THIRD DIVISION

[G.R. No. 107916. March 31, 1995.]

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

SYLLABUS

REMEDIAL LAW; PROVISIONAL REMEDIES; TEMPORARY RESTRAINING ORDER; WILLFUL REFUSAL TO COMPLY WITH THE TERMS THEREOF CONSTITUTES CONTEMPT OF COURT. — Respondent Municipality of Bunawan, acting through its mayor, clearly disobeyed the restraining order issued by the Court on December 8, 1993. Respondent admits having constructed temporary booths on the subject land as well as having used the buildings thereon for public service-oriented activities. The explanation given by respondent municipality is unacceptable. The purpose for which the buildings were used is immaterial. Respondent was duty bound to obey the injunction issued by this Court. The TRO was explicit in its language. Violating its purpose and language is patently contemptuous and merits the corresponding punishment. We reiterate the restraining order issued by the Court on December 8, 1993. WHEREFORE, the respondent Municipality of Bunawan, Agusan Del Sur, through its incumbent Municipal Mayor, is cited for contempt and is hereby FINED in the amount of one thousand pesos (P1,000.00) with the WARNING that a repetition or continuation of the acts herein found to constitute contempt of court will be dealt with more severely. The mayor is hereby ordered to DEMOLISH the structures subject of the restraining order.

D E C I S I O N

ROMERO, J p:

Petitioner seeks the resolution of his Omnibus Motion for the Enforcement of Restraining Order and Contempt.In connection with the petition for review involving the expropriation of petitioners' land by respondent Municipality of Bunawan, Agusan Del Sur, the Court

on December 8, 1993 resolved to issue a temporary restraining order enjoining and restraining:"a) Judge Evangeline S. Yuipco of the Regional Trial Court of Prosperidad, Agusan Del Sur, Branch 6, from further enforcing her decision, dated July 2, 1991 in Special Civil Case No. 719, for "Eminent Domain", and

"b) the respondent Municipality of Bunawan, through its incumbent Mayor from using and occupying all buildings constructed within and from further constructing any building on the land subject of the herein petition, effective immediately and until further orders from this Court."

In his aforesaid Omnibus Motion, petitioner alleges that the municipal mayor continues to use the buildings on the subject land and even constructed new "blocktiendas" thereon in October 1994. Photographs, affidavits and an invitation to an affair held there attached to the motion show such continuing use of the subject land. He prays that the municipal mayor and municipal officials be cited for contempt. prLLPetitioner also alleges that the sheriff has refused to enforce the TRO enjoining his regional trial court from proceeding with the case. Accordingly, he prays that a law enforcement agency be designated to enforce the restraining order by padlocking the buildings and demolishing the blocktiendas on the land.In their opposition to the motion, respondent municipal mayor admits the construction of temporary booths for a certain municipal project which was due to be demolished after October 29, 1994. However, no photos or other proofs were submitted to show that the booths had indeed been demolished. Respondent also alleges that the buildings and the land were indeed used, not for Mayor Bustillo's personal purposes, but for public service and public interest.Respondent Municipality of Bunawan, acting through its mayor, clearly disobeyed the restraining order issued by the Court on December 8, 1993. Respondent admits having constructed temporary booths on the subject land as well as having used the buildings thereon for public service-oriented activities. The explanation given by respondent municipality is unacceptable. The purpose for which the buildings were used is immaterial. Respondent was duty bound to obey the injunction issued by this Court. The TRO was explicit in its language. Violating its purpose and language is patently contemptuous and merits the corresponding punishment.

We reiterate the restraining order issued by the Court on December 8, 1993.WHEREFORE, the respondent Municipality of Bunawan, Agusan Del Sur, through its incumbent Municipal Mayor, is cited for contempt and is hereby FINED in the amount of one thousand pesos (P1,000.00) with the WARNING that a repetition or continuation of the acts herein found to constitute contempt of court will be dealt with more severely. The mayor is hereby ordered to DEMOLISH the structures subject of the restraining order. prcd

SO ORDERED.

Feliciano, Melo, Vitug and Francisco, JJ., concur.

SECOND DIVISION

[G.R. No. 6690. March 29, 1912.]

SILVESTRA TENORIO Y VILLAMIL, plaintiff-appellee, vs. THE MANILA RAILROAD COMPANY, defendant-appellant.

Jose Robles Lahesa and O'Brien & DeWitt, for appellant

A. B. Ritchey, for appellee.

SYLLABUS

1. RAILROAD CORPORATIONS; EMINENT DOMAIN; STATUTORY CONSTRUCTION. — A statute authorizing a railroad company to exercise the power of eminent domain being in derogation of general right, and conferring upon it exceptional privileges with regard to the property of others of which it may have need, should be construed strictly in favor of land owners whose property is affected by its terms; and before any right to take possession of land under such a statute can be lawfully exercised its provisions must be "fully and fairly" complied with.2. ID.; ID.; ACTION FOR DAMAGES. — The seizure and occupation of property by such a railroad company without first serving process on the owners or occupants in the manner and form prescribed by the statute authorizing condemnation proceedings, is so gross a violation of one of the most essential conditions precedent prescribed by the statute, that no claim by the company that it is acting or desires to act under the authority of its charter in taking possession of this property, can be heard by way of defense to an action for damages for the unlawful trespass.3. ID.; ID.; ID.; ERROR. — Judgment for damages against the defendant railroad company sustained, notwithstanding the fact that there was error in excluding certain evidence offered by the defendant, it appearing from a review of the whole record that the result would not have been otherwise had this evidence been admitted.4. ID.; ID.; ID.; MARKET VALUE OF LAND. — While evidence touching the assessed valuation of land is by no means conclusive as to its actual market value, and is in general of but little value, nevertheless evidence of this nature is competent and admissible for what it is worth, where the question of damages for the unlawful taking of such land is at issue.

5. ID.; ID.; ID.; UNLAWFUL POSSESSION. — A railroad company having unlawfully taken possession of a part of a tract of land, and by its operations thereon rendered the whole tract worthless to the owner, the latter is entitled to abandon the entire tract and recover damages for its full value.D E C I S I O N

CARSON, J p:

This is an action to recover damages for the alleged unlawful detention and occupation by defendant of a small parcel of land, the property of the plaintiff, situated near the railroad station in Dagupan in the Province of Pangasinan.Plaintiff alleges that the land in question, some 1,219 square meters in extent, is worth P7,314.40; that before it was entered upon by defendant, two small houses erected thereon brought her a rental at the rate of P280 per annum of which she has been deprived by defendant since the month of March, 1907; that the defendant company compelled her to move three buildings from the land taken by it, whereby she had suffered damages in the sum of P400 and that as a result of the unlawful occupation of this tract of land by the defendant company she had suffered further damages to the extent of P250 from the accumulation of water on an adjoining parcel of land of which she is the owner.Defendant company answering, admits that it has taken and is now occupying a small part of the land in question, 314 meters in extent; but alleges that it is now and always has been ready and willing to pay the plaintiff a fair price for the land thus taken and all damages to the remainder of her land resulting therefrom.In explanation of the fact that it took possession of and continues to occupy this part of the land in question with out the express consent of the plaintiff and without having made payment therefor, defendant company alleges that the land taken is a part of certain lands described in condemnation proceedings instituted in the Court of First Instance of the Province of Pangasinan, whereby, by virtue of the authority lawfully conferred upon defendant company, it sought to have the land in question, and other lands in that province, condemned for use as a roadbed; and while the facts are not fully developed in the record, it does appear that condemnation proceedings were regularly instituted for the purposes indicated, and there are indications in the record that the land in question was included in the lands sought to be condemned

therein, but that in those proceedings it was described as the property of one Silvino Tenorio, although the name of the true owner, the plaintiff in this action, is, as she alleges, Silvestra Tenorio.The defendant company both by demurrer and answer, undertook in the court below to question plaintiff s right to maintain this action (which is an ordinary action for damages for trespass on plaintiff's land) on the ground that under the statutory provisions for the condemnation of lands by virtue of which defendant company had already instituted proceedings looking to the condemnation of the land in question, it was the duty of the plaintiff to seek redress in those proceedings. But while we agree with counsel for defendant company that, had the defendant company before entering upon and taking possession of the land in question, proceeded in accordance with the provisions of law touching condemnation proceedings, by virtue of which it claims to have been acting, in that event the plaintiff would not be entitled to bring a separate action; we are of opinion that in the absence of proof of a substantial compliance with the provisions of law touching such proceedings the plaintiff was clearly entitled to institute any appropriate action to recover the damages which she may have suffered as a result of an unauthorized and unlawful seizure and occupation of her property."The mode in which land may be condemned and the steps to be taken for that purpose are prescribed either by the statute or charter conferring the right of eminent domain or by a general law. The remedy so provided is exclusive, and as a general rule the steps prescribed by the statute must be followed or the proceedings will be void. Since these statutes are in derogation of general right and of common-law modes of procedure, they must be strictly construed in favor of the landowner, and must be at least substantially or as sometimes said, 'fully and fairly' complied with. Indeed the general rule in the absence of statutory provision to the contrary, is that they must be strictly complied with. . . . Thus the statutes must be complied with as to filing and contents of petition or application, . . . notice to the landowner and other persons interested in the property, . . . and all other conditions precedent prescribed by the statute." (Cyclopedia of Law and Procedure, vol. 15, pp. 815-817, and cases cited. See also American and English Encyclopedia of Law, vol. 10, p. 1054, and cases cited.)The mode in which the defendant company was authorized to exercise the power of eminent domain is

to be found in various Acts of the Commission of which the following are pertinent citations:"The Government of the Philippine Islands, or of any province or department thereof, or of any municipality, and any person, or public or private corporation having by law the right to condemn private property for public use, shall exercise that right in the manner hereinafter prescribed." (Act No. 190 of the Philippine Commission, sec. 241.)"The complaint in condemnation proceedings shall state with certainty the right of condemnation, and describe the property sought to be condemned, showing the interest of each defendant separately." (Act No. 190, sec. 242.)"In addition to the method of procedure authorized for the exercise of the power of eminent domain by sections two hundred and forty-one to two hundred and fifty-three, inclusive, of Act Numbered One hundred and ninety, entitled 'An Act providing a Code of Procedure in civil actions and special proceedings in the Philippine Islands,' the procedure in this Act provided may be adopted whenever a railroad corporation seeks to appropriate land for the construction, extension, or operation of its railroad line." (Act No. 1258, sec. 1.)"Whenever a railroad corporation is authorized by its charter, or by general law, to exercise the power of eminent domain in the city of Manila or in any province, and has not obtained by agreement with the owners thereof the lands necessary for its purposes as authorized by law, it may in its complaint, . . . in the Court of First Instance of the province where the land is situated, Join as defendants all persons owning or claiming to own, or occupying, any of the lands sought to be condemned, or any interest therein, within the city or province, respectively, showing, so far as practicable, the interest of each defendant and stating with certainty the right of condemnation, and describing the property sought to be condemned. Process requiring the defendants to appear in answer to the complaint shall be served upon all occupants of the land sought to be condemned, and upon the owners and all persons claiming interest therein, so far as known. If the title to any lands sought to be condemned appears to be in the Insular Government, although the lands are occupied by private individuals, or if it is uncertain whether the title is in the Insular Government or in private individuals, or if the title is otherwise so obscure or doubtful that the company can not with accuracy or certainty specify who are the real owners, averment may be made by the company in its complaint to that effect. Process

shall be served upon residents and nonresidents in the same manner as provided therefor in Act Numbered One hundred and ninety, . . .." (Act No. 1258, sec. 3.)". . . The provisions . . . as to persons not notified of the condemnation proceedings, shall be such as are defined in sections 248 to 253, inclusive, of Act No. 190." (Act No. 1258, sec. 5, last five lines ) "Nothing herein contained shall be construed so as to injure, prejudice, defeat, or destroy the estate, right, or title of any person claiming land or any part thereof, or any interest therein, who was not made a party defendant to the condemnation proceeding and did not have actual or constructive notice of the proceeding in such manner as the law requires." (Act No. 190, sec. 253.)The record wholly fails to disclose that process requiring the plaintiff to appear and answer the complaint filed in the condemnation proceedings was served upon her, or upon any of the occupants of the land; and this, notwithstanding the fact, as found by the trial court and practically conceded by counsel for defendant, that she was the known owner of the land in question.The statute authorizing the defendant company to exercise the power of eminent domain, being in derogation of general right and conferring upon it exceptional privileges with regard to the property of others of which it may have need, should be construed strictly in favor of landowners whose property is affected by its terms. Hence before any right to take possession of land under this statute could have been lawfully exercised by the company, the provisions of the statute must have been "fully and fairly" complied with. Manifestly, the seizure and occupation of property without first serving process on the owners or occupants is so gross a violation of one of the most essential conditions precedent prescribed by the statute, that no claim by the company that it is acting or desires to act under the authority of its charter in taking possession of this property can be heard by way of defense to an action for damages for the unlawful trespass. The right to take such land, over the objection of the owner, and to have a fair valuation placed thereon in special proceedings prescribed by law for that purpose is made to depend upon the compliance by the company with certain conditions precedent, and of course no rights can or do arise unless such conditions are fully and fairly complied with. Not only did the defendant company fail to prove in the lower court that it had served

process on the owner and the occupants of the land, but it did not even claim to have done so when its counsel undertook to introduce in evidence the record in the pending condemnation proceedings. And, indeed, no such claim has at any time been made on its behalf.Plaintiff's evidence as to the value of the land appropriated is not wholly satisfactory but in the absence of any evidence whatever, worthy of the name, to put in doubt the testimony of her witnesses, we do not think that we would be justified in reversing the findings of fact by the trial judge who arrived at his conclusions after seeing and hearing these witnesses testify.Counsel for defendant company assigns among other errors the action of the trial judge in excluding certain testimony and insists that the exclusion of these witnesses justifies and requires the reversal of the judgment of the court below and the return of the record for a new trial. But while we agree with counsel that the trial judge erred in excluding certain evidence offered by the defendant, we are satisfied upon a review of the whole record that the result would not have been otherwise had this evidence been admitted, and we do not think that a reversal should be granted for error of this character.We think that the evidence of defendant, including the map, whereby counsel undertook to show the exact amount of the land of the plaintiff occupied by the roadbed of the railroad; as also the evidence offered touching the assessed valuation of the land of the plaintiff should have been admitted for what it was worth. But we do not think that had this evidence been admitted, and granting that it would have been to the effect claimed for it by counsel for the defendant, that the result would have been different.The conclusion of the trial judge from the evidence before him was that the entire tract mentioned in his judgment had been rendered substantially worthless to the plaintiff by the unauthorized occupation of a part of it by the defendant company, and we do not think that the evidence on which he based this conclusion would be affected by proof that only a part of the tract was actually occupied and retained in possession. The theory on which the trial judge correctly proceeded was that defendant company having unlawfully taken possession of a part of the tract of land in question, and- by its operations thereon rendered the whole tract worthless to the plaintiff, plaintiff is entitled to abandon the entire tract, and recover damages for its full value. So also proof of the assessed valuation of the land in question,

while proper and competent evidence in a case of this character, is at best of but very little value in a judicial inquiry as to its actual market value. We do not believe that the weight to be given the practically undisputed testimony of the witnesses for the plaintiff as to the actual market value of the land in question would have been materially affected by proof that this land was assessed at a valuation greatly less than that placed upon it by the trial judge.The judgment appealed from should be and is hereby affirmed with the costs of this instance against the appellant.Torres, Mapa, Johnson, and Moreland, JJ., concur.

THIRD DIVISION

[G.R. No. 125218. January 23, 1998.]

FILSTREAM INTERNATIONAL INCORPORATED, petitioner, vs. COURT OF APPEALS, JUDGE FELIPE S. TONGCO and THE CITY OF MANILA, respondents.

[G.R. No. 128077. January 23, 1998.]

FILSTREAM INTERNATIONAL INCORPORATED, petitioner, vs. COURT OF APPEALS, ORLANDO MALIT, ANTONIO CAGUIAT, ALICIA CABRERA, ARMANDO LACHICA, JACINTO CAGUIAT, GLORIA ANTONIO, ELIZALDE NAVARRA, DOLORES FUENTES, SUSANA ROY, ANTONIO IBAÑEZ, BENIGNO BASILIO, LUCERIA DEMATULAC, FLORENCIA GOMEZ, LAZARO GOMEZ, JOSE GOMEZ, VENANCIO MANALOTO, CRISTINO UMALI, DEMETRIA GATUS, PRISCILLA MALONG, DOMINGO AGUILA, RAMON SAN AGUSTIN, JULIAN FERRER, JR., FRANCISCO GALANG, FLORENTINO MALIWAT, SEVERINA VILLAR, TRINIDAD NAGUIT, JOSE NAGUIT, FORTUNATO AGUSTIN CABRERA, GAUDENCIO INTAL, DANILO DAVID, ENRIQUE DAVID, VICENTE DE GUZMAN, POLICARPIO LUMBA, BELEN PALMA, ELEN SOMVILLO, LEONARDO MANICAD, OPRENG MICLAT, BENITA MATA, GREGORIO LOPEZ, MARCELINA SAPNO, JESUS MERCADO and CALIXTO GOMEZ, respondents.

Siruelo, Muyco & Associates Law Office for petitioner in G.R. Nos. 125218 & 128077.

Lucky M. Damasen for private respondent in G.R. No. 128077.

SYNOPSIS

Petitioner, Filstream International, Inc., obtained a favorable judgment in an ejectment case it filed before the Metropolitan Trial Court of Manila. Said judgment became final and executory. However, during the pendency of the ejectment proceedings, the City of Manila passed an ordinance authorizing Mayor Lim to expropriate the subject properties of petitioner then occupied by private respondents. Pursuant to the complaint for eminent domain filed by the City of Manila, the trial court issued a Writ of Possession. On appeal, the Court of Appeals likewise finds for the

condemnation of the property and further issuing a TRO and Writ of Preliminary Injunction against the order issued by the trial court for the imposition of its ruling in the ejectment case which has became final and executory.Petitioner Filstream went to the Supreme Court objecting to the issuance of the TRO and the preliminary injunction enjoining the execution of the writ of demolition issued in the ejectment suit.

There is no dispute as to the existence of a final and executory judgment in favor of petitioner Filstream ordering the ejectment of private respondents from the properties subject of the dispute. However, it must also be conceded that the City of Manila has an undeniable right to exercise its power of eminent domain within its jurisdiction. More specifically, the City of Manila has the power to expropriate private property in the pursuit of its urban land reform and housing program as explicitly laid out in the Revised Charter of the City of Manila.

In fact, the City of Manila's right to exercise these prerogatives notwithstanding the existence of a final and executory judgment over the property to be expropriated has been upheld by this Court in the case of Philippine Columbian Association vs. Panis.

Nevertheless, despite the existence of a serious dilemma, local government units are not given an unbridled authority when exercising their power of eminent domain in pursuit of solutions to these problems. The basic rules shall have to be followed. The exercise by local government units of the power of eminent domain is not without limitations.

Private lands rank last in the order of priority for purposes of socialized housing. In the same vein, expropriation proceedings are to be resorted to only when the other modes of acquisition have been exhausted. Compliance with these conditions must be deemed mandatory because these are the only safeguards in securing the right of owners of private property to due process when their property is expropriated for public use.

Petitioner Filstream's properties were expropriated and ordered condemned in favor of the City of Manila sans any showing that resort to the acquisition of other lands listed under Sec. 9 of RA 7279 have proved futile. Evidently, there was a violation of

petitioner Filstream's right to due process which must accordingly be rectified. EDaHAT

SYLLABUS

1. ADMINISTRATIVE LAW; 1991 LOCAL GOVERNMENT CODE; LOCAL GOVERNMENT; CITY OF MANILA HAS THE RIGHT TO EXERCISE ITS POWER OF EMINENT DOMAIN. — The City of Manila has an undeniable right to exercise its power of eminent domain within its jurisdiction. The right to expropriate private property for public use is expressly granted to it under Section 19 of the 1991 Local Government Code. More specifically, the City of Manila has the power to expropriate private property in the pursuit of its urban land reform and housing program as explicitly laid out in the Revised Charter of the City of Manila (R A. No. 409). In fact, the City of Manila's right to exercise these prerogatives notwithstanding the existence of a final and executory judgment over the property to be expropriated has been upheld by this Court in the case of Philippine Columbian Association vs. Panis, G.R. No. 106528, December 21, 1993.

2. ID.; ID.; ID.; EXERCISE OF POWER OF EMINENT DOMAIN IS SUBJECT TO LIMITATIONS. — Local government units are not given an unbridled authority when exercising their power of eminent domain in pursuit of solutions to these problems. The basic rules still have to be followed, which are as follows: "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. 3, Sec. 1, 1987 Constitution); private property shall not be taken for public use without just compensation (Art. 3, Section 9, 1987 Constitution)." Thus, the exercise by local government units of the power of eminent domain is not without limitations. Even Section 19 of the 1991 Local Government Code is very explicit that it must comply with the provisions of the Constitution and pertinent laws. The governing law that deals with the subject of expropriation for purposes of urban land reform and housing is Sections 9 and 10, Republic Act 7279 (Urban Development and Housing Act of 1992). Very clear from the abovequoted provisions are the limitations with respect to the order of priority in acquiring private lands and in resorting to expropriation proceedings as a means to acquire the same. Private lands rank last in the order of priority for purposes of socialized housing. In the same vein, expropriation proceedings are to be resorted to only

when the other modes of acquisition have been exhausted. Compliance with these conditions must be deemed mandatory because these are the only safeguards in securing the right of owners of private property to due process when their property is expropriated for public use.

3. ID.; ID.; ID.; ID.; VIOLATION OF RIGHT TO DUE PROCESS MANIFEST IN CASE AT BAR. — We have carefully scrutinized the records of this case and found nothing that would indicate that respondent City of Manila complied with Sec. 9 and Sec. 10 of R.A. 7279. Petitioner Filstream's properties were expropriated and ordered condemned in favor of the City of Manila sans any showing that resort to the acquisition of other lands listed under Sec. 9 of R.A. 7279 have proved futile. Evidently, there was a violation of petitioner Filstream's right to due process which must accordingly be rectified. Indeed, it must be emphasized that the State has a paramount interest in exercising its power of eminent domain for the general good considering that the right of the State to expropriate private property as long as it is for public use always takes precedence over the interest of private property owners. However we must not lose sight of the fact that the individual rights affected by the exercise of such right are also entitled to protection, bearing in mind that the exercise of this superior right cannot override the guarantee of due process extended by the law to owners of the property to be expropriated. In this regard, vigilance over compliance with the due process requirements is in order.

D E C I S I O N

FRANCISCO, J p:

In resolving the instant petitions, the Court is tasked to strike a balance between the contending interests when the state exercises its power of eminent domain. On one side, we have the owners of the property to be expropriated who must be duly compensated for the loss of their property, while on the other is the State which must take the property for public use. prLL

Petitioner, Filstream International, Inc., is the registered owner of the properties subject of this dispute consisting of adjacent parcels of land situated in Antonio Rivera Street, Tondo II, Manila, with a total area of 3,571.10 square meters and covered by

T.C.T. Nos. 203937, 203936, 169198, 169199, 169200 and 169202 of the Register of Deeds of Manila.

On January 7, 1993, petitioner filed an ejectment suit before the Metropolitan Trial Court of Manila (Branch 15) docketed as Civil Case No. 140817-CV against the occupants of the above mentioned parcels of land (herein private respondents in G. R. No. 128077) on the grounds of termination of the lease contract and non-payment of rentals. Judgment was rendered by the MTC on September 14, 1993 ordering private respondents to vacate the premises and pay back rentals to petitioner. 1

Not satisfied, private respondents appealed the decision to the Regional Trial Court of Manila, Branch 4 (Civil Case No. 93-68130) which in turn affirmed the decision of the MTC in its decision dated February 22, 1994. Still not content, private respondents proceeded to the Court of Appeals via a petition for review (CA-G. R. SP No. 33714). The result however remained the same as the CA affirmed the decision of the RTC in its decision dated August 25, 1994. 2 Thereafter, no further action was taken by the private respondents, as a result of which the decision in the ejectment suit became final and executory.

However, it appeared that during the pendency of the ejectment proceedings private respondents filed on May 25, 1993, a complaint for Annulment of Deed of Exchange against petitioner Filstream which was docketed in Civil Case No. 93-66059 before the RTC of Manila, Branch 43. It was at this stage that respondent City of Manila came into the picture when the city government approved Ordinance No. 7813 3 on November 5, 1993, authorizing Mayor Alfredo S. Lim to initiate the acquisition by negotiation, expropriation, purchase, or other legal means certain parcels of land registered under T.C.T. Nos. 169193, 169198, 169190, 169200, 169202 and 169192 of the Registry of Deeds of Manila which formed part of the properties of petitioner then occupied by private respondents. Subsequently, the City of Manila approved Ordinance No. 7855 4 declaring the expropriation of certain parcels of land situated along Antonio Rivera and Fernando Ma. Guerrero streets in Tondo, Manila which were owned by Mr. Enrique Quijano Gutierrez, petitioner's predecessor-in-interest. The said properties were to be sold and distributed to qualified tenants of the area pursuant to the Land Use Development Program of the City of Manila.

On May 23, 1994, respondent City of Manila filed a complaint for eminent domain (Civil Case No. 94-70560) before the RTC of Manila, Branch 42, 5 seeking to expropriate the aforecited parcels of land owned by petitioner Filstream which are situated at Antonio Rivera Street, Tondo II, Manila. 6

Pursuant to the complaint filed by respondent City of Manila, the trial court issued a Writ of Possession 7 in favor of the former which ordered the transfer of possession over the disputed premises to the City of Manila.

At this juncture, petitioner Filstream filed a motion to dismiss the complaint for eminent domain as well as a motion to quash the writ of possession. The motion to dismiss was premised on the following grounds: no valid cause of action; the petition does not satisfy the requirements of public use and a mere clandestine maneuver to circumvent the writ of execution issued by the RTC of Manila, Branch 4 in the ejectment suit; violation of the constitutional guarantee against non-impairment of obligations and contracts; price offered was too low hence violative of the just compensation provision of the constitution and the said amount is without the certification of the City Treasurer for availability of funds. 8 With respect to the motion to quash the writ of possession, petitioner raised the following objections: failure to comply with Section 2 of Rule 67 of the Rules of Court, Ordinance No. 7813 is a void enactment for it was approved without a public hearing and violative of the constitutional guarantee against impairment of obligations and contracts; the price is too low and unconscionable violating the just compensation provision of the constitution, and the said writ is tainted with infirmity considering the absence of a certification from the City of Manila that there is an immediately available fund for the subject expropriation. 9

Respondent City of Manila filed its opposition 10 to petitioner Filstream's two motions and to which petitioner accordingly filed a reply. 11 On September 30, 1994, the RTC of Manila, Branch 42, issued an order denying petitioner Filstream's motion to dismiss and the motion to quash the Writ of Possession and declared as follows:

"IN FINE, the defendant's motion to dismiss and motion to quash writ of possession are both without merit and are hereby DENIED and the subject parcels of lands covered by TCT Nos. 203937, 203936, 169198, 169199, 169200 and 169202 (of the Register of Deeds of Manila) located at Antonio Rivera Street, Tondo II, Manila with a total area of 3,571.10 square meters are hereby declared CONDEMNED in favor of the City of Manila for distribution and resale to all poor and landless qualified residents/tenants in the said area under the city's 'land-for-the landless' program upon payment of just compensation which is yet to be determined by this Court." 12

Petitioner filed a motion for reconsideration 13 as well as a supplemental motion for reconsideration 14 seeking the reversal of the above-quoted order but the same were denied. 15 Still, petitioner filed a subsequent motion to be allowed to file a second motion for reconsideration but it was also denied.

Aggrieved, petitioner filed on March 31, 1996, a Petition for Certiorari with the Court of Appeals (CA-G.R. SP No. 36904) seeking to set aside the September 30, 1994 order of the RTC of Manila, Branch 42. However, on March 18, 1996, respondent CA issued a resolution dismissing the petition in this wise:

"It appearing that the above-entitled petition is insufficient in form and substance — it does not comply with Section 2(a), Rule 6 of the Revised Internal Rules of the Court of Appeals which requires that the 'petition shall be . . . accompanied by . . . other pertinent documents and papers,' aside from the fact that copies of the pleadings attached to the petition are blurred and unreadable — this Court resolved to summarily DISMISS the same (petition). 16

Petitioner filed a motion for reconsideration and attached clearer copies of the pertinent documents and papers pursuant to Section 2(a), Rule 6 of the Revised Internal Rules of the Court of Appeals. But on May 20, 1996 respondent CA issued a resolution denying the motion as petitioner failed to submit clearer and readable copies of the pleadings. 17 This prompted petitioner to proceed to this Court giving rise to the instant petition for review on certiorari under Rule 45 and docketed herein as G.R. No. 125218, assailing the dismissal of its petition by the CA in its resolution dated March 18, 1996 as well as

that of its motion for reconsideration in the resolution dated May 20, 1996.

Meanwhile, owing to the finality of the decision in the ejectment suit (Civil Case No. 140817-CV), the MTC of Manila, Branch 15, upon motion of petitioner Filstream, issued a Writ of Execution as well as a Notice to Vacate the disputed premises. 18 Private respondents filed a Motion to Recall/Quash the Writ of Execution and Notice to Vacate 19 alleging the existence of a supervening event in that the properties subject of the dispute have already been ordered condemned in an expropriation proceeding in favor of the City of Manila for the benefit of the qualified occupants thereof, thus execution shall be stayed. Petitioner opposed the motion, reiterating that the decision in the ejectment case is already final and executory and disputed private respondents' right to interpose the expropriation proceedings as a defense because the latter were not parties to the same.

For its part, the City of Manila filed on March 13, 1996, a motion for intervention with prayer to stay/quash the writ of execution on the ground that it is the present possessor of the property subject of execution.

In its order dated March 14, 1996, the MTC of Manila, Branch 14, denied private respondents' motion as it found the allegations therein bereft of merit and upheld the issuance of the Writ of Execution and Notice to Vacate in petitioner's favor. 20 Subsequently, the trial court also denied the motion filed by the City of Manila.

On April 22, 1996, the trial court issued an order commanding the demolition of the structure erected on the disputed premises. To avert the demolition, private respondents filed before the RTC of Manila, Branch 14, a Petition for Certiorari and Prohibition with prayer for the issuance of a temporary restraining order and preliminary injunction (docketed as Civil Case No. 96-78098). On April 29, 1996, the RTC of Manila, Branch 33, issued a TRO enjoining the execution of the writ issued in Civil Case No. 140817-CV by the MTC of Manila, Branch 14. 21 Subsequently the RTC issued a writ of preliminary injunction on May 14, 1996. 22

On May 15, 1996, the City of Manila filed its Petition for Certiorari and Prohibition with prayer for the issuance of a temporary restraining order and

preliminary injunction which was raffled to Branch 23 of the RTC of Manila (docketed as Civil Case No. 96-78382), seeking the reversal of the orders issued by the MTC of Manila, Branch 14, which denied its motion to intervene and quash the writ of execution in Civil Case No. 140817-CV.

Thereafter, upon motion filed by the City of Manila, an order was issued by the RTC of Manila, Branch 10, ordering the consolidation of Civil Case No. 96-78382 with Civil Case No. 96-78098 pending before Branch 14 of the RTC of Manila. 23 On May 21, 1996, the RTC of Manila, Branch 14, issued an injunction in Civil Case No. 96-78098 enjoining the implementation of the writ of execution until further orders from the court. 24 Petitioner Filstream filed a Motion to Dissolve the Writ of Preliminary Injunction and to be allowed to post a counter-bond but the trial court denied the same. Filstream then filed a motion for reconsideration from the order of denial but pending resolution of this motion, it filed a motion for voluntary inhibition of the presiding judge of the RTC of Manila, Branch 14. The motion for inhibition was granted 25 and as a result, the consolidated cases (Civil Case No. 96-78382 and 96-78098) were re-raffled to the RTC of Manila, Branch 33. cdasia

During the proceedings before the RTC of Manila, Branch 33, petitioner Filstream moved for the dismissal of the consolidated cases (Civil Case No. 96-78382 and No. 96-78098) for violation of Supreme Court Circular No. 04-94 (forum shopping) because the same parties, causes of action and subject matter involved therein have already been disposed of in the decision in the ejectment case (Civil Case No. 140817) which has already become final and executory prior to the filing of these consolidated cases.

On December 9, 1996, an order was issued by the RTC of Manila, Branch 33, ordering the dismissal of Civil Case Nos. 96-78382 and 96-78098 for violation of Supreme Court Circular No. 04-94. 26 Immediately thereafter, petitioner Filstream filed an Ex-parte Motion for Issuance of an Alias Writ of Demolition and Ejectment and a supplemental motion to the same dated January 10 and 13, 1997, respectively, 27 before the MTC of Manila, Branch 15, which promulgated the decision in the ejectment suit (Civil Case No. 140817-CV). On January 23, 1997, the court granted the motion and issued the corresponding writ of demolition.

As a consequence of the dismissal of the consolidated cases, herein private respondents filed a Petition for Certiorari and Prohibition with prayer for the issuance of a temporary restraining order and preliminary injunction before the Court of Appeals (docketed as CA-G.R. SP No. 43101) 28 assailing the above-mentioned order of dismissal by the RTC of Manila, Branch 33, as having been issued with grave abuse of discretion tantamount to lack or in excess of jurisdiction.

In a resolution dated January 28, 1997, the Court of Appeals granted herein private respondents prayer for the issuance of a temporary restraining order and directed the MTC of Manila, Branch 15, to desist from implementing the order of demolition dated January 23, 1997, unless otherwise directed. 29

At the conclusion of the hearing for the issuance of a writ of preliminary injunction, the Court of Appeals, in its resolution dated February 18, 1997, found merit in private respondents' allegations in support of their application of the issuance of the writ and granted the same, to wit:

"Finding that the enforcement or implementation of the writ of execution and notice to vacate issued in Civil Case No. 140817-CV, the ejectment case before respondent Judge Jiro, during the pendency of the instant petition, would probably be in violation of petitioners' right, and would tend to render the judgment in the instant case ineffectual, and probably work injustice to the petitioners, the application for the issuance of a writ of preliminary injunction is hereby GRANTED.

"WHEREFORE, upon the filing of a bond in the amount of P150,000.00, let a writ of preliminary injunction be issued enjoining respondents, their employees, agents, representatives and anyone acting in their behalf from enforcing or executing the writ of execution and notice to vacate issued in Civil Case No. 140817-CV of the court of respondent Judge Jiro, or otherwise disturbing the status quo, until further orders of this Court." 30

In turn, petitioner Filstream is now before this Court via a Petition for Certiorari under Rule 65 (G.R. No. 128077), seeking to nullify the Resolutions of the

Court of Appeals dated January 28, 1997 and February 18, 1997 which granted herein private respondents' prayer for a TRO and Writ of Preliminary Injunction, the same being null and void for having been issued in grave abuse of discretion.

Upon motion filed by petitioner Filstream, in order to avoid any conflicting decisions on the legal issues raised in the petitions, the Court ordered that the later petition, G.R. No. 128077 be consolidated with G.R. No. 128077 in the resolution of March 5, 1997. 31

The issue raised in G.R. No. 125218 is purely a procedural and technical matter. Petitioner takes exception to the resolutions of respondent CA dated March 18, 1996 and May 20, 1996 which ordered the dismissal of its Petition for Certiorari for non-compliance with Sec. 2(a) of Rule 6 of the Revised Internal Rules of the Court of Appeals by failing to attach to its petition other pertinent documents and papers and for attaching copies of pleadings which are blurred and unreadable. Petitioner argues that respondent appellate court seriously erred in giving more premium to form rather than substance.

We agree with the petitioner. A strict adherence to the technical and procedural rules in this case would defeat rather than meet the ends of justice as it would result in the violation of the substantial rights of petitioner. At stake in the appeal filed by petitioner before the CA is the exercise of their property rights over the disputed premises which have been expropriated and have in fact been ordered condemned in favor of the City of Manila. In effect, the dismissal of their appeal in the expropriation proceedings based on the aforementioned grounds is tantamount to a deprivation of property without due process of law as it would automatically validate the expropriation proceedings which the petitioner is still disputing. It must be emphasized that where substantial rights are affected, as in this case, the stringent application of procedural rules may be relaxed if only to meet the ends of substantial justice.

In these instances, respondent CA can exercise its discretion to suspend its internal rules and allow the parties to present and litigate their causes of action so that the Court can make an actual and complete disposition of the issues presented in the case. Rather than simply dismissing the petition summarily for non-compliance with respondent court's internal rules, respondent CA should have instead entertained

petitioner Filstream's petition for review on certiorari, and ordered petitioner to submit the corresponding pleadings which it deems relevant and replace those which are unreadable. This leniency could not have caused any prejudice to the rights of the other parties.

With regard to the other petition, G.R. No. 128077, petitioner Filstream objects to the issuance by respondent CA of the restraining order and the preliminary injunction enjoining the execution of the writ of demolition issued in the ejectment suit (Civil Case No. 140817-CV) as an incident to private respondents' pending petition assailing the dismissal by the RTC of Manila, Branch 33, of the consolidated petitions for certiorari filed by private respondents and the City of Manila on the ground of forum shopping.

The propriety of the issuance of the restraining order and the writ of preliminary injunction is but a mere incident to the actual controversy which is rooted in the assertion of the conflicting rights of the parties in this case over the disputed premises. In order to determine whether private respondents are entitled to the injunctive reliefs granted by respondent CA, we deemed it proper to extract the source of discord.

Petitioner Filstream anchors its claim by virtue of its ownership over the properties and the existence of a final and executory judgment against private respondents ordering the latter's ejectment from the premises (Civil Case No. 140817-CV).

Private respondents' claim on the other hand hinges on an alleged supervening event which has rendered the enforcement of petitioner's rights moot, that is, the expropriation proceedings (Civil Case No. 94-70560) undertaken by the City of Manila over the disputed premises for the benefit of herein private respondents. For its part, the City of Manila is merely exercising its power of eminent domain within its jurisdiction by expropriating petitioner's properties for public use.

There is no dispute as to the existence of a final and executory judgment in favor of petitioner Filstream ordering the ejectment of private respondents from the properties subject of this dispute. The judgment in the ejectment suit became final and executory after private respondents failed to interpose any appeal from the adverse decision of the Court of Appeals dated August 25, 1994 in CA-G.R. SP No. 33714. Thus, petitioner has every right to assert the

execution of this decision as it had already become final and executory.

However, it must also be conceded that the City of Manila has an undeniable right to exercise its power of eminent domain within its jurisdiction. The right to expropriate private property for public use is expressly granted to it under Section 19 of the 1991 Local Government Code, to wit:

"SEC. 19. Eminent Domain. — A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose, or welfare for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws: Provided, however, That the power of eminent domain may not be exercised unless a valid and definite offer has been previously made to the owner, and such offer was not accepted; Provided, further, That the local government unit may immediately take possession of the property upon the filing of the expropriation proceedings and upon making a deposit with the proper court of at least fifteen (15%) of the fair market value of the property based on the current tax declaration of the property to be expropriated: Provided, finally, That, the amount to be paid for the expropriated property shall be determined by the proper court, based on the fair market value at the time of the taking of the property." (Emphasis supplied)

More specifically, the City of Manila has the power to expropriate private property in the pursuit of its urban land reform and housing program as explicitly laid out in the Revised Charter of the City of Manila (R.A. No. 409) as follows:

"General powers. — The city may have a common seal and alter the same at pleasure, and may take, purchase, receive, hold, lease, convey, and dispose of real and personal property for the general interest of the city, condemn private property for public use, contract and be contracted with, sue and be sued, and prosecute and defend to final judgment and execution, and exercise all the powers hereinafter conferred." (R.A. 409, Sec. 3; Emphasis supplied).

xxx xxx xxx

"Sec. 100. The City of Manila is authorized to acquire private lands in the city and to subdivide the same into home lots for sale on easy terms to city residents, giving first priority to the bona fide tenants or occupants of said lands, and second priority to laborers and low-salaried employees. For the purpose of this section, the city may raise the necessary funds by appropriations of general funds, by securing loans or by issuing bonds, and, if necessary, may acquire the lands through expropriation proceedings in accordance with law, with the approval of the President . . .". (Emphasis supplied).

In fact, the City of Manila's right to exercise these prerogatives notwithstanding the existence of a final and executory judgment aver the property to be expropriated has been upheld by this Court in the case of Philippine Columbian Association vs. Panis, G.R. No. 106528, December 21, 1993. 32 Relying on the aforementioned provisions of the Revised Charter of the City of Manila, the Court declared that:

"The City of Manila, acting through its legislative branch, has the express power to acquire private lands in the city and subdivide these lands into home lots for sale to bona fide tenants or occupants thereof, and to laborers and low-salaried employees of the city. llcd

That only a few could actually benefit from the expropriation of the property does not diminish its public use character. It is simply not possible to provide all at once land and shelter for all who need them (Sumulong v. Guerrero, 154 SCRA 461 [1987]).

Corollary to the expanded notion of public use, expropriation is not anymore confined to vast tracts of land and landed estates (Province of Camarines Sur v. Court of Appeals, G. R. No. 103125, May 17, 1993; J. M. Tuason and Co., Inc. v. Land Tenure Administration, 31 SCRA 413 [1970]). It is therefore of no moment that the land sought to be expropriated in this case is less than half a hectare only (Pulido v. Court of Appeals, 122 SCRA 63 [1983]).

Through the years, the public use requirement in eminent domain has evolved into a flexible concept, influenced by changing conditions (Sumulong v. Guerrero, supra; Manotok v. National Housing Authority, 150 SCRA 89 [1987]; Heirs of Juancho

Ardona v. Reyes, 125 SCRA 220 [1983]). Public use now includes the broader notion of indirect public benefit or advantage, including in particular, urban land reform and housing." 33

We take judicial notice of the fact that urban land reform has become a paramount task in view of the acute shortage of decent housing in urban areas particularly in Metro Manila. Nevertheless, despite the existence of a serious dilemma, local government units are not given an unbridled authority when exercising their power of eminent domain in pursuit of solutions to these problems. The basic rules still have to be followed, which are as follows: "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. 3, Sec. 1, 1987 Constitution); private property shall not be taken for public use without just compensation (Art. 3, Section 9, 1987 Constitution)". Thus, the exercise by local government units of the power of eminent domain is not without limitations. Even Section 19 of the 1991 Local Government Code is very explicit that it must comply with the provisions of the Constitution and pertinent laws, to wit:

"SEC. 19. Eminent Domain. — A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose, or welfare for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws: . . . (Emphasis supplied).

The governing law that deals with the subject of expropriation for purposes of urban land reform and housing is Republic Act No. 7279 (Urban Development and Housing Act of 1992) and Sections 9 and 10 of which specifically provide as follows:

"Sec. 9. Priorities in the acquisition of Land. — Lands for socialized housing shall be acquired in the following order:

(a) Those owned by the Government or any of its sub-divisions, instrumentalities, or agencies, including government-owned or -controlled corporations and their subsidiaries;

(b) Alienable lands of the public domain;

(c) Unregistered or abandoned and idle lands;

(d) Those within the declared Areas for Priority Development, Zonal Improvement sites, and Slum Improvement and Resettlement Program sites which have not yet been acquired;

(e) Bagong Lipunan Improvement of Sites and Services or BLISS sites which have not yet been acquired; and

(f) Privately-owned lands.

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

"Sec. 10. Modes of Land Acquisition. — The modes of acquiring lands for purposes of this Act shall include, among others, community mortgage, land swapping, land assembly or consolidation, land banking, donation to the Government, joint-venture agreement, negotiated purchase, and expropriation: Provided, however, That expropriation shall be resorted to only when other modes of acquisition have been exhausted: Provided further, That where expropriation is resorted to, parcels of land owned by small property owners shall be exempted for purposes of this Act: Provided, finally, That abandoned property, as herein defined, shall be reverted and escheated to the State in a proceeding analogous to the procedure laid down in Rule 91 of the Rules of Court.

For the purpose of socialized housing, government-owned and foreclosed properties shall be acquired by the local government units, or by the National Housing Authority primarily through negotiated purchase: Provided, That qualified beneficiaries who are actual occupants of the land shall be given the right of first refusal." (Emphasis supplied).

Very clear from the abovequoted provisions are the limitations with respect to the order of priority in acquiring private lands and in resorting to expropriation proceedings as a means to acquire the same. Private lands rank last in the order of priority for purposes of socialized housing. In the same vein, expropriation proceedings are to be resorted to only when the other modes of acquisition have been exhausted. Compliance with these conditions must be

deemed mandatory because these are the only safeguards in securing the right of owners of private property to due process when their property is expropriated for public use.

Proceeding from the parameters laid out in the above disquisitions, we now pose the crucial question: Did the City of Manila comply with the above mentioned conditions when it expropriated petitioner Filstream's properties? We have carefully scrutinized the records of this case and found nothing that would indicate that respondent City of Manila complied with Sec. 9 and Sec. 10 of R.A. 7279. Petitioner Filstream's properties were expropriated and ordered condemned in favor of the City of Manila sans any showing that resort to the acquisition of other lands listed under Sec. 9 of RA 7279 have proved futile. Evidently, there was a violation of petitioner Filstream's right to due process which must accordingly be rectified.

