Consequently, we agree with Commissioner
Atienza's report that the fair market value of
CASE NO. 9
THIRD DIVISION
[G.R. No. 129998. December 29, 1998.]
NATIONAL POWER
CORPORATION, petitioner, vs. LOURDES
HENSON, married to Eugenio Galvez;
JOSEFINA HENSON, married to Petronio
Katigbak, JESUSA HENSON; CORAZON
HENSON, married to Jose Ricafort;
ALFREDO TANCHIATCO; BIENVENIDO
DAVID; MARIA BONDOC CAPILI, married to
Romeo Capili; and MIGUEL
MANOLOTO, respondents.
SYLLABUS
1. POLITICAL LAW; INHERENT
POWER OF THE STATE; EMINENT DOMAIN;
JUST COMPENSATION; CRITERION IN
DETERMINATION THEREOF. — The parcels
of land sought to be expropriated are
undeniably idle, undeveloped, raw agricultural
land, bereft of any improvement. Except for the
Henson family, all the other respondents were
admittedly farmer beneficiaries under
operation land transfer of the Department of
Agrarian Reform. However, the land has been
reclassified as residential. The nature and
character of the land at the time of its taking is
the principal criterion to determine just
compensation to the landowner. cdasia
2. ID.; ID.; ID.; ID.; PRICE OF P375.00
PER SQUARE METER CONSIDERED JUST
COMPENSATION FOR UNDEVELOPED
RAW LAND IN CASE AT BAR. —
Commissioner Atienza recommended a fair
market value at P375.00 per square meter.
This appears to be the closest valuation to the
market value of lots in the adjoining fully
developed subdivision. Considering that the
subject parcels of land are undeveloped raw
land, the price of P375.00 per square meter
would appear to the Court as the just
compensation for the taking of such raw land.
subject parcels of land be fixed at P375.00 per
square meter.
3. ID.; ID.; ID.; ID.; PAYMENT OF
LEGAL INTEREST ON COMPENSATION
AWARDED FROM DATE PETITIONER WAS
PLACED IN POSSESSION OF THE LAND,
PROPER IN CASE AT BAR. — The trial court
and the Court of Appeals correctly required
petitioner to pay legal interest on the
compensation awarded from September 11,
1990, the date petitioner was placed in
possession of the subject land, less the amount
respondents had withdrawn from the deposit
that petitioner made with the Provincial
Treasurer's Office.
4. ID.; ID.; ID.; DOUBLE PAYMENT
FOR 3,611 SQUARE METERS OF LOT 5 NOT
PROPER IN CASE AT BAR. — The trial court
erroneously ordered double payment for 3,611
square meters of lot 5 (portion) in the
dispositive part of its decision, and, hence, this
must be deleted.
5. ID.; ID.; ID.; AREA OF COMMUNAL
IRRIGATION CANAL MUST BE EXCLUDED
FROM EXPROPRIATION IN CASE AT BAR.
— We also agree with petitioner that the area
of the communal irrigation canal consisting of
4,809 square meters must be excluded from
the land to be expropriated. To begin with, it is
excluded in the amended complaint. Hence,
the trial court and the Court of Appeals erred in
including the same in the area to be taken.
6. ADMINISTRATIVE LAW;
ADMINISTRATIVE AGENCY; NATIONAL
POWER CORPORATION; EXEMPT FROM
PAYMENT OF COSTS OF PROCEEDINGS.
— We, however, rule that petitioner is under its
charter exempt from payment of costs of the
proceedings. DcITaC
DECISION
1
PARDO, J p:
The case is an appeal via certiorari
under Rule 45 of the Revised Rules of Court
from the decision of the Court of Appeals,
which affirmed with modification the decision of
the Regional Trial Court, San Fernando,
Pampanga, in a special civil action for eminent
domain, ordering the National Power
Corporation (NPC) to pay respondents
landowners/claimants just compensation for
the taking of their five (5) parcels of land, with
an area of 63,220 square meters at P400.00,
per square meter, with legal interest from
September 11, 1990, plus costs of the
proceedings. Cdpr
On March 21, 1990, the National Power
Corporation (NPC) originally instituted with the
Regional Trial Court, Third Judicial District,
Branch 46, San Fernando, Pampanga a
complaint 1 for eminent domain, later
amended on October 11, 1990, for the taking
for public use of five (5) parcels of land, owned
or claimed by respondents, with a total
aggregate area of 58,311 square meters, for
the expansion of the NPC Mexico Sub-
Station. 2
Respondents are the registered
owners/claimants of the five (5) parcels of land
sought to be expropriated, situated in San Jose
Matulid, Mexico Pampanga, more particularly
described as follows:
"Parcel of rice land, being Lot 1, 2, 3, 4,
and 5 of the subdivision plan Psd-03-017121
(OLT) and being a portion of Lot 212 of Mexico
Cadastre, situated in the Barangay of San Jose
Matulid, Municipality of Mexico, province of
Pampanga, Island of Luzon. Bounded on the
North by Barangay Road Calle San Jose; on
the East by Lot 6, Psd-03-017121 (OLT) owned
by the National Power Corporation; on the
South by Lot 101, Psd-03-017121 (OLT) being
an irrigation ditch; on the West by Lot 100, Psd-
03-0017121 (OLT) being an irrigation ditch and
Barrio road, containing an aggregate area of
FIFTY EIGHT THOUSAND THREE
HUNDRED ELEVEN (58,311) square meters,
which parcels of land are broken down as
follows with claimants;
1. Lot 1-A = 43,532Henson Family
sq. m. —
2. Lot 2-A = 6,823 sq.Alfredo Tanchiatco,
m. —
encumbered with
Land Bank
of the
Phil. (LBP)
3. Lot 3-A = 3,057 sq.Bienvenido David,
m. —
encumbered with LBP
4. Lot 4-A = 1,438 sq.Maria Bondoc
m. —
Capili, encumbered
with LBP
5. Lot 5-A = 3,461 sq.Miguel Manoloto
m. —
and Henson Family
Total A = 58,311
sq. m."
and cover by Transfer Certificate of Title No.
557 in the name of Henson, et al.; Transfer
Certificate of title No. 7131/Emancipation
Patent No. A-277216 in the name of Alfredo
Tanchiatco; Transfer Certificate of Title No.
7111/Emancipation Patent No. A-278086 in the
name of Bienvenido David; Transfer Certificate
of Title No. 7108/Emancipation Patent No. A-
278089 in the name of Maria B. Capili;
Certificate of Land Transfer No. 4550 in the
name of Miguel C. Manoloto, and Subdivision
Plan Psd-03-017121 (OLT), which is a
subdivision of Lot 212, Mexico Cadastre as
surveyed for Josefina Katigbak, et al. Said five
(5) parcels of land agricultural/riceland covered
by Operation Land Transfer (OLT) of the
Department of Agrarian Reform. 3
Petitioner needed the entire area of the
five (5) parcels of land, comprising an
aggregate area of 58,311 square meters, for
the expansion of its Mexico Subdivision. 4
On March 28, 1990, petitioner filed an
urgent motion to fix the provisional value of the
subject parcels of land. 3
On April 20, 1990, respondent filed a
motion to dismiss. 4 They did not challenge
petitioner's right to condemn their property, but
2
declared that the fair market value of their
property was from P180.00 to P250.00 per
square meter. 5
On July 10, 1990, the trial court denied
respondents' motion to dismiss. The court did
not declare that petitioner had a lawful right to
take the property sought to be
expropriated. 6 However, the court fixed the
provisional value of the land at P100.00 per
square meter, for a total area of
63,220 7 square meters of respondents'
property, to be deposited with the Provisional
Treasurer of Pampanga. Petitioner deposited
the amount on August 29, 1990. 8
On September 5, 1990, the trial court
issued a writ of possession in favor of
petitioner, and, on September 11, 1990, the
court's deputy sheriff placed petitioner in
possession of the subject land. 9
On November 22, 1990, and December
20, 1990, the trial court granted the motions of
respondents to withdraw the deposit made by
petitioner of the provisional value of their
property amounting to P5,831,100.00, with a
balance of P690,900.00, remaining with the
Provisional Treasurer of Pampanga. 10
On April 5, 1991, the trial court issued
an order appointing three (3) commissioners to
aid the in the reception of evidence to
determine just compensation for the taking of
subject property. After receiving the evidence
and conducting an ocular inspection, the
commissioners submitted to the court their
individual reports.
Commissioner Mariano C. Tiglao, in his
report dated September 10, 1992,
recommended that their fair market value of the
entire 63,220 square meters property be fixed
at P350.00 per square meter. Commissioner
Arnold P. Atienza, in his report dated February
24, 1993, recommended that the fair market
value be fixed at P375.00 per square meter.
Commissioner Victorino Oracio, in his report
dated April 28, 1993, recommended that the
fair market value be fixed at P170.00 per
square meter. 11
However, the trial court did not conduct
a hearing on any of the reports.
On May 19, 1993, the trial court
rendered judgment fixing the amount of just
compensation to be paid by the petitioner for
the taking of the entire area of 63,220 squares
meters at P400.00 per square meter, with legal
interest thereon computed from September 11,
1990, when petitioner was placed in
possession of the land, plus attorney's fees of
P20,000.00, and costs of the proceedings. 12
In due time, petitioner appealed to the
Court of Appeals. 13
On July 23, 1997, the Court Appeals
rendered decision affirming that of the Regional
Trial Court, except that the award of
P20,000.00 as attorney's fees was deleted. 14
Hence, this petition for review. 15
By resolution adopted on October 8,
1997, the Court required respondents to
comment on the petition within ten (10) days
from notice. 16 On January 7, 1998,
respondents filed their comment thereon. 17
By resolution adopted on February 2,
1998, the Court required petitioner to file a
reply to the comment. 18 On August 25, 1990,
petitioner filed a reply thereto. 19
We now resolve to give due course to
the petition. We modify the appealed
decision. cdphil
As respondents did not challenge
petitioner's right to expropriate their property,
the issue presented boils down to what is the
just compensation for the taking of
respondents' property for the expansion of the
NPC's Mexico Sub-station, situated in San
Jose Matulid, Mexico, Pampanga.
The parcels of land sought to be
expropriated are undeniably idle, undeveloped,
raw agricultural land, bereft of any
improvement. Except for the Henson family, all
the other respondents were admittedly farmer
beneficiaries under operation land transfer of
the Department of Agrarian Reform. However,
the land has been reclassified as residential.
The nature and character of the land at the time
of its taking is the principal criterion to
determine just compensation to the
landowner. 20
3
 In this case, the trial court and the
Court of Appeals fixed the value of the land at
P400.00 per square meter, which was the
selling price of lots in the adjacent fully
developed subdivision, the Santo Domingo
Village Subdivision. The land in question,
however, was an undeveloped, idle land,
principally agricultural in character, though
reclassified as residential. Unfortunately, the
trial court, after creating a board of
commissioners to help it determine the market
value of the land did not conduct a hearing on
the report of the commissioners. The trial court
1. The Court fixes the amount of P375.00, per
fixed the fair market value of subject land in an
amount equal to the value of lots in the
adjacent fully developed subdivision. This finds
no support in the evidence. The valuation was
even higher than the recommendation of
anyone of the commissioners.
On the other hand, Commissioner
Atienza recommended a fair market value of
P375.00 per square meter. This appears to be
the closest valuation to the market value of lots
a. Lot 1-A, with an area of 43,532 square meters
in the adjoining fully developed subdivision.
Considering that the subject parcels of land are
undeveloped raw land, the price of P375.00 per
square meter would appear to the Court as theb. Lot 2-A, with an area of 6,823 square meters
just compensation for the taking of such raw
land.
c. Lot 3-A, with an area of 3,057 square meters
Consequently, we agree with
Commissioner Atienza's report that the fair
market value of subject parcels of land be fixedd. Lot 4-A, with an area of 1,438 square meters
at P375.00 per square meter.
We also agree with petitioner that the
area of the communal irrigation canale. Lot 5-A, with an area of 3,461 square meters
consisting of 4,809 square meters must be
excluded from the land to be expropriated. To
begin with, it is excluded in the amended
complaint. Hence, the trial court and the Court
of Appeals erred in including the same in the
area to be taken.
The trial court erroneously ordered
double payment for 3,611 square meters of lot
5 (portion) in the dispositive part of its decision,
and, hence, this must be deleted.
The trial court and the Court of Appeals
correctly required petitioner to pay legal
interest 21 on the compensation awarded from
September 11, 1990, the date petitioner was
placed in possession of the subject land, less
the amount respondents had withdrawn from
the deposit that petitioner made with the
Provincial Treasurer's Office.
We however, rule that petitioner is
under its charter exempt from payment of costs
of the proceedings.
WHEREFORE, the decision of the
Court of Appeals and that of the trial court
subject of the appeal are hereby MODIFIED.
We render judgment as follows:
square meter, as the just compensation to be
paid to respondents for the taking of their
property consisting of five (5) parcels of land,
with a total area of 58,311 square meters,
described in and covered by Transfer
Certificates of Title Nos. 557, 7131, 7111, 7108
and Certificate of Land Transfer No. 4550,
which parcels of land are broken down as
follows:
belonging to Lourdes Henson, Josefina
Henson, Jesusa Henson and Corazon Henson;
belonging to Alfredo Tanchiatco;
belonging to Bienvenido David (TCT No. 7111)
belonging to Maria Bondoc Capili (TCT No.
7108)
belonging to Miguel Manaloto (150 square
meters), Certificate of Land Transfer No. 4550
and Henson Family (3,311 square meters),
deducting therefrom the amounts they had
withdrawn from the deposit of petitioner for the
provisional value of said parcels of land. 22
2. With legal interest thereon at 6% per
annum commencing on September 11, 1990,
until the finality of this decision, and at 12% per
annum therefrom on the remaining unpaid
amount until full payment.
Let this decision be recorded in the
office of the Register of Deeds of Pampanga.
No costs in all instances.
4
 SO ORDERED. dctai
Romero, Kapunan and Purisima,
JJ ., concur.
||| (National Power Corp. v. Henson, G.R. No.
129998, [December 29, 1998], 360 PHIL 922-
931)
CASE NO. 10
FIRST DIVISION
[G.R. No. 142971. May 7, 2002.]
THE CITY OF CEBU, petitioner, vs.
SPOUSES APOLONIO and BLASA
DEDAMO, respondents.
City Attorney for petitioner.
Zosa & Quijano Law Office for
respondents.
SYNOPSIS
Petitioner filed the instant petition for
review on certiorari assailing the decision of
the Court of Appeals which affirmed in toto the
decision of the Regional Trial Court of Cebu
City in Civil Case No. CEB-14632, a case for
eminent domain, which fixed the valuation of
the land subject thereof on the basis of the
recommendation of the commissioners
appointed by it. Petitioner questioned the land
valuation asserting that just compensation
should be determined as of the date of the filing
of the complaint, which in this case should be
17 September 1993, and not at the time the
property was actually taken in 1994, pursuant
to the Court's decision in "National Power
Corporation vs. Court of Appeals." In their
Comment, respondents maintained that the
trial court decided the case on the basis of the
agreement of the parties that just
compensation shall be fixed by commissioners
appointed by the court; that the petitioner did
not interpose any serious objection to the
commissioners' report; hence, it was estopped
from attacking the report on which the decision
was based.
In denying the petition, the Court held
that the applicable law as to the point of
reckoning for the determination of just
compensation is Section 19 of Republic Act
No. 7160, which expressly provides that just
compensation shall be determined as of the
time of actual taking. The petitioner had
misread the Court's ruling in the above-
mentioned case. The Court did not
categorically rule in that case that just
compensation should be determined as of the
filing of the complaint. The Court explicitly
stated therein that although the general rule in
determining just compensation in eminent
domain is the value of the property as of the
date of the filing of the complaint, the rule
"admits of an exception: where the Court fixed
the value of the property as of the date it was
taken, and not at the date of the
commencement of the expropriation
proceedings."
Moreover, it was too late for petitioner
to question the valuation without violating the
principle of equitable estoppel. Records
showed that petitioner consented to conform
with the valuation recommended by the
commissioners. It cannot detract from its
agreement now and assail the correctness of
the commissioners' assessment.
SYLLABUS
1. POLITICAL LAW; POWER OF
EMINENT DOMAIN; EXPLAINED. — Eminent
domain is a fundamental State power that is
inseparable from sovereignty. It is the
Government's right to appropriate, in the nature
of a compulsory sale to the State, private
property for public use or purpose. However,
the Government must pay the owner thereof
just compensation as consideration
therefor. AEDCHc
2. ID.; ID.; THE LOCAL
GOVERNMENT CODE OF 1991, SECTION
19, APPLICABLE TO THE CASE AT BAR;
5
ASCERTAINMENT OF JUST
COMPENSATION; JUST COMPENSATION
SHALL BE DETERMINED AS OF THE TIME
OF ACTUAL TAKING. — In the case at bar, the
applicable law as to the point of reckoning for
the determination of just compensation is
Section 19 of R.A. No. 7160, which expressly
provides that just compensation shall be
determined as of the time of actual taking.
3. ID.; ID.; ID.; ID.; GENERAL RULE;
EXCEPTION. — The petitioner has misread
our ruling in The National Power Corp. vs.
Court of Appeals. We did not categorically rule
in that case that just compensation should be
determined as of the filing of the complaint. We
explicitly stated therein that although the
general rule in determining just compensation
in eminent domain is the value of the property
as of the date of the filing of the complaint, the
rule "admits of an exception: where this Court
fixed the value of the property as of the date it
was taken and not at the date of the
commencement of the expropriation
proceedings."
4. ID.; ID.; SECTION 4, RULE 67 OF
THE RULES OF COURT, A PROCEDURAL
LAW CANNOT PREVAIL OVER R.A. NO.
7160, A SUBSTANTIVE LAW. — While
Section 4, Rule 67 of the Rules of Court
provides that just compensation shall be
determined at the time of the filing of the
complaint for expropriation, such law cannot
prevail over R.A. 7160, which is a substantive
law.
5. CIVIL LAW; ESTOPPEL IN PAIS;
PETITIONER IS ESTOPPED FROM
QUESTIONING THE VALUATION OF
COMMISSIONERS DUE TO ITS PNOC
AGREEMENT TO CONFORM THEREWITH.
— Furthermore, during the hearing on 22
November 1996, petitioner did not interpose a
serious objection. It is therefore too late for
petitioner to question the valuation now without
violating the principle of equitable estoppel.
Estoppel in pais arises when one, by his acts,
representations or admissions, or by his own
silence when he ought to speak out,
intentionally or through culpable negligence,
induces another to believe certain facts to exist
and such other rightfully relies and acts on such
belief, so that he will be prejudiced if the former
is permitted to deny the existence of such facts.
Records show that petitioner consented to
conform with the valuation recommended by
the commissioners. It cannot detract from its
agreement now and assail correctness of the
commissioners' assessment.
6. ID.; CONTRACTS HAVE THE
FORCE OF LAW BETWEEN PARTIES AND
SHOULD BE COMPLIED WITH IN GOOD
FAITH. — More than anything else, the parties,
by a solemn document freely and voluntarily
agreed upon by them, agreed to be bound by
the report of the commission and approved by
the trial court. The agreement is a contract
between the parties. It has the force of law
between them and should be complied with in
good faith. cdasia2005
DECISION
DAVIDE, JR., C.J p:
In its petition for review
on certiorari under Rule 45 of the 1997 Rules
of Civil Procedure, petitioner City of Cebu
assails the decision of 11 October 1999 of the
Court of Appeals in CA-G.R. CV No.
59204 1 affirming the judgment of 7 May 1996
of the Regional Trial Court, Branch 13, Cebu
City, in Civil Case No. CEB-14632, a case for
eminent domain, which fixed the valuation of
the land subject thereof on the basis of the
recommendation of the commissioners
appointed by it.
The material operative facts are not
disputed.
On 17 September 1993, petitioner City
of Cebu filed in Civil Case No. CEB-14632 a
complaint for eminent domain against
respondents spouses Apolonio and Blasa
Dedamo. The petitioner alleged therein that it
needed the following parcels of land of
respondents, to wit:
Lot No. 1527
Area 1,146 square meters
6
Tax Declaration 03472 A pre-trial was thereafter had.
Title No. 31833 On 23 August 1994, petitioner filed a
motion for the issuance of a writ of possession
Market value P240,660.00 pursuant to Section 19 of R.A. No. 7160. The
Assessed Value P72,200.00 motion was granted by the trial court on 21
September 1994. 3
Lot No. 1528
On 14 December 1994, the parties
Area 793 square meters executed and submitted to the trial court an
Agreement 4 wherein they declared that they
Area sought to be 478 square meters have partially settled the case and in
expropriated consideration thereof they agreed:

Tax Declaration 03450 1. That the SECOND PARTY hereby conforms to the
intention to [sic] the FIRST PARTY in
Title No. 31832 expropriating their parcels of land in the above-
cited case as for public purpose and for the
Market value for theP1,666,530.00 benefit of the general public;
whole lot
Market value of the 2. That the SECOND PARTY agrees to part with the
ownership of the subject parcels of land in favor
Area to be expropriated P100,380.00 of the FIRST PARTY provided the latter will pay
Assessed Value P49,960.00 just compensation for the same in the amount
determined by the court after due notice and
hearing;
for a public purpose, i.e., for the construction of
a public road which shall serve as an3. That in the meantime the SECOND PARTY agrees
access/relief road of Gorordo Avenue to extend to receive the amount of ONE MILLION
to the General Maxilum Avenue and the back SEVEN HUNDRED EIGHTY SIX THOUSAND
of Magellan International Hotel Roads in Cebu FOUR HUNDRED PESOS (1,786,400.00) as
City. The lots are the most suitable site for the provisional payment for the subject parcels of
purpose. The total area sought to be land, without prejudice to the final valuation as
expropriated is 1,624 square meters with an may be determined by the court;
assessed value of P1,786,400. Petitioner
deposited with the Philippine National Bank the4. That the FIRST PARTY in the light of the issuance
amount of P51,156 representing 15% of the fair of the Writ of Possession Order dated
market value of the property to enable the September 21, 1994 issued by the Honorable
petitioner to take immediate possession of the Court, agreed to take possession over that
property pursuant to Section 19 of R.A. No. portion of the lot sought to be expropriated
7160. 2 where the house of the SECOND PARTY was
located only after fifteen (15) days upon the
Respondents, filed a motion to dismiss receipt of the SECOND PARTY of the amount
the complaint because the purpose for which of P1,786,400.00;
their property was to be expropriated was not
for a public purpose but for benefit of a single5. That the SECOND PARTY upon receipt of the
private entity, the Cebu Holdings, Inc. aforesaid provisional amount, shall turn over to
Petitioner could simply buy directly from them the FIRST PARTY the title of the lot and within
the property at its fair market value if it wanted the lapse of the fifteen (15) days grace period
to, just like what it did with the neighboring lots. will voluntarily demolish their house and the
Besides, the price offered was very low in light other structure that may be located thereon at
of the consideration of P20,000 per square their own expense;
meter, more or less, which petitioner paid to the
neighboring lots. Finally, respondents alleged6. That the FIRST PARTY and the SECOND PARTY
that they have no other land in Cebu City. jointly petition the Honorable Court to render

7
 judgment in said Civil Case No. CEB-14632 in
accordance with this AGREEMENT;
7. That the judgment sought to be rendered under this
agreement shall be followed by a supplemental
judgment fixing the just compensation for the
property of the SECOND PARTY after the
Commissioners appointed by this Honorable
Court to determine the same shall have
rendered their report and approved by the
court.
Pursuant to said agreement, the trial
court appointed three commissioners to
determine the just compensation of the lots
sought to be expropriated. The commissioners
were Palermo M. Lugo, who was nominated by
petitioner and who was designated as
Chairman; Alfredo Cisneros, who was
nominated by respondents; and Herbert E.
Buot, who was designated by the trial court.
The parties agreed to their appointment.
Thereafter, the commissioners
submitted their report, which contained their
respective assessments of and
recommendation as to the valuation of the
property.
On the basis of the commissioners'
report and after due deliberation thereon, the
trial court rendered its decision on 7 May
1996, 5 the decretal portion of which reads:
WHEREFORE, in view of the
foregoing, judgment is hereby rendered in
accordance with the report of the
commissioners.
Plaintiff is directed to pay Spouses
Apolonio S. Dedamo and Blasa Dedamo the
sum of pesos: TWENTY FOUR MILLION
EIGHT HUNDRED SIXTY-FIVE THOUSAND
AND NINE HUNDRED THIRTY
(P24,865,930.00) representing the
compensation mentioned in the Complaint.
Plaintiff and defendants are directed to
pay the following commissioner's fee;
1. To Palermo Lugo - P21,000.00
2. To Herbert Buot - P19,000.00
3. To Alfredo Cisneros - P19,000.00
Without pronouncement as to cost.
SO ORDERED.
Petitioner filed a motion for
reconsideration on the ground that the
commissioners' report was inaccurate since it
included an area which was not subject to
expropriation. More specifically, it contended
that Lot No. 1528 contains 793 square meters
but the actual area to be expropriated is only
478 square meters. The remaining 315 square
meters is the subject of a separate
expropriation proceeding in Civil Case No.
CEB-8348, then pending before Branch 9 of
the Regional Trial Court of Cebu City.
On 16 August 1996, the commissioners
submitted an amended assessment for the 478
square meters of Lot No. 1528 and fixed it at
P12,824.10 per square meter, or in the amount
of P20,826,339.50. The assessment was
approved as the just compensation thereof by
the trial court in its Order of 27 December
1996. 6 Accordingly, the dispositive portion of
the decision was amended to reflect the new
valuation.
