ASSOCIATION OF SMALL LANDOWNERS vs.

HONORABLE SECRETARY OF
AGRARIAN REFORM
G.R. No. 78742 July 14, 1989
The petitioners in this case invoke the right of retention granted by P.D. No. 27 to owners of rice and corn lands not
exceeding seven hectares as long as they are cultivating or intend to cultivate the same. Their respective lands do
not exceed the statutory limit but are occupied by tenants who are actually cultivating such lands.
According to P.D. No. 316, No tenant-farmer in agricultural lands primarily devoted to rice and corn shall be ejected or
removed from his farmholding until such time as the respective rights of the tenant- farmers and the landowner shall
have been determined in accordance with the rules and regulations implementing P.D. No. 27.
The petitioners claim they cannot eject their tenants and so are unable to enjoy their right of retention because the
Department of Agrarian Reform has so far not issued the implementing rules required under the above-quoted
decree. They therefore ask the Court for a writ of mandamus to compel the respondent to issue the said rules.
In his Comment, the public respondent argues that the regulations implementing P.D. No. 27 have already been
issued, to wit, the Memorandum dated July 10, 1975 (Interim Guidelines on Retention by Small Landowners, with an
accompanying Retention Guide Table), Memorandum Circular No. 11 dated April 21, 1978, (Implementation
Guidelines of LOI No. 474), Memorandum Circular No. 18-81 dated December 29,1981 (Clarificatory Guidelines on
Coverage of P.D. No. 27 and Retention by Small Landowners), and DAR Administrative Order No. 1, series of 1985
(Providing for a Cut-off Date for Landowners to Apply for Retention and/or to Protest the Coverage of their
Landholdings under Operation Land Transfer pursuant to P.D. No. 27). For failure to file the corresponding
applications for retention under these measures, the petitioners are now barred from invoking this right.
The public respondent also stresses that the petitioners have prematurely initiated this case notwithstanding the
pendency of their appeal to the President of the Philippines. Moreover, the issuance of the implementing rules,
assuming this has not yet been done, involves the exercise of discretion which cannot be controlled through the writ
of mandamus. This is especially true if this function is entrusted, as in this case, to a separate department of the
government.
ISSUE:
Whether or not the statute is an exercise of Police Power or Power of Eminent Domain.
RULING:
There are traditional distinctions between the police power and the power of eminent domain that logically preclude
the application of both powers at the same time on the same subject. The Court held that the power being exercised
is eminent domain if the property involved was wholesome and intended for a public use. Property condemned under
the police power is noxious or intended for a noxious purpose. The confiscation of such property is not compensable,
unlike the taking of property under the power of expropriation, which requires the payment of just compensation to the
owner.
Every restriction upon the use of property imposed in the exercise of the police power deprives the owner of some
right theretofore enjoyed, and is, in that sense, an abridgment by the State of rights in property without making
compensation. But restriction imposed to protect the public health, safety or morals from dangers threatened is not a
taking. The restriction here in question is merely the prohibition of a noxious use. The property so restricted remains
in the possession of its owner. The state does not appropriate it or make any use of it. The state merely prevents the
owner from making a use which interferes with paramount rights of the public. Whenever the use prohibited ceases to
be noxious as it may because of further changes in local or social conditions the restriction will have to be
removed and the owner will again be free to enjoy his property as heretofore.
Eminent domain is an inherent power of the State that enables it to forcibly acquire private lands intended for public
use upon payment of just compensation to the owner. Private rights must then yield to the irresistible demands of the

public interest on the time-honored justification, as in the case of the police power, that the welfare of the people is
the supreme law.
The power of expropriation is by no means absolute. Basically, the requirements for a proper exercise of the power
are: (1) public use and (2) just compensation.
As earlier observed, the requirement for public use has already been settled. The purposes specified in P.D. No. 27,
Proc. No. 131 and R.A. No. 6657 are only an elaboration of the constitutional injunction that the State adopt the
necessary measures "to encourage and undertake the just distribution of all agricultural lands to enable farmers who
are landless to own directly or collectively the lands they till." That public use, as pronounced by the fundamental law
itself, must be binding on us.
The second requirement, i.e., the payment of just compensation, needs a longer and more thoughtful examination.
Just compensation is defined as the full and fair equivalent of the property taken from its owner by the
expropriator. 39 It has been repeatedly stressed by this Court that the measure is not the taker's gain but the owner's
loss. 40 The word "just" is used to intensify the meaning of the word "compensation" to convey the idea that the
equivalent to be rendered for the property to be taken shall be real, substantial, full, ample. 41
The Court has not found in the records of the Constitutional Commission any categorical agreement among the
members regarding the meaning to be given the concept of just compensation as applied to the comprehensive
agrarian reform program being contemplated. In the end, however, no special definition of the just compensation for
the lands to be expropriated was reached by the Commission. 50
With these assumptions, the Court hereby declares that the content and manner of the just compensation provided
for in the afore- quoted Section 18 of the CARP Law is not violative of the Constitution. The Court is as acutely
anxious as the rest of our people to see the goal of agrarian reform achieved at last after the frustrations and
deprivations of our peasant masses during all these disappointing decades.

LUCENA GRAND CENTRAL TERMINAL, INC. vs. JAC LINER, INC.

G.R. No. 148339
February 23, 2005
FACTS:
JAC Liner, Inc. is a common carrier operating buses which ply various routes to and from Lucena City. It filed a
petition for prohibition and injunction against the City of Lucena, its Mayor, and the Sangguniang Panlungsod of
Lucena before the Regional Trial Court (RTC) of Lucena City. It claimed that the City Ordinance Nos. 1631 and 1778
are unconstitutional on the ground that, the same constituted an invalid exercise of police power, an undue taking of
private property, and a violation of the constitutional prohibition against monopolies.
Ordinance No. 1631 granted to the Lucena Grand Central Terminal, Inc. a franchise to construct, finance, establish,
operate, and maintain a common bus-jeepney terminal facility in the City of Lucena. Section 4 (par. C) thereof
provides that it shall not grant any third party any privilege and/or concession to operate a bus, mini-bus and/or
jeepney terminal. Whereas, Ordinance No. 1778 entailed that all buses, mini-buses and out-of-town passenger
jeepneys shall be prohibited from entering the city and are hereby directed to proceed to the common terminal, for
picking-up and/or dropping of their passengers.
Respondent, who had maintained a terminal within the city, was one of those affected by the ordinances.
Petitioner, Lucena Grand Central Terminal, Inc., claiming legal interest as the grantee of the exclusive franchise for
the operation of the common terminal was allowed to intervene in the petition before the trial court.
RTC rendered judgment declaring the provision of Sec. 4(c) of Ordinance No. 1631 to the effect that the City
Government shall not grant any third party any privilege and/or concession to operate a bus, mini-bus and/or jeepney
terminal, as illegal and ultra vires because it contravenes the provisions of Republic Act No. 7160, otherwise known
as "The Local Government Code". Further, it declared that the City Ordinance No. 1778 is null and void, the same
being also an ultra vires act of the City Government of Lucena arising from an invalid, oppressive and unreasonable
exercise of the police power, more specifically, declaring illegal [sections 1(b), 3(c) and 3(e)];
Petitioners Motion for Reconsideration of the trial courts order having been denied by Order of August 6, 1999, it
elevated it via petition for review under Rule 45 before this Court. SC referred the petition to the Court of Appeals with
which it has concurrent jurisdiction, no special and important reason having been cited for it to take cognizance
thereof in the first instance.

By Decision of December 15, 2000,13 the appellate court dismissed the petition and affirmed the challenged orders of
the trial court. Its motion for reconsideration14 having been denied by the appellate court by Resolution dated June 5,
2001,15 petitioner once again comes to this Court via petition for review,16 this time assailing the Decision and
Resolution of the Court of Appeals.
Decision on the petition hinges on two issues, to wit: (1) whether the trial court has jurisdiction over the case, it not
having furnished the Office of the Solicitor General copy of the orders it issued therein, and (2) whether the City of
Lucena properly exercised its police power when it enacted the subject ordinances.

