for the approval of its
record on appeal. On December 27, 1961 the trial court issued an
order declaring both the record on appeal filed by the Republic, and
the record on appeal filed by defendant Castellvi as having been filed
out of time, thereby dismissing both appeals.
On January 11, 1962 the Republic filed a "motion to strike out the
order of December 27, 1961 and for reconsideration", and
subsequently an amended record oil appeal, against which motion the
defendants Castellvi and Toledo-Gozun filed their opposition. On July
26, 1962 the trial court issued an order, stating that "in the interest of
expediency, the questions raised may be properly and finally
determined by the Supreme Court," and at the same time it ordered the
Solicitor General to submit a record on appeal containing copies of
orders and pleadings specified therein. In an order dated November
19, 1962, the trial court approved the Republic's record on appeal as
amended.
Defendant Castellvi did not insist on her appeal. Defendant Toledo-
Gozun did not appeal.
The motion to dismiss the Republic's appeal was reiterated by
appellees Castellvi and Toledo-Gozun before this Court, but this Court
denied the motion.
In her motion of August 11, 1964, appellee Castellvi sought to
increase the provisional value of her land. The Republic, in its
comment on Castellvi's motion, opposed the same. This Court denied
Castellvi's motion in a resolution dated October 2, 1964.
The motion of appellees, Castellvi and Toledo-Gozun, dated October
6, 1969, praying that they be authorized to mortgage the lands subject
of expropriation, was denied by this Court or October 14, 1969.
On February 14, 1972, Attys. Alberto Cacnio, and Associates, counsel
for the estate of the late Don Alfonso de Castellvi in the expropriation
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CONSTITUTIONAL LAW 2 |
proceedings, filed a notice of attorney's lien, stating that as per
agreement with the administrator of the estate of Don Alfonso de
Castellvi they shall receive by way of attorney's fees, "the sum
equivalent to ten per centum of whatever the court may finally decide
as the expropriated price of the property subject matter of the case."
Before this Court, the Republic contends that the lower court erred:
1. In finding the price of P10 per square meter of the lands
subject of the instant proceedings as just compensation;
2. In holding that the "taking" of the properties under
expropriation commenced with the filing of this action;
3. In ordering plaintiff-appellant to pay 6% interest on the
adjudged value of the Castellvi property to start from July of
1956;
4. In denying plaintiff-appellant's motion for new trial based
on newly discovered evidence.
In its brief, the Republic discusses the second error assigned as the
first issue to be considered. We shall follow the sequence of the
Republic's discussion.
1. In support of the assigned error that the lower court erred in holding
that the "taking" of the properties under expropriation commenced
with the filing of the complaint in this case, the Republic argues that
the "taking" should be reckoned from the year 1947 when by virtue of
a special lease agreement between the Republic and appellee
Castellvi, the former was granted the "right and privilege" to buy the
property should the lessor wish to terminate the lease, and that in the
event of such sale, it was stipulated that the fair market value should
be as of the time of occupancy; and that the permanent improvements
amounting to more than half a million pesos constructed during a
period of twelve years on the land, subject of expropriation, were
indicative of an agreed pattern of permanency and stability of
occupancy by the Philippine Air Force in the interest of national
security. 7
Appellee Castellvi, on the other hand, maintains that the "taking" of
property under the power of eminent domain requires two essential
elements, to wit: (1) entrance and occupation by condemnor upon the
private property for more than a momentary or limited period, and (2)
devoting it to a public use in such a way as to oust the owner and
deprive him of all beneficial enjoyment of the property. This appellee
argues that in the instant case the first element is wanting, for the
contract of lease relied upon provides for a lease from year to year;
that the second element is also wanting, because the Republic was
paying the lessor Castellvi a monthly rental of P445.58; and that the
contract of lease does not grant the Republic the "right and privilege"
to buy the premises "at the value at the time of occupancy." 8
Appellee Toledo-Gozun did not comment on the Republic's argument
in support of the second error assigned, because as far as she was
concerned the Republic had not taken possession of her lands prior to
August 10, 1959.9
In order to better comprehend the issues raised in the appeal, in so far
as the Castellvi property is concerned, it should be noted that the
Castellvi property had been occupied by the Philippine Air Force
since 1947 under a contract of lease, typified by the contract marked
Exh. 4-Castellvi, the pertinent portions of which read:
"CONTRACT OF LEASE
"This AGREEMENT OF LEASE MADE AND ENTERED
into by and between INTESTATE ESTATE OF ALFONSO DE
CASTELLVI, represented by CARMEN M. DE CASTELLVI
Judicial Administratrix x x x hereinafter called the LESSOR
and THE REPUBLIC OF THE PHILIPPINES represented by
MAJ. GEN. CALIXTO DUQUE, Chief of Staff of the
ARMED FORCES OF THE PHILIPPINES, hereinafter called
the LESSEE,
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CONSTITUTIONAL LAW 2 |
"WITNESSETH:
"1. For and in consideration of the rentals hereinafter reserved
and the mutual terms, covenants and conditions of the parties,
the LESSOR has, and by these presents does, lease and let
unto the LESSEE the following described land together with
the improvements thereon and appurtenances thereof, viz:
'Un Terreno, Lote No. 27 del Plano de subdivision Psu
34752, parte de la hacienda de Campauit, situado en el
Barrio de San Jose, Municipio de Floridablanca,
Pampanga . . . midiendo una extension superficial de
cuatro milliones once mil cuatro cientos trienta y cinco
(4,001,435) [sic] metros cuadrados, mas o menos.
'Out of the above described property, 75.93 hectares
thereof are actually occupied and covered by this
contract.
'Above lot is more particularly described in TCT No.
1016, province of Pampanga . . .
of which premises, the LESSOR warrants that
he/she/they/is/are the registered owner(s) and with full
authority to execute a contract of this nature.
"2. The term of this lease shall be for the period beginning July
1, 1952 the date the premises were occupied by the
PHILIPPINE AIR FORCE, AFP until June 30, 1953, subject to
renewal for another year at the option of the LESSEE or unless
sooner terminated by the LESSEE as hereinafter provided.
"3. The LESSOR hereby warrants that the LESSEE shall have
quiet, peaceful and undisturbed possession of the demised
premises throughout the full term or period of this lease and
the LESSOR undertakes without cost to the LESSEE to eject
all trespassers, but should the LESSOR fail to do so, the
LESSEE at its option may proceed to do so at the expense of
the LESSOR. The LESSOR further agrees that should
he/she/they sell or encumber all or any part of the herein
described premises during the period of this lease, any
conveyance will be conditioned on the right of the LESSEE
hereunder.
"4. The LESSEE shall pay to the LESSOR as monthly rentals
under this lease the sum of FOUR HUNDRED FIFTY-FIVE
PESOS & 58/100(P455.58) . . .
"5. The LESSEE may, at anytime prior to the termination of
this lease, use the property for any purpose or purposes and, at
its own costs and expense make alteration, install facilities and
fixtures and erect 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.
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CONSTITUTIONAL LAW 2 |
"6. The LESSEE may terminate this lease at any time during
the term hereof by giving written notice to the LESSOR at
least thirty (30) days in advance . . ."
"7. The LESSEE should not be responsible, except under
special legislation for any damages to the premises by reason
of combat operations, acts of GOD, the elements or other acts
and deeds not due to the negligence on the part of the
LESSEE.
"8. This LEASE AGREEMENT supersedes and voids any and
all agreements and undertakings, oral or written, previously
entered into between the parties covering the property herein
leased, the same having been merged herein. This
AGREEMENT may not be modified or altered except by
instrument in writing only duly signed by the parties." 10
It was stipulated by the parties, that "the foregoing contract of lease
(Exh. 4, Castellvi) is 'similar in terms and conditions, including the
date', with the annual contracts entered into from year to year between
defendant Castellvi and the Republic of the Philippines (p. 17, t.s.n.,
Vol. III)". 11 It is undisputed, therefore, that the Republic occupied
Castellvi's land from July 1, 1947, by virtue of the above-mentioned
contract, on a year to year basis (from July 1 of each year to June 30
of the succeeding year) under the terms and conditions therein stated.
Before the expiration of the contract of lease on June 30, 1956 the
Republic sought to renew the same but Castellvi refused. When the
AFP refused to vacate the leased premises after the termination of the
contract, on July 11, 1956, Castellvi wrote to the Chief of Staff, AFP,
informing the latter that the heirs of the property had decided not to
continue leasing the property in question because they had decided to
subdivide the land for sale to the general public, demanding that the
property be vacated within 30 days from receipt of the letter, and that
the premises be returned in substantially the same condition as before
occupancy (Exh. 5 — Castellvi). A follow-up letter was sent on
January 12, 1957, demanding the delivery and return of the property
within one month from said date (Exh. 6 — Castellvi). On January 30,
1957, Lieutenant General Alfonso Arellano, Chief of Staff, answered
the letter of Castellvi, saying that it was difficult for the army to
vacate the premises in view of the permanent installations and other
facilities worth almost P500,000.00 that were erected and already
established on the property, and that, there being no other recourse,
the acquisition of the property by means of expropriation proceedings
would be recommended to the President (Exhibit "7" — Castellvi).
Defendant Castellvi then brought suit in the Court of First Instance of
Pampanga, in Civil Case No. 1458, to eject the Philippine Air Force
from the land. While this ejectment case was pending, the Republic
instituted these expropriation proceedings, and, as stated earlier in this
opinion, the Republic was placed in possession of the lands on August
10, 1959. On November 21, 1959, the Court of First Instance of
Pampanga, dismissed Civil Case No. 1458, upon petition of the
parties, in an order which, in part, reads as follows:
"1. Plaintiff has agreed, as a matter of fact has already signed
an agreement with defendants, whereby she has agreed to
receive the rent of the lands, subject matter of the instant case
from June 30, 1966 up to 1959 when the Philippine Air Force
was placed in possession by virtue of an order of the Court
upon depositing the provisional amount as fixed by the
Provincial Appraisal Committee with the Provincial Treasurer
of Pampanga;
"2. That because of the above-cited agreement wherein the
administratrix decided to get the rent corresponding to the rent
from 1956 up to 1959 and considering that this action is one of
illegal detainer and/or to recover the possession of said land by
virtue of nonpayment of rents, the instant case now has
become moot and academic and/or by virtue of the agreement
signed by plaintiff, she has waived her cause of action in the
above-entitled case."12
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CONSTITUTIONAL LAW 2 |
The Republic urges that the "taking " of Castellvi's property
should be deemed as of the year 1947 by virtue of afore-
quoted lease agreement. In American Jurisprudence, Vol. 26,
2nd edition, Section 157, on the subject of "Eminent Domain,
we read the definition of "taking" (in eminent domain) as
follows:
"'Taking' under the power of eminent domain may be defined
generally as entering upon private property for more than a
momentary period, and, under the warrant or color of legal
authority, devoting it to a public use, or otherwise informally
appropriating or injuriously affecting it in such a way as
substantially to oust the owner and deprive him of all
beneficial enjoyment thereof." 13
Pursuant to the aforecited authority, a number of circumstances must
be present in the "taking" of property for purposes of eminent domain.
First, the expropriator must enter a private property. This circumstance
is present in the instant case, when by virtue of the lease agreement
the Republic, through the AFP, took possession of the property of
Castellvi.
Second, the entrance into private property must be for more than a
momentary period. "Momentary" means, "lasting but a moment; of
but a moment's duration" (The Oxford English Dictionary, Volume VI,
page 596); "lasting a very short time; transitory; having a very brief
life; operative or recurring at every moment" (Webster's Third
International Dictionary, 1963 edition.) The word "momentary" when
applied to possession or occupancy of (real) property should be
construed to mean "a limited period" — not indefinite or permanent.
The aforecited lease contract was for a period of one year, renewable
from year to year. The entry on the property, under the lease, is
temporary, and considered transitory. The fact that the Republic,
through the AFP, constructed some installations of a permanent nature
does not alter the fact that the entry into the land was transitory, or
intended to last a year, although renewable from year to year by
consent of the owner of the land. By express provision of the lease
agreement the Republic, as lessee, undertook to return the premises in
substantially the same condition as at the time the property was first
occupied by the AFP. It is claimed that the intention of the lessee was
to occupy the land permanently, as may be inferred from the
construction of permanent improvements. But this "intention" cannot
prevail over the clear and express terms of the lease contract. Intent is
to be deduced from the language employed by the parties, and the
terms of the contract, when unambiguous, as in the instant case, are
conclusive in the absence of averment and proof of mistake or fraud
— the question being not what the intention was, but what is
expressed in the language used. (City of Manila v. Rizal Park Co.,
Inc., 53 Phil. 515, 525); Magdalena Estate, Inc. v. Myrick, 71 Phil.
344, 348). Moreover, in order to judge the intention of the contracting
parties, their contemporaneous and subsequent acts shall be
principally considered (Art. 1371, Civil Code). If the intention of the
lessee (Republic) in 1947 was really to occupy permanently
Castellvi's property, why was the contract of lease entered into on year
to year basis? Why was the lease agreement renewed from year to
year? Why did not the Republic expropriate this land of Castellvi in
1949 when, according to the Republic itself, it expropriated the other
parcels of land that it occupied at the same time as the Castellvi land,
for the purpose of converting them into a jet air base?" 14 It might
really have been the intention of the Republic to expropriate the lands
in question at some future time, but certainly mere notice — much
less an implied notice — of such intention on the part of the Republic
to expropriate the lands in the future did not, and could not, bind the
landowner, nor bind the land itself. The expropriation must be actually
commenced in court (Republic vs. Baylosis, et al., 96 Phil. 461, 484).
Third, the entry into the property should be under warrant or color of
legal authority. This circumstance in the "taking" may be considered
as present in the instant case, because the Republic entered the
Castellvi property as lessee.
Fourth, the property must be devoted to a public use or otherwise
informally appropriated or injuriously affected. It may be conceded
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CONSTITUTIONAL LAW 2 |
that the circumstance of the property being devoted to public use is
present because the property was used by the air force of the AFP.
Fifth, the utilization of the property for public use must be in such a
way as to oust the owner and deprive him of all beneficial enjoyment
of the property. In the instant case, the entry of the Republic into the
property and its utilization of the same for public use did not oust
Castellvi and deprive her of all beneficial enjoyment of the property.
Castellvi remained as owner, and was continuously recognized as
owner by the Republic, as shown by the renewal of the lease contract
from year to year, and by the provision in the lease contract whereby
the Republic undertook to return the property to Castellvi when the
lease was terminated. Neither was Castellvi deprived of all the
beneficial enjoyment of the property, because the Republic was bound
to pay, and had been paying, Castellvi the agreed monthly rentals until
the time when it filed the complaint for eminent domain on June 26,
1959.
It is clear, therefore, that the "taking" of Castellvi's property for
purposes of eminent domain cannot be considered to have taken place
in 1947 when the Republic commenced to occupy the property as
lessee thereof. We find merit in the contention of Castellvi that two
essential elements in the "taking" of property under the power of
eminent domain, namely: (1) that the entrance and occupation by the
condemnor must be for a permanent, or indefinite period, and (2) that
in devoting the property to public use the owner was ousted from the
property and deprived of its beneficial use, were not present when the
Republic entered and occupied the Castellvi property in 1947.
Untenable also is the Republic's contention that although the contract
between the parties was one of lease on a year to year basis, it was "in
reality a more or less permanent right to occupy the premises under
the guise of lease with the 'right and privilege' to buy the property
should the lessor wish to terminate the lease," and "the right to buy the
property is merged as an integral part of the lease relationship . . . so
much so that the fair market value has been agreed upon, not as of the
time of purchase, but as of the time of occupancy". 15 We cannot
accept the Republic's contention that a lease on a year to year basis
can give rise to a permanent right to occupy, since by express legal
provision a lease made for a determinate time, as was the lease of
Castellvi's land in the instant case, ceases upon the day fixed, without
need of a demand (Article 1669, Civil Code). Neither can it be said
that the right of eminent domain may be exercised by simply leasing
the premises to be expropriated (Rule 67, Section 1, Rules of Court).
Nor can it be accepted that the Republic would enter into a contract of
lease where its real intention was to buy, or why the Republic should
enter into a simulated contract of lease ("under the guise of lease", as
expressed by counsel for the Republic) when all the time the Republic
had the right of eminent domain, and could expropriate Castellvi's
land if it wanted to without resorting to any guise whatsoever. Neither
can we see how a right to buy could be merged in a contract of lease
in the absence of any agreement between the parties to that effect. To
sustain the contention of the Republic is to sanction a practice
whereby in order to secure a low price for a land which the
government intends to expropriate (or would eventually expropriate) it
would first negotiate with the owner of the land to lease the land (for
say ten or twenty years) then expropriate the same when the lease is
about to terminate, then claim that the "taking" of the property for the
purposes of the expropriation be reckoned as of the date when the
Government started to occupy the property under the lease, and then
assert that the value of the property being expropriated be reckoned as
of the start of the lease, in spite of the fact that the value of the
property, for many good reasons, had in the meantime increased
during the period of the lease. This would be sanctioning what
obviously is a deceptive scheme, which would have the effect of
depriving the owner of the property of its true and fair market value at
the time when the expropriation proceedings were actually instituted
in court. The Republic's claim that it had the "right and privilege" to
buy the property at the value that it had at the time when it first
occupied the property as lessee nowhere appears in the lease contract.
What was agreed expressly in paragraph No. 5 of the lease agreement
was that, should the lessor require the lessee to return the premises in
the same condition as at the time the same was first occupied by the
AFP, the lessee would have the "right and privilege" (or option) of
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CONSTITUTIONAL LAW 2 |
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
exorbitant but also unconscionable, and almost fantastic". On the
other hand, both Castellvi and Toledo-Gozun maintain that their lands
are residential lands with a fair market value of not less than P15.00
per square meter.
The lower court found, and declared, that the lands of Castellvi and
Toledo-Gozun are residential lands. The finding of the lower court is
in consonance with the unanimous opinion of the three commissioners
who, in their report to the court, declared that the lands are residential
lands.
The Republic assails the finding that the lands are residential,
contending that the plans of the appellees to convert the lands into
subdivision for residential purposes were only on paper, there being
no overt acts on the part of the appellees which indicated that the
subdivision project had been commenced, so that any compensation to
be awarded on the basis of the plans would be speculative. The
Republic's contention is not well taken. We find evidence showing
that the lands in question had ceased to be devoted to the production
of agricultural crops, that they had become adaptable for residential
purposes, and that the appellees had actually taken steps to convert
their lands into residential subdivisions even before the Republic filed
the complaint for eminent domain.