Indeed, it must be emphasized that the State has a paramount interest in exercising its power of eminent domain for the general good considering that the right of the State to expropriate private property as long as it is for public use always takes precedence over the interest of private property owners. However we must not lose sight of the fact that the individual rights affected by the exercise of such right are also entitled to protection, bearing in mind that the exercise of this superior right cannot override the guarantee of due process extended by the law to owners of the property to be expropriated. In this regard, vigilance over compliance with the due process requirements is in order.

WHEREFORE, the petitions are hereby GRANTED. In G.R. 125218, the resolutions of the Court of Appeals in CA-G.R. SP NO. 36904 dated March 18, 1996 and May 20, 1996 are hereby REVERSED and SET ASIDE. In G.R. No. 128077, the resolution of the Court of Appeals in CA-G.R. SP No. 43101 dated January 28, 1997 and February 18, 1997 are REVERSED and SET ASIDE.

SO ORDERED.

SECOND DIVISION

[G.R. No. 185091. August 9, 2010.]2:45 P.M.

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF EDUCATION DIVISION OF LIPA CITY (FOR PANINSINGIN PRIMARY SCHOOL), petitioner, vs. PRIMO MENDOZA and MARIA LUCERO, respondents.

DECISION

ABAD, J p:

This case is about the propriety of filing an ejectment suit against the Government for its failure to acquire ownership of a privately owned property that it had long used as a school site and to pay just compensation for it.

The Facts and the CasePaninsingin Primary School (PPS) is a public school operated by petitioner Republic of the Philippines (the Republic) through the Department of Education. PPS has been using 1,149 square meters of land in Lipa City, Batangas since 1957 for its school. But the property, a portion of Lots 1923 and 1925, were registered in the name of respondents Primo and Maria Mendoza (the Mendozas) under Transfer Certificate of Title (TCT) T-11410. 1

On March 27, 1962 the Mendozas caused Lots 1923 and 1925 to be consolidated and subdivided into four lots, as follows:

Lot 1 — 292 square meters in favor of Claudia Dimayuga;

Lot 2 — 292 square meters in favor of the Mendozas;

Lot 3 — 543 square meters in favor of Gervacio Ronquillo; and

Lot 4 — 1,149 square meters in favor of the City Government of Lipa. 2

As a result of subdivision, the Register of Deeds partially cancelled TCT T-11410 and issued new titles for Lots 1 and 3 in favor of Dimayuga and Ronquillo, respectively. Lot 2 remained in the name of the Mendozas but no new title was issued in the name of

the City Government of Lipa for Lot 4. 3 Meantime, PPS remained in possession of the property. IaESCH

The Republic claimed that, while no title was issued in the name of the City Government of Lipa, the Mendozas had relinquished to it their right over the school lot as evidenced by the consolidation and subdivision plan. Further, the property had long been tax-declared in the name of the City Government and PPS built significant, permanent improvements on the same. These improvements had also been tax-declared. 4

The Mendozas claim, on the other hand, that although PPS sought permission from them to use the property as a school site, they never relinquished their right to it. They allowed PPS to occupy the property since they had no need for it at that time. Thus, it has remained registered in their name under the original title, TCT T-11410, which had only been partially cancelled.

On November 6, 1998 the Mendozas wrote PPS, demanding that it vacate the disputed property. 5 When PPS declined to do so, on January 12, 1999 the Mendozas filed a complaint with the Municipal Trial Court in Cities (MTCC) of Lipa City in Civil Case 0002-99 against PPS for unlawful detainer with application for temporary restraining order and writ of preliminary injunction. 6

On July 13, 1999 the MTCC rendered a decision, dismissing the complaint on ground of the Republic's immunity from suit. 7 The Mendozas appealed to the Regional Trial Court (RTC) of Lipa City which ruled that the Republic's consent was not necessary since the action before the MTCC was not against it. 8

In light of the RTC's decision, the Mendozas filed with the MTCC a motion to render judgment in the case before it. 9 The MTCC denied the motion, however, saying that jurisdiction over the case had passed to the RTC upon appeal. 10 Later, the RTC remanded the case back to the MTCC, 11 which then dismissed the case for insufficiency of evidence. 12 Consequently, the Mendozas once again appealed to the RTC in Civil Case 2001-0236.

On June 27, 2006 the RTC found in favor of the Mendozas and ordered PPS to vacate the property. It held that the Mendozas had the better right of possession since they were its registered owners.

PPS, on the other hand, could not produce any document to prove the transfer of ownership of the land in its favor. 13 PPS moved for reconsideration, but the RTC denied it.

The Republic, through the Office of the Solicitor General (OSG), appealed the RTC decision to the Court of Appeals (CA) in CA-G.R. SP 96604 on the grounds that: (1) the Mendozas were barred by laches from recovering possession of the school lot; (2) sufficient evidence showed that the Mendozas relinquished ownership of the subject lot to the City Government of Lipa City for use as school; and (3) Lot 4, Pcs-5019 has long been declared in the name of the City Government since 1957 for taxation purposes. 14

In a decision dated February 26, 2008, the CA affirmed the RTC decision. 15 Upholding the Torrens system, it emphasized the indefeasibility of the Mendozas' registered title and the imprescriptible nature of their right to eject any person occupying the property. The CA held that, this being the case, the Republic's possession of the property through PPS should be deemed merely a tolerated one that could not ripen into ownership. DIEcHa

The CA also rejected the Republic's claim of ownership since it presented no documentary evidence to prove the transfer of the property in favor of the government. Moreover, even assuming that the Mendozas relinquished their right to the property in 1957 in the government's favor, the latter never took steps to have the title to the property issued in its name or have its right as owner annotated on the Mendozas' title. The CA held that, by its omissions, the Republic may be held in estoppel to claim that the Mendozas were barred by laches from bringing its action.

With the denial of its motion for reconsideration, the Republic has taken recourse to this Court via petition for review on certiorari under Rule 45.

The Issue PresentedThe issue in this case is whether or not the CA erred in holding that the Mendozas were entitled to evict the Republic from the subject property that it had used for a public school.

The Court's Ruling

A decree of registration is conclusive upon all persons, including the Government of the Republic and all its branches, whether or not mentioned by name in the application for registration or its notice. 16 Indeed, title to the land, once registered, is imprescriptible. 17 No one may acquire it from the registered owner by adverse, open, and notorious possession. 18 Thus, to a registered owner under the Torrens system, the right to recover possession of the registered property is equally imprescriptible since possession is a mere consequence of ownership.

Here, the existence and genuineness of the Mendozas' title over the property has not been disputed. While the consolidation and subdivision plan of Lots 1923 and 1925 shows that a 1,149 square meter lot had been designated to the City Government, the Republic itself admits that no new title was issued to it or to any of its subdivisions for the portion that PPS had been occupying since 1957. 19

That the City Government of Lipa tax-declared the property and its improvements in its name cannot defeat the Mendozas' title. This Court has allowed tax declarations to stand as proof of ownership only in the absence of a certificate of title. 20 Otherwise, they have little evidentiary weight as proof of ownership. 21

The CA erred, however, in ordering the eviction of PPS from the property that it had held as government school site for more than 50 years. The evidence on record shows that the Mendozas intended to cede the property to the City Government of Lipa permanently. In fact, they allowed the city to declare the property in its name for tax purposes. And when they sought in 1962 to have the bigger lot subdivided into four, the Mendozas earmarked Lot 4, containing 1,149 square meters, for the City Government of Lipa. Under the circumstances, it may be assumed that the Mendozas agreed to transfer ownership of the land to the government, whether to the City Government of Lipa or to the Republic, way back but never got around to do so and the Republic itself altogether forgot about it. Consequently, the Republic should be deemed entitled to possession pending the Mendozas' formal transfer of ownership to it upon payment of just compensation. aHICDc

The Court holds that, where the owner agrees voluntarily to the taking of his property by the

government for public use, he thereby waives his right to the institution of a formal expropriation proceeding covering such property. Further, as the Court also held in Eusebio v. Luis, 22 the failure for a long time of the owner to question the lack of expropriation proceedings covering a property that the government had taken constitutes a waiver of his right to gain back possession. The Mendozas' remedy is an action for the payment of just compensation, not ejectment.

In Republic of the Philippines v. Court of Appeals, 23 the Court affirmed the RTC's power to award just compensation even in the absence of a proper expropriation proceeding. It held that the RTC can determine just compensation based on the evidence presented before it in an ordinary civil action for recovery of possession of property or its value and damages. As to the time when just compensation should be fixed, it is settled that where property was taken without the benefit of expropriation proceedings and its owner filed an action for recovery of possession before the commencement of expropriation proceedings, it is the value of the property at the time of taking that is controlling. 24

Since the MTCC did not have jurisdiction either to evict the Republic from the land it had taken for public use or to hear and adjudicate the Mendozas' right to just compensation for it, the CA should have ordered the complaint for unlawful detainer dismissed without prejudice to their filing a proper action for recovery of such compensation.

WHEREFORE, the Court partially GRANTS the petition, REVERSES the February 26, 2008 decision and the October 20, 2008 resolution of the Court of Appeals in CA-G.R. 96604, and ORDERS the dismissal of respondents Primo and Maria Mendoza's action for eviction before the Municipal Trial Court in Cities of Lipa City in Civil Case 0002-99 without prejudice to their filing an action for payment of just compensation against the Republic of the Philippines or, when appropriate, against the City of Lipa.

SO ORDERED.

Carpio, Villarama, Jr., * Perez ** and Mendoza, JJ., concur.

||| (Republic v. Mendoza, G.R. No. 185091, August 09, 2010)

FIRST DIVISION

[G.R. No. 15870. December 3, 1919.]

VISAYAN REFINING COMPANY, DEAN C. WORCESTER, and FRED A. LEAS, petitioners, vs. HON. MANUEL CAMUS, Judge of the Court of First Instance of the Province of Rizal and HON. QUINTIN PAREDES, Attorney-General of the Philippine Islands, respondents.

Kincaid & Perkins for petitioner

Assistant Attorney-General Reyes for respondents.

SYLLABUS

1. EMINENT DOMAIN; PUBLIC USE; MILITARY AND AVIATION PURPOSES. — The use of land by the Government for military and aviation purposes is a public use within the meaning of the provisions of law authorizing the Government of the Philippine Islands to acquire real estate for public uses by the exercise of the right of eminent domain.2. ID.; JUDICIAL PROCEEDINGS; AUTHORITY OF GOVERNOR-GENERAL TO DIRECT INSTITUTION OF PROCEEDINGS. — Judicial proceedings for the condemnation of land for public use can be maintained in the name of the Government of the Philippine Islands pursuant to the directions of the Governor-General, without any other special legislative authority than that expressed in subsection (h) of section 64 of the Administrative Code, in relation with section 3 of the Jones Act.3. ID.; ID.; LEGISLATIVE APPROPRIATION. — The existence of a legislative appropriation especially destined to pay for land to be acquired by the Government through the exercise of the power of eminent domain is not an essential prerequisite to the institution and maintenance of judicial proceedings for the expropriation of such land. All that can be required of the Government is that it should comply with the conditions laid down by law as and when those conditions arise.4. ID.; RIGHT TO EXERCISE POWER; INHERENT IN SOVEREIGNTY. — The power of eminent domain is inseparable from sovereignty, being essential to the existence of the State and inherent in government even in its most primitive forms. No law, therefore, is ever necessary to confer this right upon sovereignty or upon any Government exercising sovereign or quasi-sovereign powers.

5. ID.; ID.; DUE PROCESS OF LAW JUST COMPENSATION. — The power of eminent domain, with respect to the conditions under which the property is taken, must be exercised in subjection to the restraints imposed by constitutional or organic law, and in these Islands especially with reference to section 3 of the Jones Act which declares that no law shall be enacted which shall deprive any person of property without due process of law and that private property shall not be taken for public use without just compensation.6. ID.; ID.; METHOD OF EXPROPRIATION. — If the Legislature prescribes a method of expropriation which provides for the payment of just compensation and such method is so conceived and adapted as to fulfill the constitutional requisite of due process of law, any expropriation accomplished in conformity with that method is valid.7. ID.; ID.; ID.; PAYMENT OF COMPENSATION. — There is no organic or constitutional provision in force in these Islands requiring that compensation shall actually be paid prior to the judgment of condemnation.8. ID.; ID.; ID.; PAYMENT OF COMPENSATION AS PREREQUISITE TO ACQUISITION OF PROPERTY. — The system of expropriation prescribed by laws in force in these Islands affords absolute assurance that no piece of land can be finally and irrevocably taken from an unwilling owner until compensation is paid. In this connection our courts are directed to make such final order and judgment as shall secure just compensation for the land taken, and the right of the expropriator is finally made absolutely dependent upon the payment of compensation by him.9. ID.; ID.; GIVING OF PROVISIONAL POSSESSION TO GOVERNMENT; OFFICE OF PRELIMINARY DEPOSIT. — Where provisional possession is given to the Government in an expropriation proceeding, upon the making of the deposit required by Act No. 2826 of the Philippine Legislature, the owner of the land is fully protected from any loss that might result from the temporary occupation of the land by the Government in the event that the Legislature should finally fail to appropriate any additional amount necessary to satisfy the award of the court; for such preliminary deposit serves the double purpose of prepayment upon the value of the property, if finally expropriated, and as an indemnity against damage in the eventuality that the proceeding should fail of consummation.D E C I S I O N

STREET, J p:

This is an original petition, directed to the Supreme Court, containing an alternative prayer for a writ of certiorari or prohibition, as the facts may warrant, to stop certain condemnation proceedings instituted by the Government of the Philippine Islands, and now pending in the Court of First Instance of the Province of Rizal. The respondents have interposed what is called an answer, but which is in legal effect merely a demurrer, challenging the sufficiency of the allegations of the petition. The matter having been submitted upon oral argument, the cause is now before us for the decision of the question thus presented.It appears that upon September 13, 1919, the Governor-General directed the Attorney-General to cause condemnation proceedings to be begun for the purpose of expropriating a tract of land of an area of about 1,100,463 square meters, commonly known as the site of Camp Tomas Claudio. Said land is located in the municipality of Parañaque, Province of Rizal, and lies along the water front of Manila Bay, a few miles south of the city of Manila. It is stated in communication of the Governor-General that the property in question is desired by the Government of the Philippine Islands for military and aviation purposes.In conformity with the instructions of the Governor-General, condemnation proceedings were begun by the Attorney-General on September 15, 1919, by filing a complaint in the name of the Government of the Philippine Islands in the Court of First Instance of the Province of Rizal. Numerous persons are named in the complaint as defendants because of their supposed ownership of portions of the property intended to be expropriated. In the list of persons thus impleaded appear the names of the three petitioners herein, namely, the Visayan Refining Co., Dean C. Worcester, and Fred A. Leas, who are severally owners of different portions of the property in question.In the communication of the Governor-General, the Attorney-General was directed immediately upon filing the complaint to ask the court to give the Government the possession of the land to be expropriated, after the necessary deposit should be made as provided by law. Accordingly in the complaint itself the Attorney-General prayed the court promptly and provisionally to fix the sum of P600,000 as the total value of the property and to put the Government in immediate possession when said sum should be placed at the

disposition of the court. An order was accordingly made on September 15, 1919, by the Honorable Judge Manuel Camus, of the Court of First Instance of the Province of Rizal, fixing the value of the property provisionally at the amount stated and ordering that the plaintiff be placed in possession, it being made to appear that a certificate of deposit for the amount stated had been delivered to the provincial treasurer.At this stage of the proceedings in the Court of First Instance the three respondents already mentioned, to wit, the Visayan Refining Co., Dean C. Worcester, and Fred A. Leas, interposed a demurrer, questioning the validity of the proceedings on the ground that there is no Act of the Philippine Legislature authorizing the exercise of the power of eminent domain to acquire land for military or aviation purposes.Contemporaneously with the filing of their demurrer, the same parties moved the Court of First Instance to revoke its order of September 15, giving the plaintiff provisional possession. This motion is based substantially on the same ground as the demurrer, that is, the lack of legislative authority for the proposed expropriation, but it contains one additional allegation to the effect that the deposit in court of the sum of P600,000, had been made without authority of law. In support of this contention it was shown, by means of an informal communication from the Insular Auditor, that the money in question had been taken from the unexpended balance of the funds appropriated by Acts Nos. 2784 and 2785 of the Philippine Legislature for the use of the Militia Commission. This appropriation showed, upon the date said deposit of P600,000 was made, an unexpended balance of P1,144,672.83On October 3, 1919, the Judge of the Court of First Instance overruled the demurrer interposed by the three parties mentioned and denied their motion to vacate the order granting possession to the Government. The present proceeding was thereupon instituted in this Court in the manner and for the purpose already stated.General authority to exercise the power of eminent domain is expressly conferred on the Government of the Philippine Islands, as now constituted, by section 63 of the Philippine Bill, which reads as follows:"That the Government of the Philippine Islands is hereby authorized, subject to the limitation and conditions prescribed in this Act to acquire, receive, hold, maintain, and convey title to real and personal property, and may acquire real estate for public uses

by the exercise of the right of eminent domain." (Act of Congress of July 1, 1902.)Section 3 of the Jones Act contains the further provision that "private property shall not be taken for public use without just compensation." In addition to this there is found in the same section the familiar provision, already expressed in section 5 of the Philippine Bill, that no law shall be enacted which shall deprive any person of property without due process of law, or deny any person the equal protection of the laws. (Act of Congress of August 29, 1916, sec. 3.)Section 64 of the Administrative Code of the Philippine Islands (Act No. 2711) expressly confers on the Governor-General the power, among others: "To determine when it is necessary or advantageous to exercise the right of eminent domain in behalf of the Government of the Philippine Islands; and to direct the Attorney-General, where such act is deemed advisable, to cause the condemnation proceedings to be begun in the court having proper jurisdiction."The procedural provisions relative to the conduct of expropriation proceedings are contained in sections 241 to 253, inclusive, of the Code of Civil Procedure, supplemented as they are by various later Acts of the Legislature. Among the salient features of the scheme of expropriation thus created are these: (1) If the court is of the opinion that the right of expropriation exists, three commissioners are appointed to hear the parties, view the premises, and assess the damages to be paid for the condemnation (sec. 243 Code Civ. Proc.); (2) after hearing the evidence submitted by the parties and assessing the damages in the manner prescribed by law (sec. 244), the commissioners make their report to the court, setting forth all their proceedings; and it is expressly declared that "none of their proceedings shall be effectual to bind the property or the parties until the court shall have accepted their report and rendered judgment in accordance with its recommendations" (sec. 245); (3) the court then acts upon the report, accepting the same in whole or in part, or rejecting, recommitting, or setting aside the same, as it sees fit (sec. 246). It is further declared in section 246 that —"The court . . . may make such final order and judgment as shall secure to the plaintiff the property essential to the exercise of his rights under the law, and to the defendant just compensation for the land so taken; and the judgment shall require payment of the sum awarded as provided in the next section (i. e.,

sec. 247) before the plaintiff can enter upon the ground and appropriate it to the public use."Sections 247 and 251 of the same Code are of sufficient importance in this connection to warrant quotation in their entirety. They are as follows:"SEC. 247. Rights of Plaintiff After the Judgment. — Upon payment by the plaintiff to the defendant of compensation as fixed by the judgment, or after tender to him of the amount so fixed and payment of the costs, the plaintiff shall have the right to enter in and upon the land so condemned, to appropriate the same to the public use defined in the judgment. In case the defendant and his attorney absent themselves from the court or decline to receive the same, payment may be made to the clerk of the court for him, and such officer shall be responsible on his bond therefor and shall be compelled to receive it.""SEC. 251. Final Judgment, Its Record and Effect. — The record of the final judgment in such action shall state definitely by metes and bounds and adequate description. the particular land or interest in land condemned to the public use, and the nature of the public use. A certified copy of the record of the judgment shall be recorded in the office of the registrar of deeds for the province in which the estate is situated, and its effect shall be to vest in the plaintiff for the public use stated the land and estate so described."The provisions which deal with the giving of immediate possession when the Government of the Philippine Islands is the plaintiff are found in Act No. 2826, which is in part as follows:"SEC. 2. When condemnation proceedings are instituted by or in favor of the Insular Government . . . in any competent court of the Philippines, the plaintiff shall be entitled to enter immediately upon the land covered by such proceedings, after depositing with the provincial treasurer the value of said land in cash, as previously and promptly determined and fixed by the competent court, which money the provincial treasurer shall retain subject to the order and final decision of the court: Provided, however, That the court may permit that in lieu of cash, there may be deposited with the provincial treasurer a certificate of deposit of any depository of the Government of the Philippine Islands, payable to the provincial treasurer on sight, for the sum ordered deposited by the court. The certificate and the sums represented by it shall be subject to the order and final decision of the court, and the court shall have authority to place said plaintiff in possession of the land, upon such deposit

being made, by the proper orders and a mandate, if necessary."SEC. 3. . . . Upon the payment by the plaintiff to the defendants of the compensation awarded by the sentence, or after the tender of said sum to the defendants, and the payment of the costs, or in case the court orders the price to be paid into court, the plaintiff shall be entitled to appropriate the land so condemned to the public use specified in the sentence. In case payment is made to the court, the clerk of the same shall be liable on his bond for the sum so paid and shall be obliged to receive the same."In connection with the foregoing provisions found in laws enacted under the American regime is to be considered the following provision of the Civil Code:"ART. 349 No one may be deprived of his property unless it be by competent authority for some purpose of proven public utility and after payment of the proper compensation."Unless this requisite has been complied with, it shall be the duty of the court to protect the owner of such property in its possession or to restore its possession to him, as the case may be."Taken together the laws mentioned supply a very complete scheme of judicial expropriation, deducing the authority from its ultimate source in sovereignty, providing in detail for the manner of its exercise, and making the right of the expropriator finally dependent upon payment of the amount awarded by the court.As has already been indicated the petition before us proceeds on the idea that the expropriation proceedings in question cannot be maintained by the Philippine Government in the absence of a statute authorizing the exercise of the power of eminent domain for military and aviation purposes; and while it is not urged that a special legislative Act must be passed every time any particular parcel of property is to be expropriated, it is claimed — and this really amounts to the same thing — that the Government cannot institute and prosecute expropriation proceedings unless there is already in existence a legislative appropriation especially destined to pay for the land to be taken.We are of the opinion that the contentions of the petitioners, in whatever way they may be understood or expressed, are not well founded. There is one point at least on which all must agree, namely, that if land can be taken by the Government for a public use at all, the use intended to be made of the land now in question, that is, for military and aviation purposes, is a public use. It is undeniable that a military

establishment is essential to the maintenance of organized society, and the courts will take judicial notice of the recent progress of the military and naval arts resulting from the development of aeronautics.The question as to the abstract authority of the Government to maintain expropriation proceedings upon the initiative of the Governor-General should not be confused with that which has reference to the necessity for a legislative appropriation. They really involve different problems and will be separately considered.Upon the first, we are of the opinion that in this jurisdiction at least expropriation proceedings may be maintained upon the exclusive initiative of the Governor-General, without the aid of any special legislative authority other than that already on the statute books. Furthermore if the Government complies with the requirements of law relative to the making of a deposit in court, provisional possession of the property may be at once given to it, just as is permitted in the case of any other person or entity authorized by law to exercise the power of eminent domain Special legislative authority for the buying of a piece of land by the Government is no more necessary than for buying a paper of pins; and in the case of a forced taking of property against the will of the owner, all that can be required of the government is that it should be able to comply with the conditions laid down by law as and when those conditions arise.The contention that the authority to maintain such a proceeding cannot be delegated by the Legislature to the Chief Executive, is in our opinion wholly erroneous and apparently has its basis in a misconception of fundamentals It is recognized by all writers that the power of eminent domain is inseparable from sovereignty being essential to the existence of the State and inherent in government even in its most primitive forms. Philosophers and legists may differ as to the grounds upon which the exercise of this high power is to be justified, but no one can question its existence. No law, therefore, is ever necessary to confer this right upon sovereignty or upon any government exercising sovereign or quasi-sovereign powers.As is well said by the author of the article on Eminent Domain in the encyclopaedic treatise Ruling Case Law."The power of eminent domain does not depend for its existence on a specific grant in the constitution. It is inherent in sovereignty and exists in a sovereign state without any recognition of it in the constitution. The provisions found in most of the state constitutions

relating to the taking of property for the public use do not by implication grant the power to the government of the state, but limit a power which would otherwise be without limit." (10, R. C. L., pp. 11, 12.)In other words, the provisions now generally found in the modern laws or constitutions of civilized countries to the effect that private property shall not be taken for public use without compensation have their origin in the recognition of a necessity for restraining the sovereign and protecting the individual. Moreover, as will be at once apparent, the performance of the administrative acts necessary to the exercise of the power of eminent domain in behalf of the state is lodged by tradition in the Sovereign or other Chief Executive. Therefore, when the Philippine Legislature declared in section 64 of the Administrative Code, that the Governor-General, who exercises supreme executive power in these Islands (sec. 21, Jones Act), should be the person to direct the initiation of expropriation proceedings, it placed the authority exactly where one would expect to find it, and we can conceive of no ground upon which the efficacy of the statute can reasonably be questioned. We would not of course pretend that, under our modern system of Government, in which the Legislature plays so important a role, the executive department could, without the authority of some statute, proceed to condemn property for its own uses; because the traditional prerogatives of the sovereign are not often recognized nowadays as a valid source of power, at least in countries organized under republican forms of government. Nevertheless it may be observed that the real check which the modern Legislature exerts over the Executive Department, in such a matter as this, lies not so much in the extinction of the prerogative as in the fact that the hands of the Executive can always be paralyzed by lack of money — something which is ordinarily supplied only by the Legislature.At any rate the conclusion is irresistible that where the Legislature has expressly conferred the authority to maintain expropriation proceedings upon the Chief Executive, the right of the latter to proceed therein is clear. As is said by the author of the article from which we have already quoted, "Once authority is given to exercise the power of eminent domain, the matter ceases to be wholly legislative. The executive authorities may then decide whether the power will be invoked and to what extent." (10 R. C. L., p. 14.)The power of eminent domain, with respect to the conditions under which the property is taken, must of

course be exercised in subjection to all the restraints imposed by constitutional or organic law. The two provisions by which the exercise of this power is chiefly limited in this jurisdiction are found in the third section of the Jones Act, already mentioned, which among other things declares (1) that no law shall be enacted which shall deprive any person of property without due process of law and (2) that private property shall not be taken for public use without just compensation. The latter of these provisions is directly aimed at the taking of property under the exercise of the power of eminent domain; and as this requirement, in connection with the statutes enacted to make sure the payment of compensation, usually affords all the protection that the owner of property can claim, it results that the due process clause is rarely invoked by the owner in expropriation proceedings.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. The specific provisions that just compensation shall be made is merely in the nature of a superadded requirement to be taken into account by the Legislature in prescribing the method of expropriation. 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.This point is not merely an academic one, as might superficially seem. On the contrary it has a practical bearing on the problem before us, which may be expressed by saying that, if the Legislature has prescribed a method of expropriation which provides for the payment of just compensation, and such method is so conceived and adapted as to fulfill the constitutional requisite of due process of law, any proceeding conducted in conformity with that method must be valid.These considerations are especially important to be borne in mind in connection with the second contention made by counsel for the petitioners, namely, that land cannot be expropriated by the Government in the absence of a legislative appropriation especially destined to pay for the land to be taken. To this question we now address ourselves; and while we bear in mind the cardinal fact that just compensation must be made, the further fact must not be overlooked that there is no organic or constitutional provision in force in these Islands

requiring that compensation shall actually be paid prior to the judgment of condemnation.If the laws which we have exhibited or cited in the preceding discussion are attentively examined it will be apparent that the method of expropriation adopted in this jurisdiction is such as to afford absolute assurance that no piece of land can be finally and irrevocably taken from an unwilling owner until compensation is paid. It is true that in rare instances the proceedings may be voluntarily abandoned before the expropriation is complete or the proceedings may fail because the expropriator becomes insolvent, in either of which cases the owner retains the property; and if possession has been prematurely obtained by the plaintiff in the proceedings, it must be restored. It will be noted that the title does not actually pass to the expropriator until a certified copy of the record of the judgment is recorded in the office of the register of deeds (sec. 251, Code Civ. Proc.). Before this stage of the proceedings is reached the compensation is supposed to have been paid; and the court is plainly directed to make such final order and judgment as shall secure to the defendant just compensation for the land taken. (Sec. 246, Code Civ. Proc.) . Furthermore, the right of the expropriator is finally made dependent absolutely upon the payment of compensation by him. (Sec. 3, Act No. 2826; sec. 247, Code Civ. Proc.).It will be observed that the scheme of expropriation exemplified in our statutes does not primarily contemplate the giving of a personal judgment for the amount of the award against the expropriator: the idea is rather to protect the owner by requiring payment as a condition precedent to the acquisition of the property by the other party. The power of the court to enter a judgment for the money and to issue execution thereon against the plaintiff is, however, unquestioned; and the court can without doubt proceed in either way. But whatever course be pursued the owner is completely protected from the possibility of losing his property without compensation.When the Government is plaintiff the judgment will naturally take the form of an order merely requiring the payment of the award as a condition precedent to the transfer of the title, as a personal judgment against the Government could not be realized upon execution. It is presumed that by appearing as plaintiff in condemnation proceedings, the Government submits itself to the jurisdiction of the court and thereby waives its immunity from suit. As a consequence it would be theoretically subject to the

same liability as any other expropriator. Nevertheless, the entering of a personal judgment against it would be an unnecessary, as well as profitless formality.In the face of the elaborate safeguards provided in our procedure, it is frivolous to speculate upon the possibility that the Legislature may finally refuse to appropriate any additional amount, over and above the provisional deposit, that may be necessary to pay the award. That it may do. But the Government can not keep the land and dishonor the judgment. Moreover, in the eventuality that the expropriation shall not be consummated, the owners will be protected by the deposit from any danger of loss resulting from the temporary occupation of the land by the Government; for it is obvious that this preliminary deposit serves the double purpose of a prepayment upon the value of the property, if finally expropriated, and as an indemnity against damage in the eventuality that the proceedings should fail of consummation.It appears that the money represented by the certificate of deposit which was placed at the disposal of the lower court, pursuant to the requirements of section 2 of Act No. 2826, was taken from certain appropriations under the control of the Militia Commission, a body created by section 29 of Act No. 2715, for the purpose, among others, of advising the Governor-General upon measures relative to the organization, equipment, and government of the National Guard and reserve militia. Counsel for the petitioners say that money appropriated for the purposes of the Militia Commission cannot be lawfully used to acquire the land which is now the subject of expropriation, because no authority for the exercise of the power of eminent domain is to be found in any of the Acts appropriating money for said Commission; from whence it is argued that the certificate of deposit affords no protection to the owners of property.The point appears to be one of little general importance, and we will not multiply words over it. Suffice it to say that in our opinion the Insular Auditor was acting within his authority when he let this money out of the Insular Treasury; and being now within the control of the lower court, it will doubtless in due time be applied to the purpose for which the deposit was made.From the foregoing discussion it is apparent that the action taken by the lower court in the condemnation proceedings aforesaid was in all respects regular and within the jurisdiction of the court. The writ prayed for in the petition before us, therefore, can not be issued.

The application is accordingly denied, with costs against ,the petitioners.Arellano, C. J., Torres, Araullo and Avanceña, JJ., concur.Johnson, J., reserves the right to prepare a separate opinion.Separate Opinions

MALCOLM, J., concurring:

I agree with the conclusion arrived at in the majority decision. I am clearly of the opinion that the alternative application for a writ of certiorari or prohibition should not be granted. An analysis into their simplest elements of the various questions presented may easily be made as follows: 1. The power of the Philippine Government in eminent domain; 2. The constitutional prohibition that (A) private property (E) shall not be taken for public use (C) without just compensation; and 3. The constitutional prohibition that no money shall be paid out of the treasury except in pursuance of an appropriation by law. 1. The power of eminent domain is expressly vested in the Government of the Philippine Islands by section 63 of the Act of Congress of July 1, 1902, commonly known as the Philippine Bill. The Philippine Legislature has, in turn by section 64 (h) of the Administrative Code of 1917, expressly delegated to the Governor-General the specific power and duty to determine when it is necessary or advantageous to exercise the right of eminent domain in behalf of the Government of the Philippine Islands. This delegation of legislative power to the Governor-General was authorized in view of the nature of eminent domain, which necessitates administrative agents for its execution, in view of the previous attitude assumed by the Judiciary with relation to similar delegations of power, and in view of the undeniable fact that the Governor-General is a part of the same Government of the Philippine Islands to which was transferred the right of eminent domain by the Congress of the United States. (See Government of the Philippine Islands vs. Municipality of Binangonan [1916], 34 Phil. 518.) When; therefore, the Governor-General directed the Attorney-General to cause condemnation proceedings to be begun in the Court of First Instance of Rizal with the object of having the Government obtain title to the site commonly known as "Camp Tomas Claudio," the Governor-General was merely acting as a mouthpiece of American sovereignty, pursuant to a delegated

power transmitted by the Congress of the United States to the Government of the Philippine Islands and lodged by this latter Government in the Chief Executive. Any other holding would mean that section 64 (h) of the Administrative Code is invalid, a result to be avoided.2. In the existing Philippine Bill of Rights (last sentence, paragraph 1, section 3, Act of Congress of August 29, 1916) is a provision that "private property shall not be taken for public use without just compensation." It seems undeniable (A) that Camp Claudio was "private property," and (B) that it was being "taken for public use," namely, for military and aviation purposes. The only remaining point concerns "just compensation," which can better be discussed under our division 3.3. Another provision of the Philippine Bill of Rights (paragraph 15, section 3, Act of Congress of August 29, 1916) is, "that no money shall be paid out of the treasury except in pursuance of an appropriation by law." The same Organic Act provides (paragraph 1, section 24) for an Auditor who shall "audit, in accordance with law and administrative regulations, all expenditure of funds or property pertaining to, or hela in trust, by the Government." His administrative jurisdiction is made "exclusive." The Philippine Legislature could, of course, have specifically appropriated an amount for the purchase of the Camp Claudio site just as it could have specifically enacted a law for the condemnation of such site, but instead it preferred to include in the general Appropriation Acts, under the heads of The Philippine National Guard or Philippine Militia, a large amount to be expended in the discretion of the Militia Commission, which may "use the funds appropriated for other purposes, as the efficiency of the service may require." This transfer of power to the Militia Commission, like the delegation of some of the general legislative power to the Governor-General, raises no constitutional bar. The Insular Auditor has stated that there is in the treasury over a million pesos available for the condemnation of Camp Claudio, and this decision for present purposes must be taken as final and conclusive. The six hundred thousand pesos deposit is merely the provisional determination of the value of the land by the competent court, and in no way jeopardizes the financial interests of the owners of the property. No additional security is required since the sovereign power has waived its right to be sued, has pledged the public faith, and cannot obtain title until the owners receive just compensation for their property. (See Sweet vs. Rechel [1895], 159 U. S., 380.)

In resume, therefore, the Governor-General of the Philippine Islands had the right to authorize the condemnation of this land for military and aviation purposes, and no constitutional provision has been violated. The Court of First Instance of Rizal has merely acted in strict accord with law, and its action should, consequently, be sustained.

||| (Visayan Refining Co. v. Camus, G.R. No. 15870, December 03, 1919)

FIRST DIVISION

[G.R. No. 14355. October 31, 1919.]

THE CITY OF MANILA, plaintiff-appellant, vs. CHINESE COMMUNITY OF MANILA ET AL., defendants-appellees.

City Fiscal Diaz for appellant.

Crossfield & O'Brien, Williams, Ferrier & Sycip, Delgado & Delgado, Filemon Sotto, and Ramon Salinas for appellees.

SYLLABUS

1. EMINENT DOMAIN; EXPROPRIATION OF PRIVATE PROPERTY, RIGHT OF COURTS TO INQUIRE INTO NECESSITY OF. — When a municipal corporation attempts to expropriate private property and an objection is made thereto by the owner, the courts have ample authority, in this jurisdiction, to make inquiry, and to hear proof upon an-issue properly presented, concerning the question whether or not the purpose of the appropriation is, in fact, for some public use. The right of expropriation is not inherent power in a municipal corporation and before it can exercise the right some law must exist conferring the power upon it. A municipal corporation in this jurisdiction cannot expropriate public property. The land to be expropriated must be private, and the purpose of the expropriation must be public. If the court. upon trial, finds that neither of said condition exists, or that either one of them fails, the right to expropriate does not exist. If the property is taken in the ostensible behalf of a public improvement which it can never by any possibility serve, it is being taken for a use not public, and the owner's constitutional rights call for protection by the courts.

2. ID.; ID. — Upon the other hand, the Legislature may directly determine the necessity for appropriating private property for a particular improvement for public use, and it may select the exact location of the improvement. In such a case, it is well settled that the

utility of the proposed improvement, the existence of the public necessity for its construction, the expediency of constructing it, the suitableness of the location selected, and the consequent necessity of taking the lands selected, are all questions exclusively for the legislature to determine, and the courts have no power to interfere or to substitute their own views for those of the representatives of the people.

3. ID.; ID. — But when the law does not designate the property to be taken, nor how much may be taken, then the necessity of taking private property is a question for the courts.

4. ID.; ID. — There is a wide distinction between a legislative declaration that a municipality is given authority to exercise the right of eminent domain and a decision by the municipality that there exists a necessity for the exercise of that right in a particular case.

5. ID.; ID. — Whether or not it was wise, advisable, or necessary to confer upon a municipality the power to exercise the right of eminent domain, is a question with which the courts are not concerned. But whenever that right or authority is exercised for the purpose of depriving citizens of their property, the courts are authorized, in this jurisdiction, to make inquiry and to hear proof upon the necessity in a particular case, and not the general authority.

6. ID.; ID. — In the absence of some constitutional or statutory provision to the contrary, the necessity and expediency of exercising the right of eminent domain are questions essentially political and not judicial in their character.

7. ID.; ID. — The taking of private property for any use which is not required by the necessities or convenience of the inhabitants of a state, is an unreasonable exercise of the right of eminent domain

8. ID.; ID. — That government can scarcely be deemed free where the rights of property are left solely dependent on the legislative body without restraint. The fundamental maxims of free government seem to require that the rights of personal liberty and private property should be held sacred. At least no court of justice would be warranted in assuming that the power to violate and disregard them lurks in any general grant of legislative authority or ought to be implied from any general expression of the people. The people ought not to be presumed to part with rights so vital to their security

and well-being without a very strong and direct expression of such intention.

9. ID.; ID. — The exercise of the right of eminent domain is necessarily in derogation of private rights, and the rule in that case is that the authority must be strictly construed. No species of property is held by individuals with greater tenacity and none is guarded by the constitution and laws more sedulously, than the right to the freehold of inhabitants. When the legislature interferes with that right, the plain meaning of the law should not be enlarged by doubtful interpretation.

10. ID.; ID. — The very foundation of the right to exercise eminent domain is a genuine necessity, and that necessity must be of a public character. The ascertainment of the necessity must precede, and not follow, the taking of the property. The general power to exercise the right of eminent domain must not be confused with the right to exercise it in a particular case.

11. ID.; CEMETERIES, EXPROPRIATION OF. — Where a cemetery is open to the public, it is a public use and no part of the ground can be taken for other public uses under a general authority.

12. ID.; ID. — The city of Manila is not authorized to expropriate public property.

Per MALCOLM, J., concurring:

13. EMINENT DOMAIN; POWER OF THE GOVERNMENT OF THE PHILIPPINE ISLANDS. — The Government of the Philippine Islands is authorized by the Philippine Bill to acquire real estate for public use by the exercise of the right of eminent domain.

14. ID.; ID.; CITY OF MANILA. — The city of Manila is authorized by the Philippine Legislature to condemn private property for public use.

16. ID.; ID.; ID.; PRIVATE PROPERTY; PUBLIC USE. — The Legislature has the power to authorize the taking of land already applied to one public use and devote it to another.

16. ID.; ID.; ID., ID.; ID. — When the power to take land already applied to one public use and devote it to another is granted to municipal or private corporations in express words, no question can arise.

17. ID.; ID.; ID.; ID.; ID. — Land already devoted to a public use cannot be taken by the public for another

use which is inconsistent with the first without special authority from the Legislature or authority granted by necessary and reasonable implication.

18. ID.; ID.; ID.; ID.; ID. — Land applied to one use should not be taken for another except in cases of necessity.

19. ID.; ID.; ID.; ID.; ID.; CEMETERIES; CLASSES. — Cemeteries are of two classes: public and private.

20. ID.; ID.; ID.; ID.; ID.; ID.; ID.; PUBLIC CEMETERY. — A public cemetery is one used by the general community, or neighborhood, or church .

21. ID.; ID.; ID.; ID.; ID.; ID.; ID.; PRIVATE CEMETERY. — A private cemetery is one used only by a family, or a small portion of a community.

22. ID.; ID.; ID.; ID.; ID.; ID.; ID.; CHINESE CEMETERY, CITY OF MANILA. — The Chinese Cemetery in the city of Manila is a public cemetery.

23. ID.; ID.; ID.; ID.; ID.; ID.; ID.; ID. — Cemeteries, while still devoted to pious uses, are sacred, and it cannot be supposed that the Legislature has intended that they should be violated in the absence of special provisions on the subject authorizing such invasion.

24. ID.; ID.; ID.; ID.; ID.; ID.; ID.; ID. — Held: That since the city of Manila is only permitted to condemn private property for public use and since the Chinese Cemetery in the city of Manila is a public cemetery already devoted to a public use, the city of Manila cannot condemn a portion of the cemetery for a public street.

D E C I S I O N

JOHNSON, J p:

The important question presented by this appeal is: In expropriation proceedings by the city of Manila, may the courts inquire into, and hear proof upon, the necessity of the expropriation?

That question arose in the following manner:

On the 11th day of December, 1916, the city of Manila presented a petition in the Court of First Instance of said city, praying that certain lands, therein particularly described, be expropriated for the purpose of constructing a public improvement. The petitioner, in the second paragraph of the petition, alleged:

"That for the purpose of constructing a public improvement, namely, the extension of Rizal Avenue, Manila, it is necessary for the plaintiff to acquire ownership in fee simple of certain parcels of land situated in the district of Binondo of said city within Block 83 of said district, and within the jurisdiction of this court."

The defendant, the Comunidad de Chinos de Manila [Chinese Community of Manila], answering the petition of the plaintiff, alleged that it was a corporation organized and existing under and by virtue of the laws of the Philippine Islands, having for its purpose the benefit and general welfare of the Chinese Community of the City of Manila; that it was the owner of parcels one and two of the land described in paragraph 2 of the complaint; that it denied that it was either necessary or expedient that the said parcels be expropriated for street purposes; that existing street and roads furnished ample means of communication for the public in the district covered by such proposed expropriation; that if the construction of the street or road should be considered a public necessity, other routes were available, which would fully satisfy the plaintiff's purposes, at much less expense and without disturbing the resting places of the dead; that it had a Torrens title for the lands in question; that the lands in question had been used by the defendant for cemetery purposes; that a great number of Chinese were buried in said cemetery; that if said expropriation be carried into effect, it would disturb the resting places of the dead, would require the expenditure of a large sum of money in the transfer or removal of the bodies to some other place or site and in the purchase of such new sites, would involve the destruction of existing monuments and the erection of new monuments in their stead, and would create irreparable loss and injury to the defendant and to all those persons owning and interested in the graves and monuments which would have to be destroyed; that the plaintiff was without right or authority to expropriate said cemetery or any part or portion thereof for street purposes; and that the expropriation, in fact, was not necessary as a public improvement.

The defendant Ildefonso Tambunting, answering the petition, denied each and every allegation of the complaint, and alleged that said expropriation was not a public improvement; that it was not necessary for the plaintiff to acquire the parcels of land in question;

that a portion of the lands in question was used as a cemetery in which were the graves of his ancestors; that monuments and tomb-stones of great value were found thereon; that the land had become quasi-public property of a benevolent association, dedicated and used for the burial of the dead and that many dead were buried there; that if the plaintiff deemed it necessary to extend Rizal Avenue, he had offered and still offers to grant a right of way for the said extension over other land, without cost to the plaintiff, in order that the sepulchers, chapels and graves of his ancestors may not be disturbed; that the land so ordered, free of charge, would answer every public necessity on the part of the plaintiff.

The defendant Feliza Concepcion de Delgado, with her husband, Jose Maria Delgado, and each of the other defendants, answering separately, presented substantially the same defense as that presented by the Comunidad de Chinos de Manila and Ildefonso Tambunting above referred to.

The foregoing parts of the defense presented by the defendants have been inserted in order to show the general character of the defenses presented by each of the defendants. The plaintiff alleged that the expropriation was necessary. The defendants each alleged (a) that no necessity existed for said expropriation and (b) that the land in question was a cemetery, which had been used as such for many years, and was covered with sepulchers and monuments, and that the same should not be converted into a street for public purposes.