Petitioner argues that since the trial court failed to serve a copy of its assailed orders upon the Office of the Solicitor
General, it never acquired jurisdiction over the case, it citingSection 22, Rule 3 of the Rules which provides:
SEC. 22. Notice to the Solicitor General.In any action involving the validity of any treaty, law, ordinance, executive
order, presidential decree, rules or regulations, the court in its discretion, may require the appearance of the
Solicitor General who may be heard in person or through representative duly designated by him. (Emphasis and
underscoring supplied)
Furthermore, petitioner invokes Sections 3 and 4 of Rule 63which respectively provide:
SEC. 3. Notice on Solicitor General. In any action which involves the validity of a statute, executive order or
regulation, or any other governmental regulation, the Solicitor General shall be notified by the party assailing the
same and shall be entitled to be heard upon such question.
SEC. 4. Local government ordinances. In any action involving the validity of a local government ordinance, the
corresponding prosecutor or attorney of the local government unit involved shall be similarly notified and entitled to
be heard. If such ordinance is alleged to be unconstitutional, the Solicitor General shall also be notified and entitled
to be heard. (Emphasis and underscoring supplied)
Nowhere, however, is it stated in the above-quoted rules that failure to notify the Solicitor General about the action is
a jurisdictional defect.
In fact, Rule 3, Section 22 gives the courts in any action involving the "validity" of any ordinance, inter alia,
"discretion" to notify the Solicitor General.
Section 4 of Rule 63, which more specifically deals with cases assailing the constitutionality, not just the validity, of
a local government ordinance, directs that the Solicitor General "shallalso be notified and entitled to be heard." Who
will notify him, Sec. 3 of the same rule provides it is the party which is assailing the local governments ordinance.
More importantly, however, this Court finds that no procedural defect, fatal or otherwise, attended the disposition of
the case. For respondent actually served a copy of its petition upon the Office of the Solicitor General on October 1,
1998, two days after it was filed. The Solicitor General has issued a Certification to that effect.17 There was thus
compliance with above-quoted rules.
Respecting the issue of whether police power was properly exercised when the subject ordinances were enacted: As
with the State, the local government may be considered as having properly exercised its police power only if the
following requisites are met: (1) the interests of the public generally, as distinguished from those of a particular class,
require the interference of the State, and (2) the means employed are reasonably necessary for the attainment of the
object sought to be accomplished and not unduly oppressive upon individuals. Otherwise stated, there must be a
concurrence of a lawful subject and lawful method.18
That traffic congestion is a public, not merely a private, concern, cannot be gainsaid. In Calalang v. Williams19 which
involved a statute authorizing the Director of Public Works to promulgate rules and regulations to regulate and control
traffic on national roads, this Court held:
In enacting said law, therefore, the National Assembly was prompted by considerations of public convenience and
welfare. It was inspired by a desire to relieve congestion of traffic, which is, to say the least, a menace to public
safety. Public welfare, then, lies at the bottom of the enactment of said law, and the state in order to promote the
general welfare may interfere with personal liberty, with property, and with business and occupations.20 (Emphasis
supplied)
The questioned ordinances having been enacted with the objective of relieving traffic congestion in the City of
Lucena, they involve public interest warranting the interference of the State. The first requisite for the proper exercise
of police power is thus present.

Respondents suggestion to have this Court look behind the explicit objective of the ordinances which, to it, was
actually to benefit the private interest of petitioner by coercing all bus operators to patronize its terminal does not
lie.21 Lim v. Pacquing22 instructs:
. . . [T]his Court cannot look into allegations that PD No. 771 was enacted to benefit a select group which was later
given authority to operate the jai-alai under PD No. 810. The examination of legislative motivation is generally
prohibited. (Palmer v. Thompson, 403 U.S. 217, 29 L. Ed. 2d 438 [1971] per Black, J.) There is, in the first place,
absolute lack of evidence to support ADCs allegation of improper motivation in the issuance of PD No. 771. In the
second place, as already averred, this Court cannot go behind the expressed and proclaimed purposes of PD No.
771, which are reasonable and even laudable. (Underscoring supplied)23
This leaves for determination the issue of whether the meansemployed by the Lucena Sangguniang Panlungsod to
attain its professed objective were reasonably necessary and not unduly oppressive upon individuals.
With the aim of localizing the source of traffic congestion in the city to a single location, 24 the subject ordinances
prohibit the operation of all bus and jeepney terminals within Lucena, including those already existing, and allow the
operation of only one common terminal located outside the city proper, the franchise for which was granted to
petitioner. The common carriers plying routes to and from Lucena City are thus compelled to close down their existing
terminals and use the facilities of petitioner.
In De la Cruz v. Paras,25 this Court declared unconstitutional an ordinance characterized by overbreadth. In that case,
the Municipality of Bocaue, Bulacan prohibited the operation of all night clubs, cabarets and dance halls within its
jurisdiction for the protection of public morals. Held the Court:
It cannot be said that such a sweeping exercise of alawmaking power by Bocaue could qualify under the termreasona
ble. The objective of fostering public morals, a worthyand desirable end can be attained by a measure that does note
ncompass too wide a field. Certainly the ordinance on itsface is characterized by overbreadth. The purpose sought to
be achieved could have been attained by reasonablerestrictions rather than by an absolute prohibition. The
admonition in Salaveria should be heeded: "The Judiciary should not lightly set aside legislative action when there is
not a clear invasion of personal or property rights under the guise of police regulation." It is clear that in the guise of a
police regulation, there was in this instance a clear invasion of personal or property rights, personal in the case of
those individuals desirous of patronizing those night clubs and property in terms of the investments made and
salaries to be earned by those therein employed. (Underscoring supplied)26
In Lupangco v. Court of Appeals,27 this Court, in declaring unconstitutional the resolution subject thereof, advanced a
similar consideration. That case involved a resolution issued by the Professional Regulation Commission which
prohibited examinees from attending review classes and receiving handout materials, tips, and the like three days
before the date of examination in order to preserve the integrity and purity of the licensure examinations in
accountancy. Besides being unreasonable on its face and violative of academic freedom, the measure was found to
be more sweeping than what was necessary, viz:
Needless to say, the enforcement of Resolution No. 105 is not a guarantee that the alleged leakages in the licensure
examinations will be eradicated or at least minimized. Making the examinees suffer by depriving them of legitimate
means of review or preparation on those last three precious days when they should be refreshing themselves with all
that they have learned in the review classes and preparing their mental and psychological make-up for the
examination day itself would be like uprooting the tree to get rid of a rotten branch. What is needed to be
done by the respondent is to find out the source of such leakages and stop it right there. If corrupt officials or
personnel should be terminated from their loss, then so be it. Fixers or swindlers should be flushed out. Strict
guidelines to be observed by examiners should be set up and if violations are committed, then licenses should be
suspended or revoked. x x x (Emphasis and underscoring supplied)28
As in De la Cruz29 and Lupangco,30 the ordinances assailed herein are characterized by overbreadth. They go beyond
what is reasonably necessary to solve the traffic problem. Additionally, since the compulsory use of the terminal
operated by petitioner would subject the users thereof to fees, rentals and charges, such measure is unduly
oppressive, as correctly found by the appellate court. 31 What should have been done was to determine exactly where
the problem lies and then to stop it right there.

The true role of Constitutional Law is to effect an equilibrium between authority and liberty so that rights are exercised
within the framework of the law and the laws are enacted with due deference to rights. (Underscoring supplied)32
A due deference to the rights of the individual thus requires a more careful formulation of solutions to societal
problems.
From the memorandum33 filed before this Court by petitioner, it is gathered that the Sangguniang Panlungsod had
identified the cause of traffic congestion to be the indiscriminate loading and unloading of passengers by buses on
the streets of the city proper, hence, the conclusion that the terminals contributed to the proliferation of buses
obstructing traffic on the city streets.
Bus terminals per se do not, however, impede or help impede the flow of traffic. How the outright proscription against
the existence of all terminals, apart from that franchised to petitioner, can be considered as reasonably necessary to
solve the traffic problem, this Court has not been enlightened. If terminals lack adequate space such that bus drivers
are compelled to load and unload passengers on the streets instead of inside the terminals, then reasonable
specifications for the size of terminals could be instituted, with permits to operate the same denied those which are
unable to meet the specifications.
In the subject ordinances, however, the scope of the proscription against the maintenance of terminals is so broad
that even entities which might be able to provide facilities better than the franchised terminal are barred from
operating at all.
Petitioner argues, however, that other solutions for the traffic problem have already been tried but proven ineffective.
But the grant of an exclusive franchise to petitioner has not been shown to be the only solution to the problem.
While the Sangguniang Panlungsod, via Ordinance No. 1557,34previously directed bus owners and operators to put
up their terminals "outside the poblacion of Lucena City," petitioner informs that said ordinance only resulted in the
relocation of terminals to other well-populated barangays, thereby giving rise to traffic congestion in those
areas.35 Assuming that information to be true, the Sangguniang Panlungsod was not without remedy. It could have
defined, among other considerations, in a more precise manner, the area of relocation to avoid such consequences.
As for petitioners argument that the challenged ordinances were enacted pursuant to the power of the Sangguniang
Panlungsod to "[r]egulate traffic on all streets and bridges;prohibit encroachments or obstacles thereon and, when
necessary in the interest of public welfare, authorize the removal of encroachments and illegal constructions in public
places":36 Absent any showing, nay allegation, that the terminals are encroaching upon public roads, they are not
obstacles. The buses which indiscriminately load and unload passengers on the city streets are. The power then of
the Sangguniang Panlungsod to prohibit encroachments and obstacles does not extend to terminals.1a\^/phi1.net
Neither are terminals public nuisances as petitioner argues. For their operation is a legitimate business which, by
itself, cannot be said to be injurious to the rights of property, health, or comfort of the community.
But even assuming that terminals are nuisances due to their alleged indirect effects upon the flow of traffic, at most
they are nuisance per accidens, not per se.
Unless a thing is nuisance per se, however, it may not be abated via an ordinance, without judicial proceedings, as
was done in the case at bar.
In Estate of Gregoria Francisco v. Court of Appeals,37 this Court held:
Respondents can not seek cover under the general welfare clause authorizing the abatement of nuisances without
judicial proceedings. That tenet applies to a nuisance per se, or one which affects the immediate safety of persons
and property and may be summarily abated under the undefined law of necessity (Monteverde v. Generoso, 52 Phil.
123 [1982]). The storage of copra in the quonset building is a legitimate business. By its nature, it can not be said to
be injurious to rights of property, of health or of comfort of the community. If it be a nuisance per accidens it may be