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CONSTITUTIONAL LAW 2 |
In the case of City of Manila vs. Corrales (Phil. 82, 98) this Court laid
down basic guidelines in determining the value of the property
expropriated for public purposes. This Court said:
"In determining the value of land appropriated for public
purposes, the same consideration are to be regarded as in a
sale of property between private parties. The inquiry, in such
cases, must be what is the property worth in the market,
viewed not merely with reference to the uses to which it is at
the time applied, but with reference to the uses to which it is
plainly adapted, that is to say, What is it worth from its
availability for valuable uses?
"So many and varied are the circumstances to be taken into
account in determining the value of property condemned for
public purposes, that it is practically impossible to formulate a
rule to govern its appraisement in all cases. Exceptional
circumstances will modify the most carefully guarded rule,
but, as a general thing, we should say that the compensation of
the owner is to be estimated by reference to the use for which
the property is suitable, having regard to the existing business
or wants of the community, or such as may be reasonably
expected in the immediate future. (Miss. and Rum River Boom
Co. vs. Patterson, 98 U.S., 403)."
In expropriation proceedings, therefore, the owner of the land has the
right to its value for the use for which it would bring the most in the
market. 17 The owner may thus show every advantage that his
property possesses, present and prospective, in order that the price it
could be sold for in the market may be satisfactorily
determined. 18 The owner may also show that the property is suitable
for division into village or town lots. 19
The trial court, therefore, correctly considered, among other
circumstances, the proposed subdivision plans of the lands sought to
be expropriated in finding that those lands are residential lots. This
finding of the lower court is supported not only by the unanimous
opinion of the commissioners, as embodied in their report, but also by
the Provincial Appraisal Committee of the province of Pampanga
composed of the Provincial Treasurer, the Provincial Auditor and the
District Engineer. In the minutes of the meeting of the Provincial
Appraisal Committee, held on May 14, 1959 (Exh. 13-Castellvi) We
read in its Resolution No. 10 the following:
"3. Since 1957 the land has been classified as residential in
view of its proximity to the air base and due to the fact that it
was not being devoted to agriculture. In fact, there is a plan to
convert it into a subdivision for residential purposes. The taxes
due on the property have been paid based on its classification
as residential land;"
The evidence shows that Castellvi broached the idea of subdividing
her land into residential lots as early as July 11, 1956 in her letter to
the Chief of Staff of the Armed Forces of the Philippines. (Exh. 5-
Castellvi) As a matter of fact, the layout of the subdivision plan was
tentatively approved by the National Planning Commission on
September 7, 1956. (Exh. 8-Castellvi). The land of Castellvi had not
been devoted to agriculture since 1947 when it was leased to the
Philippine Army. In 1957 said land was classified as residential, and
taxes based on its classification as residential had been paid since then
(Exh. 13-Castellvi). The location of the Castellvi land justifies its
suitability for a residential subdivision. As found by the trial court, "It
is at the left side of the entrance of the Basa Air Base and bounded on
two sides by roads (Exh. 13-Castellvi), paragraphs 1 and 2, Exh. 12-
Castellvi), the poblacion, (of Floridablanca) the municipal building,
and the Pampanga Sugar Mills are closed by. The barrio schoolhouse
and chapel are also near (T.S.N. November 23, 1960, p. 68)". 20
The lands of Toledo-Gozun (Lot 1-B and Lot 3) are practically of the
same condition as the land of Castellvi. The lands of Toledo-Gozun
adjoin the land of Castellvi. They are also contiguous to the Basa Air
Base, and are along the road. These lands are near the barrio
schoolhouse, the barrio chapel, the Pampanga Sugar Mills, and the
poblacion of Floridablanca (Exhs. 1, 3 and 4-Toledo-Gozun). As a
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matter of fact, regarding lot 1-B it had already been surveyed and
subdivided, and its conversion into a residential subdivision was
tentatively approved by the National Planning Commission on July 8,
1959 (Exhs. 5 and 6 Toledo-Gozun). As early as June, 1958, no less
than 32 man connected with the Philippine Air Force among them
commissioned officers, non-commission officers, and enlisted men
had requested Mr. and Mrs. Joaquin D. Gozun to open a subdivision
on their lands in question (Exhs. 8, 8-A to 8-ZZ-Toledo-Gozun). 21
We agree with the findings, and the conclusions, of the lower court
that the lands that are the subject of expropriation in the present case,
as of August 10, 1959 when the same were taken possession of by the
Republic, were residential lands and were adaptable for use as
residential subdivisions. Indeed, the owners of these lands have the
right to their value for the use for which they would bring the most in
the market at the time the same were taken from them. The most
important issue to be resolved in the present case relates to the
question of what is the just compensation that should be paid to the
appellees.
The Republic asserts that the fair market value of the lands of the
appellees is P.20 per square meter. The Republic cites the case of
Republic vs. Narciso, et al., L-6594, which this Court decided on May
18, 1956. The Narciso case involved lands that belonged to Castellvi
and Toledo-Gozun, and to one Donata Montemayor, which were
expropriated by the Republic in 1949 and which are now the site of
the Basa Air Base. In the Narciso case this Court fixed the fair market
value at P.20 per square meter. The lands that are sought to be
expropriated in the present case being contiguous to the lands
involved in the Narciso case, it is the stand of the Republic that the
price that should be fixed for the lands now in question should also be
at P.20 per square meter.
We can not sustain the stand of the Republic. We find that the price of
P.20 per square meter, as fixed by this Court in the Narciso case, was
based on the allegation of the defendants (owners) in their answer to
the complaint for eminent domain in that case that the price of their
lands was P2,000.00 per hectare and that was the price that they asked
the court to pay them. This Court said, then, that the owners of the
land could not be given more than what they had asked,
notwithstanding the recommendation of the majority of the
Commission on Appraisal — which was adopted by the trial court —
that the fair market value of the lands was P3,000.00 per hectare. We
also find that the price of P.20 per square meter in the Narciso case
was considered the fair market value of the lands as of the year 1949
when the expropriation proceedings were instituted, and at that time
the lands were classified as sugar lands, and assessed for taxation
purposes at around P400.00 per hectare, or P.04 per square
meter. 22 While the lands involved in the present case, like the lands
involved in the Narciso case, might have a fair market value of P.20
per square meter in 1949, it can not be denied that ten years later, in
1959, when the present proceedings were instituted, the value of those
lands had increased considerably. The evidence shows that since 1949
those lands were no longer cultivated as sugar lands, and in 1959
those lands were already classified, and assessed for taxation
purposes, as residential lands. In 1959 the land of Castellvi was
assessed at P1.00 per square meter. 23
The Republic also points out that the Provincial Appraisal Committee
of Pampanga, in its resolution No. 5 of February 15, 1957 (Exhibit D),
recommended the sum of P.20 per square meter as the fair valuation of
the Castellvi property. We find that this resolution was made by the
Republic the basis in asking the court to fix the provisional value of
the lands sought to be expropriated at P259,669.10, which was
approved by the court. 24 It must be considered, however, that the
amount fixed as the provisional value of the lands that are being
expropriated does not necessarily represent the true and correct value
of the land. The value is only "provisional" or "tentative", to serve as
the basis for the immediate occupancy of the property being
expropriated by the condemnor. The records show that this resolution
No. 5 was repealed by the same Provincial Committee on Appraisal in
its resolution No. 10 of May 14, 1959 (Exhibit 13-Castellvi). In that
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CONSTITUTIONAL LAW 2 |
resolution No. 10, the appraisal committee stated that "The Committee
has observed that the value of the land in this locality has increased
since 1957 . . .", and recommended the price of P1.50 per square
meter. It follows, therefore, that, contrary to the stand of the Republic,
that resolution No. 5 of the Provincial Appraisal Committee can not be
made the basis for fixing the fair market value of the lands of
Castellvi and Toledo-Gozun.
The Republic further relied on the certification of the Acting Assistant
Provincial Assessor of Pampanga, dated February 8, 1961 (Exhibit K),
to the effect that in 1950 the lands of Toledo-Gozun were classified
partly as sugar land and partly as urban land, and that the sugar land
was assessed at P.40 per square meter, while part of the urban land
was assessed at P.40 per square meter and part at P.20 per square
meter; and that in 1956 the Castellvi land was classified as sugar land
and was assessed at P450.00 per hectare, or P.045 per square meter.
We can not also consider this certification of the Acting Assistant
Provincial Assessor as a basis for fixing the fair market value of the
lands of Castellvi and Toledo-Gozun because, as the evidence shows,
the lands in question, in 1957, were already classified and assessed for
taxation purposes as residential lands. The certification of the assessor
refers to the year 1950 as far as the lands of Toledo-Gozun are
concerned, and to the year 1956 as far as the land of Castellvi is
concerned. Moreover, this Court has held that the valuation fixed for
the purposes of the assessment of the land for taxation purposes can
not bind the landowner where the latter did not intervene in fixing
it. 25
On the other hand, the Commissioners, appointed by the court to
appraise the lands that were being expropriated, recommended to the
court that the price of P10.00 per square meter would be the fair
market value of the lands. The commissioners made their
recommendation on the basis of their observation after several ocular
inspections of the lands, of their own personal knowledge of land
values in the province of Pampanga, of the testimonies of the owners
of the land, and other witnesses, and of documentary evidence
presented by the appellees. Both Castellvi and Toledo-Gozun testified
that the fair market value of their respective land was at P15.00 per
square meter. The documentary evidence considered by the
commissioners consisted of deeds of sale of residential lands in the
town of San Fernando and in Angeles City, in the province of
Pampanga, which were sold at prices ranging from P8.00 to P20.00
per square meter (Exhibits 15, 16, 17, 18, 19, 20, 21, 22, 23-
Castellvi). The commissioners also considered the decision in Civil
Case No. 1531 of the Court of First Instance of Pampanga, entitled
Republic vs. Sabina Tablante, which was an expropriation case filed
on January 13, 1959, involving a parcel of land adjacent to the Clark
Air Base in Angeles City, where the court fixed the price at P18.00 per
square meter (Exhibit 14-Castellvi). In their report, the
commissioners, among other things, said:
". . . This expropriation case is specially pointed out, because
the circumstances and factors involved therein are similar in
many respects to the defendants' lands in this case. The land in
Civil Case No. 1531 of this Court and the lands in the present
case (Civil Case No. 1623) are both near the air bases, the
Clark Air Base and the Basa Air Base respectively. There is a
national road fronting them and are situated in a first-class
municipality. As added advantage it may be said that the Basa
Air Base land is very near the sugar mill at Del Carmen,
Floridablanca, Pampanga, owned by the Pampanga Sugar
Mills. Also just stone's throw away from the same lands is a
beautiful vacation spot at Palacol, a sitio of the town of
Floridablanca, which counts with a natural swimming pool for
vacationists on weekends. These advantages are not found in
the case of the Clark Air Base. The defendants' lands are
nearer to the poblacion of Floridablanca then Clark Air Base is
nearer (sic) to the poblacion of Angeles, Pampanga.
"The deeds of absolute sale, according to the undersigned
commissioners, as well as the land in Civil Case No. 1531 are
competent evidence, because they were executed during the
year 1959 and before August 10 of the same year. More
specifically so the land at Clark Air Base which coincidentally
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CONSTITUTIONAL LAW 2 |
is the subject matter in the complaint in said Civil Case No.
1531, it having been filed on January 13, 1959 and the taking
of the land involved therein was ordered by the Court of First
Instance of Pampanga on January 15, 1959, several months
before the lands in this case were taken by the plaintiffs. . .
"From the above and considering further that the lowest as
well as the highest price per square meter obtainable in the
market of Pampanga relative to subdivision lots within its
jurisdiction in the year 1959 is very well known by the
Commissioners, the Commission finds that the lowest price
that can be awarded to the lands in question is P10.00 per
square meter." 26
The lower court did not altogether accept the findings of the
Commissioners based on the documentary evidence, but it considered
the documentary evidence as basis for comparison in determining land
values. The lower court arrived at the conclusion that "the unanimous
recommendation of the commissioners of ten (P10.00) pesos per
square meter for the three lots of the defendants subject of this action
is fair and just". 27 In arriving at its conclusion, the lower court took
into consideration, among other circumstances, that the lands are
titled, that there is a rising trend of land values, and the lowered
purchasing power of the Philippine peso.
In the case of Manila Railroad Co. vs. Caligsihan, 40 Phil. 326, 328,
this Court said:
"A court of first instance or, on appeal, the Supreme Court,
may change or modify the report of the commissioners by
increasing or reducing the amount of the award if the facts of
the case so justify. While great weight is attached to the report
of the commissioners, yet a court may substitute therefor its
estimate of the value of the property as gathered from the
record in certain cases, as, where the commissioners have
applied illegal principles to the evidence submitted to them, or
where they have disregarded a clear preponderance of
evidence, or where the amount allowed is either palpably
inadequate or excessive." 28
The report of the commissioners of appraisal in condemnation
proceedings are not binding, but merely advisory in character, as far
as the court is concerned. 29 In our analysis of the report of the
commissioners, We find points that merit serious consideration in the
determination of the just compensation that should be paid to Castellvi
and Toledo-Gozun for their lands. It should be noted that the
commissioners had made ocular inspections of the lands and had
considered the nature and similarities of said lands in relation to the
lands in other places in the province of Pampanga, like San Fernando
and Angeles City. We cannot disregard the observations of the
commissioners regarding the circumstances that make the lands in
question suited for residential purposes — their location near the Basa
Air Base, just like the lands in Angeles City that are near the Clark Air
Base, and the facilities that obtain because of their nearness to the big
sugar central of the Pampanga Sugar mills, and to the flourishing first
class town of Floridablanca. It is true that the lands in question are not
in the territory of San Fernando and Angeles City, but, considering the
facilities of modern communications, the town of Floridablanca may
be considered practically adjacent to San Fernando and Angeles City.
It is not out of place, therefore, to compare the land values in
Floridablanca to the land values in San Fernando and Angeles City,
and form an idea of the value of the lands in Floridablanca with
reference to the land values in those two other communities.
The important factor in expropriation proceeding is that the owner is
awarded the just compensation for his property. We have carefully
studied the record, and the evidence, in this case, and after considering
the circumstances attending the lands in question. We have arrived at
the conclusion that the price of P10.00 per square meter, as
recommended by the commissioners and adopted by the lower court,
is quite high. It is Our considered view that the price of P5.00 per
square meter would be a fair valuation of the lands in question and
would constitute a just compensation to the owners thereof. In
arriving at this conclusion We have particularly taken into
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CONSTITUTIONAL LAW 2 |
consideration the resolution of the Provincial Committee on Appraisal
of the province of Pampanga informing, among others, that in the year
1959 the land of Castellvi could he sold for from P3.00 to P4.00 per
square meter, while the land of Toledo-Gozun could be sold for from
P2.50 to P3.00 per square meter. The Court has weighed all the
circumstances relating to this expropriations proceedings, and in
fixing the price of the lands that are being expropriated the Court
arrived at a happy medium between the price as recommended by the
commissioners and approved by the court, and the price advocated by
the Republic. This Court has also taken judicial notice of the fact that
the value of the Philippine peso has considerably gone down since the
year 1959. 30 Considering that the lands of Castellvi and Toledo-
Gozun are adjoining each other, and are of the same nature, the Court
has deemed it proper to fix the same price for all these lands.
3. The third issue raised by the Republic relates to the payment of
interest. The Republic maintains that the lower court erred when it
ordered the Republic to pay Castellvi interest at the rate of 6% per
annum on the total amount adjudged as the value of the land of
Castellvi, from July 1, 1956 to July 10, 1959. We find merit in this
assignment of error.
In ordering the Republic to pay 6% interest on the total value of the
land of Castellvi from July 1, 1956 to July 10, 1959, the lower court
held that the Republic had illegally possessed the land of Castellvi
from July 1, 1956, after its lease of the land had expired on June 30,
1956, until August 10, 1959 when the Republic was placed in
possession of the land pursuant to the writ of possession issued by the
court. What really happened was that the Republic continued to
occupy the land of Castellvi after the expiration of its lease on June
30, 1956, so much so that Castellvi filed an ejectment case against the
Republic in the Court of First Instance of Pampanga. 31 However,
while that ejectment case was pending, the Republic filed the
complaint for eminent domain in the present case and was placed in
possession of the land on August 10, 1959, and because of the
institution of the expropriation proceedings the ejectment case was
later dismissed. In the order dismissing the ejectment case, the Court
of First Instance of Pampanga said:
"Plaintiff has agreed, as a matter of fact has already signed
an agreement with defendants, whereby she had agreed to
receive the rent of the lands, subject matter of the instant
case from June 30, 1956 up to 1959 when the Philippine Air
Force was placed in possession by virtue of an order of the
Court upon depositing the provisional amount as fixed by the
Provincial Appraisal Committee with the Provincial
Treasurer of Pampanga; . . ."
If Castellvi had agreed to receive the rentals from June 30, 1956 to
August 10, 1959, she should be considered as having allowed her land
to be leased to the Republic until August 10, 1959, and she could not
at the same time be entitled to the payment of interest during the same
period on the amount awarded her as the just compensation of her
land. The Republic, therefore, should pay Castellvi interest at the rate
of 6% per annum on the value of her land, minus the provisional value
that was deposited, only from July 10, 1959 when it deposited in court
the provisional value of the land.
4. The fourth error assigned by the Republic relates to the denial by
the lower court of its motion for a new trial based on nearly
discovered evidence. We do not find merit in this assignment of error.
After the lower court had decided this case on May 26, 1961, the
Republic filed a motion for a new trial, supplemented by another
motion, both based upon the ground of newly discovered evidence.
The alleged newly discovered evidence in the motion filed on June 21,
1961 was a deed of absolute sale — executed on January 25, 1961,
showing that a certain Serafin Francisco had sold to Pablo L. Narciso
a parcel of sugar land having an area of 100,000 square meters with a
sugar quota of 100 piculs, covered by P.A. No. 1701, situated in
Barrio Fortuna, Floridablanca, for P14,000, or P.14 per square meter.
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CONSTITUTIONAL LAW 2 |
In the supplemental motion, the alleged newly discovered evidence
were: (1) a deed of sale of some 35,000 square meters of land situated
at Floridablanca for P7,500.00 (or about P.21 per square meter)
executed in July, 1959, by the spouses Evelyn D. Laird and Cornelio
G. Laird in favor of spouses Bienvenido S. Aguas and Josefina Q.
Aguas; and (2) a deed of absolute sale of a parcel of land having an
area of 4,120,101 square meters, including the sugar quota covered by
Plantation Audit No. 16-1345, situated at Floridablanca, Pampanga,
for P860.00 per hectare (a little less than P.09 per square meter)
executed on October 22, 1957 by Jesus Toledo y Mendoza in favor of
the Land Tenure Administration.
