PEOPLE VS. FERRER [48 SCRA 382; NOS.

L-32613-14; 27 DEC 1972]

Monday, February 09, 2009 Posted by Coffeeholic Writes

Labels: Case Digests, Political Law

Facts: Hon. Judge Simeon Ferrer is the Tarlac trial court judge that declared RA1700 or the Anti-
Subversive Act of 1957 as a bill of attainder. Thus, dismissing the information of subversion against the
following: 1.) Feliciano Co for being an officer/leader of the Communist Party of the Philippines (CPP)
aggravated by circumstances of contempt and insult to public officers, subversion by a band and aid of
armed men to afford impunity. 2.) Nilo Tayag and 5 others, for being members/leaders of the NPA,
inciting, instigating people to unite and overthrow the Philippine Government. Attended by Aggravating
Circumstances of Aid or Armed Men, Craft, and Fraud. The trial court is of opinion that 1.) The Congress
usurped the powers of the judge 2.) Assumed judicial magistracy by pronouncing the guilt of the CPP
without any forms of safeguard of a judicial trial. 3.) It created a presumption of organizational guilt by
being members of the CPP regardless of voluntariness.

The Anti Subversive Act of 1957 was approved 20June1957. It is an act to outlaw the CPP and similar
associations penalizing membership therein, and for other purposes. It defined the Communist Party
being although a political party is in fact an organized conspiracy to overthrow the Government, not only
by force and violence but also by deceit, subversion and other illegal means. It declares that the CPP is a
clear and present danger to the security of the Philippines. Section 4 provided that affiliation with full
knowledge of the illegal acts of the CPP is punishable. Section 5 states that due investigation by a
designated prosecutor by the Secretary of Justice be made prior to filing of information in court. Section 6
provides for penalty for furnishing false evidence. Section 7 provides for 2 witnesses in open court for
acts penalized by prision mayor to death. Section 8 allows the renunciation of membership to the CCP
through writing under oath. Section 9 declares the constitutionality of the statute and its valid exercise
under freedom if thought, assembly and association.

Issues:

(1) Whether or not RA1700 is a bill of attainder/ ex post facto law.

(2) Whether or Not RA1700 violates freedom of expression.

Held: The court holds the VALIDITY Of the Anti-Subversion Act of 1957.

A bill of attainder is solely a legislative act. It punishes without the benefit of the trial. It is the substitution
of judicial determination to a legislative determination of guilt. In order for a statute be measured as a bill
of attainder, the following requisites must be present: 1.) The statute specifies persons, groups. 2.) the
statute is applied retroactively and reach past conduct. (A bill of attainder relatively is also an ex post
facto law.)

In the case at bar, the statute simply declares the CPP as an organized conspiracy for the overthrow of
the Government for purposes of example of SECTION 4 of the Act. The Act applies not only to the CPP
but also to other organizations having the same purpose and their successors. The Act’s focus is on the
conduct not person.

Membership to this organizations, to be UNLAWFUL, it must be shown that membership was acquired
with the intent to further the goals of the organization by overt acts. This is the element of MEMBERSHIP
with KNOWLEDGE that is punishable. This is the required proof of a member’s direct participation. Why is
membership punished. Membership renders aid and encouragement to the organization. Membership
makes himself party to its unlawful acts.

Furthermore, the statute is PROSPECTIVE in nature. Section 4 prohibits acts committed after approval of
the act. The members of the subversive organizations before the passing of this Act is given an
opportunity to escape liability by renouncing membership in accordance with Section 8. The statute
applies the principle of mutatis mutandis or that the necessary changes having been made.

The declaration of that the CPP is an organized conspiracy to overthrow the Philippine Government
should not be the basis of guilt. This declaration is only a basis of Section 4 of the Act. The EXISTENCE
OF SUBSTANTIVE EVIL justifies the limitation to the exercise of “Freedom of Expression and
Association” in this matter. Before the enactment of the statute and statements in the preamble, careful
investigations by the Congress were done. The court further stresses that whatever interest in freedom of
speech and association is excluded in the prohibition of membership in the CPP are weak considering
NATIONAL SECURITY and PRESERVATION of DEMOCRACY.

The court set basic guidelines to be observed in the prosecution under RA1700. In addition to proving
circumstances/ evidences of subversion, the following elements must also be established:

1. Subversive Organizations besides the CPP, it must be proven that the organization purpose is to
overthrow the present Government of the Philippines and establish a domination of a FOREIGN POWER.
Membership is willfully and knowingly done by overt acts.
2. In case of CPP, the continued pursuance of its subversive purpose. Membership is willfully and
knowingly done by overt acts.

The court did not make any judgment on the crimes of the accused under the Act. The Supreme Court set
aside the resolution of the TRIAL COURT.

Article Summary by:WritingNow360 Original Author: Supreme Court of the Philippines

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Alliance of Government Workers v Minister of Labor and Employment, 124 SCRA 1 (1983)

F: Petitioner is a federation of unions in govt-owned corps. and in govt schools. It petitioned the SC for a
ruling that PD 851, requiring "all employers... to pay their employees receiving a basic salary of not more
than P1,000 a month... a 13th month pay," applies to govt employees
HELD: NO. It is an old rule of statutory construction that restrictive statutes and acts w/c impose
burdens on the public treasury or w/c diminish rights and interests, no matter how broad their terms do
not embrace the Sovereign, unless the Sovereign is specifically mentioned. The Republic of the Phil. as a
sovereign cannot be covered by a general term like "employer" unless the language used in the law is
clear and specific to that effect.

ISSUE 2: May government employees act through a labor federation which uses the collective bargaining
power to secure increased compensation for its members?

HELD: NO. The terms and conditions of employment in the Govern¬ment including any political
subdivision or instrumentality thereof are governed by law. And this is effected through stat¬utes or
administrative circulars, rules and regulations and not through Collective Bargaining agreements.
Under the present constitution, (1973), GOCC's are now part of the civil service, thus, not allowed to use
concerted activi¬ties to get other benefits or higher salaries different from that provided by law and
regulation For more case digests and law school notes visit lizajamarga.com

Source: http://www.shvoong.com/law-and-politics/law/1831448-case-digest-alliance-government-
workers/#ixzz2KlfQ0Pcu

SSS Employee Asso. v CA 175 SCRA 686 (July 28, 1989)

Facts: The petitioners went on strike after the SSS failed to act upon the union’s demands concerning
the implementation of their CBA. SSS filed before the court action for damages with prayer for writ of
preliminary injunction against petitioners for staging an illegal strike. The court issued a temporary
restraining order pending the resolution of the application for preliminary injunction while petitioners
filed a motion to dismiss alleging the court’s lack of jurisdiction over the subject matter. Petitioners
contend that the court made reversible error in taking cognizance on the subject matter since the
jurisdiction lies on the DOLE or the National Labor Relations Commission as the case involves a labor
dispute. The SSS contends on one hand that the petitioners are covered by the Civil Service laws, rules
and regulation thus have no right to strike. They are not covered by the NLRC or DOLE therefore the
court may enjoin the petitioners from striking.

Issue: Whether or not SSS employers have the right to strike

Whether or not the CA erred in taking jurisdiction over the subject matter.

Held: The Constitutional provisions enshrined on Human Rights and Social Justice provides guarantee
among workers with the right to organize and conduct peaceful concerted activities such as strikes. On
one hand, Section 14 of E.O No. 180 provides that “the Civil Service law and rules governing concerted
activities and strikes in the government service shall be observed,

subject to any legislation that may be enacted by Congress” referring to Memorandum Circular No. 6, s.
1987 of the Civil Service Commission which states that “prior to the enactment by Congress of
applicable laws concerning strike by government employees enjoins under pain of administrative
sanctions, all government officers and employees from staging strikes, demonstrations, mass leaves,
walk-outs and other forms of mass action which will result in temporary stoppage or disruption of public
service.” Therefore in the absence of any legislation allowing govt. employees to strike they are
prohibited from doing so.

In Sec. 1 of E.O. No. 180 the employees in the civil service are denominated as “government

employees” and that the SSS is one such government-controlled corporation with an original charter,
having been created under R.A. No. 1161, its employees are part of the civil service and are covered by
the Civil Service Commission’s memorandum prohibiting strikes.

Neither the DOLE nor the NLRC has jurisdiction over the subject matter but instead it is the Public Sector
Labor-Management Council which is not granted by law authority to issue writ of injunction in labor
disputes within its jurisdiction thus the resort of SSS before the general court for the issuance of a writ
of injunction to enjoin the strike is appropriate

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 89980 December 14, 1992

B. H. BERKENKOTTER & CO., though its President GEORGE E. BERKENKOTTER,

petitioner,
vs.
COURT OF APPEALS and THE REPUBLIC OF THE PHILIPPINES, respondents.

CRUZ, J.:

The sole issue for resolution in this case is the just compensation to be paid for a parcel
of land sought to be expropriated for the use of the Apolinario R. Apacible School of
Fisheries, a government institution, in Nasugbu, Batangas.
The property has an area of 10,640 square meters and belongs to B. H. Berkenkotter &
Co., the herein petitioner. On June 18, 1982, Vicente Viray, president of the said school,
sent the owner a written offer to buy the land in line with the 5-year expansion program
of ARASOF. In reply, Berkenkotter expressed its willingness to sell at P50.00 per
square meter payable in cash. At Viray's request, the Provincial Appraisal Committee,
Office of the Provincial Assessor, Batangas City, appraised the land and fixed its market
value at P32.00 per square meter. Viray then wrote Berkenkotter another letter and
offered to buy the property at the said price. The latter stuck to its original valuation;
later it said that the property had in fact appreciated to as much as P100.00 per square
meter. Further negotiations failed to resolve the impasse between ARASOF and the
petitioner. In the end, expropriation proceedings were commenced against the petitioner
by the Republic of the Philippines on behalf of ARASOF.

In its complaint dated October 28, 1983, the Republic invoked the assessment made by
the Provincial Appraisal Committee at P32.00 per square meter and sought possession
of the property upon payment of the 10% deposit required by P.D. 48. Berkenkotter
originally questioned the purpose of the expropriation but later abandoned this objection
and concentrated only on what it called the under-appraisal of the subject land. On
March 21, 1985, the Regional Trial Court of Batangas issued an order of condemnation
and, pursuant to Rule 67, Section 5, of the Rules of Court, appointed a panel of
commissioners to determine the just compensation to be paid for the land . 1

Just compensation is defined as the full and fair equivalent of the property sought to be
expropriated. 2 The measure is not the taker's gain but the owner's loss. 3 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 benefits which may arise from
the expropriation. 4 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. 5

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 6 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. The price agreed upon
in these cases would not represent the market value of the property.

Among the factors to be considered in arriving at the fair marker 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. 7
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. 8

On September 23, 1985, the panel of commissioners submitted its report to the trial
court and recommended that the property be appraised at the unit price of P85.00. The
Republic objected and pointed to three contracts of sale the petitioner had concluded in
1985 whereby it sold three tracts of land similar in topography and adjacent to the
property in question for the unit price of only P19.18. The trial court directed the
commissioners to convene anew and receive additional evidence. It did and conducted
more interviews. In its second report dated April 1, 1987, however, the panel reiterated
its original recommendation for the valuation of the property at P85.00 per square
meter.

