POLICE POWER
237 on June 30, 1969 praying, inter
BALACUIT VS. CFI
At issue in the petition for review before Us is the validity and constitutionality
of Ordinance No. 640 passed by the Municipal Board of the City of Butuan on
April 21, 1969, the title and text of which are reproduced below:
ORDINANCE--640
ORDINANCE PENALIZING ANY PERSON, GROUP OF PERSONS, ENTITY
OR CORPORATION ENGAGED IN THE BUSINESS OF SELLING
ADMISSION TICKETS TO ANY MOVIE OR OTHER PUBLIC EXHIBITIONS,
GAMES, CONTESTS OR OTHER PERFORMANCES TO REQUIRE
CHILDREN BETWEEN SEVEN (7) AND TWELVE (12) YEARS OF AGE TO
PAY FULL PAYMENT FOR TICKETS INTENDED FOR ADULTS BUT
SHOULD CHARGE ONLY ONE-HALF OF THE SAID TICKET
xxx xxx xxx
Be it ordained by the Municipal Board of the City of Butuan in session
assembled, that:
SECTION 1—It shall be unlawful for any person, group of persons, entity, or
corporation engaged in the business of selling admission tickets to any movie
or other public exhibitions, games, contests, or other performances to require
children between seven (7) and twelve (12) years of age to pay full payment
for admission tickets intended for adults but should charge only one-half of the
value of the said tickets.
SECTION 2—Any person violating the provisions of this Ordinance shall upon
conviction be punished by a fine of not less than TWO HUNDRED PESOS
(P200.00) but not more than SIX HUNDRED PESOS (P600.00) or an
imprisonment of not less than TWO (2) MONTHS or not more than SIX (6)
MONTHS or both such firm and imprisonment in the discretion of the Court.
If the violator be a firm or corporation the penalty shall be imposed upon the
Manager, Agent or Representative of such firm or corporation.
SECTION 3—This ordinance shall take effect upon its approval.
Petitioners are Carlos Balacuit Lamberto Tan, and Sergio Yu Carcel managers
of the Maya and Dalisay Theaters, the Crown Theater, and the Diamond
Theater, respectively. Aggrieved by the effect of Ordinance No. 640, they filed
a complaint before the Court of First Instance of Agusan del Norte and Butuan
City docketed as Special Civil Case No.
alia, that the subject ordinance be declared unconstitutional and, therefore,
void and unenforceable. 1
Upon motion of the petitioners, 2 a temporary restraining order was issued on
July 14, 1969 by the court a quo enjoining the respondent City of Butuan and
its officials from enforcing Ordinance No. 640. 3 On July 29, 1969, respondents
filed their answer sustaining the validity of the ordinance.4
On January 30, 1973, the litigants filed their stipulation of facts. 5 On June 4,
1973, the respondent court rendered its decision, 6 the dispositive part of
which reads:
IN THE LIGHT OF ALL THE FOREGOING, the Court hereby adjudges in favor
of the respondents and against the petitioners, as follows:
1. Declaring Ordinance No. 640 of the City of Butuan constitutional and valid:
Provided, however, that the fine for a single offense shall not exceed TWO
HUNDRED PESOS, as prescribed in the aforequoted Section 15 (nn) of Rep.
Act No. 523;
2. Dissolving the restraining order issued by this Court; and;
3. Dismissing the complaint, with costs against the petitioners.
4. SO ORDERED. 7
Petitioners filed their motion for reconsideration 8 of the decision of the court
a quo which was denied in a resolution of the said court dated November 10,
1973.9
Hence, this petition.
Petitioners attack the validity and constitutionality of Ordinance No. 640 on the
grounds that it is ultra vires and an invalid exercise of police power.
Petitioners contend that Ordinance No. 640 is not within the power of' the
Municipal Board to enact as provided for in Section 15(n) of Republic Act No.
523, the Charter of the City of Butuan, which states:
Sec. 15. General powers and duties of the Board — Except as otherwise
provided by law, and subject to the conditions and limitations thereof, the
Municipal Board shall have the following legislative powers:
xxx xxx xxx
(n) To regulate and fix the amount of the license fees for the following; . . .
theaters, theatrical performances, cinematographs, public exhibitions and all
other performances and places of amusements ...
xxx xxx xxx
Respondent City of Butuan, on the other hand, attempts to justify the
enactment of the ordinance by invoking the general welfare clauseembodied
in Section 15 (nn) of the cited law, which provides:
(nn) To enact all ordinances it may deem necessary and proper for the
sanitation and safety, the furtherance of the prosperity, and the promotion of
the morality, peace, good order, comfort, convenience, and general welfare of
the city and its inhabitants, and such others as may be necessary to carry into
effect and discharge the powers and duties conferred by this Act, and to fix the
penalties for the violation of the ordinances, which shall not exceed a two
hundred peso fine or six months imprisonment, or both such fine and
imprisonment, for a single offense.