We find that the lower court acted correctly when it denied the
motions for a new trial.
To warrant the granting of a new trial based on the ground of newly
discovered evidence, it must appear that the evidence was discovered
after the trial; that even with the exercise of due diligence, the
evidence could not have been discovered and produced at the trial;
and that the evidence is of such a nature as to alter the result of the
case if admitted. 32 The lower court correctly ruled that these
requisites were not complied with.
The lower court, in a well-reasoned order, found that the sales made
by Serafin Francisco to Pablo Narciso and that made by Jesus Toledo
to the Land Tenure Administration were immaterial and irrelevant,
because those sales covered sugarlands with sugar quotas, while the
lands sought to be expropriated in the instant case are residential
lands. The lower court also concluded that the land sold by the
spouses Laird to the spouses Aguas was a sugar land.
We agree with the trial court. In eminent domain proceedings, in order
that evidence as to the sale price of other lands may be admitted in
evidence to prove the fair market value of the land sought to be
expropriated, the lands must, among other things, be shown to be
similar.
But even assuming, gratia argumenti, that the lands mentioned in
those deeds of sale were residential, the evidence would still not
warrant the grant of a new trial, for said evidence could have been
discovered and produced at the trial, and they cannot be considered
newly discovered evidence as contemplated in Section 1(b) of Rule 37
of the Rules of Court. Regarding this point, the trial court said:
"The Court will now show that there was no reasonable
diligence employed.
"The land described in the deed of sale executed by Serafin
Francisco, copy of which is attached to the original motion, is
covered by a Certificate of Title issued by the Office of the
Register of Deeds of Pampanga. There is no question in the
mind of the court but this document passed through the Office
of the Register of Deeds for the purpose of transferring the
title or annotating the sale on the certificate of title. It is true
that Fiscal Lagman went to the Office of the Register of Deeds
to check conveyances which may be presented in the evidence
in this case as it is now sought to be done by virtue of the
motions at bar, Fiscal Lagman, one of the lawyers of the
plaintiff, did not exercise reasonable diligence as required by
the rules. The assertion that he only went to the office of the
Register of Deeds 'now and then' to check the records in that
office only shows the half-hazard [sic] manner by which the
plaintiff looked for evidence to be presented during the hearing
before the Commissioners, if it is at all true that Fiscal Lagman
did what he is supposed to have done according to Solicitor
Padua. It would have been the easiest matter for plaintiff to
move for the issuance of a subpoena duces tecum directing the
Register of Deeds of Pampanga to come to testify and to bring
with him all documents found in his office pertaining to sales
of land in Floridablanca adjacent to or near the lands in
question executed or recorded from 1958 to the present. Even
this elementary precaution was not done by plaintiff's
numerous attorneys.
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CONSTITUTIONAL LAW 2 |
"The same can be said of the deeds of sale attached to the
supplementary motion. They refer to lands covered by
certificate of title issued by the Register of Deeds of
Pampanga. For the same reason they could have been easily
discovered if reasonable diligence has been exerted by the
numerous lawyers of the plaintiff in this case. It is noteworthy
that all these deeds of sale could be found in several
government offices, namely, in the Office of the Register of
Deeds of Pampanga, the Office of the Provincial Assessor of
Pampanga, the Office of the Clerk of Court as a part of notarial
reports of notaries public that acknowledged these documents,
or in the archives of the National Library. In respect to Annex
'B' of the supplementary motion copy of the document could
also be found in the Office of the Land Tenure Administration,
another government entity. Any lawyer with a modicum of
ability handling this expropriation case would have right away
though [sic] of digging up documents diligently showing
conveyances of lands near or around the parcels of land sought
to be expropriated in this case in the offices that would have
naturally come to his mind such as the offices mentioned
above, and had counsel for the movant really exercised the
reasonable diligence required by the Rule' undoubtedly they
would have been able to find these documents and/or caused
the issuance of subpoena duces tecum. . . .
"It is also recalled that during the hearing before the Court of
the Report and Recommendation of the Commissioners and
objection thereto, Solicitor Padua made the observation:
'I understand, Your Honor, that there was a sale that took place
in this place of land recently where the land was sold for P0.20
which is contiguous to this land.'
"The Court gave him permission to submit said document
subject to the approval of the Court. . . This was before the
decision was rendered, and later promulgated on May 26,
1961 or more than one month after Solicitor Padua made the
above observation. He could have, therefore, checked up the
alleged sale and moved for a reopening to adduce further
evidence. He did not do so. He forgot to present the evidence
at a more propitious time. Now, he seeks to introduce said
evidence under the guise of newly-discovered evidence.
Unfortunately, the Court cannot classify it as newly-discovered
evidence, because under the circumstances, the correct
qualification that can be given is 'forgotten evidence'.
Forgotten evidence, however, is not newly-discovered
evidence." 33
The granting or denial of a motion for new trial is, as a general rule,
discretionary with the trial court, whose judgment should not be
disturbed unless there is a clear showing of abuse of discretion. 34 We
do not see any abuse of discretion on the part of the lower court when
it denied the motions for a new trial.
WHEREFORE, the decision appealed from is modified, as follows:
(a) the lands of appellees Carmen vda. de Castellvi and Maria
Nieves Toledo-Gozun, as described in the complaint, are declared
expropriated for public use;
(b) the fair market value of the lands of the appellees is fixed at
P5.00 per square meter;
(c) the Republic must pay appellee Castellvi the sum of
P3,796,495.00 as just compensation for her one parcel of land
that has an area of 759,299 square meters, minus the sum of
P151,859.80 that she withdrew out of the amount that was
deposited in court as the provisional value of the land, with
interest at the rate of 6% per annum from July 10, 1959 until the
day full payment is made or deposited in court;
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CONSTITUTIONAL LAW 2 |
(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.
||| (Republic v. Vda. de Castellvi, G.R. No. L-20620, [August 15,
1974], 157 PHIL 329-364)
[G.R. Nos. 71998-99. June 2, 1993.]
EMILIANO R. DE LOS SANTOS, SPOUSES NORMA A.
PADILLA and ISIDORO L. PADILLA and the HEIRS OF
FRANCISCO DAYRIT, petitioners, vs. THE
HONORABLE INTERMEDIATE APPELLATE COURT,
HON. JUDGE CICERO C. JURADO, NESTOR
AGUSTIN and EDILBERTO CADIENTE, respondents.
Isidoro L. Padilla for petitioners.
Joaquin G. Mendoza for E. Cadiente.
DECISION
ROMERO, J p:
Questioned in the instant petition for review on certiorari is the
Decision of the then Intermediate Appellate Court 1 affirming the
December 1, 1982 Order of the then Court of First Instance of Rizal,
Branch XXII at Pasig 2 in Civil Case Nos. 46800 and 46801 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 Case Nos. 46800 and 46801 were both filed on July 13, 1982 by
petitioners who are co-owners 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)
111
CONSTITUTIONAL LAW 2 |
occupying an area of two thousand nine hundred six (2,906) square
meters of their property. Constructed in a zigzag manner, the creek
meandered through their property.
Alleging that if 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 a 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"
P15,000.00 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.
112
CONSTITUTIONAL LAW 2 |
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 sad plaint they are now. It is unthinkable then that
precisely because there was a failure to abide by what the law
requires, the government would stand to benefit. It is 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 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 Engineering 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;
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CONSTITUTIONAL LAW 2 |
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;
i. November 25, 1981 — Project implementation
was started;
j. March 3, 1982 — Construction of rock
bulkhead was completed;
k. November 23, 1981 — P249,000.00 was
released for improvement (deepening and diverting of
flow) of Binangonan River which was a
complimentary structure of Binangonan port system;
l. April 19, 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 designed 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 Isidoro 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 or 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
114
CONSTITUTIONAL LAW 2 |
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.
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.
SO ORDERED.
||| (De Los Santos v. Intermediate Appellate Court, G.R. Nos. 71998-
99, [June 2, 1993])
[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.
Roldan L. Torralba, for petitioners.
Estanislao G. Ebarle, Jr. for public respondent Municipality of
Bunawan.
SYLLABUS
POLITICAL LAW; LOCAL GOVERNMENT CODE (B.P. 337);
POWER OF THE SANGGUNIANG PANLALAWIGAN TO
REVIEW ORDINANCES, RESOLUTIONS AND EXECUTIVE
ORDERS PROMULGATED BY THE MUNICIPAL MAYOR;
DECLARATION OF INVALIDITY MUST BE ON THE SOLE
GROUND THAT IT IS BEYOND THE POWER OF THE
SANGGUNIAN BAYAN OR MAYOR TO ISSUE THE
RESOLUTION, ORDINANCE OR ORDER UNDER REVIEW. —
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 vs. Blas, where
we cited significant early jurisprudence, are applicable to the case at
bar. "The only ground upon which a provincial board may declare any
municipal resolution, ordinance, or order invalid is when such
resolution, ordinance, or order is 'beyond the powers conferred upon
the council or president making the same.' Absolutely no other ground
is recognized by the law. A strictly legal question is before the
provincial board in its consideration of a municipal resolution,
ordinance, or order. The provincial (board's) disapproval of any
resolution, ordinance, or order must be premised specifically upon the
fact that such resolution, ordinance, or order is outside the scope of
the legal powers conferred by law. If a provincial board passes these
limits, it usurps the legislative functions of the municipal council or
president. Such has been the consistent course of executive authority."
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
115
CONSTITUTIONAL LAW 2 |
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.
DECISION
ROMERO, J p:
The main issue presented in this case is whether a municipality may
expropriate private property by virtue of a municipal resolution which
was disapproved by the Sangguniang Panlalawigan. Petitioner seeks
the reversal of the Court of Appeals decision and resolution,
promulgated on July 15, 1992 and October 22, 1992
respectively, 1 and a declaration that Municipal Resolution No. 43-89
of the Bunawan Sangguniang Bayan is null and void.
On July 23, 1989, the Sangguniang Bayan of the Municipality of
Bunawan in Agusan del Sur passed Resolution No. 43-89,
"Authorizing the Municipal Mayor to Initiate the Petition for
Expropriation of a One (1) Hectare Portion of Lot No. 6138-Pls-4
Along the National Highway Owned by Percival Moday for the Site
of Bunawan Farmers Center and Other Government Sports
Facilities." 2
In due time, Resolution No. 43-89 was approved by then Municipal
Mayor Anuncio C. Bustillo and transmitted to the Sangguniang
Panlalawigan for its approval On September 11, 1989, the
Sangguniang Panlalawigan disapproved said Resolution and returned
it with the comment that "expropriation is unnecessary considering
that there are still available lots in Bunawan for the establishment of
the government center." 3
The Municipality of Bunawan, herein public respondent, subsequently
filed a Petition for Eminent Domain against petitioner
Percival Moday before the Regional Trial Court at Prosperidad,
Agusan del Sur. 4 The complaint was later amended to include the
registered owners, Percival Moday's parents, Zotico and
Leonora Moday, as party defendants.
On March 6, 1991, public respondent municipality filed a Motion to
Take or Enter Upon the Possession of Subject Matter of This Case
stating that it had already deposited with the municipal treasurer the
necessary amount in accordance with Section 2, Rule 67 of the
Revised Rules of Court and that it would be in the government's best
interest for public respondent to be allowed to take possession of the
property.
Despite petitioners' opposition and after a hearing on the merits, the
Regional Trial Court granted respondent municipality's motion to take
possession of the land. The lower court held that the Sangguniang
Panlalawigan's failure to declare the resolution invalid leaves it
effective. It added that the duty of the Sangguniang Panlalawigan is
merely to review the ordinances and resolutions passed by the
Sangguniang Bayan under Section 208 (1) ofB.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.
116
CONSTITUTIONAL LAW 2 |
SO ORDERED." 6
Petitioners' motion for reconsideration was denied by the trial court on
October 31, 1991.
Petitioners elevated the case in a petition for certiorari alleging grave
abuse of discretion on the part of the trial court but the same was
dismissed by respondent appellate court on July 15, 1992. 7 The Court
of Appeals held that the public purpose for the expropriation is clear
from Resolution No. 43-89 and that since the Sangguniang
Panlalawigan of Agusan del Sur did not declare Resolution No. 43-89
invalid, expropriation of petitioners' property could proceed. cdasia
Respondent appellate court also denied petitioners' motion for
reconsideration on October 22, 1992. 8
Meanwhile, the Municipality of Bunawan had erected three buildings
on the subject property: the Association of Barangay Councils (ABC)
Hall, the Municipal Motorpool, both wooden structures, and the
Bunawan Municipal Gymnasium, which is made of concrete.
In the instant petition for review filed on November 23, 1992,
petitioner seeks the reversal of the decision and resolution of the
Court of Appeals and a declaration that Resolution No. 43-89 of the
Municipality of Bunawan is null and void.
On December 8, 1993, the Court issued a temporary restraining order
enjoining and restraining public respondent Judge Evangeline Yuipco
from enforcing her July 2, 1991 Order and respondent municipality
from using and occupying all the buildings constructed and from
further constructing any building on the land subject of this petition. 9
Acting on petitioners' Omnibus Motion for Enforcement of
Restraining Order and for Contempt, the Court issued a Resolution on
March 15, 1995, citing incumbent municipal mayor Anuncio C.
Bustillo for contempt, ordering him to pay the fine and to demolish
the "blocktiendas" which were built in violation of the restraining
order. 10
Former Mayor Anuncio C. Bustillo paid the fine and manifested that
he lost in the May 8, 1995 election. 11 The incumbent Mayor
Leonardo Barrios, filed a Manifestation, Motion to Resolve "Urgent
Motion for Immediate Dissolution of the Temporary Restraining
Order" and Memorandum on June 11, 1996 for the Municipality of
Bunawan. 12
Petitioners contend that the Court of Appeals erred in upholding the
legality of the condemnation proceedings initiated by the municipality.
According to petitioners, the expropriation was politically motivated
and Resolution No. 43-89 was correctly disapproved by the
Sangguniang Panlalawigan, there being other municipal properties
available for the purpose. Petitioners also pray that the former Mayor
Anuncio C. Bustillo be ordered to pay damages for insisting on the
enforcement of a void municipal resolution.
The Court of Appeals declared that the Sangguniang Panlalawigan's
reason for disapproving the resolution "could be baseless, because it
failed to point out which and where are 'those available lots."'
Respondent court also concluded that since the Sangguniang
Panlalawigan did not declare the municipal board's resolution as
invalid, expropriation of petitioners' property could proceed. 13
The Court finds no merit in the petition and affirms the decision of the
Court of Appeals.
Eminent domain, the power which the Municipality of Bunawan
exercised in the instant case, is a fundamental State power that is
inseparable from sovereignty. 14 It is government's right to
appropriate, in the nature of a compulsory sale to the State, private
property for public use or purpose. 15 Inherently possessed by the
national legislature the power of eminent domain may be validly
delegated to local governments, other public entities and public
utilities. 16 For the taking of private property by the government to be
117
CONSTITUTIONAL LAW 2 |
valid, the taking must be for public use and there must be just
compensation. 17
The Municipality of Bunawan's power to exercise the right of eminent
domain is not disputed as it is expressly provided for in Batas
Pambansa Blg. 337, the Local Government Code 18 in force at the
time expropriation proceedings were initiated. Section 9 of said law
states:
"Section 9. Eminent Domain. — A local government unit may,
through its head and acting pursuant to a resolution of its
sanggunian, exercise the right of eminent domain and institute
condemnation proceedings for public use or purpose."
What petitioners question is the lack of authority of the municipality
to exercise this right since the Sangguniang Panlalawigan disapproved
Resolution No. 43-89.
Section 153 of B.P. Blg. 337 provides:
"Sec. 153. Sangguniang Panlalawigan Review. — (1) Within
thirty days after receiving copies of approved ordinances,
resolutions and executive orders promulgated by the municipal
mayor, the sangguniang panlalawigan shall examine the
documents or transmit them to the provincial attorney, or if
there be none, to the .provincial fiscal, who shall examine
them promptly and inform the sangguniang panlalawigan in
writing of any defect or impropriety which he may discover
therein and make such comments or recommendations as shall
appear to him proper.
(2) If the sangguniang panlalawigan shall find that any
municipal ordinance, resolution or executive order is beyond
the power conferred upon the sangguniang bayan or the
mayor, it shall declare such ordinance, resolution or executive
order invalid in whole or in part, entering its actions upon the
minutes and advising the proper municipal authorities thereof.
The effect of such an action shall be to annul the ordinance,
resolution or executive order in question in whole or in part.
The action of the sangguniang panlalawigan shall be final.
xxx xxx xxx." (Emphasis supplied.)
The Sangguniang Panlalawigan's disapproval of Municipal Resolution
No. 43-89 is an infirm action which does not render said resolution
null and void. The law, as expressed in Section 153 of B.P. Blg. 337,
grants the Sangguniang Panlalawigan the power to declare a
municipal resolution invalid on the sole ground that it is beyond the
power of the Sangguniang Bayan or the Mayor to issue. Although
pertaining to a similar provision of law but different factual milieu
then obtaining, the Court's pronouncements in Velazco
v. Blas, 19 where we cited significant early jurisprudence, are
applicable to the case at bar.
"The only ground upon which a provincial board may declare
any municipal resolution, ordinance, or order invalid is when
such resolution, ordinance, or order is 'beyond the powers
conferred upon the council or president making the same.'
Absolutely no other ground is recognized by the law. A strictly
legal question is before the provincial board in its
consideration of a municipal resolution, ordinance, or order.
The provincial (board's) disapproval of any resolution,
ordinance, or order must be premised specifically upon the fact
that such resolution, ordinance, or order is outside the scope of
the legal powers conferred by law. If a provincial board passes
these limits, it usurps the legislative functions of the municipal
council or president. Such has been the consistent course of
executive authority." 20
Thus, the Sangguniang Panlalawigan was without the authority to
disapprove Municipal Resolution No. 43-89 for the Municipality of
Bunawan clearly has the power to exercise the right of eminent
118
CONSTITUTIONAL LAW 2 |
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. 24Government 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.
||| (Moday v. Court of Appeals, G.R. No. 107916, [February 20,
1997])
[G.R. No. 156093. February 2, 2007.]
NATIONAL POWER CORP., petitioner, vs. SPOUSES
NORBERTO AND JOSEFINA DELA CRUZ,
METROBANK, Dasmariñas, Cavite Branch, REYNALDO
FERRER, and S.K. DYNAMICS MANUFACTURER
CORP.,respondents.
DECISION
VELASCO, JR., J p:
The Case
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 Order 2 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 PhP10,000.00 per square
meter.