so proven in a hearing conducted for that purpose. It is not per se a nuisance warranting its summary abatement
without judicial intervention.l^vvphi1.net (Underscoring supplied)381awphi1.nt
In Pampanga Bus Co., Inc. v. Municipality of Tarlac39 where the appellant-municipality similarly argued that the
terminal involved therein is a nuisance that may be abated by the Municipal Council via an ordinance, this Court held:
"Suffice it to say that in the abatement of nuisances the provisions of the Civil Code (Articles 694-707) must be
observed and followed. This appellant failed to do."
As for petitioners claim that the challenged ordinances have actually been proven effective in easing traffic
congestion: Whether an ordinance is effective is an issue different from whether it is reasonably necessary. It is
its reasonableness,not its effectiveness, which bears upon its constitutionality. If the constitutionality of a law were
measured by its effectiveness, then even tyrannical laws may be justified whenever they happen to be effective.
The Court is not unaware of the resolutions of various barangays in Lucena City supporting the establishment of a
common terminal, and similar expressions of support from the private sector, copies of which were submitted to this
Court by petitioner. The weight of popular opinion, however, must be balanced with that of an individuals rights.
There is no question that not even the strongest moral conviction or the most urgent public need, subject only to a
few notable exceptions, will excuse the bypassing of an individual's rights. It is no exaggeration to say that a person
invoking a right guaranteed under Article III of the Constitution is a majority of one even as against the rest of the
nation who would deny him that right.40
WHEREFORE, the petition is hereby DENIED.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 136349

January 23, 2006

LOURDES DE LA PAZ MASIKIP, Petitioner,

vs.
THE CITY OF PASIG, HON. MARIETTA A. LEGASPI, in her capacity as Presiding Judge of the Regional Trial
Court of Pasig City, Branch 165 and THE COURT OF APPEALS,Respondents.

DECISION
SANDOVAL GUTIERREZ, J.:
Where the taking by the State of private property is done for the benefit of a small community which seeks to have its
own sports and recreational facility, notwithstanding that there is such a recreational facility only a short distance
away, such taking cannot be considered to be for public use. Its expropriation is not valid. In this case, the Court
defines what constitutes a genuine necessity for public use.
This petition for review on certiorari assails the Decision1 of the Court of Appeals dated October 31, 1997 in CA-G.R.
SP No. 41860 affirming the Order2 of the Regional Trial Court, Branch 165, Pasig City, dated May 7, 1996 in S.C.A.
No. 873. Likewise assailed is the Resolution3 of the same court dated November 20, 1998 denying petitioners Motion
for Reconsideration.
The facts of the case are:
Petitioner Lourdes Dela Paz Masikip is the registered owner of a parcel of land with an area of 4,521 square meters
located at Pag-Asa, Caniogan, Pasig City, Metro Manila.
In a letter dated January 6, 1994, the then Municipality of Pasig, now City of Pasig, respondent, notified petitioner of
its intention to expropriate a 1,500 square meter portion of her property to be used for the "sports development and
recreational activities" of the residents of Barangay Caniogan. This was pursuant to Ordinance No. 42, Series of 1993
enacted by the then Sangguniang Bayan of Pasig.
Again, on March 23, 1994, respondent wrote another letter to petitioner, but this time the purpose was allegedly "in
line with the program of the Municipal Government to provide land opportunities to deserving poor sectors of our
community."
On May 2, 1994, petitioner sent a reply to respondent stating that the intended expropriation of her property is
unconstitutional, invalid, and oppressive, as the area of her lot is neither sufficient nor suitable to "provide land
opportunities to deserving poor sectors of our community."
In its letter of December 20, 1994, respondent reiterated that the purpose of the expropriation of petitioners property
is "to provide sports and recreational facilities to its poor residents."
Subsequently, on February 21, 1995, respondent filed with the trial court a complaint for expropriation, docketed as
SCA No. 873. Respondent prayed that the trial court, after due notice and hearing, issue an order for the
condemnation of the property; that commissioners be appointed for the purpose of determining the just
compensation; and that judgment be rendered based on the report of the commissioners.
On April 25, 1995, petitioner filed a Motion to Dismiss the complaint on the following grounds:
I

PLAINTIFF HAS NO CAUSE OF ACTION FOR THE EXERCISE OF THE POWER OF EMINENT DOMAIN,
CONSIDERING THAT:
(A) THERE IS NO GENUINE NECESSITY FOR THE TAKING OF THE PROPERTY SOUGHT TO BE
EXPROPRIATED.
(B) PLAINTIFF HAS ARBITRARILY AND CAPRICIOUSLY CHOSEN THE PROPERTY SOUGHT TO BE
EXPROPRIATED.
(C) EVEN ASSUMING ARGUENDO THAT DEFENDANTS PROPERTY MAY BE EXPROPRIATED BY
PLAINTIFF, THE FAIR MARKET VALUE OF THE PROPERTY TO BE EXPROPRIATED FAR EXCEEDS
SEVENTY-EIGHT THOUSAND PESOS (P78,000.00)
II
PLAINTIFFS COMPLAINT IS DEFECTIVE IN FORM AND SUBSTANCE, CONSIDERING THAT:
(A) PLAINTIFF FAILS TO ALLEGE WITH CERTAINTY THE PURPOSE OF THE EXPROPRIATION.
(B) PLAINTIFF HAS FAILED TO COMPLY WITH THE PREREQUISITES LAID DOWN IN SECTION 34,
RULE VI OF THE RULES AND REGULATIONS IMPLEMENTING THE LOCAL GOVERNMENT CODE;
THUS, THE INSTANT EXPROPRIATION PROCEEDING IS PREMATURE.
III
THE GRANTING OF THE EXPROPRIATION WOULD VIOLATE SECTION 261 (V) OF THE OMNIBUS ELECTION
CODE.
IV
PLAINTIFF CANNOT TAKE POSSESSION OF THE SUBJECT PROPERTY BY MERELY DEPOSITING AN
AMOUNT EQUAL TO FIFTEEN PERCENT (15%) OF THE VALUE OF THE PROPERTY BASED ON THE CURRENT
TAX DECLARATION OF THE SUBJECT PROPERTY.4
On May 7, 1996, the trial court issued an Order denying the Motion to Dismiss,5 on the ground that there is a
genuine necessity to expropriate the property for the sports and recreational activities of the residents of
Pasig. As to the issue of just compensation, the trial court held that the same is to be determined in accordance with
the Revised Rules of Court.
Petitioner filed a motion for reconsideration but it was denied by the trial court in its Order of July 31, 1996. Forthwith,
it appointed the City Assessor and City Treasurer of Pasig City as commissioners to ascertain the just compensation.
This prompted petitioner to file with the Court of Appeals a special civil action for certiorari, docketed as CA-G.R. SP
No. 41860. On October 31, 1997, the Appellate Court dismissed the petition for lack of merit. Petitioners Motion for
Reconsideration was denied in a Resolution dated November 20, 1998.
Hence, this petition anchored on the following grounds:
THE QUESTIONED DECISION DATED 31 OCTOBER 1997 (ATTACHMENT "A") AND RESOLUTION DATED 20
NOVEMBER 1998 (ATTACHMENT "B") ARE CONTRARY TO LAW, THE RULES OF COURT AND
JURISPRUDENCE CONSIDERING THAT:
I