We can see from the aforecited Section 15(n) that the power to regulate and
fix the amount of license fees for theaters, theatrical performances,
cinematographs, public exhibitions and other places of amusement has been
expressly granted to the City of Butuan under its charter. But the question
which needs to be resolved is this: does this power to regulate include the
authority to interfere in the fixing of prices of admission to these places of
exhibition and amusement whether under its general grant of power or under
the general welfare clause as invoked by the City?
This is the first time this Court is confronted with the question of direct
interference by the local government with the operation of theaters,
cinematographs and the like to the extent of fixing the prices of admission to
these places. Previous decisions of this Court involved the power to impose
license fees upon businesses of this nature as a corollary to the power of the
local government to regulate them. Ordinances which required moviehouses
or theaters to increase the price of their admission tickets supposedly to cover
the license fees have been held to be invalid for these impositions were
considered as not merely license fees but taxes for purposes of revenue and
not regulation which the cities have no power to exact, 10 unless expressly
granted by its charter. 11
Applying the ruling in Kwong Sing v. City of Manila, 12 where the word
"regulate" was interpreted to include the power to control, to govern and to
restrain, it would seem that under its power to regulate places of exhibitions
and amusement, the Municipal Board of the City of Butuan could make proper
police regulations as to the mode in which the business shall be exercised.
While in a New York case, 13 an ordinance which regulates the business of
selling admission tickets to public exhibitions or performances by virtue of the
power of cities under the General City Law "to maintain order, enforce the laws,
protect property and preserve and care for the safety, health, comfort and
general welfare of the inhabitants of the city and visitors thereto; and for any
of said purposes, to regulate and license occupations" was considered not to
be within the scope of any duty or power implied in the charter. It was held
therein that the power of regulation of public exhibitions and places of
amusement within the city granted by the charter does not carry with it any
authority to interfere with the price of admission to such places or the resale of
tickets or tokens of admission.
In this jurisdiction, it is already settled that the operation of theaters,
cinematographs and other places of public exhibition are subject to regulation
by the municipal council in the exercise of delegated police power by the local
government. 14 Thus, in People v. Chan, 15 an ordinance of the City of Manila
prohibiting first run cinematographs from selling tickets beyond their seating
capacity was upheld as constitutional for being a valid exercise of police
power. Still in another case, 16 the validity of an ordinance of the City of
Bacolod prohibiting admission of two or more persons in moviehouses and
other amusement places with the use of only one ticket was sustained as a
valid regulatory police measure not only in the interest of preventing fraud in
so far as municipal taxes are concerned but also in accordance with public
health, public safety, and the general welfare.
The City of Butuan, apparently realizing that it has no authority to enact the
ordinance in question under its power to regulate embodied in Section 15(n),
now invokes the police power as delegated to it under the general welfare
clause to justify the enactment of said ordinance.
To invoke the exercise of police power, not only must it appear that the interest
of the public generally requires an interference with private rights, but the
means adopted must be reasonably necessary for the accomplishment of the
purpose and not unduly oppressive upon individuals. 17 The legislature may
not, under the guise of protecting the public interest, arbitrarily interfere with
private business, or impose unusual and unnecessary restrictions upon lawful
occupations. In other words, the determination as to what is a proper exercise
of its police power is not final or conclusive, but is subject to the supervision of
the courts. 18
Petitioners maintain that Ordinance No. 640 violates the due process clause
of the Constitution for being oppressive, unfair, unjust, confiscatory, and an
undue restraint of trade, and violative of the right of persons to enter into
contracts, considering that the theater owners are bound under a contract with
the film owners for just admission prices for general admission, balcony and
lodge.