Upon the issue thus presented by the petition and the various answers, the Honorable Simplicio del Rosario, judge, in a very elucidated opinion, with very clear and explicit reasons, supported by abundance of authorities, decided that there was no necessity for the expropriation of the particular-strip of land in question, and absolved each and all of the defendants from all liability under the complaint, without any finding as to costs.

From that judgment the plaintiff appealed and presented the above question as its principal ground of appeal.

The theory of the plaintiff is, that once it has established the fact, under the law, that it has authority to expropriate land, it may expropriate any land it may desire; that the only function of the court in such proceedings is to ascertain the value of the land in question; that neither the court nor the owners of

the land can inquire into the advisable purpose of the expropriation or ask any questions concerning the necessities therefor; that the courts are mere appraisers of the land involved in expropriation proceedings, and, when the value of the land is fixed by the method adopted by the law, to render a judgment in favor of the defendant for its value.

That the city of Manila has authority to expropriate private lands for public purposes, is not denied. Section 2429 of Act No. 2711 (Charter of the city of Manila) provides that "the city (Manila) . . . may condemn private property for public use."

The Charter of the city of Manila contains no procedure by which the said authority may be carried into effect. We are driven, therefore, to the procedure marked out by Act No. 190 to ascertain how the said authority may be exercised. From an examination of Act No. 190, in its section 241, we find how the right of eminent domain may be exercised. Said section 241 provides that, "The Government of the Philippine Islands, or of any province or department thereof, or of any municipality, and any person, or public or private corporation having, by law, the right to condemn private property for public use, shall exercise that right in the manner hereinafter prescribed."

Section 242 provides that a complaint in expropriation proceeding shall be presented; that the complaint shall state with certainty the right of condemnation, with a description of the property sought to be condemned together with the interest of each defendant separately

Section 243 provides that if the court shall find upon trial that the right to expropriate the land in question exists, it shall then appoint commissioners.

Sections 244, 245 and 246 provide the method of procedure and duty of the commissioners. Section 248 provides for an appeal from the judgment of the Court of First Instance to the Supreme Court. Said section 248 gives the Supreme Court authority to inquire into the right of expropriation on the part of the plaintiff. If the Supreme Court on appeal shall determine that no right of expropriation existed, it shall remand the cause to the Court of First Instance with a mandate that the defendant be replaced in the possession of the property and that he recover whatever damages he may have sustained by reason of the possession of the plaintiff.

It is contended on the part of the plaintiff that the phrase in said section, "and if the court shall find that the right to expropriate exists," means simply that, if the court finds that there is some law authorizing the plaintiff to expropriate, then the courts have no other function than to authorize the expropriation and to proceed to ascertain the value of the land involved; that the necessity for the expropriation is a legislative and not a judicial question.

Upon the question whether expropriation is a legislative function exclusively, and that the courts cannot intervene except for the purpose of determining the value of the land in question, there is much legal literature. Much has been written upon both sides of that question. A careful examination of the discussions pro and con will disclose the fact that the decisions depend largely upon particular constitutional or statutory provisions. It cannot be denied, if the legislature under proper authority should grant the expropriation of a certain or particular parcel of land for some specified public purpose, that the courts would be without jurisdiction to inquire into the purpose of that legislation.

If, upon the other hand, however, the Legislature should grant general authority to a municipal corporation to expropriate private land for public purposes, we think the courts have ample authority in this jurisdiction, under the provisions above quoted, to make inquiry and to hear proof, upon an issue properly presented, concerning whether or not the lands were private and whether the purpose was, in fact, public. In other words, have not the courts in this jurisdiction the right, inasmuch as the questions relating to expropriation must be referred to them (sec. 241, Act No. 190) for final decision, to ask whether or not the law has been complied with ? Suppose, in a particular case, it should be denied that the property is not private property but public, may not the courts hear proof upon that question? Or, suppose the defense is, that the purpose of the expropriation is not public but private, or that there exists no public purpose at all, may not the courts make inquiry and hear proof upon that question?

The city of Manila is given authority to expropriate private lands for public purposes. Can it be possible that said authority confers the right to determine for itself that the land is private and that the purpose is public, and that the people of the city of Manila who pay the taxes for its support, especially those who are directly affected, may not question one or the other, or

both, of these questions? Can it be successfully contended that the phrase used in Act No. 190, "and if the court upon trial shall find that such right exists," means simply that the court shall examine the statutes simply for the purpose of ascertaining whether a law exists authorizing the petitioner to exercise the right of eminent domain ? Or, when the case arrives in the Supreme Court, can it be possible that the phrase, "if the Supreme Court shall determine that no right of expropriation exists," that that simply means that the Supreme Court shall also examine the enactments of the legislature for the purpose of determining whether or not a law exists permitting the plaintiff to expropriate?

We are of the opinion that the power of the court is not limited to that question. The right of expropriation is not an inherent power in a municipal corporation, and before it can exercise the right some law must exist conferring the power upon it. When the courts come to determine the question, they must not only find (a) that a law or authority exists for the exercise of the right of eminent domain, but (b) also that the right or authority is being exercised in accordance with the law. In the present case there are two conditions imposed upon the authority conceded to the City of Manila: First, the land must be private; and, second, the purpose must be public. If the court, upon trial, finds that neither of these conditions exists or that either one of them fails, certainly it cannot be contended that the right is being exercised in accordance with law

Whether the purpose for the exercise of the right of eminent domain is public, is a question of fact. Whether the land is public or private is also a question of fact; and, in our opinion, when the legislature conferred upon the courts of the Philippine Islands the right to ascertain upon trial whether the right exists for the exercise of eminent domain, it intended that the courts should inquire into, and hear proof upon, those questions. Is it possible that the owner of valuable land in this jurisdiction is compelled to stand mute while his land is being expropriated for a use not public, with the right simply to beg the city of Manila to pay him the value of his land? Does the law in this jurisdiction permit municipalities to expropriate lands, without question, simply for the purpose of satisfying the aesthetic sense of those who happen for the time being to be in authority ? Expropriation of lands usually calls for public expense. The taxpayers are called upon to pay the costs. Cannot the owners of land question the public use or the public necessity?

As was said above, there is a wide divergence of opinion upon the authority of the court to question the necessity or advisability of the exercise of the right of eminent domain. The divergence is usually found to depend upon particular statutory or constitutional provisions.

It has been contended — and many cases are cited in support of that contention, and section 158 of volume 10 of Ruling Case Law is cited as conclusive — that the necessity for taking property under the right of eminent domain is not a judicial question. But those who cited said section evidently overlooked the section immediately following (sec. 159), which adds: "But it is obvious that if the property is taken in the ostensible behalf of a public improvement which it can never by any possibility serve, it is being taken for a use not public, and the owner's constitutional rights call for protection by the courts. While many courts have used sweeping expression in the decisions in which they have disclaimed the power of supervising the selection of the sites of public improvements, it may be safely said that the courts of the various states would feel bound to interfere to prevent an abuse of the discretion delegated by the legislature, by an attempted appropriation of land in utter disregard of the possible necessity of its use, or when the alleged purpose was a cloak to some sinister scheme." Norwich City vs. Johnson, 86 Conn., 151; Bell vs. Mattoon Waterworks, etc. Co., 245 Ill., 544; Wheeling, etc. R. R. Co. vs. Toledo Ry. etc. Co., 72 Ohio St., 368; State vs. Stewart, 74 Wis., 620.)

Said section 158 (10 R. C. L., 183) which is cited as conclusive authority in support of the contention of the appellant, says:

"The legislature, in providing for the exercise of the power of eminent domain, may directly determine the necessity for appropriating private property for a particular improvement for public use, and it may select the exact location of the improvement. In such a case, it is well settled that the utility of the proposed improvement, the extent of the public necessity for its construction, the expediency of constructing it, the suitableness of the location selected and the consequent necessity of taking the land selected for its site, are all questions exclusively for the legislature to determine and the courts have no power to interfere, or to substitute their own views for those of the representatives of the people."

Practically every case cited in support of the above doctrine has been examined, and we are justified in making the statement that in each case the legislature directly determined the necessity for the exercise of the right of eminent domain in the particular case. It is not denied that if the necessity for the exercise of the right of eminent domain is presented to the legislative department of the government and that department decides that there exists a necessity for the exercise of the right in a particular case, that then and in that case, the courts will not go behind the action of the legislature and make inquiry concerning the necessity. But in the case of Wheeling, etc. R. R. Co. vs. Toledo, Ry., etc. Co. (72 Ohio St., 368 [106 Am. St. Rep., 622, 628] ), which is cited in support of the doctrine laid down in section 158 above quoted, the court said:

"But when the statute does not designate the property to be taken nor how much may be taken, then the necessity of taking particular property is a question for the courts Where the application to condemn or appropriate is made directly to the court, the question (of necessity) should be raised and decided in limine."

The legislative department of the government very rarely undertakes to designate the precise property which should be taken for public use. It has generally, like in the present case, merely conferred general authority to take land for public use when a necessity exists therefor. We believe that it can be confidently asserted that, under such statute, the allegation of the necessity for the appropriation is an issuable allegation which it is competent for the courts to decide. (Lynch vs. Forbes, 161 Mass., 302 [42 Am. St. Rep., 402, 407].)

There is a wide distinction between a legislative declaration that a municipality is given authority to exercise the right of eminent domain, and a decision by the municipality that there exists a necessity for the exercise of that right in a particular case. The first is a declaration simply that there exist reasons why the right should be conferred upon municipal corporation, while the second is the application of the right to a particular case. Certainly, the legislative declaration relating to the advisability of granting the power cannot be converted into a declaration that a necessity exists for its exercise in a particular case, and especially so when, perhaps, the land in question was not within the territorial jurisdiction of the municipality at the time the legislative authority was granted.

Whether it was wise, advisable, or necessary to confer upon a municipality the power to exercise the right of eminent domain, is a question with which the courts are not concerned. But when that right or authority is exercised for the purpose of depriving citizens of their property, the courts are authorized, in this jurisdiction, to make inquiry and to hear proof upon the necessity in the particular case, and not the general authority.

Volume 15 of the Cyclopedia of Law and Procedure (Cyc.), page 629, is cited as a further conclusive authority upon the question that the necessity for the exercise of the right of eminent domain is a legislative and not a judicial question. Cyclopedia, at the page stated, says:

"In the absence of some constitutional or statutory provision to the contrary, the necessity and expediency of exercising the right of eminent domain are questions essentially political and not judicial in their character. The determination of those questions (the necessity and the expediency) belongs to the sovereign power; the legislative department is final and conclusive, and the courts have no power to review it (the necessity and the expediency) . . . . It (the legislature) may designate the particular property to be condemned, and its determination in this respect cannot be reviewed by the courts."

The volume of Cyclopedia, above referred to, cites many cases in support of the doctrine quoted. While time has not permitted an examination of all of said citations, many of them have been examined, and it can be confidently asserted that said cases which are cited in support of the assertion that, "the necessity and expediency of exercising the right of eminent domain are questions essentially political and not judicial," show clearly and invariably that in each case the legislature itself usually, by a special law, designated the particular case in which the right of eminent domain might be exercised by the particular municipal corporation or entity within the state. (Eastern R. Co. vs. Boston, etc., R. Co., 11 Mass., 125 [15 Am. Rep., 13]; Brooklyn Park Com'rs. vs. Armstrong, 45 N. Y., 234 [6 Am. Rep., 70]; Hairston vs. Danville, etc. Ry. Co., 208 U. S. 598; Cincinnati vs. Louisville, etc. Ry. Co., 223 U. S. 390; U. S. vs. Chandler-Dunbar Water Power Co., 229 U. S., 53; U. S. vs. Gettysburg, etc. Co., 160 U. S., 668; Traction Co. vs. Mining Co., 196 U. S., 239; Sears vs. City of Akron, 246 U. S., 351 [erroneously cited as 242 U. S.].)

In the case of Traction Co. vs. Mining Co. (196 U. S., 239), the Supreme Court of the United States said: "It is erroneous to suppose that the legislature is beyond the control of the courts in exercising the power of eminent domain, either as to the nature of the use or the necessity to the use of any particular property. For if the use be not public or no necessity for the taking exists, the legislature cannot authorize the taking of private property against the will of the owner, notwithstanding compensation may be required."

In the case of School Board of Carolina vs. Saldaña (14 Porto Rico, 339, 356), we find the Supreme Court of Porto Rico, speaking through Justice MacLeary, quoting approvingly the following, upon the question which we are discussing: "It is well settled that although the legislature must necessarily determine in the first instance whether the use for which they (municipalities, etc.) attempt to exercise the power is a public one or not, their (municipalities, etc.) determination is not final, but is subject to correction by the courts, who may undoubtedly declare the statute unconstitutional, if it shall clearly appear that the use for which it is proposed to authorize the taking of private property is in reality not public but private." Many cases are cited in support of that doctrine.

Later, in the same decision, we find the Supreme Court of Porto Rico says: "At any rate, the rule is quite well settled that in the cases under consideration the determination of the necessity of taking a particular piece or a certain amount of land rests ultimately with the courts." (Spring Valley etc. Co. vs. San Mateo, etc. Co., 64 Cal., 123.) In the case of Board of Water Com'rs., etc. vs. Johnson (86 Conn., 571 [41 L. R. A., N. S., 1024] ), the Supreme Court of Connecticut approvingly quoted the following doctrine from Lewis on Eminent Domain (3d ed.), section 599: "In all such cases the necessity of public utility of the proposed work or improvement is a judicial question. In all such cases, where the authority is to take property necessary for the purpose, the necessity of taking particular property for a particular purpose is a judicial one, upon which the owner is entitled to be heard." Riley vs. Charleston, etc. Co., 71 S. C., 457, 489 [110 Am. St. Rep., 579]; Henderson vs. Lexington 132 Ky., 390, 403.)

The taking of private property for any use which is not required by the necessities or convenience of the inhabitants of the state, is an unreasonable exercise of the right of eminent domain, and beyond the power of the legislature to delegate. (Bennett vs. Marion,

106 Iowa, 628, 633; Wilson vs. Pittsburg, etc. Co., 222 Pa. St., 541, 545; Greasy, etc. Co. vs. Ely, etc. Co., 132 Ky., 692, 697.)

In the case of New Central Coal Co. vs. George's, etc. Co. (37 Md., 537, 564), the Supreme Court of the State of Maryland, discussing the question before us, said: "To justify the exercise of this extreme power ,(eminent domain) where the legislature has left it to depend upon the necessity that may be found to exist, in order to accomplish the purposes of the incorporation, as in this case, the party claiming the right to the exercise of the power should be required to show at least a reasonable degree of necessity for its exercise. Any rule less strict than this, with the large and almost indiscriminate delegation of the right to corporations, would likely lead to oppression and the sacrifice of private right to corporate power."

In the case of Dewey vs. Chicago, etc. Co. (184 Ill., 426, 433), the court said: "Its right to condemn property is not a general power of condemnation, but is limited to cases where a necessity for resort to private property is shown to exist. Such necessity must appear upon the face of the petition to condemn. If the necessity is denied the burden is upon the company (municipality) to establish it." (Highland, etc. Co. vs. Strickley, 116 Fed., 852, 856; Kiney vs. Citizens' Water & Light Co., 173 Ind., 252, 257; Bell vs Mattoon Waterworks, etc. Co., 245 Ill., 544 [137 Am St. Rep., 388].)

It is true that many decisions may be found asserting that what is a public use is a legislative question, and many other decisions declaring with equal emphasis that it is a judicial question. But, as long as there is a constitutional or statutory provision denying the right to take land for any use other than a public use, it occurs to us that the question whether any particular use is a public one or not is ultimately, at least, a judicial question. The legislature may, it is true, in effect declare certain uses to be public, and, under the operation of the well-known rule that a statute will not be declared to be unconstitutional except in a case free, or comparatively free, from doubt, the courts will certainly sustain the action of the legislature, unless it appears that the particular use is clearly not of a public nature. The decisions must be understood with this limitation; for, certainly, no court of last resort will be willing to declare that any and every purpose which the legislature might happen to

designate as a public use shall be conclusively held to be so, irrespective of the purpose in question and of its manifestly private character. Blackstone in his Commentaries on the English Law remarks that, so great is the regard of the law for private property that it will not authorize the least violation of it, even for the public good, unless there exists a very great necessity therefor.

In the case of Wilkinson vs. Leland (2 Fet. [U. S.], 657), the Supreme Court of the United States said: "That government can scarcely be deemed free where the rights of property are left solely dependent on the legislative body, without restraint. The fundamental maxims of free government seem to require that the rights of personal liberty and private property should be held sacred. At least no court of justice in this country would be warranted in assuming that the power to violate and disregard them — a power so repugnant to the common principles of justice and civil liberty — lurked in any general grant of legislative authority, or ought to be implied from any general expression of the people. The people ought not to be presumed to part with rights so vital to their security and well-being without very strong and direct expression of such intention." (Lewis on Eminent Domain, sec. 603; Lecoul vs. Police Jury, 20 La. Ann., 308; Jefferson vs. Jazem, 7 La. Ann., 182.)

Blackstone, in his Commentaries on the English Law, said that the right to own and possess land — a place to live separate and apart from others — to retain it as a home for the family in a way not to be molested by others — is one of the most sacred rights that men are heirs to. That right has been written into the organic law of every civilized nation. The Acts of Congress of July 1, 1902, and of August 29, 1916, which provide that "no law shall be enacted in the Philippine Islands which shall deprive any person of his property without due process of law," are but a restatement of the time-honored protection of the absolute right of the individual to his property. Neither did said Acts of Congress add anything to the law already existing in the Philippine Islands. The Spaniard fully recognized the principle and adequately protected the inhabitants of the Philippine Islands against the encroachment upon the private property of the individual. Article 349 of the Civil Code provides that: "No one may be deprived of his property unless it be by competent authority, for some purpose of proven public utility, and after payment of the proper compensation. Unless this requisite (proven public utility and payment) has been complied

with, it shall be the duty of the courts to protect the owner of such property in its possession or to restore its possession to him, as the case may be."

The exercise of the right of eminent domain, whether directly by the State, or by its authorized agents, is necessarily in derogation of private rights, and the rule in that case is that the authority must be strictly construed. No species of property is held by individuals with greater tenacity, and none is guarded by the constitution and laws more sedulously, than the right to the freehold of inhabitants. When the legislature interferes with that right, and, for greater public purposes, appropriates the land of an individual without his consent, the plain meaning of the law should not be enlarged by doubtly interpretation. (Bensley vs. Mountain lake Water Co., 13 Cal., 306 and cases cited [73 Am. Dec., 576].)

The statutory power of taking property from the owner without his consent is one of the most delicate exercise of governmental authority. It is to be watched with jealous scrutiny. Important as the power may be to the government, the inviolable sanctity which all free constitutions attach to the right of property of the citizens, constrains the strict observance of the substantial provisions of the law which are prescribed as modes of the exercise of the power, and to protect it from abuse. Not only must the authority of municipal corporations to take property be expressly conferred and the use for which it is taken specified, but the power, with all constitutional limitation and directions for its exercise, must be strictly pursued. (Dillon on Municipal Corporations [5th Ed.], sec. 1040, and cases cited; Tenorio vs. Manila Railroad Co., 22 Phil., 411.)

It can scarcely be contended that a municipality would be permitted to take property for some public use unless some public necessity existed therefor. The right to take private property for public use originates in the necessity, and the taking must be limited by such necessity. The appellant contends that inasmuch as the legislature has given it general authority to take private property for public use, that the legislature has, therefore, settled the question of the necessity in every case and that the courts are closed to the owners of the property upon that question. Can it be imagined, when the legislature adopted section 2429 of Act No. 2711, that it thereby declared that it was necessary to appropriate the property of Juan de la Cruz, whose property, perhaps, was not within the city limits at the time the law was

adopted ? The legislature, then, not having declared the necessity, can it be contemplated that it intended that a municipality should be the sole judge of the necessity in every case, and that the courts, in the face of the provision that "if upon trial they shall find that a right exists," cannot in that trial inquire into and hear proof upon the necessity for the appropriation in a particular case ?

The Charter of the city of Manila authorizes the taking of private property for public use. Suppose the owner of the property denies and successfully proves that the taking of his property serves no public use: Would the courts not be justified in inquiring into that question and in finally denying the petition if no public purpose was proved ? Can it be denied that the courts have a right to inquire into that question? If the courts can ask questions and decide, upon an issue properly presented, whether the use is public or not, is not that tantamount to permitting the courts to inquire into the necessity of the appropriation? If there is no public use, then there is no necessity, and if there is no necessity, it is difficult to understand how a public use can necessarily exist. If the courts can inquire into the question whether a public use exists or not, then it seems that it must follow that they can examine into the question of the necessity.

The very foundation of the right to exercise eminent domain is a genuine necessity, and that necessity must be of a public character. The ascertainment of the necessity must precede or accompany, and not follow, the taking of the land. (Morrison vs. Indianapolis, etc. Ry. Co., 166 Ind., 611; Stearns vs. Barre, 73 Vt., 281; Wheeling, etc. R. R. Co. vs. Toledo, Ry. etc. Co., 72 Ohio St., 368.)

The general power to exercise the right of eminent domain must not be confused with the right to exercise it in a particular case. The power of the legislature to confer, upon municipal corporations and other entities within the State, general authority to exercise the right of eminent domain cannot be questioned by the courts, but that general authority of municipalities or entities must not be confused with the right to exercise it in particular instances. The moment the municipal corporation or entity attempts to exercise the authority conferred, it must comply with the conditions accompanying the authority. The necessity for conferring the authority upon a municipal corporation to exercise the right of eminent domain is admittedly within the power of the legislature. But whether or not the municipal corporation or entity is

exercising the right in a particular case under the conditions imposed by the general authority, is a question which the courts have the right to inquire into.

The conflict in the authorities upon the question whether the necessity for the exercise of the right of eminent domain is purely legislative and not judicial, arises generally in the wisdom and propriety of the legislature in authorizing the exercise of the right of eminent domain instead of in the question of the right to exercise it in a particular case. (Creston Waterworks Co. vs. McGrath, 89 Iowa, 502.)

By the weight of authorities, the courts have the power of restricting the exercise of eminent domain to the actual reasonable necessities of the case and for the purposes designated by the law. (Fairchild vs. City of St. Paul. 48 Minn.. 540.)

And, moreover, the record does not show conclusively that the plaintiff has definitely decided that their exists a necessity for the appropriation of the particular land described in the complaint. Exhibits 4, 5, 7, and E clearly indicate that the municipal board believed at one time that other land might be used for the proposed improvement, thereby avoiding the necessity of disturbing the quiet resting place of the dead.

Aside from insisting that there exists no necessity for the alleged improvement, the defendants further contend that the street in question should not be opened through the cemetery. One of the defendants alleges that said cemetery is public property. If that allegations is true, then, of course, the city of Manila cannot appropriate it for public use. The city of Manila can only expropriate private property.

It is a well known fact that cemeteries may be public or private. The former is a cemetery used by the general community, or neighborhood, or church, while the latter is used only by a family, or a small portion of the community or neighborhood. (11 C. J., 50.)

Where a cemetery is open to the public, it is a public use and no part of the ground can be taken for other public uses under a general authority. And this immunity extends to the unimproved and unoccupied parts which are held in good faith for future use. (Lewis on Eminent Domain, sec. 434, and cases cited.)

The cemetery in question seems to have been established under governmental authority. The Spanish Governor-General, in an order creating the same, used the following language:

"The cemetery and general hospital for indigent Chinese having been founded and maintained by the spontaneous and fraternal contribution of their protector, merchants and industrials, benefactors of mankind, in consideration of their services to the Government of the Islands its internal administration, government and regime must necessarily be adjusted to the taste and traditional practices of those born and educated in China in order that the sentiments which animated the founders may be perpetually effectuated."

It is alleged, and not denied, that the cemetery in question may be used by the general community of Chinese, which fact, in the general acceptation of the definition of a public cemetery, would make the cemetery in question public property. If that is true, then, of course, the petition of the plaintiff must be denied, for the reason that the city of Manila has no authority or right under the law to expropriate public property.

But, whether or not the cemetery is public or private property, its appropriation for the uses of a public street, especially during the lifetime of those specially interested in its maintenance as a cemetery, should be a question of great concern, and its appropriation should not be made for such purposes until it is fully established that the greatest necessity exists therefor.

While we do not contend that the dead must not give place to the living, and while it is a matter of public knowledge that in the process of time sepulchers may become the seat of cities and cemeteries traversed by streets and daily trod by the feet oœ millions of men, yet, nevertheless such sacrifices and such uses of the places of the dead should not be made unless and until it is fully established that there exists an eminent necessity therefor. While cemeteries and sepulchers and the places of the burial of the dead are still within the memory and command of the active care of the living; while they are still devoted to pious uses and sacred regard, it is difficult to believe that even the legislature would adopt a law expressly providing that such places, under such circumstances, should be violated.

In such an appropriation, what, we may ask, would be the measure of damages at law, for the wounded

sensibilities of the living, in having the graves of kindred and loved ones blotted out and desecrated by a common highway or street for public travel ? The impossibility of measuring the damage and inadequacy of a remedy at law is too apparent to admit of argument. To disturb the mortal remains of those endeared to us in life sometimes becomes the sad duty of the living; but, except in cases of necessity, or for laudable purposes, the sanctity of the grave, the last resting place of our friends, should be maintained, and the preventative aid of the courts should be invoked for that object. (Railroad Company vs. Cemetery Co., 116 Tenn., 400; Evergreen Cemetery Association vs. The City of New Haven, 43 Conn., 234; Anderson vs. Acheson, 132 Iowa, 744; Beatty vs. Kurtz, 2 Peters, 566.)

In the present case, even granting that a necessity exists for the opening of the street in question, the record contains no proof of the necessity of opening the same through the cemetery. The record shows that adjoining and adjacent lands have been offered to the city free of charge, which will answer every purpose of the plaintiff.

For all of the foregoing, we are fully persuaded that the judgment of the lower court should be and is hereby affirmed, with costs against the appellant. So ordered.

Arellano, C. J., Torres, Araullo and Avanceña, JJ., concur.

||| (City of Manila v. Chinese Community of Manila, G.R. No. 14355, October 31, 1919)

THIRD DIVISION

[G.R. No. 135087. March 14, 2000.]

HEIRS OF ALBERTO SUGUITAN, petitioner, vs. CITY OF MANDALUYONG, respondent.

Marious Corpus for petitioner.

Robert L. Lim for private respondent.

SYNOPSIS

On October 13, 1994, the Sangguniang Panglungsod of Mandaluyong City issued a resolution authorizing Mayor Benjamin S. Abalos to institute expropriation proceeding over the property of Alberto Suguitan located at Boni Avenue and Sto. Rosario Streets in Mandaluyong City for the expansion of Mandaluyong Medical Center. On January 20, 1995, Mayor Abalos wrote Alberto Suguitan offering to buy his property, but Suguitan refused to sell. Consequently, the City of Mandaluyong filed a complaint for expropriation with the Regional Trial Court of Pasig. Suguitan filed a motion to dismiss. The trial court denied the said motion and subsequently, it allowed the expropriation of the subject property. Aggrieved by the said order, the heirs of Suguitan asserted that the City of Mandaluyong may only exercise its delegated power of eminent domain by means of an ordinance as required by Section 19 of Republic Act No. 7160, and not by means of a mere resolution.

The Court ruled that the basis for the exercise of the power of eminent domain by local government units is Section 19 of RA 7160 which provides that: "A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, purpose, or welfare for the benefits of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws; Provided, however, That the power of eminent domain may not be exercised unless a valid and definite offer has been previously made to the owner, and such offer was not accepted; Provided, further, That the local government unit may immediately take possession of the property upon the filing of the expropriation proceedings and upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market value of the property based on the current tax declaration of the property to be

expropriated; Provided, finally, That the amount to be paid for the expropriated property shall be determined by the proper court, based on the fair market value at the time of the taking of the property. In the present case, the City of Mandaluyong sought to exercise the power of eminent domain over petitioners' property by means of a resolution, in contravention of the first requisite. The law in this case is clear and free from ambiguity. Section 19 of the Code requires an ordinance, not a resolution, for the exercise of the power of eminent domain. Therefore, while the Court remains conscious of the constitutional policy of promoting local autonomy, it cannot grant judicial sanction to a local government unit's exercise of its delegated power of eminent domain in contravention of the very law giving it such power. SECATH

SYLLABUS

1. POLITICAL LAW; POWER OF EMINENT DOMAIN; ELUCIDATED. — Eminent domain is the right or power of a sovereign state to appropriate private property to particular uses to promote public welfare. It is an indispensable attribute of sovereignty; a power grounded in the primary duty of government to serve the common need and advance the general welfare. Thus, the right of eminent domain appertains to every independent government without the necessity for constitutional recognition. The provisions found in modern constitutions of civilized countries relating to the taking of property for the public use do not by implication grant the power to the government, but limit a power which would otherwise be without limit. Thus, our own Constitution provides that "[p]rivate property shall not be taken for public use without just compensation." Furthermore, the due process and equal protection clauses act as additional safeguards against the arbitrary exercise of this governmental power.

2. ID.; ID.; AUTHORITY FOR THE EXERCISE THEREOF MUST BE STRICTLY CONSTRUED. — Since the exercise of the power of eminent domain affects an individual's right to private property, a constitutionally-protected right necessary for the preservation and enhancement of personal dignity and intimately connected with the rights to life and liberty, the need for its circumspect operation cannot be overemphasized. In City of Manila vs. Chinese Community of Manila we said: The exercise of the right of eminent domain, whether directly by the State, or by its authorized agents, is necessarily in

derogation of private rights, and the rule in that case is that the authority must be strictly construed. No species of property is held by individuals with greater tenacity, and none is guarded by the constitution and the laws more sedulously, than the right to the freehold of inhabitants. When the legislature interferes with that right, and, for greater public purposes, appropriates the land of an individual without his consent, the plain meaning of the law should not be enlarged by doubt[ful] interpretation. (Bensley vs. Mountainlake Water Co., 13 Cal., 306 and cases cited [73 Am. Dec., 576].) The statutory power of taking from the owner without his consent is one of the most delicate exercise of governmental authority. It is to be watched with jealous scrutiny. Important as the power may be to the government, the inviolable sanctity which all free constitutions attach to the right of property of the citizens, constrains the strict observance of the substantial provisions of the law which are prescribed as modes of the exercise of the power, and to protect it from abuse. . . . (Dillon on Municipal Corporations [5th Ed.], Sec. 1040, and cases cited; Tenorio vs. Manila Railroad Co., 22 Phil., 411.)

3. ID.; ID.; LEGISLATIVE IN NATURE; MAY BE VALIDLY DELEGATED TO LOCAL GOVERNMENT UNITS. — The power of eminent domain is essentially legislative in nature. It is firmly settled, however, that such power may be validly delegated to local government units, other public entities and public utilities, although the scope of this delegated legislative power is necessarily narrower than that of the delegating authority and may only be exercised in strict compliance with the terms of the delegating law.

4. ID.; ID.; BASIS OF LOCAL GOVERNMENT UNITS FOR THE EXERCISE THEREOF. — The basis for the exercise of the power of eminent domain by local government units is Section 19 of RA 7160 which provides that: A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, purpose, or welfare for the benefits of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws; Provided, however, That the power of eminent domain may not be exercised unless a valid and definite offer has been previously made to the owner, and such offer was not accepted; Provided, further, That the local government unit may immediately take possession of

the property upon the filing of the expropriation proceedings and upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market value of the property based on the current tax declaration of the property to be expropriated; Provided, finally, That the amount to be paid for the expropriated property shall be determined by the proper court, based on the fair market value at the time of the taking of the property.

5. ID.; ID.; COURTS SHOULD DETERMINE WHETHER THE POWER OF EMINENT DOMAIN IS BEING EXERCISED BY LOCAL GOVERNMENTS IN ACCORDANCE WITH THE DELEGATING LAW. — Despite the existence of this legislative grant in favor of local governments, it is still the duty of the courts to determine whether the power of eminent domain is being exercised in accordance with the delegating law. In fact, the courts have adopted a more censorious attitude in resolving questions involving the proper exercise of this delegated power by local bodies, as compared to instances when it is directly exercised by the national legislature.

6. ID.; ID.; REQUISITES TO BE COMPLIED BY LOCAL GOVERNMENT UNITS. — The courts have the obligation to determine whether the following requisites have been complied with by the local government unit concerned: 1. An ordinance is enacted by the local legislative council authorizing the local chief executive, in behalf of the local government unit, to exercise the power of eminent domain or pursue expropriation proceedings over a particular private property. 2. The power of eminent domain is exercised for public use, purpose or welfare, or for the benefit of the poor and the landless. 3. There is payment of just compensation, as required under Section 9, Article III of the Constitution, and other pertinent laws. 4. A valid and definite offer has been previously made to the owner of the property sought to be expropriated, but said offer was not accepted.

7. ID.; ID.; SECTION 19 OF Republic Act No. 7160 REQUIRES AN ORDINANCE, NOT A RESOLUTION FOR EXERCISE THEREOF. — The law in this case is clear and free from ambiguity. Section 19 of the Code requires an ordinance, not a resolution, for the exercise of the power of eminent domain. . . . We cannot uphold respondent's contention that an ordinance is needed only to appropriate funds after the court has determined the amount of just compensation. An examination of the applicable law

will show that an ordinance is necessary to authorize the filing of a complaint with the proper court since, beginning at this point, the power of eminent domain is already being exercised.

8. ID.; ORDINANCE AND RESOLUTION; DIFFERENTIATED. — We reiterate our ruling in Municipality of Parañaque v. V.M. Realty Corporation regarding the distinction between an ordinance and a resolution. In that 1998 case we held that: We are not convinced by petitioner's insistence that the terms "resolution" and "ordinance" are synonymous. A municipal ordinance is different from a resolution. An ordinance is a law, but a resolution is merely a declaration of the sentiment or opinion of a lawmaking body on a specific matter. An ordinance possesses a general and permanent character, but a resolution is temporary in nature. Additionally, the two are enacted differently — a third reading is necessary for an ordinance, but not for a resolution, unless decided otherwise by a majority of all the Sanggunian members.

9. REMEDIAL LAW; SPECIAL CIVIL ACTION; EXPROPRIATION; STAGES OF PROCEEDINGS. — Rule 67 of the 1997 Revised Rules of Court reveals that expropriation proceedings are comprised of two stages: (1) the first is concerned with the determination of the authority of the plaintiff to exercise the power of eminent domain and the propriety of its exercise in the context of the facts involved in the suit; it ends with an order, if not in a dismissal of the action, of condemnation declaring that the plaintiff has a lawful right to take the property sought to be condemned, for the public use or purpose described in the complaint, upon the payment of just compensation to be determined as of the date of the filing of the complaint; (2) the second phase is concerned with the determination by the court of the just compensation for the property sought to be taken; this is done by the court with the assistance of not more than three (3) commissioners.

10. ID.; ID.; ID.; ID.; DETERMINATION AND AWARD OF JUST COMPENSATION IS IN LAST STAGE. — Clearly, although the determination and award of just compensation to the defendant is indispensable to the transfer of ownership in favor of the plaintiff, it is but the last stage of the expropriation proceedings, which cannot be arrived at without an initial finding by the

court that the plaintiff has a lawful right to take the property sought to be expropriated, for the public use or purpose described in the complaint. An order of condemnation or dismissal at this stage would be final, resolving the question of whether or not the plaintiff has properly and legally exercised its power of eminent domain.

11. POLITICAL LAW; EMINENT DOMAIN; LOCAL GOVERNMENT UNITS; ORDINANCE AUTHORIZING LOCAL CHIEF EXECUTIVE TO EXERCISE POWER OF EMINENT DOMAIN IS NECESSARY PRIOR TO THE FILING OF COMPLAINT. — Also, it is noted that as soon as the complaint is filed the plaintiff shall already have the right to enter upon the possession of the real property involved upon depositing with the court at least fifteen percent (15%) of the fair market value of the property based on the current tax declaration of the property to be expropriated. Therefore, an ordinance promulgated by the local legislative body authorizing its local chief executive to exercise the power of eminent domain is necessary prior to the filing by the latter of the complaint with the proper court, and not only after the court has determined the amount of just compensation to which the defendant is entitled.

12. ID.; ID.; ID.; SECTION 19 OF Republic Act No. 7160 PREVAILS OVER IMPLEMENTING RULES AND REGULATIONS. — Neither is respondent's position improved by its reliance upon Article 36 (a), Rule VI of the IRR which provides that: "If the LGU fails to acquire a private property for public use, purpose, or welfare through purchase, LGU may expropriate said property through a resolution of the sanggunian authorizing its chief executive to initiate expropriation proceedings." The Court has already discussed this inconsistency between the Code and the IRR, which is more apparent than real, in Municipality of Parañaque vs. V.M. Realty Corporation, which we quote hereunder: "Petitioner relies on Article 36, Rule VI of the Implementing Rules, which requires only a resolution to authorize an LGU to exercise eminent domain. This is clearly misplaced, because Section 19 of RA 7160, the law itself, surely prevails over said rule which merely seeks to implement it. It is axiomatic that the clear letter of the law is controlling and cannot be amended by a mere administrative rule issued for its implementation. Besides, what the discrepancy seems to indicate is a mere oversight in the wording of the implementing rules, since Article 32, Rule VI

thereof, also requires that, in exercising the power of eminent domain, the chief executive of the LGU must act pursuant to an ordinance." IDASHa

13. ID.; ID.; CANNOT BE EXERCISED BY LOCAL GOVERNMENT UNITS IN CONTRAVENTION OF THE VERY LAW GIVING IT. — While we remain conscious of the constitutional policy of promoting local autonomy, we cannot grant judicial sanction to a local government unit's exercise of its delegated power of eminent domain in contravention of the very law giving it such power.

14. REMEDIAL LAW; SPECIAL CIVIL ACTION; EXPROPRIATION; DISMISSED PETITION CAN BE REINSTATED BY LOCAL GOVERNMENT UNITS AFTER IT COMPLIED WITH ALL THE LEGAL REQUIREMENTS. — It should be noted, however, that our ruling in this case will not preclude the City of Mandaluyong from enacting the necessary ordinance and thereafter reinstituting expropriation proceedings, for so long as it has complied with all other legal requirements.

D E C I S I O N

GONZAGA-REYES, J p:

In this petition for review on certiorari under Rule 45, petitioners 1 pray for the reversal of the Order dated July 28, 1998 issued by Branch 155 of the Regional Trial Court of Pasig in SCA No. 875 entitled "City of Mandaluyong v. Alberto S. Suguitan, the dispositive portion of which reads as follows:

WHEREFORE, in view of the foregoing, the instant Motion to Dismiss is hereby DENIED and an ORDER OF CONDEMNATION is hereby issued declaring that the plaintiff, City of Mandaluyong, has a lawful right to take the subject parcel of land together with existing improvements thereon more specifically covered by Transfer Certificate Of Title No. 56264 of the Registry of Deeds for Metro Manila District II for the public use or purpose as stated in the Complaint, upon payment of just compensation.

Accordingly, in order to ascertain the just compensation, the parties are hereby directed to submit to the Court within fifteen (15) days from notice hereof, a list of independent appraisers from which the Court will select three (3) to be appointed as

Commissioners, pursuant to Section 5, Rule 67, Rules of Court. prcd

SO ORDERED. 2

It is undisputed by the parties that on October 13, 1994, the Sangguniang Panlungsod of Mandaluyong City issued Resolution No. 396, S-1994 3 authorizing then Mayor Benjamin S. Abalos to institute expropriation proceedings over the property of Alberto Suguitan located at Boni Avenue and Sto. Rosario streets in Mandaluyong City with an area of 414 square meters and more particularly described under Transfer Certificate of Title No. 56264 of the Registry of Deeds of Metro Manila District II. The intended purpose of the expropriation was the expansion of the Mandaluyong Medical Center.

Mayor Benjamin Abalos wrote Alberto Suguitan a letter dated January 20, 1995 offering to buy his property, but Suguitan refused to sell. 4 Consequently, on March 13, 1995, the city of Mandaluyong filed a complaint 5 for expropriation with the Regional Trial Court of Pasig. The case was docketed as SCA No. 875.

Suguitan filed a motion to dismiss 6 the complaint based on the following grounds — (1) the power of eminent domain is not being exercised in accordance with law; (2) there is no public necessity to warrant expropriation of subject property; (3) the City of Mandaluyong seeks to expropriate the said property without payment of just compensation; (4) the City of Mandaluyong has no budget and appropriation for the payment of the property being expropriated; and (5) expropriation of Suguitan's property is but a ploy of Mayor Benjamin Abalos to acquire the same for his personal use. Respondent filed its comment and opposition to the motion. On October 24, 1995, the trial court denied Suguitan's motion to dismiss. 7

On November 14, 1995, acting upon a motion filed by the respondent, the trial court issued an order allowing the City of Mandaluyong to take immediate possession of Suguitan's property upon the deposit of P621,000 representing 15% of the fair market value of the subject property based upon the current tax declaration of such property. On December 15, 1995, the City of Mandaluyong assumed possession of the subject property by virtue of a writ of possession issued by the trial court on December 14, 1995. 8 On

July 28, 1998, the court granted the assailed order of expropriation.

Petitioners assert that the city of Mandaluyong may only exercise its delegated power of eminent domain by means of an ordinance as required by Section 19 of Republic Act (RA) No. 7160, 9 and not by means of a mere resolution. 10 Respondent contends, however, that it validly and legally exercised its power of eminent domain; that pursuant to Article 36, Rule VI of the Implementing Rules and Regulations (IRR) of RA 7160, a resolution is a sufficient antecedent for the filing of expropriation proceedings with the Regional Trial Court. Respondent's position, which was upheld by the trial court, was explained, thus: 11

. . . in the exercise of the respondent City of Mandaluyong's power of eminent domain, a "resolution" empowering the City Mayor to initiate such expropriation proceedings and thereafter when the court has already determine[d] with certainty the amount of just compensation to be paid for the property expropriated, then follows an Ordinance of the Sanggunian Panlungsod appropriating funds for the payment of the expropriated property. Admittedly, title to the property expropriated shall pass from the owner to the expropriator only upon full payment of the just compensation. 12

Petitioners refute respondent's contention that only a resolution is necessary upon the initiation of expropriation proceedings and that an ordinance is required only in order to appropriate the funds for the payment of just compensation, explaining that the resolution mentioned in Article 36 of the IRR is for purposes of granting administrative authority to the local chief executive to file the expropriation case in court and to represent the local government unit in such case, but does not dispense with the necessity of an ordinance for the exercise of the power of eminent domain under Section 19 of the Code. 13

The petition is imbued with merit. LexLib

Eminent domain is the right or power of a sovereign state to appropriate private property to particular uses to promote public welfare. 14 It is an indispensable attribute of sovereignty; a power grounded in the primary duty of government to serve the common need and advance the general welfare. 15 Thus, the

right of eminent domain appertains to every independent government without the necessity for constitutional recognition. 16 The provisions found in modern constitutions of civilized countries relating to the taking of property for the public use do not by implication grant the power to the government, but limit a power which would otherwise be without limit. 17 Thus, our own Constitution provides that "[p]rivate property shall not be taken for public use without just compensation." 18 Furthermore, the due process and equal protection clauses 19 act as additional safeguards against the arbitrary exercise of this governmental power.

Since the exercise of the power of eminent domain affects an individual's right to private property, a constitutionally-protected right necessary for the preservation and enhancement of personal dignity and intimately connected with the rights to life and liberty, 20 the need for its circumspect operation cannot be overemphasized. In City of Manila vs. Chinese Community of Manila we said: 21

The exercise of the right of eminent domain, whether directly by the State, or by its authorized agents, is necessarily in derogation of private rights, and the rule in that case is that the authority must be strictly construed. No species of property is held by individuals with greater tenacity, and none is guarded by the constitution and the laws more sedulously, than the right to the freehold of inhabitants. When the legislature interferes with that right, and, for greater public purposes, appropriates the land of an individual without his consent, the plain meaning of the law should not be enlarged by doubt[ful] interpretation. (Bensley vs. Mountainlake Water Co., 13 Cal., 306 and cases cited [73 Am. Dec., 576].)

The statutory power of taking property from the owner without his consent is one of the most delicate exercise of governmental authority. It is to be watched with jealous scrutiny. Important as the power may be to the government, the inviolable sanctity which all free constitutions attach to the right of property of the citizens, constrains the strict observance of the substantial provisions of the law which are prescribed as modes of the exercise of the power, and to protect it from abuse. . . . (Dillon on Municipal Corporations [5th Ed.], Sec. 1040, and cases cited; Tenorio vs. Manila Railroad Co., 22 Phil., 411.)