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CONSTITUTIONAL LAW 2 |
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 Dasmariñas and Imus,
Cavite for the construction and maintenance of the proposed
Dasmariñas-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, T-671864, 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 petitioner's
Complaint, petitioner deposited PhP5,788.50 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 Dasmariñas, 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:
I. PROPERTY LOCATION
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)
Dasmariñas-Zapote 230KV Transmission Lines Project,
located within Barangay Salitran, Dasmariñas, Cavite
registered in the name of S.K. Dynamic[s] Manufacture[r],
Corp., under Transfer Certificate of Title No. T-454278.
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 Dasmariñas which was
transversed [sic] by Gen. Emilio Aguinaldo Highway [where]
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CONSTITUTIONAL LAW 2 |
several residential subdivisions and commercial IV. HIGHEST AND MOST PROFITABLE USE
establishment[s] are located.
xxx xxx xxx
Considered as some of the important improvements [on] the
vicinity are (within 1.5 radius) The subject property is situated within the
residential/commercial zone and considering the area affected
Orchard Golf and Country Club and taking into consideration, their location, shape, lot
topography, accessibility and the predominant uses of
Golden City Subdivision properties in the neighborhood, as well as the trend of land
developments in the vicinity, we are on the opinion that the
Southfield Subdivisions highest and most profitable use of the property is good for
residential and commercial purposes.
Arcontica Sports Complex
V. VALUATION OF LAND MARKET DATA
Max's Restaurant
xxx xxx xxx
Waltermart Shopping Mall
Based on the analysis of data gathered and making the proper
UMC Medical Center adjustments with respect to the location, area, shape,
accessibility, and the highest and best use of the subject
Several savings and Commercial Banks as well as several properties, it is the opinion of the herein commissioners that
Gasoline stations. the fair market value of the subject real properties is
P10,000.00 per square meter, as of this date, October 05,
Community centers such as, [sic] churches, public 1999. 7
markets, shopping malls, banks and gasoline stations are
easily accessible from the subject real properties. Thus, both commissioners recommended that the property of S.K.
Dynamics to be expropriated by petitioner be valued at PhP10,000.00
Convenience facilities such as electricity, telephone per square meter.
service as well as pipe potable water supply system are all
available along Gen. Emilio Aguinaldo Highway. The records show that the commissioners did not afford the parties the
opportunity to introduce evidence in their favor, nor did they conduct
Public transportation consisting of passenger jeepneys hearings before them. In fact, the commissioners did not issue notices
and buses as well taxicabs are [sic] regularly available to the parties to attend hearings nor provide the concerned parties the
along Gen. E. Emilio Aguinaldo Highway [sic]. opportunity to argue their respective causes.

xxx xxx xxx

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CONSTITUTIONAL LAW 2 |
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 Ferrer's 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 PhP10,000.00 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 purpose — to acquire an easement of right-of-way for the
construction and maintenance of the proposed Dasmariñas-Zapote 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 8.55-square meter portion of its property included
in the computation of just compensation.
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 PhP10,000.00
per square meter. The relevant portion of the said Order reads as
follows:
On October 8, 1999, a Commissioner's Valuation Report was
submitted in Court by the Provincial Assessor of Cavite and by
the Municipal Assessor of Dasmariñas, 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 the opinion of 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."
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
On January 20, 2000, petitioner filed a Motion for Reconsideration of
the abovementioned Order, but said motion was denied in the trial
court's March 23, 2000 Order, which states that:
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.
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.
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CONSTITUTIONAL LAW 2 |
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 . . . which fixed the fair market
value of lots located along Gen. Aguinaldo Highway,
Dasmariñas, 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.
"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 . . . ."
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
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CONSTITUTIONAL LAW 2 |
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 Court's 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; 14 thus, 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
court's 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
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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.
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. STHAID
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, petitioner's) right to
due process was violated.
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CONSTITUTIONAL LAW 2 |
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 appellant's 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 CA's 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 court's 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 party's right to procedural
due process, unless his/her inability to adduce evidence during trial
was due to his/her own fault or negligence.
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CONSTITUTIONAL LAW 2 |
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 PhP10,000.00 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 property's 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:
Just compensation is defined as the full and fair equivalent of
the property sought to be expropriated. The measure is not the
taker's gain but the owner's 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. . . .
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.
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 petitioner's 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 court's 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.
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
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CONSTITUTIONAL LAW 2 |
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.
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 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
court's 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.
||| (National Power Corp. v. Spouses dela Cruz, G.R. No. 156093,
[February 2, 2007], 543 PHIL 53-72)
[G.R. No. 146062. June 28, 2001.]
SANTIAGO ESLABAN, JR., in his capacity as Project
Manager of the National Irrigation Administration,
petitioner, vs. CLARITA VDA. DE ONORIO, respondent.
The Solicitor General for petitioner.
Public Attorney's Office for respondent.
SYNOPSIS
Subject matter of this petition is a lot known as Lot 1210-A-Pad-11-
000586, with an area of 39,512 square meters covered by TCT No. T-
22121 registered in the Registry Office of Koronadal, South Cotabato,
in the name of Clarita Vda. de Onorio, herein respondent, and her late
husband. Respondent secured title over the property by virtue of a
homestead patent. The National Irrigation Authority (NIA)
subsequently took 24,660 meters of the said lot for construction of an
irrigation canal.
Petitioner, in his capacity as Project Manager of the NIA, through the
Office of the Solicitor General, brought this petition for review before
the Supreme Court assailing the decision of the Court of Appeals
which affirmed the decision of the Regional Trial Court of Surallah,
South Cotabato ordering the NIA to pay respondent the amount of
P107,517.60 as just compensation for the questioned portion of
respondent's property taken by NIA which it used it for its main canal.
Among others, it was contended that an encumbrance was imposed on
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CONSTITUTIONAL LAW 2 |
the land in question in view of §39 of the Land Registration Act
(now P.D. 1529, Sec. 44).
The only servitude which a private property owner is required to
recognize in favor of the government is the easement of a "public
highway, way, private way established by law, or any government
canal or lateral thereof where the certificate of title does not state that
the boundaries thereof have been pre-determined." This implies that
the same should have been pre-existing at the time of the registration
of the land in order that the registered owner may be compelled to
respect it. Conversely, where the easement is not pre-existing and is
sought to be imposed only after the land has been registered under the
Land Registration Act, proper expropriation proceedings should be
had, and just compensation paid to the registered owner thereof. 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, the Court
ruled that prior expropriation proceedings should have been filed and
just compensation paid to the owner thereof before it could be taken
for public use.
The Court, therefore, affirmed the decision of the Court of Appeals
but modified it to the extent that the value of the questioned property
must be determined either as of the date of the taking of the property
or the filing of the complaint, "whichever came first."
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; ACTIONS;
CERTIFICATION AGAINST FORUM SHOPPING;
REQUIREMENT APPLIES TO FILING OF PETITIONS FOR
REVIEW ON CERTIORARI. — By reason of Rule 45, §4 of the 1997
Revised Rules on Civil Procedure, in relation to Rule 42, §2 thereof,
the requirement of a certificate of non-forum shopping applies to the
filing of petitions for review on certiorari of the decisions of the
Court of Appeals, such as the one filed by petitioner. As provided in
Rule 45, §5, "The failure of the petitioner to comply with any of the
foregoing requirements regarding . . . the contents of the document
which should accompany the petition shall be sufficient ground for the
dismissal thereof."
2. ID.; ID.; ID.; ID.; MUST BE SIGNED BY THE PRINCIPAL;
PETITION IS DEFECTIVE WHERE CERTIFICATION WAS
SIGNED BY COUNSEL ALONE; CASE AT BAR. — 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. 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.
3. CIVIL LAW; LAND REGISTRATION; CERTIFICATE OF TITLE
ISSUED TO A LAND PREVIOUSLY GRANTED BY VIRTUE OF
HOMESTEAD PATENT AND SUBSEQUENTLY REGISTERED
UNDER THE TORRENS SYSTEM IS CONCLUSIVE AND
INDEFEASIBLE. — The land under litigation, as already stated, is
covered by a transfer certificate of title registered in the Registry
Office of Koronadal, South Cotabato on May 13, 1976. This land was
originally covered by Original Certificate of Title No. (P-25592) P-
9800 which was issued pursuant to a homestead patent granted on
February 18, 1960. We have held: Whenever public lands are
alienated, granted or conveyed to applicants thereof, and the deed
grant or instrument of conveyance [sales patent] registered with the
Register of Deeds and the corresponding certificate and owner's
duplicate of title issued, such lands are deemed registered lands under
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CONSTITUTIONAL LAW 2 |
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.
4. ID.; PROPERTY; EASEMENT; MUST BE PRE-EXISTING AT
TIME OF REGISTRATION OF LAND IN ORDER THAT OWNER
THEREOF MAY BE COMPELLED TO RESPECT IT; CASE AT
BAR. — As §39 of the Land Registration Act says, however, the only
servitude which a private property owner is required to recognize in
favor of the government is the easement of a "public highway, way,
private way established by law, or any government canal or lateral
thereof where the certificate of title does not state that the boundaries
thereof have been pre-determined." This implies that the same should
have been pre-existing at the time of the registration of the land in
order that the registered owner may be compelled to respect it.
Conversely, where the easement is not pre-existing and is sought to be
imposed only after the land has been registered under the Land
Registration Act, proper expropriation proceedings should be had, and
just compensation paid to the registered owner thereof. 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.
4. CONSTITUTIONAL LAW; POWER OF EMINENT DOMAIN;
ACQUISITION OF PRIVATE PROPERTY FOR PUBLIC USE IS
SUBJECT TO PAYMENT OF JUST COMPENSATION. — 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. 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.
5. ID.; ID.; JUST COMPENSATION; EXPLAINED. — 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."
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. Nevertheless, as
noted in Ansaldo v. Tantuico, Jr., 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.
6. ID.; ID.; ID.; HOW DETERMINED; CASE AT BAR. — The value
of the property must be determined either as of the date of the taking
of the property or the filing of the complaint, "whichever came first."
Even before the new rule, however, it was already held
in Commissioner of Public Highways v. Burgos 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, 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. SATDEI
DECISION
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MENDOZA, J p:
This is a petition for review of the decision 1 of the Court of Appeals
which affirmed the decision of the Regional Trial Court, Branch 26,
Surallah, South Cotabato, ordering the National Irrigation
Administration (NIA for brevity) to pay respondent the amount of
P107,517.60 as just compensation for the taking of the latter's
property.
The facts are as follows:
Respondent Clarita Vda. de Enorio is the owner of a lot in Barangay
M. Roxas, Sto. Nino, South Cotabato with an area of 39,512 square
meters. The lot, known as Lot 1210-A-Pad-11-000586, is covered by
TCT No. T-22121 of the Registry of Deeds, South Cotabato. On
October 6, 1981, Santiago Eslaban, Jr., Project Manager of the NIA,
approved the construction of the main irrigation canal of the NIA on
the said lot, affecting a 24,660 square meter portion thereof.
Respondent's husband agreed to the construction of the NIA canal
provided that they be paid by the government for the area taken after
the processing of documents by the Commission on Audit.
Sometime in 1983, a Right-of-Way agreement was executed between
respondent and the NIA (Exh. 1). The NIA then paid respondent the
amount of P4,180.00 as Right-of-Way damages. Respondent
subsequently executed an Affidavit of Waiver of Rights and Fees
whereby she waived any compensation for damages to crops and
improvements which she suffered as a result of the construction of a
right-of-way on her property (Exh. 2). The same year, petitioner
offered respondent the sum of P35,000,00 by way of amicable
settlement pursuant to Executive Order No. 1035, §18, which provides
in part that —
Financial assistance may also be given to owners of lands
acquired under C.A. 141, as amended, for the area or portion
subject to the reservation under Section 12 thereof in such
amounts as may be determined by the implementing
agency/instrumentality concerned in consultation with the
Commission on Audit and the assessor's office concerned.
Respondent demanded payment for the taking of her property, but
petitioner refused to pay. Accordingly, respondent filed on December
10, 1990 a complaint against petitioner before the Regional Trial
Court, praying that petitioner be ordered to pay the sum of
P111,299.55 as compensation for the portion of her property used in
the construction of the canal constructed by the NIA, litigation
expenses, and the costs.
Petitioner, through the Office of the Solicitor-General, filed an
Answer, in which he admitted that NIA constructed an irrigation canal
over the property of the plaintiff and that NIA paid a certain
landowner whose property had been taken for irrigation purposes, but
petitioner interposed the defense that: (1) the government had not
consented to be sued; (2) the total area used by the NIA for its
irrigation canal was only 2.27 hectares, not 24,600 square meters; and
(3) respondent was not entitled to compensation for the taking of her
property considering that she secured title over the property by virtue
of a homestead patent under C.A. No. 141.
At the pre-trial conference, the following facts were stipulated upon:
(1) that the area taken was 24,660 square meters; (2) that it was a
portion of the land covered by TCT No. T-22121 in the name of
respondent and her late husband (Exh. A); and (3) that this area had
been taken by the NIA for the construction of an irrigation canal. 2
On October 18, 1993, the trial court rendered a decision, the
dispositive portion of which reads:
In view of the foregoing, decision is hereby rendered in favor
of plaintiff and against the defendant ordering the defendant,
National Irrigation Administration, to pay to plaintiff the sum
of One Hundred Seven Thousand Five Hundred Seventeen
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CONSTITUTIONAL LAW 2 |
Pesos and Sixty Centavos (P107,517.60) as just compensation
for the questioned area of 24,660 square meters of land owned
by plaintiff and taken by said defendant NIA which used it for
its main canal plus costs. 3
On November 15, 1993, petitioner appealed to the Court of Appeals
which, on October 31, 2000, affirmed the decision of the Regional
Trial Court. Hence this petition.
The issues in this case are:
1. WHETHER OR NOT THE PETITION IS DISMISSIBLE
FOR FAILURE TO COMPLY WITH THE
PROVISIONS OF SECTION 5, RULE 7 OF THE
REVISED RULES OF CIVIL PROCEDURE.
2. WHETHER OR NOT LAND GRANTED BY VIRTUE OF
A HOMESTEAD PATENT AND SUBSEQUENTLY
REGISTERED UNDER PRESIDENTIAL DECREE
1529 CEASES TO BE PART OF THE PUBLIC
DOMAIN.
3. WHETHER OR NOT THE VALUE OF JUST
COMPENSATION SHALL BE DETERMINED FROM
THE TIME OF THE TAKING OR FROM THE TIME
OF THE FINALITY OF THE DECISION.
4. WHETHER THE AFFIDAVIT OF WAIVER OF RIGHTS
AND FEES EXECUTED BY RESPONDENT
EXEMPTS PETITIONER FROM MAKING PAYMENT
TO THE FORMER.
We shall deal with these issues in the order they are stated.
First. Rule 7, §5 of the 1997 Revised Rules on Civil Procedure
provides —
Certification against forum shopping. — The plaintiff or
principal party shall certify under oath in the complaint or
other initiatory pleading asserting a claim for relief, or in a
sworn certification annexed thereto and simultaneously filed
therewith: (a) that he has not theretofore commenced any
action or filed any claim involving the same issues in any
court, tribunal or quasi-judicial agency and, to the best of his
knowledge, no such other action or claim is pending therein;
(b) if there is such other pending action or claim, a complete
statement of the present status thereof; and (c) if he should
thereafter learn that the same or similar action or claim has
been filed or is pending, he shall report the fact within five (5)
days therefrom to the court wherein his aforesaid complaint or
initiatory pleading has been filed.
Failure to comply with the foregoing requirements shall not be
curable by mere amendment of the complaint or other
initiatory pleading but shall be cause for the dismissal of the
case without prejudice, unless otherwise provided, upon
motion and after hearing . . .
By reason of Rule 45, §4 of the 1997 Revised Rules on Civil
Procedure, in relation to Rule 42, §2 thereof, the requirement of a
certificate of non-forum shopping applies to the filing of petitions for
review on certiorari of the decisions of the Court of Appeals, such as
the one filed by petitioner.
As provided in Rule 45, §5, "The failure of the petitioner to comply
with any of the foregoing requirements regarding . . . the contents of
the document which should accompany the petition shall be sufficient
ground for the dismissal thereof."
The requirement in Rule 7, §5 that the certification should be executed
by the plaintiff or the principal means that counsel cannot sign the
certificate against forum-shopping. The reason for this is that the
plaintiff or principal knows better than anyone else whether a petition
has previously been filed involving the same case or substantially the
132
CONSTITUTIONAL LAW 2 |
same issues. Hence, a certification signed by counsel alone is
defective and constitutes a valid cause for dismissal of the petition. 4
In this case, the petition for review was filed by Santiago Eslaban, Jr.,
in his capacity as Project Manager of the NIA. However, the
verification and certification against forum-shopping were signed by
Cesar E. Gonzales, the administrator of the agency. The real party-in-
interest is the NIA, which is a body corporate. Without being duly
authorized by resolution of the board of the corporation, neither
Santiago Eslaban, Jr. nor Cesar E. Gonzales could sign the certificate
against forum-shopping accompanying the petition for review. Hence,
on this ground alone, the petition should be dismissed.
Second. Coming to the merits of the case, the land under litigation, as
already stated, is covered by a transfer certificate of title registered in
the Registry Office of Koronadal, South Cotabato on May 13, 1976.
This land was originally covered by Original Certificate of Title No.
(P-25592) P-9800 which was issued pursuant to a homestead patent
granted on February 18, 1960. We have held:
Whenever public lands are alienated, granted or conveyed to
applicants thereof, and the deed grant or instrument of
conveyance [sales patent] registered with the Register of
Deeds and the corresponding certificate and owner's duplicate
of title issued, such lands are deemed registered lands under
the Torrens System and the certificate of title thus issued is as
conclusive and indefeasible as any other certificate of title
issued to private lands in ordinary or cadastral registration
proceedings. 5
The Solicitor-General contends, however, that an encumbrance is
imposed on the land in question in view of §39 of the Land
Registration Act (now P.D. No. 1529, §44) which provides:
Every person receiving a certificate of title in pursuance of a
decree of registration, and every subsequent purchaser of
registered land who takes a certificate of title for value in good
faith shall hold the same free from all encumbrances except
those noted on said certificate, and any of the following
encumbrances which may be subsisting, namely:
xxx xxx xxx
Third. Any public highway, way, private way established by
law, or any government irrigation canal or lateral thereof,
where the certificate of title does not state that the boundaries
of such highway, way, irrigation canal or lateral thereof, have
been determined.