Petitioner elevated the case to the
Court of Appeals, which docketed the case as
CA-G.R. CV No. 59204. Petitioner alleged that
the lower court erred in fixing the amount of just
compensation at P20,826,339.50. The just
compensation should be based on the
prevailing market price of the property at the
commencement of the expropriation
proceedings.
The petitioner did not convince the
Court of Appeals. In its decision of 11 October
1999, 7 the Court of Appeals affirmed in
toto the decision of the trial court.
Still unsatisfied, petitioner filed with us
the petition for review in the case at bar. It
raises the sole issue of whether just
compensation should be determined as of the
date of the filing of the complaint. It asserts that
it should be, which in this case should be 17
September 1993 and not at the time the
property was actually taken in 1994, pursuant
to the decision in "National Power Corporation
vs. Court of Appeals." 8
In their Comment, respondents
maintain that the Court of Appeals did not err in
affirming the decision of the trial court because
8
(1) the trial court decided the case on the basis
of the agreement of the parties that just
compensation shall be fixed by commissioners
appointed by the court; (2) petitioner did not
interpose any serious objection to the
commissioners' report of 12 August 1996 fixing
the just compensation of the 1,624-square
meter lot at P20,826,339.50; hence, it was
estopped from attacking the report on which
the decision was based; and (3) the determined
just compensation fixed is even lower than the
actual value of the property at the time of the
actual taking in 1994.
Eminent domain is a fundamental State
power that is inseparable from sovereignty. It is
the Government's right to appropriate, in the
nature of a compulsory sale to the State,
private property for public use or
purpose. 9 However, the Government must
pay the owner thereof just compensation as
consideration therefor.
In the case at bar, the applicable law as
to the point of reckoning for the determination
of just compensation is Section 19 of R.A. No.
7160, which expressly provides that just
compensation shall be determined as of the
time of actual taking. The Section reads as
follows:
SECTION 19. Eminent Domain. — A
local government unit may, through its chief
executive and acting pursuant to an ordinance,
exercise the power of eminent domain for
public use, or purpose or welfare for the benefit
of the poor and the landless, upon payment of
just compensation, pursuant to the provisions
of the Constitution and pertinent
laws: Provided, however, That the power of
eminent domain may not be exercised unless a
valid and definite offer has been previously
made to the owner, and such offer was not
accepted: Provided, further, That the local
government unit may immediately take
possession of the property upon the filing of the
expropriation proceedings and upon making a
deposit with the proper court of at least fifteen
percent (15%) of the fair market value of the
property based on the current tax declaration
of the property to be expropriated: Provided
finally, That, the amount to be paid for the
expropriated property shall be determined by
the proper court, based on the fair market value
at the time of the taking of the property.
The petitioner has misread our ruling
in The National Power Corp. vs. Court of
Appeals. 10 We did not categorically rule in
that case that just compensation should be
determined as of the filing of the complaint. We
explicitly stated therein that although the
general rule in determining just compensation
in eminent domain is the value of the property
as of the date of the filing of the complaint, the
rule "admits of an exception: where this Court
fixed the value of the property as of the date it
was taken and not at the date of the
commencement of the expropriation
proceedings."
Also, the trial court followed the then
governing procedural law on the matter, which
was Section 5 of Rule 67 of the Rules of Court,
which provided as follows:
SEC. 5. Ascertainment of
compensation. — Upon the entry of the order
of condemnation, the court shall appoint not
more than three (3) competent and
disinterested persons as commissioners to
ascertain and report to the court the just
compensation for the property sought to be
taken. The order of appointment shall
designate the time and place of the first session
of the hearing to be held by the commissioners
and specify the time within which their report is
to be filed with the court.
More than anything else, the parties, by
a solemn document freely and voluntarily
agreed upon by them, agreed to be bound by
the report of the commission and approved by
the trial court. The agreement is a contract
between the parties. It has the force of law
between them and should be complied with in
good faith. Article 1159 and 1315 of the Civil
Code explicitly provides:
Art. 1159. Obligations arising from
contracts have the force of law between the
contracting parties and should be complied
with in good faith.
Art. 1315. Contracts are perfected by
mere consent, and from that moment the
parties are bound not only to the fulfillment of
what has been expressly stipulated but also to
9
all the consequences which, according to their
nature, may be in keeping with good faith,
usage and law.
Furthermore, during the hearing on 22
November 1996, petitioner did not interpose a
serious objection. 11 It is therefore too late for
petitioner to question the valuation now without
violating the principle of equitable estoppel.
Estoppel in pais arises when one, by his acts,
representations or admissions, or by his own
silence when he ought to speak out,
intentionally or through culpable negligence,
induces another to believe certain facts to exist
and such other rightfully relies and acts on such
belief, so that he will be prejudiced if the former
is permitted to deny the existence of such
facts. 12 Records show that petitioner
consented to conform with the valuation
recommended by the commissioners. It cannot
detract from its agreement now and assail
correctness of the commissioner's
assessment.
Finally, while Section 4, Rule 67 of the
Rules of Court provides that just compensation
shall be determined at the time of the filing of
the complaint for expropriation, 13 such law
cannot prevail over R.A. 7160, which is a
substantive law. 14
WHEREFORE, finding no reversible
error in the assailed judgment of the Court of
Appeals in CA-G.R. CV No. 59204, the petition
in this case is hereby DENIED. CcSTHI
No pronouncement as to costs.
SO ORDERED.
Puno, Kapunan, Ynares-
Santiago and Austria-Martinez, JJ., concur.
||| (City of Cebu v. Spouses Dedamo, G.R. No.
142971, [May 7, 2002], 431 PHIL 524-535)
CASE NO. 11
EN BANC
[G.R. No. 161656. June 29, 2005.]
REPUBLIC OF THE PHILIPPINES,
GENERAL ROMEO ZULUETA,
COMMODORE EDGARDO GALEOS,
ANTONIO CABALUNA, DOROTEO MANTOS
& FLORENCIO
BELOTINDOS, petitioners, vs. VICENTE G.
LIM, respondent.
RESOLUTION
SANDOVAL-GUTIERREZ, J p:
Justice is the first virtue of social
institutions. 1 When the state wields its power
of eminent domain, there arises a correlative
obligation on its part to pay the owner of the
expropriated property a just compensation. If it
fails, there is a clear case of injustice that must
be redressed. In the present case fifty-seven
(57) years have lapsed from the time the
Decision in the subject expropriation
proceedings became final, but still
the Republic of the Philippines, herein
petitioner, has not compensated the owner of
the property. To tolerate such prolonged
inaction on its part is to encourage distrust and
resentment among our people — the very vices
that corrode the ties of civility and tempt men to
act in ways they would otherwise shun.
A revisit of the pertinent facts in the
instant case is imperative.
On September 5, 1938, the Republic of
the Philippines (Republic) instituted a special
civil action for expropriation with the Court of
First Instance (CFI) of Cebu, docketed as Civil
Case No. 781, involving Lots 932 and 939 of
the Banilad Friar Land Estate, Lahug, Cebu
City, for the purpose of establishing a military
reservation for the Philippine Army. Lot 932
was registered in the name of Gervasia
Denzon under Transfer Certificate of Title
(TCT) No. 14921 with an area of 25,137 square
meters, while Lot 939 was in the name of
Eulalia Denzon and covered by TCT No. 12560
consisting of 13,164 square meters.
After depositing P9,500.00 with the
Philippine National Bank, pursuant to the Order
of the CFI dated October 19, 1938,
10
the Republic took possession of the lots.
Thereafter, or on May 14, 1940, the CFI
rendered its Decision ordering the Republic to
pay the Denzons the sum of P4,062.10 as just
compensation.
The Denzons interposed an appeal to
the Court of Appeals but it was dismissed on
March 11, 1948. An entry of judgment was
made on April 5, 1948.
In 1950, Jose Galeos, one of the heirs
of the Denzons, filed with the National Airports
Corporation a claim for rentals for the two lots,
but it "denied knowledge of the matter."
Another heir, Nestor Belocura, brought the
claim to the Office of then President Carlos
Garcia who wrote the Civil Aeronautics
Administration and the Secretary of National
Defense to expedite action on said claim. On
September 6, 1961, Lt. Manuel Cabal rejected
the claim but expressed willingness to pay the
appraised value of the lots within a reasonable
time. ETaSDc
For failure of the Republic to pay for the
lots, on September 20, 1961, the Denzons'
successors-in-interest, Francisca Galeos-
Valdehueza and Josefina Galeos-
Panerio, 2 filed with the same CFI an action for
recovery of possession with damages against
the Republic and officers of the Armed Forces
of the Philippines in possession of the property.
The case was docketed as Civil Case No. R-
7208.
In the interim or on November 9, 1961,
TCT Nos. 23934 and 23935 covering Lots 932
and 939 were issued in the names of Francisca
Valdehueza and Josefina Panerio,
respectively. Annotated thereon was the
phrase "subject to the priority of the National
Airports Corporation to acquire said parcels of
land, Lots 932 and 939 upon previous payment
of a reasonable market value."
On July 31, 1962, the CFI promulgated
its Decision in favor of Valdehueza and
Panerio, holding that they are the owners and
have retained their right as such over Lots 932
and 939 because of the Republic's failure to
pay the amount of P4,062.10, adjudged in the
expropriation proceedings. However, in view of
the annotation on their land titles, they were
ordered to execute a deed of sale in favor of
the Republic. In view of "the differences in
money value from 1940 up to the present," the
court adjusted the market value at P16,248.40,
to be paid with 6% interest per annum from
April 5, 1948, date of entry in the expropriation
proceedings, until full payment.
After their motion for reconsideration
was denied, Valdehueza and Panerio
appealed from the CFI Decision, in view of the
amount in controversy, directly to this Court.
The case was docketed as No. L-21032. 3 On
May 19, 1966, this Court rendered its Decision
affirming the CFI Decision. It held that
Valdehueza and Panerio are still the registered
owners of Lots 932 and 939, there having been
no payment of just compensation by
the Republic. Apparently, this Court found
nothing in the records to show that
the Republic paid the owners or their
successors-in-interest according to the CFI
decision. While it deposited the amount of
P9,500.00, and said deposit was allegedly
disbursed, however, the payees could not be
ascertained.
Notwithstanding the above finding, this
Court still ruled that Valdehueza and Panerio
are not entitled to recover possession of the
lots but may only demand the payment of their
fair market value, ratiocinating as follows:
"Appellants would contend
that: (1) possession of Lots 932 and 939
should be restored to them as owners of the
same; (2) the Republic should be ordered to
pay rentals for the use of said lots, plus
attorney's fees; and (3) the court a quo in the
present suit had no power to fix the value of the
lots and order the execution of the deed of sale
after payment.
It is true that plaintiffs are still the
registered owners of the land, there not having
been a transfer of said lots in favor of the
Government. The records do not show that the
Government paid the owners or their
successors-in-interest according to the 1940
CFI decision although, as stated, P9,500.00
was deposited by it, and said deposit had been
disbursed. With the records lost, however, it
cannot be known who received the money
(Exh. 14 says: 'It is further certified that the
corresponding Vouchers and pertinent Journal
and Cash Book were destroyed during the last
11
World War, and therefore the names of the
payees concerned cannot be
ascertained.') And the Government now admits
that there is no available record showing that
payment for the value of the lots in question
has been made (Stipulation of Facts, par. 9,
Rec. on Appeal, p. 28). SacDIE
The points in dispute are whether such
payment can still be made and, if so, in what
amount. Said lots have been the subject of
expropriation proceedings. By final and
executory judgment in said proceedings, they
were condemned for public use, as part of an
airport, and ordered sold to the Government. In
fact, the abovementioned title certificates
secured by plaintiffs over said lots contained
annotations of the right of the National Airports
Corporation (now CAA) to pay for and acquire
them. It follows that both by virtue of the
judgment, long final, in the expropriation suit,
as well as the annotations upon their title
certificates, plaintiffs are not entitled to recover
possession of their expropriated lots — which
are still devoted to the public use for which they
were expropriated — but only to demand the
fair market value of the same."
Meanwhile, in 1964, Valdehueza and
Panerio mortgaged Lot 932 to Vicente Lim,
herein respondent, 4 as security for their loans.
For their failure to pay Lim despite demand, he
had the mortgage foreclosed in 1976. Thus,
TCT No. 23934 was cancelled, and in lieu
thereof, TCT No. 63894 was issued in his
name.
On August 20, 1992, respondent Lim
filed a complaint for quieting of title with the
Regional Trial Court (RTC), Branch 10, Cebu
City, against General Romeo Zulueta, as
Commander of the Armed Forces of the
Philippines, Commodore Edgardo Galeos, as
Commander of Naval District V of the
Philippine Navy, Antonio Cabaluna, Doroteo
Mantos and Florencio Belotindos, herein
petitioners. Subsequently, he amended the
complaint to implead the Republic.
On May 4, 2001, the RTC rendered a
decision in favor of respondent, thus:
"WHEREFORE, judgment is hereby
rendered in favor of plaintiff Vicente Lim and
against all defendants, public and
private, declaring plaintiff Vicente Lim the
absolute and exclusive owner of Lot No. 932
with all the rights of an absolute owner
including the right to possession. The monetary
claims in the complaint and in the counter
claims contained in the answer of defendants
are ordered Dismissed.
Petitioners elevated the case to the
Court of Appeals, docketed therein as CA-G.R.
CV No. 72915. In its Decision 5 dated
September 18, 2003, the Appellate Court
sustained the RTC Decision, thus:
"Obviously, defendant-
appellant Republic evaded its duty of paying
what was due to the landowners. The
expropriation proceedings had already become
final in the late 1940's and yet, up to now, or
more than fifty (50) years after,
the Republic had not yet paid the
compensation fixed by the court while
continuously reaping benefits from the
expropriated property to the prejudice of the
landowner. . . . This is contrary to the rules of
fair play because the concept of just
compensation embraces not only the correct
determination of the amount to be paid to the
owners of the land, but also the payment for the
land within a reasonable time from its taking.
Without prompt payment, compensation
cannot be considered "just" for the property
owner is made to suffer the consequence of
being immediately deprived of his land while
being made to wait for a decade or more, in this
case more than 50 years, before actually
receiving the amount necessary to cope with
the loss. To allow the taking of the landowners'
properties, and in the meantime leave them
empty-handed by withholding payment of
compensation while the government
speculates on whether or not it will pursue
expropriation, or worse, for government to
subsequently decide to abandon the property
and return it to the landowners, is undoubtedly
an oppressive exercise of eminent domain that
must never be sanctioned. (Land Bank of the
Philippines vs. Court of Appeals, 258 SCRA
404).
xxx xxx xxx
12
 An action to quiet title is a common law
remedy for the removal of any cloud or doubt
or uncertainty on the title to real property. It is
essential for the plaintiff or complainant to have
a legal or equitable title or interest in the real
property, which is the subject matter of the
action. Also the deed, claim, encumbrance or
proceeding that is being alleged as cloud on
plaintiff's title must be shown to be in fact
invalid or inoperative despite its prima
facie appearance of validity or legal efficacy
(Robles vs. Court of Appeals, 328 SCRA
97). In view of the foregoing discussion, clearly,
the claim of defendant-
appellant Republic constitutes a cloud, doubt
or uncertainty on the title of plaintiff-appellee
Vicente Lim that can be removed by an action
to quiet title. ESDHCa
WHEREFORE, in view of the
foregoing, and finding no reversible error in the
appealed May 4, 2001 Decision of Branch 9,
Regional Trial Court of Cebu City, in Civil Case
No. CEB-12701, the said decision is UPHELD
AND AFFIRMED. Accordingly, the appeal is
DISMISSED for lack of merit."
Undaunted, petitioners, through the
Office of the Solicitor General, filed with this
Court a petition for review on certiorari alleging
that the Republic has remained the owner of
Lot 932 as held by this Court in Valdehueza
vs. Republic. 6
In our Resolution dated March 1, 2004,
we denied the petition outright on the ground
that the Court of Appeals did not commit a
reversible error. Petitioners filed an urgent
motion for reconsideration but we denied the
same with finality in our Resolution of May 17,
2004.
On May 18, 2004, respondent filed
an ex-parte motion for the issuance of an entry
of judgment. We only noted the motion in our
Resolution of July 12, 2004.
On July 7, 2004, petitioners filed an
urgent plea/motion for clarification, which is
actually asecond motion for reconsideration.
Thus, in our Resolution of September 6, 2004,
we simply noted without action the motion
considering that the instant petition was
already denied with finality in our Resolution of
May 17, 2004.
On October 29, 2004, petitioners filed a
very urgent motion for leave to file a motion for
reconsideration of our Resolution dated
September 6, 2004 (with prayer to refer the
case to the En Banc). They maintain that
the Republic's right of ownership has been
settled in Valdehueza.
The basic issue for our resolution is
whether the Republic has retained ownership
of Lot 932 despite its failure to pay
respondent's predecessors-in-interest the just
compensation therefor pursuant to the
judgment of the CFI rendered as early as May
14, 1940.
Initially, we must rule on the procedural
obstacle.
While we commend the Republic for
the zeal with which it pursues the present case,
we reiterate that its urgent motion for
clarification filed on July 7, 2004 is actually a
second motion for reconsideration. This motion
is prohibited under Section 2, Rule 52, of the
1997 Rules of Civil Procedure, as amended,
which provides:
"Sec. 2. Second motion for
reconsideration. — No second motion for
reconsideration of a judgment or final
resolution by the same party shall be
entertained."
Consequently, as mentioned earlier,
we simply noted without action the motion
since petitioners' petition was already denied
with finality.
Considering the Republic's urgent and
serious insistence that it is still the owner of Lot
932 and in the interest of justice, we take
another hard look at the controversial issue in
order to determine the veracity of petitioner's
stance.
One of the basic principles enshrined in
our Constitution is that no person shall be
deprived of his private property without due
process of law; and in expropriation cases, an
essential element of due process is that there
must be just compensation whenever private
property is taken for public use. 7 Accordingly,
Section 9, Article III, of our Constitution
mandates: "Private property shall not be taken
for public use without just compensation."
13
 The Republic disregarded the
foregoing provision when it failed and refused
to pay respondent's predecessors-in-interest
the just compensation for Lots 932 and 939.
The length of time and the manner with which
it evaded payment demonstrate its arbitrary
high-handedness and confiscatory attitude.
The final judgment in the expropriation
proceedings (Civil Case No. 781) was entered
on April 5, 1948. More than half of a century
has passed, yet, to this day, the landowner,
now respondent, has remained empty-handed.
Undoubtedly, over 50 years of delayed
payment cannot, in any way, be viewed as fair.
This is more so when such delay is
accompanied by bureaucratic hassles.
Apparent from Valdehueza is the fact that
respondent's predecessors-in-interest were
given a "run around" by the Republic's officials
and agents. In 1950, despite the benefits it
derived from the use of the two lots, the
National Airports Corporation denied
knowledge of the claim of respondent's
predecessors-in-interest. Even President
Garcia, who sent a letter to the Civil
Aeronautics Administration and the Secretary
of National Defense to expedite the payment,
failed in granting relief to them. And, on
September 6, 1961, while the Chief of Staff of
the Armed Forces expressed willingness to pay
the appraised value of the lots, nothing
happened. aIcDCH
The Court of Appeals is correct in
saying that Republic's delay is contrary to the
rules of fair play, as "just compensation
embraces not only the correct determination of
the amount to be paid to the owners of the land,
but also the payment for the land within a
reasonable time from its taking. Without prompt
payment, compensation cannot be considered
'just.'" In jurisdictions similar to ours, where an
entry to the expropriated property precedes the
payment of compensation, it has been held that
if the compensation is not paid in a reasonable
time, the party may be treated as a
trespasser ab initio. 8
Corollarily, in Provincial Government of
Sorsogon vs. Vda. De Villaroya, 9 similar to the
present case, this Court expressed its disgust
over the government's vexatious delay in the
payment of just compensation, thus:
"The petitioners have been waiting for
more than thirty years to be paid for their land
which was taken for use as a public high
school. As a matter of fair procedure, it is the
duty of the Government, whenever it takes
property from private persons against their will,
to supply all required documentation and
facilitate payment of just compensation. The
imposition of unreasonable requirements and
vexatious delays before effecting payment is
not only galling and arbitrary but a rich source
of discontent with government. There should
be some kind of swift and effective recourse
against unfeeling and uncaring acts of middle
or lower level bureaucrats."
We feel the same way in the instant
case.
More than anything else, however, it is
the obstinacy of the Republic that prompted us
to dismiss its petition outright. As early as May
19, 1966, in Valdehueza, this Court mandated
the Republic to pay respondent's
predecessors-in-interest the sum of
P16,248.40 as "reasonable market value of the
two lots in question." Unfortunately, it did not
comply and allowed several decades to pass
without obeying this Court's mandate. Such
prolonged obstinacy bespeaks of lack of
respect to private rights and to the rule of law,
which we cannot countenance. It is tantamount
to confiscation of private property. While it is
true that all private properties are subject to the
need of government, and the government may
take them whenever the necessity or the
exigency of the occasion demands, however,
the Constitution guarantees that when this
governmental right of expropriation is
exercised, it shall be attended by
compensation. 10 From the taking of private
property by the government under the power of
eminent domain, there arises an implied
promise to compensate the owner for his
loss. 11
Significantly, the above-mentioned
provision of Section 9, Article III of the
Constitution is not a grant but a limitation of
power. This limiting function is in keeping with
the philosophy of the Bill of Rights against the
arbitrary exercise of governmental powers to
the detriment of the individual's rights. Given
this function, the provision should therefore
14
be strictly interpreted against the expropriator,
the government, and liberally in favor of the
property owner. 12
Ironically, in opposing respondent's
claim, the Republic is invoking this Court's
Decision in Valdehueza, a Decision it utterly
defied. How could the Republic acquire
ownership over Lot 932 when it has not paid its
owner the just compensation, required by law,
for more than 50 years? The recognized rule is
that title to the property expropriated shall pass
from the owner to the expropriator only upon
full payment of the just compensation.
Jurisprudence on this settled principle is
consistent both here and in other democratic
jurisdictions. In Association of Small
Landowners in the Philippines, Inc. et al., vs.
Secretary of Agrarian Reform, 13 thus:
"Title to property which is the subject of
condemnation proceedings does not vest the
condemnor until the judgment fixing just
compensation is entered and paid, but the
condemnor's title relates back to the date on
which the petition under the Eminent Domain
Act, or the commissioner's report under the
Local Improvement Act, is filed.
. . . Although the right to appropriate
and use land taken for a canal is complete at
the time of entry, title to the property taken
remains in the owner until payment is actually
made. (Emphasis supplied.)
In Kennedy v. Indianapolis, the US
Supreme Court cited several cases holding that
title to property does not pass to the
condemnor until just compensation had
actually been made. In fact, the decisions
appear to be uniform to this effect. As early as
1838, in Rubottom v. McLure, it was held that
'actual payment to the owner of the condemned
property was a condition precedent to the
investment of the title to the property in the
State' albeit 'not to the appropriation of it to
public use.' In Rexford v. Knight, the Court of
Appeals of New York said that the construction
upon the statutes was that the fee did not vest
in the State until the payment of the
compensation although the authority to enter
upon and appropriate the land was complete
prior to the payment. Kennedy further said that
'both on principle and authority the rule is . . .
that the right to enter on and use the property
is complete, as soon as the property is actually
appropriated under the authority of law for a
public use, but that the title does not pass from
the owner without his consent, until just
compensation has been made to him."
Our own Supreme Court has held
in Visayan Refining Co. v. Camus and
Paredes, that:
'If the laws which we have exhibited or
cited in the preceding discussion are attentively
examined it will be apparent that the method of
expropriation adopted in this jurisdiction is such
as to afford absolute reassurance that no piece
of land can be finally and irrevocably taken
from an unwilling owner until compensation is
paid . . .'" (Emphasis supplied.)
Clearly, without full payment of just
compensation, there can be no transfer of title
from the landowner to the expropriator.
Otherwise stated, the Republic's acquisition of
ownership is conditioned upon the full payment
of just compensation within a reasonable
time. 14
Significantly, in Municipality of Biñan v.
Garcia 15 this Court ruled that the
expropriation of lands consists of two stages,
to wit:
". . . The first is concerned with the
determination of the authority of the plaintiff to
exercise the power of eminent domain and the
propriety of its exercise in the context of the
facts involved in the suit. It ends with an order,
if not of dismissal of the action, "of
condemnation declaring that the plaintiff has a
lawful right to take the property sought to be
condemned, for the public use or purpose
described in the complaint, upon the payment
of just compensation to be determined as of the
date of the filing of the complaint" . . . ECDaTI
The second phase of the eminent
domain action is concerned with the
determination by the court of "the just
compensation for the property sought to be
taken." This is done by the court with the
assistance of not more than three (3)
commissioners. . . .
15
 It is only upon the completion of these
two stages that expropriation is said to have
been completed. In Republic v. Salem
Investment Corporation, 16 we ruled that, "the
process is not completed until payment of just
compensation." Thus, here, the failure of
the Republic to pay respondent and his
predecessors-in-interest for a period of 57
years rendered the expropriation process
incomplete.
The Republic now argues that
under Valdehueza, respondent is not entitled
to recover possession of Lot 932 but only to
demand payment of its fair market value. Of
course, we are aware of the doctrine that "non-
payment of just compensation (in an
expropriation proceedings) does not entitle the
private landowners to recover possession of
the expropriated lots." This is our ruling in the
recent cases of Republic of the Philippines vs.
Court of Appeals, et al., 17 and Reyes vs.