Acting on this recommendation, Judge Roseo L. Venturanza rendered judgment

affirming the right of the plaintiff to expropriate the subject land upon payment to the
owner of just compensation at the rate of P85.00 per square meter, for a total of
P904,400.00. 9

This decision was elevated to and reversed by the Court of Appeals. 10 The respondent
court noted that the three contracts of sale concluded in 1985 were practically
disregarded by the trial court. Justice Jose A. R. Melo, now a member of this Court,
observed that the lands covered by these deeds, which were adjacent to the subject
property, were voluntarily sold by Berkenkotter for the price of only P19.18 per square
meter. Moreover, the panel of commissioners relied only "on opinions and conclusions
which were patently hearsay and gratuitous. Not a single document was submitted to
support their recommended compensation of P85.00."

Accordingly, the respondent court set aside the compensation fixed by the trial court
and ordered that the subject property be paid for at the rate of P19.18 per square meter,
or a total of P204,075.20, including the amount already deposited by the Republic when
it took possession of the land.

The present petition challenges the decision of the Court of Appeals on the following
grounds:

1. The value of the subject property is more than P19.18 —

(a) Resolution No. 2-83 (Exh. "4"), which was passed by

the Provincial Appraisal Committee, Office of the
Provincial Assessor, Batangas City on April 4, 1983,
provides THAT THE PREVAILING MARKET VALUE OF
COMPARATIVE PROPERTIES IN THE LOCALITY
WAS THIRTY-TWO PESOS (P32.00) PER SQUARE
METER.
 (b) Respondent REPUBLIC — through Mr. VICENTE
VIRAY, Superintendent of Apolinario R. Apacible School
of Fisheries — OFFERED TO PAY PETITIONER
THIRTY TWO PESOS (P32.00) PER SQUARE METER
for the subject property (Exh. "D").

(c) In the APPRAISAL REPORT OF G. AMBROSIO,

INC., (Exh. "A"), the fair market value of the subject
property was assessed at NINETY-FIVE PESOS
(P95.00) per square meter, considering the various
circumstances as testified to by its representative, Mr.
Ernesto Ambrosio.

(d) MR. JAIME PIMENTEL, Administrator of Roxas y

Compania in Nasugbu, Batangas, which company owns
land within the vicinity of ARASOF, testified that lots
surrounding the property subject of these expropriation
proceedings are being sold at FOUR HUNDRED
(P400.00) to FIVE HUNDRED (P500.00) PESOS PER
SQUARE METER.

(e) MR. JUSTINO LIM, who is engaged in the selling of

the lots right across the property being expropriated,
testified that the very same properties which were the
subject of the Deeds of Sale (properties sold by
petitioner at P19.18) presented by respondent Republic
were being sold for TWO HUNDRED PESOS PER
SQUARE METER.

2. The Deeds of Sale are not reliable for purposes of determining just compensation as
the registrants tend to undervalue the cost of property to lower the expenses they would
have to pay for the documents.

3. To disregard the report of the panel of commissioner would be to violate due process.

4. No proof was presented to show that the petitioner undervalued the sale of its
properties so that it should not be penalized in these expropriation proceedings.

This is our ruling.

We do not agree that the commissioners' report was without sufficient basis as it was in
fact made only after extensive interviews with persons who, although not necessarily
experts, were nonetheless familiar with land values in the vicinity of the property sought
to be expropriated. There was also an ocular inspection of the subject land, to give the
panel a better idea of its real value. It is also not correct to say that the petitioner did not
submit any documentary evidence to support its claim. The record shows that there
was, among others, the appraisal report made by the reputable realty firm of G.
Ambrosio, Inc., which Ambrosio himself explained at the trial. 11

Even so, the report and recommendations of the panel of commissioners were not
conclusive upon the trial court, which had the right and discretion to arrive at its own
assessment of the land. The findings of the commissioners were at best only advisory
and persuasive and by no means final or binding. As the Court held in the case of
Republic v. Santos: 12

According to Section 8 of Rule 67, the Court is not bound by the commissioners' report. It
may make such order or render such judgement as shall secure to the plaintiff the
property essential to the exercise of his right of condemnation, and to the defendant just
compensation for the property expropriated. This Court may substitute its own estimate of
the value as gathered from the record.

What mystifies the Court is why, if the property was really worth P85.00 per square
meter in 1985, the petitioner agreed to sell its other lands, of the same topography as
the land in dispute and separated therefrom by only a road, at only P19.18 per square
meter. The sales it made in favor of three different purchasers, and for the said uniform
rate, are embodied in the following evidence submitted by the Republic as:

Exhibit "1" Deed of Sale dated July 18, 1985 between B. H. Berkenkotter and Co., Inc.,
as vendor, and Andrea Rodriguez Ilao, et al., as vendees. The property sold for
P140,885.76 is covered by TCT 26382 with an area of 7,344 square meters.

Exhibit "2" Deed of Sale dated July 18, 1985 between B. H. Berkenkotter and Co., Inc.,
as vendors, and Andrea Rodriguez Ilao, et al., as vendees. The property sold for
P107,102.60, is covered by TCT 26383 with an area of 5,583 square meters.

Exhibit "3" Deed of Sales dated July 18, 1985 between B. H. Berkenkotter and Co., Inc.,
and vendor, and Andrea Rodriguez Ilao, as vendee. The property, sold for P152,011.64
is covered by TCT 26384 with an area of 7,924 square meters.

There is no showing that the petitioner had any special reason for granting each of the
individual vendees the extraordinary discount amounting to as much as 75% of its
claimed real value of the land. To all appearances, they were ordinary buyers and
probably even land investors or speculators who did not deserve any particular
generosity of bounty form the petitioner. Given this far from extraordinary situation, we
find it difficult to understand why the petitioner, while insisting that the 10,640 square
meters under expropriation had a unit price of P85.00, agreed to sell as many as 7,344
square meters of similar land to the first private buyer, 5,583 square meters to the
second, and 7,924 square meters to the third, and all for only P19.18 per square meter.

The price demanded by the petitioner from the Republic of the Philippines is more than
4 times the price it willingly accepted from the private vendees. It is also noteworthy that
the individual buyers bought the land for their own private purposes only and not for the
public purpose invoked by the Republic and admitted by the petitioner itself. And no less
importantly, the petitioner has not even made any efforts to differentiate the subject
property from the lands sold at the lower rate, to justify the increase in its price by more
than 300%.

The petitioner seek to explain its curious conduct by claiming that it had liquidity
problems and needed cash when it entered into the three contracts of sale. If it really
was in that predicament, it is strange that it did not even bother to withdraw, as it had a
right to do so, the 10% deposit made by the Republic when it took possession of the
subject property in 1985. As strangely, it also did not accept the government's standing
offer, made as early as 1983, to buy the 10,640 square meters subject of the complaint
at P32.00 per square meters, for a total price of P340,480.00. This would not only have
relieved its financial difficulties but could also have avoided the expense and
inconvenience of litigation that up to now have delayed its recovery of the cost of its
property. Also, acceptance of the offer would have been a better deal than selling
20,851 square meters for only P400,000.00 from which, let it be stressed, the capital
gains tax and other expenses of documentation and registration would still have to be
deducted.

The petitioner now submits that the consideration mentioned in deeds of sale is not a
reliable index of just compensation because the parties "tend to undervalue the cost of
the property to lower the expenses they would have to pay for the documents." The
expenses presumably refer to the cost of the documentary stamps for the registration of
the property and the capital gains tax to be paid by the vendor to the government. The
suggestion is revealing. There is practically an admission here that the parties to the
three transactions did not indicate the real consideration therefor so they could evade
the legitimate taxes and fees that were due the government on the basis of the correct
purchase price.

If this was the purpose of the petitioner when it executed Exhibits 1, 2 and 3, then it is
surely hoist now by its own petard. And rightly so, for it cannot be allowed to profit from
its own deception and claim that the subject property should be assessed at the higher
rate it clandestinely agreed upon with the buyers. That is assuming the worst. But even
on the assumption that the petitioner comported itself with all propriety and rectitude
and did not falsify the consideration for the sales, the result would still be the same.
Such a posture would signify that it seriously believed the fair price for its property to be
only P19.18 per square meter, and not any lower or higher than that, whoever the
purchaser might be.

The Court is disappointed that the petitioner should demand a higher price for the
Republic, which needs the lands for a public purpose, when it was willing to accept less
from the three individual buyers who had only their private interests to serve. But this is
not only a matter of civic spirit. We recognize that the basic issue is the hard-nosed
business of tit for tat. Civic altruism aside, the simple fact is that, whatever its motive,
the petitioner cannot now assert that its property is worth P85.00 per square meter as
far as the Republic is concerned although, by its own voluntary act, it sold similar
property to private individuals for only P19.18 per square meter. There is no satisfactory
explanation for this incredible discrimination. The Republic should not pay more simply
because it is the Republic, as if it were a milking cow with unlimited resource to abuse.

It may be asked why the petitioner should not be paid at the rate at least of P32.00,
which was the price offered by Viray and in the complaint for expropriation later filled by
the Republic. The Republic had no choice then because P.D. 1533 fixed the just
compensation at the valuation given by the owner of the government, whichever was
lower. The price determined by the Provincial Appraisal Committee was lower. True, the
decree has since been declared unconstitutional in Export Processing Zone Authority v.
Dulay. 13 Even so, the fact is that the petitioner rejected that offer and has up to now
been insisting on its own unit price of P85.00.

We agree with the respondent court that by selling its lands in the three deed of sale
indicated as Exhibits 1, 2 and 3, at the uniform rate of P19.18 per square meter, the
petitioner thereby impliedly admitted that the lands subject of the expropriation
proceeding, being of the same topography and virtually in the same location is the said
other lands, should also be valued at the same rate. This rule of inconsistency is best
expressed in the familiar saying, surely not unknown to the petitioner, that what is sauce
for the goose is also sauce for the gander.

WHEREFORE, the petition is DENIED, and it is hereby affirmed that the just
compensation for the subject land should be computed at the rated of P19.18 per
square meter. Costs against the petitioner.

SO ORDERED.

Padilla, Griño-Aquino and Bellosillo, JJ., concur.

Footnotes

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 71176 May 21, 1990

REPUBLIC OF THE PHILIPPINES (Ministry of Education and Culture), petitioner,

vs.
INTERMEDIATE APPELLATE COURT and AMEREX ELECTRONICS, PHILS.
CORPORATION, respondents.

Siguion Reyna, Montecillo and Ongsiako for private respondents.

FERNAN, C.J.:

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

Inasmuch as the alleged negotiation did not materialize, on June 3, 1974, Avegon Inc.
sold the property and its improvements to Amerex Electronics, Phils. Corporation
(Amerex for brevity) for P1,800,000. Thereafter, Transfer Certificates of Title Nos.
115571, 115572, 115573 and 115574 were issued in favor of Amerex.