The power of eminent domain is essentially legislative in nature. It is firmly settled, however, that such power may be validly delegated to local government units, other public entities and public utilities, although the scope of this delegated legislative power is necessarily narrower than that of the delegating authority and may only be exercised in strict compliance with the terms of the delegating law. 22

The basis for the exercise of the power of eminent domain by local government units is Section 19 of RA 7160 which provides that:

A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, purpose, or welfare for the benefits of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws; Provided, however, That the power of eminent domain may not be exercised unless a valid and definite offer has been previously made to the owner, and such offer was not accepted; Provided, further, That the local government unit may immediately take possession of the property upon the filing of the expropriation proceedings and upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market value of the property based on the current tax declaration of the property to be expropriated; Provided, finally, That the amount to be paid for the expropriated property shall be determined by the proper court, based on the fair market value at the time of the taking of the property. cda

Despite the existence of this legislative grant in favor of local governments, it is still the duty of the courts to determine whether the power of eminent domain is being exercised in accordance with the delegating law. 23 In fact, the courts have adopted a more censorious attitude in resolving questions involving the proper exercise of this delegated power by local bodies, as compared to instances when it is directly exercised by the national legislature. 24

The courts have the obligation to determine whether the following requisites have been complied with by the local government unit concerned:

1. An ordinance is enacted by the local legislative council authorizing the local chief executive, in behalf of the local government unit, to exercise the power of

eminent domain or pursue expropriation proceedings over a particular private property.

2. The power of eminent domain is exercised for public use, purpose or welfare, or for the benefit of the poor and the landless.

3. There is payment of just compensation, as required under Section 9, Article III of the Constitution, and other pertinent laws.

4. A valid and definite offer has been previously made to the owner of the property sought to be expropriated, but said offer was not accepted. 25

In the present case, the City of Mandaluyong seeks to exercise the power of eminent domain over petitioners' property by means of a resolution, in contravention of the first requisite. The law in this case is clear and free from ambiguity. Section 19 of the Code requires an ordinance, not a resolution, for the exercise of the power of eminent domain. We reiterate our ruling in Municipality of Parañaque v. V.M. Realty Corporation 26 regarding the distinction between an ordinance and a resolution. In that 1998 case we held that:

We are not convinced by petitioner's insistence that the terms "resolution" and "ordinance" are synonymous. A municipal ordinance is different from a resolution. An ordinance is a law, but a resolution is merely a declaration of the sentiment or opinion of a lawmaking body on a specific matter. An ordinance possesses a general and permanent character, but a resolution is temporary in nature. Additionally, the two are enacted differently — a third reading is necessary for an ordinance, but not for a resolution, unless decided otherwise by a majority of all the Sanggunian members.

We cannot uphold respondent's contention that an ordinance is needed only to appropriate funds after the court has determined the amount of just compensation. An examination of the applicable law will show that an ordinance is necessary to authorize the filing of a complaint with the proper court since, beginning at this point, the power of eminent domain is already being exercised.

Rule 67 of the 1997 Revised Rules of Court reveals that expropriation proceedings are comprised of two stages: llcd

(1) the first is concerned with the determination of the authority of the plaintiff to exercise the power of eminent domain and the propriety of its exercise in the context of the facts involved in the suit; it ends with an order, if not in a dismissal of the action, of condemnation declaring that the plaintiff has a lawful right to take the property sought to be condemned, for the public use or purpose described in the complaint, upon the payment of just compensation to be determined as of the date of the filing of the complaint;

(2) the second phase is concerned with the determination by the court of the just compensation for the property sought to be taken; this is done by the court with the assistance of not more than three (3) commissioners. 27

Clearly, although the determination and award of just compensation to the defendant is indispensable to the transfer of ownership in favor of the plaintiff, it is but the last stage of the expropriation proceedings, which cannot be arrived at without an initial finding by the court that the plaintiff has a lawful right to take the property sought to be expropriated, for the public use or purpose described in the complaint. An order of condemnation or dismissal at this stage would be final, resolving the question of whether or not the plaintiff has properly and legally exercised its power of eminent domain.

Also, it is noted that as soon as the complaint is filed the plaintiff shall already have the right to enter upon the possession of the real property involved upon depositing with the court at least fifteen percent (15%) of the fair market value of the property based on the current tax declaration of the property to be expropriated. 28 Therefore, an ordinance promulgated by the local legislative body authorizing its local chief executive to exercise the power of eminent domain is necessary prior to the filing by the latter of the complaint with the proper court, and not only after the court has determined the amount of just compensation to which the defendant is entitled.

Neither is respondent's position improved by its reliance upon Article 36 (a), Rule VI of the IRR which provides that:

If the LGU fails to acquire a private property for public use, purpose, or welfare through purchase, LGU may

expropriate said property through a resolution of the sanggunian authorizing its chief executive to initiate expropriation proceedings.

The Court has already discussed this inconsistency between the Code and the IRR, which is more apparent than real, in Municipality of Parañaque vs. V.M. Realty Corporation, 29 which we quote hereunder:

Petitioner relies on Article 36, Rule VI of the Implementing Rules, which requires only a resolution to authorize an LGU to exercise eminent domain. This is clearly misplaced, because Section 19 of RA 7160, the law itself, surely prevails over said rule which merely seeks to implement it. It is axiomatic that the clear letter of the law is controlling and cannot be amended by a mere administrative rule issued for its implementation. Besides, what the discrepancy seems to indicate is a mere oversight in the wording of the implementing rules, since Article 32, Rule VI thereof, also requires that, in exercising the power of eminent domain, the chief executive of the LGU must act pursuant to an ordinance.

Therefore, while we remain conscious of the constitutional policy of promoting local autonomy, we cannot grant judicial sanction to a local government unit's exercise of its delegated power of eminent domain in contravention of the very law giving it such power.

It should be noted, however, that our ruling in this case will not preclude the City of Mandaluyong from enacting the necessary ordinance and thereafter reinstituting expropriation proceedings, for so long as it has complied with all other legal requirements. 30

WHEREFORE, the petition is hereby GRANTED. The July 28, 1998 decision of Branch 155 of the Regional Trial Court of Pasig in SCA No. 875 is hereby REVERSED and SET ASIDE. LLpr

SO ORDERED.

Melo, Vitug, Panganiban and Purisima, JJ., concur.

||| (Heirs of Suguitan v. City of Mandaluyong, G.R. No. 135087, March 14, 2000)

FIRST DIVISION

[G.R. No. 127820. July 20, 1998.]

MUNICIPALITY OF PARAÑAQUE, petitioner, vs. V.M. REALTY CORPORATION, respondent.

Leo Luis P. Mendoza for petitioner.

Robiso & Reyes for respondent.

SYNOPSIS

Pursuant to Sangguniang Bayan Resolution No. 93-95, Series of 1993, the Municipality of Parañaque filed with the Regional Trial Court of Makati, Branch 134, on September 20, 1993 a complaint for expropriation against private respondent over two parcels of land with a combined area of about 10,000 square meters located at Wakas, San Dionisio, Parañaque, Metro Manila and covered by Torrens Certificate of Title No. 48700. Allegedly, the complaint was filed for the purpose of alleviating the living conditions of the underprivileged by providing homes for the homeless through a socialized housing project.

In an Order dated February 4, 1994, the trial court authorized petitioner to take possession of the subject property upon deposit with its clerk of court of an amount equivalent to 15 percent of its fair market value based on its current tax declaration. Private respondent filed its answer alleging in the main that the complaint failed to state a cause of action because it was filed pursuant to a resolution and not to an ordinance as required by the Local Government Code. The trial court then nullified its February 4, 1994 order and dismissed the case. On appeal, the Court of Appeals affirmed the trial court's resolution. Hence, this petition.

The Supreme Court held that the petition is not meritorious. The power of eminent domain is lodged in the legislative branch of government which may delegate the exercise thereof to local government units, other public entities and public utilities. A local government unit may therefore exercise the power to expropriate private property only when authorized by Congress and subject to the latter's control and restraints, imposed through the law conferring the power or in other legislations. AIDTHC

A local government unit, like the Municipality of Parañaque, cannot authorize an expropriation of private property through a mere resolution of its lawmaking body. The Local Government Code expressly and clearly requires an ordinance or a law for the purpose. A municipal ordinance is different from a resolution. An ordinance is a law, but a resolution is merely a declaration of the sentiment or opinion of a lawmaking body on a specific matter. The fact that there is no cause of action is evident from the face of the complaint for expropriation which was based on a mere resolution. The absence of an ordinance authorizing the same is equivalent to lack of cause of action. On the other hand, the principle of res judicata does not bar subsequent proceedings for the expropriation of the same property when all the legal requirements for its valid exercise are complied with.

SYLLABUS

1. CONSTITUTIONAL LAW; EMINENT DOMAIN; EXERCISE OF THE POWER OF EMINENT DOMAIN BY AN LGU; A MUNICIPALITY MAY EXERCISE THE POWER OF EMINENT DOMAIN PURSUANT ONLY TO AN ORDINANCE AND NOT A MERE RESOLUTION. — Section 19 of RA 7160, which delegates to LGUs the power of eminent domain, also lays down the parameters for its exercise. It provides as follows: "Section 19. Eminent Domain. A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose, or welfare for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws: . . . In the case at bar, the local chief executive sought to exercise the power of eminent domain pursuant to a resolution of the municipal council. Thus, there was no compliance with the first requisite that the mayor be authorized through an ordinance. If Congress intended to allow LGUs to exercise eminent domain through a mere resolution, it would have simply adopted the language of the previous Local Government Code. But Congress did not. In a clear divergence from the previous Local Government Code, Section 19 of RA 7160 categorically requires that the local chief executive act pursuant to an ordinance.

2. REMEDIAL LAW; CIVIL PROCEDURE; CAUSE OF ACTION; PETITIONER'S COMPLAINT DOES

NOT STATE A CAUSE OF ACTION; REASON. — It is hornbook doctrine that ". . . in a motion to dismiss based on the ground that the complaint fails to state a cause of action, the question submitted before the court for determination is the sufficiency of the allegations in the complaint itself. Whether those allegations are true or not is beside the point, for their truth is hypothetically admitted by the motion. The issue rather is: admitting them to be true, may the court render a valid judgment in accordance with the prayer of the complaint?" The fact that there is no cause of action is evident from the face of the Complaint for expropriation which was based on a mere resolution. The absence of an ordinance authorizing the same is equivalent to lack of cause of action. Consequently, the Court of Appeals committed no reversible error in affirming the trial court's Decision which dismissed the expropriation suit.

3. ID.; EMINENT DOMAIN NOT BARRED BY RES JUDICATA. — The Court holds that the principle of res judicata, which finds application in generally all cases and proceedings, cannot bar the right of the State or its agent to expropriate private property. The very nature of eminent domain, as an inherent power of the State, dictates that the right to exercise the power be absolute and unfettered even by a prior judgment or res judicata. The scope of eminent domain is plenary and, like police power, can "reach every form of property which the State might need for public use." All separate interests of individuals in property are held by the government under this tacit agreement or implied reservation. Notwithstanding the grant to individuals, the eminent domain, the highest and most exact idea of property, remains in the government, or in the aggregate body of the people in their sovereign capacity; and they have the right to resume the possession of the property whenever the public interest requires it." Thus, the State or its authorized agent cannot be forever barred from exercising said right by reason alone of previous non-compliance with any legal requirement.

D E C I S I O N

PANGANIBAN, J p:

A local government unit (LGU), like the Municipality of Parañaque cannot authorize an expropriation of private property through a mere resolution of its lawmaking body. The Local Government Code expressly and clearly requires an ordinance or a local

law for the purpose. A resolution that merely expresses the sentiment or opinion of the Municipal Council will not suffice. On the other hand, the principle of res judicata does not bar subsequent proceedings for the expropriation of the same property when all the legal requirements for its valid exercise are complied with. LLphil

Statement of the CaseThese principles are applied by this Court in resolving this petition for review on certiorari of the July 22, 1996 Decision 1 of the Court of Appeals 2 in CA GR CV No. 48048, which affirmed in toto 3 the Regional Trial Court's August 9, 1994 Resolution. 4 The trial court dismissed the expropriation suit as follows:

"The right of the plaintiff to exercise the power of eminent domain is not disputed. However, such right may be exercised only pursuant to an Ordinance (Sec. 19, R.A. No. 7160). In the instant case, there is no such ordinance passed by the Municipal Council of Parañaque enabling the Municipality, thru its Chief Executive, to exercise the power of eminent domain. The complaint, therefore, states no cause of action.

Assuming that plaintiff has a cause of action, the same is barred by a prior judgment. On September 29, 1987, the plaintiff filed a complaint for expropriation involving the same parcels of land which was docketed as Civil Case No. 17939 of this Court (page 26, record). Said case was dismissed with prejudice on May 18, 1988 (page 39, record). The order of dismissal was not appealed, hence, the same became final. The plaintiff can not be allowed to pursue the present action without violating the principle of [r]es [j]udicata. While defendant in Civil Case No. 17939 was Limpan Investment Corporation, the doctrine of res judicata still applies because the judgment in said case (C.C. No. 17939) is conclusive between the parties and their successors-in-interest (Vda. de Buncio vs. Estate of the late Anita de Leon). The herein defendant is the successor-in-interest of Limpan Investment Corporation as shown by the 'Deed of Assignment Exchange' executed on June 13, 1990.

WHEREFORE, defendant's motion for reconsideration is hereby granted. The order dated February 4, 1994 is vacated and set aside.

This case is hereby dismissed. No pronouncement as to costs.

SO ORDERED." 5

Factual AntecedentsPursuant to Sangguniang Bayan Resolution No. 93-95, Series of 1993, 6 the Municipality of Parañaque filed on September 20, 1993, a Complaint for expropriation 7 against Private Respondent V.M. Realty Corporation, over two parcels of land (Lots 2-A-2 and 2-B-1 of Subdivision Plan Psd-17917), with a combined area of about 10,000 square meters, located at Wakas, San Dionisio, Parañaque, Metro Manila, and covered by Torrens Certificate of Title No. 48700. Allegedly, the complaint was filed "for the purpose of alleviating the living conditions of the underprivileged by providing homes for the homeless through a socialized housing project." 8 Parenthetically, it was also for this stated purpose that petitioner, pursuant to its Sangguniang Bayan Resolution No. 577, Series of 1991, 9 previously made an offer to enter into a negotiated sale of the property with private respondent, which the latter did not accept. 10

Finding the Complaint sufficient in form and substance, the Regional Trial Court of Makati, Branch 134, issued an Order dated January 10, 1994, 11 giving it due course. Acting on petitioner's motion said court issued an Order dated February 4, 1994, 12 authorizing petitioner to take possession of the subject property upon deposit with its clerk of court of an amount equivalent to 15 percent of its fair market value based on its current tax declaration.

On February 21, 1994, private respondent filed its Answer containing affirmative defenses and a counterclaim, 13 alleging in the main that (a) the complaint failed to state a cause of action because it was filed pursuant to a resolution and not to an ordinance as required by RA 7160 (the Local Government Code); and (b) the cause of action, if any, was barred by a prior judgment or res judicata. On private respondent's motion, its Answer was treated as a motion to dismiss. 14 On March 24, 1994, 15 petitioner filed its opposition, stressing that the trial court's Order dated February 4, 1994 was in accord with Section 19 of RA 7160, and that the principle of res judicata was not applicable.

Thereafter, the trial court issued its August 9, 1994 Resolution 16 nullifying its February 4, 1994 Order and dismissing the case. Petitioner's motions for

reconsideration and transfer of venue were denied by the trial court in a Resolution dated December 2, 1994. 17 Petitioner then appealed to Respondent Court, raising the following issues:

"1. Whether or not the Resolution of the Parañaque Municipal Council No. 93-95, Series of 1993 is a substantial compliance of the statutory requirement of Section 19, R.A. 7180 [sic] in the exercise of the power of eminent domain by the plaintiff-appellant.

2. Whether or not the complaint in this case states no cause of action.

3. Whether or not the strict adherence to the literal observance to the rule of procedure resulted in technicality standing in the way of substantial justice.

4. Whether or not the principle of res judicata is applicable to the present case." 18

As previously mentioned, the Court of Appeals affirmed in toto the trial court's Decision. Respondent Court, in its assailed Resolution promulgated on January 8, 1997, 19 denied petitioner's Motion for Reconsideration for lack of merit.

Hence, this appeal. 20

The IssuesBefore this Court, petitioner posits two issues, viz.:

"1. A resolution duly approved by the municipal council has the same force and effect of an ordinance and will not deprive an expropriation case of a valid cause of action.

2. The principle of res judicata as a ground for dismissal of case is not applicable when public interest is primarily involved." 21

The Court's RulingThe petition is not meritorious.

First Issue:Resolution Different from an OrdinancePetitioner contends that a resolution approved by the municipal council for the purpose of initiating an expropriation case "substantially complies with the requirements of the law" 22 because the terms "ordinance" and "resolution" are synonymous for "the purpose of bestowing authority [on] the local

government unit through its chief executive to initiate the expropriation proceedings in court in the exercise of the power of eminent domain." 23 Petitioner seeks to bolster this contention by citing Article 36, Rule VI of the Rules and Regulations Implementing the Local Government Code, which provides: "If the LGU fails to acquire a private property for public use, purpose, or welfare through purchase, the LGU may expropriate said property through a resolution of the Sanggunian authorizing its chief executive to initiate expropriation proceedings." 24 (Emphasis supplied.)

The Court disagrees. The power of eminent domain is lodged in the legislative branch of government, which may delegate the exercise thereof to LGUs, other public entities and public utilities. 25 An LGU may therefore exercise the power to expropriate private property only when authorized by Congress and subject to the latter's control and restraints imposed "through the law conferring the power or in other legislations." 26 In this case, Section 19 of RA 7160, which delegates to LGUs the power of eminent domain, also lays down the parameters for its exercise. It provides as follows:

"Section 19. Eminent Domain. — A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose, or welfare for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws. Provided, however, That the power of eminent domain may not be exercised unless a valid and definite offer has been previously made to the owner, and such offer was not accepted: Provided, further, That the local government unit may immediately take possession of the property upon the filing of the expropriation proceedings and upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market value of the property based on the current tax declaration of the property to be expropriated: Provided, finally, That, the amount to be paid for the expropriated .property shall be determined by the proper court, based on the fair market value at the time of the taking of the property." (Emphasis supplied)

Thus, the following essential requisites must concur before an LGU can exercise the power of eminent domain:

1. An ordinance is enacted by the local legislative council authorizing the local chief executive, in behalf of the LGU, to exercise the power of eminent domain or pursue expropriation proceedings over a particular private property. LexLib

2. The power of eminent domain is exercised for public use, purpose or welfare, or for the benefit of the poor and the landless.

3. There is payment of just compensation, as required under Section 9, Article III of the Constitution, and other pertinent laws.

4. A valid and definite offer has been previously made to the owner of the property sought to be expropriated, but said offer was not accepted. 27

In the case at bar, the local chief executive sought to exercise the power of eminent domain pursuant to a resolution of the municipal council. Thus, there was no compliance with the first requisite that the mayor be authorized through an ordinance. Petitioner cites Camarines Sur vs. Court of Appeals 28 to show that a resolution may suffice to support the exercise of eminent domain by an LGU. 29 This case, however, is not in point because the applicable law at that time was BP 337, 30 the previous Local Government Code, which had provided that a mere resolution would enable an LGU to exercise eminent domain. In contrast, RA 7160, 31 the present Local Government Code which was already in force when the Complaint for expropriation was filed, explicitly required an ordinance for this purpose.

We are not convinced by petitioner's insistence that the terms "resolution" and "ordinance" are synonymous. A municipal ordinance is different from a resolution. An ordinance is a law, but a resolution is merely a declaration of the sentiment or opinion of a lawmaking body on a specific matter. 32 An ordinance possesses a general and permanent character, but a resolution is temporary in nature. Additionally, the two are enacted differently — a third reading is necessary for an ordinance, but not for a resolution, unless decided otherwise by a majority of all the Sanggunian members. 33

If Congress intended to allow LGUs to exercise eminent domain through a mere resolution, it would have simply adopted the language of the previous Local Government Code. But Congress did not. In a

clear divergence from the previous Local Government Code, Section 19 of RA 7160 categorically requires that the local chief executive act pursuant to an ordinance. Indeed, "[l]egislative intent is determined principally from the language of a statute. Where the language of a statute is clear and unambiguous, the law is applied according to its express terms, and interpretation would be resorted to only where a literal interpretation would be either impossible or absurd or would lead to an injustice." 34 In the instant case, there is no reason to depart from this rule, since the law requiring an ordinance is not at all impossible, absurd, or unjust.

Moreover, the power of eminent domain necessarily involves a derogation of a fundamental or private right of the people. 35 Accordingly, the manifest change in the legislative language — from "resolution" under the BP 337 to "ordinance" under RA 7160 — demands a strict construction. "No species of property is held by individuals with greater tenacity, and is guarded by the Constitution and laws more sedulously, than the right to the freehold of inhabitants. When the legislature interferes with that right and, for greater public purposes, appropriates the land of an individual without his consent, the plain meaning of the law should not be enlarged by doubtful interpretation." 36

Petitioner relies on Article 36, Rule VI of the Implementing Rules, which requires only a resolution to authorize an LGU to exercise eminent domain. This is clearly misplaced, because Section 19 of RA 7160, the law itself, surely prevails over said rule which merely seeks to implement it. 37 It is axiomatic that the clear letter of the law is controlling and cannot be amended by a mere administrative rule issued for its implementation. Besides, what the discrepancy seems to indicate is a mere oversight in the wording of the implementing rules, since Article 32, Rule VI thereof, also requires that, in exercising the power of eminent domain, the chief executive of the LGU must act pursuant to an ordinance.

In this ruling, the Court does not diminish the policy embodied in Section 2, Article X of the Constitution, which provides that "territorial and political subdivisions shall enjoy local autonomy." It merely upholds the law as worded in RA 7160. We stress that an LGU is created by law and all its powers and rights are sourced therefrom. It has therefore no power to amend or act beyond the authority given and the limitations imposed on it by law. Strictly speaking,

the power of eminent domain delegated to an LGU is in reality not eminent but "inferior" domain, since it must conform to the limits imposed by the delegation, and thus partakes only of a share in eminent domain. 38 Indeed, "the national legislature is still the principal of the local government units, which cannot defy its will or modify or violate it." 39

Complaint Does Not

State a Cause of ActionIn its Brief filed before Respondent Court, petitioner argues that its Sanggunian Bayan passed an ordinance on October 11, 1994 which reiterated its Resolution No. 93-35, Series of 1993, and ratified all the acts of its mayor regarding the subject expropriation. 40

This argument is bereft of merit. In the first place, petitioner merely alleged the existence of such an ordinance, but it did not present any certified true copy thereof. In the second place, petitioner did not raise this point before this Court. In fact, it was mentioned by private respondent, and only in passing. 41 In any event, this allegation does not cure the inherent defect of petitioner's Complaint for expropriation filed on September 23, 1993. It is hornbook doctrine that

". . . in a motion to dismiss based on the ground that the complaint fails to state a cause of action, the question submitted before the court for determination is the sufficiency of the allegations in the complaint itself. Whether those allegations are true or not is beside the point, for their truth is hypothetically admitted by the motion. The issue rather is: admitting them to be true, may the court render a valid judgment in accordance with the prayer of the complaint?" 42

The fact that there is no cause of action is evident from the face of the Complaint for expropriation which was based on a mere resolution. The absence of an ordinance authorizing the same is equivalent to lack of cause of action. Consequently, the Court of Appeals committed no reversible error in affirming the trial court's Decision which dismissed the expropriation suit.

Second Issue:

Eminent Domain Not Barred by Res JudicataAs correctly found by the Court of Appeals 43 and the trial court, 44 all the requisites for the application of res judicata are present in this case. There is a previous final judgment on the merits in a prior expropriation case involving identical interests, subject matter and cause of action, which has been rendered by a court having jurisdiction over it.

Be that as it may, the Court holds that the principle of res judicata, which finds application in generally all cases and proceedings, 45 cannot bar the right of the State or its agent to expropriate private property. The very nature of eminent domain, as an inherent power of the State, dictates that the right to exercise the power be absolute and unfettered even by a prior judgment or res judicata. The scope of eminent domain is plenary and, like police power, can "reach every form of property which the State might need for public use." 46 "All separate interests of individuals in property are held of the government under this tacit agreement or implied reservation. Notwithstanding the grant to individuals, the eminent domain, the highest and most exact idea of property, remains in the government, or in the aggregate body of the people in their sovereign capacity; and they have the right to resume the possession of the property whenever the public interest requires it." 47 Thus, the State or its authorized agent cannot be forever barred from exercising said right by reason alone of previous non-compliance with any legal requirement.

While the principle of res judicata does not denigrate the right of the State to exercise eminent domain, it does apply to specific issues decided in a previous case. For example, a final judgment dismissing an expropriation suit on the ground that there was no prior offer precludes another suit raising the same issue; it cannot, however, bar the State or its agent from thereafter complying with this requirement, as prescribed by law, and subsequently exercising its power of eminent domain over the same property. 48 By the same token, our ruling that petitioner cannot exercise its delegated power of eminent domain through a mere resolution will not bar it from reinstituting similar proceedings, once the said legal requirement and, for that matter, all others are properly complied with. Parenthetically and by parity of reasoning, the same is also true of the principle of "law of the case." In Republic vs De Knecht, 49 the Court ruled that the power of the State or its agent to exercise eminent domain is not diminished by the

mere fact that a prior final judgment over the property to be expropriated has become the law of the case as to the parties. The State or its authorized agent may still subsequently exercise its right to expropriate the same property, once all legal requirements are complied with. To rule otherwise will not only improperly diminish the power of eminent domain, but also clearly defeat social justice.

WHEREFORE, the petition is hereby DENIED without prejudice to petitioner's proper exercise of its power of eminent domain over subject property. Costs against petitioner.

SO ORDERED. cdrep

Davide, Jr., Bellosillo, Vitug and Quisumbing, JJ ., concur.

||| (Municipality of Parañaque v. V.M. Realty Corp., G.R. No. 127820, July 20, 1998)

FIRST DIVISION

[G.R. No. 153974. August 7, 2006.]

MIGUEL BELUSO, NATIVIDAD BELUSO, PEDRO BELUSO, ANGELITA BELUSO, RAMON BELUSO, and AMADA DANIEL, substituted by her heirs represented by TERESITA ARROBANG, petitioner, vs. THE MUNICIPALITY OF PANAY (CAPIZ), represented by its Mayor, VICENTE B. BERMEJO, respondent.

D E C I S I O N

AUSTRIA-MARTINEZ, J p:

Before this Court is a petition for review questioning the Decision 1 of the Court of Appeals (CA) dated March 20, 2002 in CA-G.R. SP No. 47052, as well the Resolution 2 dated June 11, 2002 denying petitioners' Motion for Reconsideration thereof.

The facts are as follows:

Petitioners are owners of parcels of land with a total area of about 20,424 square meters, covered by Free Patent Nos. 7265, 7266, 7267, 7268, 7269, and 7270. 3 On November 8, 1995, the Sangguniang Bayan of the Municipality of Panay issued Resolution No. 95-29 authorizing the municipal government through the mayor to initiate expropriation proceedings. 4 A petition for expropriation was thereafter filed on April 14, 1997 by the Municipality of Panay (respondent) before the Regional Trial Court (RTC), Branch 18 of Roxas City, docketed as Civil Case No. V-6958. 5

Petitioners filed a Motion to Dismiss alleging that the taking is not for public use but only for the benefit of certain individuals; that it is politically motivated because petitioners voted against the incumbent mayor and vice-mayor; and that some of the supposed beneficiaries of the land sought to be expropriated have not actually signed a petition asking for the property but their signatures were forged or they were misled into signing the same. 6

On July 31, 1997, the trial court denied petitioners' Motion to Dismiss and declared that the expropriation in this case is for "public use" and the respondent has the lawful right to take the property upon payment of just compensation. 7 cHCIDE

Petitioners filed an Answer on August 12, 1997 reasserting the issues they raised in their Motion to Dismiss. 8

On October 1, 1997, the trial court issued an Order appointing three persons as Commissioners to ascertain the amount of just compensation for the property. 9 Petitioners filed a "Motion to Hold in Abeyance the Hearing of the Court Appointed Commissioners to Determine Just Compensation and for Clarification of the Court's Order dated October 1, 1997" which was denied by the trial court on November 3, 1997. 10 Petitioners' Motion for Reconsideration was also denied on December 9, 1997. 11

Petitioners then filed on March 2, 1998 a Petition for Certiorari before the CA claiming that they were denied due process when the trial court declared that the taking was for public purpose without receiving evidence on petitioners' claim that the Mayor of Panay was motivated by politics in expropriating their property and in denying their Motion to Hold in Abeyance the Hearing of the Court Appointed Commissioners; and that the trial court also committed grave abuse of discretion when it disregarded the affidavits of persons denying that they signed a petition addressed to the municipal government of Panay. 12 On January 17, 2001, petitioners filed a Motion to Admit Attached Memorandum and the Memorandum itself where they argued that based on the Petition for Expropriation filed by respondent, such expropriation was based only on a resolution and not on an ordinance contrary to Sec. 19 of Republic Act (R.A.) No. 7160; there was also no valid and definite offer to buy the property as the price offered by respondent to the petitioners was very low. 13

On March 20, 2002, the CA rendered its Decision dismissing the Petition for Certiorari. It held that the petitioners were not denied due process as they were able to file an answer to the complaint and were able to adduce their defenses therein; and that the purpose of the taking in this case constitutes "public use". 14 Petitioners filed a Motion for Reconsideration which was denied on June 11, 2002. 15

Thus, the present petition claiming that:

A. RESPONDENT IS WITHOUT, LACKS AND DOES NOT HAVE THE LAWFUL POWER TO ACQUIRE

ANY OR ALL OF THE SUBJECT PROPERTIES THROUGH EMINENT DOMAIN, IT BEING EXERCISED BY MEANS OF A MERE RESOLUTION, AND NOT THROUGH AN ORDINANCE AS REQUIRED BY LAW AND APPLICABLE JURISPRUDENCE;

B. RESPONDENT IS LIKEWISE WITHOUT, LACKS AND DOES NOT HAVE THE LAWFUL POWER TO ACQUIRE ANY OR ALL OF THE SUBJECT PROPERTIES THROUGH EMINENT DOMAIN, ITS PREVIOUS OFFER TO BUY THEM BEING NOT VALID; and aSACED

C. IT WAS A SERIOUS ERROR ON THE PART OF THE HONORABLE COURT OF APPEALS NOT TO DISCUSS, MUCH LESS RULE ON, BOTH IN ITS QUESTIONED DECISION AND ITS RESOLUTION PROMULGATED ON 11 JUNE 2002 PETITIONERS' ARGUMENTS THAT RESPONDENT IS WITHOUT, LACKS AND DOES NOT HAVE THE LAWFUL POWER TO ACQUIRE ANY OR ALL OF THE SUBJECT PROPERTIES THROUGH EMINENT DOMAIN, IT BEING EXERCISED BY MEANS OF A MERE RESOLUTION, AND NOT THROUGH AN ORDINANCE AS REQUIRED BY LAW AND APPLICABLE JURISPRUDENCE, AND ITS PREVIOUS OFFER TO BUY THEM BEING NOT VALID, DESPITE THE FACT THAT THESE OBJECTIONS WERE PROPERLY PLEADED IN PETITIONERS' MEMORANDUM WHICH WAS DULY ADMITTED IN ITS RESOLUTION PROMULGATED ON 29 JANUARY 2001; and

D. PETITIONERS WERE UTTERLY DENIED PROCEDURAL DUE PROCESS OF LAW BY THE COURT A QUO, WHEN IT SIMPLY DECLARED IN ITS ORDER DATED 31 JULY 1997 THAT THE TAKING BY RESPONDENT OF PETITIONERS' PROPERTIES IS PURPORTEDLY FOR PUBLIC PURPOSE WITHOUT RECEIVING EVIDENCE ON THEIR ASSERTED CLAIM THAT RESPONDENT'S MUNICIPAL MAYOR WAS POLITICALLY MOTIVATED IN SEEKING THE EXPROPRIATION OF THEIR PROPERTIES AND NOT FOR PUBLIC PURPOSE. 16

Petitioners argue that: contrary to Sec. 19 of R.A. No. 7160 of the Local Government Code, which provides that a local government may exercise the power of eminent domain only by "ordinance," respondent's expropriation in this case is based merely on a

"resolution"; while objection on this ground was neither raised by petitioners in their Motion to Dismiss nor in their Answer, such objection may still be considered by this Court since the fact upon which it is based is apparent from the petition for expropriation itself; a defense may be favorably considered even if not raised in an appropriate pleading so long as the facts upon which it is based are undisputed; courts have also adopted a more censorious attitude in resolving questions involving the proper exercise of local bodies of the delegated power of expropriation, as compared to instances when it is directly exercised by the national legislature; respondent failed to give, prior to the petition for expropriation, a previous valid and definite offer to petitioners as the amount offered in this case was only P10.00 per square meter, when the properties are residential in nature and command a much higher price; the CA failed to discuss and rule upon the arguments raised by petitioners in their Memorandum; attached to the Motion to Dismiss were affidavits and death certificates showing that there were people whose names were in the supposed petition asking respondent for land, but who did not actually sign the same, thus showing that the present expropriation was not for a public purpose but was merely politically motivated; considering the conflicting claims regarding the purpose for which the properties are being expropriated and inasmuch as said issue may not be rightfully ruled upon merely on the basis of petitioners' Motion to Dismiss and Answer as well as respondent's Petition for Expropriation, what should have been done was for the RTC to conduct hearing where each party is given ample opportunity to prove its claim. 17

Respondent for its part contends that its power to acquire private property for public use upon payment of just compensation was correctly upheld by the trial court; that the CA was correct in finding that the petitioners were not denied due process, even though no hearing was conducted in the trial court, as petitioners were still able to adduce their objections and defenses therein; and that petitioners' arguments have been passed upon by both the trial court and the CA and were all denied for lack of substantial merit. 18

Respondent filed a Memorandum quoting at length the decision of the CA to support its position. 19 Petitioners meanwhile opted to have the case resolved based on the pleadings already filed. 20

We find the petition to be impressed with merit. CTaIHE

Eminent domain, which is the power of a sovereign state to appropriate private property to particular uses to promote public welfare, is essentially lodged in the legislature. 21 While such power may be validly delegated to local government units (LGUs), other public entities and public utilities the exercise of such power by the delegated entities is not absolute. 22 In fact, the scope of delegated legislative power is narrower than that of the delegating authority and such entities may exercise the power to expropriate private property only when authorized by Congress and subject to its control and restraints imposed through the law conferring the power or in other legislations. 23 Indeed, LGUs by themselves have no inherent power of eminent domain. 24 Thus, strictly speaking, the power of eminent domain delegated to an LGU is in reality not eminent but "inferior" since it must conform to the limits imposed by the delegation and thus partakes only of a share in eminent domain. 25 The national legislature is still the principal of the LGUs and the latter cannot go against the principal's will or modify the same. 26

The exercise of the power of eminent domain necessarily involves a derogation of a fundamental right. 27 It greatly affects a landowner's right to private property which is a constitutionally protected right necessary for the preservation and enhancement of personal dignity and is intimately connected with the rights to life and liberty. 28 Thus, whether such power is exercised directly by the State or by its authorized agents, the exercise of such power must undergo painstaking scrutiny. 29

Indeed, despite the existence of legislative grant in favor of local governments, it is still the duty of the courts to determine whether the power of eminent domain is being exercised in accordance with the delegating law.

Sec. 19 of R.A. No. 7160, which delegates to LGUs the power of eminent domain expressly provides:

SEC. 19. Eminent Domain. — A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose, or welfare for the

benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws: Provided, however, That the power of eminent domain may not be exercised unless a valid and definite offer has been previously made to the owner, and such offer was not accepted: Provided, further, That the local government unit may immediately take possession of the property upon the filing of the expropriation proceedings and upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market value of the property based on the current tax declaration of the property to be expropriated: Provided, finally, That, the amount to be paid for the expropriated property shall be determined by the proper court, based on the fair market value at the time of the taking of the property. ATSIED

It is clear therefore that several requisites must concur before an LGU can exercise the power of eminent domain, to wit:

1. An ordinance is enacted by the local legislative council authorizing the local chief executive, in behalf of the local government unit, to exercise the power of eminent domain or pursue expropriation proceedings over a particular private property.

2. The power of eminent domain is exercised for public use, purpose or welfare, or for the benefit of the poor and the landless.

3. There is payment of just compensation, as required under Section 9, Article III of the Constitution, and other pertinent laws.

4. A valid and definite offer has been previously made to the owner of the property sought to be expropriated, but said offer was not accepted. 30

The Court in no uncertain terms have pronounced that a local government unit cannot authorize an expropriation of private property through a mere resolution of its lawmaking body. 31 R.A. No. 7160 otherwise known as the Local Government Code expressly requires an ordinance for the purpose and a resolution that merely expresses the sentiment of the municipal council will not suffice. 32

A resolution will not suffice for an LGU to be able to expropriate private property; and the reason for this is settled:

. . . A municipal ordinance is different from a resolution. An ordinance is a law, but a resolution is merely a declaration of the sentiment or opinion of a lawmaking body on a specific matter. An ordinance possesses a general and permanent character, but a resolution is temporary in nature. Additionally, the two are enacted differently — a third reading is necessary for an ordinance, but not for a resolution, unless decided otherwise by a majority of all the Sanggunian members.

If Congress intended to allow LGUs to exercise eminent domain through a mere resolution, it would have simply adopted the language of the previous Local Government Code. But Congress did not. In a clear divergence from the previous Local Government Code, Sec. 19 of R.A. [No.] 7160 categorically requires that the local chief executive act pursuant to an ordinance. . . . 33

As respondent's expropriation in this case was based merely on a resolution, such expropriation is clearly defective. While the Court is aware of the constitutional policy promoting local autonomy, the court cannot grant judicial sanction to an LGU's exercise of its delegated power of eminent domain in contravention of the very law giving it such power. 34

The Court notes that petitioners failed to raise this point at the earliest opportunity. Still, we are not precluded from considering the same. This Court will not hesitate to consider matters even those raised for the first time on appeal in clearly meritorious situations, 35 such as in this case. aESIDH

Thus, the Court finds it unnecessary to resolve the other issues raised by petitioners.

It is well to mention however that despite our ruling in this case respondent is not barred from instituting similar proceedings in the future, provided that it complies with all legal requirements. 36

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA-G.R. SP No. 47052 is REVERSED and SET ASIDE. The Complaint in Civil Action No. V-6958 is DISMISSED without prejudice.

No costs.

SO ORDERED.

Panganiban, C.J., Ynares-Santiago, Callejo, Sr. and Chico-Nazario, JJ., concur.

||| (Beluso v. Municipality of Panay (Capiz), G.R. No. 153974, August 07, 2006)

EN BANC

[G.R. No. L-20620. August 15, 1974.]

REPUBLIC OF THE PHILIPPINES, plaintiff-appellant, vs. CARMEN M. VDA. DE CASTELLVI, ET AL., defendants-appellees.

Office of the Solicitor General for plaintiff-appellant.

C .A. Mendoza & A.V . Raquiza and Alberto Cacnio & Associates for defendant-appellees.

D E C I S I O N

ZALDIVAR, J p:

Appeal from the decision of the Court of First Instance of Pampanga in its Civil Case No. 1623, an expropriation proceeding.

Plaintiff-appellant, the Republic of the Philippines, (hereinafter referred to as the Republic) filed, on June 26, 1959, a complaint for eminent domain against defendant-appellee, Carmen M. vda. de Castellvi, judicial administratrix of the estate of the late Alfonso de Castellvi hereinafter referred to as Castellvi), over a parcel of land situated in the barrio of San Jose, Floridablanca, Pampanga, described as follows:

"A parcel of land, Lot No. 199-B Bureau of Lands Plan Swo-23666. Bounded on the NE by Maria Nieves Toledo-Gozun; on the SE by national road; on the SW by AFP reservation, and on the NW by AFP reservation. Containing an area of 759,299 square meters, more or less, and registered in the name of Alfonso Castellvi under TCT No. 13631 of the Register of Deeds of Pampanga . . .";

and against defendant-appellee Maria Nieves Toledo Gozun (hereinafter referred to as Toledo-Gozun), over two parcels of land described as follows:"A parcel of land (Portion of Lot 1-B, Blk-1, Bureau of Lands Plan Psd, 26254. Bounded on the NE by Lot 3, on the SE by Lot 3; on the SW by Lot 1-B, Blk. 2 (equivalent to Lot 199-B Swo 23666; on the NW by AFP military reservation. Containing an area of 450,273 square meters, more or less, and registered in the name of Maria Nieves Toledo-Gozun under TCT No. 8708 of the Register of Deeds of Pampanga. . . .", and

"A parcel of land (Portion of Lot 3, Blk-1, Bureau of Lands Plan Psd 26254. Bounded on the NE by Lot No. 3, on the SE by school lot and national road, on the SW by Lot 1-B Blk 2 (equivalent to Lot 199-B Swo 23666), on the NW by Lot 1-B, Blk-1. Containing an area of 88,772 square meters, more or less, and registered in the name of Maria Nieves Toledo Gozun under TCT No. 8708 of the Register of Deeds of Pampanga, . . ."

In its complaint, the Republic alleged, among other things, that the fair market value of the above-mentioned lands, according to the Committee on Appraisal for the Province of Pampanga, was not more than P2,000 per hectare, or a total market value of P259,669.10; and prayed, that the provisional value of the lands be fixed at P259,669.10, that the court authorizes plaintiff to take immediate possession of the lands upon deposit of that amount with the Provincial Treasurer of Pampanga; that the court appoints three commissioners to ascertain and report to the court the just compensation for the property sought to be expropriated, and that the court issues thereafter a final order of condemnation.

On June 29, 1959 the trial court issued an order fixing the provisional value of the lands at P259,669.10.

In her "motion to dismiss" filed on July 14, 1959, Castellvi alleged, among other things, that the land under her administration, being a residential land, had a fair market value of P15.00 per square meter, so it had a total market value of P11,389,485.00; that the Republic, through the Armed Forces of the Philippines, particularly the Philippine Air Force, had been, despite repeated demands, illegally occupying her property since July 1, 1956, thereby preventing her from using and disposing of it, thus causing her damages by way of unrealized profits. This defendant prayed that the complaint be dismissed, or that the Republic be ordered to pay her P15.00 per square meter, or a total of P11,389,485.00, plus interest thereon at 6% per annum from July 1, 1956; that the Republic be ordered to pay her P5,000,000.00 as unrealized profits, and the costs of the suit.

By order of the trial court, dated August, 1959, Amparo C. Diaz, Dolores G. viuda de Gil, Paloma Castellvi, Carmen Castellvi, Rafael Castellvi, Luis Castellvi, Natividad Castellvi de Raquiza, Jose Castellvi and Consuelo Castellvi were allowed to intervene as parties defendants. Subsequently,

Joaquin V. Gozun, Jr., husband of defendant Nieves Toledo Gozun, was also allowed by the court to intervene as a party defendant.

After the Republic had deposited with the Provincial Treasurer of Pampanga the amount of P259,669.10, the trial court ordered that the Republic be placed in possession of the lands. The Republic was actually placed in possession of the lands on August 10, 1959. 1

In her "motion to dismiss", dated October 22, 1959, Toledo-Gozun alleged, among other things, that her two parcels of land were residential lands, in fact a portion with an area of 343,303 square meters had already been subdivided into different lots for sale to the general public, and the remaining portion had already been set aside for expansion sites of the already completed subdivisions; that the fair market value of said lands was P15.00 per square meter, so they had a total market value of P8,085,675.00; and she prayed that the complaint be dismissed, or that she be paid the amount of P8,085,675.00, plus interest thereon at the rate of 6% per annum from October 13, 1959, and attorney's fees in the amount of P50,000.00.

Intervenors Jose Castellvi and Consuelo Castellvi in their answer, filed on February 11, 1960, and also intervenor Joaquin Gozun, Jr., husband of defendant Maria Nieves Toledo-Gozun, in his motion to dismiss, dated May 27, 1960, all alleged that the value of the lands sought to be expropriated was at the rate of P15.00 per square meter.

On November 4, 1959, the trial court authorized the Provincial Treasurer of Pampanga to pay defendant Toledo-Gozun the sum of P107,609.00 as provisional value of her lands. 2 On May 16, 1960 the trial Court authorized the Provincial Treasurer of Pampanga to pay defendant Castellvi the amount of P151,859.80 as provisional value of the land under her administration, and ordered said defendant to deposit the amount with the Philippine National Bank under the supervision of the Deputy Clerk of Court. In another order of May 16, 1960 the trial Court entered an order of condemnation. 3

The trial Court appointed three commissioners: Atty. Amadeo Yuzon, Clerk of Court, as commissioner for the court; Atty. Felicisimo G. Pamandanan, counsel of the Philippine National Bank Branch at Floridablanca,

for the plaintiff; and Atty. Leonardo F. Lansangan, Filipino legal counsel at Clark Air Base, for the defendants. The Commissioners, after having qualified themselves, proceeded to the performance of their duties.