A. THERE IS NO EVIDENCE TO PROVE THAT THERE IS GENUINE NECESSITY FOR THE TAKING OF
THE PETITIONERS PROPERTY.
B. THERE IS NO EVIDENCE TO PROVE THAT THE PUBLIC USE REQUIREMENT FOR THE EXERCISE
OF THE POWER OF EMINENT DOMAIN HAS BEEN COMPLIED WITH.
C. THERE IS NO EVIDENCE TO PROVE THAT RESPONDENT CITY OF PASIG HAS COMPLIED WITH
ALL CONDITIONS PRECEDENT FOR THE EXERCISE OF THE POWER OF EMINENT DOMAIN.
THE COURT A QUOS ORDER DATED 07 MAY 1996 AND 31 JULY 1996, WHICH WERE AFFIRMED BY THE
COURT OF APPEALS, EFFECTIVELY AMOUNT TO THE TAKING OF PETITIONERS PROPERTY WITHOUT DUE
PROCESS OF LAW:
II
THE COURT OF APPEALS GRAVELY ERRED IN APPLYING OF RULE ON ACTIONABLE DOCUMENTS TO THE
DOCUMENTS ATTACHED TO RESPONDENT CITY OF PASIGS COMPLAINTDATED 07 APRIL 1995 TO JUSTIFY
THE COURT A QUOS DENIAL OF PETITIONERS RESPONSIVE PLEADING TO THE COMPLAINT FOR
EXPROPRIATION (THE MOTION TO DISMISS DATED 21 APRIL 1995).
III
THE COURT OF APPEALS GRAVELY ERRED IN APPLYING THE RULE ON HYPOTHETICAL ADMISSION OF
FACTS ALLEGED IN A COMPLAINT CONSIDERING THAT THE MOTION TO DISMISSFILED BY PETITIONER IN
THE EXPROPRIATION CASE BELOW WAS THE RESPONSIVE PLEADING REQUIRED TO BE FILED UNDER
THE THEN RULE 67 OF THE RULES OF COURT AND NOT AN ORIDNARY MOTION TO DISMISS UNDER RULE
16 OF THE RULES OF COURT.
The foregoing arguments may be synthesized into two main issues one substantive and one procedural. We will
first address the procedural issue.
Petitioner filed her Motion to Dismiss the complaint for expropriation on April 25, 1995. It was denied by the trial court
on May 7, 1996. At that time, the rule on expropriation was governed by Section 3, Rule 67 of the Revised Rules of
Court which provides:
"SEC. 3. Defenses and objections. Within the time specified in the summons, each defendant, in lieu of an answer,
shall present in a single motion to dismiss or for other appropriate relief, all his objections and defenses to the right of
the plaintiff to take his property for the use or purpose specified in the complaint. All such objections and defenses not
so presented are waived. A copy of the motion shall be served on the plaintiffs attorney of record and filed with the
court with proof of service."
The motion to dismiss contemplated in the above Rule clearly constitutes the responsive pleading which takes the
place of an answer to the complaint for expropriation. Such motion is the pleading that puts in issue the right of the
plaintiff to expropriate the defendants property for the use specified in the complaint. All that the law requires is that a
copy of the said motion be served on plaintiffs attorney of record. It is the court that at its convenience will set the
case for trial after the filing of the said pleading.6
The Court of Appeals therefore erred in holding that the motion to dismiss filed by petitioner hypothetically admitted
the truth of the facts alleged in the complaint, "specifically that there is a genuine necessity to expropriate petitioners
property for public use." Pursuant to the above Rule, the motion is a responsive pleading joining the issues. What the
trial court should have done was to set the case for the reception of evidence to determine whether there is indeed a
genuine necessity for the taking of the property, instead of summarily making a finding that the taking is for public use
and appointing commissioners to fix just compensation. This is especially so considering that the purpose of the
expropriation was squarely challenged and put in issue by petitioner in her motion to dismiss.

Significantly, the above Rule allowing a defendant in an expropriation case to file a motion to dismiss in lieu of an
answer was amended by the 1997 Rules of Civil Procedure, which took effect on July 1, 1997. Section 3, Rule 67
now expressly mandates that any objection or defense to the taking of the property of a defendant must be set forth
in an answer.
The fact that the Court of Appeals rendered its Decision in CA-G.R. SP No. 41860 on October 31, after the 1997
Rules of Civil Procedure took effect, is of no moment. It is only fair that the Rule at the time petitioner filed her motion
to dismiss should govern. The new provision cannot be applied retroactively to her prejudice.
We now proceed to address the substantive issue.
In the early case of US v. Toribio,7 this Court defined the power of eminent domain as "the right of a government to
take and appropriate private property to public use, whenever the public exigency requires it, which can be done only
on condition of providing a reasonable compensation therefor." It has also been described as the power of the State
or its instrumentalities to take private property for public use and is inseparable from sovereignty and inherent in
government.8
The power of eminent domain is lodged in the legislative branch of the government. It delegates the exercise thereof
to local government units, other public entities and public utility corporations,9 subject only to Constitutional
limitations. Local governments have no inherent power of eminent domain and may exercise it only when expressly
authorized by statute.10Section 19 of the Local Government Code of 1991 (Republic Act No. 7160) prescribes the
delegation by Congress of the power of eminent domain to local government units and lays down the parameters for
its exercise, thus:
"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, 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 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 expropriated property shall be determined by the proper court, based on the fair market value at the time of the
taking of the property."
Judicial review of the exercise of eminent domain is limited to the following areas of concern: (a) the adequacy of the
compensation, (b) the necessity of the taking, and (c) the public use character of the purpose of the taking.11
In this case, petitioner contends that respondent City of Pasig failed to establish a genuine necessity which justifies
the condemnation of her property. While she does not dispute the intended public purpose, nonetheless, she insists
that there must be a genuine necessity for the proposed use and purposes. According to petitioner, there is already
an established sports development and recreational activity center at Rainforest Park in Pasig City, fully operational
and being utilized by its residents, including those from Barangay Caniogan. Respondent does not dispute this.
Evidently, there is no "genuine necessity" to justify the expropriation.
The right to take private property for public purposes necessarily originates from "the necessity" and the taking must
be limited to such necessity. In City of Manila v. Chinese Community of Manila,12 we held that the very foundation of
the right to exercise eminent domain is a genuine necessity and that necessity must be of a public character.
Moreover, the ascertainment of the necessity must precede or accompany and not follow, the taking of the land.
In City of Manila v. Arellano Law College,13 we ruled that "necessity within the rule that the particular property to be
expropriated must be necessary, does not mean an absolute but only a reasonable or practical necessity, such as
would combine the greatest benefit to the public with the least inconvenience and expense to the condemning party
and the property owner consistent with such benefit."

Applying this standard, we hold that respondent City of Pasig has failed to establish that there is a genuine necessity
to expropriate petitioners property. Our scrutiny of the records shows that the Certification14 issued by the Caniogan
Barangay Council dated November 20, 1994, the basis for the passage of Ordinance No. 42 s. 1993 authorizing the
expropriation, indicates that the intended beneficiary is the Melendres Compound Homeowners Association, a
private, non-profit organization, not the residents of Caniogan. It can be gleaned that the members of the said
Association are desirous of having their own private playground and recreational facility. Petitioners lot is the nearest
vacant space available. The purpose is, therefore, not clearly and categorically public. The necessity has not been
shown, especially considering that there exists an alternative facility for sports development and community
recreation in the area, which is the Rainforest Park, available to all residents of Pasig City, including those of
Caniogan.
The right to own and possess property is one of the most cherished rights of men. It is so fundamental that it has
been written into organic law of every nation where the rule of law prevails. Unless the requisite of genuine necessity
for the expropriation of ones property is clearly established, it shall be the duty of the courts to protect the rights of
individuals to their private property. Important as the power of eminent domain may be, the inviolable sanctity which
the Constitution attaches to the property of the individual requires not only that the purpose for the taking of private
property be specified. The genuine necessity for the taking, which must be of a public character, must also be shown
to exist.
WHEREFORE, the petition for review is GRANTED. The challenged Decision and Resolution of the Court of Appeals
in CA-G.R. SP No. 41860 are REVERSED. The complaint for expropriation filed before the trial court by respondent
City of Pasig, docketed as SCA No. 873, is ordered DISMISSED.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 147511

January 20, 2003

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

ARMANDO Z. FRANCISCO; ALMA C. FRANCISCO; EUGENIA Z. LUNA; CLARITA Z. ZABALLERO, LEONARDO
Z. ZABALLERO, JR, and TEODORO Z. ZABALLERO, in substitution of LEONARDO M. ZABALLERO;
AUGUSTO M. ZABALLERO; FRINE A. ZABALLERO; ELENA FRONDA ZABALLERO; VICTOR GREGORIO F.
ZABALLERO; MARIA ELENA F. ZABALLERO; LOURDES ZABALLERO-LAVA; SOCORRO EMILIA
ZABALLERO-YAP; and TERESITA F. ZABALLERO, petitioners,
vs.
NATIONAL HOUSING AUTHORITY, respondent.
PUNO, J.:
This is an appeal by certiorari from the decision of the Court of Appeals in CA-GR CV No. 51641 dated September
29, 20001 affirming the judgment of the Regional Trial Court of Quezon City, Branch 79 which dismissed the
complaint for forfeiture of rights filed by herein petitioners, as well as the Resolution dated March 13, 2001 denying
petitioners' motion for reconsideration.