On August 29, 1975, the Solicitor General filed for the Department of Education and
Culture (DEC) a complaint against Amerex for the expropriation of said property before
the Court of First Instance of Manila (Civil Case No. 99190). The complaint stated that
the property was needed by the government as a permanent site for the Manuel de la
Fuente High School (later renamed Don Mariano Marcos Memorial High School); that
the fair market value of the property had been declared by Amerex as P2,435,000, and
that the assessor had determined its market value as P2,432,042 and assessed it for
taxation purposes in the amount of P1,303,470. 1

In a motion praying that the plaintiff be authorized to take immediate possession of the
property, the then Acting Solicitor General Hugo E. Gutierrez, Jr., invoking Presidential
Decree No. 42, informed the court that said assessed value of the property for taxation
purposes had been deposited with the Philippine National Bank (PNB) in Escolta,
Manila on September 30, 1975.

Consequently, on October 9, 1975, the court issued an order directing the sheriff to
place the plaintiff in possession of the property. The plaintiff took actual possession
thereof on October 13, 1975.

Amerex filed a motion to dismiss the complaint stating that while it was not contesting
the merits of the complaint, the same failed to categorically state the amount of just
compensation for the property. It therefore prayed that in consonance with P.D. No.
794, the just compensation be fixed at P2,432,042, the market value of the property
determined by the assessor which was lower than Amerex's own declaration.

The motion to dismiss was opposed by the plaintiff reasoning that while indeed the
market value as determined by the assessor was lower than that declared by Amerex,
the plaintiff intended to present evidence of a much lower market value.

Alleging that its motion to dismiss merely sought a clarification on the just compensation
for the property, Amerex filed a motion to withdraw the plaintiffs deposit of P1,303,470
with the PNB without prejudice to its entitlement to the amount of P1,128,572, the
balance of the just compensation of P2,432,042 insisted upon. The plaintiff interposed
no objection to the motion provided that an order of condemnation be issued by the
court and that the plaintiff be allowed to present its evidence on the matter of just
compensation.

On December 3, 1975, the lower court issued an order vesting the plaintiff with the
lawful light to take the property upon payment of just compensation as provided by law.
On December 19, 1975, after the parties had submitted the names of their respective
recommendees to the appraisal committee, the lower court appointed Atty. Narciso
Peña, Aurelio V. Aquino and Atty. Higinio Sunico as commissioners.

Thereafter, the lower court ordered Amerex to submit an audited financial statement on
the acquisition cost of the property including expenses for its improvement. Amerex was
also allowed by the court, after it had filed a second motion therefor, to withdraw the
P1,303,470 deposit with the PNB.

On March 12, 1976, the plaintiff filed a motion for leave of court to amend its complaint
stating that after it had filed the same, P.D. No. 464 2 was amended by P.D. No. 794;
that Section 92 of said Code, as amended, provided that when private property is
acquired for public use, its just compensation "shall not exceed the market value
declared by the owner or administrator or anyone having legal interest in the property,
or such market value as determined by the assessor, whichever is lower"; and that the
amended complaint would state that the fair market value of the property could not be in
excess of P1,800,000, the amount for which defendant's predecessor-in-interest had
offered to sell said properties to the Division of Public Schools of Manila and which
amount was also the purchase price paid by Amerex to Avegon Inc. In due course,
plaintiff filed an amended complaint.

Amerex, however, opposed the motion for leave to amend the complaint contending
that the plaintiff was insisting on a valuation given by neither the owner nor the assessor
as mandated by P.D. No. 794 but by another person in August 1973 when the peso
value was much higher.

The lower court denied the motion to amend the complaint; but after the plaintiff had
filed a motion for reconsideration, the lower court admitted the amended complaint on
April 27, 1976. In the meantime, Amerex submitted to the court "audited financial
statements' consisting of an account stating that the cost of its land and buildings was
P2,107,479.48, and another account stating that it incurred total expenses of P150,539
for their maintenance. 3 These statements yielded the amount of P2,258,018.48 as the
total value of the property.

The commissioners conducted an ocular inspection and hearing on the value of the
property. On October 18, 1976, the plaintiff filed a motion seeking the disqualification of
Engineer Aurelio B. Aquino as commissioner on the ground that he could not be
expected to be unbiased inasmuch as in the three appraisal reports submitted by
Amerex, Aquino had indicated as fair market value of the property amounts much more
than the plaintiffs fair market value determination of P1,800,000. Said appraisal reports
were made by Ampil Realty and Appraisal Co., Inc. with Aquino signing thereon as real
estate appraiser. One report, dated February 15, 1974 and submitted to Commonwealth
Insurance Company indicated P2,100,000 as the fair market value of the property. 4
Two other reports were made at the behest of Amerex with one, dated November 15,
1974, fixing the fair market value at P2,300,000 5, and the other, dated June 5, 1975,
with P2,400,000 as the fair market value. 6

Amerex opposed the motion to disqualify Aquino as commissioner, and the court, in its
order of November 5, 1976, denied it. Hence, on January 24, 1977, the commissioners
submitted their appraisal report finding that the fair market value of the property was
P2,763,400. The commissioners, however added:

Under the provision of Presidential Decree No. 464, as amended by Presidential Decree
No. 794, abovequoted, we could have safely adopted the valuation of the City Assessor
in the sum of P2,432,042.00, this being lower than that declared by the owner in the sum
of P2,435,000.00, although by actual appraisal of the undersigned Commissioners the
property could command a fair market value of P2,763,400.00 as of the date of our ocular
inspection.

Considering, however, that according to the audited statement submitted by defendant,

the acquisition costs and other legal expenses incurred on the subject property by
AMEREX, the grand total of P2,258,018.57, are (sic) lower than the findings of the
undersigned Commissioners, the explanation being the fact that the price of the sale was
a real bargain possibly due to dire necessities of the seller Avegon, it is respectfully
submitted that the said sum of P2,258,018.57 be adopted for purposes of determining
just compensation payable to defendant AMEREX, which sum does not exceed, but is
even lower than, the fair market value was determined by the City Assessor and as
7
declared by said defendant.

Both parties objected to the report of the commissioners. The plaintiff contended that
the commissioners' conclusion that the fair market value of the property was P2,763,400
was unsupported by evidence and that their recommended just compensation of
P2,258,018.57 was excessive. It reiterated its stand that the just compensation should
only be P1,800,000 it being the price had the sale between the city school board and
Avegon Inc. materialized and also the actual price of the sale between Avegon Inc. and
Amerex. On the other hand, Amerex averred that the recommended just compensation
was unjustified in view of the commissioners' finding that the fair market value of the
property was P2,763,400.

On March 15, 1977, the lower court 8 rendered a decision based on the following
findings:

The court believes that the findings of the commissioners are supported by the evidence
adduced during the hearings and that their recommendation is reasonable. The property
was originaly owned by Avegon Inc. and was assessed at P1,079,370.00 by the City of
Manila for the year 1974 (Exh. A-4). Avegon Inc. offered to sell it to the City School Board
on July 21, 1973 at P2,300,000.00 but it accepted the counter-offer of P1,800,000. The
negotiations, however, fell through when the city failed to act (Exhs. C, C-1, C-2, C-3 and
C-4). The property was appraised on February 15, 1974 at P2,100,000.00 at the Instance
of Commonwealth Insurance Company, an affiliate of Warner, Barnes & Co., Inc. (Exh.
G). The defendant company introduced improvements on the property in the middle part
of 1974 worth P260,690.50 (Exhs. 4, 4-A to 4-J; 11, 13, 14 to 19). After the renovation,
 the property was again appraised at the instance of the defendant at P2,300,000.00 on
November 15, 1974 (Exh. 2). Due to the world-wide recession, there followed a slump in
the demand for electronic products. On June 4, 1975, the Traders Commodities
Corporation offered to buy the property at P2,750,000.00 with a deposit of P50,000.00 as
earnest money. The offer was formally made by the law firm Salonga, Ordoñez, Yap,
Africano and Associates (Exch. 6). The offer was accepted on June 9, 1975 (Exhs. 7 and
8). The sale was not consummated, however, when the government notified the
defendant in a conference held in Malacanang on June 15, 1975 that it wanted to buy the
property for the use of the Manuel de la Fuente High School (Exh. 9). Because of the
failure of the parties to agree on the price and other conditions of the purchase, the
government filed this action on August 2, 1975.

It is apparent that the commissioners were influenced by the fact that the city assessors
fixed the market value of the property at P2,432,042.00 for the year 1975 pursuant to
Presidential Decree No. 464 and that there was a perfected contract to buy it at
P2,750,000.00. No evidence was presented nor even an allegation made, to show that
the government valuation is fraudulent or erroneous. It must therefore be regular (Rule
131, sec. m) and in view of the reliance of the Presidential Decree upon it as a standard
to be followed by the courts in arriving at the just compensation of the property when it is
acquired by the government, it has great evidentiary weight. The offer to buy at
P2,750,000.00 was made by one of the most reputable law firms in the country. It is not
likely that it would have lent itself to any fraudulent device or scheme to inflate the value
of the property. Commissioner Peña is a renowned authority on land registration, and has
been a realtor for many years. Atty. Higinio Sunico is the chief of the Land Management
Division, Bureau of Lands, who was recommended by the plaintiff. Both are well-known
for their probability Although it appears that Mr. Aquino, the commissioner recommended
by the defendant, had occasion in the past to participate in transactions involving the
same property, the court believes that the concurrence of the other commissioners is a
safe guaranty of the correctness of their appraisal and recommendation.

Accordingly, the dispositive portion of the decision reads as follows:

WHEREFORE, judgment is hereby rendered funding the amount of P2,258.018.57 as

just compensation for the property of the defendant and declaring the plaintiff entitled to
possess and approximate it to the public use alleged in the complaint and to retain it
upon payment of the said amount, after deducting the amount of P1,303,470.00, with
legal interest from October 13, 1975 when the plaintiff was placed in possession of the
real property, and upon payment to each of the commissioners of the sum of P35.00 for
their attendance during the hearings held on January 23, February 16, May 11, July 23,
September 17, October 12 and December 10, 1976, plus P500.00 each for the
preparation of the report, and the costs.

The plaintiff elevated the case to the then Intermediate Appellate Court (IAC) for review.
On October 29, 1984, it affirmed the appealed decision with the modification that the
plaintiff Republic of the Philippines be exempted from the payment of the
commissioners' fees, the P500.00 granted each of them for the preparation of the report
and the costs.

Its motion for the reconsideration of said decision having been denied, petitioner filed
the instant petition submitting the following issues for resolution:
 1. Whether or not respondent Court erred in not disqualifying
Commissioner Aurelio B. Aquino from membership in the Committee of
Appraisal.

2. Whether or not respondent Court erred in not totally disregarding the

audited statement by the defendant, which is hearsay in nature and was
not formally offered in evidence.

3. Whether or not respondent Court erred in totally disregarding

petitioner's evidence showing that the award of just compensation should
be only P1,800,000.00 and not P2,258.018.57 as awarded by said
respondent Court.

The issue of the disqualification of Aquino as commissioner deserves scant attention.