On March 15, 1961 the Commissioners submitted their report and recommendation, wherein, after having determined that the lands sought to be expropriated were residential lands, they recommended unanimously that the lowest price that should be paid was P10.00 per square meter, for both the lands of Castellvi and Toledo-Gozun; that an additional P5,000.00 be paid to Toledo-Gozun for improvements found on her land; that legal interest on the compensation, computed from August 10, 1959, be paid after deducting the amounts already paid to the owners, and that no consequential damages be awarded. 4 The Commissioners' report was objected to by all the parties in the case — by defendants Castellvi and Toledo-Gozun, who insisted that the fair market value of their lands should be fixed at P15.00 per square meter; and by the Republic, which insisted that the price to be paid for the lands should be fixed at P0.20 per square meter. 5

After the parties-defendants and intervenors had filed their respective memoranda, and the Republic, after several extensions of time, had adopted as its memorandum its objections to the report of the Commissioners, the trial court, on May 26, 1961, rendered its decision 6 the dispositive portion of which reads as follows:

"WHEREFORE, taking into account all the foregoing circumstances, and that the lands are titled, . . . the rising trend of land values,. . . and the lowered purchasing power of the Philippine peso, the court finds that the unanimous recommendation of the commissioners of ten (P10.00) pesos per square meter for the three lots of the defendants subject of this action is fair and just."

xxx xxx xxx

"The plaintiff will pay 6% interest per annum on the total value of the lands of defendant Toledo-Gozun since (sic) the amount deposited as provisional value from August 10, 1959 until full payment is made to said defendant or deposit therefor is made in court.

"In respect to the defendant Castellvi, interest at 6% per annum will also be paid by the plaintiff to defendant Castellvi from July 1, 1956 when plaintiff commenced its illegal possession of the Castellvi land when the instant action had not yet been commenced to July 10, 1959 when the provisional value thereof was actually deposited in court, on the total value of the said (Castellvi) land as herein adjudged. The same rate of interest shall be paid from July 11, 1959 on the total value of the land herein adjudged minus the amount deposited as provisional value, or P151,859.80, such interest to run until full payment is made to said defendant or deposit therefor is made in court. All the Intervenors having failed to produce evidence in support of their respective interventions, said interventions are ordered dismissed.

"The costs shall be charged to the plaintiff."

On June 21, 1961 the Republic filed a motion for a new trial and/or reconsideration, upon the grounds of newly-discovered evidence, that the decision was not supported by the evidence, and that the decision was against the law, against which motion defendants Castellvi and Toledo-Gozun filed their respective oppositions. On July 8, 1961 when the motion of the Republic for new trial and/or reconsideration was called for hearing, the Republic filed a supplemental motion for new trial upon the ground of additional newly-discovered evidence. This motion for new trial and/or reconsideration was denied by the court on July 12, 1961.

On July 17, 1961 the Republic gave notice of its intention to appeal from the decision of May 26, 1961 and the order of July 12, 1961. Defendant Castellvi also filed, on July 17, 1961, her notice of appeal from the decision of the trial court.

The Republic filed various ex-parte motions for extension of time within which to file its record on appeal. The Republic's record on appeal was finally submitted on December 6, 1961.

Defendants Castellvi and Toledo-Gozun filed not only a joint opposition to the approval of the Republic's record on appeal, but also a joint memorandum in support of their opposition. The Republic also filed a memorandum in support of its prayer for the approval of its record on appeal. On December 27, 1961 the

trial court issued an order declaring both the record on appeal filed by the Republic, and the record on appeal filed by defendant Castellvi as having been filed out of time, thereby dismissing both appeals.

On January 11, 1962 the Republic filed a "motion to strike out the order of December 27, 1961 and for reconsideration", and subsequently an amended record oil appeal, against which motion the defendants Castellvi and Toledo-Gozun filed their opposition. On July 26, 1962 the trial court issued an order, stating that "in the interest of expediency, the questions raised may be properly and finally determined by the Supreme Court," and at the same time it ordered the Solicitor General to submit a record on appeal containing copies of orders and pleadings specified therein. In an order dated November 19, 1962, the trial court approved the Republic's record on appeal as amended.

Defendant Castellvi did not insist on her appeal. Defendant Toledo-Gozun did not appeal.

The motion to dismiss the Republic's appeal was reiterated by appellees Castellvi and Toledo-Gozun before this Court, but this Court denied the motion.

In her motion of August 11, 1964, appellee Castellvi sought to increase the provisional value of her land. The Republic, in its comment on Castellvi's motion, opposed the same. This Court denied Castellvi's motion in a resolution dated October 2, 1964.

The motion of appellees, Castellvi and Toledo-Gozun, dated October 6, 1969, praying that they be authorized to mortgage the lands subject of expropriation, was denied by this Court or October 14, 1969.

On February 14, 1972, Attys. Alberto Cacnio, and Associates, counsel for the estate of the late Don Alfonso de Castellvi in the expropriation proceedings, filed a notice of attorney's lien, stating that as per agreement with the administrator of the estate of Don Alfonso de Castellvi they shall receive by way of attorney's fees, "the sum equivalent to ten per centum of whatever the court may finally decide as the expropriated price of the property subject matter of the case."

Before this Court, the Republic contends that the lower court erred:

1. In finding the price of P10 per square meter of the lands subject of the instant proceedings as just compensation;

2. In holding that the "taking" of the properties under expropriation commenced with the filing of this action;

3. In ordering plaintiff-appellant to pay 6% interest on the adjudged value of the Castellvi property to start from July of 1956;

4. In denying plaintiff-appellant's motion for new trial based on newly discovered evidence.

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

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

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

"right and privilege" to buy the premises "at the value at the time of occupancy." 8

Appellee Toledo-Gozun did not comment on the Republic's argument in support of the second error assigned, because as far as she was concerned the Republic had not taken possession of her lands prior to August 10, 1959. 9

In order to better comprehend the issues raised in the appeal, in so far as the Castellvi property is concerned, it should be noted that the Castellvi property had been occupied by the Philippine Air Force since 1947 under a contract of lease, typified by the contract marked Exh. 4-Castellvi, the pertinent portions of which read:

"CONTRACT OF LEASE

"This AGREEMENT OF LEASE MADE AND ENTERED into by and between INTESTATE ESTATE OF ALFONSO DE CASTELLVI, represented by CARMEN M. DE CASTELLVI Judicial Administratrix x x x hereinafter called the LESSOR and THE REPUBLIC OF THE PHILIPPINES represented by MAJ. GEN. CALIXTO DUQUE, Chief of Staff of the ARMED FORCES OF THE PHILIPPINES, hereinafter called the LESSEE,

"WITNESSETH:

"1. For and in consideration of the rentals hereinafter reserved and the mutual terms, covenants and conditions of the parties, the LESSOR has, and by these presents does, lease and let unto the LESSEE the following described land together with the improvements thereon and appurtenances thereof, viz:

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

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

'Above lot is more particularly described in TCT No. 1016, province of Pampanga . . .

of which premises, the LESSOR warrants that he/she/they/is/are the registered owner(s) and with full authority to execute a contract of this nature.

"2. The term of this lease shall be for the period beginning July 1, 1952 the date the premises were occupied by the PHILIPPINE AIR FORCE, AFP until June 30, 1953, subject to renewal for another year at the option of the LESSEE or unless sooner terminated by the LESSEE as hereinafter provided.

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

"4. The LESSEE shall pay to the LESSOR as monthly rentals under this lease the sum of FOUR HUNDRED FIFTY-FIVE PESOS & 58/100(P455.58) . . .

"5. The LESSEE may, at anytime prior to the termination of this lease, use the property for any purpose or purposes and, at its own costs and expense make alteration, install facilities and fixtures and erect additions . . . which facilities or fixtures . . . so placed in, upon or attached to the said premises shall be and remain property of the LESSEE and may be removed therefrom by the LESSEE prior to the termination of this lease. The LESSEE shall surrender possession of the premises upon the expiration or termination of this lease and if so required by the LESSOR, shall return the premises in substantially the same condition as that existing at the time same were first occupied by the AFP, reasonable and ordinary wear and tear and damages by the elements or by circumstances over which the LESSEE has no control excepted: PROVIDED, that if the LESSOR so requires the return of the premises in such condition, the LESSOR shall give written notice thereof to the LESSEE at least twenty (20) days before the termination of the lease and provided, further, that

should the LESSOR give notice within the time specified above, the LESSEE shall have the right and privilege to compensate the LESSOR at the fair value or the equivalent, in lieu of performance of its obligation, if any, to restore the premises. Fair value is to be determined as the value at the time of occupancy less fair wear and tear and depreciation during the period of this lease.

"6. The LESSEE may terminate this lease at any time during the term hereof by giving written notice to the LESSOR at least thirty (30) days in advance . . ."

"7. The LESSEE should not be responsible, except under special legislation for any damages to the premises by reason of combat operations, acts of GOD, the elements or other acts and deeds not due to the negligence on the part of the LESSEE.

"8. This LEASE AGREEMENT supersedes and voids any and all agreements and undertakings, oral or written, previously entered into between the parties covering the property herein leased, the same having been merged herein. This AGREEMENT may not be modified or altered except by instrument in writing only duly signed by the parties." 10

It was stipulated by the parties, that "the foregoing contract of lease (Exh. 4, Castellvi) is 'similar in terms and conditions, including the date', with the annual contracts entered into from year to year between defendant Castellvi and the Republic of the Philippines (p. 17, t.s.n., Vol. III)". 11 It is undisputed, therefore, that the Republic occupied Castellvi's land from July 1, 1947, by virtue of the above-mentioned contract, on a year to year basis (from July 1 of each year to June 30 of the succeeding year) under the terms and conditions therein stated.

Before the expiration of the contract of lease on June 30, 1956 the Republic sought to renew the same but Castellvi refused. When the AFP refused to vacate the leased premises after the termination of the contract, on July 11, 1956, Castellvi wrote to the Chief of Staff, AFP, informing the latter that the heirs of the property had decided not to continue leasing the property in question because they had decided to subdivide the land for sale to the general public, demanding that the property be vacated within 30 days from receipt of the letter, and that the premises

be returned in substantially the same condition as before occupancy (Exh. 5 — Castellvi). A follow-up letter was sent on January 12, 1957, demanding the delivery and return of the property within one month from said date (Exh. 6 — Castellvi). On January 30, 1957, Lieutenant General Alfonso Arellano, Chief of Staff, answered the letter of Castellvi, saying that it was difficult for the army to vacate the premises in view of the permanent installations and other facilities worth almost P500,000.00 that were erected and already established on the property, and that, there being no other recourse, the acquisition of the property by means of expropriation proceedings would be recommended to the President (Exhibit "7" — Castellvi).

Defendant Castellvi then brought suit in the Court of First Instance of Pampanga, in Civil Case No. 1458, to eject the Philippine Air Force from the land. While this ejectment case was pending, the Republic instituted these expropriation proceedings, and, as stated earlier in this opinion, the Republic was placed in possession of the lands on August 10, 1959. On November 21, 1959, the Court of First Instance of Pampanga, dismissed Civil Case No. 1458, upon petition of the parties, in an order which, in part, reads as follows:

"1. Plaintiff has agreed, as a matter of fact has already signed an agreement with defendants, whereby she has agreed to receive the rent of the lands, subject matter of the instant case from June 30, 1966 up to 1959 when the Philippine Air Force was placed in possession by virtue of an order of the Court upon depositing the provisional amount as fixed by the Provincial Appraisal Committee with the Provincial Treasurer of Pampanga;

"2. That because of the above-cited agreement wherein the administratrix decided to get the rent corresponding to the rent from 1956 up to 1959 and considering that this action is one of illegal detainer and/or to recover the possession of said land by virtue of nonpayment of rents, the instant case now has become moot and academic and/or by virtue of the agreement signed by plaintiff, she has waived her cause of action in the above-entitled case." 12

The Republic urges that the "taking " of Castellvi's property should be deemed as of the year 1947 by virtue of afore-quoted lease agreement. In American Jurisprudence, Vol. 26, 2nd edition, Section 157, on

the subject of "Eminent Domain, we read the definition of "taking" (in eminent domain) as follows:

"'Taking' under the power of eminent domain may be defined generally as entering upon private property for more than a momentary period, and, under the warrant or color of legal authority, devoting it to a public use, or otherwise informally appropriating or injuriously affecting it in such a way as substantially to oust the owner and deprive him of all beneficial enjoyment thereof." 13

Pursuant to the aforecited authority, a number of circumstances must be present in the "taking" of property for purposes of eminent domain.

First, the expropriator must enter a private property. This circumstance is present in the instant case, when by virtue of the lease agreement the Republic, through the AFP, took possession of the property of Castellvi.

Second, the entrance into private property must be for more than a momentary period. "Momentary" means, "lasting but a moment; of but a moment's duration" (The Oxford English Dictionary, Volume VI, page 596); "lasting a very short time; transitory; having a very brief life; operative or recurring at every moment" (Webster's Third International Dictionary, 1963 edition.) The word "momentary" when applied to possession or occupancy of (real) property should be construed to mean "a limited period" — not indefinite or permanent. The aforecited lease contract was for a period of one year, renewable from year to year. The entry on the property, under the lease, is temporary, and considered transitory. The fact that the Republic, through the AFP, constructed some installations of a permanent nature does not alter the fact that the entry into the land was transitory, or intended to last a year, although renewable from year to year by consent of the owner of the land. By express provision of the lease agreement the Republic, as lessee, undertook to return the premises in substantially the same condition as at the time the property was first occupied by the AFP. It is claimed that the intention of the lessee was to occupy the land permanently, as may be inferred from the construction of permanent improvements. But this "intention" cannot prevail over the clear and express terms of the lease contract. Intent is to be deduced from the language employed by the parties, and the terms of the contract, when unambiguous, as in the instant case, are conclusive in

the absence of averment and proof of mistake or fraud — the question being not what the intention was, but what is expressed in the language used. (City of Manila v. Rizal Park Co., Inc., 53 Phil. 515, 525); Magdalena Estate, Inc. v. Myrick, 71 Phil. 344, 348). Moreover, in order to judge the intention of the contracting parties, their contemporaneous and subsequent acts shall be principally considered (Art. 1371, Civil Code). If the intention of the lessee (Republic) in 1947 was really to occupy permanently Castellvi's property, why was the contract of lease entered into on year to year basis? Why was the lease agreement renewed from year to year? Why did not the Republic expropriate this land of Castellvi in 1949 when, according to the Republic itself, it expropriated the other parcels of land that it occupied at the same time as the Castellvi land, for the purpose of converting them into a jet air base?" 14 It might really have been the intention of the Republic to expropriate the lands in question at some future time, but certainly mere notice — much less an implied notice — of such intention on the part of the Republic to expropriate the lands in the future did not, and could not, bind the landowner, nor bind the land itself. The expropriation must be actually commenced in court (Republic vs. Baylosis, et al., 96 Phil. 461, 484).

Third, the entry into the property should be under warrant or color of legal authority. This circumstance in the "taking" may be considered as present in the instant case, because the Republic entered the Castellvi property as lessee.

Fourth, the property must be devoted to a public use or otherwise informally appropriated or injuriously affected. It may be conceded that the circumstance of the property being devoted to public use is present because the property was used by the air force of the AFP.

Fifth, the utilization of the property for public use must be in such a way as to oust the owner and deprive him of all beneficial enjoyment of the property. In the instant case, the entry of the Republic into the property and its utilization of the same for public use did not oust Castellvi and deprive her of all beneficial enjoyment of the property. Castellvi remained as owner, and was continuously recognized as owner by the Republic, as shown by the renewal of the lease contract from year to year, and by the provision in the lease contract whereby the Republic undertook to return the property to Castellvi when the lease was

terminated. Neither was Castellvi deprived of all the beneficial enjoyment of the property, because the Republic was bound to pay, and had been paying, Castellvi the agreed monthly rentals until the time when it filed the complaint for eminent domain on June 26, 1959.

It is clear, therefore, that the "taking" of Castellvi's property for purposes of eminent domain cannot be considered to have taken place in 1947 when the Republic commenced to occupy the property as lessee thereof. We find merit in the contention of Castellvi that two essential elements in the "taking" of property under the power of eminent domain, namely: (1) that the entrance and occupation by the condemnor must be for a permanent, or indefinite period, and (2) that in devoting the property to public use the owner was ousted from the property and deprived of its beneficial use, were not present when the Republic entered and occupied the Castellvi property in 1947.

Untenable also is the Republic's contention that although the contract between the parties was one of lease on a year to year basis, it was "in reality a more or less permanent right to occupy the premises under the guise of lease with the 'right and privilege' to buy the property should the lessor wish to terminate the lease," and "the right to buy the property is merged as an integral part of the lease relationship . . . so much so that the fair market value has been agreed upon, not as of the time of purchase, but as of the time of occupancy". 15 We cannot accept the Republic's contention that a lease on a year to year basis can give rise to a permanent right to occupy, since by express legal provision a lease made for a determinate time, as was the lease of Castellvi's land in the instant case, ceases upon the day fixed, without need of a demand (Article 1669, Civil Code). Neither can it be said that the right of eminent domain may be exercised by simply leasing the premises to be expropriated (Rule 67, Section 1, Rules of Court). Nor can it be accepted that the Republic would enter into a contract of lease where its real intention was to buy, or why the Republic should enter into a simulated contract of lease ("under the guise of lease", as expressed by counsel for the Republic) when all the time the Republic had the right of eminent domain, and could expropriate Castellvi's land if it wanted to without resorting to any guise whatsoever. Neither can we see how a right to buy could be merged in a contract of lease in the absence of any agreement

between the parties to that effect. To sustain the contention of the Republic is to sanction a practice whereby in order to secure a low price for a land which the government intends to expropriate (or would eventually expropriate) it would first negotiate with the owner of the land to lease the land (for say ten or twenty years) then expropriate the same when the lease is about to terminate, then claim that the "taking" of the property for the purposes of the expropriation be reckoned as of the date when the Government started to occupy the property under the lease, and then assert that the value of the property being expropriated be reckoned as of the start of the lease, in spite of the fact that the value of the property, for many good reasons, had in the meantime increased during the period of the lease. This would be sanctioning what obviously is a deceptive scheme, which would have the effect of depriving the owner of the property of its true and fair market value at the time when the expropriation proceedings were actually instituted in court. The Republic's claim that it had the "right and privilege" to buy the property at the value that it had at the time when it first occupied the property as lessee nowhere appears in the lease contract. What was agreed expressly in paragraph No. 5 of the lease agreement was that, should the lessor require the lessee to return the premises in the same condition as at the time the same was first occupied by the AFP, the lessee would have the "right and privilege" (or option) of paying the lessor what it would fairly cost to put the premises in the same condition as it was at the commencement of the lease, in lieu of the lessee's performance of the undertaking to put the land in said condition. The "fair value" at the time of occupancy, mentioned in the lease agreement, does not refer to the value of the property if bought by the lessee, but refers to the cost of restoring the property in the same condition as of the time when the lessee took possession of the property. Such fair value cannot refer to the purchase price, for purchase was never intended by the parties to the lease contract. It is a rule in the interpretation of contracts that "However general the terms of a contract may be, they shall not be understood to comprehend things that are distinct and cases that are different from those upon which the parties intended to agree" (Art. 1372, Civil Code)

We hold, therefore, that the "taking' of the Castellvi property should not be reckoned as of the year 1947

when the Republic first occupied the same pursuant to the contract of lease, and that the just compensation to be paid for the Castellvi property should not be determined on the basis of the value of the property as of that year. The lower court did not commit an error when it held that the "taking" of the property under expropriation commenced with the filing of the complaint in this case.

Under Section 4 of Rule 67 of the Rules of Court, 16 the "just compensation" is to be determined as of the date of the filing of the complaint. This Court has ruled that when the taking of the property sought to be expropriated coincides with the commencement of the expropriation proceedings, or takes place subsequent to the filing of the complaint for eminent domain, the just compensation should be determined as of the date of the filing of the complaint. (Republic vs. Philippine National Bank, L-14158, April 12, 1961, 1 SCRA 957, 961-962). In the instant case, it is undisputed that the Republic was placed in possession of the Castellvi property, by authority of the court, on August 10, 1959. The "taking" of the Castellvi property for the purposes of determining the just compensation to be paid must, therefore, be reckoned as of June 26, 1959 when the complaint for eminent domain was filed.

Regarding the two parcels of land of Toledo-Gozun, also sought to be expropriated, which had never been under lease to the Republic, the Republic was placed in possession of said lands, also by authority of the court, on August 10, 1959. The taking of those lands, therefore, must also be reckoned as of June 26, 1959, the date of the filing of the complaint for eminent domain.

2. Regarding the first assigned error — discussed as the second issue — the Republic maintains that, even assuming that the value of the expropriated lands is to be determined as of June 26, 1959, the price of P10.00 per square meter fixed by the lower court "is not only exorbitant but also unconscionable, and almost fantastic". On the other hand, both Castellvi and Toledo-Gozun maintain that their lands are residential lands with a fair market value of not less than P15.00 per square meter.

The lower court found, and declared, that the lands of Castellvi and Toledo-Gozun are residential lands. The finding of the lower court is in consonance with the unanimous opinion of the three commissioners who,

in their report to the court, declared that the lands are residential lands.

The Republic assails the finding that the lands are residential, contending that the plans of the appellees to convert the lands into subdivision for residential purposes were only on paper, there being no overt acts on the part of the appellees which indicated that the subdivision project had been commenced, so that any compensation to be awarded on the basis of the plans would be speculative. The Republic's contention is not well taken. We find evidence showing that the lands in question had ceased to be devoted to the production of agricultural crops, that they had become adaptable for residential purposes, and that the appellees had actually taken steps to convert their lands into residential subdivisions even before the Republic filed the complaint for eminent domain.

In the case of City of Manila vs. Corrales (Phil. 82, 98) this Court laid down basic guidelines in determining the value of the property expropriated for public purposes. This Court said:

"In determining the value of land appropriated for public purposes, the same consideration are to be regarded as in a sale of property between private parties. The inquiry, in such cases, must be what is the property worth in the market, viewed not merely with reference to the uses to which it is at the time applied, but with reference to the uses to which it is plainly adapted, that is to say, What is it worth from its availability for valuable uses?

"So many and varied are the circumstances to be taken into account in determining the value of property condemned for public purposes, that it is practically impossible to formulate a rule to govern its appraisement in all cases. Exceptional circumstances will modify the most carefully guarded rule, but, as a general thing, we should say that the compensation of the owner is to be estimated by reference to the use for which the property is suitable, having regard to the existing business or wants of the community, or such as may be reasonably expected in the immediate future. (Miss. and Rum River Boom Co. vs. Patterson, 98 U.S., 403)."

In expropriation proceedings, therefore, the owner of the land has the right to its value for the use for which it would bring the most in the market. 17 The owner may thus show every advantage that his property

possesses, present and prospective, in order that the price it could be sold for in the market may be satisfactorily determined. 18 The owner may also show that the property is suitable for division into village or town lots. 19

The trial court, therefore, correctly considered, among other circumstances, the proposed subdivision plans of the lands sought to be expropriated in finding that those lands are residential lots. This finding of the lower court is supported not only by the unanimous opinion of the commissioners, as embodied in their report, but also by the Provincial Appraisal Committee of the province of Pampanga composed of the Provincial Treasurer, the Provincial Auditor and the District Engineer. In the minutes of the meeting of the Provincial Appraisal Committee, held on May 14, 1959 (Exh. 13-Castellvi) We read in its Resolution No. 10 the following:

"3. Since 1957 the land has been classified as residential in view of its proximity to the air base and due to the fact that it was not being devoted to agriculture. In fact, there is a plan to convert it into a subdivision for residential purposes. The taxes due on the property have been paid based on its classification as residential land;"

The evidence shows that Castellvi broached the idea of subdividing her land into residential lots as early as July 11, 1956 in her letter to the Chief of Staff of the Armed Forces of the Philippines. (Exh. 5-Castellvi) As a matter of fact, the layout of the subdivision plan was tentatively approved by the National Planning Commission on September 7, 1956. (Exh. 8-Castellvi). The land of Castellvi had not been devoted to agriculture since 1947 when it was leased to the Philippine Army. In 1957 said land was classified as residential, and taxes based on its classification as residential had been paid since then (Exh. 13-Castellvi). The location of the Castellvi land justifies its suitability for a residential subdivision. As found by the trial court, "It is at the left side of the entrance of the Basa Air Base and bounded on two sides by roads (Exh. 13-Castellvi), paragraphs 1 and 2, Exh. 12-Castellvi), the poblacion, (of Floridablanca) the municipal building, and the Pampanga Sugar Mills are closed by. The barrio schoolhouse and chapel are also near (T.S.N. November 23, 1960, p. 68)". 20

The lands of Toledo-Gozun (Lot 1-B and Lot 3) are practically of the same condition as the land of

Castellvi. The lands of Toledo-Gozun adjoin the land of Castellvi. They are also contiguous to the Basa Air Base, and are along the road. These lands are near the barrio schoolhouse, the barrio chapel, the Pampanga Sugar Mills, and the poblacion of Floridablanca (Exhs. 1, 3 and 4-Toledo-Gozun). As a matter of fact, regarding lot 1-B it had already been surveyed and subdivided, and its conversion into a residential subdivision was tentatively approved by the National Planning Commission on July 8, 1959 (Exhs. 5 and 6 Toledo-Gozun). As early as June, 1958, no less than 32 man connected with the Philippine Air Force among them commissioned officers, non-commission officers, and enlisted men had requested Mr. and Mrs. Joaquin D. Gozun to open a subdivision on their lands in question (Exhs. 8, 8-A to 8-ZZ-Toledo-Gozun). 21

We agree with the findings, and the conclusions, of the lower court that the lands that are the subject of expropriation in the present case, as of August 10, 1959 when the same were taken possession of by the Republic, were residential lands and were adaptable for use as residential subdivisions. Indeed, the owners of these lands have the right to their value for the use for which they would bring the most in the market at the time the same were taken from them. The most important issue to be resolved in the present case relates to the question of what is the just compensation that should be paid to the appellees.

The Republic asserts that the fair market value of the lands of the appellees is P.20 per square meter. The Republic cites the case of Republic vs. Narciso, et al., L-6594, which this Court decided on May 18, 1956. The Narciso case involved lands that belonged to Castellvi and Toledo-Gozun, and to one Donata Montemayor, which were expropriated by the Republic in 1949 and which are now the site of the Basa Air Base. In the Narciso case this Court fixed the fair market value at P.20 per square meter. The lands that are sought to be expropriated in the present case being contiguous to the lands involved in the Narciso case, it is the stand of the Republic that the price that should be fixed for the lands now in question should also be at P.20 per square meter.

We can not sustain the stand of the Republic. We find that the price of P.20 per square meter, as fixed by this Court in the Narciso case, was based on the allegation of the defendants (owners) in their answer to the complaint for eminent domain in that case that

the price of their lands was P2,000.00 per hectare and that was the price that they asked the court to pay them. This Court said, then, that the owners of the land could not be given more than what they had asked, notwithstanding the recommendation of the majority of the Commission on Appraisal — which was adopted by the trial court — that the fair market value of the lands was P3,000.00 per hectare. We also find that the price of P.20 per square meter in the Narciso case was considered the fair market value of the lands as of the year 1949 when the expropriation proceedings were instituted, and at that time the lands were classified as sugar lands, and assessed for taxation purposes at around P400.00 per hectare, or P.04 per square meter. 22 While the lands involved in the present case, like the lands involved in the Narciso case, might have a fair market value of P.20 per square meter in 1949, it can not be denied that ten years later, in 1959, when the present proceedings were instituted, the value of those lands had increased considerably. The evidence shows that since 1949 those lands were no longer cultivated as sugar lands, and in 1959 those lands were already classified, and assessed for taxation purposes, as residential lands. In 1959 the land of Castellvi was assessed at P1.00 per square meter. 23

The Republic also points out that the Provincial Appraisal Committee of Pampanga, in its resolution No. 5 of February 15, 1957 (Exhibit D), recommended the sum of P.20 per square meter as the fair valuation of the Castellvi property. We find that this resolution was made by the Republic the basis in asking the court to fix the provisional value of the lands sought to be expropriated at P259,669.10, which was approved by the court. 24 It must be considered, however, that the amount fixed as the provisional value of the lands that are being expropriated does not necessarily represent the true and correct value of the land. The value is only "provisional" or "tentative", to serve as the basis for the immediate occupancy of the property being expropriated by the condemnor. The records show that this resolution No. 5 was repealed by the same Provincial Committee on Appraisal in its resolution No. 10 of May 14, 1959 (Exhibit 13-Castellvi). In that resolution No. 10, the appraisal committee stated that "The Committee has observed that the value of the land in this locality has increased since 1957 . . .", and recommended the price of P1.50 per square meter. It follows, therefore, that, contrary

to the stand of the Republic, that resolution No. 5 of the Provincial Appraisal Committee can not be made the basis for fixing the fair market value of the lands of Castellvi and Toledo-Gozun.

The Republic further relied on the certification of the Acting Assistant Provincial Assessor of Pampanga, dated February 8, 1961 (Exhibit K), to the effect that in 1950 the lands of Toledo-Gozun were classified partly as sugar land and partly as urban land, and that the sugar land was assessed at P.40 per square meter, while part of the urban land was assessed at P.40 per square meter and part at P.20 per square meter; and that in 1956 the Castellvi land was classified as sugar land and was assessed at P450.00 per hectare, or P.045 per square meter. We can not also consider this certification of the Acting Assistant Provincial Assessor as a basis for fixing the fair market value of the lands of Castellvi and Toledo-Gozun because, as the evidence shows, the lands in question, in 1957, were already classified and assessed for taxation purposes as residential lands. The certification of the assessor refers to the year 1950 as far as the lands of Toledo-Gozun are concerned, and to the year 1956 as far as the land of Castellvi is concerned. Moreover, this Court has held that the valuation fixed for the purposes of the assessment of the land for taxation purposes can not bind the landowner where the latter did not intervene in fixing it. 25

On the other hand, the Commissioners, appointed by the court to appraise the lands that were being expropriated, recommended to the court that the price of P10.00 per square meter would be the fair market value of the lands. The commissioners made their recommendation on the basis of their observation after several ocular inspections of the lands, of their own personal knowledge of land values in the province of Pampanga, of the testimonies of the owners of the land, and other witnesses, and of documentary evidence presented by the appellees. Both Castellvi and Toledo-Gozun testified that the fair market value of their respective land was at P15.00 per square meter. The documentary evidence considered by the commissioners consisted of deeds of sale of residential lands in the town of San Fernando and in Angeles City, in the province of Pampanga, which were sold at prices ranging from P8.00 to P20.00 per square meter (Exhibits 15, 16, 17, 18, 19, 20, 21, 22, 23-Castellvi). The commissioners also considered the decision in Civil

Case No. 1531 of the Court of First Instance of Pampanga, entitled Republic vs. Sabina Tablante, which was an expropriation case filed on January 13, 1959, involving a parcel of land adjacent to the Clark Air Base in Angeles City, where the court fixed the price at P18.00 per square meter (Exhibit 14-Castellvi). In their report, the commissioners, among other things, said:

". . . This expropriation case is specially pointed out, because the circumstances and factors involved therein are similar in many respects to the defendants' lands in this case. The land in Civil Case No. 1531 of this Court and the lands in the present case (Civil Case No. 1623) are both near the air bases, the Clark Air Base and the Basa Air Base respectively. There is a national road fronting them and are situated in a first-class municipality. As added advantage it may be said that the Basa Air Base land is very near the sugar mill at Del Carmen, Floridablanca, Pampanga, owned by the Pampanga Sugar Mills. Also just stone's throw away from the same lands is a beautiful vacation spot at Palacol, a sitio of the town of Floridablanca, which counts with a natural swimming pool for vacationists on weekends. These advantages are not found in the case of the Clark Air Base. The defendants' lands are nearer to the poblacion of Floridablanca then Clark Air Base is nearer (sic) to the poblacion of Angeles, Pampanga.

"The deeds of absolute sale, according to the undersigned commissioners, as well as the land in Civil Case No. 1531 are competent evidence, because they were executed during the year 1959 and before August 10 of the same year. More specifically so the land at Clark Air Base which coincidentally is the subject matter in the complaint in said Civil Case No. 1531, it having been filed on January 13, 1959 and the taking of the land involved therein was ordered by the Court of First Instance of Pampanga on January 15, 1959, several months before the lands in this case were taken by the plaintiffs. . .

"From the above and considering further that the lowest as well as the highest price per square meter obtainable in the market of Pampanga relative to subdivision lots within its jurisdiction in the year 1959 is very well known by the Commissioners, the Commission finds that the lowest price that can be awarded to the lands in question is P10.00 per square meter." 26

The lower court did not altogether accept the findings of the Commissioners based on the documentary evidence, but it considered the documentary evidence as basis for comparison in determining land values. The lower court arrived at the conclusion that "the unanimous recommendation of the commissioners of ten (P10.00) pesos per square meter for the three lots of the defendants subject of this action is fair and just". 27 In arriving at its conclusion, the lower court took into consideration, among other circumstances, that the lands are titled, that there is a rising trend of land values, and the lowered purchasing power of the Philippine peso.

In the case of Manila Railroad Co. vs. Caligsihan, 40 Phil. 326, 328, this Court said:

"A court of first instance or, on appeal, the Supreme Court, may change or modify the report of the commissioners by increasing or reducing the amount of the award if the facts of the case so justify. While great weight is attached to the report of the commissioners, yet a court may substitute therefor its estimate of the value of the property as gathered from the record in certain cases, as, where the commissioners have applied illegal principles to the evidence submitted to them, or where they have disregarded a clear preponderance of evidence, or where the amount allowed is either palpably inadequate or excessive." 28

The report of the commissioners of appraisal in condemnation proceedings are not binding, but merely advisory in character, as far as the court is concerned. 29 In our analysis of the report of the commissioners, We find points that merit serious consideration in the determination of the just compensation that should be paid to Castellvi and Toledo-Gozun for their lands. It should be noted that the commissioners had made ocular inspections of the lands and had considered the nature and similarities of said lands in relation to the lands in other places in the province of Pampanga, like San Fernando and Angeles City. We cannot disregard the observations of the commissioners regarding the circumstances that make the lands in question suited for residential purposes — their location near the Basa Air Base, just like the lands in Angeles City that are near the Clark Air Base, and the facilities that obtain because of their nearness to the big sugar central of the Pampanga Sugar mills, and to the

flourishing first class town of Floridablanca. It is true that the lands in question are not in the territory of San Fernando and Angeles City, but, considering the facilities of modern communications, the town of Floridablanca may be considered practically adjacent to San Fernando and Angeles City. It is not out of place, therefore, to compare the land values in Floridablanca to the land values in San Fernando and Angeles City, and form an idea of the value of the lands in Floridablanca with reference to the land values in those two other communities.

The important factor in expropriation proceeding is that the owner is awarded the just compensation for his property. We have carefully studied the record, and the evidence, in this case, and after considering the circumstances attending the lands in question. We have arrived at the conclusion that the price of P10.00 per square meter, as recommended by the commissioners and adopted by the lower court, is quite high. It is Our considered view that the price of P5.00 per square meter would be a fair valuation of the lands in question and would constitute a just compensation to the owners thereof. In arriving at this conclusion We have particularly taken into consideration the resolution of the Provincial Committee on Appraisal of the province of Pampanga informing, among others, that in the year 1959 the land of Castellvi could he sold for from P3.00 to P4.00 per square meter, while the land of Toledo-Gozun could be sold for from P2.50 to P3.00 per square meter. The Court has weighed all the circumstances relating to this expropriations proceedings, and in fixing the price of the lands that are being expropriated the Court arrived at a happy medium between the price as recommended by the commissioners and approved by the court, and the price advocated by the Republic. This Court has also taken judicial notice of the fact that the value of the Philippine peso has considerably gone down since the year 1959. 30 Considering that the lands of Castellvi and Toledo-Gozun are adjoining each other, and are of the same nature, the Court has deemed it proper to fix the same price for all these lands.

3. The third issue raised by the Republic relates to the payment of interest. The Republic maintains that the lower court erred when it ordered the Republic to pay Castellvi interest at the rate of 6% per annum on the total amount adjudged as the value of the land of

Castellvi, from July 1, 1956 to July 10, 1959. We find merit in this assignment of error.

In ordering the Republic to pay 6% interest on the total value of the land of Castellvi from July 1, 1956 to July 10, 1959, the lower court held that the Republic had illegally possessed the land of Castellvi from July 1, 1956, after its lease of the land had expired on June 30, 1956, until August 10, 1959 when the Republic was placed in possession of the land pursuant to the writ of possession issued by the court. What really happened was that the Republic continued to occupy the land of Castellvi after the expiration of its lease on June 30, 1956, so much so that Castellvi filed an ejectment case against the Republic in the Court of First Instance of Pampanga. 31 However, while that ejectment case was pending, the Republic filed the complaint for eminent domain in the present case and was placed in possession of the land on August 10, 1959, and because of the institution of the expropriation proceedings the ejectment case was later dismissed. In the order dismissing the ejectment case, the Court of First Instance of Pampanga said:

"Plaintiff has agreed, as a matter of fact has already signed an agreement with defendants, whereby she had agreed to receive the rent of the lands, subject matter of the instant case from June 30, 1956 up to 1959 when the Philippine Air Force was placed in possession by virtue of an order of the Court upon depositing the provisional amount as fixed by the Provincial Appraisal Committee with the Provincial Treasurer of Pampanga; . . ."

If Castellvi had agreed to receive the rentals from June 30, 1956 to August 10, 1959, she should be considered as having allowed her land to be leased to the Republic until August 10, 1959, and she could not at the same time be entitled to the payment of interest during the same period on the amount awarded her as the just compensation of her land. The Republic, therefore, should pay Castellvi interest at the rate of 6% per annum on the value of her land, minus the provisional value that was deposited, only from July 10, 1959 when it deposited in court the provisional value of the land.

4. The fourth error assigned by the Republic relates to the denial by the lower court of its motion for a new trial based on nearly discovered evidence. We do not find merit in this assignment of error.

After the lower court had decided this case on May 26, 1961, the Republic filed a motion for a new trial, supplemented by another motion, both based upon the ground of newly discovered evidence. The alleged newly discovered evidence in the motion filed on June 21, 1961 was a deed of absolute sale — executed on January 25, 1961, showing that a certain Serafin Francisco had sold to Pablo L. Narciso a parcel of sugar land having an area of 100,000 square meters with a sugar quota of 100 piculs, covered by P.A. No. 1701, situated in Barrio Fortuna, Floridablanca, for P14,000, or P.14 per square meter.

In the supplemental motion, the alleged newly discovered evidence were: (1) a deed of sale of some 35,000 square meters of land situated at Floridablanca for P7,500.00 (or about P.21 per square meter) executed in July, 1959, by the spouses Evelyn D. Laird and Cornelio G. Laird in favor of spouses Bienvenido S. Aguas and Josefina Q. Aguas; and (2) a deed of absolute sale of a parcel of land having an area of 4,120,101 square meters, including the sugar quota covered by Plantation Audit No. 16-1345, situated at Floridablanca, Pampanga, for P860.00 per hectare (a little less than P.09 per square meter) executed on October 22, 1957 by Jesus Toledo y Mendoza in favor of the Land Tenure Administration.

We find that the lower court acted correctly when it denied the motions for a new trial.

To warrant the granting of a new trial based on the ground of newly discovered evidence, it must appear that the evidence was discovered after the trial; that even with the exercise of due diligence, the evidence could not have been discovered and produced at the trial; and that the evidence is of such a nature as to alter the result of the case if admitted. 32 The lower court correctly ruled that these requisites were not complied with.

The lower court, in a well-reasoned order, found that the sales made by Serafin Francisco to Pablo Narciso and that made by Jesus Toledo to the Land Tenure Administration were immaterial and irrelevant, because those sales covered sugarlands with sugar quotas, while the lands sought to be expropriated in the instant case are residential lands. The lower court also concluded that the land sold by the spouses Laird to the spouses Aguas was a sugar land.

We agree with the trial court. In eminent domain proceedings, in order that evidence as to the sale price of other lands may be admitted in evidence to prove the fair market value of the land sought to be expropriated, the lands must, among other things, be shown to be similar.

But even assuming, gratia argumenti, that the lands mentioned in those deeds of sale were residential, the evidence would still not warrant the grant of a new trial, for said evidence could have been discovered and produced at the trial, and they cannot be considered newly discovered evidence as contemplated in Section 1(b) of Rule 37 of the Rules of Court. Regarding this point, the trial court said:

"The Court will now show that there was no reasonable diligence employed.

"The land described in the deed of sale executed by Serafin Francisco, copy of which is attached to the original motion, is covered by a Certificate of Title issued by the Office of the Register of Deeds of Pampanga. There is no question in the mind of the court but this document passed through the Office of the Register of Deeds for the purpose of transferring the title or annotating the sale on the certificate of title. It is true that Fiscal Lagman went to the Office of the Register of Deeds to check conveyances which may be presented in the evidence in this case as it is now sought to be done by virtue of the motions at bar, Fiscal Lagman, one of the lawyers of the plaintiff, did not exercise reasonable diligence as required by the rules. The assertion that he only went to the office of the Register of Deeds 'now and then' to check the records in that office only shows the half-hazard [sic] manner by which the plaintiff looked for evidence to be presented during the hearing before the Commissioners, if it is at all true that Fiscal Lagman did what he is supposed to have done according to Solicitor Padua. It would have been the easiest matter for plaintiff to move for the issuance of a subpoena duces tecum directing the Register of Deeds of Pampanga to come to testify and to bring with him all documents found in his office pertaining to sales of land in Floridablanca adjacent to or near the lands in question executed or recorded from 1958 to the present. Even this elementary precaution was not done by plaintiff's numerous attorneys.

"The same can be said of the deeds of sale attached to the supplementary motion. They refer to lands

covered by certificate of title issued by the Register of Deeds of Pampanga. For the same reason they could have been easily discovered if reasonable diligence has been exerted by the numerous lawyers of the plaintiff in this case. It is noteworthy that all these deeds of sale could be found in several government offices, namely, in the Office of the Register of Deeds of Pampanga, the Office of the Provincial Assessor of Pampanga, the Office of the Clerk of Court as a part of notarial reports of notaries public that acknowledged these documents, or in the archives of the National Library. In respect to Annex 'B' of the supplementary motion copy of the document could also be found in the Office of the Land Tenure Administration, another government entity. Any lawyer with a modicum of ability handling this expropriation case would have right away though [sic] of digging up documents diligently showing conveyances of lands near or around the parcels of land sought to be expropriated in this case in the offices that would have naturally come to his mind such as the offices mentioned above, and had counsel for the movant really exercised the reasonable diligence required by the Rule' undoubtedly they would have been able to find these documents and/or caused the issuance of subpoena duces tecum. . . .

"It is also recalled that during the hearing before the Court of the Report and Recommendation of the Commissioners and objection thereto, Solicitor Padua made the observation:

'I understand, Your Honor, that there was a sale that took place in this place of land recently where the land was sold for P0.20 which is contiguous to this land.'

"The Court gave him permission to submit said document subject to the approval of the Court. . . This was before the decision was rendered, and later promulgated on May 26, 1961 or more than one month after Solicitor Padua made the above observation. He could have, therefore, checked up the alleged sale and moved for a reopening to adduce further evidence. He did not do so. He forgot to present the evidence at a more propitious time. Now, he seeks to introduce said evidence under the guise of newly-discovered evidence. Unfortunately, the Court cannot classify it as newly-discovered evidence, because under the circumstances, the correct qualification that can be given is 'forgotten evidence'.

Forgotten evidence, however, is not newly-discovered evidence." 33

The granting or denial of a motion for new trial is, as a general rule, discretionary with the trial court, whose judgment should not be disturbed unless there is a clear showing of abuse of discretion. 34 We do not see any abuse of discretion on the part of the lower court when it denied the motions for a new trial.

WHEREFORE, the decision appealed from is modified, as follows:

(a) the lands of appellees Carmen vda. de Castellvi and Maria Nieves Toledo-Gozun, as described in the complaint, are declared expropriated for public use;

(b) the fair market value of the lands of the appellees is fixed at P5.00 per square meter;

(c) the Republic must pay appellee Castellvi the sum of P3,796,495.00 as just compensation for her one parcel of land that has an area of 759,299 square meters, minus the sum of P151,859.80 that she withdrew out of the amount that was deposited in court as the provisional value of the land, with interest at the rate of 6% per annum from July 10, 1959 until the day full payment is made or deposited in court;

(d) the Republic must pay appellee Toledo-Gozun the sum of P2,695,225.00 as the just compensation for her two parcels of land that have a total area of 539,045 square meters, minus the sum of P107,809.00 that she withdrew out of the amount that was deposited in court as the provisional value of her lands, with interest at the rate of 6%, per annum from July 10, 1959 until the day full payment is made or deposited in court;

(e) the attorney's lien of Atty. Alberto Cacnio is enforced; and

(f) the costs should be paid by appellant Republic of the Philippines, as provided in Section 12, Rule 67, and in Section 13 Rule 141, of the Rules of Court.

IT IS SO ORDERED.

Makalintal, C . J ., Barredo, Antonio, Esguerra, Fernandez, Muñoz Palma and Aquino, JJ ., concur.

Castro, Fernando, Teehankee and Makasiar, J J ., did not take part.

||| (Republic v. Vda. de Castellvi, G.R. No. L-20620, August 15, 1974)

FIRST DIVISION

[G.R. No. L-26400. February 29, 1972.]