National Housing Authority. 18 However, the
facts of the present case do not justify its
application. It bears stressing that
the Republic was ordered to pay just
compensation twice, the first was in the
expropriation proceedings and the second,
in Valdehueza. Fifty-seven (57) years have
passed since then. We cannot but construe
the Republic's failure to pay just compensation
as a deliberate refusal on its part. Under such
circumstance, recovery of possession is in
order. In several jurisdictions, the courts held
that recovery of possession may be had when
property has been wrongfully taken or is
wrongfully retained by one claiming to act
under the power of eminent domain 19 or
where a rightful entry is made and the party
condemning refuses to pay the compensation
which has been assessed or agreed
upon; 20 or fails or refuses to have the
compensation assessed and paid. 21
The Republic also contends that where
there have been constructions being used by
the military, as in this case, public interest
demands that the present suit should not be
sustained.
It must be emphasized that an
individual cannot be deprived of his property for
the public convenience. 22 In Association of
Small Landowners in the Philippines, Inc. vs.
Secretary of Agrarian Reform, 23 we ruled:
"One of the basic principles of the
democratic system is that where the rights of
the individual are concerned, the end does not
justify the means. It is not enough that there be
a valid objective; it is also necessary that the
means employed to pursue it be in keeping with
the Constitution. Mere expediency will not
excuse constitutional shortcuts. There is no
question that not even the strongest moral
conviction or the most urgent public need,
subject only to a few notable exceptions, will
excuse the bypassing of an individual's rights.
It is no exaggeration to say that a person
invoking a right guaranteed under Article III of
the Constitution is a majority of one even as
against the rest of the nation who would deny
him that right.
The right covers the person's life, his
liberty and his property under Section 1 of
Article III of the Constitution. With regard to his
property, the owner enjoys the added
protection of Section 9, which reaffirms the
familiar rule that private property shall not be
taken for public use without just
compensation."
The Republic's assertion that the
defense of the State will be in grave danger if
we shall order the reversion of Lot 932 to
respondent is an overstatement. First, Lot 932
had ceased to operate as an airport. What
remains in the site is just the National Historical
Institute's marking stating that Lot 932 is
the "former location of Lahug Airport."
And second, there are only thirteen (13)
structures located on Lot 932, eight (8) of which
are residence apartments of military
personnel. Only two (2) buildings are actually
used as training centers. Thus, practically
speaking, the reversion of Lot 932 to
respondent will only affect a handful of military
personnel. It will not result to "irreparable
damage" or "damage beyond pecuniary
estimation," as what the Republic vehemently
claims. ETCcSa
We thus rule that the special
circumstances prevailing in this case entitle
respondent to recover possession of the
expropriated lot from the Republic. Unless this
form of swift and effective relief is granted to
16
him, the grave injustice committed against his
predecessors-in-interest, though no fault or
negligence on their part, will be perpetuated.
Let this case, therefore, serve as a wake-up
call to the Republic that in the exercise of its
power of eminent domain, necessarily in
derogation of private rights, it must comply with
the Constitutional limitations. This Court, as the
guardian of the people's right, will not stand still
in the face of the Republic's oppressive and
confiscatory taking of private property, as in
this case.
At this point, it may be argued that
respondent Vicente Lim acted in bad faith in
entering into a contract of mortgage with
Valdehueza and Panerio despite the clear
annotation in TCT No. 23934 that Lot 932 is
"subject to the priority of the National Airports
Corporation [to acquire said parcels of land] . .
. upon previous payment of a reasonable
market value."
The issue of whether or not respondent
acted in bad faith is immaterial considering that
the Republic did not complete the
expropriation process. In short, it failed to
perfect its title over Lot 932 by its failure to pay
just compensation. The issue of bad faith would
have assumed relevance if
the Republic actually acquired title over Lot
932. In such a case, even if respondent's title
was registered first, it would be the Republic's
title or right of ownership that shall be
upheld. But now, assuming that respondent
was in bad faith can such fact vest upon
the Republic a better title over Lot 932? We
believe not. This is because in the first place,
the Republic has no title to speak of.
At any rate, assuming that respondent
had indeed knowledge of the annotation, still
nothing would have prevented him from
entering into a mortgage contract involving Lot
932 while the expropriation proceeding was
pending. Any person who deals with a property
subject of an expropriation does so at his own
risk, taking into account the ultimate possibility
of losing the property in favor of the
government. Here, the annotation merely
served as a caveat that the Republic had
a preferential right to acquire Lot 932 upon its
payment of a "reasonable market value." It did
not proscribe Valdehueza and Panerio from
exercising their rights of ownership including
their right to mortgage or even to dispose of
their property. In Republic vs. Salem
Investment Corporation, 24 we recognized the
owner's absolute right over his property
pending completion of the expropriation
proceeding, thus:
"It is only upon the completion of these
two stages that expropriation is said to have
been completed. Moreover, it is only upon
payment of just compensation that title over the
property passes to the government. Therefore,
until the action for expropriation has been
completed and terminated, ownership over the
property being expropriated remains with the
registered owner. Consequently, the latter can
exercise all rights pertaining to an
owner, including the right to dispose of his
property subject to the power of the State
ultimately to acquire it through expropriation.
It bears emphasis that when
Valdehueza and Panerio mortgaged Lot 932 to
respondent in 1964, they were still the owners
thereof and their title had not yet passed to the
petitioner Republic. In fact, it never did. Such
title or ownership was rendered conclusive
when we categorically ruled
in Valdehueza that: "It is true that plaintiffs are
still the registered owners of the land, there not
having been a transfer of said lots in favor of
the Government."
For respondent's part, it is reasonable
to conclude that he entered into the contract of
mortgage with Valdehueza and Panerio fully
aware of the extent of his right as a mortgagee.
A mortgage is merely an accessory contract
intended to secure the performance of the
principal obligation. One of its characteristics is
that it is inseparable from the property. It
adheres to the property regardless of who its
owner may subsequently be. 25 Respondent
must have known that even if Lot 932 is
ultimately expropriated by the Republic, still,
his right as a mortgagee is protected. In this
regard, Article 2127 of the Civil Code provides:
"Art. 2127. The mortgage extends to
the natural accessions, to the improvements,
growing fruits, and the rents or income not yet
received when the obligation becomes due,
17
and to the amount of the indemnity granted or
owing to the proprietor from the insurers of the
property mortgaged, or in virtue of
expropriation for public use, with the
declarations, amplifications, and limitations
established by law, whether the estate remains
in the possession of the mortgagor or it passes
in the hands of a third person. HcSDIE
In summation, while the prevailing
doctrine is that "the non-payment of just
compensation does not entitle the private
landowner to recover possession of the
expropriated lots, 26 however, in cases where
the government failed to pay just
compensation within five (5) 27 years from the
finality of the judgment in the expropriation
proceedings, the owners concerned shall have
the right to recover possession of their
property. This is in consonance with the
principle that "the government cannot keep the
property and dishonor the judgment." 28 To be
sure, the five-year period limitation will
encourage the government to pay just
compensation punctually. This is in keeping
with justice and equity. After all, it is the duty of
the government, whenever it takes property
from private persons against their will, to
facilitate the payment of just compensation.
In Cosculluela v. Court of Appeals, 29we
defined just compensation as not only the
correct determination of the amount to be paid
to the property owner but also the payment of
the property within a reasonable time. Without
prompt payment, compensation cannot be
considered "just."
WHEREFORE, the assailed Decision
of the Court of Appeals in CA-G.R. CV No.
72915 is AFFIRMED in toto.
The Republic's motion for
reconsideration of our Resolution dated March
1, 2004 is DENIED with FINALITY. No further
pleadings will be allowed.
Let an entry of judgment be made in
this case.
SO ORDERED.
Davide, Jr., C. J., Puno, Panganiban,
Quisumbing, Ynares-Santiago, Carpio,
Austria-Martinez, Corona, Carpio-Morales,
Callejo, Sr., Azcuna, Tinga, Chico-
Nazario and Garcia, JJ.,concur.
CASE NO. 12
THIRD DIVISION
[G.R. No. 139495. November 27, 2000.]
MACTAN-CEBU INTERNATIONAL AIRPORT
AUTHORITY (MCIAA), petitioner, vs. THE
HON. COURT OF APPEALS and VIRGINIA
CHIONGBIAN, respondents.
The Solicitor General for petitioner.
Chiu Tangete & Gabumpa Law
Office for private respondent.
SYNOPSIS
Subject of the action is Lot 941,
adjoining the then Lahug Airport, registered in
the name of Mactan-Cebu International Airport
Authority (MCIAA). Said lot was expropriated
by the Republic of the Philippines in 1961,
through Civil Case No. R-1881, for the
expansion and improvement of Lahug, Airport.
Later, the assets of the Lahug Airport, including
Lot 941 were transferred to MCIAA. Lahug
Airport, however, was closed and Chiongbian
filed a case for reconveyance alleging that she
was given the right of repurchase once the land
is longer needed for the airport. The trial court
ruled in favor of Chiongbian and the same was
affirmed by the Court of Appeals.
Chiongbian cannot repurchase Lot
941. The terms of the judgment in Civil Case
No. R-1881 are clear and unequivocal and
grant title to Lot 941 in fee simple to the
Republic of the Philippines. There was no
condition imposed to the effect the lot would
return to Chiongbian or that Chiongbian had a
right to repurchase the same if the purpose for
which it was expropriated is ended or
abandoned. Indeed, to allow the alleged
compromise agreement of reconveyance
which was supposedly made prior to the
18
rendition of judgment on the expropriation case
is to modify said judgment that has long
become final and executory.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE;
RULES OF ADMISSIBILITY;
DOCUMENTARY EVIDENCE; PAROL
EVIDENCE RULE; NOT APPLICABLE TO A
JUDGMENT OF THE COURT. — Evidence
reveals that Lot No. 941 was appropriated by
the Republic of the Philippines through
expropriation proceedings in Civil Case No. R-
1881. . . . The terms of the judgment [therein]
are clear and unequivocal and grant title to Lot
No. 941 in fee simple to the Republic of the
Philippines. There was no condition imposed to
the effect that the lot would return to
CHIONGBIAN or that CHIONGBIAN had a
right to repurchase the same if the purpose for
which it was expropriated is ended or
abandoned or if the property was to be used
other than as the Lahug airport. CHIONGBIAN
cannot rely on the ruling in Mactan Cebu
International Airport vs. Court of
Appeals wherein the presentation of parol
evidence was allowed to prove the existence of
a written agreement containing the right to
repurchase. Said case did not involve
expropriation proceedings but a contract of
sale. . . [The parol evidence rule] applies to
written agreements and has no application to a
judgment of a court . . . . To permit
CHIONGBIAN to prove the existence of a
compromise settlement which she claims to
have entered into with the Republic of the
Philippines prior to the rendition of judgment in
the expropriation case would result in a
modification of the judgment of a court which
has long become final and executory. cASEDC
2. CIVIL LAW; CONTRACTS;
UNENFORCEABLE CONTRACTS;
INADMISSIBLE TESTIMONIES UNDER THE
STATUTE OF FRAUDS TO PROVE
EXISTENCE OF ALLEGED SALE. — Under
1403 of the Civil Code, a contract for the sale
of real property shall be unenforceable unless
the same, or some note or memorandum
thereof, be in writing, and subscribed by the
party charged, or by his agent; evidence,
therefore of the agreement cannot be received
without the writing or a secondary evidence of
its contents. . . . MCIAA objected to the purpose
for which the testimonies of CHIONGBIAN and
BERCEDE were offered, i.e. to prove the
existence of the alleged written agreement
evincing a right to repurchase Lot No. 941 in
favor of CHIONGBIAN, for being in violation of
the Statute of Frauds. MCIAA also objected to
the purpose for which the testimony of
PASTRANA was offered, i.e. to prove the
existence of the alleged written agreement and
an alleged deed of sale, on the same ground.
Consequently, the testimonies of these
witnesses are inadmissible under the Statute of
Frauds to prove the existence of the alleged
sale.
3. REMEDIAL LAW; EVIDENCE;
RULES OF ADMISSIBILITY; TESTIMONIAL
EVIDENCE; HEARSAY RULE. — [E]vidence is
hearsay if its probative value is not based on
the personal knowledge of the witness but on
the knowledge of another person who is not on
the witness stand.
4. POLITICAL LAW; EMINENT
DOMAIN; EXPROPRIATION; WHEN
PROPER. — [E]xpropriation lies only when it is
made necessary by the opposition of the owner
to the sale or by the lack of agreement as to the
price.
5. CIVIL LAW; CONTRACTS;
COMPROMISE AGREEMENT; JUDICIAL
COMPROMISE. — [A] compromise is a
contract whereby the parties, by making
reciprocal concessions, avoid litigation or put
an end to one already commenced. Essentially.
it is a contract perfected by mere consent, the
latter being manifested by the meeting of the
offer and the acceptance upon the thing and
the cause which are to constitute the contract.
A judicial compromise has the force of law and
is conclusive between the parties and it is not
valid and binding on a party who did not sign
the same. Since CHIONGBIAN was not a party
to the compromise agreements, she cannot
legally invoke the same. CAcDTI
DECISION
19
GONZAGA-REYES, Jp:
This Petition for Review
on Certiorari seeks the reversal of the Decision
of the Court of Appeals 1 in CA G.R. CV No.
56495 entitled "Virginia Chiongbian vs.
Mactan-Cebu International Airport Authority"
which affirmed the Decision of the Regional
Trial Court, 2 7th Judicial Region, Branch 24,
Cebu City.
The Court of Appeals rendered its
decision based on the following facts:
"Subject of the action is Lot 941
consisting of 13,766 square meters located in
Lahug, Cebu City, adjoining the then Lahug
Airport and covered by TCT No. 120366 of the
Registry of Deeds of Cebu City, in the name of
MCIAA.
During the liberation, the Lahug Airport
was occupied by the United States Army. Then,
in 1947, it was turned over to the Philippine
Government through Vthe Surplus Property
Commission. Subsequently, it was transferred
to the Bureau of Aeronautics which was
succeeded by the National Airports
Corporation. When the latter was dissolved, it
was replaced by the Civil Aeronautics
Administration (CAA).
On April 16, 1952, the Republic of the
Philippines, represented by the CAA, filed an
expropriation proceeding, Civil Case No. R-
1881 (Court of First Instance of Cebu, Third
Branch), on several parcels of land in Lahug,
Cebu City, which included Lot 941, for the
expansion and improvement of Lahug Airport.
In June 1953, appellee Virginia
Chiongbian purchased Lot 941 from its original
owner, Antonina Faborada, the original
defendant in the expropriation case, for
P8,000.00. Subsequently, TCT No. 9919 was
issued in her name (Exh. D).
Then, on December 29, 1961,
judgment was rendered in the expropriation
case in favor of the Republic of the Philippines
which was made to pay Virginia Chiongbian the
amount of P34,415.00 for Lot 941, with legal
interest computed from November 16, 1947,
the date when the government begun using it.
Virginia Chiongbian did not appeal therefrom.
Thereafter, absolute title to Lot 941 was
transferred to the Republic of the Philippines
under TCT No. 27696 (Exhs. E and 2).
Then, in 1990, Republic Act No.
6958 was passed by Congress creating the
Mactan-Cebu International Airport Authority to
which the assets of the Lahug Airport was
transferred. Lot 941 was then transferred in the
name of MCIAA under TCT No. 120366 on May
8, 1992.
On July 24, 1995, Virginia Chiongbian
filed a complaint for reconveyance of Lot 941
with the Regional Trial Court of Cebu, Branch
9, docketed as Civil Case No. CEB-17650
alleging, that sometime in 1949, the National
Airport Corporation (NAC) ventured to expand
the Cebu Lahug Airport. As a consequence, it
sought to acquire by expropriation or
negotiated sale several parcels of lands
adjoining the Lahug Airport, one of which was
Lot 941 owned by Virginia Chiongbian. Since
she and other landowners could not agree with
the NAC's offer for the compensation of their
lands, a suit for eminent domain was instituted
on April 16, 1952, before the then Court of First
Instance of Cebu (Branch III), against forty-five
(45) landowners, including Virginia
Chiongbian, docketed as Civil Case No. R-
1881, entitled "Republic of the Philippine vs.
Damian Ouano, et al." It was finally decided on
December 29, 1961 in favor of the Republic of
the Philippines.
Some of the defendants-landowners,
namely, Milagros Urgello, Mamerto Escaño,
Inc. and Ma. Atega Vda. de Deen, appealed the
decision to the Court of Appeals under CA-G.R.
No. 33045-R, which rendered a modified
judgment allowing them to repurchase their
expropriated properties. Virginia Chiongbian,
on the other hand, did not appeal and instead,
accepted the compensation for Lot 941 in the
amount of P34,415, upon the assurance of the
NAC that she or her heirs would be given the
right of reconveyance for the same price once
the land would no longer be used as (sic)
airport.
Consequently, TCT No. 9919 of
Virginia Chiongbian was cancelled and TCT
No. 27696 was issued in the name of the
Republic of the Philippines. Then, with the
20
creation of the MCIAA, it was cancelled and
TCT No. 120366 was issued in its name.
However, no expansion of the Lahug
Airport was undertaken by MCIAA and its
predecessors-in-interest. In fact, when Mactan
International Airport was opened for
commercial flights, the Lahug Airport was
closed at the end of 1991 and all its airport
activities were undertaken at and transferred to
the Mactan International Airport. Thus, the
purpose for which Lot 941 was taken ceased to
exist." 3
On June 3, 1997, the RTC rendered
judgment in favor of the respondent Virginia
Chiongbian (CHIONGBIAN) the dispositive
portion of the decision reads:
"WHEREFORE, in the light of the
foregoing, the Court hereby renders judgment
in favor of the plaintiff, Virginia Chiongbian and
against the defendant, Mactan Cebu
International Authority (MCIAA), ordering the
latter to restore to plaintiff the possession and
ownership of the property denominated as Lot
No. 941 upon reimbursement of the
expropriation price paid to plaintiff.
The Register of Deeds is therefore
ordered to effect the Transfer of the Certificate
Title from the defendant to the plaintiff on Lot
No. 941, cancelling Transfer Certificate of Title
No. 120366 in the name of defendant MCIAA
and to issue a new title on the same lot in the
name of Virginia Chiongbian.
No pronouncement as to cost.
SO ORDERED." 4
Aggrieved by the holding of the trial
court, the petitioner Mactan Cebu International
Airport Authority (MCIAA) appealed the
decision to the Court of Appeals, which
affirmed the RTC decision. Motion for
Reconsideration was denied 5 hence this
petition where MCIAA raises the following
grounds in support of its petition:
I.
THE COURT OF APPEALS ERRED IN
UPHOLDING THE TRIAL COURT'S
JUDGMENT THAT THERE WAS A CHIONGBIAN to prove the alleged repurchase
REPURCHASE AGREEMENT AND
IGNORING PETITIONER'S
PROTESTATIONS THAT ADMISSION OF
RESPONDENT'S ORAL EVIDENCE IS NOT
ALLOWED UNDER THE STATUE OF
FRAUDS.
II.
THE COURT OF APPEALS ERRED IN
HOLDING THAT THE DECISION
IN LIMBACO IS MATERIAL AND
APPLICABLE TO THE CASE AT BAR.
III.
THE COURT OF APPEALS ERRED IN
HOLDING THAT THE MODIFIED JUDGMENT
IN CA-GR NO. 33045 SHOULD INURE TO
THE BENEFIT OF CHIONGBIAN EVEN IF
SHE WAS NOT A PARTY IN SAID APPEALED
CASE.
IV.
THE COURT OF APPEALS ERRED IN
RULING THAT THE RIGHT OF VIRGINIA
CHIONGBIAN TO REPURCHASE SHOULD
BE UNDER THE SAME TERMS AND
CONDITIONS AS THE OTHER
LANDOWNERS SUCH THAT HER
REPURCHASE PRICE IS ONLY
P34,415.00." 6
MCIAA contends that the Republic of
the Philippines appropriated Lot No. 941
through expropriation proceedings in Civil
Case No. R-1881. The judgment rendered
therein was unconditional and did not contain a
stipulation that ownership thereof would revert
to CHIONGBIAN nor did it give CHIONGBIAN
the right to repurchase the same in the event
the lot was no longer used for the purpose it
was expropriated. Moreover, CHIONGBIAN's
claim that there was a repurchase agreement
is not supported by documentary evidence.
The mere fact that twenty six (26) other
landowners repurchased their property located
at the aforementioned Lahug airport is of no
consequence considering that said landowners
were able to secure a rider in their contracts
entitling them to repurchase their property.
MCIAA also argues that the Court of
Appeals erroneously concluded that it did not
object to the evidence presented by
agreement considering that the transcript of
21
stenographic notes shows that it manifested its
objections thereto for being in violation of the
Statute of Frauds.
MCIAA also faults the Court of Appeals
for applying the ruling in the case of Limbaco
vs. Court of Appeals. 7 It is the position of
MCIAA that the ruling in the case of Limbaco is
not squarely in point with respect to the present
case for the reason that the Limbaco case
involved a contract of sale of real property and
not an expropriation.
Moreover, MCIAA alleges that the
Court of Appeals erred in ruling that the case
of Escaño, et. al. vs. Republic 8 proves the
existence of the repurchase agreement.
MCIAA claims that although the parties in said
case were CHIONGBIAN's co-defendants in
Civil Case No. R-1881, CHIONGBIAN did not
join in their appeal of the judgment of
condemnation. The modified judgment in CA
G.R. No. 33045-R should not therefore
redound to CHIONGBIAN's benefit who was no
longer a party thereto or to the compromise
agreement which Escaño et. al. entered into
with the Republic of the Philippines. TECcHA
Finally, assuming for the sake of
argument that CHIONGBIAN has a right to
repurchase Lot No. 941, MCIAA claims that the
Court of Appeals erred in ruling that the right of
CHIONGBIAN to purchase said lot should be
under the same terms and conditions given to
the other landowners and not at the prevailing
market price. Such ruling is grossly unfair and
would result in unjustly enriching
CHIONGBIAN for the reason that she received
just compensation for the property at the time
of its taking by the government and that the
property is now worth several hundreds of
millions of pesos due to the improvements
introduced by MCIAA. 9
On the other hand, aside from praying
that this Court affirm the decision of the Court
of Appeals, the private respondent
CHIONGBIAN prays that the petition be denied
for the reason that it violates the 1997 Rules on
Civil Procedure, more specifically the
requirement of a certification of non-forum
shopping. CHIONGBIAN claims that the
Verification and Certification on Non-Forum
Shopping executed by the MCIAA on
September 13, 1999 was signed by a Colonel
Marcelino A. Cordova whose appointment as
Assistant General Manager of MCIAA was
disapproved by the Civil Service Commission
as early as September 2, 1999. It is
CHIONGBIAN's position that since his
appointment was disapproved, the Verification
attached to the petition for review
on certiorari cannot be considered as having
been executed by the "plaintiff" or "principal
party" who under Section 5, Rule 7 of the Rules
of Court can validly make the certification in the
instant petition. Consequently, the petition
should be considered as not being verified and
as such should not be considered as having
been filed at all.
After a careful consideration of the
arguments presented by the parties, we
resolve to grant the petition.
We first resolve the procedural issue.
We are not persuaded by
CHIONGBIAN's claim that the Verification and
Certification against forum shopping
accompanying MCIAA's petition was
insufficient for allegedly having been signed by
one who was not qualified to do so. As pointed
out by the MCIAA, Colonel Cordova signed the
Verification and Certification against forum
shopping as Acting General Manager of the
MCIAA, pursuant to Office Order No. 5322-99
dated September 10, 1999 issued by the
General Manager of MCIAA, Alfonso
Allere. 10 Colonel Cordova did not sign the
Verification and Certification against forum
shopping pursuant to his appointment as
assistant General Manager of the MCIAA,
which was later disapproved by the
Commission on Appointments. This fact has
not been disputed by CHIONGBIAN.
We come now to the substantive
aspects of the case wherein the issue to be
resolved is whether the abandonment of the
public use for which Lot No. 941 was
expropriated entitles CHIONGBIAN to
reacquire it.
In Fery vs. Municipality of
Cabanatuan, 11 this Court had occasion to rule
on the same issue as follows:
"The answer to that question depends
upon the character of the title acquired by the
22
expropriator, whether it be the State, a
province, a municipality, or a corporation which
has the right to acquire property under the
power of eminent domain. If, for example, land
is expropriated for a particular purpose, with
the condition that when that purpose is ended
or abandoned the property shall return to its
former owner, then, of course, when the
purpose is terminated or abandoned the former
owner reacquires the property so expropriated.
If, for example, land is expropriated for a public
street and the expropriation is granted upon
condition that the city can only use it for a
public street, then, of course, when the city
abandons its use as a public street, it returns to
the former owner, unless there is some
statutory provision to the contrary. Many other
similar examples might be given. If, upon the
contrary, however, the decree of expropriation
gives to the entity a fee simple title, then, of
course, the land becomes the absolute
property of the expropriator, whether it be the
State, a province, or municipality, and in that
case the non-user does not have the effect of
defeating the title acquired by the expropriation
proceedings. DCATHS
When land has been
acquired for public use in fee simple,
unconditionally, either by the exercise of
eminent domain or by purchase, the former
owner retains no rights in the land, and the
public use may be abandoned, or the land may
be devoted to a different use, without any
impairment of the estate or title acquired, or
any reversion to the former owner. 12
In the present case, evidence reveals
that Lot No. 941 was appropriated by the
Republic of the Philippines through
expropriation proceedings in Civil Case No. R-
1881. The dispositive portion of the decision in
said case reads insofar as pertinent as follows:
"IN VIEW OF THE FOREGOING,
judgment is hereby rendered:
1. Declaring the expropriation of Lots
Nos. 75, 76, 89, 90, 91, 105, 106, 107, 108,
104, 921-A, 88, 93, 913-B, 72, 77, 916, 777-A,
918, 919, 920, 764-A, 988, 744-A, 745-A, 746,
747, 752-A, 263-A, 941, 942, 740-A, 743, 985,
956, 976-A, 984, 989-A; and 947, including in
the Lahug Airport, Cebu City, justified and in
lawful exercise of the right of eminent domain;
2. Declaring the fair market values of
the lots thus taken and condemning the plaintiff
to pay the same to the respective owners with
legal interest from the dates indicated therein,
as follows: Lots Nos. 75, 76, 89, 90, 91, 92,
105, 106, 107, 108-P31, 977 (minus P10,639
or P21,278 as balance in favor of Mamerto
Escaño, Inc., with legal interest from November
16, 1947 until fully paid; . . . Lot No. 941-
P34,415.00 in favor of Virginia Chiongbian,
with legal interest from November 16, 1947
until fully paid; . . .