Under Section 8, Rule 67 of the Rules of Court, the court may take the following actions
on the report submitted by commissioners: it may "accept the report and render
judgment in accordance therewith; or for cause shown, it may recommit the same to the
commissioners for further report of facts, or it may set aside the report and appoint new
commissioners, or it may accept the report in part and reject it in part; . . . ." In other
words, the report of the commissioners is merely advisory and recommendatory in
character as far as the court is concerned. 9

Hence, it hardly matters that one of the three commissioners had a preconceived and
biased valuation of the condemned property. The veracity or exactitude of the estimate
arrived at by the commissioners may not be adversely affected thereby. In fact, the
report of only two commissioners may suffice if the third commissioner dissents from the
former's valuation. 10 Indeed, the participation of an allegedly biased commissioner may
not result in the total disregard of an appraisal report in the absence of proof that the
two other commissioners were unduly influenced by their allegedly partial colleague.

The determination of just compensation for a condemned property is basically a judicial

function. As the court is not bound by the commissioners' report, it may make such
order or render such judgment as shall secure to the plaintiff the property essential to
the exercise of its right of condemnation, and to the defendant just compensation for the
property expropriated. For that matter, this Court may even substitute its own estimate
of the value as gathered from the record. 11 Hence, although the determination of just
compensation appears to be a factual matter which is ordinarily outside the ambit of its
jurisdiction, this Court may disturb the lower court's factual finding on appeal when there
is clear error or grave abuse of discretion. 12

We hold that the courts below made an erroneous determination of just compensation in
this case.

In the first place, the just compensation prescribed herein is based on the
commissioners' recommendation which in turn is founded on the "audited" statements of
Amerex that the property is worth P2,258,018.57. As earlier pointed out, while the court
may accept the commissioners' report and render judgment in accordance therewith, it
may not do so without considering whether the report is supported by evidence. The
court is also duty-bound to determine whether the commissioners had discharged the
trust reposed in them according to well-established rules and formed their judgment
upon correct legal principles for they are not supposed to act ad libitum . 13

Amerex's "audited" statement on the acquisition cost, cost of painting and major repairs,
taxes, and insurance premiums which totals P2,107,479.48, contains the following
certification:

We have checked the details of the transactions indicated in the foregoing schedule of
Land and Building Account as at January 31, 1976 with the books and records of Amerex
Electronics (Philippines) Corporation which were presented to us for examination and
have found the details to be in accordance therewith. We have not made an audit of the
books of accounts of Amerex Electronics (Philippines) Corporation.

Sycip, Gorres Velayo & Co.

PTR No. 4709791

January 23, 1976

Makati, Rizal

14
(Emphasis supplied).

Amerex's other "audited" statement on the maintenance expenses of the property

wherein it allegedly incurred the amount of P150,539.09 contains a similar certification
by the same accounting firm specifically stating that the auditor did not make an audit of
the books of accounts of Amerex. 15

It is clear from these certifications that the accounting firm which issued them merely
compared the figures in the schedules or "audited" statements with those of the records
and books of accounts of Amerex. As no investigation was made as to the veracity of
the figures in the account, there was no audit in the real sense of the term. To audit is to
examine an account, compare it with the vouchers, adjust the same, and to state the
balance, by persons legally authorized for the purpose. 16 While the word "audit" is
sometimes restricted to a mere mathematical process, it generally includes
investigation, the weighing of evidence, and deciding whether items should or should
not be included in the account . 17 Audit involves the exercise of discretion; it is a quasi-
judicial function. 18 The accuracy of the "audited" statements herein is therefore suspect.

Besides the fact that the petitioner was not furnished a copy of the audited statements
which were also not introduced in evidence, Enrique P. Esteban, vice-president and
treasurer of Amerex, and even a representative of the accounting firm, were likewise not
presented during the trial thereby depriving petitioner herein of the opportunity to cross-
examine them. It would therefore be unfair to the petitioner to hold it bound by the
"audited" statements of Amerex which may have been premised on false or mistaken
data. 19
This Court having declared as unconstitutional the mode of fixing just compensation
under P.D. No. 794 20 just compensation should be determined either at the time of the
actual taking of the government or at the time of the judgment of the court, whichever
comes first. 21

In this case, the issuance of the condemnation order and the actual taking of the
property both occurred in October, 1975. Accordingly, the appraisal made by Ampil
Realty and Appraisal Co., Inc. on June 5, 1975, which date is nearest to that of the
actual taking of the property, should be the basis for the determination of just
compensation the record being bereft of any indications of anomaly appertaining
thereto. It should be added that Wenceslao Ampil, the president of said appraisal firm,
testified at the trial and therefore petitioner had the opportunity to confront him and to
question his report. The reasonableness of the June 5,1975 appraisal fixing at
P2,400,000 the fair market value of the property, is bolstered by the fact that on June 4,
1975, Traders Commodities Corporation, through its lawyer, Sedfrey A. Ordoñez offered
to buy the property at P2,750,000. 22 It must be emphasized, however, that legal interest
on the balance of the just compensation of P2,400,000 after deducting the amount of
P1,303,470 which had been delivered to Amerex, should be paid by petitioner from the
time the government actually took over the propert y. 23

Much as we realize the need of the government, under these trying times, to get the
best possible price for the expropriated property considering the ceaseless and
continuing necessity for schools, we cannot agree with the petitioner that the just
compensation for the property should be the price it commanded when it was first
offered for sale to the City School Board of Manila. Petitioner failed to substantiate its
claim that the property is worth the lower amount of P1,800,000. In contrast, Amerex
submitted evidence consisting of the aforesaid June 5, 1975 appraisal report which
fixed the fair market value of the property at P2,400,000.

WHEREFORE, the just compensation of the property expropriated for the use of the
Manuel de la Fuente High School Don Mariano Marcos Memorial High School) is
hereby fixed at Two Million Four Hundred Thousand Pesos (P2,400,000.00). After
deducting the amount of P1,303,470.00 therefrom, the petitioner shall pay the balance
with legal interest from October 13, 1975.

SO ORDERED.

Feliciano and Cortes, JJ., concur.

Gutierrez, Jr. and Bidin, JJ., took no part

Republic of the Philippines

SUPREME COURT
Manila
 FIRST DIVISION

G.R. No. 77071 March 22, 1990

MUNICIPALITY OF TALISAY, petitioner,

vs.
SPOUSES HILARIO RAMIREZ and ERLINDA RAMIREZ and SPOUSES WILLIAM
ABARQUEZ and JOSEPHINE ABARQUEZ, respondents.

Carlos A. Marcos for petitioner.

Raul Ha. Sesbreño for private respondents.

CRUZ, J.:

This case has, to use a tired phrase, been overtaken by events. The petition has been
de-fanged so to speak, and must now be retired.

The facts are simple.

On 13 November 1985, the Municipality of Talisay, in Cebu, filed a complaint for the
expropriation of two lots belonging to the private respondents. On 25 November 1985,
Judge Valeriano P. Tomol, Jr. of the Regional Trial Court of Cebu denied the
defendants' motion to dismiss, after hearing, and issued a writ of possession in favor of
the plaintiff. On 21 April 1986, the court ordered the parties to designate three
commissioners each to assist it in fixing the just compensation for the condemned
properties. Subsequently, the plaintiff not having complied, the respondent judge issued
an order dated 15 August 1986 dismissing the complaint pursuant to Rule 17, Section 3,
of the Rules of Court. In a motion for reconsideration filed on 12 September 1986, the
plaintiff, while maintaining that the order of dismissal was invalid and praying that it be
recalled, nevertheless submitted the names of its three recommendees. The motion
was denied on 3 October 1986 on the ground that the new administration of the plaintiff
had not "passed a resolution signifying its adoption of the expropriation sought in this
case," although the order was amended "by making the dismissal as being without
prejudice." A motion for clarification/ reconsideration filed by the defendants on 21
October 1986 was denied by the respondent court on 3 December 1986, but the
plaintiff, still not satisfied, then came to this court in a petition for certiorari.

On 2 December 1987, this Court gave due course to the petition and required the
parties to submit simultaneous memoranda. The private respondents complied on 11
January 1988 but the petitioner has not done so to date. On 30 May 1988, the private
respondents filed an urgent manifestation praying for the dismissal of the petition on the
ground that the new government of the Municipality of Talisay was not pursuing that act
taken by its predecessors, besides the fact that the just compensation for the
condemned properties could no longer be fixed in accordance with the several
presidential decrees invoked by the petitioner. To ascertain the stand of the present
Sangguniang Bayan of Talisay, the Court required it in a resolution dated 15 January
1990 to manifest its position regarding the pending expropriation case. In response, the
said legislative body sent a copy of its Resolution No. 90-10, adopted on 25 January
1990, manifesting to the Court the intention of the government of the Municipality of
Talisay to continue with the expropriation of the subject lots.

Dispensing with the memorandum which the petitioner has failed to file, the Court now
proceeds to examine, in the light of the memorandum of the private respondents and
the other pleadings filed by the parties, the issues raised in the petition.

The petitioner maintains that it was not under obligation to submit the names of three
commissioners to assist in the determination of the just compensation for the
condemned properties, as required by the respondent judge in his order of 21 April
1986. Such determination, it argues, is the duty of the court alone under Rule 67,
Section 5, of the Rules of Court. Moreover, the just compensation is no longer fixed by
commissioners under the said Rule as this has been repealed by P.D. Nos. 42, 76, 464,
794, 1224, 1259, 1313, 1517, and 1533. These decrees provide that the just
compensation in expropriation cases shall be the value given to the condemned
property by either the owner thereof or the government assessor, whichever valuation is
lower.

The rule laid down in these decrees is no longer controlling, having been declared
unconstitutional in the landmark case of Export Processing Zone Authority v. Dulay, 1
where Justice Hugo E. Gutierrez, Jr. held for a unanimous Court:

The method of ascertaining just compensation under the aforecited decrees constitutes
impermissible encroachment on judicial prerogatives. It tends to render this Court inutile
in a matter which under the Constitution is reserved to it for final determination.

Thus, although in an expropriation proceeding the court technically would still have the
power to determine the just compensation for the property, following the applicable
decrees, its task would be relegated to simply stating the lower value of the property as
declared either by the owner or the assessor. As a necessary consequence, it would be
useless for the court to appoint commissioners under Rule 67 of the Rules of Court.
Moreover, the need to satisfy the due process clause in the taking of private property is
seemingly fulfilled since it cannot be said that a judicial proceeding was not had before
the actual taking. However, the strict application of the decrees during the proceedings
would be nothing short of a mere formality or charade as the court has only to choose
between the valuation of the owner and that of the assessor, and its choice is always
limited to the lower of the two. The court cannot exercise its discretion or independence
in determining what is just or fair. Even a grade school pupil could substitute for the judge
insofar as the determination of constitutional just compensation is concerned.

xxx xxx xxx

In the present petition, we are once again confronted with the same question of whether
the courts under P.D. 1533, which contains the same provision on just compensation as
its predecessor decrees, still have the power and authority to determine just
 compensation, independent of what is stated by the decree and to this effect, to appoint
commissioners for such purpose.