VICTORIA AMIGABLE, plaintiff-appellant, vs. NICOLAS CUENCA, as Commissioner of Public Highways and REPUBLIC OF THE PHILIPPINES, defendants-appellees.

Quirico del Mar, Domingo Antigua, Antonio Paulin and N. Capangpangan for plaintiff and appellant.

Assistant Solicitor General Guillermo Torres and Solicitor Dominador L. Quiroz for defendants and appellees.

SYLLABUS

1. POLITICAL LAW; EMINENT DOMAIN; PROJECT USED BY GOVERNMENT FOR ROAD PURPOSES; RIGHTS OR REGISTERED OWNER TO DUE COMPENSATION ANYTIME. — Considering that no annotation in favor of the government appears at the back of her certificate of title and that she has not executed any deed of conveyance of any portion of her lot to the government, the appellant remains the owner of the whole lot. As registered owner, she could bring an action to recover possession of the portion of land in question at anytime because possession is one of the attributes of ownership. However, since restoration of possession of said portion by the government is neither convenient nor feasible at this time because it has been and is now being used for road purposes, the only relief available is for the government to make due compensation which it could and should have done years ago.

2. ID.; ID.; ID.; ID.; RIGHT TO DAMAGES. — The owner of the land is entitled to damages in the form of legal interest on the price of the land from the time it was taken up to the time that payment is made by the government. In addition, the government should pay for attorney's fees, the amount of which should be fixed by the trial court after hearing.

3. ID.; ID.; BASIS FOR DUE COMPENSATION. — To determine the due compensation for the land appropriated by the Government, the basis should be the price or value thereof at the time of the taking.

D E C I S I O N

MAKALINTAL, J p:

This is an appeal from the decision of the Court of First Instance of Cebu in its Civil Case No. R-5977, dismissing the plaintiff's complaint.

Victoria Amigable, the appellant herein, is the registered owner of Lot No. 639 of the Banilad Estate in Cebu City as shown by Transfer Certificate of Title No. T-18060, which superseded Transfer Certificate of Title No. RT-3272 (T-3435) issued to her by the Register of Deeds of Cebu on February 1, 1924. No annotation in favor of the government of any right or interest in the property appears at the back of the certificate. Without prior expropriation or negotiated sale, the government used a portion of said lot, with an area of 6,167 square meters, for the construction of the Mango and Gorordo Avenues.

It appears that said avenues were already existing in 1921 although "they were in bad condition and very narrow, unlike the wide and beautiful avenues that they are now," and "that the tracing of said roads was begun in 1924, and the formal construction in 1925." *On March 27, 1958 Amigable's counsel wrote the President of the Philippines, requesting payment of the portion of her lot which had been appropriated by the government. The claim was indorsed to the Auditor General, who disallowed it in his 9th Indorsement dated December 9, 1958. A copy of said indorsement was transmitted to Amigable's counsel by the Office of the President on January 7, 1959.

On February 6, 1959 Amigable filed in the court a quo a complaint, which was later amended on April 17, 1959 upon motion of the defendants, against the Republic of the Philippines and Nicolas Cuenca, in his capacity as Commissioner of Public Highways for the recovery of ownership and possession of the 6,167 square meters of land traversed by the Mango and Gorordo Avenues. She also sought the payment of compensatory damages in the sum of P50,000.00 for the illegal occupation of her land, moral damages in the sum of P25,000.00, attorney's fees in the sum of P5,000.00 and the costs of the suit.

Within the reglementary period the defendants filed a joint answer denying the material allegations of the complaint and interposing the following affirmative defenses, to wit: (1) that the action was premature, the claim not having been filed first with the Office of the Auditor General; (2) that the right of action for the

recovery of any amount which might be due the plaintiff, if any, had already prescribed; (3) that the action being a suit against the Government, the claim for moral damages, attorney's fees and costs had no valid basis since as to these items the Government had not given its consent to be sued; and (4) that inasmuch as it was the province of Cebu that appropriated and used the area involved in the construction of Mango Avenue, plaintiff had no cause of action against the defendants.

During the scheduled hearings nobody appeared for the defendants notwithstanding due notice, so the trial court proceeded to receive the plaintiff's evidence ex parte. On July 29, 1959 said court rendered its decision holding that it had no jurisdiction over the plaintiff's cause of action for the recovery of possession and ownership of the portion of her lot in question on the ground that the government cannot be sued without its consent; that it had neither original nor appellate jurisdiction to hear, try and decide plaintiff's claim for compensatory damages in the sum of P50,000.00, the same being a money claim against the government; and that the claim for moral damages had long prescribed, nor did it have jurisdiction over said claim because the government had not given its consent to be sued. Accordingly, the complaint was dismissed. Unable to secure a reconsideration, the plaintiff appealed to the Court of Appeals, which subsequently certified the case to Us, there being no question of fact involved.

The issue here is whether or not the appellant may properly sue the government under the facts of the case.

In the case of Ministerio vs. Court of First Instance of Cebu, 1 involving a claim for payment of the value of a portion of land used for the widening of the Gorordo Avenue in Cebu City, this Court, through Mr. Justice Enrique M. Fernando, held that where the government takes away property from a private landowner for public use without going through the legal process of expropriation or negotiated sale, the aggrieved party may properly maintain a suit against the government without thereby violating the doctrine of governmental immunity from suit without its consent. We there said:

". . . If the constitutional mandate that the owner be compensated for property taken for public use were to be respected, as it should, then a suit of this character

should not be summarily dismissed. The doctrine of governmental immunity from suit cannot serve as an instrument for perpetrating an injustice on a citizen. Had the government followed the procedure indicated by the governing law at the time, a complaint would have been filed by it, and only upon payment of the compensation fixed by the judgment, or after tender to the party entitled to such payment of the amount fixed, may it have the right to enter in and upon the land so condemned, to appropriate the same to the public use defined in the judgment.' If there were an observance of procedural regularity, petitioners would not be in the sad plaint they are now. It is unthinkable then that precisely because there was a failure to abide by what the law requires, the government would stand to benefit. It is just as important, if not more so, that there be fidelity to legal norms on the part of officialdom if the rule of law were to be maintained. It is not too much to say that when the government takes any property for public use, which is conditioned upon the payment of just compensation, to be judicially ascertained, it makes manifest that it submits to the jurisdiction of a court. There is no thought then that the doctrine of immunity from suit could still be appropriately invoked."

Considering that no annotation in favor of the government appears at the back of her certificate of title and that she has not executed any deed of conveyance of any portion of her lot to the government, the appellant remains the owner of the whole lot. As registered owner, she could bring an action to recover possession of the portion of land in question at anytime because possession is one of the attributes of ownership. However, since restoration of possession of said portion by the government is neither convenient nor feasible at this time because it is now and has been used for road purposes, the only relief available is for the government to make due compensation which it could and should have done years ago. To determine the due compensation for the land, the basis should be the price or value thereof at the time of the taking. 2

As regards the claim for damages, the plaintiff is entitled thereto in the form of legal interest on the price of the land from the time it was taken up to the time that payment is made by the government. 3 In addition, the government should pay for attorney's fees, the amount of which should be fixed by the trial court after hearing.

WHEREFORE, the decision appealed from is hereby set aside and the case remanded to the court a quo for the determination of compensation, including attorney's fees, to which the appellant is entitled as above indicated. No pronouncement as to costs.

||| (Amigable v. Cuenca, G.R. No. L-26400, February 29, 1972)

THIRD DIVISION

[G.R. No. 113194. March 11, 1996.]

NATIONAL POWER CORPORATION, petitioner, vs. COURT OF APPEALS and MACAPANTON MANGONDATO, respondents.

Jose G. Bruno, Wilfredo J. Collado and Rolando Gamalinda for petitioner.

Macapanton K. Mangondato in his own behalf.

SYLLABUS

1. POLITICAL LAW; EMINENT DOMAIN; JUST COMPENSATION; DETERMINATION THEREOF; GENERAL RULE IS DATE OF FILING OF THE COMPLAINT. — The general rule in determining "just compensation" in eminent domain is the value of the property as of the date of the filing of the complaint. Normally, the time of the taking coincides with the filing of the complaint for expropriation. Hence, many rulings of this Court have equated just compensation with the value of the property as of the time of filing of the complaint consistent with the above provision of Section 4, Rule 67 of the Revised Rules of Court. So too, where the institution of the action precedes entry into the property, the just compensation is to be ascertained as of the time of the filing of the complaint.

2. ID.; ID.; ID.; ID.; ID.; EXCEPTION IS WHERE THE COURT FIXED THE VALUE OF THE PROPERTY AS OF THE DATE OF TAKING; NOT APPLICABLE IN CASE AT BAR. — The general rule admits of an exception; where this Court fixed the value of the property as of the date it was taken and not at the date of the commencement of the expropriation proceedings. This exception finds application where the owner would be given undue incremental advantages arising from the use to which the government devotes the property expropriated — as for instance, the extension of a main thoroughfare as was the case in Caro de Araullo. In the instant case, however, it is difficult to conceive of how there could have been an extra-ordinary increase in the value of the owner's land arising from the expropriation, as indeed the records do not show any evidence that the valuation of P1,000.00 reached in 1992 was due to increments directly caused by petitioner's use of the land. Since the petitioner is claiming an exception to

Rule 67, Section 4, it has the burden of proving its claim that its occupancy and use — not ordinary inflation and increase in land values — was the direct cause of the increase in valuation from 1978 to 1992.

3. ID.; ID.; "TAKING" THEREIN; ELEMENTS; WHEN SATISFIED IN CASE AT BAR. — This Court has defined the elements of "taking" as the main ingredient in the exercise of power of eminent domain, in the following words: "A number of circumstances must be present in the 'taking' of property for purposes of eminent domain: (1) the expropriator must enter a private property; (2) the entrance into private property must be for more than a momentary period; (3) the entry into the property should be under warrant or color of legal authority; (4) the property must be devoted to a public use or otherwise informally appropriated or injuriously affected; and (5) the utilization of the property for public use must be in such a way to oust the owner and deprive him of all beneficial enjoyment of the property." In this case, the petitioner's entrance in 1978 was without intent to expropriate or was not made under warrant or color of legal authority, for it believed the property was public land covered by PROCLAMATION NO. 1354 and flatly refused the claim for compensation. Only in 1990, did the petitioner recognize private respondent's ownership and negotiate for the voluntary purchase of the property. A Deed of Sale with provisional payment and subject to negotiations for the correct price was then executed. This is not the intent nor the expropriation contemplated by law. This is a simple attempt at a voluntary purchase and sale. Petitioner neglected and/or refused to exercise the power of eminent domain. Only in 1992, did petitioner manifest its intention to exercise the power of eminent domain.

4. ID.; ID.; JUST COMPENSATION; VALUATION OF COMMISSIONERS; FINDINGS OF FACTS OF THE COURT OF APPEALS, RESPECTED. — In an expropriation case where the principal issue is the determination of just compensation, as is the case here, a trial before Commissioners is indispensable to allow the parties to present evidence on the issue of just compensation. Inasmuch as the determination of just compensation in eminent domain cases is a judicial function and factual findings of the Court of Appeals are conclusive on the parties and reviewable only when the case falls within the recognized exceptions, which is not the situation obtaining in this petition, we see no reason to disturb the factual

findings as to valuation of the subject property. As can be gleaned from the records, the court-and-the-parties-appointed commissioners did not abuse their authority in evaluating the evidence submitted to them nor misappropriate the clear preponderance of evidence. The amount fixed and agreed to by the respondent appellate Court is not grossly exorbitant.

D E C I S I O N

PANGANIBAN, J p:

At what point in time should the value of the land subject of expropriation be computed: at the date of the "taking" or the date of the filing of the complaint for eminent domain? This is the main question posed by the parties in this petition for review on certiorari assailing the Decision 1 of the Court of Appeals 2 which affirmed in toto the decision of the Regional Trial Court of Marawi City. 3 The dispositive portion of the decision of the trial court reads: 4

"WHEREFORE, the prayer in the recovery case for Napocor's surrender of the property is denied but Napocor is ordered to pay monthly rentals in the amount of P15,000.00 from 1978 up to July 1992 with 12% interest per annum from which sum the amount of P2,199,500.00 should be deducted; and the property is condemned in favor of Napocor effective July 1992 upon payment of the fair market value of the property at One Thousand (P1,000.00) Pesos per square meter or a total of Twenty-One Million Nine Hundred Ninety-Five Thousand (P21,995,000.00) Pesos.

"SO ORDERED. Costs against NAPOCOR."

The FactsThe facts are undisputed by both the petitioner and the private respondent, 5 and are quoted from the Decision of the respondent Court, 6 as follows:

"In 1978, National Power Corporation (NAPOCOR), took possession of a 21,995 square meter land which is a portion of Lot 1 of the subdivision plan (LRC) Psd-116159 situated in Marawi City, owned by Mangondato, and covered by Transfer Certificate of Title No. T-378-A, under the mistaken belief that it forms part of the public land reserved for use by NAPOCOR for hydroelectric power purposes under PROCLAMATION NO. 1354 of the President of the Philippines dated December 3, 1974.

"NAPOCOR alleged that the subject land was until then possessed and administered by Marawi City so that in exchange for the city's waiver and quitclaim of any right over the property, NAPOCOR had paid the city a 'financial assistance' of P40.00 per square meter.

"In 1979, when NAPOCOR started building its Agus I HE (Hydroelectric Plant) Project, Mangondato demanded compensation from NAPOCOR. NAPOCOR refused to compensate insisting that the property is public land and that it had already paid 'financial assistance' to Marawi City in exchange for the rights over the property.

"Mangondato claimed that the subject land is his duly registered private property covered by Transfer Certificate of Title No. T-378-A in his name, and that he is not privy to any agreement between NAPOCOR and Marawi City and that any payment made to said city cannot be considered as payment to him.

"More than a decade later NAPOCOR acceded to the fact that the property belongs to Mangondato.

"At the outset, in March, 1990, NAPOCOR's regional legal counsel, pursuant to Executive Order No. 329 dated July 11, 1988 requested Marawi City's City Appraisal Committee to appraise the market value of the property in Saduc, Marawi City affected by the infrastructure projects of NAPOCOR without specifying any particular land-owner. The City Appraisal Committee in its Minutes dated March 8, 1990, fixed the fair market value as follows: 7

'Land Fair Market Value Per Sq. M.

Price Per Sq. M Price per Sq. M.

Along the City Not in the City

National Highway National Highway

P150 Residential Lot P100

P250 Commercial Lot P180

P300 Industrial Lot P200

(Records, Civil Case No. 610-92, p. 20).

"On July 13, 1990, NAPOCOR's National Power Board (hereafter NAPOCOR's board) passed Resolution No. 90-225 resolving to pay Mangondato P100.00 per square meter for only a 12,132 square meter portion of the subject property plus 12% interest per annum from 1978. However, in the August 7, 1990 board meeting, confirmation of said resolution was deferred to allow NAPOCOR's regional legal counsel to determine whether P100.00 per square meter is the fair market value. (Records, Civil Case No. 605-92, p. 45).

"On August 14, 1990, NAPOCOR's board passed Resolution No. 90-316 resolving that Mangondato be paid the base price of P40.00 per square meter for the 12,132 square meter portion (P485,280.00) plus 12% interest per annum from 1978 (P698,808.00) pending the determination whether P100.00 per square meter is the fair market value of the property (id.).

"Pursuant to the aforementioned resolution Mangondato was paid P1,184,088.00 (id., p. 58).

NAPOCOR's regional legal counsel's findings embodied in 2 memoranda to NAPOCOR's general counsel (dated January 29, 1991 and February 19, 1991) state that Mangondato's property is classified as industrial, that the market value of industrial lots in Marawi City when NAPOCOR took possession is P300.00 for those along the national highway and P200.00 for those not along the highway and that on the basis of recent Supreme Court decisions, NAPOCOR has to pay not less than P300.00 per square meter. NAPOCOR's general counsel incorporated the foregoing findings in his report to the board plus the data that the area possessed by NAPOCOR is 21,995 square meters, and that the legal rate of interest per annum from the time of the taking of the property alleged to be in 1978, is 12%, but recommended to the board that the fair market value of the property is P100.00 per square meter; NAPOCOR's board on May 17, 1991 passed Resolution No. 91-247 resolving to pay Mangondato P100.00 per square meter for the property excluding 12% interest per annum (id., pp. 50-52).

"In a letter dated December 17, 1991, Mangondato disagreed with the NAPOCOR board's Resolution No. 91-247 pegging the compensation for his land at

P100.00 per square meter without interest from 1978. Mangondato submitted that the fair market value of his land is even more than the P300.00 (per) square meter stated in the City Appraisal Report but that for expediency, he is willing to settle for P300.00 per square meter plus 12% interest per annum from 1978 (id., pp. 53-59).

"In another letter dated February 4, 1992, Mangondato reiterated his disagreement to the P100.00 per square meter compensation without interest. At the same time, to get partial payment, he asked that he be paid in the meantime, P100.00 per square meter without prejudice to pursuing his claim for the proper and just compensation plus interest thereon (id., p. 60).

"On February 12, 1992, NAPOCOR's general counsel filed a memorandum for its president finding no legal impediment if they, in the meantime were to pay Mangondato P100.00 per square meter without prejudice to the final determination of the proper and just compensation by the board inasmuch as the regional counsel submitted to him (general counsel) 2 memoranda stating that the appraisal of industrial lots in Marawi City when NAPOCOR took possession is P300.00 per square meter for those along the national highway and P200.00 per square meter for those not along the highway, and that NAPOCOR has to pay not less than P300.00 per square meter plus 12% interest on the basis of recent Supreme Court decisions. Further, the general counsel submitted that since the board has already set the purchase price at P100.00 per square meter (Resolution No. 91-247). NAPOCOR would not be prejudiced thereby (id., pp. 60-62).

"In March, 1992, the parties executed a Deed of Sale Of A Registered Property where NAPOCOR acceded to Mangondato's request of provisional payment of P100.00 per square meter excluding interest and without prejudice to Mangondato's pursuance of claims for just compensation and interest. Mangondato was paid P1,015,412.00 in addition to the P1,184,088.00 earlier paid to him by NAPOCOR which payments total P2,199,500.00 for the 12,995 square meter land (Records, Civil Case No. 610-92, pp. 85-87).

"In his letter to NAPOCOR's president dated April 20, 1992, Mangondato asked for the payment of P300.00 per square meter plus 12% interest per annum from

1978. NAPOCOR's president, in his memorandum to the board dated April 24, 1992 recommended the approval of Mangondato's request (Records, Civil Case No. 605-92, pp. 63-69).

"On May 25, 1992, NAPOCOR's board passed Resolution No. 92-121 granting its president the authority to negotiate for the payment of P100.00 per square meter for the land plus 12% interest per annum from 1978 less the payments already made to Mangondato and to Marawi City on the portion of his land and with the provisos that said authorized payment shall be effected only after Agus I HE Project has been placed in operation and that said payment shall be covered by a deed of absolute sale with a quitclaim executed by Mangondato (id., pp. 70-71).

"On July 7, 1992, Mangondato filed before the lower court Civil Case No. 605-92 against NAPOCOR seeking to recover the possession of the property described in the complaint as Lots 1 and 3 of the subdivision plan (LRC) Psd-116159 against NAPOCOR, the payment of a monthly rent of P15,000.00 from 1978 until the surrender of the property, attorney's fees and costs, and the issuance of a temporary restraining order and a writ of preliminary mandatory injunction to restrain NAPOCOR from proceeding with any construction and/or improvements on Mangondato's land or from committing any act of dispossession (id., pp. 1-8).

"The temporary restraining order was issued by the lower court. Anent the prayer for the writ of preliminary mandatory injunction, NAPOCOR filed its Opposition thereto on July 23, 1992 (id., pp. 17-20).

"Before the lower court could resolve the pending incident on the writ of preliminary mandatory injunction, and instead of filing a motion to dismiss, NAPOCOR, on July 27, 1992, filed also before the lower court, Civil Case No. 610-92 which is a Complaint for eminent domain against Mangondato over the subject property (Records, Civil Case No. 610-92, pp. 1-3).

"On the same date Mangondato filed his Manifestation in Lieu of Answer contending that the negotiations for payment made by NAPOCOR were 'virtual dictations' on a 'take it or leave it' basis; that he was given the 'run-around' by NAPOCOR for 15 years; so that there was no agreement reached as to payment because of NAPOCOR's insistence of its

own determination of the price; that he treats the P2,199.500.00 so far received by him as partial payment for the rent for the use of his property. Mangondato prayed that he be compensated in damages for the unauthorized taking and continued possession of his land from 1978 until the filing of the Complaiant (sic) in the expropriation case; that should the lower court order the expropriation of the subject property, that the just compensation for the land be reckoned from the time of the filing of the expropriation case; that the expropriation case be consolidated with the recovery of possession case; that the restraining order issued in the recovery of possession case be maintained and a writ of preliminary injunction be at once issued against NAPOCOR; and that NAPOCOR be ordered to deposit the value of the land as provisionally determined by the lower court (id., pp. 4-5).

"Upon agreement of the parties, the 2 cases were ordered consolidated and the lower court appointed the following commissioners: Atty. Saipal Alawi, representing the lower court; Atty. Connie Doromal, representing NAPOCOR; and Mr. Alimbsar A. Ali, from the City Assessor's Office to ascertain and report to the court the just compensation (id., pp. 6-7).

"The lower court ordered NAPOCOR to deposit with the Philippine National Bank the amount of P10,997,500.00, provisionally fixing the value of the land at P500.00 per square meter P100.00 lower than the assessed value of the land appearing in Tax Declaration No. 0873 for 1992 which was used as basis by the lower court (id., p. 8).

"In its Motion for Reconsideration of the Order For Provisional Deposit[,] NAPOCOR opposed the provisional value quoted by the lower court saying that the basis of the provisional value of the land should be the assessed value of the property as of the time of the taking which in this case is 1978 when the assessed value of the land under Tax Declaration No. 7394 was P100.00 per square meter (id., pp. 28-32). In reply, Mangondato filed his Opposition To Motion For Reconsideration Of the Order For Provisional Deposit (id., pp. 44-46). However, the lower court did not rule on the provisional value to be deposited and chose to go right into the determination of just compensation on the ground that the 'provisional valuation could not be decided without going into the second phase of expropriation cases which is the determination by the court of the just

compensation for the property soguht (sic) to be taken (NPC vs. Jocson, supra)' (Decision, p. 5).

"On August 5, 1992, Mangondato filed a Motion To Dismiss in the expropriation case alleging that NAPOCOR filed its Complaint for eminent domain not for the legitimate aim of pursuing NAPOCOR's business and purpose but to legitimize a patently illegal possession and at the same time continue dictating its own valuation of the property. Said motion was however, later withdrawn by Mangondato (id., pp. 37-39 and 47).

"In the meanwhile, the commissioners filed their respective reports. On July 28, 1992, Commissioner Doromal filed his report recommending a fair market value of P300.00 per square meter as of November 23, 1978, (id., pp. 11-27). On August 6, 1992, Commissioners Alawi and Ali filed their joint report recommending a fair market value of P1,000.00 per square meter as of 1992 (id., pp. 40-42).

"After the parties filed their respective comments to the commissioners' reports, on August 21, 1992, the lower court rendered its decision denying Mangondato recovery of possession of the property but ordering NAPOCOR to pay a monthly rent of P15,000.00 from 1978 up to July 1992 with 12% interest per annum and condemning the property in favor of NAPOCOR effective July, 1992 upon the payment of P1,000.00 per square meter or a total of P21,995,000.00 as just compensation.

"Mangondato filed a Motion For Partial Execution Pending Appeal which was granted by the lower court in an Order dated September 15, 1992 (id., pp. 151-152 and 157-160). However, on appeal by NAPOCOR via a Petition For Certiorari in CA-G.R. SP No. 28971 to this Court, said Order was annulled and set aside (Rollo, pp. 30-37).

"NAPOCOR filed a Motion For Reconsideration of the decision alleging that the fair market value of the property at the time it was taken allegedly in 1978 is P40.00 per square meter. After Mangondato filed his Opposition To Motion For Reconsideration the lower court denied NAPOCOR's motion for reconsideration in an Order dated September 15, 1992 (Records, Civil Case No. 610-92, pp. 145-149).

"In the meanwhile, on August 7, 1992, Mangondato filed an Ex-Parte Manifestation To Correct Clerical

Error of Description of Property submitting that Lot 3 which does not form part of the subject property was included in the Complaint because of a clerical error inadvertently committed by the typist who continuously copied the description of the property covered by Transfer Certificate of Title No. T-378-A, and thus praying that the position of the Complaint describing Lot 3 be deleted (Records, Civil Case No. 605-92, p. 22).

"On August 12, 1992, the intervenors filed their Motion For Intervention and Intervention claiming interest against each of the parties on the ground that Lot 3 which is included in the Complaint has since been conveyed by Mangondato to their predecessors-in-interest and that they are entitled to just compensation from NAPOCOR should the lower court decide that NAPOCOR is entitled to expropriate the entire area described in the Complaint (id., pp. 23-34).

"In an Order dated August 19, 1992 the lower court granted intervenor's Motion For Intervention (id., p. 72).

"On August 25, 1992, the lower court ordered the deletion of the portion in the Complaint describing Lot 3 and declared that intervenors' Motion For Intervention has become moot (id., p. 82).

"On October 13, 1992 the intervenors filed their Motion To Reconsider The Order Of August 25, 1992 and The Decision Dated August 21, 1992 which was however denied by the lower court in an Order dated November 26, 1992 (id., pp. 162-184)."

The IssuesTwo errors were raised before this Court by the petitioner, thus: 8

"ASSIGNMENT OF ERRORS

THE RESPONDENT COURT ERRED IN AFFIRMING THAT THE JUST COMPENSATION FOR THE PROPERTY IS ITS VALUE IN 1992, WHEN THE COMPLAINT WAS FILED, AND NOT ITS VALUE IN 1978, WHEN THE PROPERTY WAS TAKEN BY PETITIONER.

THE COURT ERRED IN FIXING THE VALUE OF JUST COMPENSATION AT P1,000.00 PER

SQUARE METER INSTEAD OF P40.00 PER SQUARE METER."

The petitioner summarized the two issues it raised by asking "whether or not the respondent court was justified in deviating from the well-settled doctrine that just compensation is the equivalent of the value of the property taken for public use reckoned from the time of taking." 9 In his Comment, private respondent worded the issues as follows: 10

". . . As stated by the respondent court, Napocor, in its appeal —

'. . . avers that the taking of the proerty (sic) should not be reckoned as of the year 1992 when NAPOCOR filed its Complaint for eminent domain but as of the year 1978 when it took possession of the property, and that the just compensation, determined as it should be, on the basis of the value of the property as of 1978, as P40.00 per square meter.' "

The petitioner, after failing to persuade both lower courts, reiterated before us its proposition (with cited cases) "that when the taking of property precedes the filing of the judicial proceeding, the value of the property at the time it was taken shall be the basis for the payment of just compensation." 11

The First Issue: Date of Taking or Date of Suit?The general rule in determining "just compensation" in eminent domain is the value of the property as of the date of the filing of the complaint, as follows: 12

"Sec. 4. Order of Condemnation. When such a motion is overruled or when any party fails to defend as required by this rule, the court may enter an order of condemnation declaring that the plaintiff has a lawful right to take the property sought to be condemned, for the public use or purpose described in the complaint, upon the payment of just compensation to be determined as of the date of the filing of the complaint . . ." (Emphasis supplied).

Normally, the time of the taking coincides with the filing of the complaint for expropriation. Hence, many rulings of this Court have equated just compensation with the value of the property as of the time of filing of the complaint consistent with the above provision of the Rules. So too, where the institution of the action precedes entry into the property, the just

compensation is to be ascertained as of the time of the filing of the complaint. 13

The general rule, however, admits of an exception: where this Court fixed the value of the property as of the date it was taken and not at the date of the commencement of the expropriation proceedings.

In the old case of Provincial Government of Rizal vs. Caro de Araullo, 14 the Court ruled that ". . . the owners of the land have no right to recover damages for this unearned increment resulting from the construction of the public improvement (lengthening of Taft Avenue from Manila to Pasay) for which the land was taken. To permit them to do so would be to allow them to recover more than the value of the land at the time when it was taken, which is the true measure of the damages, or just compensation, and would discourage the construction of important public improvements."

In subsequently cases, 15 the Court, following the above doctrine, invariably held that the time of taking is the critical date in determining lawful or just compensation. Justifying this stance, Mr. Justice (later Chief Justice) Enrique Fernando, speaking for the Court in Municipality of La Carlota vs. The Spouses Felicidad Baltazar and Vicente Gan, 16 said, ". . . the owner as is the constitutional intent, is paid what he is entitled to according to the value of the property so devoted to public use as of the date of the taking. From that time, he had been deprived thereof. He had no choice but to submit. He is not, however, to be despoiled of such a right. No less than the fundamental law guarantees just compensation. It would be an injustice to him certainly if from such a period, he could not recover the value of what was lost. There could be on the other hand, injustice to the expropriator if by a delay in the collection, the increment in price would accrue to the owner. The doctrine to which this Court has been committed is intended precisely to avoid either contingency fraught with unfairness."

Simply stated, the exception finds application where the owner would be given undue incremental advantages arising from the use to which the government devotes the property expropriated — as for instance, the extension of a main thoroughfare as was the case in Caro de Araullo. In the instant case, however, it is difficult to conceive of how there could have been an extra-ordinary increase in the value of

the owner's land arising from the expropriation, as indeed the records do not show any evidence that the valuation of P1,000.00 reached in 1992 was due to increments directly caused by petitioner's use of the land. Since the petitioner is claiming an exception to Rule 67, Section 4, 17 it has the burden of proving its claim that its occupancy and use — not ordinary inflation and increase in land values — was the direct cause of the increase in valuation from 1978 to 1992.

Side Issue: When is There "Taking" of PropertyBut there is yet another cogent reason why this petition should be denied and why the respondent Court should be sustained. An examination of the undisputed factual environment would show that the "taking" was not really made in 1978.

This Court has defined the elements of "taking" as the main ingredient in the exercise of power of eminent domain, 18 in the following words:

"A number of circumstances must be present in the 'taking' of property for purposes of eminent domain: (1) the expropriator must enter a private property; (2) the entrance into private property must be for more than a momentary period; (3) the entry into the property should be under warrant or color of legal authority; (4) the property must be devoted to a public use or otherwise informally appropriated or injuriously affected; and (5) the utilization of the property for public use must be in such a way to oust the owner and deprive him of all beneficial enjoyment of the property." (Emphasis supplied)

In this case, the petitioner's entrance in 1978 was without intent to expropriate or was not made under warrant or color of legal authority, for it believed the property was public land covered by PROCLAMATION NO. 1354. When the private respondent raised his claim of ownership sometime in 1979, the petitioner flatly refused the claim for compensation, nakedly insisted that the property was public land and wrongly justified its possession by alleging it had already paid "financial assistance" to Marawi City in exchange for the rights over the property. Only in 1990, after more than a decade of beneficial use, did the petitioner recognize private respondent's ownership and negotiate for the voluntary purchase of the property. A Deed of Sale with provisional payment and subject to negotiations for the correct price was then executed. Clearly, this is not the intent nor the expropriation contemplated by

law. This is a simple attempt at a voluntary purchase and sale. Obviously, the petitioner neglected and/or refused to exercise the power of eminent domain. cdll

Only in 1992, after the private respondent sued to recover possession and petitioner filed its Complaint to expropriate, did petitioner manifest its intention to exercise the power of eminent domain. Thus, the respondent Court correctly held: 19

"If We decree that the fair market value of the land be determined as of 1978, then We would be sanctioning a deceptive scheme whereby NAPOCOR, for any reason other than for eminent domain would occupy another's property and when later pressed for payment, first negotiate for a low price and then conveniently expropriate the property when the land owner refuses to accept its offer claiming that the taking of the property for the purpose of eminent domain should be reckoned as of the date when it started to occupy the property and that the value of the property should be computed as of the date of the taking despite the increase in the meantime in the value of the property."

In Noble vs. City of Manila, 20 the City entered into a lease-purchase agreement of a building constructed by the petitioner's predecessor-in-interest in accordance with the specifications of the former. The Court held that being bound by the said contract, the City could not expropriate the building. Expropriation could be resorted to "only when it is made necessary by the opposition of the owner to the sale or by the lack of any agreement as to the price." Said the Court:

"The contract, therefore, in so far as it refers to the purchase of the building, as we have interpreted it, is in force, not having been revoked by the parties or by judicial decision. This being the case, the city being bound to buy the building at an agreed price, under a valid and subsisting contract, and the plaintiff being agreeable to its sale, the expropriation thereof, as sought by the defendant, is baseless. Expropriation lies only when it is made necessary by the opposition of the owner to the sale or by the lack of any agreement as to the price. There being in the present case a valid and subsisting contract, between the owner of the building and the city, for the purchase thereof at an agreed price, there is no reason for the expropriation." (Emphasis supplied)

In the instant case, petitioner effectively repudiated the deed of sale it entered into with the private respondent when it passed Resolution No. 92-121 on May 25, 1992 authorizing its president to negotiate, inter alia, that payment "shall be affected only after Agus I HE project has been placed in operation." It was only then that petitioner's intent to expropriate became manifest as private respondent disagreed and, barely a month after, filed suit.

The Second Issue: ValuationWe now come to the issue of valuation.

The fair market value as held by the respondent Court, is the amount of P1,000.00 per square meter. In an expropriation case where the principal issue in the determination of just compensation, as is the case here, a trial before Commissioners is indispensable to allow the parties to present evidence on the issue of just compensation. 21 Inasmuch as the determination of just compensation in eminent domain cases is a judicial function 22 and factual findings of the Court of Appeals are conclusive on the parties and reviewable only when the case falls within the recognized exception, 23 which is not the situation obtaining in this petition, we see no reason to disturb the factual findings as to valuation of the subject property. As can be gleaned from the records, the court-and-the-parties-appointed commissioners did not abuse their authority in evaluating the evidence submitted to them nor misappreciate the clear preponderance of evidence. The amount fixed and agreed to by the respondent appellate Court is not grossly exorbitant. 24 To quote: 25

"Commissioner Ali comes from the Office of the Register of Deeds who may well be considered an expert, with a general knowledge of the appraisal of real estate and the prevailing prices of land in the vicinity of the land in question so that his opinion on the valuation of the property cannot be lightly brushed aside.

"The prevailing market value of the land is only one of the determinants used by the commissioners' report the others being as herein shown:

xxx xxx xxx

"Commissioner Doromal's report, recommending P300.00 per square meter, differs from the 2

commissioners only because his report was based on the valuation as of 1978 by the City Appraisal Committee as clarified by the latter's chairman in response to NAPOCOR's general counsel's query (id., pp. 128-129)."

In sum, we agree with the Court of Appeals that petitioner has failed to show why it should be granted an exemption from the general rule in determining just compensation provided under Section 4 of Rule 67. On the contrary, private respondent has convinced us that, indeed, such general rule should in fact be observed in this case.

WHEREFORE, the petition is hereby DISMISSED and the judgment appealed from AFFIRMED, except as to the interest on the monthly rentals, which is hereby reduced from twelve percent (12%) to the legal rate of six percent (6%) per annum. Costs against the petitioner.

SO ORDERED.

Narvasa, C.J., Davide, Jr., Melo and Francisco, JJ., concur.

||| (National Power Corp. v. Court of Appeals, G.R. No. 113194, March 11, 1996)

FIRST DIVISION

[G.R. No. L-20232. September 30, 1964.]

MUNICIPALITY OF LA CARLOTA, plaintiff-appellee, vs. NATIONAL WATERWORKS and SEWERAGE AUTHORITY (NAWASA), defendant-appellant.

Rodolfo M. Uriarte, Rolando N. Medalla, Ernesto Ma. Uriarte and Abundio B. Huelar for plaintiff-appellee.

Government Corporate Counsel for defendant-appellant.

SYLLABUS

1. CONSTITUTIONAL LAW; TRANSFER TO NAWASA OF JURISDICTION, SUPERVISION AND CONTROL OF MUNICIPAL WATERWORKS IS UNCONSTITUTIONAL. — The contention of the NAWASA that although ownership of municipal waterworks may not be validly transferred to the NAWASA under Republic Act No. 1383, yet said law authorizes the NAWASA to "have jurisdiction, supervision and control" over all government owned Municipal Waterworks, is held untenable because it is hard to conceive how the jurisdiction, supervision and control of a municipality's waterworks system may be vested in the NAWASA without destroying the integrity of the said municipality's right of dominion. Ownership is nothing without the inherent rights of possession, control and enjoyment. Where the owner is deprived of the ordinary and beneficial use of his property or of its value by its being diverted to public use, there is taking within the constitutional sense. (Tañada & Fernando, Constitution of the Philippines, 4th ed., Vol. I, 215-216).

D E C I S I O N

MAKALINTAL, J p:

The municipality of La Carlota was the owner of the waterworks system serving its inhabitants until the enactment of Republic Act No. 1383 on June 28, 1955, when by virtue of its provisions the National Waterworks and Sewerage Authority (NAWASA) assumed ownership and took over the supervision, administration and control of the said system, including the collection of water rentals from the consumers. On April 5, 1950 the municipality

commenced this action in the Court of First Instance of Negros Occidental against the NAWASA for recovery and accounting. On September 27, 1961 judgment was rendered as follows:

"EN VIRTUD DE LO EXPUESTO, el Juzgado falla esta causa condenado a la demandada para que restituya al demandante el dominio y titulo, asi como la posesion, supervision, administracion y control del sistema de traida de aguas del Municipio de la Carlota.

"Se ordena, asimismo, a la demandada para que dentro del plazo de 30 dias a contar desde le fecha en que esta decision quede firme y ejecutoria, rinda una cuenta detallada de todas las cantidades cobradas por ella de los consumidores del sistema durante el periodo de itempo desde que se hizo cargo del sistema hasta la fecha en que actualmente haya restituido al demandante dicho sistema.

"Por falta de pruebas, se sobresee la reconvencion interpuesta por la demandada.

"Las costas del juicio se tasaran en contra de la demandada."

In the present appeal by the defendant it assigns one error in the judgment, namely, "in holding that the possession, administration, supervision and maintenance of the La Carlota water system is vested in the municipality of La Carlota . . . even on the assumption that ownership of said system belongs to the municipality."

The appellant concedes, on the authority of City of Baguio vs. NAWASA, 57 O.G. No. 9, p. 1584, and City of Cebu vs. NAWASA, G.R. No. L-12892, April 20, 1960, that in so far as Republic Act No. 1383 transfers ownership of the water system of the appellee to the appellant the said Act is unconstitutional because it does not provide for the payment of just compensation as required by the Constitution, the transfer being in the nature of expropriation of private (patrimonial) property. However, it is contended that although ownership may not thus be transferred, the law (Sec. 1) also authorizes the NAWASA to have jurisdiction, supervision and control over . . . all areas now served by existing government owned waterworks and sewerage and drainage systems within the boundaries of cities, municipalities, and municipal

districts in the Philippines . . . "On this ground the appellant prays that the judgment appealed from be reversed in part and that the return to it of the "possession, supervision, administration and control of the La Carlota waterworks system" be ordered.

In City of Cebu vs. NAWASA, supra, which was an action for declaratory relief, this Court did not squarely pass upon the question of whether, apart from ownership, the defendant could exercise "jurisdiction, supervision and control" over the Cebu waterworks system without paying just compensation. It is true that the trial court upheld the exercise of such right in its decision, leaving for future determination and question of what would constitute acts of ownership and what would be considered as an exercise of jurisdiction, supervision and control, but this Court on appeal did not treat the particular matter as an issue before it and neither passed upon it nor rendered a ruling thereon. That case is therefore no authority for the position of the appellant here as presented in its lone assignment of error. Neither may it find support in the statement in our decision in City of Baguio vs. NAWASA, supra, that "unless this aspect of the law (concerning payment of just compensation is clarified and appellee is given its due compensation, appellee cannot be deprived of its property even if appellant desires to take over the administration in line with the spirit of the law." This Court, in said decision, took note of the authorities cited by the appellant therein to sustain its contention that Congress has the power, without impairing vested rights, to transfer property of a municipal corporation from one government agency to another as long as such property continues to be devoted to its original purpose. But the decision precisely pointed out that those authorities are not in point, since the transfers involved therein were merely for purposes of administration, the ownership of and benefits from the property being retained by the municipal corporations concerned, whereas the clear intent of Republic Act No. 1383 'is to affect a real transfer of the ownership of the waterworks . . . and does not merely encompass a transfer of administration."

It is hard to conceive how the jurisdiction, supervision and control of the appellee's waterworks system may be vested in the appellant without destroying the integrity of the appellee's right of dominion. Ownership is nothing without the inherent rights of possession, control and enjoyment. Where the owner is deprived of the ordinary and beneficial use of his

property or of its value by its being diverted to public use, there is taking within the constitutional sense. Tañada & Fernando, Constitution of the Philippines, 4th ed., Vol. 1, 215-216. Such deprivation would be the certain consequence if, as prayed for by the appellant, it should be allowed to assume jurisdiction supervision and control over the waterworks system of the appellee. That would be little less than all assumption of ownership itself and not of mere administration.

The judgment appealed from is affirmed, with costs.

Bengzon, C.J., Bautista Angelo, Reyes, J.B.L., Paredes, Dizon, Regala, Bengzon, J.P. and Zaldivar, JJ., concur.

Concepcion and Barrera, JJ., took no part.

||| (Municipality of La Carlota v. NAWASA, G.R. No. L-20232, September 30, 1964)

EN BANC

[G.R. No. L-18841. January 27, 1969.]

REPUBLIC OF THE PHILIPPINES, plaintiff-appellant, vs. PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, defendant-appellant.

Solicitor General Arturo A. Alafriz, Assistant Solicitor General Antonio A. Torres and Solicitor Camilo D. Quiason for plaintiff- appellant.

Ponce Enrile, Siguion Reyna, Montecillo & Belo for defendant-appellant.

SYLLABUS

1.CONSTITUTIONAL LAW; EMINENT DOMAIN; EXPROPRIATION OF PUBLIC SERVICE UTILITIES; PAYMENT OF JUST COMPENSATION LIKE EXPROPRIATION OF REAL PROPERTY. — Where the Republic may not compel the PLDT to celebrate a contract with it, the Republic may, in the exercise of the sovereign power of eminent domain, require the telephone company to permit interconnection of the government telephone system and that of the PLDT, as the needs of the government service may require, subject to the payment of just compensation to be determined by the court. Normally, of course, the power of eminent domain results in the taking or appropriation of title to, and possession of, the expropriated property; but no cogent reason appears why the said power may not be availed of to impose only a burden upon the owner of condemned property, without loss of title and possession. It is unquestionable that the real property may, through expropriation, be subjected to an easement of right of way. The use of the PLDT's lines and services to allow interservice connection between both telephone systems is not much different. In either case private property is subjected to a burden for public use and benefit. If, under Section 6, Article XIII, of the Constitution, the State may, in the interest of national welfare, transfer utilities to public ownership upon payment of just compensation, there is no reason why the State may not require a public utility to render services in the general interest, provided just compensation is paid therefor.

2.ID.; ID.; ID.; DISMISSAL OF PETITION BY COURT A QUO NOT PROPER IN INSTANT CASE. — The Republic's cause of action to compel the PLDT to

execute a contract with the former, through the Bureau, for the use of the facilities of defendant's telephone system throughout the Philippines under such terms and conditions as the court might consider reasonable, is predicated upon the radio telephonic isolation of Bureau's facilities from the outside World if the severance of the interconnection were to be carried out by the PLDT, thereby preventing the Bureau of Telecommunications from properly discharging its functions, to the prejudice of the general public. Save for the prayer to compel the PLDT to enter into a contract (and the prayer is no essential part of the pleading), the averments make out a case for compulsory rendering of inter-connecting services by the telephone company upon such terms and conditions as the court may determine to be just. And since the lower court found that both parties "are practically at one that defendant (PLDT) is entitled to reasonable compensation from plaintiff for the reasonable use of the former's telephone facilities" the lower court should have proceeded to treat the case as one of condemnation of such services independently of contract and proceeded to determine the just and reasonable compensation for the same, instead of dismissing the petition.

3.ID.; ID.; ID.; CFI AND NOT THE PSC HAS AUTHORITY TO EXERCISE JURISDICTION IN EXPROPRIATION OF PUBLIC UTILITIES. — The plea that the court of first instance had no jurisdiction to entertain the petition and that the proper forum for the action was the Public Service Commission, under the law, the Public Service Commission has no authority to pass upon actions for the taking of private property under the sovereign right of eminent domain. Furthermore, while the defendant telephone company is a public utility corporation whose franchise, equipment and other properties are under the jurisdiction, supervision and control of the Public Service Commission, yet the plaintiff's telecommunications network is a public service owned by the Republic and operated by an instrumentality of the National Government, hence, exempt under Section 14 of the Public Service Act, from such jurisdiction, supervision and control. The Bureau of Telecommunications was created in pursuance of a state policy reorganizing the government offices and the determination of state policy is not vested in the Commission.