As this provision says, however, the only servitude which a private
property owner is required to recognize in favor of the government is
the easement of a "public highway, way, private way established by
law, or any government canal or lateral thereof where the certificate of
title does not state that the boundaries thereof have been pre-
determined." This implies that the same should have been pre-
existing at the time of the registration of the land in order that the
registered owner may be compelled to respect it. Conversely, where
the easement is not pre-existing and is sought to be imposed only after
the land has been registered under the Land Registration Act, proper
expropriation proceedings should be had, and just compensation paid
to the registered owner thereof. 6
In this case, the irrigation canal constructed by the NIA on the
contested property was built only on October 6, 1981, several years
after the property had been registered on May 13, 1976. Accordingly,
prior expropriation proceedings should have been filed and just
compensation paid to the owner thereof before it could be taken for
public use.
Indeed, the rule is that where private property is needed for
conversion to some public use, the first thing obviously that the
government should do is to offer to buy it. 7 If the owner is willing to
133
CONSTITUTIONAL LAW 2 |
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. (Italics
added)
Thus, the value of the property must be determined either as of the
date of the taking of the property or the filing of the complaint,
"whichever came first." Even before the new rule, however, it was
already held inCommissioner 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.
134
CONSTITUTIONAL LAW 2 |
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. Nino, South Cotabato.
However, as the Court of Appeals correctly held:
[I]f NIA intended to bind the appellee to said affidavit, it
would not even have bothered to give her any amount for
damages caused on the improvements/crops within the
appellee's property. This, apparently was not the case, as can
be gleaned from the disbursement voucher in the amount of
P4,180.00 (page 10 of the Folder of Exhibits in Civil Case
396) issued on September 17, 1983 in favor of the appellee,
and the letter from the Office of the Solicitor General
recommending the giving of "financial assistance in the
amount of P35,000.00" to the appellee.
Thus, We are inclined to give more credence to the appellee's
explanation that the waiver of rights and fees "pertains only to
improvements and crops and not to the value of the land
utilized by NIA for its main canal." 15
WHEREFORE, premises considered, the assailed decision of the
Court of Appeals is hereby AFFIRMED with MODIFICATION to the
extent that the just compensation for the contested property be paid to
respondent in the amount of P16,047.61 per hectare, with interest at
the legal rate of six percent (6%) per annum from the time of taking
until full payment is made. Costs against petitioner.
SO ORDERED.
||| (Eslaban, Jr. v. Vda. de Onorio, G.R. No. 146062, [June 28, 2001],
412 PHIL 667-680)
[G.R. No. 129998. December 29, 1998.]
NATIONAL POWER CORPORATION, petitioner, vs.
LOURDES HENSON, married to Eugenio Galvez;
JOSEFINA HENSON, married to Petronio Katigbak,
JESUSA HENSON; CORAZON HENSON, married to
Jose Ricafort; ALFREDO TANCHIATCO; BIENVENIDO
DAVID; MARIA BONDOC CAPILI, married to Romeo
Capili; and MIGUEL MANOLOTO, respondents.
SYLLABUS
135
CONSTITUTIONAL LAW 2 |
1. POLITICAL LAW; INHERENT POWER OF THE STATE;
EMINENT DOMAIN; JUST COMPENSATION; CRITERION IN
DETERMINATION THEREOF. — 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 reclassified 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.
2. ID.; ID.; ID.; ID.; PRICE OF P375.00 PER SQUARE METER
CONSIDERED JUST COMPENSATION FOR UNDEVELOPED
RAW LAND IN CASE AT BAR. — 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.
3. ID.; ID.; ID.; ID.; PAYMENT OF LEGAL INTEREST ON
COMPENSATION AWARDED FROM DATE PETITIONER WAS
PLACED IN POSSESSION OF THE LAND, PROPER IN CASE AT
BAR. — The trial court and the Court of Appeals correctly required
petitioner to pay legal interest 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.
4. ID.; ID.; ID.; DOUBLE PAYMENT FOR 3,611 SQUARE
METERS OF LOT 5 NOT PROPER IN CASE AT BAR. — 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.
5. ID.; ID.; ID.; AREA OF COMMUNAL IRRIGATION CANAL
MUST BE EXCLUDED FROM EXPROPRIATION IN CASE AT
BAR. — 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.
6. ADMINISTRATIVE LAW; ADMINISTRATIVE AGENCY;
NATIONAL POWER CORPORATION; EXEMPT FROM
PAYMENT OF COSTS OF PROCEEDINGS. — We, however, rule
that petitioner is under its charter exempt from payment of costs of the
proceedings.
DECISION
PARDO, J p:
The case is an appeal via certiorari under Rule 45 of the Revised
Rules of Court from the decision of the Court of Appeals, which
affirmed with modification the decision of the Regional Trial Court,
San Fernando, Pampanga, in a special civil action for eminent
domain, ordering the National Power Corporation (NPC) to pay
respondents landowners/claimants just compensation for the taking of
their five (5) parcels of land, with an area of 63,220 square meters at
P400.00, per square meter, with legal interest from September 11,
1990, plus costs of the proceedings.
On March 21, 1990, the National Power Corporation (NPC) originally
instituted with the Regional Trial Court, Third Judicial District,
Branch 46, San Fernando, Pampanga a complaint 1 for eminent
domain, later amended on October 11, 1990, for the taking for public
use of five (5) parcels of land, owned or claimed by respondents, with
a total aggregate area of 58,311 square meters, for the expansion of
the NPC Mexico Sub-Station. 2
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CONSTITUTIONAL LAW 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:
"Parcel of rice land, being Lot 1, 2, 3, 4, and 5 of the
subdivision plan Psd-03-017121 (OLT) and being a portion of
Lot 212 of Mexico Cadastre, situated in the Barangay of San
Jose Matulid, Municipality of Mexico, province of Pampanga,
Island of Luzon. Bounded on the North by Barangay Road
Calle San Jose; on the East by Lot 6, Psd-03-017121 (OLT)
owned by the National Power Corporation; on the South by
Lot 101, Psd-03-017121 (OLT) being an irrigation ditch; on
the West by Lot 100, Psd-03-0017121 (OLT) being an
irrigation ditch and Barrio road, containing an aggregate area
of FIFTY EIGHT THOUSAND THREE HUNDRED
ELEVEN (58,311) square meters, which parcels of land are
broken down as follows with claimants;
1. Lot 1-A = 43,532 sq. m. — Henson Family
2. Lot 2-A = 6,823 sq. m. — Alfredo Tanchiatco,
encumbered with
Land Bank of the
Phil. (LBP)
3. Lot 3-A = 3,057 sq. m. — Bienvenido David,
encumbered with LBP
4. Lot 4-A = 1,438 sq. m. — Maria Bondoc
Capili, encumbered
with LBP
5. Lot 5-A = 3,461 sq. m. — Miguel Manoloto
and Henson Family
Total A = 58,311 sq. m."
and cover 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. Manoloto, 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 agricultural/riceland covered by Operation Land Transfer
(OLT) of the Department of Agrarian Reform. 3
Petitioner needed the entire area of the five (5) parcels of land,
comprising an aggregate area of 58,311 square meters, for the
expansion of its Mexico Subdivision. 4
On March 28, 1990, petitioner filed an urgent motion to fix the
provisional value of the subject parcels of land. 3
On April 20, 1990, respondent 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 Provisional 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
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CONSTITUTIONAL LAW 2 |
P5,831,100.00, with a balance of P690,900.00, remaining with the
Provisional Treasurer of Pampanga. 10
On April 5, 1991, the trial court issued an order appointing three (3)
commissioners to aid the in the reception of evidence to determine
just compensation for the taking of subject property. After receiving
the evidence and conducting an ocular inspection, the commissioners
submitted to the court their individual reports.
Commissioner Mariano C. Tiglao, in his report dated September 10,
1992, recommended that their 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 Oracio, in his report dated
April 28, 1993, recommended that the fair market value be fixed at
P170.00 per square meter. 11
However, the trial court did not conduct a hearing on any of the
reports.
On May 19, 1993, the trial court rendered judgment fixing the amount
of just compensation to be paid by the petitioner for the taking of the
entire area of 63,220 squares 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 Appeals rendered decision affirming that
of the Regional Trial Court, except that the award of P20,000.00 as
attorney's fees was deleted. 14
Hence, this petition for review. 15
By resolution adopted on October 8, 1997, the Court required
respondents to comment on the petition within ten (10) days from
notice. 16 On January 7, 1998, respondents filed their comment
thereon. 17
By resolution adopted on February 2, 1998, the Court required
petitioner to file a reply to the comment. 18 On August 25, 1990,
petitioner filed a reply thereto. 19
We now resolve to give due course to the petition. We modify the
appealed decision.
As respondents did not challenge petitioner's right to expropriate their
property, the issue presented boils down to what is the just
compensation for the taking of respondents' property for the
expansion of the NPC's Mexico Sub-station, situated in San Jose
Matulid, Mexico, Pampanga.
The parcels of land sought to be expropriated are undeniably idle,
undeveloped, raw agricultural land, bereft of any improvement.
Except for the Henson family, all the other respondents were
admittedly farmer beneficiaries under operation land transfer of the
Department of Agrarian Reform. However, the land has been
reclassified as residential. The nature and character of the land at the
time of its taking is the principal criterion to determine just
compensation to the landowner. 20
In this case, the trial court and the Court of Appeals fixed the value of
the land at P400.00 per square meter, which was the selling price of
lots in the adjacent fully developed subdivision, the Santo Domingo
Village Subdivision. The land in question, however, was an
undeveloped, idle land, principally agricultural in character, though
reclassified 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.
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CONSTITUTIONAL LAW 2 |
The trial court fixed the fair market value of subject land in an amount
equal to the value of lots in the adjacent fully developed subdivision.
This finds no support in the evidence. The valuation was even higher
than the recommendation of anyone of the commissioners.
On the other hand, Commissioner Atienza recommended a fair market
value of P375.00 per square meter. This appears to be the closest
valuation to the market value of lots in the adjoining fully developed
subdivision. Considering that the subject parcels of land are
undeveloped raw land, the price of P375.00 per square meter would
appear to the Court as the just compensation for the taking of such
raw land.
Consequently, we agree with Commissioner Atienza's report that the
fair market value of subject parcels of land be fixed at P375.00 per
square meter.
We also agree with petitioner that the area of the communal irrigation
canal consisting of 4,809 square meters must be excluded from the
land to be expropriated. To begin with, it is excluded in the amended
complaint. Hence, the trial court and the Court of Appeals erred in
including the same in the area to be taken.
The trial court erroneously ordered double payment for 3,611 square
meters of lot 5 (portion) in the dispositive part of its decision, and,
hence, this must be deleted.
The trial court and the Court of Appeals correctly required petitioner
to pay legal interest 21 on the compensation awarded from September
11, 1990, the date petitioner was placed in possession of the subject
land, less the amount respondents had withdrawn from the deposit that
petitioner made with the Provincial Treasurer's Office.
We however, rule that petitioner is under its charter exempt from
payment of costs of the proceedings.
WHEREFORE, the decision of the Court of Appeals and that of the
trial court subject of the appeal are hereby MODIFIED.
We render judgment as follows:
1. The Court fixes the amount of P375.00, per square meter, as
the just compensation to be paid to respondents for the
taking of their property consisting of five (5) parcels of
land, with a total area of 58,311 square meters, described
in and covered by Transfer Certificates of Title Nos. 557,
7131, 7111, 7108 and Certificate of Land Transfer No.
4550, which parcels of land are broken down as follows:
a. Lot 1-A, with an area of 43,532 square meters
belonging to Lourdes Henson, Josefina Henson,
Jesusa Henson and Corazon Henson;
b. Lot 2-A, with an area of 6,823 square meters
belonging to Alfredo Tanchiatco;
c. Lot 3-A, with an area of 3,057 square meters
belonging to Bienvenido David (TCT No. 7111)
d. Lot 4-A, with an area of 1,438 square meters
belonging to Maria Bondoc Capili (TCT No.
7108)
e. Lot 5-A, with an area of 3,461 square meters
belonging to Miguel Manaloto (150 square
meters), Certificate of Land Transfer No. 4550
and Henson Family (3,311 square meters),
deducting therefrom the amounts they had withdrawn from the
deposit of petitioner for the provisional value of said parcels of
land. 22
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CONSTITUTIONAL LAW 2 |
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.
||| (NAPOCOR v. Henson, G.R. No. 129998, [December 29, 1998],
360 PHIL 922-931)
[G.R. No. 142971. May 7, 2002.]
THE CITY OF CEBU, petitioner, vs. SPOUSES
APOLONIO and BLASA DEDAMO, respondents.
City Attorney for petitioner.
Zosa & Quijano Law Office for respondents.
SYNOPSIS
Petitioner filed the instant petition for review on certiorari assailing
the decision of the Court of Appeals which affirmed in toto the
decision of the Regional Trial Court of 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. Petitioner questioned the land
valuation asserting that just compensation should be determined as of
the date of the filing of the complaint, which in this case should be 17
September 1993, and not at the time the property was actually taken in
1994, pursuant to the Court's decision in "National Power
Corporation vs. Court of Appeals." In their Comment, respondents
maintained that 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; that the petitioner did not
interpose any serious objection to the commissioners' report; hence, it
was estopped from attacking the report on which the decision was
based.
In denying the petition, the Court held that the applicable law as to the
point of reckoning for the determination of just compensation is
Section 19 of Republic Act No. 7160, which expressly provides that
just compensation shall be determined as of the time of actual taking.
The petitioner had misread the Court's ruling in the above-mentioned
case. The Court did not categorically rule in that case that just
compensation should be determined as of the filing of the complaint.
The Court 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 the 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."
Moreover, it was too late for petitioner to question the valuation
without violating the principle of equitable estoppel. Records showed
that petitioner consented to conform with the valuation recommended
by the commissioners. It cannot detract from its agreement now and
assail the correctness of the commissioners' assessment.
SYLLABUS
1. POLITICAL LAW; POWER OF EMINENT DOMAIN;
EXPLAINED. — Eminent domain is a fundamental State power that
is inseparable from sovereignty. It is the Government's right to
140
CONSTITUTIONAL LAW 2 |
appropriate, in the nature of a compulsory sale to the State, private
property for public use or purpose. However, the Government must
pay the owner thereof just compensation as consideration therefor.
2. ID.; ID.; THE LOCAL GOVERNMENT CODE OF 1991,
SECTION 19, APPLICABLE TO THE CASE AT BAR;
ASCERTAINMENT OF JUST COMPENSATION; JUST
COMPENSATION SHALL BE DETERMINED AS OF THE TIME
OF ACTUAL TAKING. — 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.
3. ID.; ID.; ID.; ID.; GENERAL RULE; EXCEPTION. — The
petitioner has misread our ruling in The National Power Corp. vs.
Court of Appeals. 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."
4. ID.; ID.; SECTION 4, RULE 67 OF THE RULES OF COURT, A
PROCEDURAL LAW CANNOT PREVAIL OVER R.A. NO. 7160, A
SUBSTANTIVE LAW. — 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, such law cannot
prevail over R.A. 7160, which is a substantive law.
5. CIVIL LAW; ESTOPPEL IN PAIS; PETITIONER IS ESTOPPED
FROM QUESTIONING THE VALUATION OF COMMISSIONERS
DUE TO ITS PNOC AGREEMENT TO CONFORM THEREWITH.
— Furthermore, during the hearing on 22 November 1996, petitioner
did not interpose a serious objection. 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. 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.
6. ID.; CONTRACTS HAVE THE FORCE OF LAW BETWEEN
PARTIES AND SHOULD BE COMPLIED WITH IN GOOD FAITH.
— 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.cdasia2005
DECISION
DAVIDE, JR., C.J p:
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 CA-G.R. CV No.
59204 1 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.
The material operative 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
141
CONSTITUTIONAL LAW 2 |
spouses Apolonio and Blasa Dedamo. The petitioner alleged therein
that it needed the following parcels of land of respondents, to wit:
Lot No. 1527
Area 1,146 square meters
Tax Declaration 03472
Title No. 31833
Market value P240,660.00
Assessed Value P72,200.00
Lot No. 1528
Area 793 square meters
Area sought to be 478 square meters
expropriated
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
Assessed Value P49,960.00
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 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.
A pre-trial was thereafter had.
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
On 14 December 1994, the parties executed and submitted to the trial
court an Agreement 4 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;
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 may be 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
142
CONSTITUTIONAL LAW 2 |
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;
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;
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;
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.
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.
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 of 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
143
CONSTITUTIONAL LAW 2 |
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. 9However, 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
144
CONSTITUTIONAL LAW 2 |
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:
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 commissioner's
assessment.
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
WHEREFORE, finding no reversible error in the assailed judgment of
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.
||| (City of Cebu v. Spouses Dedamo, G.R. No. 142971, [May 7, 2002],
431 PHIL 524-535)
[G.R. No. 161656. June 29, 2005.]
REPUBLIC OF THE PHILIPPINES, GENERAL ROMEO
ZULUETA, COMMODORE EDGARDO GALEOS,
ANTONIO CABALUNA, DOROTEO MANTOS &
FLORENCIO BELOTINDOS, petitioners, vs. VICENTE
G. LIM,respondent.
145
CONSTITUTIONAL LAW 2 |
R E S OLUTIO N
SANDOVAL-GUTIERREZ, J p:
Justice is the first virtue of social institutions. 1 When the state wields
its power of eminent domain, there arises a correlative obligation on
its part to pay the owner of the expropriated property a just
compensation. If it fails, there is a clear case of injustice that must be
redressed. In the present case fifty-seven (57) years have lapsed from
the time the Decision in the subject expropriation proceedings became
final, but still the Republic of the Philippines, herein petitioner, has
not compensated the owner of the property. To tolerate such prolonged
inaction on its part is to encourage distrust and resentment among our
people — the very vices that corrode the ties of civility and tempt men
to act in ways they would otherwise shun.
A revisit of the pertinent facts in the instant case is imperative.
On September 5, 1938, the Republic of the Philippines (Republic)
instituted a special civil action for expropriation with the Court of
First Instance (CFI) of Cebu, docketed as Civil Case No. 781,
involving Lots 932 and 939 of the Banilad Friar Land Estate, Lahug,
Cebu City, for the purpose of establishing a military reservation for
the Philippine Army. Lot 932 was registered in the name of Gervasia
Denzon under Transfer Certificate of Title (TCT) No. 14921 with an
area of 25,137 square meters, while Lot 939 was in the name of
Eulalia Denzon and covered by TCT No. 12560 consisting of 13,164
square meters.
After depositing P9,500.00 with the Philippine National Bank,
pursuant to the Order of the CFI dated October 19, 1938, the Republic
took possession of the lots. Thereafter, or on May 14, 1940, the CFI
rendered its Decision ordering the Republic to pay the Denzons the
sum of P4,062.10 as just compensation.
The Denzons interposed an appeal to the Court of Appeals but it was
dismissed on March 11, 1948. An entry of judgment was made
on April 5, 1948.