This time, we answer in the affirmative.

xxx xxx xxx

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

With this decision, the rules for determining just compensation as laid down in Rule 67
of the Rules of Court have been reactivated and are again applicable. Hence, the
petitioner cannot continue arguing that commissioners are no longer necessary to assist
the court in determining the just compensation for the properties it seeks to expropriate.
While it is true that, strictly speaking, it is the court that shall appoint the said
commissioners, there is nothing to prevent it from seeking the recommendations of the
parties on this matter, the better to ensure their fair representation. Indeed, the
petitioner should have welcomed the chance to submit their three recommendees
instead of peevishly questioning the well-meaning order of the respondent judge. We
feel the petitioner was quibbling too much and needlessly belligerent. What it should
have done, instead of simply ignoring the order, was to call the attention of the court to
the presidential decrees which had made the commissioners unnecessary. It did not do
this, except belatedly in its motion for reconsideration. Under the circumstances, the trial
judge was justified in dismissing the complaint under Rule 17, Section 3, of the Rules of
Court, for failure of the plaintiff to comply with his order.

We feel nevertheless that, as the petitioner finally did comply with that order by
submitting the names of its recommendees in its motion for reconsideration, such
compliance should justify the setting aside of the order of dismissal and the
reinstatement of the case below. This would avoid the further delay that would be
incurred if the same complaint had to be re-filed and the parties were to go back to
square one, as it were, and begin the proceedings all over again. Such delay would not
be in the best interest of either party and more so of the people intended to be benefited
by the expropriation.

WHEREFORE, the Orders of the respondent court dated 15 August 1986, 3 October
1986, and 3 December 1986 are SET ASIDE and Civil Case No. CEB-4424 in the
Regional Trial Court of Cebu is REINSTATED for hearing and decision in accordance
with Rule 67 of the Rules of Court. No costs.

SO ORDERED.

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

 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-61293 February 15, 1990

DOMINGO B. MADDUMBA and ANITA C. MADDUMBA, petitioners,

vs.
GOVERNMENT SERVICE INSURANCE SYSTEM, Represented by its Chairman,
Board of Trustees, HONORABLE LEONILO OCAMPO, respondent.

Vicente P. Leus for petitioners.

The Government Corporate Counsel for GSIS.

REGALADO, J.:

This petition for mandamus seeks to compel respondent Government Service Insurance
System (GSIS) to accept Land Bank bonds at their face value as installments payments
for a pre-existing obligation.

The records disclose that on December 10, 1980, respondent GSIS conducted a public
bidding of several foreclosed properties. Included in the properties offered to the public
was a house and lot situated at 3377 New Panaderos Street, Sta. Ana, Manila, covered
by Transfer Certificate of Title No. 4749 of the Register of Deeds of Manila.

Petitioner Domingo B. Maddumba participated in the public bidding and submitted his
sealed bid in the amount of P98,000.00 in Philippine currency. The bid was subject to
the condition that there should be a down payment of 35% of the amount thereof, the
10% constituting the proposal bond with the remaining 25% to be paid after the receipt
of the notice of award or acceptance of the bid. Accordingly, petitioner enclosed with his
sealed bid a manager's check in the amount of P9,500.00 and cash in the amount of
P300.00 to complete the P9,800.00 proposal bond.

Upon the receipt of the notice of award, petitioner offered to pay the additional 25% in
Land Bank bonds at their face value. These bonds were issued to petitioner as payment
for his riceland consisting of twenty-six hectares located in Cordon, Isabela acquired by
the Government from him under Presidential Decree No. 27. However, the GSIS
rejected the offer, hence it was withdrawn by petitioner. Petitioner then offered to pay in
cash the remaining 25% down payment "and all future installments." 1 Thereafter, on
November 16, 1981, petitioner paid in cash the balance of the required down payment.
A "Deed of Conditional Sale" was executed by the parties on November 19, 1981,
where the petitioner as vendee agreed to pay the vendor GSIS "the balance of the
purchase price of SIXTY THREE THOUSAND SEVEN HUNDRED FIVE & 50/100
(P63,705.50) PESOS, Philippine currency, in SIXTY (60) monthly installments of ONE
THOUSAND FOUR HUNDRED SIXTEEN & 69/100 (P1,416.69) PESOS, Philippine
currency, at twelve (12%) percent interest per annum, compounded monthly, beginning
December 1, 1981." 2

The first installment in the amount of P1,416.00 was paid by petitioner on December 3,
1981. When the second monthly installment became due, petitioner sent a letter dated
January 5, 1982, to the GSIS Board of Trustees requesting that he be allowed to pay
the monthly amortizations with his Land Bank bonds commencing in January, 1982 until
the exhaustion of the said bonds. 3 Petitioner invoked the provisions of Secton 85 of
Republic Act No. 3844, as amended by Presidential Decree No. 251.

The GSIS Board of Trustees, in its Resolution No. 91 adopted on January 22, 1982,
denied petitioner's offer. The board "resolved to reiterate the policy that Land Bank
bonds shall be accepted as payment only at a discounted rate to yield the System 18%
at maturity. 4

In a letter dated February 12, 1982, petitioner asked the Board of Trustees to reconsider
Resolution No. 91. 5 Petitioner reiterated his reliance on Section 85 of Republic Act No.
3844, as amended, and further supported his position with the contention that the policy
of the GSIS contravenes the ruling in the case of Gonzales, et al. vs. The Government
Insurance System, etc., et al. 6 Likng in the case of ewise, petitioner submitted an
opinion of the Ministry of Agrarian Reform, dated February 12, 1982, wherein it was
stated,a inter alia, that "if the GSIS accepts the Land Bank bonds as payment thereof, it
must accept the same at par or face value. To accept said bonds at a discounted rate
would lessen the credibility of the bonds as instruments of indebtedness." 7

In a letter dated May 31, 1982, petitioner was advised by the Manager, Acquired Assets
Department, GSIS that Resolution No. 415 was adopted on May 18, 1982 by the GSIS
Board of Trustees denying the request of petitioner. Hence, on August 5, 1982, the
instant original action for mandamus was filed by petitioner.

The issue posed by this petition is whether or not under the provisions of Section 85 of
Republic Act No. 3844, as amended by Presidential Decree No. 251 effective July 21,
1973, the GSIS may be compelled to accept Land Bank bonds at their face value in
payment for a residential house and lot purchased by the bondholder from the GSIS.

The aforesaid provision of law provides:

Sec. 85. Use of Bonds. — The bonds issued by the Bank may be used by the holder
thereof and shall be accepted for any of the following:

xxx xxx xxx

 2. Payment for the purchase of shares of stock or assets of government-owned or
controlled corporations.

Upon offer by the bondholders, the corporation owned or controlled by the Government
shall, through its Board of Directors, negotiate with such bondholder with respect to the
price and other terms and conditions of the sale. In case there are various bondholders
making the offer, the one willing to purchase under the terms and conditions most
favorable to the corporation shall be preferred. If no price is acceptable to the
corporation, the same shall be determined by the Committee of Appraisers composed of
three members, one to be appointed by the corporation, another by the bondholder
making the highest or only offer, and the third by the members so chosen. The expense
of appraisal shall be borne equally by the corporation and the successful purchaser.

Should the Government offer for sale to the public any or all the shares of stock or the
assets of any of the Government-owned or controlled corporations, the bidder who offers
to pay in bonds of the Land Bank shall be preferred, provided that the various bids be
equal in every respect in the medium of payment.

xxx xxx xxx

It is not disputed that under the above quoted provisions, a government-owned or

controlled corporation, like the GSIS, is compelled to accept Land Bank bonds as
payment for the purchase of its assets. As a matter of fact, the bidder who offers to pay
in bonds of the Land Bank is entitled to preference. What respondent GSIS is resisting,
however, is its being compelled to accept said bonds at their face value. Respondent, in
support of its stance that it can discount the bonds, avers that "(a) PD 251 has amended
Section 85 of RA 3844 by deleting and eliminating the original provision that Land Bank
bonds shall be accepted 'in the amount of their face value'; and (b) to accept the said
bonds at their face value will impair the actuarial solvency of the GSIS and thoroughly
prejudice its capacity to pay death, retirement, insurance, dividends and other benefits
and claims to its more than a million members, the majority of whom are low salaried
government employees and workers." 8

We cannot agree with respondent.

Respondent's arguments disregard the fact that the provisions of Section 85 are
primarily designed to cushion the impact of dispossession. Not only would there be
inconvenience resulting from dispossession itself, but also from the modes of payment
in financing the acquisition of farm lots. Acceptance of Land Bank bonds, instead of
money, undoubtedly involves a certain degree of sacrifice for the landowner. This, of
course, is in addition to the fact that, in case of expropriation of land covered by land
reform, the landowner will seldom get the compensation he desires. Thus, discounting
the Land Banks bonds, and thereby reducing their effective value, entails and imposes
an additional burden on his part. It is, in fact, in consideration of this sacrifice that we
extended the rule on liberality in the interpretation of the provisions of Republic Act No.
3844, then known as the Agricultural Land Reform Code, in favor not only of the actual
tillers but the landowners as well. Ita semper fiat relatio ut valeat dispositio. The
interpretation must always be such that the disposition may prevail.
The nature of a Land Bank bond itself fortifies our view that the respondent may be
compelled to accept those bonds at their face value. As explained in an earlier case:

True, the statute does not explicitly provide that Land Bank bonds shall be accepted at
their face value. There can be no question, however, that such is the intendment of the
law particularly in the absence of any provision expressly permitting discounting, as
differentiated from Republic Act No. 304, or the Backpay Law, as amended by Republic
Acts Nos. 800 and 897, which expressly allows it.

Land Bank bonds are certificates of indebtedness, approved by the Monetary Board of
the Central Bank, fully tax-exempt both as to principal and income, and bear interest at
the rate of 6% per annum redeemable at the option of the Land Bank at or before
maturity, which in no case shall exceed 25 years. They are fully negotiable and
unconditionally guaranteed by the Government of the Republic of the Philippines.

These bonds are deemed contracts and the obligations resulting therefrom fall within the
purview of the non-impairment clause of the Constitution, and any impairment thereof
may take any encroachment in any respect upon the obligation and cannot be permitted.
Thus, the value of these bonds cannot be diminished by any direct or indirect act,
particularly, since said bonds are fully guaranteed by the Government of the Philippines.
They are issued not in the open market nor for the primary purpose of raising funds or
pooling financial resources but in the captive market of landowners and to facilitate the
speedy transfer of lands to the tenant-farmers in support of the land reform program of
the Government. They are not ordinary commercial paper in that sense subject to
9
discounting (Emphasis supplied).

We are aware that the above cited cases primarily involved Section 80 of the law as
applied to cases where government financial institutions were compelled to accept Land
Bank bonds at their face value for the discharge of existing encumbrances on parcels of
land given as security even if not an the lands covered by the mortgage were acquired
by the Land Bank under Presidential Decree No. 27. Evidently, however, the variance in
the factual setting would not change the very nature of said bonds by reason of which
payment of pre-existing obligations to government financial institutions at their face or
par value is justified and authorized. It would be hermeneutically unjustified to adopt a
tenuous theory which would subject the parity of Land Bank bonds to qualifications and
distinctions when the law itself does not so provide.

The deed of conditional sale which was executed by the parties herein is subject to the
obligation of and guaranteed by the Government under said bonds. Their agreement for
the payment of installments in Philippine currency cannot in any way be construed as
an alteration, nor should it detract from the essence and compulsion, of said obligation
While, in one instance, petitioner offered to pay his future installments in cash, that offer
was obviously not voluntarily made but was exacted from him because of the refusal of
respondent to accept the Land Bank bonds. That incident should not prevent petitioner
from making, and allow respondent to refuse, an alternative mode of payment
authorized by law and under the conditions laid down by this Court.