4.REMEDIAL LAW; ESTOPPEL; GOVERNMENT NOT ESTOPPED BY THE MISTAKE OF ITS AGENTS. — Section 79, subsection (b), of Executive Order No. 94, Series of 1947 does not limit the Bureau of Telecommunications to non-commercial activities or prevents it from serving the general public. It may be that in its original prospectuses the Bureau officials had stated that the service would be limited to government offices; but such limitations could not block future expansion of the system, as authorized by the terms of the Executive Order, nor could the officials of the Bureau bind the Government not to engage in services that are authorized by law. It is a well-known rule that erroneous application and enforcement of the law by public officers do not block subsequent correct application of the statute and that the Government is never estopped by mistake or error on the part of its agents.

5.CIVIL LAW; CONTRACTS; FREEDOM TO STIPULATE TERMS AND CONDITIONS; PARTIES CAN NOT BE COERCED. — Parties can not be coerced to enter into a contract where no agreement is had between them as to the principal terms and conditions of the contract. Freedom to stipulate such terms and condition is of the essence of our contractual system, and by express provision of the statute, a contract may be annulled if tainted by violence, intimidation or undue influence (Articles 1306, 1336, 1337, Civil Code of the Philippines).

6.ID.; ID.; FRAUDULENT CONTRACT OR UNFAIR COMPETITION NOT PRESENT IN CASE AT BAR. — The theses that the Bureau's commercial services constituted unfair competition, and that the Bureau was guilty of fraud and abuse under its contract, are untenable: (1) the competition is merely hypothetical, the demand for telephone service being very much more than the supposed competitors can supply, (2) the PLDT franchise is non-exclusive, that it is well-known that defendant PLDT is unable to adequately cope with the current demands for telephone service and that its right to just compensation for the services rendered to the Government telephone system and its users is herein recognized and preserved, and (3) when the Bureau of Telecommunications subscribed to the trunk lines, defendant knew or should have known that their use by the subscriber was more or less public and all embracing in nature and the acceptance by the defendant of the payment of rentals, despite its knowledge that the plaintiff had extended the use of the trunk lines to commercial

purposes, implies assent by the defendant to such extended use. To uphold the PLDT's contention is to subordinate the needs of the general public to the right of the PLDT to derive profit from the future expansion of its services under its non-exclusive franchise.

D E C I S I O N

REYES, J.B.L., J p:

Direct appeals, upon a joint record on appeal, by both the plaintiff and the defendant from the dismissal, after hearing, by the Court of First Instance of Manila, in its Civil Case No. 35805, of their respective complaint and counterclaims, but making permanent a preliminary mandatory injunction therefore issued against the defendant on the inter-connection of telephone facilities owned and operated by said parties.

The plaintiff, Republic of the Philippines, is a political entity exercising governmental powers through its branches and instrumentalities, one of which is the Bureau of Telecommunications. That office was created on 1 July 1947, under Executive Order No. 94, with the following powers and duties, in addition to certain powers and duties formerly vested in the Director of Posts:

"SEC. 79.The Bureau of Telecommunications shall exercise the following powers and duties:

"(a)To operate and maintain existing wire-telegraph and radio- telegraph offices, stations, and facilities, and those to be established to restore the pre-war telecommunication service under the Bureau of Posts, as well as such additional offices or stations as may hereafter be established to provide telecommunication service in places requiring such service;

"(b)To investigate, consolidate, negotiate for, operate and maintain wire-telephone or radio telephone communication service throughout the Philippines by utilizing such existing facilities in cities, towns, and provinces as may be found feasible and under such terms and conditions or arrangements with the present owners or operators thereof as may be agreed upon to the satisfaction of all concerned;

"(c)To prescribe, subject to approval by the Department Head, equitable rates of charges for messages handled by the system and/or for timecalls and other services that may be rendered by said system;

"(d)To establish and maintain coastal stations to serve ships at sea or aircrafts and, when public interest so requires, to engage in the international telecommunication service in agreement with other countries desiring to establish such service with the Republic of the Philippines; and

"(e)To abide by all existing rules and regulations prescribed by the International Telecommunication Convention relative to the accounting, disposition and exchange of messages handled in the international service, and those that may hereafter be promulgated by said convention and adhered to by the Government of the Republic of the Philippines." 1

The defendant, Philippine Long Distance Telephone Company (PLDT for short), is a public service corporation holding a legislative franchise, Act 3426, as amended by Commonwealth Act 407, to install, operate and maintain a telephone system throughout the Philippines and to carry on the business of electrical transmission of messages within the Philippines and between the Philippines and the telephone systems of other countries. 2 The RCA Communications, Inc., (which is not a party to the present case, but has contractual relations with the parties) is an American corporation authorized to transact business in the Philippines and is the grantee, by assignment, of a legislative franchise to operate a domestic station for the reception and transmission of long distance wireless messages (Act 2178) and to operate broadcasting and radio-telephone and radio-telegraphic communications services (Act 3180) 3 Sometime in 1933, the defendant, PLDT, and the RCA Communications, Inc., entered into an agreement whereby telephone messages, coming from the United States and received by RCA's domestic station, could automatically be transferred to the lines of PLDT; and vice-versa, for calls collected by the PLDT for transmission from the Philippines to the United States. The contracting parties agreed to divide the tolls, as follows: 25% to PLDT and 75% to RCA. The sharing was amended in 1941 to 30% for PLDT and 70% for RCA, and again amended in 1947

to a 50-50 basis. The arrangement was later extended to radio-telephone messages to and from European and Asiatic countries. Their contract contained a stipulation that either party could terminate it on a 24-month notice to the other. 4 On 2 February 1956, PLDT gave notice to RCA to terminate their contract on 2 February 1956. 5

Soon after its creation in 1947, the Bureau of Telecommunications set up its own Government Telephone System by utilizing its own appropriation and equipment and by renting trunk lines of the PLDT to enable government offices to call private parties. 6 Its application for the use of these trunk lines was in the usual form of applications for telephone service, containing a statement, above the signature of the applicant, that the latter will abide by the rules and regulations of the PLDT which are on file with the Public Service Commission. 7 One of the many rules prohibits the public use of the service furnished the telephone subscriber for his private use. 8 The Bureau has extended its services to the general public since 1948, 9 using the same trunk lines owned by, and rented from, the PLDT, and prescribing its (the Bureau's) own schedule of rates. 10 Through these trunk lines, a Government Telephone System (GTS) subscriber could make a call to a PLDT subscriber in the same way that the latter could make a call to the former.

On 5 March 1958, the plaintiff, through the Director of Telecommunications, entered into an agreement with RCA Communications, Inc., for a joint overseas telephone service whereby the Bureau would convey radio-telephone overseas calls received by RCA's station to and from local residents. 11 Actually, they inaugurated this joint operation on 2 February 1958, under a "provisional" agreement. 12

On 7 April 1958, the defendant, Philippine Long Distance Telephone Company, complained to the Bureau of Telecommunications that said bureau was violating the conditions under which their Private Branch Exchange (PBX) is interconnected with the PLDT's facilities, referring to the rented trunk lines, for the Bureau had used the trunk lines not only for the use of government offices but even to serve private persons or the general public, in competition with the business of the PLDT; and gave notice that if said violations were not stopped by midnight of 12 April 1958, the PLDT would sever the telephone connections. 13 When the PLDT received no reply, it

disconnected the trunk lines being rented by the Bureau at midnight on 12 April 1958. 14 The result was the isolation of the Philippines, on telephone services, from the rest of the world, except the United States. 15

At that time, the Bureau was maintaining 5,000 telephones and had 5,000 pending applications for telephone connection. 16 The PLDT was also maintaining 60,000 telephones and had also 20,000 pending applications. 17 Through the years, neither of them has been able to fill up the demand for telephone service.

The Bureau of Telecommunications had proposed to the PLDT on 8 January 1958 that both enter into an interconnecting agreement, with the government paying (on a call basis) for all calls passing through the interconnecting facilities from the Government Telephone System to the PLDT. 18 The PLDT replied that it was willing to enter into an agreement on overseas telephone service to Europe and Asian countries provided that the Bureau would submit to the jurisdiction and regulations of the Public Service Commission and in consideration of 37 1/2% of the gross revenues. 19 In its memorandum in lieu of oral argument in this Court dated 9 February 1964, on page 8, the defendant reduced its offer to 33 1/3% (1/3) as its share in the overseas telephone service. The proposals were not accepted by either party.

On 12 April 1958, plaintiff Republic commenced suit against the defendant, Philippine Long Distance Telephone Company, in the Court of First Instance of Manila (Civil Case No. 35805), praying in its complaint for judgment commanding the PLDT to execute a contract with plaintiff, through the Bureau, for the use of the facilities of defendant's telephone system throughout the Philippines under such terms and conditions as the court might consider reasonable, and for a writ of preliminary injunction against the defendant company to restrain the severance of the existing telephone connections and/or restore those severed.

Acting on the application of the plaintiff, and on the ground that the severance of telephone connections by the defendant company would isolate the Philippines from other countries, the court a quo, on 14 April 1958, issued an order for the defendant:

"(1) to forthwith reconnect and restore the seventy-eight (78) trunk lines that it has disconnected between the facilities of the Government Telephone System, including its overseas telephone services, and the facilities of defendant; (2) to refrain from carrying into effect its threat to sever the existing telephone communication between the Bureau of Telecommunications and defendant, and not to make connection over its telephone system of telephone calls coming to the Philippines from foreign countries through the said Bureau's telephone facilities and the radio facilities Of RCA Communications, Inc.; and (3) to accept and connect through its telephone system all such telephone calls coming to the Philippines from foreign countries — until further order of this Court."

On 28 April 1958, the defendant company filed its answer, with counterclaims.

It denied any obligation on its part to execute a contract of services with the Bureau of Telecommunications; contested the jurisdiction of the Court of First Instance to compel it to enter into interconnecting agreements, and averred that it was justified to disconnect the trunk lines heretofore leased to the Bureau of Telecommunications under the existing agreement because its facilities were being used in fraud of its rights. The PLDT further claimed that the Bureau was engaging in commercial telephone operations in excess of authority, in competition with, and to the prejudice of, the PLDT, using defendant's own telephone poles, without proper accounting of revenues.

After trial, the lower court rendered judgment that it could not compel the PLDT to enter into an agreement with the Bureau because the parties were not in agreement; that under Executive Order 94, establishing the Bureau of Telecommunications, said Bureau was not limited to servicing government offices alone, nor was there any in the contract of lease of the trunk lines, since the PLDT knew, or ought to have known, at the time that their use by the Bureau was to be public throughout the Islands, hence the Bureau was neither guilty of fraud, abuse, or misuse of the poles of the PLDT; and, in view of serious public prejudice that would result from the disconnection of the trunk lines, declared the preliminary injunction permanent, although it dismissed both the complaint and the counterclaims.

Both parties appealed.

Taking up first the appeal of the Republic, the latter complains of the action of the trial court in dismissing the part of its complaint seeking to compel the defendant to enter into an interconnecting contract with it, because the parties could not agree on the terms and conditions of the interconnection, and of its refusal to fix the terms and conditions therefor.

We agree with the court below that parties can not be coerced to enter into a contract where no agreement is had between them as to the principal terms and conditions of the contract. Freedom to stipulate such terms and conditions is of the essence of our contractual system, and by express provision of the statute, a contract may be annulled if tainted by violence, intimidation or undue influence (Articles 1306, 1336, 1337, Civil Code of the Philippines). But the court a quo has apparently overlooked that while the Republic may not compel the PLDT to celebrate a contract with it, the Republic may, in the exercise of the sovereign power of eminent domain, require the telephone company to permit interconnection of the government telephone system and that of the PLDT, as the needs of the government service may require, subject to the payment of just compensation to be determined by the court. Normally, of course, the power of eminent domain results in the taking or appropriation of title to, and possession of, the expropriated property; but no cogent reason appears why the said power may not be availed of to impose only a burden upon the owner of condemned property, without loss of title and possession. It is unquestionable that real property may, through expropriation, be subjected to an easement of right of way. The use of the PLDT's lines and services to allow interservice connection between both telephone systems is not much different. In either case private property is subjected to a burden for public use and benefit. If under Section 6, Article XIII, of the Constitution, the State may, in the interest of national welfare, transfer utilities to public ownership upon payment of just compensation, there is no reason why the State may not require a public utility to render services in the general interest, provided just compensation is paid therefor. Ultimately, the beneficiary of the interconnecting service would be the users of both telephone systems, so that the condemnation would be for public use.

The Bureau of Telecommunications, under Section 78(b) of Executive Order No. 94, may operate and maintain wire telephone or radio telephone communications throughout the Philippines by utilizing existing facilities in cities, towns, and provinces under such terms and conditions or arrangement with present owners or operators as may be agreed upon to the satisfaction of all concerned; but there is nothing in this Section that would exclude resort to condemnation proceedings where unreasonable or unjust terms and conditions are exacted, to the extent of crippling or seriously hampering the operations of said Bureau.

A perusal of the complaint shows that the Republic's cause of action is predicated upon the radio telephonic isolation of the Bureau's facilities from the outside world if the severance of interconnection were to be carried out by the PLDT, thereby preventing the Bureau of Telecommunications from properly discharging its functions, to the prejudice of the general public. Save for the prayer to compel the PLDT to enter into a contract (and the prayer is no essential part of the pleading), the averments make out a case for compulsory rendering of inter-connecting services by the telephone company upon such terms and conditions as the court may determine to be just. And since the lower court found that both parties "are practically at one that defendant (PLDT) is entitled to reasonable compensation from plaintiff for the reasonable use of the former's telephone facilities" (Decision, Record on Appeal, page 224), the lower court should have proceeded to treat the case as one of condemnation of such services independently of contract and proceeded to determine the just and reasonable compensation for the same, instead of dismissing the petition.

This view we have taken of the true nature of the Republic's petition necessarily results in overruling the plea of defendant- appellant PLDT that the court of first instance had no jurisdiction to entertain the petition and that the proper forum for the action was the Public Service Commission. That body, under the law, has no authority to pass upon actions for the taking of private property under the sovereign right of eminent domain. Furthermore, while the defendant telephone company is a public utility corporation whose franchise, equipment and other properties are under the jurisdiction, supervision and control of the Public Service Commission (Sec. 13, Public Service

Act), yet the plaintiff's telecommunications network is a public service owned by the Republic and operated by an instrumentality of the National Government, hence exempt, under Section 14 of the Public Service Act, from such jurisdiction, supervision and control. The Bureau of Telecommunications was created in pursuance of a state policy reorganizing the government offices —

"to meet the exigencies attendant upon the establishment of the free and independent Government of the Republic of the Philippines, and for the purpose of promoting simplicity, economy and efficiency in its operation" (Section 1, Republic Act No. 51)

and the determination of state policy is not vested in the Commission (Utilities Com. vs. Bartonville Bus Line, 290 Ill. 574; 124 N.E. 373)Defendant PLDT, as appellant, contends that the court below was in error in not holding that the Bureau of Telecommunications was not empowered to engage in commercial telephone business, and in ruling that said defendant was not justified in disconnecting the telephone trunk lines it had previously leased to the Bureau. We find that the court a quo ruled correctly in rejecting both assertions.

Executive Order No. 94, Series of 1947, reorganizing the Bureau of Telecommunications, expressly empowered the latter in its Section 79, subsection (b), to "negotiate for, operate and maintain wire telephone or radio telephone communication service throughout the Philippines," and, in subsection (c), "to prescribe subject to approval by the Department Head, equitable rates of charges for messages handled by the system and/or for time calls and other services that may be rendered by the system." Nothing in these provisions limits the Bureau to non-commercial activities or prevents it from serving the general public. It may be that in its original prospectuses the Bureau officials had stated that the service would be limited to government offices: but such limitations could not block future expansion of the system, as authorized by the terms of the Executive Order, nor could the officials of the Bureau bind the Government not to engage in services that are authorized by law. It is a well-known rule that erroneous application and enforcement of the law by public officers do not block subsequent correct application of the statute (PLDT vs. Collector of Internal Revenue, 90 Phil. 676), and

that the Government is never estopped by mistake or error on the part of its agents (Pineda vs. Court of First Instance of Tayabas, 52 Phil. 803, 807; Benguet Consolidated Mining Co. vs. Pineda, 98 Phil. 711, 724)

The theses that the Bureau's commercial services constituted unfair competition, and that the Bureau was guilty of fraud and abuse under its contract, are, likewise, untenable.

First, the competition is merely hypothetical, the demand for telephone service being very much more than the supposed competitors can supply. As previously noted, the PLDT had 20,000 pending applications at the time, and the Bureau had another 5,000. The telephone company's inability to meet the demands for service are notorious even now. Second, the charter of the defendant expressly provides:

"Sec. 14.The rights herein granted shall not be exclusive, and the rights and power to grant to any corporation, association or person other than the grantee franchise for the telephone or electrical transmission of messages or signals shall not be impaired or affected by the granting of this franchise: —" (Act 3436)

And third, as the trial court correctly stated, "when the Bureau of Telecommunications subscribed to the trunk lines, defendant knew or should have known that their use by the subscriber was more or less public and all embracing in nature, that is, throughout the Philippines, if not abroad" (Decision, Record on Appeal, page 216)The acceptance by the defendant of the payment of rentals, despite its knowledge that the plaintiff had extended the use of the trunk lines to commercial purposes, continuously since 1948, implies assent by the defendant to such extended use. Since this relationship has been maintained for a long time and the public has patronized both telephone systems, and their interconnection is to the public convenience, it is too late for the defendant to claim misuse of its facilities, and it is not now at liberty to unilaterally sever the physical connection of the trunk lines.

". . ., but there is high authority for the position that, when such physical connection has been voluntarily made, under a fair and workable arrangement and guaranteed by contract and the continuous line has come to be patronized and established as a great

public convenience, such connection shall not in breach of the agreement be severed by one of the parties. In that case, the public is held to have such an interest in the arrangement that its rights must receive due consideration. This position finds approval in State ex rel. vs. Cadwaller, 172 Ind. 619, 636, 87 N.E. 650, and is stated in the elaborate and learned opinion of Chief Justice Myers as follows: `Such physical connection cannot be required as of right, but if such connection is voluntarily made by contract, as is here alleged to be the case, so that the public acquires an interest in its continuance, the act of the parties in making such connection is equivalent to a declaration of a purpose to waive the primary right of independence, and it imposes upon the property such a public status that it may not be disregarded' — citing Mohan v. Mich. Tel. Co., 132 Mich, 242, 93 N.W. 629, and the reasons upon which it is in part made to rest are referred to in the same opinion, as follows: `Where private property is by the consent of the owner invested with a public interest or privilege for the benefit of the public, the owner can no longer deal with it as private property only, but must hold it subject to the rights of the public in the exercise of that public interest or privilege conferred for their benefit.' Allnut v. Inglis (1810) 12 East, 527. The doctrine of this early case is the acknowledged law." (Clinton-Dunn Tel. Co. v. Carolina Tel. & Tel. Co., 74 S.E. 636, 638)

It is clear that the main reason for the objection of the PLDT lies in the fact that said appellant did not expect that the Bureau's telephone system would expand with such rapidity as it has done; but this expansion is no ground for the discontinuance of the service agreed upon.

The last issue urged by the PLDT as appellant is its right to compensation for the use of its poles for bearing telephone wires of the Bureau of Telecommunications. Admitting that Section 19 of the PLDT charter reserves to the Government —

"the privilege without compensation of using the poles of the grantee to attach one ten-pin cross-arm, and to install, maintain and operate wires of its telegraph system thereon: Provided, however, That the Bureau of Posts shall have the right to place additional cross-arms and wires on the poles of the grantee by paying a compensation, the rate of which is to be agreed upon by the Director of Posts and the grantee; —"

the defendant counterclaimed for P8,772.00 for the use of its poles by the plaintiff, contending that what was allowed free use, under the aforequoted provision, was one ten-pin cross-arm attachment and only for plaintiff's telegraph system, not for its telephone system; that said Section could not refer to the plaintiff's telephone system, because it did not have such telephone system when defendant acquired its franchise. The implication of the argument is that plaintiff has to pay for the use of defendant's poles if such use is for plaintiff's telephone system and has to pay also if it attaches more than one (1) ten-pin cross-arm for telegraphic purposes. As there is no proof that the telephone wires strain the poles of the PLDT more than the telegraph wires, nor that they cause more damage than the wires of the telegraph system, or that the Government has attached to the poles more than one ten-pin in cross-arm as permitted by the PLDT charter, we see no point in this assignment of error. So long as the burden to be borne by the PLDT poles is not increased, we see no reason why the reservation in favor of the telegraph wires of the government should not be extended to its telephone line, any time that the government decided to engage also in this kind of communication.

In the ultimate analysis, the true objection of the PLDT to continue the link between its network and that of the Government is that the latter competes "politically" (sic) with its own telephone services. Considering, however, that the PLDT franchise is non- exclusive; that it is well-known that defendant PLDT is unable to adequately cope with the current demands for telephone service, as shown by the number of pending applications therefor; and that the PLDT's right to just compensation for the services rendered to the Government telephone system and its users is herein recognized and preserved, the objections of defendant-appellant are without merit. To uphold the PLDT's contention is to subordinate the needs of the general public to the right of the PLDT to derive profit from the future expansion of its services under its non-exclusive franchise.

WHEREFORE, the decision of the Court of First Instance, now under appeal, is affirmed, except in so far as it dismisses the petition of the Republic of the Philippines to compel the Philippine Long Distance Telephone Company to continue servicing the

Government telephone system upon such terms, and for a compensation, that the trial court may determine to be just, including the period elapsed from the filing of the original complaint or petition. And for this purpose, the records are ordered returned to the court of origin for further hearings and other proceedings not inconsistent with this opinion. No costs.

Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Ruiz Castro, Fernando, Capistrano, Teehankee and Barredo, JJ., concur.

||| (Republic v. PLDT Co., G.R. No. L-18841, January 27, 1969)

EN BANC

[G.R. No. 132922. April 21, 1998.]

TELECOMMUNICATIONS AND BROADCAST ATTORNEYS OF THE PHILIPPINES, INC. and GMA NETWORK, INC., petitioners, vs. THE COMMISSION ON ELECTIONS, respondent.

SYNOPSIS

Section 11 (b) of R.A. No. 6646 prohibits the sale or donation of print space or air time for political ads, except to the Commission on Elections. Petitioners challenge the validity thereof on the ground (1) that it takes property without due process of law and without just compensation; (2) that it denies radio and television broadcast companies the equal protection of the laws; and (3) that it is in excess of the power given to the COMELEC to supervise or regulate the operation of media of communication or information during the period of election. AICHaS

Radio and television broadcasting companies do not own the airwaves and frequencies through which they transmit broadcast signals and images. They are merely given the temporary privilege of using them or franchise, the exercise of the which may reasonably be burdened with the performance by the grantee of some form of public service, such as providing print space or air time to Comelec. Section 92 of B.P. Blg. 881 must be deemed incorporated in R.A. No. 7252 granting GMA Network, Inc. a franchise and does not constitute denial of due process and that B.P. Blg. 881, §92 is not an invalid amendment of petitioner's franchise but the enforcement of a duty voluntarily assumed by petitioner in accepting a public grant of privilege.

An administrative agency cannot, in the exercise of lawmaking, amend a statute of Congress. Therefore §2 of Resolution No. 2983-A of the Comelec providing for payment of just compensation is invalid.

B.P. Blg. 881, §92 does not single out radio and television stations in providing free air time. There are important differences in the characteristics of the broadcast media and the print media, which justify their differential treatment for free speech purposes.

The freedom of television and radio broadcasting is somewhat lesser in scope than the freedom accorded to newspaper and print media.

What the COMELEC is authorized to supervise or regulate by Art. IX-C, §4 of the Constitution, among other things, is the use by media of information of their franchises or permits, while what Congress (not the COMELEC) prohibits is the sale or donation of print space or air time for political ads. In other words, the object of supervision or regulation is different from the object of the prohibition.

SYLLABUS

1. REMEDIAL LAW; ACTIONS; PARTIES; LOCUS STANDI; LAWYERS OF RADIO AND TELEVISION BROADCASTING COMPANIES WITHOUT STANDING TO QUESTION OPERATION OF SECTION 92 OF B. P. BLG. 881 PROVIDING FREE COMELEC AIR TIME. — At the threshold of this suit is the question of standing of petitioner Telecommunications and Broadcast Attorneys of the Philippines, Inc. (TELEBAP). As already noted, its members assert an interest as lawyers of radio and television broadcasting companies and as citizens, taxpayers, and registered voters. In those cases in which citizens were authorized to sue, this Court upheld their standing in view of the "transcendental importance" of the constitutional question raised which justified the granting of relief. In contrast, in the case at bar, as will presently be shown, petitioners' substantive claim is without merit. To the extent, therefore, that a party's standing is determined by the substantive merit of his case or a preliminary estimate thereof, petitioner TELEBAP must be held to be without standing. Indeed, a citizen will be allowed to raise a constitutional question only when he can show that he has personally suffered some actual or threatened injury as a result of the allegedly illegal conduct of the government; the injury is fairly traceable to the challenged action; and the injury is likely to be redressed by a favorable action. Members of petitioner have not shown that they have suffered harm as a result of the operation of §92 of B.P. Blg. 881. Nor do members of petitioner TELEBAP have an interest as registered voters since this case does not concern their right of suffrage. Their interest in §92 of B.P. Blg. 881 should be precisely in upholding its validity. Much less do they have an interest as taxpayers since this case does not involve the exercise by Congress of its taxing or spending power.

A party suing as a taxpayer must specifically show that he has a sufficient interest in preventing the illegal expenditure of money raised by taxation and that he will sustain a direct injury as a result of the enforcement of the questioned statute. Nor indeed as a corporate entity does TELEBAP have standing to assert the rights of radio and television broadcasting companies. Standing jus tertii will be recognized only if it can be shown that the party suing has some substantial relation to the third party, or that the third party cannot assert his constitutional right, or that the right of the third party will be diluted unless the party in court is allowed to espouse the third party's constitutional claim. None of these circumstances is here present. The mere fact that TELEBAP is composed of lawyers in the broadcast industry does not entitle them to bring this suit in their name as representatives of the affected companies.

2. ID.; ID.; ID.; ID.; OPERATOR OF RADIO AND TV BROADCAST STATIONS WITH STANDING TO CHALLENGE RESOLUTION OF COMELEC PROVIDING FREE AIR TIME. — Nevertheless, we have decided to take this case since the other petitioner, GMA Network, Inc., appears to have the requisite standing to bring this constitutional challenge. Petitioner operates radio and television broadcast stations in the Philippines affected by the enforcement of §92 of B.P. Blg. 881 requiring radio and television broadcast companies to provide free air time to the COMELEC for the use of candidates for campaign and other political purposes.

3. CONSTITUTIONAL LAW; LEGISLATIVE DEPARTMENT; FRANCHISE OF RADIO AND TV STATIONS; SUBJECT TO AMENDMENT, ALTERATION OR REPEAL. — All broadcasting, whether by radio or by television stations, is licensed by the government. Airwave frequencies have to be allocated as there are more individuals who want to broadcast than there are frequencies to assign. A franchise is thus a privilege subject, among other things, to amendment by Congress in accordance with the constitutional provision that "any such franchise or right granted . . . shall be subject to amendment, alteration or repeal by the Congress when the common good so requires."

4. ID.; ID.; ID.; COMELEC RESOLUTION PROVIDING FREE COMELEC TIME, AN AMENDMENT THERETO; CASE AT BAR. — The idea that broadcast stations may be required to

provide COMELEC Time free of charge is not new. It goes back to the Election Code of 1971 (R.A. No. 6388). This provision was carried over with slight modification by the 1978 Election Code (P.D. No. 1296). Substantially the same provision is now embodied in §92 of B.P. Blg. 881. Indeed, provisions for COMELEC Time have been made by amendment of the franchises of radio and television broadcast stations and, until the present case was brought, such provisions had not been thought of as taking property without just compensation. Art. XII, §11 of the Constitution authorizes the amendment of franchises for "the common good." What better measure can be conceived for the common good than one for free air time for the benefit not only of candidates but even more of the public, particularly the voters, so that they will be fully informed of the issues in an election? "[I]t is the right of the viewers and listeners, not the right of the broadcasters which is paramount. Radio and television broadcasting companies, which are given franchises, do not own the airwaves and frequencies through which they transmit broadcast signals and images. They are merely given the temporary privilege of using them. Since a franchise is a mere privilege, the exercise of the privilege may reasonably be burdened with the performance by the grantee of some form of public service.

5. ID.; ID.; ID.; ID.; RADIO AND TV BROADCAST STATIONS DO NOT OWN THE AIRWAVES; NO PROPERTY TAKEN WHERE THEY WERE REQUIRED TO PROVIDE FREE AIRTIME TO COMELEC. — As held in Red Lion Broadcasting Co. v. F.C.C., which upheld the right of a party personally attacked to reply, "licenses to broadcast do not confer ownership of designated frequencies, but only the temporary privilege of using them." Consequently, "a license permits broadcasting, but the license has no constitutional right to be the one who holds the license or to monopolize a radio frequency to the exclusion of his fellow citizens. There is nothing in the First Amendment which prevents the Government from requiring a licensee to share his frequency with others and to conduct himself as a proxy or fiduciary with obligations to present those views and voices which are representative of his community and which would otherwise, by necessity, be barred from the airwaves." As radio and television broadcast stations do not own the airwaves, no private property is taken by the requirement that they provide air time to the COMELEC.

6. ID.; ID.; ID.; SECTION 92 OF B.P. Blg. 881, A VALID AMENDMENT OF GMA'S FRANCHISE. — It is noteworthy that §49 of R.A. No. 6388, from which §92 of B.P. Blg. 881 was taken, expressly provided that the COMELEC Time should "be considered as part of the public service time said stations are required to furnish the Government for the dissemination of public information and education under their respective franchises or permits." There is no reason to suppose that §92 of B.P. Blg. 881 considers the COMELEC Time therein provided to be otherwise than as a public service which petitioner is required to render under §4 of its charter (R.A. No. 7252). In sum, B.P. Blg. 881, §92 is not an invalid amendment of petitioner's franchise but the enforcement of a duty voluntarily assumed by petitioner in accepting a public grant of privilege.

7. ADMINISTRATIVE LAW; ADMINISTRATIVE AGENCY; CANNOT IN THE EXERCISE OF LAWMAKING, AMEND A STATUTE OF CONGRESS. — Thus far, we have confined the discussion to the provision of §92 of B.P. Blg. 881 for free air time without taking into account COMELEC Resolution No. 2983-A, §2. This is because the amendment providing for the payment of "just compensation" is invalid, being in contravention of §92 of B.P. Blg. 881 that radio and television time given during the period of the campaign shall be "free of charge." Indeed, Resolution No. 2983 originally provided that the time allocated shall be "free of charge," just as §92 requires such time to be given "free of charge." The amendment appears to be a reaction to petitioners' claim in this case that the original provision was unconstitutional because it allegedly authorized the taking of property without just compensation. The Solicitor General, relying on the amendment, claims that there should be no more dispute because the payment of compensation is now provided for. It is basic, however, that an administrative agency cannot, in the exercise of lawmaking, amend a statute of Congress. Since §2 of Resolution No. 2983-A is invalid, it cannot be invoked by the parties.

8. CONSTITUTIONAL LAW; BILL OF RIGHTS; EQUAL PROTECTION OF THE LAWS; IMPORTANT DIFFERENCES BETWEEN PRINT AND AIR MEDIA JUSTIFY DIFFERENTIAL TREATMENT FOR FREE SPEECH PURPOSES. — Petitioners complain that B.P. Blg. 881, §92 singles out radio and television

stations to provide free air time. They contend that newspapers and magazines are not similarly required as, in fact, in Philippine Press Institute v. COMELEC we upheld their right to the payment of just compensation for the print space they may provide under §90. The argument will not bear analysis. It rests on the fallacy that broadcast media are entitled to the same treatment under the free speech guarantee of the Constitution as the print media. There are important differences in the characteristics of the two media, however, which justify their differential treatment for free speech purposes. Because of the physical limitations of the broadcast spectrum, the government must, of necessity allocate broadcast frequencies to those wishing to use them. There is no similar justification for government allocation and regulation of the print media. In the allocation of limited resources, relevant conditions may validly be imposed on the grantees or licensees. The reason for this is that, as already noted, the government spends public funds for the allocation and regulation of the broadcast industry, which it does not do in the case of the print media. To require the radio and television broadcast industry to provide free air time for the COMELEC Time is a fair exchange for what the industry gets. From another point of view, this Court has also held that because of the unique and pervasive influence of the broadcast media, "[n]ecessarily . . . the freedom of television and radio broadcasting is somewhat lesser in scope than the freedom accorded to newspaper and print media." Petitioners' assertion therefore that §92 of B.P. Blg 881 denies them the equal protection of the law has no basis.

9. ID.; COMMISSION ON ELECTIONS; POWER TO REGULATE; DIFFERENT FROM POWER OF CONGRESS TO PROHIBIT. — It is argued that the power to supervise or regulate given to the COMELEC under Art. IX-C, §4 of the Constitution does not include the power to prohibit. In the first place, what the COMELEC is authorized to supervise or regulate by Art. IX-C, §4 of the Constitution, among other things, is the use by media of information of their franchises or permits, while what Congress (not the COMELEC) prohibits is the sale or donation of print space or air time for political ads. In other words, the object of supervision or regulation is different from the object of the prohibition. It is another fallacy for petitioners to contend that the power to regulate does not include the power to prohibit. This may have force if the object of the power were the same.

10. ID.; LEGISLATIVE DEPARTMENT; SEC. 92 OF B.P. Blg. 881 PROVIDING FREE COMELEC AIRTIME, UPHOLDS THE PEOPLE'S RIGHT TO INFORMATION ON MATTERS OF PUBLIC CONCERN. — To affirm the validity of §92 B.P. Blg. 881 is to hold public broadcasters to their obligation to see to it that the variety and vigor of public debate on issues in an election is maintained. For while broadcast media are not mere common carriers but entities with free speech rights, they are also public trustees charged with the duty of ensuring that the people have access to the diversity of views on political issues. This right of the people is paramount to the autonomy of broadcast media. To affirm the validity of §92, therefore, is likewise to uphold the people's right to information on matters of public concern. The use of property bears a social function and is subject to the state's duty to intervene for the common good. Broadcast media can find their just and highest reward in the fact that whatever altruistic service they may render in connection with the holding of elections is for that common good.

ROMERO, J., dissenting opinion:

1. CONSTITUTIONAL LAW; EMINENT DOMAIN; CONSTRUED. — The power of eminent domain is a power inherent in sovereignty and requires no constitutional provision to give it force. It is the rightful authority which exists in every sovereignty, to control and regulate those rights of a public nature which pertain to its citizens in common, and to appropriate and control individual property for the public benefit as the public safety, necessity, convenience or welfare demand. The right to appropriate private property to public use, however, lies dormant in the state until legislative action is had, pointing out the occasions, the modes, the conditions and agencies for its appropriation. AECacS

2. ID.; COMMISSION ON ELECTIONS; RESOLUTION GRANTING FREE COMELEC AIR TIME, AN EXERCISE OF EMINENT DOMAIN WITHOUT PAYMENT OF JUST COMPENSATION. — Section 92 of BP 881, insofar as it requires radio and television stations to provide Comelec with radio and television time free of charge is a flagrant violation of the constitutional mandate that private property shall not be taken for public use without just compensation. While it is inherent in the State, the sovereign right to appropriate property has never

been understood to include taking property for public purposes without the duty and responsibility of ordering compensation to the individual whose property has been sacrificed for the good of the community. There is, of course no question that the taking of the property in the case at bar is for public use, i.e., to ensure that air time is allocated equally among the candidates, however, there is no justification for the taking without payment of just compensation. While Resolution No. 2983-A has provided that just compensation shall be paid for the 30 minutes of prime time granted by the television stations to respondent Comelec, we note that the resolution was passed pursuant to Section 92 of BP 881 which mandates that radio and television time be provided to respondent Comelec free of charge. Since the legislative intent is the controlling element in determining the administrative powers rights, privileges and immunities granted, respondent Comelec may, at any time, despite the resolution passed, compel television and radio stations to provide it with airtime free of charge.

3. ID.; EMINENT DOMAIN; LIMITATIONS. — Section 9, Article III of the 1987 Constitution which reads "No private property shall be taken for public use without just compensation," gives us two limitations on the power of eminent domain: (1) the purpose of taking must be for public use and (2) just compensation must be given to the owner of the private property.

4. ID.; ID.; DIFFERENTIATED FROM POLICE POWER. — Police power must be distinguished from the power of eminent domain. In the exercise of police power, there is a restriction of property interest to promote public welfare or interest which involves no compensable taking. When the power of eminent domain, however, is exercised, property interest is appropriated and applied to some public purpose necessitating compensation therefor. Traditional distinctions between police power and the power of eminent domain precluded application of both powers at the same time on the same subject. Property condemned under the exercise of police power, on the other hand, is noxious or intended for noxious purpose and, consequently, is not compensable. Police power proceeds from the principle that every holder of property, however absolute and unqualified may be his title, holds it under the implied liability that his use of it shall not be injurious to the equal enjoyment of others having an equal right to the enjoyment of their property, nor injurious to the rights

of the community. Rights of property, like all other social and conventional rights, are subject to reasonable limitations in their enjoyment as shall prevent them from being injurious, and to such reasonable restraints and regulations established by law as the legislature, under the governing and controlling power vested in them by the constitution, may think necessary and expedient.

5. ID.; POLICE POWER; RESTRICTION OF SALE OR DONATION OF AIRTIME DURING CAMPAIGN PERIOD TO COMELEC, AN EXERCISE THEREOF; EXERCISE EXCEEDS LIMITATION. — The petition before us is no different from the above-cited case. Insofar as Sec. 92 of BP 881 read in conjunction with Sec. 11(b) of RA 6646 restricts the sale or donation of airtime by radio and television stations during the campaign period to respondent Comelec, there is an exercise of police power for the regulation of property in accordance with the Constitution. To the extent however that Sec. 92 of BP 881 mandates that airtime be provided free of charge to respondent Comelec to be allocated equally among all candidates, the regulation exceeds the limits of police power and should be recognized as a taking. In the case of Pennsylvania Coal Co. v. Mahon, Justice Holmes laid down the limits of police power in this wise, "The general rule is that while property may be regulated to a certain extent, if the regulation goes too far, will be recognized as a taking."

6. ID.; EMINENT DOMAIN; ACQUISITION OF TITLE OR POSSESSION OF PROPERTY, NOT ESSENTIAL TO TAKING. — While the power of eminent domain often results in the appropriation of title to or possession of property, it need not always be the case. It is a settled rule that neither acquisition nor total destruction of value is essential to taking and it is equally in cases where title remains with the private owner that inquiry should be made to determine whether the impairment of a property is merely regulated or amounts to a compensable taking. A regulation which deprives any person profitable use of his property constitutes a taking and entitles him to compensation unless the invasion of right is so slight as to permit the regulation to be justified under the police power. Similarly, a police regulation which unreasonably restricts the right to use business property for business purposes, amounts to taking of private property and the owner

may recover therefor. It is also settled jurisprudence that acquisition of right of way easement falls within the purview of eminent domain. aTcSID

7. ID.; ID.; COMPENSABLE TAKING; MANIFEST IN LOSS OF EARNING. — While there is no taking or appropriation of title to, and possession of the expropriated property in the case at bar, there is compensable taking inasmuch as there is a loss of the earnings for the airtime which the petitioner-intervenors are compelled to donate. It is a loss which, to paraphrase Philippine Press Institute v. Comelec, could hardly be considered "de minimis" if we are to take into account the monetary value of the compulsory donation measured by the current advertising rates of the radio and television stations.

8. ID.; ID.; PRINT MEDIA NOT COMPELLED TO DONATE FREE SPACE. — In the case of Philippine Press Institute v. Comelec, we had occasion to state that newspapers and other print media are not compelled to donate free space to respondent Comelec inasmuch as this would be in violation of the constitutional provision that no private property shall be taken for public use without just compensation.

9. ID.; ID.; ID.; RULE APPLICABLE TO RADIO AND TV STATIONS; REASON. — We find no cogent reason why radio and television stations should be treated any differently considering that their operating expenses as compared to those of the newspaper and other print media publishers involve; considerably greater amount of financial resources. The fact that one needs a franchise from government to establish a radio and television station while no license is needed to start newspaper should not be made a basis for treating broadcast media any differently from the print media in compelling the former to "donate" airtime to respondent Comelec. While no franchises and rights are granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires, this provides no license for government to disregard the cardinal rule that corporations with franchises are as much entitled to due process and equal protection of laws guaranteed under the Constitution. SHaATC

VITUG, J., separate opinion:

1. CONSTITUTIONAL LAW; LEGISLATIVE DEPARTMENT; Batas Pambansa Blg. 881; A LEGITIMATE EXERCISE OF POLICE POWER. — I

assent in most part to the well-considered opinion written by Mr. Justice Vicente V. Mendoza in his ponencia particularly, in holding that petitioner TELEBAP lacks locus standi in filing the instant petition and in declaring that Section 92 of Batas Pambansa Blg. 881 is a legitimate exercise of police power of the State.

2. ID.; STATE; POLICE POWER; STANDARDS FOR LAWFUL EXERCISE. — In this case, the assailed law, in my view, has not failed in meeting the standards set forth for its lawful exercise, i.e., (a) that its utilization is demanded by the interests of the public, and (b) that the means employed are reasonably necessary, and not unduly oppressive, for the accomplishment of the purpose and objectives of the law.

3. ID.; LEGISLATIVE DEPARTMENT; FRANCHISE TO BROADCAST MEDIA; A PRIVILEGE BURDENED WITH RESPONSIBILITIES. — The grant of franchise to broadcast media is a privilege burdened with responsibilities. While it is, primordially, a business enterprise, it nevertheless, also addresses in many ways certain imperatives of public service. In Stone vs. Mississippi (101, U.S. 814, cited in Cruz, Constitutional Law, 1995 ed., p. 40), a case involving a franchise to sell lotteries which petitioner claims to be a contract which may not be impaired, the United States Supreme Court opined: ". . . (T)he Legislature cannot bargain away the police power of a State. Irrevocable grants of property and franchises may be made if they do not impair the supreme authority to make laws for the right government of the State; but no Legislature can curtail the power of its successors to make such laws as they may deem proper in matters of police . . .

4. ID.; COMMISSION ON ELECTIONS; SECTION 2 OF RESOLUTION NO. 2983-A REQUIRING FREE COMELEC AIR TIME, A VALID EXERCISE OF POLICE POWER. — I cannot consider COMELEC Resolution No. 2983-A, particularly Section 2 thereof, as being in contravention of B.P. No. 881. There is nothing in the law that prohibits the COMELEC from itself procuring airtime, perhaps longer than that which can reasonably be allocated, if it believes that in so opting, it does so for the public good. aHECST

PANGANIBAN, J., dissenting opinion:

1. POLITICAL LAW; EMINENT DOMAIN; PRINT MEDIA CANNOT BE REQUIRED TO DONATE ADVERTISING SPACE TO COMELEC WITHOUT PAYMENT OF JUST COMPENSATION. — In Philippine Press Institute Inc. (PPI) vs. Commission on Elections this Court ruled that print media companies cannot be required to donate advertising space, free of charge to the Comelec for equal allocation among candidates, on the ground that such compulsory seizure of print space is equivalent to a proscribed taking of private property for public use without payment of just compensation.

2. CONSTITUTIONAL LAW; LEGISLATIVE DEPARTMENT; FRANCHISE; ONCE GRANTED BECOMES PROPERTY OF THE GRANTEE WHICH CANNOT BE TAKEN WITHOUT PAYMENT OF JUST COMPENSATION. — In stamping unbridled donations with its imprimatur, the majority overlooks the twofold nature and purpose of a franchise: other than serving the public benefit which is subject to government regulation, it must also be to the franchise holder's advantage. Once granted, a franchise (not the air lanes) together with concomitant private rights, becomes property of the grantee. It is regarded by law precisely as other property, and, as any other property, it is safeguarded by the Constitution from arbitrary revocation or impairment. The rights under a franchise can be neither taken nor curtailed for public use or purpose, even by the government as the grantor, without payment of just compensation as guaranteed under our fundamental law. The fact that the franchise relates to public use or purpose does not entitle the state to abrogate or impair its use without just compensation.

3. STATUTORY CONSTRUCTION; STATUTES; CONSIDERED VAGUE AND INVALID IF THEY LEAVE LAW ENFORCERS UNBRIDLED DISCRETION IN CARRYING OUT THEIR PROVISIONS. — As a rule, a statute may be said to be vague and invalid if "it leaves law enforcers (in this case, the Comelec) unbridled discretion in carrying out its provisions and becomes an arbitrary flexing of the government muscle." (People vs. Nazario, 165 SCRA 186, 195, August 31, 1988) AScHCD

4. CONSTITUTIONAL LAW; LEGISLATIVE DEPARTMENT; LIMITATIONS ON LEGISLATIVE REGULATIONS OF PUBLIC UTILITIES. — "[L]egislative regulation of public utilities must not have the effect of depriving an owner of his property

without due process of law, nor of confiscating or appropriating private property without due process of law, nor of confiscating or appropriating private property without just compensation, nor of limiting or prescribing irrevocably vested rights or privileges lawfully acquired under a charter or franchise." The power to regulate is subject to these constitutional limits. Consequently, "rights under a franchise cannot be taken or damaged for a public use without the making of just compensation therefor." To do so is clearly beyond the power of the legislature to regulate.