Records show that in 1977, respondent National Housing Authority (NHA) filed separate complaints for the
expropriation of sugarcane lands, particularly Lot Nos. 6450, 6448-E, 6198-A and 6199 of the cadastral survey of
Dasmarias, Cavite belonging to the petitioners, before the then Court of First Instance of Cavite, and docketed as
Civil Case Nos. T.G.-392, T.G.-396 and T.G.-417. The stated public purpose of the expropriation was the expansion of
the Dasmarias Resettlement Project to accommodate the squatters who were relocated from the Metropolitan
Manila area. The trial court rendered judgment ordering the expropriation of these lots and the payment of just
compensation. This was affirmed by the Supreme Court in a decision rendered on October 29, 1987 in the case of
NHA vs. Zaballero2 and which became final on November 26, 1987.3
On February 24, 1989, the expropriation court (now Branch 18, Regional Trial Court of Tagaytay City) issued an
Order4 the dispositive portion of which reads:
"WHEREFORE, and resolving thus, let an Alias Writ of Execution be immediately issued and that:
(1) The Register of Deeds of the Province of Cavite is hereby ordered to transfer, in the name of the plaintiff
National Housing Authority, the following:
(a) Transfer Certificate No. RT-638 containing an area of 79,167 square meters situated in Barrio
Bangkal, Dasmarias, Cavite;
(b) Transfer Certificate of Title No. T-55702 containing an area of 20,872 square meters situated in
Barrio Bangkal, Dasmarias, Cavite;
(c) Transfer Certificate of Title No. RT-639 and RT-4641 covering Lot Nos. 6198-A and 6199 with an
aggregate area of 159,985 square meters also situated in Barrio Bangkal, Dasmarias, Cavite.
(2) Plaintiff National Housing Authority is likewise hereby ordered, under pain of contempt, to immediately
pay the defendants, the amounts stated in the Writ of Execution as the adjudicated compensation of their
expropriated properties, which process was received by it according to the records, on September 26, 1988,
segregating therefrom, and in separate check, the lawyer's fees in favor of Atty. Bobby P. Yuseco, in the
amount of P322,123.05, as sustained by their contract as gleaned from the records, with no other deduction,
paying on its own (NHA) account, the necessary legal expenses incident to the registration or issuance of
new certificates of title, pursuant to the provisions of the Property Registration Law (PD 1529);
(3) Defendants, however, are directed to pay the corresponding capital gains tax on the subject properties,
directing them additionally, to coordinate with the plaintiff NHA in this regard, in order to facilitate the
termination of this case, put an end to this controversy and consign the same to its final rest."
For the alleged failure of respondent NHA to comply with the above order, petitioners filed on April 28, 1992 a
complaint5for forfeiture of rights before the Regional Trial Court of Quezon City, Branch 79, in Civil Case No. Q-9212093. They alleged that respondent NHA had not relocated squatters from the Metropolitan Manila area on the
expropriated lands in violation of the stated public purpose for expropriation and had not paid the just compensation
fixed by the court. They prayed that respondent NHA be enjoined from disposing and alienating the expropriated
properties and that judgment be rendered forfeiting all its rights and interests under the expropriation judgment. In its
Answer,6 respondent NHA averred that it had already paid a substantial amount to herein petitioners and that the
expropriation judgment could not be executed in view of several issues raised by respondent NHA before the
expropriation court (now Branch 18, RTC, Tagaytay City) concerning capital gains tax, registration fees and other
expenses for the transfer of title to respondent NHA, as well as the claims for attorney's fees of Atty. Joaquin Yuseco,
Jr., collaborating counsel for petitioners.
Ocular inspections7 conducted by the trial court on the subject properties show that:
"1. 80% of Lot No. 6198-A with an area of 120,146 square meters is already occupied by relocatees whose
houses are made of light materials with very few houses partly made of hollow blocks. The relocatees were
relocated only on (sic) March of 1994;

2. Most of the area covered by Lot No. 2075 is almost occupied by houses and structures, most of which are
made of concrete materials. These houses are not being occupied by squatters relocated to the said lot by
the defendant NHA;
3. Lot No. 6199 is also occupied by concrete houses and structures but likewise there are no relocatees in
said lot. A large area of the same is still unoccupied."
On September 29, 1995, the trial court rendered judgment dismissing the complaint. Finding that the failure of
respondent NHA to pay just compensation and of petitioners to pay capital gains tax are both unjustified and
unreasonable, the trial court held that: (1) respondent NHA is not deemed to have abandoned the public purpose for
which the subject properties were expropriated because the relocation of squatters involves a long and tedious
process. It ruled that respondent NHA actually pursued the public purpose of the expropriation when it entered into a
contract with Arceo C. Cruz involving the construction of low cost housing on the expropriated lots to be sold to
qualified low income beneficiaries; (2) there is no condition imposed in the expropriation judgment that the subject
properties shall revert back to its original owners in case the purpose of expropriation is terminated or abandoned; (3)
the payment of just compensation is independent of the obligation of herein petitioners to pay capital gains tax; and
(4) in the payment of just compensation, the basis should be the value at the time the property was taken. On appeal,
the Court of Appeals affirmed the decision of the trial court.
Petitioners are now before us raising the following assignment of errors:
"1. The Honorable Court of Appeals had decided a question of substance not in accord with justice and
equity when it ruled that, as the judgment of the expropriation court did not contain a condition that should
the expropriated property be not used for the intended purpose it would revert to the condemnee, the action
to declare the forfeiture of rights under the expropriation judgment can not prosper;
2. The Honorable Court of Appeals decided a question of substance not in accord with jurisprudence, justice
and equity when it ruled that the non-payment is not a ground for forfeiture;
3. The Honorable Court of Appeals erred in not declaring the judgment of expropriation forfeited in light of
the failure of respondent to use the expropriated property for the intended purpose but for a totally different
purpose."
The petition is not impressed with merit.
Petitioners contend that respondent NHA violated the stated public purpose for the expansion of the Dasmarias
Resettlement Project when it failed to relocate the squatters from the Metro Manila area, as borne out by the ocular
inspection conducted by the trial court which showed that most of the expropriated properties remain unoccupied.
Petitioners likewise question the public nature of the use by respondent NHA when it entered into a contract for the
construction of low cost housing units, which is allegedly different from the stated public purpose in the expropriation
proceedings. Hence, it is claimed that respondent NHA has forfeited its rights and interests by virtue of the
expropriation judgment and the expropriated properties should now be returned to herein petitioners. We are not
persuaded.
The 1987 Constitution explicitly provides for the exercise of the power of eminent domain over private properties
upon payment of just compensation. More specifically, section 9, Article III states that private property shall not be
taken for public use without just compensation. The constitutional restraints are public use and just compensation.
Petitioners cannot insist on a restrictive view of the eminent domain provision of the Constitution by contending that
the contract for low cost housing is a deviation from the stated public use. It is now settled doctrine that the concept of
public use is no longer limited to traditional purposes. Here, as elsewhere, the idea that "public use" is strictly limited
to clear cases of "use by the public" has been abandoned. The term "public use" has now been held to be
synonymous with "public interest," "public benefit," "public welfare," and "public convenience."8 The rationale for this
new approach is well explained in the case of Heirs of Juancho Ardona, et al. vs. Reyes, et al.,9 to wit:

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

xxx

xxx

The taking to be valid must be for public use. There was a time when it was felt that a literal meaning should
be attached to such a requirement. Whatever project is undertaken must be for the public to enjoy, as in the
case of streets or parks. Otherwise, expropriation is not allowable. It is not anymore. As long as the purpose
of the taking is public, then the power of eminent domain comes into play. As just noted, the constitution in at
least two cases, to remove any doubt, determines what is public use. One is the expropriation of lands to be
subdivided into small lots for resale at cost to individuals. The other is in the transfer, through the exercise of
this power, of utilities and other private enterprise to the government. It is accurate to state then that at
present whatever may be beneficially employed for the general welfare satisfies the requirement of
public use." (emphasis supplied)
The act of respondent NHA in entering into a contract with a real estate developer for the construction of low cost
housing on the expropriated lots to be sold to qualified low income beneficiaries cannot be taken to mean as a
deviation from the stated public purpose of their taking. Jurisprudence has it that the expropriation of private land for
slum clearance and urban development is for a public purpose even if the developed area is later sold to private
homeowners, commercials firms, entertainment and service companies, and other private concerns.10
Moreover, the Constitution itself allows the State to undertake, for the common good and in cooperation with the
private sector, a continuing program of urban land reform and housing which will make at affordable cost decent
housing and basic services to underprivileged and homeless citizens in urban centers and resettlement areas.11 The
expropriation of private property for the purpose of socialized housing for the marginalized sector is in furtherance of
the social justice provision under Section 1, Article XIII of the Constitution which provides that:
"SECTION 1. The Congress shall give highest priority to the enactment of measures that protect and
enhance the right of all the people to human dignity, reduce social, economic, and political inequalities, and
remove cultural inequities by equitably diffusing wealth and political power for the common good.
To this end, the State shall require the acquisition, ownership, use and disposition of property and its
increments."
It follows that the low cost housing project of respondent NHA on the expropriated lots is compliant with the "public
use" requirement.
We likewise do not subscribe to petitioners' contention that the stated public purpose was abandoned when
respondent NHA failed to occupy the expropriated lots by relocating squatters from the Metro Manila area. The
expropriation judgment declared that respondent NHA has a lawful right to take petitioners properties "for the public
use or purpose of expanding the Dasmarias Resettlement Project." The taking here is absolute, without any
condition, restriction or qualification. Contrary to petitioners' submission, the ruling enunciated in the early case
of Fery vs. Municipality of Cabanatuan,12 is still good and sound doctrine, viz.:
"x x x If, for example, land is expropriated for a particular purpose, with the condition that when that purpose
is ended or abandoned the property shall return to its former owner, then, of course, when the purpose is
terminated or abandoned the former owner reacquires the property so expropriated. x x x If, upon the
contrary, however, the decree of expropriation gives to the entity a fee simple title, then, of course, the land
becomes the absolute property of the expropriator x x x.
When land has been acquired for public use in fee simple unconditionally, either by the exercise of
eminent domain or by purchase, the former owner retains no rights in the land, and the public use