In Homeowners' Association of the Philippines, Inc. v. Municipal Board of the
City of Manila, 19 this Court held:
The authority of municipal corporations to regulate is essentially police power,
Inasmuch as the same generally entails a curtailment of the liberty, the rights
and/or the property of persons, which are protected and even guaranteed by
the Constitution, the exercise of police power is necessarily subject to a
qualification, limitation or restriction demanded by the regard, the respect and
the obedience due to the prescriptions of the fundamental law, particularly
those forming part of the Constitution of Liberty, otherwise known as the Bill of
Rights — the police power measure must be reasonable. In other words,
individual rights may be adversely affected by the exercise of police power to
the extent only — and only to the extent--that may be fairly required by the
legitimate demands of public interest or public welfare.
What is the reason behind the enactment of Ordinance No. 640?
A reading of the minutes of the regular session of the Municipal Board when
the ordinance in question was passed shows that a certain Councilor Calo, the
proponent of the measure, had taken into account the complaints of parents
that for them to pay the full price of admission for their children is too financially
burdensome.
The trial court advances the view that "even if the subject ordinance does not
spell out its raison d'etre in all probability the respondents were impelled by
the awareness that children are entitled to share in the joys of their elders, but
that considering that, apart from size, children between the ages of seven and
twelve cannot fully grasp the nuance of movies or other public exhibitions,
games, contests or other performances, the admission prices with respect to
them ought to be reduced. 19a
We must bear in mind that there must be public necessity which demands the
adoption of proper measures to secure the ends sought to be attained by the
enactment of the ordinance, and the large discretion is necessarily vested in
the legislative authority to determine not only what the interests of the public
require, but what measures are necessary for the protection of such interests.
20 The methods or means used to protect the public health, morals, safety or
welfare, must have some relation to the end in view, for under the guise of the
police power, personal rights and those pertaining to private property will not
be permitted to be arbitralily invaded by the legislative department. 21
We agree with petitioners that the ordinance is not justified by any necessity
for the public interest. The police power legislation must be firmly grounded on
public interest and welfare, and a reasonable relation must exist between
purposes and means.22 The evident purpose of the ordinance is to help ease
the burden of cost on the part of parents who have to shell out the same
amount of money for the admission of their children, as they would for
themselves, A reduction in the price of admission would mean corresponding
savings for the parents; however, the petitioners are the ones made to bear
the cost of these savings. The ordinance does not only make the petitioners
suffer the loss of earnings but it likewise penalizes them for failure to comply
with it. Furthermore, as petitioners point out, there will be difficulty in its
implementation because as already experienced by petitioners since the
effectivity of the ordinance, children over 12 years of age tried to pass off their
age as below 12 years in order to avail of the benefit of the ordinance. The
ordinance does not provide a safeguard against this undesirable practice and
as such, the respondent City of Butuan now suggests that birth certificates be
exhibited by movie house patrons to prove the age of children. This is,
however, not at all practicable. We can see that the ordinance is clearly
unreasonable if not unduly oppressive upon the business of petitioners.
Moreover, there is no discernible relation between the ordinance and the
promotion of public health, safety, morals and the general welfare.
Respondent City of Butuan claims that it was impelled to protect the youth from
the pernicious practice of movie operators and other public exhibitions
promoters or the like of demanding equal price for their admission tickets along
with the adults. This practice is allegedly repugnant and unconscionable to the
interest of the City in the furtherance of the prosperity, peace, good order,
comfort, convenience and the general well-being of its inhabitants.
There is nothing pernicious in demanding equal price for both children and
adults. The petitioners are merely conducting their legitimate businesses. The
object of every business entrepreneur is to make a profit out of his venture.
There is nothing immoral or injurious in charging the same price for both
children and adults. In fact, no person is under compulsion to purchase a ticket.
It is a totally voluntary act on the part of the purchaser if he buys a ticket to
such performances.
Respondent City of Butuan claims that Ordinance No. 640 is reasonable and
necessary to lessen the economic burden of parents whose minor children are
lured by the attractive nuisance being maintained by the petitioners.
Respondent further alleges that by charging the full price, the children are
being exploited by movie house operators. We fail to see how the children are
exploited if they pay the full price of admission. They are treated with the same
quality of entertainment as the adults. The supposition of the trial court that
because of their age children cannot fully grasp the nuances of such
entertainment as adults do fails to convince Us that the reduction in admission
ticket price is justifiable. In fact, by the very claim of respondent that movies
and the like are attractive nuisances, it is difficult to comprehend why the
municipal board passed the subject ordinance. How can the municipal
authorities consider the movies an attractive nuisance and yet encourage
parents and children to patronize them by lowering the price of admission for
children? Perhaps, there is some ,truth to the argument of petitioners that
Ordinance No. 640 is detrimental to the public good and the general welfare
of society for it encourages children of tender age to frequent the movies,
rather than attend to their studies in school or be in their homes.