3. After the payment of the foregoing
financial obligation to the landowners, directing
the latter to deliver to the plaintiff the
corresponding Transfer Certificate of Title to
their representative lots; and upon the
presentation of the said titles to the Register of
Deeds, ordering the latter to cancel the same
and to issue, in lieu thereof, new Transfer
Certificates of Title in the name of the plaintiff.
NO COST.
SO ORDERED." 13 (Italics supplied)
The terms of the judgment are clear
and unequivocal and grant title to Lot No. 941
in fee simple to the Republic of the Philippines.
There was no condition imposed to the effect
that the lot would return to CHIONGBIAN or
that CHIONGBIAN had a right to repurchase
the same if the purpose for which it was
expropriated is ended or abandoned or if the
property was to be used other than as the
Lahug airport.
CHIONGBIAN cannot rely on the ruling
in Mactan Cebu International Airport vs. Court
of Appeals 14 wherein the presentation of
parol evidence was allowed to prove the
existence of a written agreement containing the
right to repurchase. Said case did not involve
expropriation proceedings but a contract of
sale. This Court consequently allowed the
presentation of parol evidence to prove the
existence of an agreement allowing the right of
repurchase based on the following
ratiocination:
"Under the parol evidence rule, when
the terms of an agreement have been reduced
into writing, it is considered as containing all the
terms agreed upon, and there can be, between
23
the parties and their successors-in-interest, no
evidence of such terms other than the contents
of the written agreement. However, a party may
present evidence to modify, explain or add to
the terms of the written agreement if he puts in
issue in his pleading, the failure of the written
agreement to express the true intent of the
parties thereto. In the case at bench, the fact
which private respondents seek to establish by
parol evidence consists of the agreement or
representation made by the NAC that induced
Inez Ouano to execute the deed of sale; that
the vendors and their heirs are given the right
of repurchase should the government no longer
need the property. Where a parol
contemporaneous agreement was the moving
cause of the written contract, or where the parol
agreement forms part of the consideration of
the written contract, and it appears that the
written contract was executed on the faith of
the parol contract or representation, such
evidence is admissible. It is recognized that
proof is admissible of any collateral parol
agreement that is not inconsistent with the
terms of the written contract though it may
relate to the same subject matter. The rule
excluding parol evidence to vary or contradict a
writing does not extend so far as to preclude
the admission of existing evidence to show
prior or contemporaneous collateral parol
agreements between the parties, but such
evidence may be received, regardless of
whether or not the written agreement contains
any reference to such collateral agreement,
and whether the action is at law or in
equity. aCIHcD
More importantly, no objection was
made by petitioner when private respondents
introduced evidence to show the right of
repurchase granted by the NAC to Inez Ouano.
It has been repeatedly laid down as a rule of
evidence that a protest or objection against the
admission of any evidence must be made at
the proper time, and if not so made, it will be
understood to have been waived." 15
This pronouncement is not applicable
to the present case since the parol evidence
rule which provides that "when the terms of a
written agreement have been reduced to
writing, it is considered as containing all the
terms agreed upon, and there can be, between
the parties and their successors-in-interest, no
evidence of such terms other than the contents
of the written agreement" applies to written
agreements and has no application to a
judgment of a court. To permit CHIONGBIAN
to prove the existence of a compromise
settlement which she claims to have entered
into with the Republic of the Philippines prior to
the rendition of judgment in the expropriation
case would result in a modification of the
judgment of a court which has long become
final and executory. IEHaSc
And even assuming for the sake of
argument that CHIONGBIAN could prove the
existence of the alleged written agreement
acknowledging her right to repurchase Lot No.
941 through parol evidence, the Court of
Appeals erred in holding that the evidence
presented by CHIONGBIAN was admissible.
Under 1403 of the Civil Code, a
contract for the sale of real property shall be
unenforceable unless the same, or some note
or memorandum thereof, be in writing, and
subscribed by the party charged, or by his
agent; evidence, therefore of the agreement
cannot be received without the writing or a
secondary evidence of its contents.
Contrary to the finding of the Court of
Appeals, the records reveal that MCIAA
objected to the purpose for which the
testimonies of CHIONGBIAN 16 and
Patrosinio Berceder 17(BERCEDE) were
offered, i.e. to prove the existence of the
alleged written agreement evincing a right to
repurchase Lot No. 941 in favor of
CHIONGBIAN, for being in violation of the
Statute of Frauds. MCIAA also objected to the
purpose for which the testimony of Attorney
Manuel Pastrana (PASTRANA) was
offered, i.e. to prove the existence of the
alleged written agreement and an alleged deed
of sale, on the same ground. 18 Consequently,
the testimonies of these witnesses are
inadmissible under the Statute of Frauds to
prove the existence of the alleged sale.
Aside from being inadmissible under
the provisions of the Statute of Frauds,
CHIONGBIAN's and BERCEDE's testimonies
are also inadmissible for being hearsay in
nature. Evidence is hearsay if its probative
value is not based on the personal knowledge
of the witness but on the knowledge of another
24
 person who is not on the witnessQ: So you are now trying to tell us that that assurance
stand. 19CHIONGBIAN, through deposition, was never made to you personally. Is that right,
testified that: Mam?
"ATTY. DUBLIN (To Witness)
Q: Mrs. Chiongbian, you said a while ago that there
was an assurance by the government to returnQ: When you said "he," are you referring to your lawyer
this property to you in case Lahug Airport will
be no longer used, is that correct?
WITNESS:
A: Yes, sir. That is true.
ATTY. DUBLIN: (To witness)
Q: Can you recall when was this verbal assuranceA: Yes, sir. 20
made?
A: I cannot remember anymore.
Q: You cannot also remember the year in which the
alleged assurance was made?
A: I cannot also remember because I'm very forgetful.
Q: Now, can you tell us so far as you can remember
who was that person or government authority
or employee that made the alleged assurance?
A: The owner of the property.
Q: Now, how many times was this assurance being
made to you to return this property in case the
Lahug Airport will no longer be used?
A: 2 or 3, I cannot recall.
Q: You cannot also remember in what particular place
or places was this assurance being made?
A: In my previous residence in Mabolo.
DEPOSITION OFFICER:
The assurance was made in my previous residence at
Mabolo.
WITNESS:
A: I entrusted that to my lawyer, Atty. Pedro
Calderon. IDSaEA
ATTY. DUBLIN: (to witness)
Q: You mean the assurance was made personally to
your lawyer at that time, Atty. Pedro Calderon?
A: Yes, sir.
A: He assured me directly that the property will be
returned to me.
at that time, Atty. Pedro Calderon
A: Yes, sir.
Q: So, in effect, it was your lawyer, Atty. Pedro
Calderon, who made the assurance to you that
the property will be returned in case Lahug
Airport will be abandoned?
CHIONGBIAN's testimony shows that
she had no personal knowledge of the alleged
assurance made by the Republic of the
Philippines that Lot No. 941 would be returned
to her in the event that the Lahug Airport was
closed. She stated that she only learned of the
alleged assurance of the Republic of the
Philippines through her lawyer, Attorney
Calderon, who was not presented as a witness.
BERCEDE's testimony regarding the
alleged agreement is likewise inadmissible to
prove the existence of the agreement for also
being hearsay in nature. Like CHIONGBIAN,
BERCEDE did not have personal knowledge of
the alleged assurance made by the Republic of
the Philippines to his father that their land
would be returned should the Lahug Airport
cease to operate for he only learned of the
alleged assurance through his father.
PASTRANA's testimony does little to
help CHIONGBIAN's cause. He claims that
subsequent to the execution of the alleged
written agreement but prior to the rendition of
judgment in the expropriation case, the
Republic and CHIONGBIAN executed a Deed
of Sale over Lot No. 941 wherein
CHIONGBIAN sold the aforementioned lot to
the Republic of the Philippines. However,
CHIONGBIAN never mentioned the existence
of a deed of sale. 21 In fact, the records
disclose that Lot No. 941 was transferred to the
Republic of the Philippines pursuant to the
judgment of expropriation in Civil Case No. R-
1881 which CHIONGBIAN herself enforced by
filing a motion for withdrawal of the money after
25
the decision was rendered. 22 Moreover, since and the acceptance upon the thing and the
the very terms of the judgment in Civil Case No. cause which are to constitute the contract. 26A
R-1881 are silent regarding the alleged deed of judicial compromise has the force of law and is
sale or of the alleged written agreement conclusive between the parties 27 and it is not
acknowledging the right of CHIONGBIAN to valid and binding on a party who did not sign
repurchase Lot No. 941, the only logical the same. 28 Since CHIONGBIAN was not a
conclusion is that no sale in fact took place and party to the compromise agreements, she
that no compromise agreement was executed cannot legally invoke the same.
prior to the rendition of the judgment. Had
CHIONGBIAN and the Republic executed a ACCORDINGLY, the Decision of the
contract of sale as claimed by PASTRANA, the Court of Appeals is hereby REVERSED and
Republic of the Philippines would not have SET ASIDE. The complaint of Virginia
needed to pursue the expropriation case Chiongbian against the Mactan-Cebu
inasmuch as it would be duplicitous and would International Airport Authority for
result in the Republic of the Philippines reconveyance of Lot No. 941 is DISMISSED.
expropriating something it had already owned. SO ORDERED.
Expropriation lies only when it is made
necessary by the opposition of the owner to the Melo, Vitug, and Panganiban,
sale or by the lack of agreement as to the JJ., concur.
price. 23 Consequently, CHIONGBIAN cannot
||| (Mactan-Cebu International Airport Authority
compel MCIAA to reconvey Lot No. 941 to her
v. Court of Appeals, G.R. No. 139495,
since she has no cause of action against
[November 27, 2000], 399 PHIL 695-712)
MCIAA. caTESD
Finally, CHIONGBIAN cannot invoke
the modified judgment of the Court of Appeals CASE NO. 13
in the case of Republic of the Philippines
vs. Escaño, et. al. 24 where her co-
defendants, Mamerto Escaño, Inc., Milagros EN BANC
Urgello and Maria Atega Vda. De Deen entered
into separate and distinct compromise
agreements with the Republic of the [G.R. No. 176625. February 25, 2010.]
Philippines wherein they agreed to sell their
land subject of the expropriation proceedings to MACTAN-CEBU INTERNATIONAL AIRPORT
the latter subject to the resolutory condition that AUTHORITY and AIR TRANSPORTATION
in the event the Republic of the Philippines no OFFICE, petitioners, vs. BERNARDO L.
longer uses said property as an airport, title and LOZADA, SR., and the HEIRS OF ROSARIO
ownership of said property shall revert to its MERCADO, namely, VICENTE LOZADA,
respective owners upon reimbursement of the MARIO M. LOZADA, MARCIA L. GODINEZ,
price paid therefor without interest. MCIAA VIRGINIA L. FLORES, BERNARDO
correctly points out that since CHIONGBIAN LOZADA, JR., DOLORES GACASAN,
did not appeal the judgment of expropriation in SOCORRO CAFARO and ROSARIO
Civil Case No. R-1881 and was not a party to LOZADA, represented by MARCIA LOZADA
the appeal of her co-defendants, the judgment GODINEZ, respondents.
therein cannot redound to her benefit. And
even assuming that CHIONGBIAN was a party
to the appeal, she was not a party to the
compromise agreements entered into by her DECISION
co-defendants. A compromise is a contract
whereby the parties, by making reciprocal
concessions, avoid litigation or put an end to
NACHURA, J p:
one already commenced. 25 Essentially, it is a
contract perfected by mere consent, the latter
being manifested by the meeting of the offer

26
 This is a petition for review
on certiorari under Rule 45 of the Rules of
Court, seeking to reverse, annul, and set aside
the Decision 1 dated February 28, 2006 and
the Resolution 2 dated February 7, 2007 of the
Court of Appeals (CA) (Cebu City), Twentieth
Division, in CA-G.R. CV No. 65796.
The antecedent facts and proceedings
are as follows:
Subject of this case is Lot No. 88-SWO-
25042 (Lot No. 88), with an area of 1,017
square meters, more or less, located in Lahug,
Cebu City. Its original owner was Anastacio
Deiparine when the same was subject to
expropriation proceedings, initiated by the
Republic of the Philippines (Republic),
represented by the then Civil Aeronautics
Administration (CAA), for the expansion and
improvement of the Lahug Airport. The case
was filed with the then Court of First Instance
of Cebu, Third Branch, and docketed as Civil
Case No. R-1881.
As early as 1947, the lots were already
occupied by the U.S. Army. They were turned
over to the Surplus Property Commission, the
Bureau of Aeronautics, the National Airport
Corporation and then to the CAA. HSEcTC
During the pendency of the
expropriation proceedings, respondent
Bernardo L. Lozada, Sr. acquired Lot No. 88
from Deiparine. Consequently, Transfer
Certificate of Title (TCT) No. 9045 was issued
in Lozada's name.
On December 29, 1961, the trial court
rendered judgment in favor of the Republic and
ordered the latter to pay Lozada the fair market
value of Lot No. 88, adjudged at P3.00 per
square meter, with consequential damages by
way of legal interest computed from November
16, 1947 — the time when the lot was first
occupied by the airport. Lozada received the
amount of P3,018.00 by way of payment.
The affected landowners appealed.
Pending appeal, the Air Transportation Office
(ATO), formerly CAA, proposed a compromise
settlement whereby the owners of the lots
affected by the expropriation proceedings
would either not appeal or withdraw their
respective appeals in consideration of a
commitment that the expropriated lots would be
resold at the price they were expropriated in the
event that the ATO would abandon the Lahug
Airport, pursuant to an established policy
involving similar cases. Because of this
promise, Lozada did not pursue his appeal.
Thereafter, Lot No. 88 was transferred and
registered in the name of the Republic under
TCT No. 25057.
The projected improvement and
expansion plan of the old Lahug Airport,
however, was not pursued.
Lozada, with the other landowners,
contacted then CAA Director Vicente Rivera,
Jr., requesting to repurchase the lots, as per
previous agreement. The CAA replied that
there might still be a need for the Lahug Airport
to be used as an emergency DC-3 airport. It
reiterated, however, the assurance that "should
this Office dispose and resell the properties
which may be found to be no longer necessary
as an airport, then the policy of this Office is to
give priority to the former owners subject to the
approval of the President."
On November 29, 1989, then President
Corazon C. Aquino issued a Memorandum to
the Department of Transportation, directing the
transfer of general aviation operations of the
Lahug Airport to the Mactan International
Airport before the end of 1990 and, upon such
transfer, the closure of the Lahug
Airport. SATDEI
Sometime in 1990, the Congress of the
Philippines passed Republic Act (R.A.) No.
6958, entitled "An Act Creating the Mactan-
Cebu International Airport Authority,
Transferring Existing Assets of the Mactan
International Airport and the Lahug Airport to
the Authority, Vesting the Authority with Power
to Administer and Operate the Mactan
International Airport and the Lahug Airport, and
for Other Purposes."
From the date of the institution of the
expropriation proceedings up to the present,
the public propose of the said expropriation
(expansion of the airport) was never actually
initiated, realized, or implemented. Instead, the
old airport was converted into a commercial
complex. Lot No. 88 became the site of a jail
known as Bagong Buhay Rehabilitation
Complex, while a portion thereof was occupied
by squatters. 3 The old airport was converted
27
 into what is now known as the Ayala I.T. Park,(i) Since the public purpose for the expropriation no
a commercial area.
Thus, on June 4, 1996, petitioners
initiated a complaint for the recovery of
possession and reconveyance of ownership of
Lot No. 88. The case was docketed as Civil
Case No. CEB-18823 and was raffled to the
Regional Trial Court (RTC), Branch 57, Cebu
City. The complaint substantially alleged as
follows:
(a) Spouses Bernardo and Rosario Lozada were the
registered owners of Lot No. 88 covered by
TCT No. 9045;
(b) In the early 1960's, the Republic sought to acquire
by expropriation Lot No. 88, among others, in
connection with its program for the
improvement and expansion of the Lahug
Airport;
(c) A decision was rendered by the Court of First
Instance in favor of the Government and
against the land owners, among whom was
Bernardo Lozada, Sr. appealed therefrom;
(d) During the pendency of the appeal, the parties(2) The property was expropriated among several
entered into a compromise settlement to the
effect that the subject property would be resold
to the original owner at the same price when it
was expropriated in the event that the
Government abandons the Lahug
Airport; HTCISE
(e) Title to Lot No. 88 was subsequently transferred to
the Republic of the Philippines (TCT No.
25057);
(f) The projected expansion and improvement of the
Lahug Airport did not materialize;
(g) Plaintiffs sought to repurchase their property from
then CAA Director Vicente Rivera. The latter
replied by giving as assurance that priority
would be given to the previous owners, subject
to the approval of the President, should CAA
decide to dispose of the properties;
(h) On November 29, 1989, then President Corazon C.
Aquino, through a Memorandum to the
Department of Transportation and
Communications (DOTC), directed the transfer
of general aviation operations at the Lahug
Airport to the Mactan-Cebu International
Airport Authority;
longer exists, the property must be returned to
the plaintiffs. 4 HSacEI
In their Answer, petitioners asked for
the immediate dismissal of the complaint. They
specifically denied that the Government had
made assurances to reconvey Lot No. 88 to
respondents in the event that the property
would no longer be needed for airport
operations. Petitioners instead asserted that
the judgment of condemnation was
unconditional, and respondents were,
therefore, not entitled to recover the
expropriated property notwithstanding non-use
or abandonment thereof.
After pretrial, but before trial on the
merits, the parties stipulated on the following
set of facts:
(1) The lot involved is Lot No. 88-SWO-25042 of the
Banilad Estate, situated in the City of Cebu,
containing an area of One Thousand
Seventeen (1,017) square meters, more or
less;
other properties in Lahug in favor of the
Republic of the Philippines by virtue of a
Decision dated December 29, 1961 of the CFI
of Cebu in Civil Case No. R-1881;
(3) The public purpose for which the property was
expropriated was for the purpose of the Lahug
Airport; DCASEc
(4) After the expansion, the property was transferred in
the name of MCIAA; [and]
(5) On November 29, 1989, then President Corazon C.
Aquino directed the Department of
Transportation and Communication to transfer
general aviation operations of the Lahug
Airport to the Mactan-Cebu International
Airport Authority and to close the Lahug Airport
after such transfer[.] 5
During trial, respondents presented
Bernardo Lozada, Sr. as their lone witness,
while petitioners presented their own witness,
Mactan-Cebu International Airport Authority
legal assistant Michael Bacarisas.
On October 22, 1999, the RTC
rendered its Decision, disposing as follows:
28
 WHEREFORE, in the light of the
foregoing, the Court hereby renders judgment
in favor of the plaintiffs, Bernardo L. Lozada,
Sr., and the heirs of Rosario Mercado, namely,
Vicente M. Lozada, Marcia L. Godinez, Virginia
L. Flores, Benardo M. Lozada, Jr., Dolores L.
Gacasan, Socorro L. Cafaro and Rosario M.
Lozada, represented by their attorney-in-fact
Marcia Lozada Godinez, and against
defendants Cebu-Mactan International Airport
Authority (MCIAA) and Air Transportation
Office (ATO):
1. ordering MCIAA and ATO to restore
to plaintiffs the possession and ownership of
their land, Lot No. 88 Psd-821 (SWO-23803),
upon payment of the expropriation price to
plaintiffs; and
2. ordering the Register of Deeds to
effect the transfer of the Certificate of Title from
defendant[s] to plaintiffs on Lot No. [88],
cancelling TCT No. 20357 in the name of
defendant MCIAA and to issue a new title on
the same lot in the name of Bernardo L.
Lozada, Sr. and the heirs of Rosario Mercado,
namely: Vicente M. Lozada, Mario M. Lozada,
Marcia L. Godinez, Virginia L. Flores, Bernardo
M. Lozada, Jr., Dolores L. Gacasan, Socorro L.
Cafaro and Rosario M. Lozada. cCTAIE
No pronouncement as to costs.
SO ORDERED. 6
Aggrieved, petitioners interposed an
appeal to the CA. After the filing of the
necessary appellate briefs, the CA rendered its
assailed Decision dated February 28, 2006,
denying petitioners' appeal and affirming in
toto the Decision of the RTC, Branch 57, Cebu
City. Petitioners' motion for reconsideration
was, likewise, denied in the questioned CA
Resolution dated February 7, 2007.
Hence, this petition arguing that: (1) the
respondents utterly failed to prove that there
was a repurchase agreement or compromise
settlement between them and the Government;
(2) the judgment in Civil Case No. R-1881 was
absolute and unconditional, giving title in fee
simple to the Republic; and (3) the
respondents' claim of verbal assurances from
government officials violates the Statute of
Frauds.
The petition should be denied.
Petitioners anchor their claim to the
controverted property on the supposition that
the Decision in the pertinent expropriation
proceedings did not provide for the condition
that should the intended use of Lot No. 88 for
the expansion of the Lahug Airport be aborted
or abandoned, the property would revert to
respondents, being its former owners.
Petitioners cite, in support of this position, Fery
v. Municipality of Cabanatuan, 7 which
declared that the Government acquires only
such rights in expropriated parcels of land as
may be allowed by the character of its title over
the properties —
If . . . land is expropriated for a
particular purpose, with the condition that when
that purpose is ended or abandoned the
property shall return to its former owner, then,
of course, when the purpose is terminated or
abandoned the former owner reacquires the
property so expropriated. If . . . land is
expropriated for a public street and the
expropriation is granted upon condition that the
city can only use it for a public street, then, of
course, when the city abandons its use as a
public street, it returns to the former owner,
unless there is some statutory provision to the
contrary. . . . . If, upon the contrary, however,
the decree of expropriation gives to the entity a
fee simple title, then, of course, the land
becomes the absolute property of the
expropriator, whether it be the State, a
province, or municipality, and in that case the
non-user does not have the effect of defeating
the title acquired by the expropriation
proceedings. . . . . HECTaA
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 right 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. . . . . 8
Contrary to the stance of petitioners,
this Court had ruled otherwise in Heirs of
Timoteo Moreno and Maria Rotea v. Mactan-
Cebu International Airport Authority, 9 thus —
29
 Moreover, respondent MCIAA has
brought to our attention a significant and telling
portion in the Decision in Civil Case No. R-
1881 validating our discernment that the
expropriation by the predecessors of
respondent was ordered under the running
impression that Lahug Airport would continue
in operation —
As for the public purpose of the
expropriation proceeding, it cannot now be
doubted. Although Mactan Airport is being
constructed, it does not take away the actual
usefulness and importance of the Lahug
Airport: it is handling the air traffic both civilian
and military. From it aircrafts fly to Mindanao
and Visayas and pass thru it on their flights to
the North and Manila. Then, no evidence was
adduced to show how soon is the Mactan
Airport to be placed in operation and whether
the Lahug Airport will be closed immediately
thereafter. It is up to the other departments of
the Government to determine said matters. The
Court cannot substitute its judgment for those
of the said departments or agencies. In the
absence of such showing, the Court will
presume that the Lahug Airport will continue to
be in operation (emphasis supplied).
While in the trial in Civil Case No. R-
1881 [we] could have simply acknowledged the
presence of public purpose for the exercise of
eminent domain regardless of the survival of
Lahug Airport, the trial court in
its Decision chose not to do so but instead
prefixed its finding of public purpose upon its
understanding that "Lahug Airport will continue
to be in operation." Verily, these meaningful
statements in the body of the Decision warrant
the conclusion that the expropriated properties
would remain to be so until it was confirmed
that Lahug Airport was no longer "in
operation." This inference further implies two
(2) things: (a) after the Lahug Airport ceased its
undertaking as such and the expropriated lots
were not being used for any airport expansion
project, the rights vis-à-vis the expropriated
Lots Nos. 916 and 920 as between the State
and their former owners, petitioners herein,
must be equitably adjusted; and (b) the
foregoing unmistakable declarations in the
body of the Decision should merge with and
become an intrinsic part of the fallo thereof
which under the premises is clearly inadequate
since the dispositive portion is not in accord
with the findings as contained in the body
thereof. 10 caCEDA
Indeed, the Decision in Civil Case No.
R-1881 should be read in its entirety, wherein
it is apparent that the acquisition by the
Republic of the expropriated lots was subject to
the condition that the Lahug Airport would
continue its operation. The condition not having
materialized because the airport had been
abandoned, the former owner should then be
allowed to reacquire the expropriated
property. 11
On this note, we take this opportunity to
revisit our ruling in Fery, which involved an
expropriation suit commenced upon parcels of
land to be used as a site for a public market.
Instead of putting up a public market,
respondent Cabanatuan constructed
residential houses for lease on the area.
Claiming that the municipality lost its right to the
property taken since it did not pursue its public
purpose, petitioner Juan Fery, the former
owner of the lots expropriated, sought to
recover his properties. However, as he had
admitted that, in 1915, respondent Cabanatuan
acquired a fee simple title to the lands in
question, judgment was rendered in favor of
the municipality, following American
jurisprudence, particularly City of Fort Wayne
v. Lake Shore & M.S. RY. Co., 12 McConihay
v. Theodore Wright, 13 and Reichling v.