5. ID.; BILL OF RIGHTS; EQUAL PROTECTION OF LAWS; VIOLATION THEREOF MANIFEST WHERE BROADCAST STATIONS WERE COMPELLED TO DONATE FREE TIME WHILE MAKING PAYMENT TO PRINT MEDIA ADS. — Smacking of undisguised discrimination is the fact that in PPI vs. Comelec, this Court has required payment of print media ads but, in this case, compels broadcast stations to donate their end product on a massive scale. The simplistic distinction given — that radio and TV stations are mere grantees of government franchises while newspaper companies are not — does not justify the grand larceny of precious air time. This is a violation not only of private property, but also of the constitutional right to equal protection itself. The proffered distinction between print and broadcast media is too insignificant and too flimsy to be a valid justification for the discrimination. The print and broadcast media are equal in the sense that both derive their revenues principally from paid ads. They should thus be treated equally by the law in respect of such ads. EHSAaD

D E C I S I O N

MENDOZA, J p:

In Osmeña v. COMELEC , G.R. No. 132231, decided March 31, 1998, 1 we upheld the validity of §11(b) of R.A. No. 6646 which prohibits the sale or donation of print space or air time for political ads, except to the Commission on Elections under §90, of B.P. No. 881, the Omnibus Election Code, with respect to print media, and §92, with respect to broadcast media. In the present case, we consider the validity of §92 of B.P. Blg. No. 881 against claims that the requirement that radio and television time be given free takes property without due process of law; that it violates the eminent domain clause of the Constitution which

provides for the payment of just compensation; that it denies broadcast media the equal protection of the laws; and that, in any event, it violates the terms of the franchise of petitioner GMA Network, Inc. dctai

Petitioner Telecommunications and Broadcast Attorneys of the Philippines, Inc. is an organization of lawyers of radio and television broadcasting companies. They are suing as citizens, taxpayers, and registered voters. The other petitioner, GMA Network, Inc., operates radio and television broadcasting stations throughout the Philippines under a franchise granted by Congress.

Petitioners challenge the validity of §92 on the ground (1) that it takes property without due process of law and without just compensation; (2) that it denies radio and television broadcast companies the equal protection of the laws; and (3) that it is in excess of the power given to the COMELEC to supervise or regulate the operation of media of communication or information during the period of election.

The Question of StandingAt the threshold of this suit is the question of standing of petitioner Telecommunications and Broadcast Attorneys of the Philippines, Inc. (TELEBAP). As already noted, its members assert an interest as lawyers of radio and television broadcasting companies and as citizens, taxpayers, and registered voters.

In those cases 2 in which citizens were authorized to sue, this Court upheld their standing in view of the "transcendental importance" of the constitutional question raised which justified the granting of relief. In contrast, in the case at bar, as will presently be shown, petitioners' substantive claim is without merit. To the extent, therefore, that a party's standing is determined by the substantive merit of his case or a preliminary estimate thereof, petitioner TELEBAP must be held to be without standing. Indeed, a citizen will be allowed to raise a constitutional question only when he can show that he has personally suffered some actual or threatened injury as a result of the allegedly illegal conduct of the government; the injury is fairly traceable to the challenged action; and the injury is likely to be redressed by a favorable action. 3 Members of petitioner have not shown that they have

suffered harm as a result of the operation of §92 of B.P. Blg. 881.

Nor do members of petitioner TELEBAP have an interest as registered voters since this case does not concern their right of suffrage. Their interest in §92 of B.P. Blg. 881 should be precisely in upholding its validity.

Much less do they have an interest as taxpayers since this case does not involve the exercise by Congress of its taxing or spending power. 4 A party suing as a taxpayer must specifically show that he has a sufficient interest in preventing the illegal expenditure of money raised by taxation and that he will sustain a direct injury as a result of the enforcement of the questioned statute.

Nor indeed as a corporate entity does TELEBAP have standing to assert the rights of radio and television broadcasting companies. Standing jus tertii will be recognized only if it can be shown that the party suing has some substantial relation to the third party, or that the third party cannot assert his constitutional right, or that the right of the third party will be diluted unless the party in court is allowed to espouse the third party's constitutional claim. None of these circumstances is here present. The mere fact that TELEBAP is composed of lawyers in the broadcast industry does not entitle them to bring this suit in their name as representatives of the affected companies.

Nevertheless, we have decided to take this case since the other petitioner, GMA Network, Inc., appears to have the requisite standing to bring this constitutional challenge. Petitioner operates radio and television broadcast stations in the Philippines affected by the enforcement of §92 of B.P. Blg. 881 requiring radio and television broadcast companies to provide free air time to the COMELEC for the use of candidates for campaign and other political purposes.

Petitioner claims that it suffered losses running to several million pesos in providing COMELEC Time in connection with the 1992 presidential election and the 1995 senatorial election and that it stands to suffer even more should it be required to do so again this year. Petitioner's allegation that it will suffer losses again because it is required to provide free air time is sufficient to give it standing to question the validity of §92. 5

Airing of COMELEC Time, a Reasonable Condition for Grant of Petitioner's Franchise

As pointed out in our decision in Osmeña v. COMELEC , §11(b) of R.A. No. 6646 and §90 and §92 of B.P. Blg. 881 are part and parcel of a regulatory scheme designed to equalize the opportunity of candidates in an election in regard to the use of mass media for political campaigns. These statutory provisions state in relevant parts:

R.A. No. 6646

SEC. 11. Prohibited Forms of Election Propaganda. — In addition to the forms of election propaganda prohibited under Section 85 of Batas Pambansa Blg. 881, it shall be unlawful:

xxx xxx xxx

(b) for any newspapers, radio broadcasting or television station, or other mass media, or any person making use of the mass media to sell or to give free of charge print space or air time for campaign or other political purposes except to the Commission as provided under Section 90 and 92 of Batas Pambansa Blg. 881. Any mass media columnist, commentator, announcer or personality who is a candidate for any elective public office shall take a leave of absence from his work as such during the campaign period.

B.P. Blg. 881 (Omnibus Election Code)

SEC. 90. Comelec space. — The Commission shall procure space in at least one newspaper of general circulation in every province or city: Provided, however, That in the absence of said newspaper, publication shall be done in any other magazine or periodical in said province or city, which shall be known as "Comelec Space" wherein candidates can announce their candidacy. Said space shall be allocated, free of charge, equally and impartially by the Commission among all candidates within the area in which the newspaper is circulated. (Sec. 45. 1978 EC).

SEC. 92. Comelec time. — The Commission shall procure radio and television time to be known as "Comelec Time" which shall be allocated equally and impartially among the candidates within the area of coverage of all radio and television stations. For this

purpose, the franchise of all radio broadcasting and television stations are hereby amended so as to provide radio or television time, free of charge, during the period of the campaign. (Sec. 46, 1978 EC)

Thus, the law prohibits mass media from selling or donating print space and air time to the candidates and requires the COMELEC instead to procure print space and air time for allocation to the candidates. It will be noted that while §90 of B.P. Blg. 881 requires the COMELEC to procure print space which, as we have held, should be paid for, §92 states that air time shall be procured by the COMELEC free of charge.

Petitioners contend that §92 of BP Blg. 881 violates the due process clause 6 and the eminent domain provision 7 of the Constitution by taking air time from radio and television broadcasting stations without payment of just compensation. Petitioners claim that the primary source of revenue of the radio and television stations is the sale of air time to advertisers and that to require these stations to provide free air time is to authorize a taking which is not "a de minimis temporary limitation or restraint upon the use of private property." According to petitioners, in 1992, the GMA Network, Inc. lost P22,498,560.00 in providing free air time of one (1) hour every morning from Mondays to Fridays and one (1) hour on Tuesdays and Thursdays from 7:00 to 8:00 p.m. (prime time) and, in this year's elections, it stands to lose P58,980,850.00 in view of COMELEC's requirement that radio and television stations provide at least 30 minutes of prime time daily for the COMELEC Time. 8

Petitioners' argument is without merit. All broadcasting, whether by radio or by television stations, is licensed by the government. Airwave frequencies have to be allocated as there are more individuals who want to broadcast than there are frequencies to assign. 9 A franchise is thus a privilege subject, among other things, to amendment by Congress in accordance with the constitutional provision that "any such franchise or right granted . . . shall be subject to amendment, alteration or repeal by the Congress when the common good so requires." 10

The idea that broadcast stations may be required to provide COMELEC Time free of charge is not new. It goes back to the Election Code of 1971 (R.A. No. 6388), which provided:

SEC. 49. Regulation of election propaganda through mass media. — (a) The franchises of all radio broadcasting and television stations are hereby amended so as to require each such station to furnish free of charge, upon request of the Commission [on Elections], during the period of sixty days before the election not more than fifteen minutes of prime time once a week which shall be known as "Comelec Time" and which shall be used exclusively by the Commission to disseminate vital election information. Said "Comelec Time" shall be considered as part of the public service time said stations are required to furnish the Government for the dissemination of public information and education under their respective franchises or permits.

This provision was carried over with slight modification by the 1978 Election Code (P.D. No. 1296), which provided:

SEC. 46. COMELEC Time. — The Commission [on Elections] shall procure radio and television time to be known as "COMELEC Time" which shall be allocated equally and impartially among the candidates within the area of coverage of said radio and television stations. For this purpose, the franchises of all radio broadcasting and television stations are hereby amended so as to require such stations to furnish the Commission radio or television time, free of charge, during the period of the campaign, at least once but not oftener than every other day.

Substantially the same provision is now embodied in §92 of B.P. Blg. 881.

Indeed, provisions for COMELEC Time have been made by amendment of the franchises of radio and television broadcast stations and, until the present case was brought, such provisions had not been thought of as taking property without just compensation. Art. XII, §11 of the Constitution authorizes the amendment of franchises for "the common good." What better measure can be conceived for the common good than one for free air time for the benefit not only of candidates but even more of the public, particularly the voters, so that they will be fully informed of the issues in an election? "[I]t is the right of the viewers and listeners, not the right of the broadcasters, which is paramount." 11

Nor indeed can there be any constitutional objection to the requirement that broadcast stations give free air time. Even in the United States, there are responsible scholars who believe that government controls on broadcast media can constitutionally be instituted to ensure diversity of views and attention to public affairs to further the system of free expression. For this purpose, broadcast stations may be required to give free air time to candidates in an election. 12 Thus, Professor Cass R. Sunstein of the University of Chicago Law School, in urging reforms in regulations affecting the broadcast industry, writes:

Elections. We could do a lot to improve coverage of electoral campaigns. Most important, government should ensure free media time for candidates. Almost all European nations make such provision; the United States does not. Perhaps government should pay for such time on its own. Perhaps broadcasters should have to offer it as a condition for receiving a license. Perhaps a commitment to provide free time would count in favor of the grant of a license in the first instance. Steps of this sort would simultaneously promote attention to public affairs and greater diversity of view. They would also help overcome the distorting effects of "soundbites" and the corrosive financial pressures faced by candidates in seeking time on the media. 13

In truth, radio and television broadcasting companies, which are given franchises, do not own the airwaves and frequencies through which they transmit broadcast signals and images. They are merely given the temporary privilege of using them. Since a franchise is a mere privilege, the exercise of the privilege may reasonably be burdened with the performance by the grantee of some form of public service. Thus, in De Villata v. Stanley, 14 a regulation requiring interisland vessels licensed to engage in the interisland trade to carry mail and, for this purpose, to give advance notice to postal authorities of date and hour of sailings of vessels and of changes of sailing hours to enable them to tender mail for transportation at the last practicable hour prior to the vessel's departure, was held to be a reasonable condition for the state grant of license. Although the question of compensation for the carriage of mail was not in issue, the Court strongly implied that such service could be without compensation, as in fact under Spanish sovereignty the mail was carried free. 15

In Philippine Long Distance Telephone Company v. NTC , 16 the Court ordered the PLDT to allow the interconnection of its domestic telephone system with the international gateway facility of Eastern Telecom. The Court cited (1) the provisions of the legislative franchise allowing such interconnection; (2) the absence of any physical, technical, or economic basis for restricting the linking up of two separate telephone systems; and (3) the possibility of increase in the volume of international traffic and more efficient service, at more moderate cost, as a result of interconnection.

Similarly, in the earlier case of PLDT v. NTC , 17 it was held:

Such regulation of the use and ownership of telecommunications systems is in the exercise of the plenary police power of the State for the promotion of the general welfare. The 1987 Constitution recognizes the existence of that power when it provides:

"Sec. 6. The use of property bears a social function, and all economic agents shall contribute to the common good. Individuals and private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish, and operate economic enterprises, subject to the duty of the State to promote distributive justice and to intervene when the common good so demands" (Article XII).

The interconnection which has been required of PLDT is a form of "intervention" with property rights dictated by "the objective of government to promote the rapid expansion of telecommunications services in all areas of the Philippines, . . . to maximize the use of telecommunications facilities available, . . . in recognition of the vital role of communications in nation building . . . and to ensure that all users of the public telecommunications service have access to all other users of the service wherever they may be within the Philippines at an acceptable standard of service and at reasonable cost" (DOTC Circular No. 90-248). Undoubtedly, the encompassing objective is the common good. The NTC, as the regulatory agency of the State, merely exercised its delegated authority to regulate the use of telecommunications networks when it decreed interconnection.

In the granting of the privilege to operate broadcast stations and thereafter supervising radio and

television stations, the state spends considerable public funds in licensing and supervising such stations. 18 It would be strange if it cannot even require the licensees to render public service by giving free air time.

Considerable effort is made in the dissent of Mr. Justice Panganiban to show that the production of television programs involves large expenditure and requires the use of equipment for which huge investments have to be made. The dissent cites the claim of GMA Network that the grant of free air time to the COMELEC for the duration of the 1998 campaign period would cost the company P52,380,000, representing revenue it would otherwise earn if the air time were sold to advertisers, and the amount of P6,600,850, representing the cost of producing a program for the COMELEC Time, or the total amount of P58,980,850.

The claim that petitioner would be losing P52,380,000 in unrealized revenue from advertising is based on the assumption that air time is "finished product" which, it is said, become the property of the company, like oil produced from refining or similar natural resources after undergoing a process for their production. But air time is not owned by broadcast companies. As held in Red Lion Broadcasting Co. v. F .C .C ., 19 which upheld the right of a party personally attacked to reply, "licenses to broadcast do not confer ownership of designated frequencies, but only the temporary privilege of using them." Consequently, "a license permits broadcasting, but the licensee has no constitutional right to be the one who holds the license or to monopolize a radio frequency to the exclusion of his fellow citizens. There is nothing in the First Amendment which prevents the Government from requiring a licensee to share his frequency with others and to conduct himself as a proxy or fiduciary with obligations to present those views and voices which are representative of his community and which would otherwise, by necessity, be barred from the airwaves." 20 As radio and television broadcast stations do not own the airwaves, no private property is taken by the requirement that they provide air time to the COMELEC.

Justice Panganiban's dissent quotes from Tolentino on the Civil Code which says that "the air lanes themselves 'are not property because they cannot be appropriated for the benefit of any individual.'" (p. 5) That means neither the State nor the stations own the

air lanes. Yet the dissent also says that "The franchise holders can recover their huge investments only by selling air time to advertisers." (p. 13) If air lanes cannot be appropriated, how can they be used to produce air time which the franchise holders can sell to recover their investment? There is a contradiction here.

As to the additional amount of P6,600,850, it is claimed that this is the cost of producing a program and it is for such items as "sets and props," "video tapes," "miscellaneous (other rental, supplies, transportation, etc.)," and "technical facilities (technical crew such as director and cameraman as well as 'on air plugs')." There is no basis for this claim. Expenses for these items will be for the account of the candidates. COMELEC Resolution No. 2983, §6(d) specifically provides in this connection:

(d) Additional services such as tape-recording or video-taping of programs, the preparation of visual aids, terms and condition thereof, and the consideration to be paid therefor may be arranged by the candidates with the radio/television station concerned. However, no radio/television station shall make any discrimination among candidates relative to charges, terms, practices or facilities for in connection with the services rendered.

It is unfortunate that in the effort to show that there is taking of private property worth millions of pesos, the unsubstantiated charge is made that by its decision the Court permits the "grand larceny of precious time," and allows itself to become "the people's unwitting oppressor." The charge is really unfortunate. In Jackman v. Rosenbaum Co., 21 Justice Holmes was so incensed by the resistance of property owners to the erection of party walls that he was led to say in his original draft, "a statute, which embodies the community's understanding of the reciprocal rights and duties of neighboring landowners, does not need to invoke the petty larceny of the police power in its justification." Holmes's brethren corrected his taste, and Holmes had to amend the passage so that in the end it spoke only of invoking "the police power." 22 Justice Holmes spoke of the "petty larceny" of the police power. Now we are being told of the "grand larceny [by means of the police power] of precious air time."

Giving Free Air Time a Duty Assumed by Petitioner

Petitioners claim that §92 is an invalid amendment of R.A. No. 7252 which granted GMA Network, Inc. a franchise for the operation of radio and television broadcasting stations. They argue that although §5 of R.A. No. 7252 gives the government the power to temporarily use and operate the stations of petitioner GMA Network or to authorize such use and operation, the exercise of this right must be compensated.

The cited provision of R.A. No. 7252 states:

SEC. 5. Right of Government. — A special right is hereby reserved to the President of the Philippines, in times of rebellion, public peril, calamity, emergency, disaster or disturbance of peace and order, to temporarily take over and operate the stations of the grantee, to temporarily suspend the operation of any station in the interest of public safety, security and public welfare, or to authorize the temporary use and operation thereof by any agency of the Government, upon due compensation to the grantee, for the use of said stations during the period when they shall be so operated.

The basic flaw in petitioner's argument is that it assumes that the provision for COMELEC Time constitutes the use and operation of the stations of the GMA Network, Inc. This is not so. Under §92 of B.P. Blg. 881, the COMELEC does not take over the operation of radio and television stations but only the allocation of air time to the candidates for the purpose of ensuring, among other things, equal opportunity, time, and the right to reply as mandated by the Constitution. 23

Indeed, it is wrong to claim an amendment of petitioner's franchise for the reason that B.P. Blg. 881, which is said to have amended R.A. No. 7252, actually antedated it. 24 The provision of §92 of B.P. Blg. 881 must be deemed instead to be incorporated in R.A. No. 7252. And, indeed, §4 of the latter statute does.

For the fact is that the duty imposed on the GMA Network, Inc. by its franchise to render "adequate public service time" implements §92 of B.P. Blg. 881. Undoubtedly, its purpose is to enable the government to communicate with the people on matters of public interest. Thus, R.A. No. 7252 provides:

SEC. 4. Responsibility to the Public. — The grantee shall provide adequate public service time to enable the Government, through the said broadcasting stations, to reach the population on important public issues; provide at all times sound and balanced programming; promote public participation such as in community programming; assist in the functions of public information and education; conform to the ethics of honest enterprise; and not use its station for the broadcasting of obscene and indecent language, speech, act or scene, or for the dissemination of deliberately false information or willful misrepresentation, or to the detriment of the public interest, or to incite, encourage, or assist in subversive or treasonable acts. (Emphasis added)

It is noteworthy that §49 of R.A. No. 6388, from which §92 of B.P. Blg. 881 was taken, expressly provided that the COMELEC Time should "be considered as part of the public service time said stations are required to furnish the Government for the dissemination of public information and education under their respective franchises or permits." There is no reason to suppose that §92 of B.P. Blg. 881 considers the COMELEC Time therein provided to be otherwise than as a public service which petitioner is required to render under §4 of its charter (R.A. No. 7252). In sum, B.P. Blg. 881, §92 is not an invalid amendment of petitioner's franchise but the enforcement of a duty voluntarily assumed by petitioner in accepting a public grant of privilege.

Thus far, we have confined the discussion to the provision of §92 of B.P. Blg. 881 for free air time without taking into account COMELEC Resolution No. 2983-A, §2 of which states:

SEC. 2. Grant of "Comelec Time". — Every radio broadcasting and television station operating under franchise shall grant the Commission, upon payment of just compensation, at least thirty (30) minutes of prime time daily, to be known as "Comelec Time", effective February 10, 1998 for candidates for President, Vice-President and Senators, and effective March 27, 1998, for candidates for local elective offices, until May 9, 1998. (Emphasis added)

This is because the amendment providing for the payment of "just compensation" is invalid, being in contravention of §92 of B.P. Blg. 881 that radio and television time given during the period of the campaign shall be "free of charge." Indeed,

Resolution No. 2983 originally provided that the time allocation shall be "free of charge," just as §92 requires such time to be given "free of charge." The amendment appears to be a reaction to petitioners' claim in this case that the original provision was unconstitutional because it allegedly authorized the taking of property without just compensation.The Solicitor General, relying on the amendment, claims that there should be no more dispute because the payment of compensation is now provided for. It is basic, however, that an administrative agency cannot, in the exercise of lawmaking, amend a statute of Congress. Since §2 of Resolution No. 2983-A is invalid, it cannot be invoked by the parties.

Law Allows Flextime for Programming by Stations, Not Confiscation of Air Time by COMELECIt is claimed that there is no standard in the law to guide the COMELEC in procuring free air time and that "theoretically the COMELEC can demand all of the air time of such stations." 25 Petitioners do not claim that COMELEC Resolution No. 2983-A arbitrarily sequesters radio and television time. What they claim is that because of the breadth of the statutory language, the provision in question is susceptible of "unbridled, arbitrary and oppressive exercise." 26

The contention has no basis. For one, the COMELEC is required to procure free air time for candidates "within the area of coverage" of a particular radio or television broadcaster so that it cannot, for example, procure such time for candidates outside that area. At what time of the day and how much time the COMELEC may procure will have to be determined by it in relation to the overall objective of informing the public about the candidates, their qualifications and their programs of government. As stated in Osmeña v. COMELEC , the COMELEC Time provided for in §92, as well as the COMELEC Space provided for in §90, is in lieu of paid ads which candidates are prohibited to have under §11(b) of R.A. No. 6646. Accordingly, this objective must be kept in mind in determining the details of the COMELEC Time as well as those of the COMELEC Space.

There would indeed be objection to the grant of power to the COMELEC if §92 were so detailed as to leave no room for accommodation of the demands of radio and television programming. For were that the case, there could be an intrusion into the editorial prerogatives of radio and television stations.

Differential Treatment of Broadcast Media JustifiedPetitioners complain that B.P. Blg. 881, §92 singles out radio and television stations to provide free air time. They contend that newspapers and magazines are not similarly required as, in fact, in Philippine Press Institute v. COMELEC 27 we upheld their right to the payment of just compensation for the print space they may provide under §90.

The argument will not bear analysis. It rests on the fallacy that broadcast media are entitled to the same treatment under the free speech guarantee of the Constitution as the print media. There are important differences in the characteristics of the two media, however, which justify their differential treatment for free speech purposes. Because of the physical limitations of the broadcast spectrum, the government must, of necessity, allocate broadcast frequencies to those wishing to use them. There is no similar justification for government allocation and regulation of the print media. 28

In the allocation of limited resources, relevant conditions may validly be imposed on the grantees or licensees. The reason for this is that, as already noted, the government spends public funds for the allocation and regulation of the broadcast industry, which it does not do in the case of the print media. To require the radio and television broadcast industry to provide free air time for the COMELEC Time is a fair exchange for what the industry gets.

From another point of view, this Court has also held that because of the unique and pervasive influence of the broadcast media, "[n]ecessarily . . . the freedom of television and radio broadcasting is somewhat lesser in scope than the freedom accorded to newspaper and print media." 29

The broadcast media have also established a uniquely pervasive presence in the lives of all Filipinos. Newspapers and current books are found only in metropolitan areas and in the poblaciones of municipalities accessible to fast and regular transportation. Even here, there are low income masses who find the cost of books, newspapers, and magazines beyond their humble means. Basic needs like food and shelter perforce enjoy high priorities.

On the other hand, the transistor radio is found everywhere. The television set is also becoming

universal. Their message may be simultaneously received by a national or regional audience of listeners including the indifferent or unwilling who happen to be within reach of a blaring radio or television set. The materials broadcast over the airwaves reach every person of every age, persons of varying susceptibilities to persuasion, persons of different I.Q.s and mental capabilities, persons whose reactions to inflammatory or offensive speech would be difficult to monitor or predict. The impact of the vibrant speech is forceful and immediate. Unlike readers of the printed work, the radio audience has lesser opportunity to cogitate, analyze, and reject the utterance. 30

Petitioners' assertion therefore that §92 of B.P. Blg. 881 denies them the equal protection of the law has no basis. In addition, their plea that §92 (free air time) and §11(b) of R.A. No. 6646 (ban on paid political ads) should be invalidated would pave the way for a return to the old regime where moneyed candidates could monopolize media advertising to the disadvantage of candidates with less resources. That is what Congress tried to reform in 1987 with the enactment of R.A. No. 6646. We are not free to set aside the judgment of Congress, especially in light of the recent failure of interested parties to have the law repealed or at least modified.

Requirement of COMELEC Time, a Reasonable Exercise of the State's Power to Regulate Use of FranchisesFinally, it is argued that the power to supervise or regulate given to the COMELEC under Art. IX-C, §4 of the Constitution does not include the power to prohibit. In the first place, what the COMELEC is authorized to supervise or regulate by Art. IX-C, §4 of the Constitution, 31 among other things, is the use by media of information of their franchises or permits, while what Congress (not the COMELEC) prohibits is the sale or donation of print space or air time for political ads. In other words, the object of supervision or regulation is different from the object of the prohibition. It is another fallacy for petitioners to contend that the power to regulate does not include the power to prohibit. This may have force if the object of the power were the same.

In the second place, the prohibition in §11(b) of R.A. No. 6646 is only half of the regulatory provision in the

statute. The other half is the mandate to the COMELEC to procure print space and air time for allocation to candidates. As we said in Osmeña v. COMELEC .

The term political "ad ban," when used to describe §11(b) of R.A. No. 6646, is misleading, for even as §11(b) prohibits the sale or donation of print space and air time to political candidates, it mandates the COMELEC to procure and itself allocate to the candidates space and time in the media. There is no suppression of political ads but only a regulation of the time and manner of advertising.

xxx xxx xxx

. . . What is involved here is simply regulation of this nature. Instead of leaving candidates to advertise freely in the mass media, the law provides for allocation, by the COMELEC of print space and air time to give all candidates equal time and space for the purpose of ensuring "free, orderly, honest, peaceful, and credible elections."

With the prohibition on media advertising by candidates themselves, the COMELEC Time and COMELEC Space are about the only means through which candidates can advertise their qualifications and program of government. More than merely depriving candidates of time for their ads, the failure of broadcast stations to provide air time unless paid by the government would clearly deprive the people of their right to know. Art. III, §7 of the Constitution provides that "the right of the people to information on matters of public concern shall be recognized," while Art. XII, §6 states that "the use of property bears a social function [and] the right to own, establish, and operate economic enterprises [is] subject to the duty of the State to promote distributive justice and to intervene when the common good so demands."

To affirm the validity of §92 of B.P. Blg. 881 is to hold public broadcasters to their obligation to see to it that the variety and vigor of public debate on issues in an election is maintained. For while broadcast media are not mere common carriers but entities with free speech rights, they are also public trustees charged with the duty of ensuring that the people have access to the diversity of views on political issues. This right of the people is paramount to the autonomy of broadcast media. To affirm the validity of §92, therefore, is likewise to uphold the people's right to

information on matters of public concern. The use of property bears a social function and is subject to the state's duty to intervene for the common good. Broadcast media can find their just and highest reward in the fact that whatever altruistic service they may render in connection with the holding of elections is for that common good.

For the foregoing reasons, the petition is dismissed.

SO ORDERED.

||| (Telecommunications and Broadcast Attorneys of the Philippines, Inc. v. COMELEC, G.R. No. 132922, April 21, 1998)

THIRD DIVISION

[G.R. No. 183297. December 23, 2009.]

NATIONAL POWER CORPORATION, petitioner, vs. OMAR G. MARUHOM, ELIAS G. MARUHOM, BUCAY G. MARUHOM, MAMOD G. MARUHOM, FAROUK G. MARUHOM, HIDJARA G. MARUHOM, ROCANIA G. MARUHOM, POTRISAM G. MARUHOM, LUMBA G. MARUHOM, SINAB G. MARUHOM, ACMAD G. MARUHOM, SOLAYMAN G. MARUHOM, MOHAMAD M. IBRAHIM, CAIRORONESA M. IBRAHIM, and LUCMAN IBRAHIM, represented by his heirs ADORA B. IBRAHIM, NASSER B. IBRAHIM, JAMALODIN B. IBRAHIM, RAJID NABBEL B. IBRAHIM, AMEER B. IBRAHIM and SARAH AIZAH B. IBRAHIM, * respondents.

DECISION

NACHURA, J p:

Petitioner National Power Corporation (NPC) filed this Petition for Review on Certiorari, seeking to nullify the May 30, 2008 Decision 1 of the Court of Appeals (CA) in CA-G.R. SP No. 02065-MIN, affirming the Order dated November 13, 2007 issued by Hon. Amer R. Ibrahim, which granted respondents' motion for issuance of a writ of execution.

The antecedents.

Lucman G. Ibrahim and his co-heirs Omar G. Maruhom, Elias G. Maruhom, Bucay G. Maruhom, Mamod G. Maruhom, Farouk G. Maruhom, Hidjara G. Maruhom, Rocania G. Maruhom, Potrisam G. Maruhom, Lumba G. Maruhom, Sinab G. Maruhom, Acmad G. Maruhom, Solayman G. Maruhom, Mohamad M. Ibrahim and Cairoronesa M. Ibrahim (respondents) are owners of a 70,000-square meter lot in Saduc, Marawi City. Sometime in 1978, NPC, without respondents' knowledge and consent, took possession of the subterranean area of the land and constructed therein underground tunnels. The tunnels were used by NPC in siphoning the water of Lake Lanao and in the operation of NPC's Agus II, III, IV, V, VI, and VII projects located in Saguiran, Lanao del Sur; Nangca and Balo-i in Lanao del Norte; and Ditucalan and Fuentes in Iligan City. Respondents only discovered the existence of the tunnels sometime in July 1992. Thus, on October 7, 1992, respondents demanded that NPC pay damages and vacate the subterranean portion of the land, but the demand was not heeded.

Hence, on November 23, 1994, respondents instituted an action for recovery of possession of land and damages against NPC with the Regional Trial Court (RTC) of Lanao del Sur, docketed as Civil Case No. 1298-94.

After trial, the RTC rendered a decision, 2 the decretal portion of which reads: SEHaTC

WHEREFORE, judgment is hereby rendered:

1.Denying [respondents'] prayer for [NPC] to dismantle the underground tunnels constructed beneath the lands of [respondents] in Lots 1, 2, and 3 of Survey Plan FP (VII-5) 2278;

2.Ordering [NPC] to pay to [respondents] the fair market value of said 70,000 square meters of land covering Lots 1, 2, and 3 as described in Survey Plan FP (VII-5) 2278 less the area of 21,995 square meters at P1,000.00 per square meter or a total of P48,005,000.00 for the remaining unpaid portion of 48,005 square meters; with 6% interest per annum from the filing of this case until paid;

3.Ordering [NPC] to pay [respondents] a reasonable monthly rental of P0.68 per square meter of the total area of 48,005 square meters effective from its occupancy of the foregoing area in 1978 or a total of P7,050,974.40.

4.Ordering [NPC] to pay [respondents] the sum of P200,000.00 as moral damages; and

5.Ordering [NPC] to pay the further sum of P200,000.00 as attorney's fees and the costs.

SO ORDERED. 3

Respondents then filed an Urgent Motion for Execution of Judgment Pending Appeal. On the other hand, NPC filed a Notice of Appeal. Thereafter, it filed a vigorous opposition to the motion for execution of judgment pending appeal with a motion for reconsideration of the RTC decision.

On August 26, 1996, NPC withdrew its Notice of Appeal to give way to the hearing of its motion for reconsideration. On August 28, 1996, the RTC issued an Order granting execution pending appeal and denying NPC's motion for reconsideration. The

Decision of the RTC was executed pending appeal and the funds of NPC were garnished by respondents.

On October 4, 1996, Lucman Ibrahim and respondents Omar G. Maruhom, Elias G. Maruhom, Bucay G. Maruhom, Mamod G. Maruhom, Farouk G. Maruhom, Hidjara G. Maruhom, Potrisam G. Maruhom and Lumba G. Maruhom filed a Petition for Relief from Judgment, 4 asserting as follows:

1.They did not file a motion to reconsider or appeal the decision within the reglementary period of fifteen (15) days from receipt of judgment because they believed in good faith that the decision was for damages and rentals and attorney's fees only as prayed for in the complaint;

2.It was only on August 26, 1996 that they learned that the amounts awarded to the respondents represented not only rentals, damages and attorney's fees but the greatest portion of which was payment of just compensation which, in effect, would make the petitioner NPC the owner of the parcels of land involved in the case; CDScaT

3.When they learned of the nature of the judgment, the period of appeal had already expired;

4.They were prevented by fraud, mistake, accident, or excusable negligence from taking legal steps to protect and preserve their rights over their parcels of land insofar as the part of the decision decreeing just compensation for respondents' properties;

5.They would never have agreed to the alienation of their property in favor of anybody, considering the fact that the parcels of land involved in this case were among the valuable properties they inherited from their dear father and they would rather see their land crumble to dust than sell it to anybody. 5

After due proceedings, the RTC granted the petition and rendered a modified judgment dated September 8, 1997, thus:

WHEREFORE, a modified judgment is hereby rendered:

1.Reducing the judgment award of [respondents] for the fair market value of P48,005,000.00 by [P]9,526,000.00 or for a difference [of]

P38,479,000.00 and by the further sum of P33,603,500.00 subject of the execution pending appeal leaving a difference of [P]4,878,500.00 which may be the subject of execution upon the finality of this modified judgment with 6% interest per annum from the filing of the case until paid.

2.Awarding the sum of P1,476,911.00 to herein [respondents] Omar G. Maruhom, Elias G. Maruhom, Bucay G. Maruhom, Mahmod G. Maruhom, Farouk G. Maruhom, Hidjara G. Maruhom, Portrisam G. Maruhom and Lumba G. Maruhom as reasonable rental deductible from the awarded sum of P7,050,974.40 pertaining to [respondents].

3.Ordering [NPC] embodied in the August 7, 1996 decision to pay [respondents] the sum of P200,000.00 as moral damages; and further sum of P200,000.00 as attorney's fees and costs.

SO ORDERED. 6

Lucman Ibrahim and NPC then filed their separate appeals with the CA, docketed as CA-G.R. CV No. 57792. On June 8, 2005, the CA rendered a Decision, 7 setting aside the modified judgment and reinstating the original Decision, amending it further by deleting the award of moral damages and reducing the amount of rentals and attorney's fees, thus:

WHEREFORE, premises considered, herein Appeals are hereby partially GRANTED, the Modified Judgment is ordered SET ASIDE and rendered of no force and effect and the original Decision of the court a quo dated 7 August 1996 is hereby RESTORED with the MODIFICATION that the award of moral damages is DELETED and the amounts of rentals and attorney's fees are REDUCED to P6,887,757.40 and P50,000.00, respectively. CETDHA

In this connection, the Clerk of Court of RTC Lanao del Sur is hereby directed to reassess and determine the additional filing fee that should be paid by Plaintiff-Appellant IBRAHIM taking into consideration the total amount of damages sought in the complaint vis-Ã -vis the actual amount of damages awarded by this Court. Such additional filing fee shall constitute as a lien on the judgment.

SO ORDERED 8

The above decision was affirmed by this Court on June 29, 2007 in G.R. No. 168732, viz.:WHEREFORE, the petition is DENIED and the Decision of the Court of Appeals in C.A.-G.R. CV No. 57792 dated June 8, 2005 is AFFIRMED.

No costs.

SO ORDERED. 9

NPC moved for reconsideration of the Decision, but this Court denied it on August 29, 2007.To satisfy the judgment, respondents filed with the RTC a motion for execution of its August 7, 1996 decision, as modified by the CA. On November 13, 2007, the RTC granted the motion, and issued the corresponding writ of execution. Subsequently, a notice of garnishment was issued upon NPC's depositary bank.

NPC then filed a Petition for Certiorari (with Urgent Prayer for the Immediate Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction) with the CA, docketed as CA-G.R. SP No. 02065-MIN. It argued that the RTC gravely abused its discretion when it granted the motion for execution without ordering respondents to transfer their title in favor of NPC. By allowing the payment of just compensation for a parcel of land without the concomitant right of NPC to get title thereto, the RTC clearly varied the terms of the judgment in G.R. No. 168732, justifying the issuance of a writ of certiorari. NPC also prayed for the issuance of a temporary restraining order (TRO) to enjoin the implementation of the writ of execution and notice of garnishment. On November 29, 2007, the CA granted NPC's prayer and issued a TRO, enjoining the implementation of the writ of execution and the notice of garnishment.

On May 30, 2008, the CA rendered the now assailed Decision, 10 dismissing NPC's petition for certiorari. Rejecting NPC's argument, the CA declared that this Court's Decision in G.R. No. 168732 intended NPC to pay the full value of the property as compensation without ordering the transfer of respondents' title to the land. According to the CA, in a plethora of cases involving lands traversed by NPC's transmission lines, it had been consistently ruled that an easement is compensable by the full value of the property despite the fact that NPC was only after a right-of-way easement, if by such easement it perpetually or indefinitely deprives the land owner of his proprietary

rights by imposing restrictions on the use of the property. The CA, therefore, ordered NPC to pay its admitted obligation to respondents amounting to P36,219,887.20. 11 TEAICc

NPC is now before us faulting the CA for dismissing the former's petition for certiorari. It also prayed for a TRO to enjoin respondents and all persons acting under their authority from implementing the May 30, 2008 Decision of the CA. In its July 9, 2008 Resolution, 12 this Court granted NPC's prayer, and issued a TRO enjoining the execution of the assailed CA Decision.

In the main, NPC insists that the payment of just compensation for the land carries with it the correlative right to obtain title or ownership of the land taken. It stresses that this Court's Decision in G.R. No. 168732 is replete with pronouncements that the just compensation awarded to respondents corresponds to compensation for the entire land and not just for an easement or a burden on the property, thereby necessitating a transfer of title and ownership to NPC upon satisfaction of judgment. NPC added that by granting respondents' motion for execution, and consequently issuing the writ of execution and notice of garnishment, the RTC and the CA allowed respondents to retain title to the property even after the payment of full compensation. This, according to NPC, was a clear case of unjust enrichment.

The petition lacks merit.

It is a fundamental legal axiom that a writ of execution must conform strictly to the dispositive portion of the decision sought to be executed. A writ of execution may not vary from, or go beyond, the terms of the judgment it seeks to enforce. When a writ of execution does not conform strictly to a decision's dispositive portion, it is null and void. 13

Admittedly, the tenor of the dispositive portion of the August 7, 1996 RTC decision, as modified by the CA and affirmed by this Court, did not order the transfer of ownership upon payment of the adjudged compensation. Neither did such condition appear in the text of the RTC decision, and of this Court's Decision in G.R. No. 168732.

As aptly pointed out by the CA in its assailed Decision:

[NPC], by its selective quotations from the Decision in G.R. No. 168732, would have Us suppose that the High Court, in decreeing that [NPC] pay the full value of the property as just compensation, implied that [NPC] was entitled to the entire land, including the surface area and not just the subterranean portion. No such inference can be drawn from [the] reading of the entirety of the High Court's Decision. On the contrary, a perusal of the subject Decision yields to this Court the unmistakable sense that the High Court intended [NPC] to pay the full value of the subject property as just compensation without ordering the transfer o[f] respondents' title to the land. This is patent from the following language of the High Court as quoted by [NPC] itself:

In disregarding this procedure and failing to recognize respondents' ownership of the sub-terrain portion, petitioner took a risk and exposed itself to greater liability with the passage of time. It must be emphasized that the acquisition of the easement is not without expense. The underground tunnels impose limitations on respondents' use of the property for an indefinite period and deprive them of its ordinary use. Based upon the foregoing, respondents are clearly entitled to the payment of just compensation. Notwithstanding the fact that [NPC] only occupies the sub-terrain portion, it is liable to pay not merely an easement but rather the full compensation for land. This is so because in this case, the nature of the easement practically deprives the owners of its normal beneficial use. Respondents, as the owners of the property thus expropriated, are entitled to a just compensation which should be neither more nor less, whenever it is possible to make the assessment, than the money equivalent of said property. 14 DcCHTa

Clearly, the writ of execution issued by the RTC and affirmed by the CA does not vary, but is, in fact, consistent with the final decision in this case. The assailed writ is, therefore, valid.Indeed, expropriation is not limited to the acquisition of real property with a corresponding transfer of title or possession. The right-of-way easement resulting in a restriction or limitation on property rights over the land traversed by transmission lines also falls within the ambit of the term expropriation. 15

As we explained in Camarines Norte Electric Cooperative, Inc. v. Court of Appeals: 16

The acquisition of an easement of a right-of-way falls within the purview of the power of eminent domain. Such conclusion finds support in easements of right-of-way where the Supreme Court sustained the award of just compensation for private property condemned for public use. The Supreme Court, in Republic v. PLDT thus held that:

"Normally, of course, the power of eminent domain results in the taking or appropriation of title to, and possession of, the expropriated property; but no cogent reason appears why said power may not be availed of to impose only a burden upon the owner of condemned property, without loss of title and possession. It is unquestionable that real property may, through expropriation, be subjected to an easement of right-of-way."

However, a simple right-of-way easement transmits no rights, except the easement. Vines Realty retains full ownership and it is not totally deprived of the use of the land. It can continue doing what it wants to do with the land, except those that would result in contact with the wires.

The acquisition of this easement, nevertheless, is not gratis. Considering the nature and effect of the installation power lines, the limitations on the use of the land for an indefinite period deprives private respondents of its ordinary use. For these reasons, Vines Realty is entitled to payment of just compensation, which must be neither more nor less than the money equivalent of the property. 17

It is, therefore, clear that NPC's acquisition of an easement of right-of-way on the lands of respondents amounted to expropriation of the portions of the latter's property for which they are entitled to a reasonable and just compensation.The term just compensation had been defined as the full and fair equivalent of the property taken from its owner by the expropriator. The measure is not the taker's gain, but the owner's loss. The word just is used to intensify the meaning of the word compensation and to convey thereby the idea that the equivalent to be rendered for the property to be taken shall be real, substantial, full, and ample. 18 DTAIaH

In Camarines Norte Electric Cooperative, Inc. v. Court of Appeals 19 and National Power Corporation v. Manubay Agro-Industrial Development Corporation, 20 this Court sustained the award of just

compensation equivalent to the fair and full value of the property even if petitioners only sought the continuation of the exercise of their right-of-way easement and not the ownership over the land. There is simply no basis for NPC to claim that the payment of fair market value without the concomitant transfer of title constitutes an unjust enrichment.

In fine, the issuance by the RTC of a writ of execution and the notice of garnishment to satisfy the judgment in favor of respondents could not be considered grave abuse of discretion. The term grave abuse of discretion, in its juridical sense, connotes capricious, despotic, oppressive, or whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse must be of such degree as to amount to an evasion of positive duty or a virtual refusal to perform a duty enjoined by law, as where the power is exercised in an arbitrary and capricious manner by reason of passion and hostility. The word capricious, usually used in tandem with the term arbitrary, conveys the notion of willful and unreasoning action. Thus, when seeking the corrective hand of certiorari, a clear showing of caprice and arbitrariness in the exercise of discretion is imperative. 21 In this case, NPC utterly failed to demonstrate caprice or arbitrariness on the part of the RTC in granting respondents' motion for execution. Accordingly, the CA committed no reversible error in dismissing NPC's petition for certiorari.

It is almost trite to say that execution is the fruit and the end of the suit and is the life of the law. A judgment, if left unexecuted, would be nothing but an empty victory for the prevailing party. Litigation must end sometime and somewhere. An effective and efficient administration of justice requires that once a judgment has become final, the winning party be not deprived of the fruits of the verdict. Courts must, therefore, guard against any scheme calculated to bring about that result. Constituted as they are to put an end to controversies, courts should frown upon any attempt to prolong them. 22 We, therefore, write finis to this litigation.

WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals in CA-G.R. SP No. 02065-MIN is AFFIRMED. The temporary restraining order issued by this Court on July 9, 2008 is LIFTED.

SO ORDERED.

Corona, Velasco, Jr., Peralta and Del Castillo, ** JJ., concur.

||| (NPC v. Maruhom, G.R. No. 183297, December 23, 2009)