In 1950, Jose Galeos, one of the heirs of the Denzons, filed with the
National Airports Corporation a claim for rentals for the two lots, but
it "denied knowledge of the matter." Another heir, Nestor Belocura,
brought the claim to the Office of then President Carlos Garcia who
wrote the Civil Aeronautics Administration and the Secretary of
National Defense to expedite action on said claim. On September 6,
1961, Lt. Manuel Cabal rejected the claim but expressed willingness
to pay the appraised value of the lots within a reasonable time.
For failure of the Republic to pay for the lots, on September 20, 1961,
the Denzons' successors-in-interest, Francisca Galeos-Valdehueza
and Josefina Galeos-Panerio, 2 filed with the same CFI an action for
recovery of possession with damages against the Republic and officers
of the Armed Forces of the Philippines in possession of the property.
The case was docketed as Civil Case No. R-7208.
In the interim or on November 9, 1961, TCT Nos. 23934 and 23935
covering Lots 932 and 939 were issued in the names of Francisca
Valdehueza and Josefina Panerio, respectively. Annotated thereon was
the phrase "subject to the priority of the National Airports Corporation
to acquire said parcels of land, Lots 932 and 939 upon previous
payment of a reasonable market value."
On July 31, 1962, the CFI promulgated its Decision in favor of
Valdehueza and Panerio, holding that they are the owners and have
retained their right as such over Lots 932 and 939 because of the
Republic's 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.
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CONSTITUTIONAL LAW 2 |
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 attorney's fees; and (3) the court a quo in
the present suit had no power to fix the value of the lots and
order the execution of the deed of sale after payment.
It is true that plaintiffs are still the registered owners of the
land, there not having been a transfer of said lots in favor of
the Government. The records do not show that the
Government paid the owners or their successors-in-interest
according to the 1940 CFI decision although, as stated,
P9,500.00 was deposited by it, and said deposit had been
disbursed. With the records lost, however, it cannot be known
who received the money (Exh. 14 says: 'It is further certified
that the corresponding Vouchers and pertinent Journal and
Cash Book were destroyed during the last World War, and
therefore the names of the payees concerned cannot be
ascertained.') And the Government now admits that there is no
available record showing that payment for the value of the lots
in question has been made (Stipulation of Facts, par. 9, Rec.
on Appeal, p. 28).
The points in dispute are whether such payment can still be
made and, if so, in what amount. Said lots have been the
subject of expropriation proceedings. By final and executory
judgment in said proceedings, they were condemned for public
use, as part of an airport, and ordered sold to the Government.
In fact, the abovementioned title certificates secured by
plaintiffs over said lots contained annotations of the right of
the National Airports Corporation (now CAA) to pay for and
acquire them. It follows that both by virtue of the judgment,
long final, in the expropriation suit, as well as the annotations
upon their title certificates, plaintiffs are not entitled to
recover possession of their expropriated lots — which are still
devoted to the public use for which they were expropriated —
but only to demand the fair market value of the same."
Meanwhile, in 1964, Valdehueza and Panerio mortgaged Lot 932
to Vicente Lim, herein respondent, 4 as security for their loans. For
their failure to pay Lim despite demand, he had the mortgage
foreclosed in 1976. Thus, TCT No. 23934 was cancelled, and in lieu
thereof, TCT No. 63894 was issued in his name.
On August 20, 1992, respondent Lim filed a complaint for quieting of
title with the Regional Trial Court (RTC), Branch 10, Cebu City,
against General Romeo Zulueta, as Commander of the Armed Forces
of the Philippines, Commodore Edgardo Galeos, as Commander of
Naval District V of the Philippine Navy, Antonio Cabaluna, Doroteo
Mantos and Florencio Belotindos, herein petitioners. Subsequently, he
amended the complaint to implead the Republic.
On May 4, 2001, the RTC rendered a decision in favor of respondent,
thus:
"WHEREFORE, judgment is hereby rendered in favor of
plaintiff Vicente Lim and against all defendants, public and
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private, declaring plaintiff Vicente Lim the absolute and
exclusive owner of Lot No. 932 with all the rights of an
absolute owner including the right to possession. The
monetary claims in the complaint and in the counter claims
contained in the answer of defendants are ordered Dismissed.
Petitioners elevated the case to the Court of Appeals, docketed therein
as CA-G.R. CV No. 72915. In its Decision 5 dated September 18,
2003, the Appellate Court sustained the RTC Decision, thus:
"Obviously, defendant-appellant Republic evaded its duty of
paying what was due to the landowners. The expropriation
proceedings had already become final in the late 1940's 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. . . . 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).
xxx xxx xxx
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
plaintiff's 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.
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CONSTITUTIONAL LAW 2 |
On July 7, 2004, petitioners filed an urgent plea/motion for
clarification, which is actually asecond 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 Republic's 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 respondent's
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 Republic's 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 petitioner's 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 respondent's 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
respondent's predecessors-in-interest were given a "run around" by the
Republic's 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 respondent's predecessors-in-interest. Even
President Garcia, who sent a letter to the Civil Aeronautics
Administration and the Secretary of National Defense to expedite the
payment, failed in granting relief to them. And, on September 6, 1961,
while the Chief of Staff of the Armed Forces expressed willingness to
pay the appraised value of the lots, nothing happened.
The Court of Appeals is correct in saying that Republic's 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
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CONSTITUTIONAL LAW 2 |
has been held that if the compensation is not paid in a reasonable
time, the party may be treated as a trespasser ab initio. 8
Corollarily, in Provincial Government of Sorsogon vs. Vda. De
Villaroya, 9 similar to the present case, this Court expressed its disgust
over the government's 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
respondent's 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 Court's mandate. Such prolonged obstinacy bespeaks of lack of
respect to private rights and to the rule of law, which we cannot
countenance. It is tantamount to confiscation of private property.
While it is true that all private properties are subject to the need of
government, and the government may take them whenever the
necessity or the exigency of the occasion demands, however, the
Constitution guarantees that when this governmental right of
expropriation is exercised, it shall be attended by
compensation. 10 From the taking of private property by the
government under the power of eminent domain, there arises an
implied promise to compensate the owner for his loss. 11
Significantly, the above-mentioned provision of Section 9, Article III
of the Constitution is not a grant but a limitation of power. This
limiting function is in keeping with the philosophy of the Bill of
Rights against the arbitrary exercise of governmental powers to the
detriment of the individual's rights. Given this function, the provision
should therefore be strictly interpreted against the expropriator, the
government, and liberally in favor of the property owner. 12
Ironically, in opposing respondent's claim, the Republic is invoking
this Court's Decision in Valdehueza, a Decision it utterly defied. How
could the Republic acquire ownership over Lot 932 when it has not
paid its owner the just compensation, required by law, for more than
50 years? The recognized rule is that title to the property expropriated
shall pass from the owner to the expropriator only upon full payment
of the just compensation. Jurisprudence on this settled principle is
consistent both here and in other democratic jurisdictions.
In Association of Small Landowners in the Philippines, Inc. et al., vs.
Secretary of Agrarian Reform, 13 thus:
"Title to property which is the subject of condemnation
proceedings does not vest the condemnor until the judgment
fixing just compensation is entered and paid, but the
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.
. . . 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
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CONSTITUTIONAL LAW 2 |
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 Republic's acquisition of ownership is conditioned upon the
full payment of just compensation within a reasonable time. 14
Significantly, in Municipality of Biñan v. Garcia 15 this Court ruled
that the expropriation of lands consists of two stages, to wit:
". . . 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. In Republic v. Salem Investment
Corporation, 16 we ruled that, "the process is not completed until
payment of just compensation." Thus, here, the failure of the Republic
to pay respondent and his predecessors-in-interest for a period of 57
years rendered the expropriation process incomplete.
The Republic now argues that under Valdehueza, respondent is not
entitled to recover possession of Lot 932 but only to demand payment
of its fair market value. Of course, we are aware of the doctrine that
"non-payment of just compensation (in an expropriation proceedings)
does not entitle the private landowners to recover possession of the
expropriated lots." This is our ruling in the recent cases of Republic of
the Philippines vs. Court of Appeals, et al., 17 and Reyes vs. National
Housing Authority. 18 However, the facts of the present case do not
justify its application. It bears stressing that the Republic was ordered
to pay just compensation twice, the first was in the expropriation
proceedings and the second, in Valdehueza. Fifty-seven (57) years
have passed since then. We cannot but construe the Republic's failure
to pay just compensation as a deliberate refusal on its part. Under
such circumstance, recovery of possession is in order. In several
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jurisdictions, the courts held that recovery of possession may be had
when property has been wrongfully taken or is wrongfully retained by
one claiming to act under the power of eminent domain 19 or where a
rightful entry is made and the party condemning refuses to pay the
compensation which has been assessed or agreed upon; 20 or fails or
refuses to have the compensation assessed and paid. 21
The Republic also contends that where there have been constructions
being used by the military, as in this case, public interest demands that
the present suit should not be sustained.
It must be emphasized that an individual cannot be deprived of his
property for the public convenience. 22 In Association of Small
Landowners in the Philippines, Inc. vs. Secretary of Agrarian
Reform, 23 we ruled:
"One of the basic principles of the democratic system is that
where the rights of the individual are concerned, the end does
not justify the means. It is not enough that there be a valid
objective; it is also necessary that the means employed to
pursue it be in keeping with the Constitution. Mere expediency
will not excuse constitutional shortcuts. There is no question
that not even the strongest moral conviction or the most urgent
public need, subject only to a few notable exceptions, will
excuse the bypassing of an individual's rights. It is no
exaggeration to say that a person invoking a right guaranteed
under Article III of the Constitution is a majority of one even
as against the rest of the nation who would deny him that
right.
The right covers the person's life, his liberty and his property
under Section 1 of Article III of the Constitution. With regard
to his property, the owner enjoys the added protection of
Section 9, which reaffirms the familiar rule that private
property shall not be taken for public use without just
compensation."
The Republic's 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 Institute's
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 people's
right, will not stand still in the face of the Republic's 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] . . . 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
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CONSTITUTIONAL LAW 2 |
a case, even if respondent's title was registered first, it would be the
Republic's 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 owner's absolute
right over his property pending completion of the expropriation
proceeding, thus:
"It is only upon the completion of these two stages that
expropriation is said to have been completed. Moreover, it is
only upon payment of just compensation that title over the
property passes to the government. Therefore, until the action
for expropriation has been completed and terminated,
ownership over the property being expropriated remains with
the registered owner. Consequently, the latter can exercise all
rights pertaining to an owner,including the right to dispose of
his property subject to the power of the State ultimately to
acquire it through expropriation.
It bears emphasis that when Valdehueza and Panerio mortgaged Lot
932 to respondent in 1964, they were still the owners thereof and their
title had not yet passed to the petitioner Republic. In fact, it never did.
Such title or ownership was rendered conclusive when we
categorically ruled in Valdehueza that: "It is true that plaintiffs are
still the registered owners of the land, there not having been a transfer
of said lots in favor of the Government."
For respondent's part, it is reasonable to conclude that he entered into
the contract of mortgage with Valdehueza and Panerio fully aware of
the extent of his right as a mortgagee. A mortgage is merely an
accessory contract intended to secure the performance of the principal
obligation. One of its characteristics is that it is inseparable from the
property. It adheres to the property regardless of who its owner may
subsequently be. 25 Respondent must have known that even if Lot
932 is ultimately expropriated by the Republic, still, his right as a
mortgagee is protected. In this regard, Article 2127 of the Civil Code
provides:
"Art. 2127. The mortgage extends to the natural accessions, to
the improvements, growing fruits, and the rents or income not
yet received when the obligation becomes due, and to the
amount of the indemnity granted or owing to the proprietor
from the insurers of the property mortgaged, or in virtue of
expropriation for public use, with the declarations,
amplifications, and limitations established by law, whether the
estate remains in the possession of the mortgagor or it passes
in the hands of a third person.
In summation, while the prevailing doctrine is that "the non-payment
of just compensation does not entitle the private landowner to recover
possession of the expropriated lots, 26 however, in cases where the
government failed to pay just compensation within five (5) 27 years
from the finality of the judgment in the expropriation proceedings, the
owners concerned shall have the right to recover possession of their
property. This is in consonance with the principle that "the
government cannot keep the property and dishonor the
judgment." 28 To be sure, the five-year period limitation will
encourage the government to pay just compensation punctually. This
is in keeping with justice and equity. After all, it is the duty of the
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CONSTITUTIONAL LAW 2 |
government, whenever it takes property from private persons against
their will, to facilitate the payment of just compensation.
In Cosculluela v. Court of Appeals, 29 we defined just compensation
as not only the correct determination of the amount to be paid to the
property owner but also the payment of the property within
a reasonable time. Without prompt payment, compensation cannot be
considered "just."
WHEREFORE, the assailed Decision of the Court of Appeals in CA-
G.R. CV No. 72915 is AFFIRMED in toto.
The Republic's motion for reconsideration of our Resolution dated
March 1, 2004 is DENIED with FINALITY. No further pleadings will
be allowed.
Let an entry of judgment be made in this case.
SO ORDERED.
||| (Republic v. Lim, G.R. No. 161656, [June 29, 2005], 500 PHIL 652-
672)
[G.R. No. 139495. November 27, 2000.]
MACTAN-CEBU INTERNATIONAL AIRPORT
AUTHORITY (MCIAA), petitioner, vs. THE HON.
COURT OF APPEALS and VIRGINIA
CHIONGBIAN, respondents.
The Solicitor General for petitioner.
Chiu Tangete & Gabumpa Law Office for private respondent.
SYNOPSIS
Subject of the action is Lot 941, adjoining the then Lahug Airport,
registered in the name of Mactan-Cebu International Airport Authority
(MCIAA). Said lot was expropriated by the Republic of the
Philippines in 1961, through Civil Case No. R-1881, for the expansion
and improvement of Lahug, Airport. Later, the assets of the Lahug
Airport, including Lot 941 were transferred to MCIAA. Lahug
Airport, however, was closed and Chiongbian filed a case for
reconveyance alleging that she was given the right of repurchase once
the land is longer needed for the airport. The trial court ruled in favor
of Chiongbian and the same was affirmed by the Court of Appeals.
Chiongbian cannot repurchase Lot 941. The terms of the judgment in
Civil Case No. R-1881 are clear and unequivocal and grant title to Lot
941 in fee simple to the Republic of the Philippines. There was no
condition imposed to the effect 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. Indeed, to allow the
alleged compromise agreement of reconveyance which was
supposedly made prior to the rendition of judgment on the
expropriation case is to modify said judgment that has long become
final and executory.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; RULES OF ADMISSIBILITY;
DOCUMENTARY EVIDENCE; PAROL EVIDENCE RULE; NOT
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CONSTITUTIONAL LAW 2 |
APPLICABLE TO A JUDGMENT OF THE COURT. — Evidence
reveals that Lot No. 941 was appropriated by the Republic of the
Philippines through expropriation proceedings in Civil Case No. R-
1881. . . . The terms of the judgment [therein] 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
Appeals 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. . . [The parol evidence rule] 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.
2. CIVIL LAW; CONTRACTS; UNENFORCEABLE CONTRACTS;
INADMISSIBLE TESTIMONIES UNDER THE STATUTE OF
FRAUDS TO PROVE EXISTENCE OF ALLEGED SALE. — 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. . . .
MCIAA objected to the purpose for which the testimonies of
CHIONGBIAN and 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 PASTRANA was offered, i.e. to
prove the existence of the alleged written agreement and an alleged
deed of sale, on the same ground. Consequently, the testimonies of
these witnesses are inadmissible under the Statute of Frauds to prove
the existence of the alleged sale.
3. REMEDIAL LAW; EVIDENCE; RULES OF ADMISSIBILITY;
TESTIMONIAL EVIDENCE; HEARSAY RULE. — [E]vidence 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.
4. POLITICAL LAW; EMINENT DOMAIN; EXPROPRIATION;
WHEN PROPER. — [E]xpropriation 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.
5. CIVIL LAW; CONTRACTS; COMPROMISE AGREEMENT;
JUDICIAL COMPROMISE. — [A] compromise is a contract
whereby the parties, by making reciprocal concessions, avoid
litigation or put an end to one already commenced. Essentially. it 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. A judicial compromise has the
force of law and is conclusive between the parties and it is not valid
and binding on a party who did not sign the same. Since
CHIONGBIAN was not a party to the compromise agreements, she
cannot legally invoke the same.
DECISION
GONZAGA-REYES, Jp:
This Petition for Review on Certiorari seeks the reversal of the
Decision of the Court of Appeals 1 in CA G.R. CV No. 56495 entitled
"Virginia Chiongbian vs. Mactan-Cebu International Airport
Authority" which affirmed the Decision of the Regional Trial
Court, 2 7th Judicial Region, Branch 24, Cebu City.
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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 NAC's 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 Escaño, Inc. and Ma. Atega Vda. de Deen,
appealed the decision to the Court of Appeals under CA-G.R.
No. 33045-R, 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
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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-in-interest. 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 COURT'S JUDGMENT THAT THERE WAS A
REPURCHASE AGREEMENT AND IGNORING
PETITIONER'S PROTESTATIONS THAT ADMISSION OF
RESPONDENT'S 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.
THE COURT OF APPEALS ERRED IN HOLDING THAT
THE MODIFIED JUDGMENT IN CA-GR 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
P34,415.00." 6
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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, CHIONGBIAN's 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 Appeals. 7 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 Escaño, et. al. vs. Republic 8 proves the existence of
the repurchase agreement. MCIAA claims that although the parties in
said case were CHIONGBIAN's 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 CHIONGBIAN's benefit who was no
longer a party thereto or to the compromise agreement which Escaño
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 CHIONGBIAN's
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.
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 CHIONGBIAN's claim that the Verification
and Certification against forum shopping accompanying MCIAA's
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
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CONSTITUTIONAL LAW 2 |
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 Cabanatuan, 11 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. DCATHS
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
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 Escaño, Inc., with legal interest from November 16,
1947 until fully paid; . . . Lot No. 941-P34,415.00 in favor of
Virginia Chiongbian, with legal interest from November 16,
1947 until fully paid; . . .
3. After the payment of the foregoing financial obligation to
the landowners, directing the latter to deliver to the plaintiff
the corresponding Transfer Certificate of Title to their
representative lots; and upon the presentation of the said titles
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CONSTITUTIONAL LAW 2 |
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 (Italics 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 Appeals 14 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
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CONSTITUTIONAL LAW 2 |
have entered into with the Republic of the Philippines prior to the "ATTY. DUBLIN (To Witness)
rendition of judgment in the expropriation case would result in a
modification of the judgment of a court which has long become final Q: Mrs. Chiongbian, you said a while ago that there was an
and executory. assurance by the government to return this property to
you in case Lahug Airport will be no longer used, is that
And even assuming for the sake of argument that CHIONGBIAN correct?
could prove the existence of the alleged written agreement
acknowledging her right to repurchase Lot No. 941 through parol WITNESS:
evidence, the Court of Appeals erred in holding that the evidence
presented by CHIONGBIAN was admissible. A: Yes, sir. That is true.