Covington Lumber Co., 14 all uniformly holding
that the transfer to a third party of the
expropriated real property, which necessarily
resulted in the abandonment of the particular
public purpose for which the property was
taken, is not a ground for the recovery of the
same by its previous owner, the title of the
expropriating agency being one of fee simple.
Obviously, Fery was not decided
pursuant to our now sacredly held
constitutional right that private property shall
not be taken for public use without just
compensation. 15It is well settled that the
taking of private property by the Government's
power of eminent domain is subject to two
mandatory requirements: (1) that it is for a
particular public purpose; and (2) that just
compensation be paid to the property owner.
These requirements partake of the nature of
implied conditions that should be complied with
30
to enable the condemnor to keep the property
expropriated. 16 ECcTaS
More particularly, with respect to the
element of public use, the expropriator should
commit to use the property pursuant to the
purpose stated in the petition for expropriation
filed, failing which, it should file another petition
for the new purpose. If not, it is then incumbent
upon the expropriator to return the said
property to its private owner, if the latter desires
to reacquire the same. Otherwise, the
judgment of expropriation suffers an intrinsic
flaw, as it would lack one indispensable
element for the proper exercise of the power of
eminent domain, namely, the particular public
purpose for which the property will be devoted.
Accordingly, the private property owner would
be denied due process of law, and the
judgment would violate the property owner's
right to justice, fairness, and equity.
In light of these premises, we now
expressly hold that the taking of private
property, consequent to the Government's
exercise of its power of eminent domain, is
always subject to the condition that the
property be devoted to the specific public
purpose for which it was taken. Corollarily, if
this particular purpose or intent is not initiated
or not at all pursued, and is peremptorily
abandoned, then the former owners, if they so
desire, may seek the reversion of the property,
subject to the return of the amount of just
compensation received. In such a case, the
exercise of the power of eminent domain has
become improper for lack of the required
factual justification. 17
Even without the foregoing declaration,
in the instant case, on the question of whether
respondents were able to establish the
existence of an oral compromise agreement
that entitled them to repurchase Lot No. 88
should the operations of the Lahug Airport be
abandoned, we rule in the affirmative.
It bears stressing that both the RTC,
Branch 57, Cebu and the CA have passed
upon this factual issue and have declared, in
no uncertain terms, that a compromise
agreement was, in fact, entered into between
the Government and respondents, with the
former undertaking to resell Lot No. 88 to the
latter if the improvement and expansion of the
Lahug Airport would not be pursued. In
affirming the factual finding of the RTC to this
effect, the CA declared — EHSIcT
Lozada's testimony is cogent. An
octogenarian widower-retiree and a resident of
Moon Park, California since 1974, he testified
that government representatives verbally
promised him and his late wife while the
expropriation proceedings were on-going that
the government shall return the property if the
purpose for the expropriation no longer exists.
This promise was made at the premises of the
airport. As far as he could remember, there
were no expropriation proceedings against his
property in 1952 because the first notice of
expropriation he received was in 1962. Based
on the promise, he did not hire a lawyer.
Lozada was firm that he was promised that the
lot would be reverted to him once the public use
of the lot ceases. He made it clear that the
verbal promise was made in Lahug with other
lot owners before the 1961 decision was
handed down, though he could not name the
government representatives who made the
promise. It was just a verbal promise;
nevertheless, it is binding. The fact that he
could not supply the necessary details for the
establishment of his assertions during cross-
examination, but that "When it will not be used
as intended, it will be returned back, we just
believed in the government," does not
dismantle the credibility and truthfulness of his
allegation. This Court notes that he was 89
years old when he testified in November 1997
for an incident which happened decades ago.
Still, he is a competent witness capable of
perceiving and making his perception known.
The minor lapses are immaterial. The decision
of the competency of a witness rests primarily
with the trial judge and must not be disturbed
on appeal unless it is clear that it was
erroneous. The objection to his competency
must be made before he has given any
testimony or as soon as the incompetency
becomes apparent. Though Lozada is not part
of the compromise agreement, 18 he
nevertheless adduced sufficient evidence to
support his claim. 19
As correctly found by the CA, unlike
in Mactan Cebu International Airport Authority
v. Court of Appeals, 20 cited by petitioners,
where respondent therein offered testimonies
31
which were hearsay in nature, the testimony of
Lozada was based on personal knowledge as
the assurance from the government was
personally made to him. His testimony on
cross-examination destroyed neither his
credibility as a witness nor the truthfulness of
his words.
Verily, factual findings of the trial court,
especially when affirmed by the CA, are
binding and conclusive on this Court and may
not be reviewed. A petition for certiorari under
Rule 45 of the Rules of Court contemplates
only questions of law and not of fact. 21 Not
one of the exceptions to this rule is present in
this case to warrant a reversal of such
findings. AaCEDS
As regards the position of petitioners
that respondents' testimonial evidence violates
the Statute of Frauds, suffice it to state that the
Statute of Frauds operates only with respect to
executory contracts, and does not apply to
contracts which have been completely or
partially performed, the rationale thereof being
as follows:
In executory contracts there is a wide
field for fraud because unless they be in writing
there is no palpable evidence of the intention of
the contracting parties. The statute has
precisely been enacted to prevent fraud.
However, if a contract has been totally or
partially performed, the exclusion of parol
evidence would promote fraud or bad faith, for
it would enable the defendant to keep the
benefits already delivered by him from the
transaction in litigation, and, at the same time,
evade the obligations, responsibilities or
liabilities assumed or contracted by him
thereby. 22
In this case, the Statute of Frauds,
invoked by petitioners to bar the claim of
respondents for the reacquisition of Lot No. 88,
cannot apply, the oral compromise settlement
having been partially performed. By reason of
such assurance made in their favor,
respondents relied on the same by not
pursuing their appeal before the CA. Moreover,
contrary to the claim of petitioners, the fact of
Lozada's eventual conformity to the appraisal
of Lot No. 88 and his seeking the correction of
a clerical error in the judgment as to the true
area of Lot No. 88 do not conclusively establish
that respondents absolutely parted with their
property. To our mind, these acts were simply
meant to cooperate with the government,
particularly because of the oral promise made
to them.
The right of respondents to repurchase
Lot No. 88 may be enforced based on a
constructive trust constituted on the property
held by the government in favor of the former.
On this note, our ruling in Heirs of Timoteo
Moreno is instructive, viz.: IcAaEH
Mactan-Cebu International Airport
Authority is correct in stating that one would not
find an express statement in the Decision in
Civil Case No. R-1881 to the effect that "the
[condemned] lot would return to [the
landowner] or that [the landowner] had a right
to repurchase the same if the purpose for which
it was expropriated is ended or abandoned or if
the property was to be used other than as the
Lahug Airport." This omission notwithstanding,
and while the inclusion of this pronouncement
in the judgment of condemnation would have
been ideal, such precision is not absolutely
necessary nor is it fatal to the cause of
petitioners herein. No doubt, the return or
repurchase of the condemned properties of
petitioners could be readily justified as the
manifest legal effect or consequence of the trial
court's underlying presumption that "Lahug
Airport will continue to be in operation" when it
granted the complaint for eminent domain and
the airport discontinued its activities.
The predicament of petitioners involves
a constructive trust, one that is akin to the
implied trust referred to in Art. 1454 of the Civil
Code, "If an absolute conveyance of property
is made in order to secure the performance of
an obligation of the grantor toward the grantee,
a trust by virtue of law is established. If the
fulfillment of the obligation is offered by the
grantor when it becomes due, he may demand
the reconveyance of the property to him." In the
case at bar, petitioners conveyed Lots No. 916
and 920 to the government with the latter
obliging itself to use the realties for the
expansion of Lahug Airport; failing to keep its
bargain, the government can be compelled by
petitioners to reconvey the parcels of land to
them, otherwise, petitioners would be denied
the use of their properties upon a state of
affairs that was not conceived nor
32
contemplated when the expropriation was
authorized.
Although the symmetry between the
instant case and the situation contemplated by
Art. 1454 is not perfect, the provision is
undoubtedly applicable. For, as explained by
an expert on the law of trusts: "The only
problem of great importance in the field of
constructive trust is to decide whether in the
numerous and varying fact situations
presented to the courts there is a wrongful
holding of property and hence a threatened
unjust enrichment of the
defendant." Constructive trusts are fictions of
equity which are bound by no unyielding
formula when they are used by courts as
devices to remedy any situation in which the
holder of legal title may not in good conscience
retain the beneficial interest. AICDSa
In constructive trusts, the arrangement
is temporary and passive in which the trustee's
sole duty is to transfer the title and possession
over the property to the plaintiff-beneficiary. Of
course, the "wronged party seeking the aid of a
court of equity in establishing a constructive
trust must himself do equity." Accordingly, the
court will exercise its discretion in deciding
what acts are required of the plaintiff-
beneficiary as conditions precedent to
obtaining such decree and has the obligation to
reimburse the trustee the consideration
received from the latter just as the plaintiff-
beneficiary would if he proceeded on the theory
of rescission. In the good judgment of the court,
the trustee may also be paid the necessary
expenses he may have incurred in sustaining
the property, his fixed costs for improvements
thereon, and the monetary value of his services
in managing the property to the extent that
plaintiff-beneficiary will secure a benefit from
his acts.
The rights and obligations between the
constructive trustee and the beneficiary, in this
case, respondent MCIAA and petitioners over
Lots Nos. 916 and 920, are echoed in Art. 11901. Respondents are ORDERED to return to petitioners
of the Civil Code, "When the conditions have
for their purpose the extinguishment of an
obligation to give, the parties, upon the
fulfillment of said conditions, shall return to
each other what they have received . . . . In
case of the loss, deterioration or improvement
of the thing, the provisions which, with respect
to the debtor, are laid down in the preceding
article shall be applied to the party who is
bound to return . . . ." 23
On the matter of the repurchase price,
while petitioners are obliged to reconvey Lot
No. 88 to respondents, the latter must return to
the former what they received as just
compensation for the expropriation of the
property, plus legal interest to be computed
from default, which in this case runs from the
time petitioners comply with their obligation to
respondents. cDTACE
Respondents must likewise pay
petitioners the necessary expenses they may
have incurred in maintaining Lot No. 88, as well
as the monetary value of their services in
managing it to the extent that respondents
were benefited thereby.
Following Article 1187 24 of the Civil
Code, petitioners may keep whatever income
or fruits they may have obtained from Lot No.
88, and respondents need not account for the
interests that the amounts they received as just
compensation may have earned in the
meantime.
In accordance with Article 1190 25 of
the Civil Code vis-à-vis Article 1189, which
provides that "(i)f a thing is improved by its
nature, or by time, the improvement shall inure
to the benefit of the creditor . . .," respondents,
as creditors, do not have to pay, as part of the
process of restitution, the appreciation in value
of Lot No. 88, which is a natural consequence
of nature and time. 26
WHEREFORE, the petition is DENIED.
The February 28, 2006 Decision of the Court of
Appeals, affirming the October 22, 1999
Decision of the Regional Trial Court, Branch
87, Cebu City, and its February 7, 2007
Resolution
are AFFIRMED with MODIFICATION as
follows: SDIACc
the just compensation they received for the
expropriation of Lot No. 88, plus legal interest,
in the case of default, to be computed from the
time petitioners comply with their obligation to
reconvey Lot No. 88 to them;
33
2. Respondents are ORDERED to pay petitioners the
necessary expenses the latter incurred in
maintaining Lot No. 88, plus the monetary
value of their services to the extent that
respondents were benefited thereby;
3. Petitioners are ENTITLED to keep whatever fruits
and income they may have obtained from Lot
No. 88; and
4. Respondents are also ENTITLED to keep whatever
interests the amounts they received as just
compensation may have earned in the
meantime, as well as the appreciation in value
of Lot No. 88, which is a natural consequence
of nature and time;
In light of the foregoing modifications,
the case is REMANDED to the Regional Trial
Court, Branch 57, Cebu City, only for the
purpose of receiving evidence on the amounts
that respondents will have to pay petitioners in
accordance with this Court's decision. No
costs. HTAIcD
SO ORDERED.
Puno, C.J., Carpio, Corona, Carpio
Morales, Velasco, Jr., Leonardo-de Castro,
Brion, Bersamin, Del Castillo, Abad, Villarama,
Jr., Perez and Mendoza, JJ., concur.
Peralta, J., is on official leave.
CASE NO. 14
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.
Renato G. Dela Cruz & Associates for
petitioners.
SYNOPSIS
Petitioners' lots were ordered
expropriated in favor of the NHA for the public
purpose of expansion of the Dasmariñas
Resettlement Project to accommodate the
squatters relocated from the Metropolitan Manila
area. The NHA, however, had failed to relocate the
squatters on the expropriated lands and had not
fully paid petitioners the just compensation fixed
by the court. Hence, petitioners prayed for the
forfeiture of NHA's rights under the expropriation
judgment.
The Court found the petition not
impressed with merit. Public purpose was not
abandoned by failure to relocate the squatters to
the expropriated lands. The low-cost housing
project of the NHA on the subject lots to be sold to
qualified low income beneficiaries is not a
deviation from public purpose; it is in furtherance
of social justice. Further, non-payment of just
compensation is not a ground to recover
possession of the expropriated lots. At any rate,
petitioners are entitled to the full payment of the
just compensation with legal interest of 12% per
annum computed from the taking of the property
until full payment.
SYLLABUS
1. POLITICAL LAW; INHERENT POWERS
OF THE STATE; EMINENT DOMAIN; TAKING OF
PRIVATE PROPERTY FOR PUBLIC USE; NOT
DEVIATED BY HAVING LOW COST HOUSING
PROJECT. — The 1987 Constitution explicitly
provides for the exercise of the power of eminent
domain over private properties upon payment of
34
just compensation. More specifically, Section 9,
Article III states that private property shall not be
taken for public use without just compensation.
The constitutional restraints are public use and just
compensation. Petitioners cannot insist on a
restrictive view of the eminent domain provision of
the Constitution by contending that the contract
for low cost housing is a deviation from the stated
public use. It is now settled doctrine that the
concept of public use is no longer limited to
traditional purposes. Here, as elsewhere, the idea
that "public use" is strictly limited to clear cases of
"use by the public" has been abandoned. The term
"public use" has now been held to be synonymous
with "public interest," "public benefit," "public
welfare," and "public convenience." Thus, in Heirs
of Juancho Ardona, et al. vs. Reyes, et al.,it was
specified that ...It is accurate to state then that at
present whatever may be beneficially employed for
the general welfare satisfies the requirement of
public use." The 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.
The expropriation of private property for the
purpose of socialized housing for the marginalized
sector is in furtherance of the social justice
provision under Section 1, Article XIII of
the Constitution.
2. ID.;ID.;ID.;ID.;"TAKING" THEREOF IS
ABSOLUTE. — We likewise do not subscribe to
petitioners' contention that the stated public
purpose was abandoned when respondent NHA
failed to occupy the expropriated lots by relocating
squatters from the Metro Manila area. The
expropriation judgment declared that respondent
NHA has a lawful right to take petitioners
properties "for the public use or purpose of
expanding the Dasmariñas Resettlement Project."
The taking here is absolute, without any condition,
restriction or qualification. Contrary to petitioners'
submission, the ruling enunciated in the early case
of Fery vs. Municipality of Cabanatuan,is still good
and sound doctrine, viz.:"...When land has been
acquired for public use in fee simple unconditionally,
either by the exercise of eminent domain or by
purchase, the former owner retains no rights in the
land, and the public use may be abandoned, or the
land may be devoted to a different use, without any
impairment of the estate or title acquired, or any
reversion to the former owner."
3. ID.;ID.;ID.;ID.;ALTHOUGH NON-
PAYMENT OF JUST COMPENSATION DOES NOT
ENTITLE THE LANDOWNERS TO RECOVER
POSSESSION OF THE EXPROPRIATED LOTS,
PAYMENT THEREOF IS NECESSARY FOR TITLE
TO PASS FROM THE OWNER TO THE
EXPROPRIATOR. — In the recent case
of Republic of the Philippines vs. Court of Appeals, et
al.,the Court ruled that non-payment of just
compensation does not entitle the private
landowners to recover possession of their
expropriated lots. However, the refusal of
respondent NHA to pay just compensation,
allegedly for failure of petitioners to pay capital
gains tax and surrender the owners' duplicate
certificates of title, is unfounded and unjustified.
First, under the expropriation judgment the
payment of just compensation is not subject to any
condition. Second, it is a recognized rule that
although the right to enter upon and appropriate
the land to public use is completed prior to
payment, title to the property expropriated shall
pass from the owner to the expropriator only upon
full payment of the just compensation. In Republic,
et al. vs. Court of Appeals, et al.,the Court imposed
interest at 12% per annum in order to help
eliminate the issue of the constant fluctuation and
inflation of the value of the currency over time.
Perforce, while petitioners are not entitled to the
return of the expropriated property, they are
entitled to be paid the balance of P1,218,574.35
with legal interest thereon at 12% per annum
computed from the taking of the property in 1977
until the due amount shall have been fully
paid. TaCDIc
DECISION
PUNO, J p:
This is an appeal by certiorari from the
decision of the Court of Appeals in CA-GR CV No.
35
 51641, dated September 29, 2000 1 affirming the
judgment of the Regional Trial Court of Quezon
City, Branch 79 which dismissed the complaint for
forfeiture of rights filed by herein petitioners, as
well as the Resolution dated March 13, 2001
denying petitioners' motion for reconsideration.
Records show that in 1977, respondent
National Housing Authority (NHA) filed separate
complaints for the expropriation of sugarcane
lands, particularly Lot Nos. 6450, 6448-E, 6198-A
and 6199 of the cadastral survey of Dasmariñas,
Cavite belonging to the petitioners, before the
then Court of First Instance of Cavite, and
docketed as Civil Case Nos. T.G.-392, T.G.-396 and
T.G.-417. The stated public purpose of the
expropriation was the expansion of the
Dasmariñas Resettlement Project to
accommodate the squatters who were relocated
from the Metropolitan Manila area. The trial court
rendered judgment ordering the expropriation of
these lots and the payment of just compensation.
This was affirmed by the Supreme Court in a
decision rendered on October 29, 1987 in the case
of NHA vs. Zaballero 2 and which became final on
November 26, 1987. 3
On February 24, 1989, the expropriation
court (now Branch 18, Regional Trial Court of
Tagaytay City) issued an Order 4 the dispositive
portion of which reads: HEDCAS
"WHEREFORE, and resolving thus, let an
Alias Writ of Execution be immediately issued and
that:
(1) The Register of Deeds of the Province
of Cavite is hereby ordered to transfer, in the name
of the plaintiff National Housing Authority, the
following:
(a) Transfer Certificate No. RT-638 containing an area of
79,167 square meters situated in Barrio Bangkal,
Dasmariñas, Cavite;
(b) Transfer Certificate of Title No. T-55702 containing an
area of 20,872 square meters situated in Barrio
Bangkal, Dasmariñas, Cavite;
(c) Transfer Certificate of Title No. RT-639 and RT-4641
covering Lot Nos. 6198-A and 6199 with an
aggregate area of 159,985 square meters also
situated in Barrio Bangkal, Dasmariñas, Cavite.
(2) Plaintiff National Housing Authority is
likewise hereby ordered, under pain of contempt,
to immediately pay the defendants, the amounts
stated in the Writ of Execution as the adjudicated
compensation of their expropriated properties,
which process was received by it according to the
records, on September 26, 1988, segregating
therefrom, and in separate check, the lawyer's fees
in favor of Atty. Bobby P. Yuseco, in the amount of
P322,123.05, as sustained by their contract as
gleaned from the records, with no other
deduction, paying on its own (NHA) account, the
necessary legal expenses incident to the
registration or issuance of new certificates of title,
pursuant to the provisions of the Property
Registration Law (PD 1529);
(3) Defendants, however, are directed to
pay the corresponding capital gains tax on the
subject properties, directing them additionally, to
coordinate with the plaintiff NHA in this regard, in
order to facilitate the termination of this case, put
an end to this controversy and consign the same to
its final rest."
For the alleged failure of respondent NHA
to comply with the above order, petitioners filed
on April 28, 1992 a complaint 5 for forfeiture of
rights before the Regional Trial Court of Quezon
City, Branch 79, in Civil Case No. Q-92-12093. They
alleged that respondent NHA had not relocated
squatters from the Metropolitan Manila area on
the expropriated lands in violation of the stated
public purpose for expropriation and had not paid
the just compensation fixed by the court. They
prayed that respondent NHA be enjoined from
disposing and alienating the expropriated
properties and that judgment be rendered
forfeiting all its rights and interests under the
expropriation judgment. In its
Answer, 6respondent 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.
36
 "1. The Honorable Court of Appeals had decided a question
Ocular inspections 7 conducted by the
trial court on the subject properties show that:
"1. 80% of Lot No. 6198-A with an area of 120,146 square
meters is already occupied by relocatees whose
houses are made of light materials with very few
houses partly made of hollow blocks. The
relocatees were relocated only on (sic) March of
1994;
2. The Honorable Court of Appeals decided a question of
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
3. The Honorable Court of Appeals erred in not declaring
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." DcTAIH
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:
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;
substance not in accord with jurisprudence, justice
and equity when it ruled that the non-payment is
not a ground for forfeiture;
the judgment of expropriation forfeited in light of
the failure of respondent to use the expropriated
property for the intended purpose but for a totally
different purpose."
The petition is not impressed with merit.
Petitioners contend that respondent NHA
violated the stated public purpose for the
expansion of the Dasmariñas Resettlement
Project when it failed to relocate the squatters
from the Metro Manila area, as borne out by the
ocular inspection conducted by the trial court
which showed that most of the expropriated
properties remain unoccupied. Petitioners
likewise question the public nature of the use by
respondent NHA when it entered into a contract
for the construction of low cost housing units,
which is allegedly different from the stated public
purpose in the expropriation proceedings. Hence,
it is claimed that respondent NHA has forfeited its
rights and interests by virtue of the expropriation
judgment and the expropriated properties should
now be returned to herein petitioners. We are not
persuaded.
The 1987 Constitution explicitly provides
for the exercise of the power of eminent domain
over private properties upon payment of just
compensation. More specifically, Section 9, Article
III states that private property shall not be taken
for public use without just compensation. The
constitutional restraints are public use and just
compensation.
Petitioners cannot insist on a restrictive
view of the eminent domain provision of
37
the Constitution by contending that the contract
for low cost housing is a deviation from the stated
public use. It is now settled doctrine that the
concept of public use is no longer limited to
traditional purposes. Here, as elsewhere, the idea
that "public use" is strictly limited to clear cases of
"use by the public" has been abandoned. The term
"public use" has now been held to be synonymous
with "public interest," "public benefit," "public
welfare," and "public convenience." 8 The
rationale for this new approach is well explained in
the case of Heirs of Juancho Ardona, et
al. vs. Reyes, et a1., 9 to wit:
"The restrictive view of public use may be
appropriate for a nation which circumscribes the
scope of government activities and public
concerns and which possesses big and correctly
located public lands that obviate the need to take
private property for public purposes. Neither
circumstance applies to the Philippines. We have
never been a laissez faire State. And the
necessities which impel the exertion of sovereign
power are all too often found in areas of scarce
public land or limited government resources.
xxx xxx xxx
The taking to be valid must be for public
use. There was a time when it was felt that a literal
meaning should be attached to such a
requirement. Whatever project is undertaken
must be for the public to enjoy, as in the case of
streets or parks. Otherwise, expropriation is not
allowable. It is not anymore. As long as the
purpose of the taking is public, then the power of
eminent domain comes into play. As just noted,
the constitution in at least two cases, to remove
any doubt, determines what is public use. One is
the expropriation of lands to be subdivided into
small lots for resale at cost to individuals. The
other is in the transfer, through the exercise of this
power, of utilities and other private enterprise to
the government. It is accurate to state then that at
present whatever may be beneficially employed for
the general welfare satisfies the requirement of
public use." (italics supplied) cASIED
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
theConstitution which provides that:
"SECTION 1. The Congress shall give
highest priority to the enactment of measures that
protect and enhance the right of all the people to
human dignity, reduce social, economic, and
political inequalities, and remove cultural
inequities by equitably diffusing wealth and
political power for the common good.
To this end, the State shall require the
acquisition, ownership, use and disposition of
property and its increments."
It follows that the low cost housing project
of respondent NHA on the expropriated lots is
compliant with the "public use" requirement.
We likewise do not subscribe to
petitioners' contention that the stated public
purpose was abandoned when respondent NHA
failed to occupy the expropriated lots by relocating
squatters from the Metro Manila area. The
expropriation judgment declared that respondent
NHA has a lawful right to take petitioners
properties "for the public use or purpose of
expanding the Dasmariñas Resettlement Project."
The taking here is absolute, without any condition,
restriction or qualification. Contrary to petitioners'
submission, the ruling enunciated in the early case
38
of Fery vs. Municipality of Cabanatuan, 12 is still
good and sound doctrine, viz.:
"...If, for example, land is expropriated for
a particular purpose, with the condition that when
that purpose is ended or abandoned the property
shall return to its former owner, then, of course,
when the purpose is terminated or abandoned the
former owner reacquires the property so
expropriated. ...If, upon the contrary, however, the
decree of expropriation gives to the entity a fee
simple title, then, of course, the land becomes the
absolute property of the expropriator ....
When land has been acquired for public use
in fee simple unconditionally, either by the exercise
of eminent domain or by purchase, the former owner
retains no rights in the land, and the public use may
be abandoned, or the land may be devoted to a
different use, without any impairment of the estate
or title acquired, or any reversion to the former
owner."
Petitioners further aver that the
continued failure of respondent NHA to pay just
compensation for a long period of time justifies the
forfeiture of its rights and interests over the
expropriated lots. They demand the return of the
expropriated lots. Respondent NHA justifies the
delay to pay just compensation by reason of the
failure of petitioners to pay the capital gains tax
and to surrender the owners' duplicate certificates
of title.