Respondent cannot rely on the deletion by Presidential Decree No. 251 of the provision
in Section 85 that the bonds shall be accepted in the amount of their face value, and
wrest therefrom an interpretation in support of its thesis. Implied repeals are frowned
upon in this jurisdiction. They are not favored in law and will not be so declared unless
the intent of the legislature is manifest. In the present case, no such intention to effect
changes in the law exists nor is it even apparent. On the contrary, it can be said that
when amendments were made to Section 85, the legislators were fully aware of the
nature of Land Bank bonds, which would necessarily be concordant with the analysis
and explanation subsequently made by the Court in the cases hereinbefore cited. If the
legislature had really been minded to make changes in the policy on the acceptance
value of said bonds, they could have expressly so provided with facility and ease. Thus,
although such amendment by deletion was effected in 1973 and the cases which
clarified this point were decided in 1986 and 1987 on factual situations subsequent to
1973, this argument now posited by respondent based on such amendment was not
taken into account by the Court in laying down its aforequoted doctrinal rulings.

Neither can the respondent complain that the acceptance of said bonds at their face
value will impair its actuarial solvency. We are constrained to quote from Gonzales
again, that "(w)hatever unfavorable results the acceptance may have on its finances,
the effects must be deemed to have been intended by Presidential Decree No. 251,
particularly, when it provided for the payment in bonds to government lending
institutions their 'existing charters to the contrary notwithstanding.' If iniquitous to said
institutions, it remains now with the legislative branch to make the necessary revisions if
desired. The traditional role assigned to the Judiciary is to implement and not to thwart
fundamental policy goals."

It is apropos to recall, all this juncture, our reminder in the aforecited case of Philippine
National Bank vs. Amores, et al., which applies with equal force to herein respondent
and the present case:

Suffice it to mention that the petitioner is a government lending institution and as such, it
has the obligation to support unequivocably government programs already on stream and
not to introduce its own interpretative policies which may thwart such programs or modify
them to nothingness. This is specially compelling with regard to land reform, the great
venture of the government.

The preamble of PD 251 eloquently articulates government intent to implement the state
policy of 'diverting landlord capital in agriculture to industrial development' by 'mobilization
and harnessing properly all available government resources for the realization of the
desired agrarian reform program.' For agrarian reform cannot be fully realized without the
intervention of the government particularly in the payment of just compensation. Surely,
the tenant by himself does not have and cannot afford the wherewithal to defray the cost
of the land tranferred to him. It is only with the full support and active assistance of the
government principally through its financial institutions that payment of just compensation
to the landowner may be realized. ... (Emphasis supplied).

WHEREFORE, the writ of mandamus prayed for is hereby GRANTED. Respondent

Government Service Insurance System is ordered to accept the bonds issued by the
Land Bank of the Philippines at their par or face value.

SO ORDERED.
Melencio-Herrera (Chairperson), Paras, Padilla and Sarmiento, JJ., concur.

Footnotes

1 Rollo, 138.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-48685 September 30, 1987

LORENZO SUMULONG and EMILIA VIDANES-BALAOING, petitioners,

vs.
HON. BUENAVENTURA GUERRERO and NATIONAL HOUSING AUTHORITY,
respondents.

CORTES, J.:

On December 5, 1977 the National Housing Authority (NIIA) filed a complaint for
expropriation of parcels of land covering approximately twenty five (25) hectares, (in
Antipolo, Rizal) including the lots of petitioners Lorenzo Sumulong and Emilia Vidanes-
Balaoing with an area of 6,667 square meters and 3,333 square meters respectively.
The land sought to be expropriated were valued by the NHA at one peso (P1.00) per
square meter adopting the market value fixed by the provincial assessor in accordance
with presidential decrees prescribing the valuation of property in expropriation
proceedings.

Together with the complaint was a motion for immediate possession of the properties.
The NHA deposited the amount of P158,980.00 with the Philippine National Bank,
representing the "total market value" of the subject twenty five hectares of land,
pursuant to Presidential Decree No. 1224 which defines "the policy on the expropriation
of private property for socialized housing upon payment of just compensation."

On January 17, 1978, respondent Judge issued the following Order:

Plaintiff having deposited with the Philippine National Bank, Heart Center Extension
Office, Diliman, Quezon City, Metro Manila, the amount of P158,980.00 representing the
total market value of the subject parcels of land, let a writ of possession be issued.

SO ORDERED.
 Pasig, Metro Manila, January 17, 1978.

(SGD)
BUENAVENTURA S.
GUERRERO

J
u
d
g
e

Petitioners filed a motion for reconsideration on the ground that they had been deprived
of the possession of their property without due process of law. This was however,
denied.

Hence, this petition challenging the orders of respondent Judge and assailing the
constitutionality of Pres. Decree No. 1224, as amended. Petitioners argue that:

1) Respondent Judge acted without or in excess of his jurisdiction or with grave abuse of
discretion by issuing the Order of January 17, 1978 without notice and without hearing
and in issuing the Order dated June 28, 1978 denying the motion for reconsideration.

2) Pres. Decree l224, as amended, is unconstitutional for being violative of the due
process clause, specifically:

a) The Decree would allow the taking of property regardless of size and
no matter how small the area to be expropriated;

b) "Socialized housing" for the purpose of condemnation proceeding, as

defined in said Decree, is not really for a public purpose;

c) The Decree violates procedural due process as it allows immediate

taking of possession, control and disposition of property without giving
the owner his day in court;

d) The Decree would allow the taking of private property upon payment
of unjust and unfair valuations arbitrarily fixed by government assessors;

e) The Decree would deprive the courts of their judicial discretion to

determine what would be the "just compensation" in each and every
raise of expropriation.

Indeed, the exercise of the power of eminent domain is subject to certain limitations
imposed by the constitution, to wit:

Private property shall not be taken for public use without just compensation (Art. IV, Sec.
9);

No person shall be deprived of life, liberty, or property without due process of law, nor
shall any person be denied the equal protection of the laws (Art. IV, sec. 1).
Nevertheless, a clear case of constitutional infirmity has to be established for this Court
to nullify legislative or executive measures adopted to implement specific constitutional
provisions aimed at promoting the general welfare.

Petitioners' objections to the taking of their property subsumed under the headings of
public use, just compensation, and due process have to be balanced against competing
interests of the public recognized and sought to be served under declared policies of the
constitution as implemented by legislation.

1. Public use

a) Socialized Housing

Petitioners contend that "socialized housing" as defined in Pres. Decree No. 1224, as
amended, for the purpose of condemnation proceedings is not "public use" since it will
benefit only "a handful of people, bereft of public character."

"Socialized housing" is defined as, "the construction of dwelling units for the middle and
lower class members of our society, including the construction of the supporting
infrastructure and other facilities" (Pres. Decree No. 1224, par. 1). This definition was
later expanded to include among others:

a) The construction and/or improvement of dwelling units for the middle and lower income
groups of the society, including the construction of the supporting infrastructure and other
facilities;

b) Slum clearance, relocation and resettlement of squatters and slum dwellers as well as
the provision of related facilities and services;

c) Slum improvement which consists basically of allocating homelots to the dwellers in

the area or property involved, rearrangemeant and re-alignment of existing houses and
other dwelling structures and the construction and provision of basic community facilities
and services, where there are none, such as roads, footpaths, drainage, sewerage, water
and power system schools, barangay centers, community centers, clinics, open spaces,
parks, playgrounds and other recreational facilities;

d) The provision of economic opportunities, including the development of commercial and

industrial estates and such other facilities to enhance the total community growth; and

e) Such other activities undertaken in pursuance of the objective to provide and maintain
housing for the greatest number of people under Presidential Decree No, 757, (Pres.
Decree No. 1259, sec. 1)

The "public use" requirement for a and exercise of the power of eminent domain is a
flexible and evolving concept influenced by changing conditions. In this jurisdiction, the
statutory and judicial trend has been summarized as follows:

The taking to be valid must be for public use. There was a time when it was felt that a
literal meaning should be attached to such a requirement. Whatever project is undertaken
 must be for the public to enjoy, as in the case of streets or parks. Otherwise,
expropriation is not allowable. It is not anymore. As long as the purpose of the taking is
public, then the power of eminent domain comes into play. As just noted, the constitution
in at least two cases, to remove any doubt, determines what is public use. One is the
expropriation of lands to be subdivided into small lots for resale at cost to individuals. The
other is in the transfer, through the exercise of this power, of utilities and other private
enterprise to the government. It is accurate to state then that at present whatever may be
beneficially employed for the general welfare satisfies the requirement of public use
[Heirs of Juancho Ardona v. Reyes, G.R. Nos. 60549, 60553-60555 October 26, 1983,
125 SCRA 220 (1983) at 234-5 quoting E. FERNANDO, THE CONSTITUTION OF THE
PHILIPPINES 523-4, (2nd ed., 1977) Emphasis supplied].

The term "public use" has acquired a more comprehensive coverage. To the literal
import of the term signifying strict use or employment by the public has been added the
broader notion of indirect public benefit or advantage. As discussed in the above cited
case of Heirs of Juancho Ardona:

The restrictive view of public use may be appropriate for a nation which circumscribes the
scope of government activities and public concerns and which possesses big and
correctly located public lands that obviate the need to take private property for public
purposes. Neither circumstance applies to the Philippines. We have never been a laissez
faire State. And the necessities which impel the exertion of sovereign power are all too
often found in areas of scarce public land or limited government resources. (p. 231)

Specifically, urban renewal or redevelopment and the construction of low-cost housing

is recognized as a public purpose, not only because of the expanded concept of public
use but also because of specific provisions in the Constitution. The 1973 Constitution
made it incumbent upon the State to establish, maintain and ensure adequate social
services including housing [Art. 11, sec. 7]. The 1987 Constitution goes even further by
providing that:

The State shall promote a just and dynamic social order that will ensure the prosperity
and independence of the nation and free the people from poverty through policies that
provide adequate social services, promote full employment, a rising standard of living and
an improved quality of life for all. [Art. II, sec. 9]

The state shall by law, and for the common good, undertake, in cooperation with the
private sector, a continuing program of urban land reform and housing which will make
available at affordable cost decent housing and basic services to underprivileged and
homeless citizens in urban centers and resettlement areas. It shall also promote
adequate employment opportunities to such citizens. In the implementation of such
program the State shall respect the rights of small property owners. (Art. XIII, sec. 9,
Emphaisis supplied)

Housing is a basic human need. Shortage in housing is a matter of state concern since
it directly and significantly affects public health, safety, the environment and in sum, the
general welfare. The public character of housing measures does not change because
units in housing projects cannot be occupied by all but only by those who satisfy
prescribed qualifications. A beginning has to be made, for it is not possible to provide
housing for are who need it, all at once.
Population growth, the migration to urban areas and the mushrooming of crowded
makeshift dwellings is a worldwide development particularly in developing countries. So
basic and urgent are housing problems that the United Nations General Assembly
proclaimed 1987 as the "International Year of Shelter for the Homeless" "to focus the
attention of the international community on those problems". The General Assembly is
Seriously concerned that, despite the efforts of Governments at the national and local
levels and of international organizations, the driving conditions of the majority of the
people in slums and squatter areas and rural settlements, especially in developing
countries, continue to deteriorate in both relative and absolute terms." [G.A. Res.
37/221, Yearbook of the United Nations 1982, Vol. 36, p. 1043-4]

In the light of the foregoing, this Court is satisfied that "socialized housing" fans within
the confines of "public use". It is, particularly important to draw attention to paragraph
(d) of Pres. Dec. No. 1224 which opportunities inextricably linked with low-cost housing,
or slum clearance, relocation and resettlement, or slum improvement emphasize the
public purpose of the project.