Under 1403 of the Civil Code, a contract for the sale of real property ATTY. DUBLIN: (To witness)
shall be unenforceable unless the same, or some note or memorandum
thereof, be in writing, and subscribed by the party charged, or by his Q: Can you recall when was this verbal assurance made?
agent;evidence, therefore of the agreement cannot be received without
the writing or a secondary evidence of its contents. A: I cannot remember anymore.

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 Berceder 17 (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, CHIONGBIAN's and BERCEDE's 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:
Q: You cannot also remember the year in which the alleged
assurance was made?
A: I cannot also remember because I'm 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?

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A: In my previous residence in Mabolo.
DEPOSITION OFFICER:
The assurance was made in my previous residence at Mabolo.
WITNESS:
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
A: Yes, sir.
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?
A: Yes, sir. 20
CHIONGBIAN's 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.
BERCEDE's 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.
PASTRANA's testimony does little to help CHIONGBIAN's cause.
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
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CONSTITUTIONAL LAW 2 |
MCIAA to reconvey Lot No. 941 to her since she has no cause of SO ORDERED.
action against MCIAA.
||| (Mactan-Cebu International Airport Authority v. Court of Appeals,
Finally, CHIONGBIAN cannot invoke the modified judgment of the G.R. No. 139495, [November 27, 2000], 399 PHIL 695-712)
Court of Appeals in the case of Republic of the Philippines
vs. Escaño, et. al. 24 where her co-defendants, Mamerto Escaño, 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 [G.R. No. 137152. January 29, 2001.]
even assuming that CHIONGBIAN was a party to the appeal, she was
not a party to the compromise agreements entered into by her co- CITY OF MANDALUYONG, petitioner, vs. ANTONIO N.,
defendants. A compromise is a contract whereby the parties, by FRANCISCO N., THELMA N., EUSEBIO N., RODOLFO
making reciprocal concessions, avoid litigation or put an end to one N., all surnamed AGUILAR, respondents.
already commenced. 25 Essentially, it is a contract perfected by mere
consent, the latter being manifested by the meeting of the offer and the Jimmy D. Lacebal for petitioner.
acceptance upon the thing and the cause which are to constitute the
contract. 26 A judicial compromise has the force of law and is
Ricardo J. M. Rivera Law Office for private respondents.
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
SYNOPSIS
party to the compromise agreements, she cannot legally invoke the
same.
Respondents Antonio, Francisco, Thelma, Eusebio and Rodolfo, all
surnamed Aguilar, were the registered owners of three adjoining parcels
of land with an aggregate area of 1,847 square meters located at 9 de
Febrero Street, Brgy. Mauwag, City of Mandaluyong. Several decades
ACCORDINGLY, the Decision of the Court of Appeals is hereby
ago, on a portion of the said lots, respondents constructed residential
REVERSED and SET ASIDE. The complaint of Virginia Chiongbian
houses which they leased out to tenants and on the vacant portion, other
against the Mactan-Cebu International Airport Authority for
families also constructed residential structures which they likewise
reconveyance of Lot No. 941 is DISMISSED.
occupied. In 1983, those lots were classified by the Board of the
Housing and Urban Development Coordinating Counsel as an area for
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CONSTITUTIONAL LAW 2 |
priority development for urban land reform under Proclamation Nos.
1967 and 2284. As a result, the tenants and occupants of the said lots
offered to purchase those lots from respondents but the latter refused.
On November 7, 1996, the Sangguniang Panglungsod of the City of
Mandaluyong authorized Mayor Benjamin Abalos through a resolution
to initiate action for the expropriation of the subject lots and the
construction of a medium-rise condominium for qualified occupants
therein. On January 10, 1996, Mayor Abalos sent a letter to respondents
offering to purchase the said lots, but the latter did not answer. Thus,
Mayor Abalos filed a complaint for expropriation before the Regional
Trial Court, Branch 168 of Pasig City. In their answer, respondents
alleged that the expropriation of their land is arbitrary and capricious
and is not for public purpose. Moreover, the subject lots are their only
real property and are too small for expropriation. On November 5, 1997,
petitioner filed an Amended Complaint. It reduced the area sought to be
expropriated to two parcels of land only totalling 1,636 square meters.
At the preliminary hearing, Antonio Aguilar testified and presented
documentary evidence to support their claims while petitioner did not
present any evidence. On September 17, 1997, the trial court dismissed
the Amended Complaint. Hence, this petition.
The Court ruled that 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.
Eusebio Aguilar's share was 347 square meters under TCT No. 13853,
while Virginia Aguilar's was 89 square meters under TCT No. 13854.
Eusebio died on March 23, 1995, and, according to Antonio's testimony,
the former was survived by five (5) children. 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 co-owners of
the property together with those who survive. After Eusebio died; his
five heirs became co-owners of his 347 square-meter portion. Dividing
the 347 square meters among the five would entitle 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. Finally, the Court noted 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.
Petition was DISMISSED.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; PRESIDENTIAL DECREE
NO. 1517 (URBAN LAND REFORM ACT); OPTIMUM USE OF
LAND AS A NATIONAL RESOURCE FOR PUBLIC WELFARE. —
Presidential Decree (P.D.) No. 1517, theUrban 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. 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.
2. ID.; REPUBLIC ACT NO. 7279 (URBAN DEVELOPMENT
HOUSING ACT OF 1992); PURPOSE. — 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 privileged 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
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development process and improve the capability of local government
units in undertaking urban development and housing programs and
projects.
3. ID.; ID.; PROCEDURE FOR ACQUISITION OF LAND FOR
SOCIALIZED HOUSING. — 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, identifylands for
socialized housing and resettlements 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.
4. ID.; ID.; PRIORITIES IN THE ACQUISITION OF LAND FOR
SOCIALIZED HOUSING. — Lands for socialized housing are to be
acquired in the following order: (1) government lands; (2) alienable
lands of public domain; (3) unregistered or abandoned or idle 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.
5. ID.; ID.; MODES OF LAND ACQUISITION. — 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 or expropriation is subject to
two conditions: (a) it shall be resorted to only when the other modes of
acquisition have been exhausted; and (b) parcels of land owned by small
property owners are exempt from such acquisition.
6. ID.; ID.; ACQUISITION OF THE LANDS IN THE PRIORITY LIST
MUST BE MADE SUBJECT TO THE MODES AND CONDITIONS
AS REQUIRED THEREOF. — 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 hierarchy 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,
lands 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.
7. ID.; ID.; EXPROPRIATION SHALL BE RESORTED TO WHEN
OTHER MODES OF ACQUISITION HAVE BEEN EXHAUSTED;
NOT COMPLIED IN CASE AT BAR. — 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. 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. 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.
8. ID.; ID.; PARCELS OF LAND OWNED BY SMALL-PROPERTY
OWNERS ARE EXEMPTED FROM EXPROPRIATION. — 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
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CONSTITUTIONAL LAW 2 |
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 Lina
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."
9. ID.; ID.; "SMALL-PROPERTY OWNERS"; DEFINED. — "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.
10. CIVIL LAW; PROPERTY; CO-OWNERSHIP; NO INDIVIDUAL
CAN CLAIM TITLE TO ANY DEFINITE PORTION OF
COMMUNITY PROPERTY UNTIL THE PARTITION THEREOF. —
Under a co-ownership, the ownership of an undivided thing or right
belongs to different persons. During 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.
11. ID.; ID.; ID.; CO-OWNER IS FREE TO ALIENATE; ASSIGN OR
MORTGAGE HIS UNDIVIDED INTEREST IN THE COMMON
PROPERTY. — 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." 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. He may also
validly lease his undivided interest to a third party independently of the
other co-owners. The effect of any such transfer is limited to the portion
which may be awarded to him upon the partition of the property. Article
493 therefore gives the owner of an undivided interest in the property
the right to freely sell and dispose of his undivided interest. 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. 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.
12. ID.; ID.; ID.; PARTITION WAS NECESSARY INCIDENT OF CO-
OWNERSHIP AND PRESUMED TO HAVE BEEN DONE IN GOOD
FAITH; CASE AT BAR. — In the instant case, the titles to the subject
lots were issued in respondents' names as co-owners in 1997 — ten (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 even been attached by his creditors. 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. 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." The partition was merely a necessary incident of the co-
ownership; and absent any evidence to the contrary, this partition is
presumed to have been done in good faith.
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CONSTITUTIONAL LAW 2 |
13. LABOR AND SOCIAL LEGISLATION; REPUBLIC ACT NO.
7279 (URBAN DEVELOPMENT AND HOUSING ACT OF 1992);
"SMALL-PROPERTY OWNER"; SHARE OF EACH CO-OWNER OF
THE PROPERTY SOUGHT TO BE EXPROPRIATED DID NOT
EXCEED THE 300 SQUARE METER LIMIT; CASE AT BAR. —
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. Eusebio Aguilar's share was 347
square meters under TCT No. 13853 while Virginia Aguilar's was 89
square meters under TCT No. 13854. 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 the 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 annotations;
" . . . subject to . . . 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." Eusebio died on March 23, 1995, and, according to Antonio's
testimony, the former was survived by five (5) children. 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 co-
owners of the property together with those who survive. After Eusebio
died, his five heirs became co-owners of his 347 square meters 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.
14. ID.; ID.; ID.; PROPERTY OWNERS DO NOT APPEAR TO OWN
REAL PROPERTY OTHER THAN THE LOTS SUBJECT OF
EXPROPRIATION; PRESENT IN THE CASE AT BAR. — 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. 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 respondent or any one of them. Petitioner did not present any
little 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 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. 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; Quezon
City; Makati City; Pasay City; Parañaque; Caloocan City; Pasig City;
Muntinlupa; Marikina and the then municipality of Las Piñas and the
municipality of San Juan del Monte as having no real property
registered for taxation in their individual names.
15. ID.; ID.; MODES OF LAND ACQUISITION; EXPROPRIATION;
PUBLIC PURPOSE WAS NEGATED BY EVICTION OF TENANTS
AND OTHER OCCUPANTS FROM THE LAND IN QUESTION. —
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.
DECISION
PUNO, J p:
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 City 1 dismissing the
petitioner's Amended Complaint in SCA No. 1427 for expropriation of
two (2) parcels of land in Mandaluyong City.
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CONSTITUTIONAL LAW 2 |
The antecedent facts are as follows:
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"
adopting their "Answer with Counterclaim" and "Motion for
Preliminary Hearing" as their answer to the Amended Complaint. 6
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 September 17, 1998, the trial court issued an order dismissing the
Amended Complaint after declaring respondents as "small property
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CONSTITUTIONAL LAW 2 |
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 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:
"SECTION 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;
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CONSTITUTIONAL LAW 2 |
(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; and (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 hierarchy in their
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CONSTITUTIONAL LAW 2 |
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. 17As 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
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
Lina 23 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. 26 This 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 . . . (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
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CONSTITUTIONAL LAW 2 |
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. 32 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, 1998 35 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:
"ARTICLE 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
172
CONSTITUTIONAL LAW 2 |
interest to a third party independently of the other co-owners. 41 The
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 1987—ten (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.
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
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 . . . , 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 co-
owners of the property together with those who survive. 56 After
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
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CONSTITUTIONAL LAW 2 |
ancestral home in Paco, Manila and the land on which it stands are
owned by respondents or any one 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;61 Makati City;62 Pasay City;63 Parañaque;64 Caloocan
City;65 Pasig City;66 Muntinlupa; 67 Marikina;68 and the then
municipality of Las Piñas 69 and the municipality of San Juan del
Monte 70 as having no real property registered for taxation in their
individual names.
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
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.
||| (City of Mandaluyong v. Aguilar, G.R. No. 137152, [January 29,
2001], 403 PHIL 404-428)
[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.
Renato G. Dela Cruz & Associates for petitioners.
SYNOPSIS
Petitioners' lots were ordered expropriated in favor of the NHA for the
public purpose of expansion of the Dasmariñas Resettlement Project
to accommodate the squatters relocated from the Metropolitan Manila
area. The NHA, however, had failed to relocate the squatters on the
expropriated lands and had not fully paid petitioners the just
compensation fixed by the court. Hence, petitioners prayed for the
forfeiture of NHA's rights under the expropriation judgment.
The Court found the petition not impressed with merit. Public purpose
was not abandoned by failure to relocate the squatters to the
expropriated lands. The low-cost housing project of the NHA on the
subject lots to be sold to qualified low income beneficiaries is not a
deviation from public purpose; it is in furtherance of social justice.
Further, non-payment of just compensation is not a ground to recover
possession of the expropriated lots. At any rate, petitioners are entitled
to the full payment of the just compensation with legal interest of 12%
per annum computed from the taking of the property until full
payment.
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CONSTITUTIONAL LAW 2 |
SYLLABUS
1. POLITICAL LAW; INHERENT POWERS OF THE STATE;
EMINENT DOMAIN; TAKING OF PRIVATE PROPERTY FOR
PUBLIC USE; NOT DEVIATED BY HAVING LOW COST
HOUSING PROJECT. — 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."
Thus, in Heirs of Juancho Ardona, et al. vs. Reyes, et al., it was
specified that . . . It is accurate to state then that at present whatever
may be beneficially employed for the general welfare satisfies the
requirement of public use." The Constitutionitself 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. 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.
2. ID.; ID.; ID.; ID.; "TAKING" THEREOF IS ABSOLUTE. — We
likewise do not subscribe to petitioners' contention that the stated
public purpose was abandoned when respondent NHA failed to
occupy the expropriated lots by relocating squatters from the Metro
Manila area. The expropriation judgment declared that respondent
NHA has a lawful right to take petitioners properties "for the public
use or purpose of expanding the Dasmariñas Resettlement Project."
The taking here is absolute, without any condition, restriction or
qualification. Contrary to petitioners' submission, the ruling
enunciated in the early case of Fery vs. Municipality of Cabanatuan,
is still good and sound doctrine, viz.: ". . . 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."
3. ID.; ID.; ID.; ID.; ALTHOUGH NON-PAYMENT OF JUST
COMPENSATION DOES NOT ENTITLE THE LANDOWNERS TO
RECOVER POSSESSION OF THE EXPROPRIATED LOTS,
PAYMENT THEREOF IS NECESSARY FOR TITLE TO PASS
FROM THE OWNER TO THE EXPROPRIATOR. — In the recent
case of Republic of the Philippines vs. Court of Appeals, et al., the
Court ruled that non-payment of just compensation does not entitle the
private landowners to recover possession of their expropriated lots.
However, 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, is 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 Republic, et al.
vs. Court of Appeals, et al., 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. 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.
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CONSTITUTIONAL LAW 2 |
DECISION
PUNO, J p:
This is an appeal by certiorari from the decision of the Court of
Appeals in CA-GR CV No. 51641, dated September 29,
2000 1 affirming the judgment of the Regional Trial Court of Quezon
City, Branch 79 which dismissed the complaint for forfeiture of rights
filed by herein petitioners, as well as the Resolution dated March 13,
2001 denying petitioners' motion for reconsideration.
Records show that in 1977, respondent National Housing Authority
(NHA) filed separate complaints for the expropriation of sugarcane
lands, particularly Lot Nos. 6450, 6448-E, 6198-A and 6199 of the
cadastral survey of Dasmariñas, Cavite belonging to the petitioners,
before the then Court of First Instance of Cavite, and docketed as
Civil Case Nos. T.G.-392, T.G.-396 and T.G.-417. The stated public
purpose of the expropriation was the expansion of the Dasmariñas
Resettlement Project to accommodate the squatters who were
relocated from the Metropolitan Manila area. The trial court rendered
judgment ordering the expropriation of these lots and the payment of
just compensation. This was affirmed by the Supreme Court in a
decision rendered on October 29, 1987 in the case of NHA
vs. Zaballero 2 and which became final on November 26, 1987. 3
On February 24, 1989, the expropriation court (now Branch 18,
Regional Trial Court of Tagaytay City) issued an Order 4 the
dispositive portion of which reads: HEDCAS
"WHEREFORE, and resolving thus, let an Alias Writ of
Execution be immediately issued and that:
(1) The Register of Deeds of the Province of Cavite is
hereby ordered to transfer, in the name of the plaintiff
National Housing Authority, the following:
(a) Transfer Certificate No. RT-638 containing an
area of 79,167 square meters situated in Barrio
Bangkal, Dasmariñas, Cavite;
(b) Transfer Certificate of Title No. T-55702
containing an area of 20,872 square meters
situated in Barrio Bangkal, Dasmariñas, Cavite;
(c) Transfer Certificate of Title No. RT-639 and RT-
4641 covering Lot Nos. 6198-A and 6199 with
an aggregate area of 159,985 square meters also
situated in Barrio Bangkal, Dasmariñas, Cavite.
(2) Plaintiff National Housing Authority is likewise
hereby ordered, under pain of contempt, to
immediately pay the defendants, the amounts stated in
the Writ of Execution as the adjudicated compensation
of their expropriated properties, which process was
received by it according to the records, on September
26, 1988, segregating therefrom, and in separate check,
the lawyer's fees in favor of Atty. Bobby P. Yuseco, in
the amount of P322,123.05, as sustained by their
contract as gleaned from the records, with no other
deduction, paying on its own (NHA) account, the
necessary legal expenses incident to the registration or
issuance of new certificates of title, pursuant to the
provisions of the Property Registration Law (PD
1529);
(3) Defendants, however, are directed to pay the
corresponding capital gains tax on the subject
properties, directing them additionally, to coordinate
with the plaintiff NHA in this regard, in order to
facilitate the termination of this case, put an end to this
controversy and consign the same to its final rest."
176
CONSTITUTIONAL LAW 2 |
For the alleged failure of respondent NHA to comply with the above
order, petitioners filed on April 28, 1992 a complaint 5 for forfeiture
of rights before the Regional Trial Court of Quezon City, Branch 79,
in Civil Case No. Q-92-12093. They alleged that respondent NHA had
not relocated squatters from the Metropolitan Manila area on the
expropriated lands in violation of the stated public purpose for
expropriation and had not paid the just compensation fixed by the
court. They prayed that respondent NHA be enjoined from disposing
and alienating the expropriated properties and that judgment be
rendered forfeiting all its rights and interests under the expropriation
judgment. In its Answer, 6 respondent NHA averred that it had already
paid a substantial amount to herein petitioners and that the
expropriation judgment could not be executed in view of several
issues raised by respondent NHA before the expropriation court (now
Branch 18, RTC, Tagaytay City) concerning capital gains tax,
registration fees and other expenses for the transfer of title to
respondent NHA, as well as the claims for attorney's fees of Atty.