In the recent case of Republic of the
Philippines vs. Court of Appeals, et al., 13 the Court
ruled that non-payment of just compensation does
not entitle the private landowners to recover
possession of their expropriated lots. Thus:
"Thus, in Valdehueza vs. Republic where
the private landowners had remained unpaid ten
years after the 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. ....It follows
that both by virtue of the judgment, long final, in
the expropriation suit, as well as the annotations
upon their title certificates, plaintiffs are not
entitled to recover possession of their
expropriated lots — which are still devoted to the
public use for which they were expropriated — but
only to demand the market value of the same.
Said relief may be granted under plaintiffs'
prayer for such other remedies, which may be
deemed just and equitable under the premises.'
The Court proceeded to reiterate its
pronouncement in Alfonso vs. Pasay City where
the recovery of possession of property taken for
public use prayed for by the unpaid landowner was
denied even while no requisite expropriation
proceedings were first instituted. The landowner
was merely given the relief of recovering
compensation for his property computed at its
market value at the time it was taken and
appropriated by the State.
The judgment rendered by the Bulacan
RTC in 1979 on the expropriation
proceedings provides not only for the payment of
just compensation to herein respondents but
likewise adjudges the property condemned in favor
of petitioner over which parties, as well as their
privies, are bound. Petitioner has occupied, utilized
and, for all intents and purposes, exercised dominion
over the property pursuant to the judgment. The
exercise of such rights vested to it as the condemnee
indeed has amounted to at least a partial
compliance or satisfaction of the 1979
judgment,thereby preempting any claim of bar by
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." (italics supplied)
We, however, likewise find the refusal of
respondent NHA to pay just compensation,
39
allegedly for failure of petitioners to pay capital
gains tax and surrender the owners' duplicate
certificates of title, to be unfounded and
unjustified.
First, under the expropriation judgment
the payment of just compensation is not subject to
any condition. Second, it is a recognized rule that
although the right to enter upon and appropriate
the land to public use is completed prior to
payment, title to the property expropriated shall
pass from the owner to the expropriator only upon
full payment of the just compensation. In the case
of Association of Small Landowners in the
Phils.,Inc.,et al. vs. Secretary of Agrarian
Reform, 14 it was held that:
"Title to property which is the subject of
condemnation proceedings does not vest the
condemnor until the judgment fixing just
compensation is entered and paid, but the
condemnor's title relates back to the date on
which the petition under the Eminent Domain Act,
or the commissioner's report under the Local
Improvement Act, is filed.
...Although the right to appropriate and use
land taken for a canal is complete at the time of
entry, title to the property taken remains in the
owner until payment is actually made. HDTSIE
In Kennedy v. Indianapolis,the US
Supreme Court cited several cases holding that
title to property does not pass to the condemnor
until just compensation had actually been made. In
fact, the decisions appear to be uniformly to this
effect. As early as 1838, in Rubottom v. McLure,it
was held that 'actual payment to the owner of the
condemned property was a condition precedent to
the investment of the title to the property in the
State' albeit 'not to the appropriation of it to public
use.' In Rexford v. Knight,the Court of Appeals of
New York said that the construction upon the
statutes was that the fee did not vest in the State
until the payment of the compensation although
the authority to enter upon and appropriate the
land was complete prior to the payment. Kennedy
further said that 'both on principle and authority
the rule is ...that the right to enter on and use the
property is complete, as soon as the property is
actually appropriated under the authority of law for
a public use, but that the title does not pass from the
owner without his consent, until just compensation
has been made to him.'"
Our own Supreme Court has held
in Visayan Refining Co. v. Camus and Paredes,that:
If the laws which we have exhibited or
cited in the preceding discussion are attentively
examined it will be apparent that the method of
expropriation adopted in this jurisdiction is such as
to afford absolute reassurance that no piece of
land can be finally and irrevocably taken from an
unwilling owner until compensation is paid. ...."
(italicssupplied)
With respect to the amount of the just
compensation still due and demandable from
respondent NHA, the lower courts erred in not
awarding interest computed from the time the
property is actually taken to the time when
compensation is actually paid or deposited in
court. In Republic, et al. vs. Court of Appeals, et
al., 15 the Court imposed interest at 12% per
annum in order to help eliminate the issue of the
constant fluctuation and inflation of the value of
the currency over time, thus:
"The constitutional limitation of 'just
compensation' is considered to be the sum
equivalent to the market value of the property,
broadly described to be the price fixed by the seller
in open market in the usual and ordinary course of
legal action and competition or the fair value of the
property as between one who receives, and one
who desires to sell, it being fixed at the time of the
actual taking by the government. Thus, if property
is taken for public use before compensation is
deposited with the court having jurisdiction over
the case, the final compensation must include
interests on its just value to be computed from the
time the property is taken to the time when
compensation is actually paid or deposited with
the court. In fine, between the taking of the
property and the actual payment, legal interests
accrue in order to place the owner in a position as
good as (but not better than) the position he was
in before the taking occurred.
...This allowance of interest on the
amount found to be the value of the property as of
the time of the taking computed, being an
effective forbearance, at 12% per annum should
40
 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. HEacAS
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.
Panganiban, Sandoval-Gutierrez,
Corona and Carpio-Morales, JJ., concur.
||| (Reyes v. National Housing Authority, G.R. No.
147511, [January 20, 2003], 443 PHIL 603-617)
CASE NO. 15
SECOND DIVISION
[G.R. No. 137569. June 23, 2000.]
REPUBLIC OF THE PHILIPPINES, plaintiff-
appellee, vs. SALEM INVESTMENT
CORPORATION, MARIA DEL CARMEN ROXAS
DE ELIZALDE, CONCEPCION CABARRUS VDA.
DE SANTOS, defendants-appellees. MILAGROS
AND INOCENTES DE LA
RAMA, petitioners, ALFREDO
GUERRERO, respondent.
The Solicitor General for plaintiff-appellee.
M.M. Lazaro & Associates for petitioners.
Arturo S. Santos for respondent A.
Guerrero.
SYNOPSIS
Declaring Alfredo Guerrero the rightful
owner of a 920-square meter expropriated
property, the Pasay City Regional Trial Court
ordered payment to him of just compensation for
the taking of the land. The Court of Appeals
affirmed this decision. Hence, this action,
petitioner spouses Milagros and Inocentes De La
Rama claiming that when they agreed to sell a
parcel of land in 1988 to Guerrero, it did not include
the portion expropriated by the Republic.
According to said spouses, at that time, such
portion had been expropriated by the government
by virtue of B.P. Blg. 340 which took effect on
February 17, 1983.
It is only upon payment of just
compensation that title over the property passes
to the government. Until then, ownership over the
property being expropriated remains with the
41
registered owner. Consequently, the latter can
exercise all rights pertaining to an owner, including
the right to dispose of his property, subject to the
power of the State to ultimately acquire it through
expropriation.
The government filed a petition for the
determination of just compensation in 1990. At
that point, title to the expropriated property
remained with the De la Ramas and did not pass to
the government. Thus, in 1988, the De la Ramas
still had authority to transfer ownership of their
land and convey all rights, including the right to
receive just compensation, to Guerrero.
The contention of the De la Ramas that
the Deed of Absolute Sale excluded the portion
expropriated by the government is untenable.
Guerrero bought the entire property free from all
claims of third persons except those of the
government. aATESD
SYLLABUS
1. CONSTITUTIONAL LAW; POWER OF
EMINENT DOMAIN; INHERENT POWERS OF
STATE; LIMITATION. — The power of eminent
domain is an inherent power of the State. No
constitutional conferment is necessary to vest it in
the State. The constitutional provision on eminent
domain, Art. III, §9, provides a limitation rather
than a basis for the exercise of such power by the
government. Thus, it states that "Private property
shall not be taken for public use without just
compensation."
2. ID.; ID.; HOW INITIATED. —
Expropriation may be initiated by court action or
by legislation. In both instances, just
compensation is determined by the courts.
3. ID.; ID.; STAGES. — The expropriation
of lands consists of two stages. As explained
in Municipality of Biñan v. Garcia: The first is
concerned with the determination of the authority
of the plaintiff to exercise the power of eminent
domain and the propriety of its exercise in the
context of the facts involved in the suit. It ends
with an order, if not of dismissal of the action, "of
condemnation declaring that the plaintiff has a
lawful right to take the property sought to be
condemned, for the public use or purpose
described in the complaint, upon the payment of
just compensation to be determined as of the date
of the filing of the complaint." . . . The second
phase of the eminent domain action is concerned
with the determination by the court of "the just
compensation for the property sought to be
taken." This is done by the court with the
assistance of not more than three (3)
commissioners. It is only upon the completion of
these two stages that expropriation is said to have
been completed. Moreover, it is only upon
payment of just compensation that title over the
property passes to the government. Therefore,
until the action for expropriation has been
completed and terminated, ownership over the
property being expropriated remains with the
registered owner.
4. ID.; ID.; ID.; ID.; ID.; CASE AT BAR. — In
the case at hand, the first stage of expropriation
was completed when B.P. Blg. 340 was enacted
providing for the expropriation of 1,380 square
meters of the land in question. The
constitutionality of this law was upheld in the case
of Republic v. De Knecht. In 1990, the government
commenced the second stage of expropriation
through the filing of a petition for the
determination of just compensation. This stage
was not completed, however, because of the
intervention of Guerrero which gave rise to the
question of ownership of the subject land.
Therefore, the title to the expropriated property of
the De la Ramas remained with them and did not
at that point pass to the government.
5. CIVIL LAW; PROPERTY; OWNERSHIP;
WHAT CONSTITUTES EFFECTIVE CONVEYANCE
THEREOF. — It is true that the contract to sell did
not convey to Guerrero the subject parcel of land
described therein. However, it created an
obligation on the part of the De la Ramas to convey
the land, subject to the fulfillment of the
suspensive conditions therein stated. The
declaration of this contract's validity, which paved
the way for the subsequent execution of the Deed
of Absolute Sale on March 8, 1994, following the
order of the Regional Trial Court for its execution,
by the Clerk of Court, Branch 113, Pasay City,
effectively conveyed ownership of said parcel of
land to Guerrero.
42
 6. ID.; OBLIGATION AND CONTRACTS;
SUBROGATION; EFFECTS THEREOF. — Lot 834
was conveyed in 1994 to Guerrero by virtue of the
Deed of Absolute Sale. This contract was
registered in the Register of Deeds and,
accordingly, a new transfer certificate of title was
issued to Guerrero. Pursuant thereto, and by virtue
of subrogation, the latter became the rightful
owner entitled to receive the just compensation
from the Republic.
7. ID.; HUMAN RELATIONS; UNJUST
ENRICHMENT; CASE AT BAR. — We take note of
the fact that the De la Ramas have withdrawn and
appropriated for themselves the amount paid by
Guerrero. This amount represented the purchase
price of the entire 4,075 square meters of land,
including the expropriated portion, which was the
subject of their agreement. The payment,
therefore, to them of the value of the expropriated
portion would unjustly enrich them. AHSEaD
8. REMEDIAL LAW; CIVIL PROCEDURE;
FINAL AND EXECUTORY JUDGMENT CAN NO
LONGER BE QUESTIONED. — Petitioners can no
longer question a judgment which has already
become final and executory. The order of the
Regional Trial Court on the payment of legal
interest was issued on September 18, 1991 in the
case for specific performance against the De la
Ramas (Civil Case No. 6974-P). Hence, they are
already barred from questioning it now in this
proceeding.
DECISION
MENDOZA, J p:
The main petition in this case is for
determination of just compensation for the
expropriation of lands under B.P. Blg. 340. Alfredo
Guerrero intervened in this proceeding arguing
that, instead of the De la Ramas, he should receive
the just compensation for the subject land. The
trial court and the Court of Appeals declared him
the rightful recipient of the amount. This is an
appeal from the decision 1 of the Court of Appeals.
We affirm. cdtai
The facts are as follows:
On February 17, 1983, Batas Pambansa
Blg. 340 was passed authorizing the expropriation
of parcels of lands in the names of defendants in
this case, including a portion of the land, consisting
of 1,380 square meters, belonging to Milagros and
Inocentes De la Rama covered by TCT No. 16913.
On December 14, 1988, or five years
thereafter, Milagros and Inocentes De la Rama
entered into a contract 2 with intervenor Alfredo
Guerrero whereby the De la Ramas agreed to sell
to Guerrero the entire property covered by TCT
No. 16213, consisting of 4,075 square meters for
the amount of P11,800,000.00. The De la Ramas
received the sum of P2,200,000.00 as partial
payment of the purchase price, the balance
thereof to be paid upon release of the title by the
Philippine Veterans Bank
On November 3, 1989, Guerrero filed in
the Regional Trial Court in Pasay City a complaint
for specific performance (Civil Case No. 6974-P) to
compel the De la Ramas to proceed with the sale.
On July 10, 1990, while this case for
specific performance was pending, the Republic of
the Philippines filed the present case (Civil Case
No. 7327) for expropriation pursuant to B.P. Blg.
340. 3 Among the defendants named in the
complaint were Milagros and Inocentes De la
Rama as registered owners of Lot 834, a portion of
which (Lot 834-A) was part of the expropriated
property. Upon the deposit of P12,970,350.00
representing 10 percent of the approximate
market value of the subject lands, a writ of
possession 4 was issued on August 29, 1990 in
favor of the government.
On May 2, 1991, Guerrero filed a motion
for intervention 5 alleging that the De la Ramas
had agreed to sell to him the entire Lot 834 (TCT
No. 16213) on December 14, 1988 and that a case
for specific performance had been filed by him
against the De la Ramas. cdtai
On September 9, 1991, based on the
report of the committee on appraisers appointed
by the court and the submissions of defendants,
the trial court approved payment to the De la
Ramas at the rate of P23,976.00 per square meter
for the taking of 920 square meters out of the 1,380
43
square meters to be expropriated under B.P. Blg.
340. 6
Meanwhile, on September 18, 1991, the
trial court rendered a decision in the case for
specific performance (Civil Case No. 6974-
P) 7 upholding the validity of the contract to sell
and ordering the De la Ramas to execute the
corresponding deed of sale covering the subject
property in favor of Guerrero. The De la Ramas
appealed to the Court of Appeals (CA-G.R. No. CV-
35116) but their petition was dismissed on July 28,
1992. They tried to appeal to this Court (G.R. No.
106488) but again they failed in their bid as their
petition for review was denied on December 7,
1992.
Meanwhile, on October 2, 1991, Guerrero
filed an Omnibus Motion 8 praying that the just
compensation for the land be deposited in court
pursuant to Rule 67, §9 of the Rules of Court. As his
motion for intervention and omnibus motion had
not yet been resolved, Guerrero filed with the
Court of Appeals a petition
for mandamus, certiorari, and injunction with
temporary restraining order 9 (C.A.-G.R. SP No.
28311) to enjoin the Republic from releasing or
paying to the De la Ramas any amount
corresponding to the payment of the expropriated
property and to compel the trial court to resolve
his two motions.
On January 12, 1993, the Court of Appeals
rendered a decision granting the writ
of mandamus. 10
Nonetheless, the De la Ramas filed on
March 17, 1993 a Motion for Authority to
Withdraw 11 the deposit made by the Republic in
1991. This motion was denied as the trial court, on
May 7, 1993, allowed the intervention of Guerrero
and ordered the Republic to deposit the amount of
just compensation with the Clerk of Court of RTC,
Pasay City. 12
On June 16, 1993, the De la Ramas filed a
Motion for Execution 13 again praying that the
court's order dated September 9, 1991, approving
the recommendation of the appraisal committee,
be enforced. This was duly opposed by
Guerrero. 14
On June 22, 1993, the trial court denied
the motion of the De la Ramas holding that there
had been a change in the situation of the parties,
therefore, making the execution of the September
9, 1991 Order inequitable, impossible, or unjust. 15
As if to further delay the proceedings of
this case, the De la Ramas then filed an Omnibus
Motion seeking clarification of the September 18,
1991 decision of the trial court in the case for
specific performance, upholding the validity of the
contract to sell, insofar as the area covered by the
contract was concerned, and asking that a
restraining order be issued until this motion was
granted. prcd
In its order dated October 7, 1993, the trial
court clarified that the area of land covered by the
contract to sell included the portion expropriated
by the Republic. It stated:
WHEREFORE, by way of clarification, the
court holds that the transfer of title to the plaintiff
under the Contract to Sell dated December 14,
1988 covers the entire Lot 834 consisting of 4,075
square meters (including the expropriated
portion); that this change of owner over the entire
property is necessarily junior or subject to the
superior rights of the REPUBLIC over the
expropriated portion (the metes and bounds of
which are clearly defined in Section 1 '6' of B.P. Blg.
340); that the Contract to Sell dated December 14,
1988 executed by the parties is a valid document
that authorizes the plaintiff to step into the shoes
of the defendants in relation to the property
covered by TCT No. 16213; and that the transfer
shall be free from all liens and encumbrances
except for the expropriated portion of 1,380 square
meters. 16
The decision in the action for specific
performance in Civil Case No. 6974-P having
become final, an order of execution 17 was issued
by the Pasay City RTC, and as a result of which, a
deed of absolute sale 18 was executed by the
Branch Clerk of Court on March 8, 1994 in favor of
Guerrero upon payment by him of the sum of
P8,808,000.00 on January 11, 1994 and the further
sum of P1,608,900.00 on February 1, 1994 as full
payment for the balance of the purchase price
under the contract to sell of December 14, 1988.
44
 The entire amount was withdrawn and dulyII THE COURT OF APPEALS WRONGLY INTERPRETED
received by the De la Ramas. 19 THE CONTRACT TO SELL BY HOLDING THAT
THE PETITIONERS DE LA RAMAS HAD
Thereafter, the De la Ramas sought the CONVEYED TO THE RESPONDENT GUERRERO
nullification of the June 22, 1993 order of the trial
THE WHOLE PROPERTY COVERED BY TCT NO.
court in this case, denying their motion for 16213, INCLUDING THE EXPROPRIATED AREA.
execution of the order approving the
recommendation of the appraisal committee, byIII. THE HONORABLE COURT OF APPEALS WRONGLY
filing a petition for certiorari and mandamus in the DECLARED THAT THE PETITIONERS DE LA
Court of Appeals. This petition was, however, RAMAS COULD STILL SELL IN 1988 THEIR
dismissed in a decision dated July 29, 1994 of the PROPERTY AS TITLE THERETO HAD NOT YET
appellate court. 20 PASSED TO THE GOVERNMENT IN 1983.
On April 5, 1995, the Pasay City RegionalIV. THE COURT OF APPEALS GRAVELY ERRED IN
Trial Court, Branch 111, declared Guerrero the WRONGLY INTERPRETING THE CONTRACT TO
rightful owner of the 920-square meter SELL, BY HOLDING THAT PETITIONERS DE LA
expropriated property and ordered payment to RAMAS HAD CONVEYED TO THE RESPONDENT
him of just compensation for the taking of the GUERRERO THE RIGHT TO RECEIVE THE JUST
land. The dispositive portion of its decision COMPENSATION FOR THE EXPROPRIATED
reads: llcd AREA.
WHEREFORE, respondent-intervenorV. THE COURT OF APPEALS GRAVELY ERRED IN
Alfredo Guerrero is hereby declared as the rightful HOLDING THAT THE RIGHT TO RECEIVE THE
person entitled to receive the just compensation of JUST COMPENSATION FOR THE EXPROPRIATED
the 920-square meter portion of the property AREA BECAME VESTED UPON THE
described in TCT No. 16213 of the Register of RESPONDENT GUERRERO THROUGH
Deeds of Pasay City and ordering the Philippine SUBROGATION. cdasia
National Bank to release and deliver to Uniland
VI. THE COURT OF APPEALS GRAVELY ERRED IN
Realty and Development Corporation, the
HOLDING THAT THE RESPONDENT GUERRERO
assignee of Guerrero, the amount of
HAD PAID TO PETITIONERS RAMAS THE FULL
P20,000,000.00 representing the deposit made by
PURCHASE PRICE OF P11,800,000.00
the plaintiff through the Department of Public
STIPULATED IN THE CONTRACT TO SELL OF 14
Works and Highways in the Philippine National
Bank, Escolta Branch with the check solely payable DECEMBER 1988. 23
to said Uniland Realty and Development As already stated, the De la Ramas and
Corporation, as assignee of Alfredo Guerrero. 21 Guerrero entered into a contract to sell with
respect to Lot 834. This lot has an area of 4,075
This decision was subsequently affirmed
square meters. This contract was executed on,
by the Court of Appeals. 22
December 14, 1988, after B.P. Blg. 340 was passed
Hence, this petition. authorizing the expropriation of a portion of the
land, consisting of 1,380 square meters, of the De
The De la Ramas contend:
la Ramas. The only issue in this case is who,
I. THE COURT OF APPEALS WRONGLY INTERPRETED between the De la Ramas and Guerrero, is/are
B.P. NO. 340 BY HOLDING THAT BATAS entitled to receive payment of just compensation
PAMBANSA BLG. 340 MERELY AUTHORIZED for the taking of 920 square meters of the land in
THE EXPROPRIATION OF THE LANDS OF THE question? LexLib
DEFENDANTS, INCLUDING THAT PORTION The De la Ramas claim that they should
BELONGING TO THE HEREIN PETITIONERS DE receive the amount of just compensation because
LA RAMAS COVERED BY TCT NO. 16213. cdasia
when they agreed to sell Lot 834 in 1988 to
Guerrero, it did not include the portion
expropriated by the Republic since, at that time,

45
such portion had been expropriated by the
government by virtue of B.P. Blg. 340, which took
effect on February 17, 1983. They state:
In, 1988, the petitioners Ramas could no
longer agree to sell to another person the
expropriated property itself. For one thing, the
property was already expropriated and petitioners
Ramas for not objecting in effect conveyed the
same to the Government. Secondly, the physical
and juridical possession of the property was
already in the Government. Thirdly, the equitable
and beneficial title over the property was already
vested in the Government, and therefore the
property itself was already outside the commerce
of man. As a matter of fact, the property was
already part of a Government infrastructure. 24
On the other hand, Alfredo Guerrero
argues that the title to the expropriated portion of
Lot 834 did not immediately pass to the
government upon the enactment of B.P. Blg.
340 in 1983, as payment of just compensation was
yet to be made before ownership of the land was
transferred to the government. As a result,
petitioners still owned the entire Lot 834 at the
time they agreed to sell it to Guerrero. Therefore,
since Guerrero obtained ownership of Lot 834,
including the 920 square meters expropriated by
the government, he has the right to receive the
just compensation over the said property. cdphil
We find the De la Ramas' contention
without merit. We hold that Guerrero is entitled to
receive payment of just compensation for the
taking of the land.
The power of eminent domain
The power of eminent domain is an
inherent power of the State. No constitutional
conferment is necessary to vest it in the State. The
constitutional provision on eminent domain, Art.
III, §9, provides a limitation rather than a basis for
the exercise of such power by the government.
Thus, it states that "Private property shall not be
taken for public use without just compensation."
Expropriation may be initiated by court
action or by legislation. 25 In both instances, just
compensation is determined by the courts. 26
The expropriation of lands consists of two
stages. As explained in Municipality of Biñan
v. Garcia: 27
The first is concerned with the
determination of the authority of the plaintiff to
exercise the power of eminent domain and the
propriety of its exercise in the context of the facts
involved in the suit. It ends with an order, if not of
dismissal of the action, "of condemnation
declaring that the plaintiff has a lawful right to take
the property sought to be condemned, for the
public use or purpose described in the complaint,
upon the payment of just compensation to be
determined as of the date of the filing of the
complaint" . . . cdtai
The second phase of the eminent domain
action is concerned with the determination by the
court of the "just compensation for the property
sought to be taken." This is done by the court with
the assistance of not more than three (3)
commissioners. . .
It is only upon the completion of these two
stages that expropriation is said to have been
completed. Moreover, it is only upon payment of
just compensation that title over the property
passes to the government. 28 Therefore, until the
action for expropriation has been completed and
terminated, ownership over the property being
expropriated remains with the registered owner.
Consequently, the latter can exercise all rights
pertaining to an owner, including the right to
dispose of his property, subject to the power of the
State ultimately to acquire it through
expropriation.
In the case at hand, the first stage of
expropriation was completed when B.P. Blg.
340 was enacted providing for the expropriation of
1,380 square meters of the land in question. The
constitutionality of this law was upheld in the case
of Republic v. De Knecht. 29 In 1990, the
government commenced the second stage of
expropriation through the filing of a petition for
the determination of just compensation. This
stage was not completed, however, because of the
intervention of Guerrero which gave rise to the
question of ownership of the subject land.
Therefore, the title to the expropriated property of
46
the De la Ramas remained with them and did not
at that point pass to the government.
The De la Ramas are mistaken in arguing
that the two stages of expropriation cited above
only apply to judicial, and not to legislative,
expropriation. Although Congress has the power
to determine what land to take, it can not do so
arbitrarily. Judicial determination of the propriety
of the exercise of the power, for instance, in view
of allegations of partiality and prejudice by those
adversely affected, 30 and the just compensation
for the subject property is provided in our
constitutional system. Cdpr
We see no point in distinguishing between
judicial and legislative expropriation as far as the
two stages mentioned above are concerned. Both
involve these stages and in both the process is not
completed until payment of just compensation is
made. The Court of Appeals was correct in saying
that B.P. Blg. 340 did not effectively expropriate
the land of the De la Ramas. As a matter of fact, it
merely commenced the expropriation of the
subject property.
Thus, in 1988, the De la Ramas still had
authority to transfer ownership of their land and
convey all rights, including the right to receive just
compensation, to Guerrero.