Moreover, as a logical consequence of the ordinance, movie house and
theater operators will be discouraged from exhibiting wholesome movies for
general patronage, much less children's pictures if only to avoid compliance
with the ordinance and still earn profits for themselves. For after all, these
movie house and theater operators cannot be compelled to exhibit any
particular kind of film except those films which may be dictated by public
demand and those which are restricted by censorship laws. So instead of
children being able to share in the joys of their elders as envisioned by the trial
court, there will be a dearth of wholesome and educational movies for them to
enjoy.
There are a number of cases decided by the Supreme Court and the various
state courts of the United States which upheld the right of the proprietor of a
theater to fix the price of an admission ticket as against the right of the state to
interfere in this regard and which We consider applicable to the case at bar.
A theater ticket has been described to be either a mere license, revocable at
the will of the proprietor of the theater or it may be evidence of a contract
whereby, for a valuable consideration, the purchaser has acquired the right to
enter the theater and observe the performance on condition that he behaves
properly. 23 Such ticket, therefore, represents a right, Positive or conditional,
as the case may be, according to the terms of the original contract of sale. This
right is clearly a right of property. The ticket which represents that right is also,
necessarily, a species of property. As such, the owner thereof, in the absence
of any condition to the contrary in the contract by which he obtained it, has the
clear right to dispose of it, to sell it to whom he pleases and at such price as
he can obtain. 24 So that an act prohibiting the sale of tickets to theaters or
other places of amusement at more than the regular price was held invalid as
conflicting with the state constitution securing the right of property. 25
In Collister vs. Hayman, 26 it was held:
The defendants were conducting a private business, which, even if clothed
with a public interest, was without a franchise to accommodate the public, and
they had the right to control it, the same as the proprietors of any other
business, subject to such obligations as were placed upon them by statute.
Unlike a carrier of passengers, for instance, with a franchise from the state,
and hence under obligation to transport anyone who applies and to continue
the business year in and year out, the proprietors of a theater can open and
close their place at will, and no one can make a lawful complaint. They can
charge what they choose for admission to their theater. They can limit the
number admitted. They can refuse to sell tickets and collect the price of
admission at the door. They can preserve order and enforce quiet while the
performance is going on. They can make it a part of the contract and condition
of admission, by giving due notice and printing the condition in the ticket that
no one shall be admitted under 21 years of age, or that men only or women
only shall be admitted, or that a woman cannot enter unless she is
accompanied by a male escort, and the like. The proprietors, in the control of
their business, may regulate the terms of admission in any reasonable way. If
those terms are not satisfactory, no one is obliged to buy a ticket or make the
contract. If the terms are satisfactory, and the contract is made, the minds of
the parties meet upon the condition, and the purchaser impliedly promises to
perform it.
In Tyson and Bro. — United Theater Ticket Officers, Inc. vs. Banton, 27 the
United States Supreme Court held:
... And certainly a place of entertainment is in no legal sense a public utility;
and quite as certainly, its activities are not such that their enjoyment can be
regarded under any conditions from the point of view of an emergency.
The interest of the public in theaters and other places of entertainment may be
more nearly, and with better reason, assimilated to the like interest in provision
stores and markets and in the rental of houses and apartments for residence
purposes; although in importance it fails below such an interest in the
proportion that food and shelter are of more moment than amusement or
instruction. As we have shown there is no legislative power to fix the prices of
provisions or clothing, or the rental charges for houses and apartments, in the
absence of some controlling emergency; and we are unable to perceive any
dissimilarities of such quality or degree as to justify a different rule in respect
of amusements and entertainment ...
We are in consonance with the foregoing observations and conclusions of
American courts. In this jurisdiction, legislation had been passed controlling
the prices of goods commodities and drugs during periods of emergency, 28
limiting the net profits of public utility 29 as well as regulating rentals of
residential apartments for a limited period, 30 as a matter of national policy in
the interest of public health and safety, economic security and the general
welfare of the people. And these laws cannot be impugned as unconstitutional
for being violative of the due process clause.
However, the same could not be said of theaters, cinematographs and other
exhibitions. In no sense could these businesses be considered public utilities.
