EPZA VS.

DULAY

Facts:  The four parcels of land which are the subject of this case is where
the Mactan Export Processing Zone Authority in Cebu (EPZA) is to be
constructed. Private respondent San Antonio Development Corporation (San
Antonio, for brevity), in which these lands are registered under, claimed
that the lands were expropriated to the government without them reaching
the agreement as to the compensation.

Respondent Judge Dulay then issued an order for the appointment of the

commissioners to determine the just compensation. It was later found out
that the payment of the government to San Antonio would be P15 per
square meter, which was objected to by the latter contending that under PD
1533, the basis of just compensation shall be fair and according to
the fair market value declared by the owner of the property sought
to be expropriated, or by the assessor, whichever is lower.
Such objection and the subsequent Motion for Reconsideration were denied
and hearing was set for the reception of the commissioner’s report. EPZA
then filed this petition for certiorari and mandamus enjoining the
respondent from further hearing the case.

Issue: Whether or Not the exclusive and mandatory mode of

determining just compensation in PD 1533 is unconstitutional.

Held: 

Yes. The Supreme Court ruled that the mode of determination of just
compensation in PD 1533 is unconstitutional.
The ascertainment of what constitutes just compensation for
property taken in eminent domain cases is a judicial prerogative,
and PD 76, which fixes payment on the basis of the assessment by
the assessor or the declared valuation by the owner, is
unconstitutional.

The method of ascertaining just compensation constitutes impermissible

encroachment to judicial prerogatives. It tends to render the courts inutile
in a matter in which under the Constitution is reserved to it for financial
determination. The valuation in the decree may only serve as guiding
principle or one of the factors in determining just compensation, but
it may not substitute the court’s own judgment as to what amount
should be awarded and how to arrive at such amount. The
determination of just compensation is a judicial function. The
executive department or the legislature may make the initial determination
but when a party claims a violation of the guarantee in the Bill of
Rights that the private party may not be taken for public use without just
compensation, no statute, decree, or executive order can mandate that its
own determination shall prevail over the court’s findings. Much less can the
courts be precluded from looking into the justness of the decreed
compensation