The Contract to Sell and the Deed of Absolute Sale
The contract to sell between the De la
Ramas and Guerrero, executed on December 14,
1988, reads:
CONTRACT TO SELL
KNOW ALL MEN BY THESE PRESENTS:
This CONTRACT is made and executed by and
between:
MILAGROS DE LA RAMA and INOCENTES DE LA
RAMA, of legal age, both single, Filipinos Citizen
and with residence and postal address at 2838 F.B.
Harrison St., Pasay City, Metro Manila, hereinafter
referred to as the SELLERS. cdtai
-and-
ALFREDO S. GUERRERO, of legal age,
Filipino, married to SUSANA C. PASCUAL and
with residence and postal address at No. 17
Mangyan, La Vista, Quezon City, hereinafter
referred to as the BUYER.
WITNESSETH:
WHEREAS, the SELLERS are the
registered owners of a parcel of land consisting of
4,075 square meters together with all the
improvements thereon situated at 2838 F.B.
Harrison St., Pasay City, covered by Transfer
Certificate of Title No. 16213 of the Registry of
Deeds of Pasay City and more particularly
described as follows:
A PARCEL OF LAND (Lot 834 of the
Cadastral Survey of Pasay, L.R.C. Cad. Rec. No.),
situated in the City of Pasay. Bounded on the N.,
along line 1-2 by lot 835; and along line 2-3 by Lot
836, on the NE., and SE., along lines 3-4-5 by lot
833, all of Pasay Cadastre; and on the SW., along
lines 5-6-1 by Calle F.B. Harrison. Beginning at a
point marked "1" on plan, being N. 3 deg. 50'E.,
100.44 m. from B.L.L.M. 5, Pasay Cadastre; thence
N. 84 deg. 19'E., 73.79 m. to point 2; thence N. 84
deg. 19'E., 14.47 m. to point 3; thence S. 93 deg.
11'E., 45.69 m. to point 4; thence S. 33 deg.
10'W.,87.39 m. to point 5; thence N. 10 deg. 46'W.,
11.82 m. to point 6; thence N. 10 deg. 46'W., 35.70
m. to point of beginning; containing an area of
FOUR THOUSAND AND SEVENTY FIVE (4,075)
SQUARE METERS. All points referred to are
indicated on the plan and marked on the ground by
Old Points; bearing true date of the cadastral
survey, Oct., 1928 to Nov., 1930. LibLex
WHEREAS, the SELLERS offer to sell and
the BUYER agrees to buy the above-described real
property;
NOW, THEREFORE, for and in
consideration of the amount of ELEVEN MILLION
EIGHT HUNDRED THOUSAND PESOS
(P11,800,000.00) the parties hereby agree to enter
unto the Contract subject to such terms and
conditions as follows:
1. Upon execution of this Contract, the
BUYER shall pay the SELLERS the sum of TWO
MILLION TWO HUNDRED TWO THOUSAND
PESOS (P2,200,000.00) it being understood and
agreed that this payment shall be for the purpose
of liquidating in full the mortgage indebtedness
and affecting the redemption of the property
47
subject of the sale as annotated at the back of the
title;
2. The balance of EIGHT MILLION EIGHT
HUNDRED THOUSAND PESOS (P8,800,000.00)
shall be paid by the BUYER upon release of the title
by the Phil. Veterans Bank and execution of the
Deed of Absolute Sale; prcd
3. The amount of P800,000.00 shall be
paid by the BUYER upon payment of Capital Gains
Tax and documentary sales stamp by the SELLERS
and their vacation of the premises.
4. All existing improvements shall be
assigned to the BUYER;
5. The SELLERS shall settle all realty taxes
up to the end of 1988, water and electric bills;
6. The SELLERS shall pay three percent
(3%) of the total consideration as broker's
commission to be computed in the purchase price
of P11,000,000.00;
7. It is hereby agreed and covenanted and
stipulated by and between the parties hereto that
the SELLERS shall execute and deliver to the
BUYER a formal Absolute Deed of Sale free from
all liens and encumbrances;
8. That the SELLERS shall vacate the
premises and or deliver the physical possession of
the property within thirty (30) days from the date
of sale, that is upon complete payment by the
BUYER of the agreed purchase price and execution
of Deed of Sale; prLL
9. That the execution of all legal
documents in connection with this sale transaction
shall be done thru SELLERS' legal counsel;
10. The BUYER shall assume payment of
transfer and registration expenses.
IN WITNESS WHEREOF, the parties have
hereunto set their hands this 14th day of
December 1988 at Manila, Metro Manila. 31
The land, as described above in the
Contract to Sell, includes the land expropriated
under B.P. Blg. 340, to wit:
6. A parcel of land (a portion of Lot No.
834 of the Cadastral Survey of Pasay, Cadastral
Case. No. 23, G.L.R.O. Cadastral Record No. 1368),
situated in the City of Pasay, bounded on the
southeast, along lines 1-2-3 by Lot No. 833, Pasay
Cadastre; and on the southwest, along lines 3-4-5
by Calle F.B. Harrison; and on the north, points 5-
17-17-1 by the remaining portion of Lot 834;
beginning at point marked "1" on plan, being S. 32
deg. 17' 44"E., 267.187 meters from BLLM No. 5,
Pasay Cadastre; thence S.9 deg. 11'E., 11.579 m. to
point "2"; thence S.82 deg. 10'W., 87.390 m. to
point "3"; thence N. 10 deg. 45' 58"W., 11.82 m. to
point "4"; thence N. 10 deg. 46 W., 15,568.4 m. to
point "5"; thence S.15 deg. 37' 27"E., 3.287 m. to
point "6"; thence S.34 deg.. 32'27"E., 3.287 m. to
point "7"; thence S. 53 deg. 26'50"E., 3.287 m. to
point "8"; thence S. 72 deg. 22'51"E., 3.287 m. to
point "9"; thence N. 88 deg. 40'32"E., 3.287 m. to
point "10"; thence N. 72 deg. 00'53"E., 6.480 m. to
point "11"; thence N. 84 deg. 55' 05"E., 10.375 m. to
point "12"; thence N. 85 deg. 38'14"E., 10.375 m. to
point "13"; thence N. 86 deg. 21' 10"E., 10.375 m. to
point "14"; thence N. 87 deg. 04' 18"E., 10.375 m. to
point "15"; thence N. 87 deg. 97' 06"E., 10.375 m. to
point "16"; thence N. 88 deg. 30'11"E., 10.375 m. to
point "17"; thence N. 89 deg. 12'56"E., 9.422 m. to
the point of beginning, containing an area of one
thousand three hundred eighty square meters
(1,380.00 Sq.M.), more or less. 32
As the trial court in the case for specific
performance ruled, the contract to sell, covered
the entire Lot 834, including the expropriated area,
which was then owned by the De la Ramas.
It is true that the contract to sell did not
convey to Guerrero the subject parcel of land
described therein. However, it created an
obligation on the part of the De la Ramas to convey
the land, subject to the fulfillment of the
suspensive conditions therein stated. The
declaration of this contract's validity, which paved
the way for the subsequent execution of the Deed
of Absolute Sale on March 8, 1994, following the
order of the Regional Trial Court for its execution,
by the Clerk of Court, Branch 113, Pasay City,
effectively conveyed ownership of said parcel of
land to Guerrero.
The contention that the Deed of Absolute
Sale excluded the portion expropriated by the
48
government is untenable. The Deed of Absolute
Sale reads in pertinent parts:
That for and in consideration of the sum of
ELEVEN MILLION PESOS (P11,000,000),
Philippine Currency, paid by the VENDEE, the
VENDORS, by these presents hereby SELL,
TRANSFER, CONVEY and ASSIGN, unto the
herein VENDEE, his heirs, successors-in-interest
and assigns, by way of absolute sale, a parcel of
land located in 2838 F.B. Harrison Street, Pasay
City, formerly covered by Transfer Certificate of
Title No. 16213 of the land records of Pasay City,
presently covered by the new Transfer Certificate
of Title No. 132995, together with all
improvements thereon, free from all liens and
encumbrances whatsoever except over a portion
equal to one thousand three hundred eighty (1,380)
square meters expropriated by the Republic of the
Philippines under and by virtue of Batas Pambansa
Blg. 340 which took effect on February 17, 1983,
the technical description of which is found therein,
and which Lot 834 in its entirety is more
particularly described as follows: cdrep
A PARCEL OF LAND (Lot 834 of the
Cadastral Survey of Pasay, L.R.C. Cad. Rec No.),
situated in the City of Pasay. Bounded on the N.
along line 1-2 by Lot 835, and along line 2-3 by Lot
836; on the NE., and SE., along lines 3-4-5 by Lot
833; all of Pasay Cadastre; and on the SW., along
lines 5-6-1 by Calle F.B. Harrison. Beginning at a
point marked "1" on plan, being N. 3 deg. 50'E.,
100.44 from B.L.L.M. 5; Pasay Cadastre; thence N.
84 deg. 19'E., 73.79 m. to point 2; thence N. 84 deg.
19'E., 14.47 m. to point 3; thence S. 9 deg. 11'E.,
45.69 m. to point 4; thence S.53 deg. 10'W., 87.39
m. to point 5; thence N. 10 deg. 46'W., 11.82 m. to
point 6; thence N. 10 deg. 46'W., 35.70 m. to point
of beginning; containing an area of FOUR
THOUSAND AND SEVENTY FIVE (4,075) SQUARE
METERS. All points referred to are indicated on the
plan and are marked on the ground by Old Points;
bearing true date of the Cadastral Survey, Oct.
1928 to Nov. 1, 1930. 33
The underscored phrase does not say that
the expropriated portion of the lot was excluded
from the sale. Rather, it states that the entire
property, consisting of 4,075 square meters, was
being sold free from all liens and encumbrances
except the lien in favor of the government over the
portion being expropriated by it. Stated in another
way, Guerrero was buying the entire property free
from all claims of third persons except those of the
government. cdrep
Evidently, Lot 834 was conveyed in 1994
to Guerrero by virtue of the Deed of Absolute Sale.
This contract was registered in the Register of
Deeds and, accordingly, a new transfer certificate
of title was issued to Guerrero. 34 Pursuant
thereto, and by virtue of subrogation, the latter
became the rightful owner entitled to receive the
just compensation from the Republic.
The De la Ramas make much of the fact
that ownership of the land was transferred to the
government because the equitable and the
beneficial title was already acquired by it in 1983,
leaving them with only the naked title. However,
as this Court held in Association of Small
Landowners in the Phil., Inc. v. Secretary of
Agrarian Reform: 35
The recognized rule, indeed, is that title to
the property expropriated shall pass from the
owner to the expropriator only upon full payment
of the just compensation. Jurisprudence on this
settled principle is consistent both here and in
other democratic jurisdictions. Thus:
. . . although the right to expropriate and
use land taken for a canal is complete at the time
of entry, title to the property taken remains in the
owner until payment is actually made. (Italics
supplied).
In Kennedy v. Indianapolis, the US
Supreme Court cited several cases holding that
title to property does not pass to the condemnor
until just compensation had actually been made. In
fact, the decisions appear to be uniformly to this
effect. As early as 1838, in Rubottom v. McLure, it
was held that "actual payment to the owner of the
condemned property was a condition precedent to
the investment of the title to the property in the
State" albeit "not to the appropriation of it to
public use." In Rexford v. Knight, the Court of
Appeals of New York said that the construction
upon the statutes was that the fee did not vest in
the State until the payment of the compensation
although the authority to enter upon and
49
appropriate the land was complete prior to the
payment. Kennedy further said that "both on
principle and authority the rule is . . . that the right
to enter upon and use the property is complete, as
soon as the property is actually appropriated under
the authority of law for a public use, but that the
title does not pass from the owner without his
consent, until just compensation has been made to
him." LLjur
The amount paid by Guerrero
Lastly, the De la Ramas contend that
Guerrero only paid P7,417,000 00 and not
P8,800,000.00 as stipulated in the contract to sell.
However, Guerrero explained in his comment in
this case:
In making such misleading allegations,
petitioners withheld the information that on
January 25, 1994, Branch 114 of the Pasay City
Regional Trial Court had issued an order which
explained very clearly why the sum of
P7,417,000.00 deposited by Guerrero constitute
full payment of the agreed price, viz: llcd
Plaintiff's motion is meritorious. The
decision dated September 18,1991 rendered in this
case has long become final and executory.
Paragraph 4 of the dispositive portion of said
decision reads as follows:
4. Ordering defendants Milagros dela
Rama and Inocentes dela Rama to execute the
corresponding deed of sale conveying the subject
property, free from all liens and encumbrances in
favor of the plaintiff upon payment of the latter of
his balance of P8,800,000.00:
xxx xxx xxx
6. Ordering both defendants, jointly and
severally, to pay the plaintiff the following:
a. the sum of P500,000.00 by way of moral
damages;
b. the sum of P200,000.00 by way of
exemplary damages;
c. the sum of P100,000.00 by way of
attorney's fees;
d. legal interest of the amount of
P2,200,000.00 from August 2, 1989 until the deed
of absolute sale is executed in favor of the plaintiff;
The plaintiff [Alfredo Guerrero] is
therefore entitled to collect from the defendants
[Milagros and Inocentes de la Rama] the sum of
P800,000.00 in damages and attorney's fees, and
interest at the legal rate. The earlier computation
of the court's Branch Sheriff Edilberto Santiago is
wrong. The legal rate of interest for damages, and
even for loans where interest was not stipulated, is
6% per annum (Art. 2209, Civil Code). The rate of
12% per annum was established by the Monetary
Board when, under the power vested in it by P.D.
116 to amend Act No. 2655 (more commonly
known as the Anti Usury Law), it amended Section
1 by 'increasing the rate of legal interest for loans,
renewals and forbearance thereof, as well as for
judgments, from 6% per annum to 12% per
annum. Inasmuch as the Monetary Board may not
repeal or amend the Civil Code, in the face of the
apparent conflict between Art. 2209 and Act No.
2655 as amended, it is this court's persuasion that
the ruling of the Monetary Board applies only to
banks, financing companies, pawnshops and
intermediaries performing quasi-banking
functions, all of which are under the control and
supervision of the Central Bank and of the
Monetary Board. LLphil
The interest rate on the P2,200,000.00
paid to the defendants by the plaintiff at the
inception of the transactions should be only 6%
per annum from August 2, 1989, and as of January
2, 1994 this amounts to the sum of P583,000.00
and P11,000.00 every month thereafter until the
deed of absolute sale over the property subject
matter of this case is executed. The amounts
payable by the defendants to the plaintiff
therefore stands at a total of P1,383,000.00.
Offsetting this amount from the balance of
P8,800,000.00, the plaintiff must still pay to the
defendants the sum of P7,417,000.00. The plaintiff
has already deposited with the Clerk of Court of
this court the sum of P5,808,100.00 as of January
11, 1994; he should add to this the sum of
P1,608,900.00. 36
The De la Ramas question this ruling of
the lower court. They say:
50
 That Petitioners do not agree with the
explanation of the lower Court, which held that the
Petitioners are liable to pay legal interest on the
initial payment of P2,200.00 that petitioners
received under the Contract To Sell as part of the
purchase price. Why should Petitioners pay legal
interest on a sum of money that was payable to
them and which they received as initial payment of
the purchase price? This ruling is absurd and
preposterous. It is a legal monstrosity. 37
Petitioners can no longer question a
judgment which has already become final and
executory. The order of the Regional Trial Court on
the payment of legal interest was issued on
September 18, 1991 in the case for specific
performance against the De la Ramas (Civil Case
No. 6974-P). Hence, they are already barred from
questioning it now in this proceeding.
Finally, we take note of the fact that the
De la Ramas have withdrawn and appropriated for
themselves the amount paid by Guerrero. This
amount represented the purchase price of the
entire 4,075 square meters of land, including the
expropriated portion, which was the subject of
their agreement. The payment, therefore, to them
of the value of the expropriated portion would
unjustly enrich them. Cdpr
WHEREFORE, the decision of the Court
Appeals is AFFIRMED.
SO ORDERED.
Bellosillo, Quisumbing, Buena and De
Leon, Jr., JJ., concur.
||
CASE NO. 16
SECOND DIVISION
[G.R. No. 143643. June 27, 2003.]
NATIONAL POWER
CORPORATION, petitioner, vs. SPS. JOSE C.
CAMPOS, JR. and MA. CLARA LOPEZ-
CAMPOS, respondents.
The Solicitor General for petitioner.
Law Firm of R.V. Domingo & Associates for
respondents.
SYNOPSIS
Petitioner in this case claimed that under
Article 620 of the Civil Code, it had already
acquired by prescription the easement of right-of-
way over the portion of the subject property where
its wooden electric posts and transmission lines
were erected.
On appeal, the Supreme Court affirmed
the decision of the CA and the RTC which ordered
the petitioner to pay, among others, actual, moral
and nominal damages to the respondents'
spouses, for having violated or invaded the latter's
property. The Court also held: that petitioner's
possession of that portion of subject property
where it erected the wooden posts and
transmission lines was merely upon the tolerance
of the respondents-owners, thus, it will not create
an easement of right-of-way by prescription.
Neither can petitioner invoke Section 34 (i) of Rep.
Act. No. 6395, as amended. The five-year period
provided thereunder, within which all claims for
compensation and damages, should be reckoned
from the time that it acquired title over the private
property on which the right-of-way is sought to be
established. Prior thereto, respondent's right to
file an action for the claims for compensation
and/or damages does not even commence to run.
SYLLABUS
1. CIVIL LAW; CIVIL CODE; PROPERTY;
PRESCRIPTION, AS A MODE OF ACQUIRING
OWNERSHIP; CASE AT BAR. — Prescription as a
mode of acquisition under Article 620 of the Civil
Code requires the existence of the following: (1)
capacity to acquire by prescription; (2) a thing
capable of acquisition by prescription; (3)
possession of the thing under certain conditions;
and (4) lapse of time provided by law. Acquisitive
prescription may either be ordinary, in which case
the possession must be in good faith and with just
51
title, or extraordinary, in which case there is
neither good faith nor just title. In either case,
there has to be possession which must be in the
concept of an owner, public, peaceful and
uninterrupted. . . . In this case, the records clearly
reveal that the petitioner's possession of that
portion of the subject property where it erected
the wooden posts and transmission lines was
merely upon the tolerance of the respondents.
Accordingly, this permissive use by the petitioner
of that portion of the subject property, no matter
how long continued, will not create an easement
of right-of-way by prescription. TCacIA
2. ID.; ID.; ID.; ID.; POSSESSION OF
PROPERTY BY MERE TOLERANCE OF THE
OWNER WILL NOT CREATE AN EASEMENT OF
RIGHT-OF-WAY BY PRESCRIPTION; CASE AT
BAR. — The five-year period provided under
Section 3(i) of Rep. Act No. 6395, as amended,
within which all claims for compensation and/or
damages may be allowed against the petitioner
should be reckoned from the time that it acquired
title over the private property on which the right-
of-way is sought to be established. Prior thereto,
the claims for compensation and/or damages do
not prescribe. . . . The petitioner instituted the
expropriation proceedings only on December 12,
1995. Indisputably, the petitioner never acquired
title to that portion of the subject property where
it erected the wooden electrical posts and
transmission lines. Until such time, the five-year
prescriptive period within which the respondents'
right to file an action to claim for compensation
and/or damages for the petitioner's use of their
property does not even commence to run. The CA
thus correctly ruled that Section 3(i) of Rep. Act
No. 6395, as amended, finds no application in this
case and that the respondents' action against the
petitioner has not prescribed.
3. ID.; ID.; ID.; DAMAGES AWARDED FOR
VIOLATION OF PROPERTY RIGHT; CASE AT BAR.
— Nominal damages are adjudicated in order that
a right of the plaintiff, which has been violated or
invaded by the defendant, may be vindicated or
recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by
him. Similarly, the court may award nominal
damages in every case where any property right
has been invaded. The petitioner, in blatant
disregard of the respondents' proprietary right,
trespassed the subject property and conducted
engineering surveys thereon. It even attempted to
deceive the respondents' caretaker by claiming
that its agents were authorized by the respondents
to enter the property when in fact, the
respondents never gave such authority. Under the
circumstances, the award of nominal damages is
likewise warranted. Finally, the award of
attorney's fees as part of damages is deemed just
and equitable considering that by the petitioner's
unjustified acts, the respondents were obviously
compelled to litigate and incur expenses to protect
their interests over the subject property.
DECISION
CALLEJO, SR., J p:
This is a petition for review of the
Decision 1 dated June 16, 2000 of the Court of
Appeals in CA-G.R. CV No. 54265. The assailed
decision affirmed in toto the Decision 2 of the
Regional Trial Court (RTC) of Quezon City, Branch
98, which ordered petitioner National Power
Corporation to pay, among others, actual, moral
and nominal damages in the total amount of
P1,980,000 to respondents Spouses Jose C.
Campos, Jr. and Ma. Clara A. Lopez-Campos.
The petition at bar stemmed from the
following antecedents:
On February 2, 1996, the respondents
filed with the court a quo an action for sum of
money and damages against the petitioner. In
their complaint, the respondents alleged that they
are the owners of a parcel of land situated in Bo.
San Agustin, Dasmariñas, Cavite, consisting of
66,819 square meters ("subject property") covered
by Transfer Certificate of Title (TCT) No. T-957323.
Sometime in the middle of 1970, Dr. Paulo C.
Campos, who was then the President of the Cavite
Electric Cooperative and brother of respondent
Jose C. Campos, Jr., verbally requested the
respondents to grant the petitioner a right-of-way
over a portion of the subject property. Wooden
electrical posts and transmission lines were to be
52
installed for the electrification of Puerto Azul. The subject property was selected "in a manner
respondents acceded to this request upon the compatible with the greatest public good and the
condition that the said installation would only be least private injury" and that it (petitioner) had
temporary in nature. The petitioner assured the tried to negotiate with the respondents for the
respondents that the arrangement would be acquisition of the right-of-way easement on the
temporary and that the wooden electric posts subject property but that the parties failed to reach
would be relocated as soon as permanent posts an amicable settlement. 5
and transmission lines shall have been installed.
Contrary to the verbal agreement of the parties, The respondents maintained that,
contrary to the petitioner's allegations, there were
however, the petitioner continued to use the
subject property for its wooden electrical posts other more suitable or appropriate sites for the
and transmission lines without compensating the petitioner's all-steel transmission lines and that
the petitioner chose the subject property in a
respondents therefor. 3
whimsical and capricious manner. The
The complaint likewise alleged that some respondents averred that the proposed right-of-
time in 1994, the petitioner's agents trespassed on way was not the least injurious to them as the
the subject property and conducted engineering system design prepared by the petitioner could be
surveys thereon. The respondents' caretaker further revised to avoid having to traverse the
asked these agents to leave the property. subject property. The respondents vigorously
Thereafter, in 1995, a certain "Mr. Raz," who denied negotiating with the petitioner in
claimed to be the petitioner's agent, went to the connection with the latter's acquisition of a right-
office of respondent Jose C. Campos, Jr., then of-way on the subject property. 6
Associate Justice of the Supreme Court, and
requested permission from the latter to enter the Finally, the complaint alleged that
unaware of the petitioner's intention to
subject property and conduct a survey in
expropriate a portion of the subject property, the
connection with the petitioner's plan to erect an
respondents sold the same to Solar Resources, Inc.
all-steel transmission line tower on a 24-square
As a consequence, the respondents stand to lose a
meter area inside the subject property.
substantial amount of money derived from the
Respondent Jose Campos, Jr., refused to grant the
proceeds of the sale of the subject property should
permission and expressed his preference to talk to
the buyer (Solar Resources, Inc.) decide to annul
the Chief of the Calaca Sub-station or the head of
the petitioner's Quezon City office. The the sale because of the contemplated
expropriation of the subject property. 7
respondents did not hear from "Mr. Raz" or any
one from the petitioner's office since then. The complaint a quo thus prayed that the
Sometime in July or August of 1995, the petitioner be adjudged liable to pay the
petitioner's agents again trespassed on the subject respondents, among others, actual, nominal and
property, presenting to the respondents' caretaker moral damages:
a letter of authority purportedly written by
respondent Jose C. Campos, Jr. When the WHEREFORE, premises considered, it is
caretaker demanded that the letter be given to respectfully prayed that the Honorable Court
him for verification with respondent Jose C. award the plaintiffs:
Campos, Jr. himself, the petitioner's agentsa. Actual damages for the use of defendants' property since
refused to do so. Consequently, the caretaker middle 1970's, including legal interest thereon, as
ordered the agents to leave the subject property. 4 may be established during the trial; DcSTaC
The complaint further alleged that onb. P1,000,000.00 as nominal damages;
December 12, 1995, the petitioner instituted an
expropriation case involving the subject propertyc. P1,000,000.00 as moral damages;
before the RTC of Imus, Cavite, Branch 22. The
d. Lost business opportunity as may be established during
case was docketed as Civil Case No. 1174-95. The
the trial;
petitioner alleged in its complaint therein that the

53
e. P250,000.00 as attorney's fees;
f. Costs of suit.
Plaintiffs pray for other, further and
different reliefs as may be just and equitable under
the premises. 8
Upon receipt of the summons and
complaint, the petitioner moved for additional
time to file its responsive pleading. However,
instead of filing an answer to the complaint, the
petitioner filed a motion to dismiss on the ground
that the action had prescribed and that there was
another action pending between the same parties
for the same cause (litis pendencia). The
respondents opposed said motion. On May 2,
1996, the RTC issued an order denying the
petitioner's motion to dismiss.
The petitioner then moved for
reconsideration of the aforesaid order. The
respondents opposed the same and moved to
declare the petitioner in default on the ground that
its motion for reconsideration did not have the
required notice of hearing; hence, it did not toll the
running of the reglementary period to file an
answer.