may be abandoned, or the land may be devoted to a different use, without any impairment of the
estate or title acquired, or any reversion to the former owner."
Petitioners further aver that the continued failure of respondent NHA to pay just compensation for a long period of
time justifies the forfeiture of its rights and interests over the expropriated lots. They demand the return of the
expropriated lots. Respondent NHA justifies the delay to pay just compensation by reason of the failure of petitioners
to pay the capital gains tax and to surrender the owners' duplicate certificates of title.
In the recent case of Republic of the Philippines vs. Court of Appeals, et al.,13 the Court ruled that non-payment of just
compensation does not entitle the private landowners to recover possession of their expropriated lots. Thus:
"Thus, in Valdehueza vs. Republic where the private landowners had remained unpaid ten years after the
termination of the expropriation proceedings, this Court ruled
'The points in dispute are whether such payment can still be made and, if so, in what amount. Said lots have
been the subject of expropriation proceedings. By final and executory judgment in said proceedings, they
were condemned for public use, as part of an airport, and ordered sold to the government. x x x. It follows
that both by virtue of the judgment, long final, in the expropriation suit, as well as the annotations upon their
title certificates, plaintiffs are not entitled to recover possession of their expropriated lots which are still
devoted to the public use for which they were expropriated but only to demand the market value of the
same.
Said relief may be granted under plaintiffs' prayer for such other remedies, which may be deemed just and
equitable under the premises.'
The Court proceeded to reiterate its pronouncement inAlfonso vs. Pasay City where the recovery of
possession of property taken for public use prayed for by the unpaid landowner was denied even while no
requisite expropriation proceedings were first instituted. The landowner was merely given the relief of
recovering compensation for his property computed at its market value at the time it was taken and
appropriated by the State.
The judgment rendered by the Bulacan RTC in 1979 on the expropriation proceedings provides not only
for the payment of just compensation to herein respondents but likewise adjudges the property
condemned in favor of petitioner over which parties, as well as their privies, are bound. Petitioner
has occupied, utilized and, for all intents and purposes, exercised dominion over the property
pursuant to the judgment. The exercise of such rights vested to it as the condemnee indeed has
amounted to at least a partial compliance or satisfaction of the 1979 judgment, thereby preempting
any claim of bar by prescription on grounds of non-execution. In arguing for the return of their property
on the basis of non-payment, respondents ignore the fact that the right of the expropriating authority
is far from that of an unpaid seller in ordinary sales, to which the remedy of rescission might
perhaps apply. An in rem proceeding, condemnation acts upon the property. After condemnation, the
paramount title is in the public under a new and independent title; thus, by giving notice to all claimants to a
disputed title, condemnation proceedings provide a judicial process for securing better title against all the
world than may be obtained by voluntary conveyance." (emphasis supplied)
We, however, likewise find the refusal of respondent NHA to pay just compensation, allegedly for failure of petitioners
to pay capital gains tax and surrender the owners' duplicate certificates of title, to be unfounded and unjustified.
First, under the expropriation judgment the payment of just compensation is not subject to any condition. Second, it is
a recognized rule that although the right to enter upon and appropriate the land to public use is completed prior to
payment, title to the property expropriated shall pass from the owner to the expropriator only upon full payment of the
just compensation. In the case of Association of Small Landowners in the Phils., Inc., et al. vs. Secretary of Agrarian
Reform,14 it was held that:

"Title to property which is the subject of condemnation proceedings does not vest the condemnor until the
judgment fixing just compensation is entered and paid, but the condemnor's title relates back to the date on
which the petition under the Eminent Domain Act, or the commissioner's report under the Local
Improvement Act, is filed.
x x x Although the right to appropriate and use land taken for a canal is complete at the time of entry,
title to the property taken remains in the owner until payment is actually made.
In Kennedy v. Indianapolis, the US Supreme Court cited several cases holding that title to property does not
pass to the condemnor until just compensation had actually been made. In fact, the decisions appear to be
uniformly to this effect. As early as 1838, in Rubottom v. McLure, it was held that 'actual payment to the
owner of the condemned property was a condition precedent to the investment of the title to the property in
the State' albeit 'not to the appropriation of it to public use.' In Rexford v. Knight, the Court of Appeals of New
York said that the construction upon the statutes was that the fee did not vest in the State until the payment
of the compensation although the authority to enter upon and appropriate the land was complete prior to the
payment. Kennedy further said that 'both on principle and authority the rule is x x x that the right to enter
on and use the property is complete, as soon as the property is actually appropriated under the
authority of law for a public use, but that the title does not pass from the owner without his consent,
until just compensation has been made to him.'"
Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes, that:
If the laws which we have exhibited or cited in the preceding discussion are attentively examined it will be
apparent that the method of expropriation adopted in this jurisdiction is such as to afford absolute
reassurance that no piece of land can be finally and irrevocably taken from an unwilling owner until
compensation is paid. x x x." (emphasis supplied)
With respect to the amount of the just compensation still due and demandable from respondent NHA, the lower
courts erred in not awarding interest computed from the time the property is actually taken to the time when
compensation is actually paid or deposited in court. In Republic, et al. vs. Court of Appeals, et al.,15 the Court
imposed interest at 12% per annum in order to help eliminate the issue of the constant fluctuation and inflation of the
value of the currency over time, thus:
"The constitutional limitation of 'just compensation' is considered to be the sum equivalent to the market
value of the property, broadly described to be the price fixed by the seller in open market in the usual and
ordinary course of legal action and competition or the fair value of the property as between one who
receives, and one who desires to sell, it being fixed at the time of the actual taking by the government. Thus,
if property is taken for public use before compensation is deposited with the court having jurisdiction over the
case, the final compensation must include interests on its just value to be computed from the time the
property is taken to the time when compensation is actually paid or deposited with the court. In fine, between
the taking of the property and the actual payment, legal interests accrue in order to place the owner in a
position as good as (but not better than) the position he was in before the taking occurred.
x x x This allowance of interest on the amount found to be the value of the property as of the time of the
taking computed, being an effective forbearance, at 12% per annum should help eliminate the issue of the
constant fluctuation and inflation of the value of the currency over time. Article 1250 of the Civil Code,
providing that, in case of extraordinary inflation or deflation, the value of the currency at the time of the
establishment of the obligation shall be the basis for the payment when no agreement to the contrary is
stipulated, has strict application only to contractual obligations. In other words, a contractual agreement is
needed for the effects of extraordinary inflation to be taken into account to alter the value of the currency."
Records show that there is an outstanding balance of P1,218,574.35 that ought to be paid to petitioners.16 It is not
disputed that respondent NHA took actual possession of the expropriated properties in 1977.17 Perforce, while
petitioners are not entitled to the return of the expropriated property, they are entitled to be paid the balance of
P1,218,574.35 with legal interest thereon at 12% per annum computed from the taking of the property in 1977 until
the due amount shall have been fully paid.