In the case at bar, the use to which it is proposed to put the subject parcels of land
meets the requisites of "public use". The lands in question are being expropriated by the
NHA for the expansion of Bagong Nayon Housing Project to provide housing facilities to
low-salaried government employees. Quoting respondents:

1. The Bagong Nayong Project is a housing and community development undertaking of

the National Housing Authority. Phase I covers about 60 hectares of GSIS property in
Antipolo, Rizal; Phase II includes about 30 hectares for industrial development and the
rest are for residential housing development.

It is intended for low-salaried government employees and aims to provide housing and
community services for about 2,000 families in Phase I and about 4,000 families in Phase
II.

It is situated on rugged terrain 7.5 kms. from Marikina Town proper; 22 Kms. east of
Manila; and is within the Lungs Silangan Townsite Reservation (created by Presidential
Proclamation No. 1637 on April 18, 1977).

The lands involved in the present petitions are parts of the expanded/additional areas for
the Bagong Nayon Project totalling 25.9725 hectares. They likewise include raw, rolling
hills. (Rollo, pp. 266-7)

The acute shortage of housing units in the country is of public knowledge. Official data
indicate that more than one third of the households nationwide do not own their dwelling
places. A significant number live in dwellings of unacceptable standards, such as
shanties, natural shelters, and structures intended for commercial, industrial, or
agricultural purposes. Of these unacceptable dwelling units, more than one third is
located within the National Capital Region (NCR) alone which lies proximate to and is
expected to be the most benefited by the housing project involved in the case at bar
[See, National Census and Statistics Office, 1980 Census of Population and Housing].
According to the National Economic and Development Authority at the time of the
expropriation in question, about "50 per cent of urban families, cannot afford adequate
shelter even at reduced rates and will need government support to provide them with
social housing, subsidized either partially or totally" [NEDA, FOUR YEAR
DEVELOPMENT PLAN For 1974-1977, p. 357]. Up to the present, housing some
remains to be out of the reach of a sizable proportion of the population" [NEDA,
MEDIUM-TERM PHILIPPINE DEVELOPMENT PLAN 1987-1992, p. 240].

The mushrooming of squatter colonies in the Metropolitan Manila area as well as in

other cities and centers of population throughout the country, and, the efforts of the
government to initiate housing and other projects are matters of public knowledge [See
NEDA, FOUR YEAR DEVELOPMENT PLAN For 1974-1977, pp. 357-361; NEDA,
FIVE-YEAR PHILIPPINE DEVELOPMENT PLAN 1978-1982, pp. 215-228 NEDA, FIVE
YEAR PHILIPPINE DEVELOPMENT PLAN 1983-1987, pp. 109-117; NEDA, MEDIUM
TERM PHILIPPINE DEVELOPMENT PLAN 1987-1992, pp. 240-254].

b) Size of Property

Petitioners further contend that Pres. Decree 1224, as amended, would allow the taking
of "any private land" regardless of the size and no matter how small the area of the land
to be expropriated. Petitioners claim that "there are vast areas of lands in Mayamot,
Cupang, and San Isidro, Antipolo, Rizal hundred of hectares of which are owned by a
few landowners only. It is surprising [therefore] why respondent National Housing
Authority [would] include [their] two man lots ..."

In J.M. Tuason Co., Inc. vs. Land Tenure Administration [G. R. No. L-21064, February
18, 1970, 31 SCRA 413 (1970) at 428] this Court earlier ruled that expropriation is not
confined to landed estates. This Court, quoting the dissenting opinion of Justice J.B.L.
Reyes in Republic vs. Baylosis, [96 Phil. 461 (1955)], held that:

The propriety of exercising the power of eminent domain under Article XIII, section 4 of
our Constitution cannot be determined on a purely quantitative or area basis. Not only
does the constitutional provision speak of lands instead of landed estates, but I see no
cogent reason why the government, in its quest for social justice and peace, should
exclusively devote attention to conflicts of large proportions, involving a considerable
number of individuals, and eschew small controversies and wait until they grow into a
major problem before taking remedial action.

The said case of J.M. Tuason Co., Inc. departed from the ruling in Guido vs. Rural
Progress Administration [84 Phil. 847 (1949)] which held that the test to be applied for a
valid expropriation of private lands was the area of the land and not the number of
people who stood to be benefited. Since then "there has evolved a clear pattern of
adherence to the "number of people to be benefited test" " [Mataas na Lupa Tenants
Association, Inc. v. Dimayuga, G.R. No. 32049, June 25,1984, 130 SCRA 30 (1984) at
39]. Thus, in Pulido vs. Court of Appeals [G.R. No. 57625, May 3, 1983, 122 SCRA 63
(1983) at 73], this Court stated that, "[i]t is unfortunate that the petitioner would be
deprived of his landholdings, but his interest and that of his family should not stand in
the way of progress and the benefit of the greater may only of the inhabitants of the
country."

The State acting through the NHA is vested with broad discretion to designate the
particular property/properties to be taken for socialized housing purposes and how
much thereof may be expropriated. Absent a clear showing of fraud, bad faith, or gross
abuse of discretion, which petitioners herein failed to demonstrate, the Court will give
due weight to and leave undisturbed the NHA's choice and the size of the site for the
project. The property owner may not interpose objections merely because in their
judgment some other property would have been more suitable, or just as suitable, for
the purpose. The right to the use, enjoyment and disposal of private property is
tempered by and has to yield to the demands of the common good. The Constitutional
provisions on the subject are clear:

The State shall promote social justice in all phases of national development. (Art. II, sec.
10)

The Congress shall give highest priority to the enactment of measures that protect and
enhance the right of all the people to human dignity, reduce social, economic, and
political inequalities, and remove cultural inequities by equitably diffusing wealth and
political power for the common good. To this end, the State shall regulate the acquisition,
ownership, use and disposition of property and its increments. (Art, XIII, sec. 1)

Indeed, the foregoing provisions, which are restatements of the provisions in the 1935
and 1973 Constitutions, emphasize:

...the stewardship concept, under which private property is supposed to be held by the
individual only as a trustee for the people in general, who are its real owners. As a mere
steward, the individual must exercise his rights to the property not for his own exclusive
and selfish benefit but for the good of the entire community or nation [Mataas na Lupa
Tenants Association, Inc. supra at 42-3 citing I. CRUZ, PHILIPPINE POLITICAL LAW, 70
(1983 ed.)].

2. Just Compensation

Petitioners maintain that Pres. Decree No. 1224, as amended, would allow the taking of
private property upon payment of unjust and unfair valuations arbitrarily fixed by
government assessors. In addition, they assert that the Decree would deprive the courts
of their judicial discretion to determine what would be "just compensation".

The foregoing contentions have already been ruled upon by this Court in the case of
Ignacio vs. Guerrero (G.R. No. L-49088, May 29, 1987) which, incidentally, arose from
the same expropriation complaint that led to this instant petition. The provisions on just
compensation found in Presidential Decree Nos. 1224, 1259 and 1313 are the same
provisions found in Presidential Decree Nos. 76, 464, 794 and 1533 which were
declared unconstitutional in Export Processing Zone All thirty vs. Dulay (G.R. No. 5960
April 29, 1987) for being encroachments on prerogatives.
This Court abandoned the ruling in National Housing Authority vs. Reyes [G.R. No.
49439, June 29,1983, 123 SCRA 245 (1983)] which upheld Pres. Decree No. 464, as
amended by - Presidential Decree Nos. 794, 1224 and 1259.

In said case of Export Processing Zone Authority, this Court pointed out that:

The basic unfairness of the decrees is readily apparent.

Just compensation means the value of the property at the time of the taking. It means a
fair and full equivalent for the loss sustained. ALL the facts as to the condition of the
property and its surroundings, its improvements and capabilities, should be considered.

xxx xxx xxx

Various factors can come into play in the valuation of specific properties singled out for
expropriation. The values given by provincial assessors are usually uniform for very wide
areas covering several barrios or even an entire total with the exception of the poblacion.
Individual differences are never taken into account. The value of land is based on such
generalities as its possible cultivation for rice, corn, coconuts, or other crops. Very often
land described as directional has been cultivated for generations. Buildings are described
in terms of only two or three classes of building materials and estimates of areas are
more often inaccurate than correct. Tax values can serve as guides but cannot be
absolute substitutes for just compensation.

To say that the owners are estopped to question the valuations made by assessors since
they had the opportunity to protest is illusory. The overwhelming mass of landowners
accept unquestioningly what is found in the tax declarations prepared by local assessors
or municipal clerks for them. They do not even look at, much less analyze, the
statements. The Idea of expropriation simply never occurs until a demand is made or a
case filed by an agency authorized to do so. (pp. 12-3)

3. Due Process

Petitioners assert that Pres. Decree 1224, as amended, violates procedural due
process as it allows immediate taking of possession, control and disposition of property
without giving the owner his day in court. Respondent Judge ordered the issuance of a
writ of possession without notice and without hearing.

The constitutionality of this procedure has also been ruled upon in the Export
Processing Zone Authority case, viz:

It is violative of due process to deny to the owner the opportunity to prove that the
valuation in the tax documents is unfair or wrong. And it is repulsive to basic concepts of
justice and fairness to allow the haphazard work of minor bureaucrat or clerk to
absolutely prevail over the judgment of a court promulgated only after expert
commissioners have actually viewed the property, after evidence and arguments pro and
con have been presented, and after all factors and considerations essential to a fair and
just determination have been judiciously evaluated. (p. 13)

On the matter of the issuance of a writ of possession, the ruling in the Ignacio case is
reiterated, thus:
 [I]t is imperative that before a writ of possession is issued by the Court in expropriation
proceedings, the following requisites must be met: (1) There must be a Complaint for
expropriation sufficient in form and in substance; (2) A provisional determination of just
compensation for the properties sought to be expropriated must be made by the trial
court on the basis of judicial (not legislative or executive) discretion; and (3) The deposit
requirement under Section 2, Rule 67 must be complied with. (p. 14)

This Court holds that "socialized housing" defined in Pres. Decree No. 1224, as
amended by Pres. Decree Nos. 1259 and 1313, constitutes "public use" for purposes of
expropriation. However, as previously held by this Court, the provisions of such decrees
on just compensation are unconstitutional; and in the instant case the Court finds that
the Orders issued pursuant to the corollary provisions of those decrees authorizing
immediate taking without notice and hearing are violative of due process.