On July 15, 1996, the RTC issued an order
denying the petitioner's motion for
reconsideration. Subsequently, on July 24, 1996, it
issued another order granting the respondents'
motion and declared the petitioner in default for
its failure to file an answer. The petitioner filed a
motion to set aside the order of default but the
same was denied by the RTC.
The petitioner filed a petition
for certiorari, prohibition and preliminary
injunction with the Court of Appeals, docketed as
CA-G.R. SP No. 41782, assailing the May 2, 1996,
July 15, 1996 and July 24, 1996 Orders issued by
the RTC as having been issued with grave abuse of
discretion and to enjoin it from proceeding with
the case. On February 13, 1996, the CA dismissed
the petition for certiorari, prohibition and
preliminary injunction filed by the petitioner in CA-
G.R. SP No. 41782.
In the meantime, the respondents
adduced their evidence ex parte in the RTC. As
synthesized by the trial court, the respondents
adduced evidence, thus:
From the evidence thus far submitted, it
appears that the plaintiffs spouses, both of whom
professional of high standing in society, are the
absolute owners of a certain parcel of land situated
in Bo. San Agustin, Dasmariñas, Cavite, consisting
of 66,819 square meters, more or less, covered and
embraced in TCT No. T-95732. Sometime in the
mid-1970, Dr. Paulo C. Campos, brother of Justice
Jose Campos, Jr., then President of the Cavite
Electric Cooperative, approached the latter and
confided to him the desire of the National Power
Corporation to be allowed to install temporary
wooden electric posts on the portion of his wife's
property in order that the high-tension
transmission line coming from Kaliraya passing
thru that part of Cavite can be continued to the
direction of Puerto Azul.
Having heard the plea of his brother and
the fact that National Power Corporation was
under pressure because at the time that Puerto
Azul was being developed there was no electricity
nor was there electrical lines towards that place
and acting on the belief that the installation of
wooden electric posts would be temporary in
nature, plaintiffs gave oral permission for the NPC
personnel to enter the said parcel of land. Dr. Paulo
C. Campos, assured him that it was just a
temporary measure to meet the emergency need
of the Puerto Azul and that the wooden electric
posts will be relocated when a permanent posts
and transmission lines shall have been installed.
Pursuant to their understanding, the National
Power Corporation installed wooden posts across
a portion of plaintiffs' property occupying a total
area of about 2,000 square meters more or less. To
date, defendant NPC has been using the plaintiffs'
property for its wooden electrical posts and
transmission lines; that the latter has estimated
that the aggregate rental (which they peg at the
conservative rate of P1.00 per square meter) of the
2,000 square meters for twenty-four (24) years
period, would amount to the aggregate sum of
P480,000.00.
From the time National Power
Corporation installed those temporary wooden
posts, no notice was ever served upon the plaintiffs
54
of their intention to relocate the same or to install
permanent transmission line on the property. Also,
there was no personal contact between them.
However, in late 1994, plaintiffs' overseer found a
group of persons of the defendant NPC conducting
survey inside the said property, and were asked to
leave the premises upon being discovered that
they have no authority to do so from the owners
thereof. Subsequently thereafter, or sometime in
1995, a person by the name of Mr. Paz, bearing a
letter from Calaca Regional Office, went to see
Justice Jose C. Campos, Jr. in his office, informing
the latter that he was authorized by the National
Power Corporation to acquire private lands. In the
same breath, Mr. Paz requested his permission to
let NPC men enter the subject property and to
conduct a survey in connection with its plan to
erect an all steel transmission line tower on a 24
square meter area inside plaintiffs' property, but
same was denied. Justice Campos, however,
expressed his preference to talk instead to the
Chief of the Calaca Sub-station or the Head of the
NPC, Quezon City office. Since then, nothing
however transpired. aECTcA
Sometime in July or August 1995,
plaintiffs learned that defendant's agents again
entered the subject property. This time, they have
presented to the caretaker a letter of authority
supposedly from Justice Jose C. Campos, Jr. And,
when prodded to see the letter for verification,
defendant's agents refused to do so. So, they were
ordered out of the vicinity. Plaintiffs stressed that
defendant's repeated intrusions into their property
without their expressed knowledge and consent
had impugned on their constitutional right to
protection over their property.
Later, on December 12, 1995, plaintiffs
received copy of summons and complaint in Civil
Case No. 1174-95 filed by the defendant before the
Regional Trial Court, Fourth Judicial Region,
Branch 22, Imus, Cavite for the expropriation of
5,320 square meters of plaintiffs' above-described
property to be used as right-of-way for the all-steel
transmission line tower of the Calaca-Dasmariñas
230 KV T/L Project. But what had caused plaintiffs'
discomfiture is the allegation in said complaint
stating that the "parcel of land sought to be
expropriated has not been applied to nor
expropriated for any public use and is selected by
plaintiff in a manner compatible with the greatest
good and the least private injury" and that
defendant "had negotiated with (plaintiffs) for the
acquisition of the right-of-way easement over the
portion of the same for the public purpose as
above-stated at a price prescribed by law, but
failed to reach an agreement with them
notwithstanding the repeated negotiations
between the parties."
Plaintiffs' assert that at no instance was
there a negotiation between them and the NPC or
its representative. The alleged "talk" initiated by
Mr. Paz with Justice Campos, Jr. just ended in the
latter's remonstrance and in prevailing upon the
former of his preference to discuss the matter with
a more responsible officer of the National Power
Corporation, such as the Chief of the Calaca Sub-
Station or the Head of NPC's Office in Quezon City.
But plaintiffs' plea just fell on the deaf ear. The
next thing they know was Civil Case No. Q-1174-95
already filed in court. A party to a case shall not do
falsehood nor shall mislead or misrepresent the
contents of its pleading. That gross
misrepresentation had been made by the National
Power Corporation in their said pleading is
irrefutable.
Plaintiffs-spouses Campos declared that
there are other areas more suitable or appropriate
that can be utilized as alternative sites for the all-
steel transmission line tower. Just a few meters
from the planned right-of-way is an abandoned
road occupied by squatters; it is a government
property and the possession of which the NPC
need not compensate. The latter had not exercised
judiciously in the proper selection of the property
to be appropriated. Evidently, NPC's choice was
whimsical and capricious. Such arbitrary selection
of plaintiffs' property despite the availability of
another property in a manner compatible with the
greatest public good and the least private injury,
constitutes an impermissible encroachment of
plaintiffs' proprietary rights and their right to due
process and equal protection.
Concededly, NPC's intention is to
expropriate a portion of plaintiffs' property. This
limitation on the right of ownership is the
paramount right of the National Power
Corporation granted by law. But before a person
55
 can be deprived of his property through the(c) Five Hundred Thousand Pesos (P500,000.00) as nominal
exercise of the power of eminent domain, the
requisites of law must strictly be complied with.
(Endencia vs. Lualhati, 9 Phil. 177) No person shall(d) One Hundred Fifty Thousand Pesos (P150,000.00) as
be deprived of his property except by competent
authority and for public use and always upon(e) Costs of suit in the amount of P11,239.00.
payment of just compensation. Should this
requirement be not first complied with, the courts
shall protect and, in a proper case, restore the
owner in his possession. (Art. 433 Civil Code of the
Philippines)
Records disclose that in breach of such
verbal promise, defendant NPC had not withdrawn
the wooden electrical posts and transmission lines;
said wooden electrical posts and transmission lines
still occupy a portion of plaintiffs' property; that
the NPC had benefited from them for a long period
of time already, sans compensation to the owners
thereof.
Without first complying with the
primordial requisites appurtenant to the exercise
of the power of eminent domain, defendant NPC
again boldly intruded into plaintiffs' property by
conducting engineering surveys with the end in
view of expropriating 5,320 square meters thereof
to be used as right-of-way for the all-steel
transmission line tower of the Calaca-Dasmariñas
230 KV T/L Project. Such acts constitute a
deprivation of one's property for public use
without due compensation. It would therefore
seem that the expropriation had indeed departed
from its own purpose and turns out to be an
instrument to repudiate compliance with
obligation legally and validly contracted. 9
On September 26, 1996, the RTC
rendered a decision finding the petitioner liable for
damages to the respondents. The dispositive
portion of the RTC decision reads:
WHEREFORE, in view of the foregoing
consideration, justment [sic] is hereby rendered in
favor of the plaintiffs, condemning the defendant
to pay —
(a) Actual damages of P480,000.00 for the use of plaintiff's
property;
(b) One Million Pesos (P1,000,000.00) as moral damages;
damages;
attorney's fees; and
SO ORDERED. 10
The petitioner appealed the decision to
the Court of Appeals which on June 16, 1990
rendered a decision affirming the ruling of the
RTC. cTCaEA
Essentially, the CA held that the
respondents' claim for compensation and
damages had not prescribed because Section 3(i)
of the petitioner's Charter, Republic Act No. 6395,
as amended, is not applicable to the case. The CA
likewise gave scant consideration to the
petitioner's claim that the respondents' complaint
should be dismissed on the ground of litis
pendencia. According to the CA, the complaint a
quo was the more appropriate action considering
that the venue for the expropriation case (Civil
Case No. 1174-95) was initially improperly laid. The
petitioner filed the expropriation proceedings with
the RTC in Imus, Cavite, when the subject property
is located in Dasmariñas, Cavite. Moreover, the
parties in the two actions are not the same since
the respondents were no longer included as
defendants in the petitioner's amended complaint
in the expropriation case (Civil Case No. 1174-95)
but were already replaced by Solar Resources, Inc.,
the buyer of the subject property, as defendant
therein.
The CA likewise found the damages
awarded by the RTC in favor of the respondents
just and reasonable under the circumstances
obtaining in the case.
The petitioner now comes to this Court
seeking to reverse and set aside the assailed
decision. The petitioner alleges as follows:
I
The Court of Appeals grievously erred and
labored under a gross misapprehension of fact in
finding that the Complaint below should not be
dismissed on the ground of prescription.
56
 II
The Court of Appeals erred in affirming
the award of nominal and moral damages,
attorney's fees and costs of litigation. 11
Citing Article 620 of the Civil Code, the
petitioner contends that it had already acquired
the easement of right-of-way over the portion of
the subject property by prescription, the said
easement having been allegedly continuous and
apparent for a period of about twenty-three (23)
years, i.e., from about the middle of 1970 to the
early part of 1994. The petitioner further invokes
Section 3(i) of its Charter in asserting that the
respondents already waived their right to institute
any action for compensation and/or damages
concerning the acquisition of the easement of
right-of-way in the subject property. Accordingly,
the petitioner concludes that the award of
damages in favor of the respondents is not
warranted.
The petition is bereft of merit.
The petitioner's claim that, under Article
620 of the Civil Code, it had already acquired by
prescription the easement of right-of-way over
that portion of the subject property where its
wooden electric posts and transmission lines were
erected is untenable. Article 620 of the Civil Code
provides that:
Art. 620. Continuous and apparent
easements are acquired either by virtue of a title or
by prescription of ten years.
Prescription as a mode of acquisition
requires the existence of the following: (1) capacity
to acquire by prescription; (2) a thing capable of
acquisition by prescription; (3) possession of the
thing under certain conditions; and (4) lapse of
time provided by law. 12 Acquisitive prescription
may either be ordinary, in which case the
possession must be in good faith and with just
title, 13 or extraordinary, in which case there is
neither good faith nor just title. In either case,
there has to be possession which must be in the
concept of an owner, public, peaceful and
uninterrupted. 14 As a corollary, Article 1119 of
the Civil Code provides that:
Art. 1119. Acts of possessory character
executed in virtue of license or by mere tolerance
of the owner shall not be available for the purposes
of possession.
In this case, the records clearly reveal that
the petitioner's possession of that portion of the
subject property where it erected the wooden
posts and transmission lines was merely upon the
tolerance of the respondents. Accordingly, this
permissive use by the petitioner of that portion of
the subject property, no matter how long
continued, will not create an easement of right-of-
way by prescription. The case of Cuaycong vs.
Benedicto 15 is particularly instructive. In that
case, the plaintiffs for more than twenty years
made use of the road that passed through the
hacienda owned by the defendants, being the only
road that connected the plaintiff's hacienda to the
public road. The defendants closed the road in
question and refused the use of the same unless a
toll was paid. The plaintiffs therein brought an
action to enjoin the defendants from interfering
with the use of the road. In support of their action,
the plaintiffs presented evidence tending to show
that they have acquired the right-of-way through
the road by prescription. This Court rejected the
contention, holding as follows:
Had it been shown that the road had been
maintained at the public expense, with the
acquiescence of the owners of the estates crossed
by it, this would indicate such adverse possession
by the government as in course of time would
ripen into title or warrant the presumption of a
grant or of a dedication. But in this case there is no
such evidence, and the claims of plaintiffs,
whether regarded as members of the public
asserting a right to use the road as such, or as
persons claiming a private easement of way over
the land of another must be regarded as resting
upon the mere fact of user. DACaTI
If the owner of a tract of land, to
accommodate his neighbors or the public in
general, permits them to cross his property, it is
reasonable to suppose that it is not his intention, in
so doing, to divest himself of the ownership of the
land so used, or to establish an easement upon it,
and that the persons to whom such permission,
tacit or express, is granted, do not regard their
57
privilege of use as being based upon anything
more than the mere tolerance of the owner.
Clearly, such permissive use is in its inception
based upon an essentially revocable license. If the
use continues for a long period of time, no change
being made in the relations of the parties by any
express or implied agreement, does the owner of
the property affected lose his right of revocation?
Or, putting the same question in another form,
does the mere permissive use ripen into title by
prescription?
It is a fundamental principle of the law in
this jurisdiction concerning the possession of real
property that such possession is not affected by
acts of a possessory character which are "merely
tolerated" by the possessor, which are or due to his
license (Civil Code, Arts. 444 and 1942). This
principle is applicable not only with respect to the
prescription of the dominium as a whole, but to the
prescription of right in rem. In the case of Cortes vs.
Palanca Yu-Tibo (2 Phil. Rep., 24, 38), the Court
said:
The provision of article 1942 of the Civil
Code to the effect that acts which are merely
tolerated produce no effect with respect to
possession is applicable as much to the
prescription of real rights as to the prescription of
the fee, it being a glaring and self-evident error to
affirm the contrary, as does the appellant in his
motion papers. Possession is the fundamental
basis of prescription. Without it no kind of
prescription is possible, not even the
extraordinary. Consequently, if acts of mere
tolerance produce no effect with respect to
possession, as that article provides, in conformity
with Article 444 of the same Code, it is evident that
they can produce no effect with respect to
prescription, whether ordinary or extraordinary.
This is true whether the prescriptive acquisition be
of a fee or of real rights, for the same reason holds
in one and the other case; that is, that there has
been no true possession in the legal sense of the
word. (Citations omitted)
Possession, under the Civil Code, to1. The petitioner entered upon the private property in the
constitute the foundation of a prescriptive right,
must be possession under claim of title (en
concepto de dueño), or to use the common law
equivalent of the term, it must be adverse. Acts of2. The owner of the private property shall be paid the just
possessory character performed by one who holds
by mere tolerance of the owner are clearly not en
concepto de dueño, and such possessory acts, no
matter how long so continued, do not start the
running of the period of prescription. 16
Following the foregoing disquisition, the
petitioner's claim that it had acquired the
easement of right-of-way by prescription must
perforce fail. As intimated above, possession is the
fundamental basis of prescription, whether
ordinary or extraordinary. The petitioner never
acquired the requisite possession in this case. Its
use of that portion of the subject property where it
erected the wooden poles and transmission lines
was due merely to the tacit license and tolerance
of the respondents. As such, it cannot be made the
basis of the acquisition of an easement of right-of-
way by prescription.
Neither can the petitioner invoke Section
3(i) of its Charter (Rep. Act No. 6395, as amended)
to put up the defense of prescription against the
respondents. The said provision reads in part:
Sec. 3(i). . . . The Corporation or its
representatives may also enter upon private
property in the lawful performance or prosecution
of its business or purposes, including the
construction of transmission lines
thereon; Provided, that the owner of such private
property shall be paid the just compensation
therefor in accordance with the provisions
hereinafter provided; Provided, further, that any
action by any person claiming compensation
and/or damages shall be filed within five years
after the right-of-way, transmission lines,
substations, plants or other facilities shall have
been established: Provided, finally, that after the
said period no suit shall be brought to question the
said right-of-way, transmission lines, substations,
plants or other facilities nor the amounts of
compensation and/or damages involved;
Two requisites must be complied before
the above provision of law may be invoked:
lawful performance or prosecution of its
businesses or purposes; and
compensation therefor.
58
 As correctly asserted by the respondents,
Section 3(i) of Rep. Act No. 6395, as amended,
presupposes that the petitioner had already taken
the property through a negotiated sale or the
exercise of the power of eminent domain, and not
where, as in this case, the petitioner was merely
temporarily allowed to erect wooden electrical
posts and transmission lines on the subject
property. Significantly, the provision uses the term
"just compensation," implying that the power of
eminent domain must first be exercised by the
petitioner in accordance with Section 9, Article III
of the Constitution, which provides that "no
private property shall be taken for public use
without just compensation."
This Court's ruling in Lopez vs. Auditor
General 17 is likewise in point:
The petitioner brought this case to this
Court on the sole issue of prescription. He
cites Alfonso vs. Pasay City in which a lot owner
was allowed to bring an action to recover
compensation for the value of his land, which the
Government had taken for road purposes, despite
the lapse of thirty years (1924-1954). On the other
hand, the respondents base their defense of
prescription on Jaen vs. Agregado which held an
action for compensation for land taken in building
a road barred by prescription because it was
brought after more than ten years (i.e., thirty three
years, from 1920 to 1953). They argue that the
ruling in Alfonso cannot be applied to this case
because, unlike Alfonso who made repeated
demands for compensation within ten years,
thereby interrupting the running of the period of
prescription, the petitioner here filed his claim only
in 1959. HCIaDT
It is true that in Alfonso vs. Pasay City this
Court made the statement that "registered lands
are not subject to prescription and that on grounds
of equity, the government should pay for private
property which it appropriates though for the
benefit of the public, regardless of the passing of
time." But the rationale in that case is that where
private property is taken by the Government for
public use without first acquiring title thereto
either through expropriation or negotiated sale,
the owner's action to recover the land or the value
thereof does not prescribe. This is the point that
has been overlooked by both parties.
On the other hand, where private
property is acquired by the Government and all
that remains is the payment of the price, the
owner's action to collect the price must be brought
within ten years otherwise it would be barred by
the statute of limitations. 18
Thus, the five-year period provided under
Section 3(i) of Rep. Act No. 6395, as amended,
within which all claims for compensation and/or
damages may be allowed against the petitioner
should be reckoned from the time that it acquired
title over the private property on which the right-
of-way is sought to be established. Prior thereto,
the claims for compensation and/or damages do
not prescribe. In this case, the findings of the CA
is apropos:
Undeniably, NPC never acquired title over
the property over which its wooden electrical posts
and transmission lines were erected. It never filed
expropriation proceedings against such property.
Neither did it negotiate for the sale of the same. It
was merely allowed to temporarily enter into the
premises. As NPC's entry was gained through
permission, it had no intention to acquire
ownership either by voluntary purchase or by the
exercise of eminent domain. 19
The petitioner instituted the
expropriation proceedings only on December 12,
1995. Indisputably, the petitioner never acquired
title to that portion of the subject property where
it erected the wooden electrical posts and
transmission lines. Until such time, the five-year
prescriptive period within which the respondents'
right to file an action to claim for compensation
and/or damages for the petitioner's use of their
property does not even commence to run. The CA
thus correctly ruled that Section 3(i) of Rep. Act
No. 6395, as amended, finds no application in this
case and that the respondents' action against the
petitioner has not prescribed.
With respect to the damages awarded in
favor of the respondents, the petitioner avers,
thus:
The Court of Appeals erred in
affirming the award of nominal
59
and moral damages, attorney's
fees and costs of litigation.
It follows from Section 31(c) of R.A.
6395 that the award moral and nominal damages,
as well as attorney's fees and costs are baseless.
The right to claim them has likewise prescribed. 20
With our ruling that the claims of the
respondents had not prescribed, the petitioner's
contention that the respondents are not entitled
to moral and nominal damages and attorney's fees
must fail. In affixing the award for moral and
nominal damages and attorney's fees, the CA
ratiocinated:
With respect to the fourth assignment of
error, this Court is not persuaded to reverse much
less modify the court a quo's findings.
An award of moral damages would require
certain conditions to be met, to wit: (1) first, there
must be an injury, whether physical, mental or
psychological, clearly sustained by the claimant;
(2) second, there must be a culpable act or
omission factually established; (3) third, the
wrongful act or omission of the defendant is the
proximate cause of the injury sustained by the
claimant; and (4) fourth, the award of damages is
predicated on any of the cases stated in Article
2219 of the Civil Code.
NPC made it appear that it negotiated
with the appellees when no actual negotiations
took place. This allegation seriously affected the
ongoing sale of the property to Solar Resources,
Inc. as appellees seemed to have sold the property
knowing fully well that a portion thereof was being
expropriated. Such an act falls well within Article
21 of the Civil Code. NPC's subterfuge certainly
besmirched the reputation and professional
standing of Justice Jose C. Campos, Jr. and
Professor Maria Clara A. Lopez-Campos, and
caused them physical suffering, mental anguish,
moral shock and wounded feelings.
The records show that Justice Campos'
career included, among other[s], being a Professor
of Law at the University of the Philippines; Acting
Chairman of the Board of Transportation;
Presiding Judge of the Court of First Instance of
Pasay City, and Associate Justice of the Court of
Appeals. Such career reached its apex when he
was appointed Associate Justice of the Supreme
Court in 1992. Justice Campos was a member of
the Judicial and Bar Council when NPC filed its Civil
Case No. 1174-95. Professor Maria Clara A. Lopez-
Campos is a noted authority in Corporate and
Banking Laws and is a Professor Emerita of the
University of the Philippines from 1981 to the
present. She had taught more than three decades
at the College of Law. Against such backdrop, it
does not take too much imagination to conclude
that the oppressive and wanton manner in which
NPC sought to exercise its statutory right of
eminent domain warranted the grant of moral
damages.
On the award of nominal damages, such
are adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the
defendant, may be vindicated or recognized, and
not for the purpose of indemnifying the plaintiff
for any loss suffered by him. As previously
discussed, it does not brood well for a government
entity such as NPC to disregard the tenets of
private property enshrined in the Constitution.
NPC not only intentionally trespassed on
appellees' property and conducted engineering
surveys thereon but also sought to fool the
appellees' caretaker by claiming that such entry
was authorized. Moreover, NPC even justifies such
trespass as falling under its right to expropriate the
property. Under the circumstances, the award of
nominal damages is sustained.
That NPC's highhanded exercise of its
right of eminent domain constrained the appellees
to engage the services of counsel is obvious. As
testified upon, the appellees engaged their
counsel for an agreed fee of P250,000.00. The trial
court substantially reduced this to P150,000.00.
Inasmuch as such services included not only the
present action but also those for Civil Case No.
1174-95 erroneously filed by NPC with the
Regional Trial Court of Imus, Cavite, and the
Petition for Certiorari in CA-GR No. 41782, this
Court finds such attorney's fees to be reasonable
and equitable. 21
We agree with the CA.
The award of moral damages in favor of
the respondents is proper given the circumstances
obtaining in this case. As found by the CA:
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 NPC made it appear that it negotiated such authority. Under the circumstances, the
with the appellees when no actual negotiation award of nominal damages is likewise warranted.
took place. This allegation seriously affected the
ongoing sale of the property to Solar Resources, Finally, the award of attorney's fees as
part of damages is deemed just and equitable
Inc. as appellees seemed to have sold the property
knowing fully well that a portion thereof was being considering that by the petitioner's unjustified
expropriated. Such an act falls well within Article acts, the respondents were obviously compelled to
litigate and incur expenses to protect their
21 of the Civil Code. NPC's subterfuge certainly
besmirched the reputation and professionally interests over the subject property. 25
standing of Justice Jose C. Campos, Jr. and WHEREFORE, the petition is hereby
Professor Maria Clara A. Lopez-Campos, and DENIED for lack of merit. The assailed Decision
caused them physical suffering, mental anguish, dated June 16, 2000 of the Court of Appeals in CA-
moral shock and wounded feelings. G.R. CV No. 54265 is AFFIRMED in toto.
The records show that Justice Campos' SO ORDERED.
career included, among other[s], being a Professor
of Law at the University of the Philippines; Acting
Chairman of the Board of Transportation;
Presiding Judge of the Court of First Instance of
Pasay City, and Associate Justice of the Court of
Appeals. Such career reached its apex when he
was appointed Associate Justice of the Supreme
Court in 1992. Justice Campos was a member of
the Judicial and Bar Council when NPC filed its Civil
Case No. 1174-95. Professor Maria Clara A. Lopez-
Campos is a noted authority in Corporate and
Banking Laws and is a Professor Emerita of the
University of the Philippines from 1981 to the
present. She had taught more than three decades
at the College of Law. Against such backdrop, it
does not take too much imagination to conclude
that the oppressive and wanton manner in which
NPC sought to exercise its statutory right of
eminent domain warranted the grant of moral
damages. 22
Further, nominal damages are
adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the
defendant, may be vindicated or recognized, and
not for the purpose of indemnifying the plaintiff
for any loss suffered by him. 23 Similarly, the court
may award nominal damages in every case where
any property right has been invaded. 24 The
petitioner, in blatant disregard of the respondents'
proprietary right, trespassed the subject property
and conducted engineering surveys thereon. It
even attempted to deceive the respondents'
caretaker by claiming that its agents were
authorized by the respondents to enter the
property when in fact, the respondents never gave

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