WHEREFORE, the appealed judgment is modified as follows:

1. Ordering respondent National Housing Authority to pay petitioners the amount of P1,218,574.35 with legal
interest thereon at 12% per annum computed from the taking of the expropriated properties in 1997 until the
amount due shall have been fully paid;
2. Ordering petitioners to pay the capital gains tax; and
3. Ordering petitioners to surrender to respondent National Housing Authority the owners' duplicate
certificates of title of the expropriated properties upon full payment of just compensation.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 146091

July 28, 2008

MARIA PAZ V. NEPOMUCENO, joined by her husband, FERMIN A. NEPOMUCENO, Petitioners,

vs.
CITY OF SURIGAO and SALVADOR SERING in his capacity as City Mayor of Surigao, Respondents.
DECISION
CORONA, J.:
Petitioners assail the February 29, 2000 decision1 and October 12, 2000 resolution of the Court of Appeals (CA) in
CA-G.R. CV No. 56461 affirming with modification the decision of the Regional Trial Court (RTC) of Surigao City,
Branch 32, in Civil Case No. 4570.
Civil Case No. 4570 was a complaint for "Recovery of Real Property and/or its Market Value" filed by petitioner Maria
Paz Nepomuceno to recover a 652 sq. m. portion2 of her 50,000 sq. m. lot3 which was occupied, developed and used
as a city road by the city government of Surigao. Maria Paz alleged that the city government neither asked her
permission to use the land nor instituted expropriation proceedings for its acquisition. On October 4, 1994, she and
her husband, co-petitioner, Fermin A. Nepomuceno, wrote respondent (then Surigao City Mayor) Salvador Sering a
letter proposing an amicable settlement for the payment of the portion taken over by the city. They subsequently met
with Mayor Sering to discuss their proposal but the mayor rebuffed them in public and refused to pay them anything.
In a letter dated January 30, 1995, petitioners sought reconsideration of the mayors stand. But again, the city mayor
turned this down in his reply dated January 31, 1995. As a consequence, petitioners claimed that they suffered
mental anguish, embarrassment, disappointment and emotional distress which entitled them to moral damages.

In their answer, respondents admitted the existence of the road in question but alleged that it was constructed way
back in the 1960s during the administration of former Mayor Pedro Espina. At that time, the lot was owned by the
spouses Vicente and Josefa Fernandez who signed a road right-of-way agreement in favor of the municipal
government. However, a copy of the agreement could no longer be found because the records were completely
destroyed and lost when the Office of the City Engineer was demolished by typhoon Nitang in 1994.
After hearing the parties and evaluating their respective evidence, the RTC rendered its decision4 and held:
WHEREFORE, premises considered, judgment is hereby rendered ordering the City of Surigao to pay to Maria Paz
V. Nepomuceno and her husband, Fermin Nepomuceno, the sum of P5,000.00 as attorneys fees, and the further
sum ofP3,260.00 as compensation for the portion of land in dispute, with legal interest thereon from 1960 until fully
paid, and upon payment, directing her to execute the corresponding deed of conveyance in favor of the said
defendant. The Clerk of Court shall execute the necessary instrument in the event of her failure to do so.
The claims for moral and exemplary damages are denied for lack of basis. No pronouncement as to costs.
SO ORDERED.5
Unsatisfied with that decision, the petitioners appealed to the CA. As stated earlier, the CA modified the RTC decision
and held that petitioners were entitled to P30,000 as moral damages for having been rebuffed by Mayor Sering in the
presence of other people. It also awarded petitioners P20,000 as attorneys fees and litigation expenses considering
that they were forced to litigate to protect their rights and had to travel to Surigao City from their residence in Ormoc
City to prosecute their claim. The CA affirmed the decision of the trial court in all other respects. Petitioners filed a
motion for reconsideration but it was denied. Hence, this petition.
Petitioners claim that, in fixing the value of their property, justice and equity demand that the value at the time of
actual payment should be the basis, not the value at the time of the taking as the RTC and CA held. They
demand P200/sq. m. or a total sum of P130,400 plus legal interest. In the alternative, petitioners pray for the reexamination of the meaning of just compensation and cite the separate concurring opinion of Justice Antonio Barredo
in Municipality of La Carlota v. Spouses Gan.6
Petitioners also assert that the CA decision in Spouses Mamerto Espina, Sr. and Flor Espina v. City of Ormoc7 should
be applied to this case because of the substantial factual similarity between the two cases. In that case, the City of
Ormoc was directed to institute a separate expropriation proceeding over the subject property.
Moreover, petitioners maintain that exemplary damages should be awarded because respondent City of Surigao
illegally took their property.
Petitioners arguments are without merit.
In a long line of cases, we have consistently ruled that where actual taking is made without the benefit of
expropriation proceedings and the owner seeks recovery of the possession of the property prior to the filing of
expropriation proceedings, it is the value of the property at the time of taking that is controlling for purposes of
compensation.8 As pointed out inRepublic v. Lara,9 the reason for this rule is:
The owner of private property should be compensated only for what he actually loses; it is not intended that his
compensation shall extend beyond his loss or injury. And what he loses is only the actual value of his property
at the time it is taken. This is the only way the compensation to be paid can be truly just; i.e., "just" not only to the
individual whose property is taken, "but to the public, which is to pay for it."
Thus, the value of petitioners property must be ascertained as of 1960 when it was actually taken. It is as of that time
that the real measure of their loss may fairly be adjudged. The value, once fixed, shall earn interest at the legal rate
until full payment is effected, conformably with other principles laid down by case law.10

Regarding petitioners contention on the applicability of Article 1250 of the Civil Code,11 Republic v. CA12 is
enlightening:
Article 1250 of the Civil Code, providing that, in case of extraordinary inflation or deflation, the value of the currency
at the time of the establishment of the obligation shall be the basis for the payment when no agreement to the
contrary is stipulated, has strict application only to contractual obligations. In other words, a contractual
agreement is needed for the effects of extraordinary inflation to be taken into account to alter the value of the
currency. (emphasis supplied)1avvphi1
Since there was never any contractual obligation between the parties in this case, Article 1250 of the Civil Code finds
no application.
Moreover, petitioners cannot properly insist on the application of the CA decision in Spouses Mamerto Espina, Sr.
and Flor Espina v. City of Ormoc.13 A decision of the CA does not establish judicial precedent. A ruling of the CA on
any question of law is not binding on this Court.14 In fact, the Court may review, modify or reverse any such ruling of
the CA.
Finally, we deny petitioners prayer for exemplary damages. Exemplary damages may be imposed by way of example
or correction for the public good.15 The award of these damages is meant to be a deterrent to socially deleterious
actions.16Exemplary damages would have been appropriate had it been shown that the city government indeed
misused its power of eminent domain.17 In this case, both the RTC and the CA found there was no socially
deleterious action or misuse of power to speak of. We see no reason to rule otherwise.
WHEREFORE, the petition is hereby DENIED.
Costs against petitioners.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-10448

August 30, 1957

IN THE MATTER OF A PETITION FOR DECLARATORY JUDGMENT REGARDING THE VALIDITY OF

MUNICIPAL ORDINANCE NO. 3659 OF THE CITY OF MANILA. PHYSICAL THERAPY ORGANIZATION OF THE
PHILIPPINES, INC.,petitioner-appellant,
vs.
THE MUNICIPAL BOARD OF THE CITY OF MANILA and ARSENIO H. LACSON, as Mayor of the City of
Manila,respondents-appellees.

Mariano M. de Joya for appellant.

City Fiscal Eugenio Angeles and Assistant Fiscal Arsenio Naawa for appellees.
MONTEMAYOR, J.:
The petitioner-appellant, an association of registered massagists and licensed operators of massage clinics in the
City of Manila and other parts of the country, filed an action in the Court of First Instance of Manila for declaratory
judgment regarding the validity of Municipal Ordinance No. 3659, promulgated by the Municipal Board and approved
by the City Mayor. To stop the City from enforcing said ordinance, the petitioner secured an injunction upon filing of a
bond in the sum of P1,000.00. A hearing was held, but the parties without introducing any evidence submitted the
case for decision on the pleadings, although they submitted written memoranda. Thereafter, the trial court dismissed
the petition and later dissolved the writ of injunction previously issued.
The petitioner appealed said order of dismissal directly to this Court. In support of its appeal, petitioner-appellant
contends among other things that the trial court erred in holding that the Ordinance in question has not restricted the
practice of massotherapy in massage clinics to hygienic and aesthetic massage, that the Ordinance is valid as it does
not regulate the practice of massage, that the Municipal Board of Manila has the power to enact the Ordinance in
question by virtue of Section 18, Subsection (kk), Republic Act 409, and that permit fee of P100.00 is moderate and
not unreasonable. Inasmuch as the appellant assails and discuss certain provisions regarding the ordinance in
question, and it is necessary to pass upon the same, for purposes of ready reference, we are reproducing said
ordinance in toto.
ORDINANCE No. 3659
AN ORDINANCE REGULATING THE OPERATION OF MASSAGE CLINICS IN THE CITY OF MANILA AND
PROVIDING PENALTIES FOR VIOLATIONS THEREOF.
Be it ordained by the Municipal Board of the City of Manila, that:
Section 1. Definition. For the purpose of this Ordinance the following words and phrases shall be taken in
the sense hereinbelow indicated:
(a) Massage clinic shall include any place or establishment used in the practice of hygienic and aesthetic
massage;
(b) Hygienic and aesthetic massage shall include any system of manipulation of treatment of the superficial
parts of the human body of hygienic and aesthetic purposes by rubbing, stroking, kneading, or tapping with
the hand or an instrument;
(c) Massagist shall include any person who shall have passed the required examination and shall have been
issued a massagist certificate by the Committee of Examiners of Massagist, or by the Director of Health or
his authorized representative;
(d) Attendant or helper shall include any person employed by a duly qualified massagist in any message
clinic to assist the latter in the practice of hygienic and aesthethic massage;
(e) Operator shall include the owner, manager, administrator, or any person who operates or is responsible
for the operation of a message clinic.
SEC. 2. Permit Fees. No person shall engage in the operation of a massage clinic or in the occupation of
attendant or helper therein without first having obtained a permit therefor from the Mayor. For every permit
granted under the provisions of this Ordinance, there shall be paid to the City Treasurer the following annual
fees:

(a) Operator of a massage

(b) Attendant or helper

P100.00
5.00

Said permit, which shall be renewed every year, may be revoked by the Mayor at any time for the violation of
this Ordinance.
SEC. 3. Building requirement. (a) In each massage clinic, there shall be separate rooms for the male and
female customers. Rooms where massage operations are performed shall be provided with sliding curtains
only instead of swinging doors. The clinic shall be properly ventilated, well lighted and maintained under
sanitary conditions at all times while the establishment is open for business and shall be provided with the
necessary toilet and washing facilities.
(b) In every clinic there shall be no private rooms or separated compartment except those assigned for toilet,
lavatories, dressing room, office or kitchen.
(c) Every massage clinic shall "provided with only one entrance and it shall have no direct or indirect
communication whatsoever with any dwelling place, house or building.
SEC. 4. Regulations for the operation of massage clinics. (a) It shall be unlawful for any operator
massagist, attendant or helper to use, or allow the use of, a massage clinic as a place of assignation or
permit the commission therein of any incident or immoral act. Massage clinics shall be used only for hygienic
and aesthetic massage.
(b) Massage clinics shall open at eight o'clock a.m. and shall close at eleven o'clock p.m.
(c) While engaged in the actual performance of their duties, massagists, attendants and helpers in a
massage clinic shall be as properly and sufficiently clad as to avoid suspicion of intent to commit an indecent
or immoral act;
(d) Attendants or helpers may render service to any individual customer only for hygienic and aesthetic
purposes under the order, direction, supervision, control and responsibility of a qualified massagist.
SEC. 5. Qualifications No person who has previously been convicted by final judgment of competent
court of any violation of the provisions of paragraphs 3 and 5 of Art. 202 and Arts. 335, 336, 340 and 342 of
the Revised Penal Code, or Secs. 819 of the City of Manila, or who is suffering from any venereal or
communicable disease shall engage in the occupation of massagist, attendant or helper in any massage
clinic. Applicants for Mayor's permit shall attach to their application a police clearance and health certificate
duly issued by the City Health Officers as well as a massagist certificate duly issued by the Committee or
Examiners for Massagists or by the Director of Health or his authorized representatives, in case of
massagists.
SEC. 6. Duty of operator of massage clinic. No operator of massage clinic shall allow such clinic to
operate without a duly qualified massagist nor allow, any man or woman to act as massagist, attendant or
helper therein without the Mayor's permit provided for in the preceding sections. He shall submit whenever
required by the Mayor or his authorized representative the persons acting as massagists, attendants or
helpers in his clinic. He shall place the massage clinic open to inspection at all times by the police, health
officers, and other law enforcement agencies of the government, shall be held liable for anything which may
happen with the premises of the massage clinic.
SEC. 7. Penalty. Any person violating any of the provisions of this Ordinance shall upon conviction, be
punished by a fine of not less than fifty pesos nor more than two hundred pesos or by imprisonment for not
less than six days nor more than six months, or both such fine and imprisonment, at the discretion of the
court.

SEC. 8. Repealing Clause. All ordinances or parts of ordinances, which are inconsistent herewith, are
hereby repealed.
SEC. 9. Effectivity. This Ordinance shall take effect upon its approval.
Enacted, August 27, 1954.
Approved, September 7, 1954.
The main contention of the appellant in its appeal and the principal ground of its petition for declaratory judgment is
that the City of Manila is without authority to regulate the operation of massagists and the operation of massage
clinics within its jurisdiction; that whereas under the Old City Charter, particularly, Section 2444 (e) of the Revised
Administrative Code, the Municipal Board was expressly granted the power to regulate and fix the license fee for the
occupation of massagists, under the New Charter of Manila, Republic Act 409, said power has been withdrawn or
omitted and that now the Director of Health, pursuant to authority conferred by Section 938 of the Revised
Administrative Code and Executive Order No. 317, series of 1941, as amended by Executive Order No. 392, series,
1951, is the one who exercises supervision over the practice of massage and over massage clinics in the Philippines;
that the Director of Health has issued Administrative Order No. 10, dated May 5, 1953, prescribing "rules and
regulations governing the examination for admission to the practice of massage, and the operation of massage
clinics, offices, or establishments in the Philippines", which order was approved by the Secretary of Health and duly
published in the Official Gazette; that Section 1 (a) of Ordinance No. 3659 has restricted the practice of massage to
only hygienic and aesthetic massage prohibits or does not allow qualified massagists to practice therapeutic massage
in their massage clinics. Appellant also contends that the license fee of P100.00 for operator in Section 2 of the
Ordinance is unreasonable, nay, unconscionable.
If we can ascertain the intention of the Manila Municipal Board in promulgating the Ordinance in question, much of
the objection of appellant to its legality may be solved. It would appear to us that the purpose of the Ordinance is not
to regulate the practice of massage, much less to restrict the practice of licensed and qualified massagists of
therapeutic massage in the Philippines. The end sought to be attained in the Ordinance is to prevent the commission
of immorality and the practice of prostitution in an establishment masquerading as a massage clinic where the
operators thereof offer to massage or manipulate superficial parts of the bodies of customers for hygienic and
aesthetic purposes. This intention can readily be understood by the building requirements in Section 3 of the
Ordinance, requiring that there be separate rooms for male and female customers; that instead of said rooms being
separated by permanent partitions and swinging doors, there should only be sliding curtains between them; that there
should be "no private rooms or separated compartments, except those assigned for toilet, lavatories, dressing room,
office or kitchen"; that every massage clinic should be provided with only one entrance and shall have no direct or
indirect communication whatsoever with any dwelling place, house or building; and that no operator, massagists,
attendant or helper will be allowed "to use or allow the use of a massage clinic as a place of assignation or permit the
commission therein of any immoral or incident act", and in fixing the operating hours of such clinic between 8:00 a.m.
and 11:00 p.m. This intention of the Ordinance was correctly ascertained by Judge Hermogenes Concepcion,
presiding in the trial court, in his order of dismissal where he said: "What the Ordinance tries to avoid is that the
massage clinic run by an operator who may not be a masseur ormassagista may be used as cover for the running or
maintaining a house of prostitution."
Ordinance No. 3659, particularly, Sections 1 to 4, should be considered as limited to massage clinics used in the
practice of hygienic and aesthetic massage. We do not believe that Municipal Board of the City of Manila and the
Mayor wanted or intended to regulate the practice of massage in general or restrict the same to hygienic and
aesthetic only.
As to the authority of the City Board to enact the Ordinance in question, the City Fiscal, in representation of the
appellees, calls our attention to Section 18 of the New Charter of the City of Manila, Act No. 409, which gives
legislative powers to the Municipal Board to enact all ordinances it may deem necessary and proper for the promotion
of the morality, peace, good order, comfort, convenience and general welfare of the City and its inhabitants. This is
generally referred to as the General Welfare Clause, a delegation in statutory form of the police power, under which
municipal corporations, are authorized to enact ordinances to provide for the health and safety, and promote the
morality, peace and general welfare of its inhabitants. We agree with the City Fiscal.

As regards the permit fee of P100.00, it will be seen that said fee is made payable not by the masseur or massagist,
but by the operator of a massage clinic who may not be a massagist himself. Compared to permit fees required in
other operations, P100.00 may appear to be too large and rather unreasonable. However, much discretion is given to
municipal corporations in determining the amount of said fee without considering it as a tax for revenue purposes:
The amount of the fee or charge is properly considered in determining whether it is a tax or an exercise of
the police power. The amount may be so large as to itself show that the purpose was to raise revenue and
not to regulate, but in regard to this matter there is a marked distinction between license fees imposed upon
useful and beneficial occupations which the sovereign wishes to regulate but not restrict, and those which
are inimical and dangerous to public health, morals or safety. In the latter case the fee may be very large
without necessarily being a tax. (Cooley on Taxation, Vol. IV, pp. 3516-17; underlining supplied.)
Evidently, the Manila Municipal Board considered the practice of hygienic and aesthetic massage not as a useful and
beneficial occupation which will promote and is conducive to public morals, and consequently, imposed the said
permit fee for its regulation.
In conclusion, we find and hold that the Ordinance in question as we interpret it and as intended by the appellees is
valid. We deem it unnecessary to discuss and pass upon the other points raised in the appeal. The order appealed
from is hereby affirmed. No costs.