WHEREFORE, the Orders of the lower court dated January 17, 1978 and June 28,
1978 issuing the writ of possession on the basis of the market value appearing therein
are annulled for having been issued in excess of jurisdiction. Let this case be remanded
to the court of origin for further proceedings to determine the compensation the
petitioners are entitled to be paid. No costs.

SO ORDERED.

Teehankee, C.J., Yap, Fernan, Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras,
Feliciano, Gancayco, Padilla, Bidin and Sarmiento, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 77765 August 15, 1988

SEBASTIAN COSCULLUELA, petitioner,

vs.
THE HONORABLE COURT OF APPEALS and the REPUBLIC OF THE
PHILIPPINES, represented by NATIONAL IRRIGATION ADMINISTRATION,
respondents.

Pio G. Villoso for petitioner.

GUTIERREZ, JR., J.:

This is a petition for review on certiorari which seeks to set aside the decision of the
Court of Appeals nullifying the orders of the trial court on the ground that said orders in
effect, sought the enforcement of a writ of execution against government funds. The
petitioner contends that to set aside the writ of execution would be an abridgment of his
right to just compensation and due process of law. The public respondents on the other
hand, state that government funds cannot be disbursed without proper appropriation
and that a writ of execution cannot legally issue against the State.

On March 8, 1976, the Republic of the Philippines filed a complaint with the Court of
First Instance of Iloilo to expropriate two parcels of land in the municipality of Barotac,
Iloilo owned by petitioner Sebastian Cosculluela and one Mita Lumampao, for the
construction of the canal network of the Barotac Irrigation Project.

On April 4, 1976, the trial court rendered a decision granting the expropriation and
ordered the public respondent to pay the following amounts:

1. To Mita Lumampao, the sum of P20,000 minus P4,001.82 which she had already
withdrawn plus P3,000 attorney's fees; and

2. Sebastian Cosculluela, the sum of P200,000.00 which is the reasonable estimate of

his actual and consequential loss by reason of the taking of his 3 hectares of land,
destruction of the sugarcane therein and the reduce in the yield of his sugarcane farm
due to water lagging and seepage; plus attorney's fees of P10,000 and litigation
expenses of P5,000.00. (p. 36, Rollo)

On appeal, the Court of Appeals modified the trial court's decision in that the attorney's
fees and litigation expenses were reduced from P10,000.00 and P5,000.00 to
P5,000.00 and P2,500.00 respectively. The decision became final and executory on
September 21, 1985.

On May 7, 1986, on motion of the petitioner, the trial court ordered the issuance of a writ
of execution to implement the judgment of the appellate court.

On August 11, 1986, the respondent Republic filed a motion to set aside the order of
May 7, 1986 as well as the writ of execution issued pursuant thereto, contending that
the funds of the National Irrigation Authority (NIA) are government funds and therefore,
cannot be disbursed without a government appropriation.

On October 6, 1986, the lower court issued an order modifying its order of May 7, 1986,
directing instead that the respondenit Republic deposit with the Philippine National Bank
(PNB) in the name of the petitioner, the amount adjudged in favor of the latter.

The respondent filed a petition with the Court of Appeals to annul the orders of May 7
and October 6, 1986.

On November 25, 1986, the appellate court rendered the questioned decision setting
aside the aforementioned orders of the trial court on the ground that public or
government funds are not subject to levy and execution.
In this instant petition, the petitioner assails the decision of the appellate court as being
violative of his right to just compensation and due process of law. He maintains that
these constitutional guarantees transcend all administrative and procedural laws and
jurisprudence for as between these said laws and the constitutional rights of private
citizens, the latter must prevail.

As admitted by the respondent Republic, the NIA took possession of the expropriated
property in 1975 and for around ten (10) years already, it has been servicing the
farmers on both sides of the Barotac Viejo Irrigation Project in Iloilo Province and has
been collecting fees therefor by way of taxes at the expense of the petitioner. On the
other hand, the petitioner, who is already more than eighty (80) years old and sickly, is
undergoing frequent hospitalization, and is made to suffer further by the unconscionable
delay in the payment of just compensation based on a final and executory judgment.

The respondent Republic, on the other hand, argues that while it has no intention of
keeping the land and dishonoring the judgment, the manner by which the same will
have to be satisfied must not be inconsistent with prevailing jurisprudence, and that is,
that public funds such as those of the respondent NIA cannot be disbursed without the
proper appropriation.

We rule for the petitioner.

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. Thus, in the case of Province of Pangasinan v.
CFI Judge of Pangasinan, Branch VIII (80 SCRA 117, 120-121), this Court speaking
through then Chief Justice Fernando ruled:

There is full and ample recognition of the power of eminent domain by Justice Street in a
leading case of Visayan Refining Co. v. Camus (4C) Phil. 550 [1919]) decided prior to the
Commonwealth, the matter being governed by the Philippine Autonomy Act of 1916,
otherwise known as the Jones Law. It was characterized as "inseparable from
sovereignty being essential to the existence of the State and inherent in government
even in its most primitive forms." (Ibid, 558) Nonetheless, he was careful to point out: "In
other words, the provisions now generally found in the modern laws of constitutions of
civilized countries to the effect that private property shall not be taken for public use
without just compensation have their origin in the recognition of a necessity for restraining
the sovereign and protecting the individual. (Ibid, 559) Moreover, he did emphasize:
"Nevertheless it should be noted that the whole problem of expropriation is resolvable in
its ultimate analysis into a constitutional question of due process of law. ... Even were
there no organic or constitutional provision in force requiring compensation to be paid,
the seizure of one's property without payment, even though intended for a public use,
would undoubtedly be held to be a taking without due process of law and a denial of the
equal protection of the laws. That aspect of the matter was stressed in the recent case of
J. M. Tuason and Co., Inc. v. Land Tenure Administration. (31 SCRA 413) Conformably
to such a fundamental principle then, in accordance with a constitutional mandate, this
Court has never hesitated to assure that there be just compensation. If it were otherwise,
the element of arbitrariness certainly would enter. It is bad enough that an owner of a
property, in the event of the exercise of this sovereign prerogative, has no choice but to
 yield to such a taking. It is infinitely worse if thereafter, he is denied all these years the
payment to which he is entitled. This is one of the instances where law and morals speak
to the same effect. (Cf. Province of Tayabas v. Perez, 66 Phil. 467 [1938] and other
related cases).

The property of the petitioner was taken by the government in 1975. The following year,
respondent NIA made the required deposit of P2,097.30 with the Philippine National
Bank and within the same year, the Barotac Viejo Irrigation Project was finished. Since
then, for more than a period of ten (10) years, the project has been of service to the
farmers nearby in the province of Iloilo. It is, thus, inconceivable how this project could
have been started without the necessary appropriation for just compensation. Needless
to state, no government instrumentality, agency, or subdivision has any business
initiating expropriation proceedings unless it has adequate funds, supported by proper
appropriation acts, to pay for the property to be seized from the owner. Not only was the
government able to make an initial deposit of P2,097.30 but the project was finished in
only a year's time. We agree with the petitioner that before the respondent NIA
undertook the construction of the Barotac Viejo Irrigation Project, the same was duly
authorized, with the corresponding funds appropriated for the payment of expropriated
land and to pay for equipment, salaries of personnel, and other expenses incidental to
the project. The NIA officials responsible for the project have to do plenty of explaining
as to where they misdirected the funds intended for the expropriated property.

The present case must be distinguished from earlier cases where payment for property
expropriated by the National Government may not be realized upon execution. As a
rule, the legislature must first appropriate the additional amount to pay the award. (See
Commissioner of Public Highways v. San Diego, 31 SCRA 616 and Visayan Refining
Co. v. Camus & Paredes, 40 Phil. 550).

In the present case, the Barotac Viejo Project was a package project of government.
Money was allocated for an entire project. Before bulldozers and ditch diggers tore up
the place and before millions of pesos were put into the development of the project, the
basic responsibility of paying the owners for property seized from them should have
been met.

Another distinction lies in the fact that the NIA collects fees for the use of the irrigation
system constructed on the petitioner's land. It does not have to await an express act of
Congress to locate funds for this specific purpose. The rule in earlier precedents that
the functions and public services rendered by the state cannot be allowed to be
paralyzed or disrupted by the diversion of public funds from their legitimate and specific
objects (Commissioner of Public Highways v. San Diego, supra, at p. 625) is not
applicable here. There is no showing of any public service to be disrupted if the fees
collected from the farmers of Iloilo for the use of irrigation water from the disrupted
property were utilized to pay for that property.

We must emphasize that nowhere in any expropriation case has there been a deviation
from the rule that the Government must pay for expropriated property. In the
Commissioner of Public Highways case, the Court stressed that it is incumbent upon
the legislature to appropriate the necessary amount because it cannot keep the land
and dishonor the judgment.

This case illustrates the expanded meaning of "public use" in the eminent domain
clause. (Constitution, Article III, Section 9.) The petitioner's land was not taken for the
construction of a road, bridge, school, public buildings, or other traditional objects of
expropriation. When the National Housing Authority expropriates raw land to convert
into housing projects for rent or sale to private persons or the NIA expropriates land to
construct irrigation systems and sells water rights to farmers, it would be the height of
abuse and ignominy for the agencies to start earning from those properties while
ignoring final judgments ordering the payment of just compensation to the former
owners.

Just compensation means not only the correct determination of the amount to be paid to
the owner of the land but also the payment of the land within a reasonable time from its
taking. Without prompt payment, compensation cannot be considered "just" for the
property owner is made to suffer the consequence of being immediately deprived of his
land while being made to wait for a decade or more before actually receiving the
amount necessary to cope with his loss. Thus, in the case of Provincial Government of
Sorsogon v. Rosa E. Vda. de Villaroyo (153 SCRA 291), we ruled:

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.

Under ordinary circumstances, immediate return to the owners of the unpaid property is
the obvious remedy. ln cases where land is taken for public use, public interest, however,
must, be considered. The children of Gubat, Sorsogon have been using the disputed land
as their high school athletic grounds for thirty years. (Emphasis supplied)

In the present case, the irrigation project was completed and has been in operation since
1976. The project is benefitting the farmers specifically and the community in general.
Obviously, the petitioner's land cannot be returned to him. However, it is high time that
the petitioner be paid what was due him eleven years ago. It is arbitrary and capricious
for a government agency to initiate expropriation proceedings, seize a person's property,
allow the judgment of the court to become final and executory and then refuse to pay on
the ground that there are no appropriations for the property earlier taken and profitably
used. We condemn in the strongest possible terms the cavalier attitude of government
officials who adopt such a despotic and irresponsible stance.

WHEREFORE, the petition is hereby GRANTED. The decision and order of the
respondent appellate court dated November 25, 1987 and February 16, 1987
respectively are ANNULLED and SET ASIDE. The Regional Trial Court of Iloilo City is
ordered to immediately execute the final judgment in Civil Case No. 10530 and effect
payment of P200,000.00 as just compensation deducting therefrom the partial payment
already deposited by the respondent at the institution of the action below with legal
interest from September 21, 1985, plus P5,000.00 attorney's fees and P2,500.00
litigation expenses.

SO ORDERED.

Fernan, C.J., Feliciano, Bidin and Cortes, JJ., concur.