Joaquin Yuseco, Jr., collaborating counsel for petitioners.
Ocular inspections 7 conducted by the trial court on the subject
properties show that:
"1. 80% of Lot No. 6198-A with an area of 120,146 square
meters is already occupied by relocatees whose houses
are made of light materials with very few houses partly
made of hollow blocks. The relocatees were relocated
only on (sic) March of 1994;
2. Most of the area covered by Lot No. 2075 is almost
occupied by houses and structures, most of which are
made of concrete materials. These houses are not being
occupied by squatters relocated to the said lot by the
defendant NHA;
3. Lot No. 6199 is also occupied by concrete houses and
structures but likewise there are no relocatees in said lot.
A large area of the same is still unoccupied."
On September 29, 1995, the trial court rendered judgment dismissing
the complaint. Finding that the failure of respondent NHA to pay just
compensation and of petitioners to pay capital gains tax are both
unjustified and unreasonable, the trial court held that: (1) respondent
NHA is not deemed to have abandoned the public purpose for which
the subject properties were expropriated because the relocation of
squatters involves a long and tedious process. It ruled that respondent
NHA actually pursued the public purpose of the expropriation when it
entered into a contract with Arceo C. Cruz involving the construction
of low cost housing on the expropriated lots to be sold to qualified
low income beneficiaries; (2) there is no condition imposed in the
expropriation judgment that the subject properties shall revert back to
its original owners in case the purpose of expropriation is terminated
or abandoned; (3) the payment of just compensation is independent of
the obligation of herein petitioners to pay capital gains tax; and (4) in
the payment of just compensation, the basis should be the value at the
time the property was taken. On appeal, the Court of Appeals affirmed
the decision of the trial court.
Petitioners are now before us raising the following assignment of
errors:
"1. The Honorable Court of Appeals had decided a question of
substance not in accord with justice and equity when it
ruled that, as the judgment of the expropriation court did
not contain a condition that should the expropriated
property be not used for the intended purpose it would
revert to the condemnee, the action to declare the
forfeiture of rights under the expropriation judgment can
not prosper;
2. The Honorable Court of Appeals decided a question of
substance not in accord with jurisprudence, justice and
177
CONSTITUTIONAL LAW 2 |
equity when it ruled that the non-payment is not a ground
for forfeiture;
3. The Honorable Court of Appeals erred in not declaring the
judgment of expropriation forfeited in light of the failure
of respondent to use the expropriated property for the
intended purpose but for a totally different purpose."
The petition is not impressed with merit.
Petitioners contend that respondent NHA violated the stated public
purpose for the expansion of the Dasmariñas Resettlement Project
when it failed to relocate the squatters from the Metro Manila area, as
borne out by the ocular inspection conducted by the trial court which
showed that most of the expropriated properties remain unoccupied.
Petitioners likewise question the public nature of the use by
respondent NHA when it entered into a contract for the construction
of low cost housing units, which is allegedly different from the stated
public purpose in the expropriation proceedings. Hence, it is claimed
that respondent NHA has forfeited its rights and interests by virtue of
the expropriation judgment and the expropriated properties should
now be returned to herein petitioners. We are not persuaded.
The 1987 Constitution explicitly provides for the exercise of the
power of eminent domain over private properties upon payment of
just compensation. More specifically, Section 9, Article III states that
private property shall not be taken for public use without just
compensation. The constitutional restraints are public use and just
compensation.
Petitioners cannot insist on a restrictive view of the eminent domain
provision of the Constitution by contending that the contract for low
cost housing is a deviation from the stated public use. It is now settled
doctrine that the concept of public use is no longer limited to
traditional purposes. Here, as elsewhere, the idea that "public use" is
strictly limited to clear cases of "use by the public" has been
abandoned. The term "public use" has now been held to be
synonymous with "public interest," "public benefit," "public welfare,"
and "public convenience." 8 The rationale for this new approach is
well explained in the case of Heirs of Juancho Ardona, et
al. vs. Reyes, et a1., 9 to wit:
"The restrictive view of public use may be appropriate for a
nation which circumscribes the scope of government activities
and public concerns and which possesses big and correctly
located public lands that obviate the need to take private
property for public purposes. Neither circumstance applies to
the Philippines. We have never been a laissez faire State. And
the necessities which impel the exertion of sovereign power
are all too often found in areas of scarce public land or limited
government resources.
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." (italics
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
178
CONSTITUTIONAL LAW 2 |
cannot be taken to mean as a deviation from the stated public purpose
of their taking. Jurisprudence has it that the expropriation of private
land for slum clearance and urban development is for a public purpose
even if the developed area is later sold to private homeowners,
commercials firms, entertainment and service companies, and other
private concerns. 10
Moreover, the Constitution itself allows the State to undertake, for the
common good and in cooperation with the private sector, a continuing
program of urban land reform and housing which will make at
affordable cost decent housing and basic services to underprivileged
and homeless citizens in urban centers and resettlement areas. 11 The
expropriation of private property for the purpose of socialized housing
for the marginalized sector is in furtherance of the social justice
provision under Section 1, Article XIII of the Constitution which
provides that:
"SECTION 1. The Congress shall give highest priority to the
enactment of measures that protect and enhance the right of all
the people to human dignity, reduce social, economic, and
political inequalities, and remove cultural inequities by
equitably diffusing wealth and political power for the common
good.
To this end, the State shall require the acquisition, ownership,
use and disposition of property and its increments."
It follows that the low cost housing project of respondent NHA on the
expropriated lots is compliant with the "public use" requirement.
We likewise do not subscribe to petitioners' contention that the stated
public purpose was abandoned when respondent NHA failed to
occupy the expropriated lots by relocating squatters from the Metro
Manila area. The expropriation judgment declared that respondent
NHA has a lawful right to take petitioners properties "for the public
use or purpose of expanding the Dasmariñas Resettlement Project."
The taking here is absolute, without any condition, restriction or
qualification. Contrary to petitioners' submission, the ruling
enunciated in the early case of Fery vs. Municipality of
Cabanatuan, 12 is still good and sound doctrine, viz.:
". . . 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,
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 . . . .
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
179
CONSTITUTIONAL LAW 2 |
termination of the expropriation proceedings, this Court ruled
— prescription on grounds of non-execution. In arguing for the
'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. .
. . . 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
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." (italics 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.
. . . Although the right to appropriate and use land taken for a
canal is complete at the time of entry, title to the property
180
CONSTITUTIONAL LAW 2 |
taken remains in the owner until payment is actually
made. HDTSIE
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.'"
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. . . . ." (italics 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.
. . . 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."
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CONSTITUTIONAL LAW 2 |
Records show that there is an outstanding balance of P1,218,574.35
that ought to be paid to petitioners. 16 It is not disputed that
respondent NHA took actual possession of the expropriated properties
in 1977. 17 Perforce, while petitioners are not entitled to the return of
the expropriated property, they are entitled to be paid the balance of
P1,218,574.35 with legal interest thereon at 12% per annum computed
from the taking of the property in 1977 until the due amount shall
have been fully paid.
WHEREFORE, the appealed judgment is modified as follows:
1. Ordering respondent National Housing Authority to pay
petitioners the amount of P1,218,574.35 with legal
interest thereon at 12% per annum computed from the
taking of the expropriated properties in 1997 until the
amount due shall have been fully paid;
2. Ordering petitioners to pay the capital gains tax; and
3. Ordering petitioners to surrender to respondent National
Housing Authority the owners' duplicate certificates of
title of the expropriated properties upon full payment
of just compensation.
SO ORDERED.
||| (Reyes v. National Housing Authority, G.R. No. 147511, [January
20, 2003], 443 PHIL 603-617)
[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.
The Solicitor General for plaintiff-appellee.
M.M. Lazaro & Associates for petitioners.
Arturo S. Santos for respondent A. Guerrero.
SYNOPSIS
Declaring Alfredo Guerrero the rightful owner of a 920-square meter
expropriated property, the Pasay City Regional Trial Court ordered
payment to him of just compensation for the taking of the land. The
Court of Appeals affirmed this decision. Hence, this action, petitioner
spouses Milagros and Inocentes De La Rama claiming that when they
agreed to sell a parcel of land in 1988 to Guerrero, it did not include
the portion expropriated by the Republic. According to said spouses,
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.
It is only upon payment of just compensation that title over the
property passes to the government. Until then, 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 to ultimately acquire it through expropriation.
The government filed a petition for the determination of just
compensation in 1990. At that point, title to the expropriated property
remained with the De la Ramas and did not pass to the government.
Thus, in 1988, the De la Ramas still had authority to transfer
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CONSTITUTIONAL LAW 2 |
ownership of their land and convey all rights, including the right to
receive just compensation, to Guerrero.
The contention of the De la Ramas that the Deed of Absolute Sale
excluded the portion expropriated by the government is untenable.
Guerrero bought the entire property free from all claims of third
persons except those of the government.
SYLLABUS
1. CONSTITUTIONAL LAW; POWER OF EMINENT DOMAIN;
INHERENT POWERS OF STATE; LIMITATION. — 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."
2. ID.; ID.; HOW INITIATED. — Expropriation may be initiated by
court action or by legislation. In both instances, just compensation is
determined by the courts.
3. ID.; ID.; STAGES. — The expropriation of lands consists of two
stages. As explained in Municipality of Biñan v. Garcia: 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. Therefore, until the action for expropriation has
been completed and terminated, ownership over the property being
expropriated remains with the registered owner.
4. ID.; ID.; ID.; ID.; ID.; CASE AT BAR. — 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. 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 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.
5. CIVIL LAW; PROPERTY; OWNERSHIP; WHAT CONSTITUTES
EFFECTIVE CONVEYANCE THEREOF. — 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.
6. ID.; OBLIGATION AND CONTRACTS; SUBROGATION;
EFFECTS THEREOF. — 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. Pursuant thereto, and by virtue of
subrogation, the latter became the rightful owner entitled to receive
the just compensation from the Republic.
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CONSTITUTIONAL LAW 2 |
7. ID.; HUMAN RELATIONS; UNJUST ENRICHMENT; CASE AT
BAR. — 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.
8. REMEDIAL LAW; CIVIL PROCEDURE; FINAL AND
EXECUTORY JUDGMENT CAN NO LONGER BE QUESTIONED.
— 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.
DECISION
MENDOZA, J p:
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
decision 1 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. 16913.
On December 14, 1988, or five years thereafter, Milagros and
Inocentes De la Rama entered into a contract 2 with intervenor
Alfredo Guerrero whereby the De la Ramas agreed to sell to 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, 1988 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
184
CONSTITUTIONAL LAW 2 |
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
Motion 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
order 9 (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 13 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 metes 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 execution 17 was issued by
the Pasay City RTC, and as a result of which, a deed of absolute
sale 18 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.
185
CONSTITUTIONAL LAW 2 |
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, Escolta Branch with the check
solely payable to said Uniland Realty and Development
Corporation, as assignee of Alfredo Guerrero. 21
This decision was subsequently affirmed by the Court of Appeals. 22
Hence, this petition.
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 P11,800,000.00 STIPULATED
186
CONSTITUTIONAL LAW 2 |
IN THE CONTRACT TO SELL OF 14 DECEMBER
1988. 23
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 property itself was
already outside the commerce of man. As a matter of fact, the
property was already part of a Government infrastructure. 24
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.
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 Biñan 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. .
.
187
CONSTITUTIONAL LAW 2 |
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. 28Therefore, until the action for expropriation has been
completed and terminated, ownership over the property being
expropriated remains with the registered owner. Consequently, the
latter can exercise all rights pertaining to an owner, including the right
to dispose of his property, subject to the power of the State ultimately
to acquire it through expropriation.
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 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.
-and-
ALFREDO 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.
WITNESSETH:
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.
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CONSTITUTIONAL LAW 2 |
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 TWO 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;
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CONSTITUTIONAL LAW 2 |
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
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 "17"; 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
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CONSTITUTIONAL LAW 2 |
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.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. 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. 33
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. 34Pursuant 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. (Italics 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
191
CONSTITUTIONAL LAW 2 |
rule is . . . that the right to enter upon 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 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.
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
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CONSTITUTIONAL LAW 2 |
payable by the defendants to the plaintiff therefore stands at a ||| (Republic v. Salem Investment Corp., G.R. No. 137569, [June 23,
total of P1,383,000.00. Offsetting this amount from the 2000], 389 PHIL 658-676)
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 P2,200.00 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
[G.R. No. 143643. June 27, 2003.]
Petitioners can no longer question a judgment which has already
become final and executory. The order of the Regional Trial Court on NATIONAL POWER CORPORATION, petitioner, vs. SPS.
the payment of legal interest was issued on September 18, 1991 in the JOSE C. CAMPOS, JR. and MA. CLARA LOPEZ-
case for specific performance against the De la Ramas (Civil Case No. CAMPOS, respondents.
6974-P). Hence, they are already barred from questioning it now in
this proceeding. The Solicitor General for petitioner.

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 Appeals is AFFIRMED.
Law Firm of R.V. Domingo & Associates for respondents.
SYNOPSIS
Petitioner in this case claimed that under Article 620 of the Civil
Code, it had already acquired by prescription the easement of right-of-
way over the portion of the subject property where its wooden electric
posts and transmission lines were erected.

SO ORDERED. On appeal, the Supreme Court affirmed the decision of the CA and the
RTC which ordered the petitioner to pay, among others, actual, moral
and nominal damages to the respondents' spouses, for having violated
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CONSTITUTIONAL LAW 2 |
or invaded the latter's property. The Court also held: that petitioner's
possession of that portion of subject property where it erected the
wooden posts and transmission lines was merely upon the tolerance of
the respondents-owners, thus, it will not create an easement of right-
of-way by prescription. Neither can petitioner invoke Section 34 (i) of
Rep. Act. No. 6395, as amended. The five-year period provided
thereunder, within which all claims for compensation and damages,
should be reckoned from the time that it acquired title over the private
property on which the right-of-way is sought to be established. Prior
thereto, respondent's right to file an action for the claims for
compensation and/or damages does not even commence to run.
SYLLABUS
1. CIVIL LAW; CIVIL CODE; PROPERTY; PRESCRIPTION, AS A
MODE OF ACQUIRING OWNERSHIP; CASE AT BAR. —
Prescription as a mode of acquisition under Article 620 of the Civil
Code 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. Acquisitive prescription may either be ordinary, in
which case the possession must be in good faith and with just title, 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. . . . In this case, the
records clearly reveal that the petitioner's 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.
2. ID.; ID.; ID.; ID.; POSSESSION OF PROPERTY BY MERE
TOLERANCE OF THE OWNER WILL NOT CREATE AN
EASEMENT OF RIGHT-OF-WAY BY PRESCRIPTION; CASE AT
BAR. — 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-of-way is sought to be established. Prior thereto,
the claims for compensation and/or damages do not prescribe. . . . 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 petitioner's
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.
3. ID.; ID.; ID.; DAMAGES AWARDED FOR VIOLATION OF
PROPERTY RIGHT; CASE AT BAR. — 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. Similarly, the court may award nominal
damages in every case where any property right has been invaded.
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 attorney's fees as
part of damages is deemed just and equitable considering that by the
petitioner's unjustified acts, the respondents were obviously compelled
to litigate and incur expenses to protect their interests over the subject
property.
DECISION
CALLEJO, SR., J p:
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CONSTITUTIONAL LAW 2 |
This is a petition for review of the Decision 1 dated June 16, 2000 of
the Court of Appeals in CA-G.R. CV No. 54265. The assailed
decision affirmed in toto the Decision 2 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, Dasmariñas, 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
The complaint likewise alleged that some time in 1994, the
petitioner's 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 petitioner's 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 petitioner's 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 petitioner's Quezon City
office. The respondents did not hear from "Mr. Raz" or any one from
the petitioner's office since then. Sometime in July or August of 1995,
the petitioner's 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 petitioner's 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 petitioner's
allegations, there were other more suitable or appropriate sites for the
petitioner's 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 latter's acquisition of a right-of-way
on the subject property. 6
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CONSTITUTIONAL LAW 2 |
Finally, the complaint alleged that unaware of the petitioner's 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 1970's, 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 attorney's 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 petitioner's 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 petitioner's
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, Dasmariñas, Cavite, consisting of
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CONSTITUTIONAL LAW 2 |
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 wife's 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 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
defendant's 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, defendant's agents
refused to do so. So, they were ordered out of the vicinity.
Plaintiffs stressed that defendant's 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' above-described property to be
used as right-of-way for the all-steel transmission line tower of
the Calaca-Dasmariñas 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
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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 latter's 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 NPC's 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, NPC's 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, NPC's 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-
Dasmariñas 230 KV T/L Project. Such acts constitute a
deprivation of one's 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
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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
plaintiff's 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 attorney's fees; and
(e) Costs of suit in the amount of P11,239.00.
SO ORDERED. 10
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
petitioner's Charter, Republic Act No. 6395, as amended, is not
applicable to the case. The CA likewise gave scant consideration to
the petitioner's 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 Dasmariñas, Cavite. Moreover, the parties in the two
actions are not the same since the respondents were no longer
included as defendants in the petitioner's 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, attorney's 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.
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CONSTITUTIONAL LAW 2 |
The petition is bereft of merit.
The petitioner's 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 petitioner's 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. Benedicto 15 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 plaintiff's 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
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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 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 dueño), 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 dueño, 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 petitioner's 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.
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CONSTITUTIONAL LAW 2 |
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 Court's ruling in Lopez vs. Auditor General 17 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 owner's
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 owner's action to collect the price must be brought within
ten years otherwise it would be barred by the statute 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-of-way 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
NPC's 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 petitioner's
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,
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CONSTITUTIONAL LAW 2 |
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, attorney's fees and costs of litigation.
It follows from Section 31(c) of R.A. 6395 that the award
moral and nominal damages, as well as attorney's 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 petitioner's contention that the respondents are not entitled to
moral and nominal damages and attorney's fees must fail. In affixing
the award for moral and nominal damages and attorney's 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
quo's 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 ongoing 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. NPC's
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
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CONSTITUTIONAL LAW 2 |
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 NPC's 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 attorney's 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 ongoing 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. NPC's
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 attorney's fees as part of damages is deemed just
and equitable considering that by the petitioner's 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.
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CONSTITUTIONAL LAW 2 |
SO ORDERED.

||| (National Power Corp. v. Spouses Campos, Jr., G.R. No. 143643,
[June 27, 2003], 453 PHIL 79-97)

205