The State has not found it appropriate as a national policy to interfere with the
admission prices to these performances. This does not mean however, that
theaters and exhibitions are not affected with public interest even to a certain
degree. Motion pictures have been considered important both as a medium for
the communication of Ideas and expression of the artistic impulse. Their
effects on the perceptions by our people of issues and public officials or public
figures as well as the prevailing cultural traits are considerable. 31 People of
all ages flock to movie houses, games and other public exhibitions for
recreation and relaxation. The government realizing their importance has seen
it fit to enact censorship laws to regulate the movie industry. 32 Their aesthetic
entertainment and even educational values cannot be underestimated. Even
police measures regulating the operation of these businesses have been
upheld in order to safeguard public health and safety.
Nonetheless, as to the question of the subject ordinance being a valid exercise
of police power, the same must be resolved in the negative. While it is true that
a business may be regulated, it is equally true that such regulation must be
within the bounds of reason, that is, the regulatory ordinance must be
reasonable, and its provisions cannot be oppressive amounting to an arbitrary
interference with the business or calling subject of regulation. A lawful
business or calling may not, under the guise of regulation, be unreasonably
interfered with even by the exercise of police power.33 A police measure for
the regulation of the conduct, control and operation of a business should not
encroach upon the legitimate and lawful exercise by the citizens of their
property rights.34 The right of the owner to fix a price at which his property
shall be sold or used is an inherent attribute of the property itself and, as such,
within the protection of the due process clause."" Hence, the proprietors of a
theater have a right to manage their property in their own way, to fix what prices
of admission they think most for their own advantage, and that any person who
did not approve could stay away. 36
Respondent City of Butuan argues that the presumption is always in favor of
the validity of the ordinance. This maybe the rule but it has already been held
that although the presumption is always in favor of the validity or
reasonableness of the ordinance, such presumption must nevertheless be set
aside when the invalidity or unreasonableness appears on the face of the
ordinance itself or is established by proper evidence.37 The exercise of police
power by the local government is valid unless it contravenes the fundamental
law of the land, or an act of the legislature, or unless it is against public policy
or is unreasonable, oppressive, partial, discriminating or in derogation of a
common right.38
Ordinance No. 640 clearly invades the personal and property rights of
petitioners for even if We could assume that, on its face, the interference was
reasonable, from the foregoing considerations, it has been fully shown that it
is an unwarranted and unlawful curtailment of the property and personal rights
of citizens. For being unreasonable and an undue restraint of trade, it cannot,
under the guise of exercising police power, be upheld as valid.
WHEREFORE, the decision of the trial court in Special Civil Case No. 237 is
hereby REVERSED and SET ASIDE and a new judgment is hereby rendered
declaring Ordinance No. 640 unconstitutional and, therefore, null and void.
This decision is immediately executory.
SO ORDERED.
LOZANO VS. MARTINEZ
The constitutionality of Batas Pambansa Bilang 22 (BP 22 for short), popularly
known as the Bouncing Check Law, which was approved on April 3, 1979, is
the sole issue presented by these petitions for decision. The question is
definitely one of first impression in our jurisdiction.
These petitions arose from cases involving prosecution of offenses under the
statute. The defendants in those cases moved seasonably to quash the
informations on the ground that the acts charged did not constitute an offense,
the statute being unconstitutional. The motions were denied by the respondent
trial courts, except in one case, which is the subject of G. R. No. 75789,
wherein the trial court declared the law unconstitutional and dismissed the
case. The parties adversely affected have come to us for relief.
As a threshold issue the former Solicitor General in his comment on the
petitions, maintained the posture that it was premature for the accused to
elevate to this Court the orders denying their motions to quash, these orders
being interlocutory. While this is correct as a general rule, we have in justifiable
cases intervened to review the lower court's denial of a motion to quash. 1 In
view of the importance of the issue involved here, there is no doubt in our mind
that the instant petitions should be entertained and the constitutional challenge
to BP 22 resolved promptly, one way or the other, in order to put to rest the
doubts and uncertainty that exist in legal and judicial circles and the general
public which have unnecessarily caused a delay in the disposition of cases
involving the enforcement of the statute.
For the purpose of resolving the constitutional issue presented here, we do not
find it necessary to delve into the specifics of the informations involved in the
cases which are the subject of the petitions before us. 2 The language of BP
22 is broad enough to cover all kinds of checks, whether present dated or
postdated, or whether issued in payment of pre-existing obligations or given in
mutual or simultaneous exchange for something of value.
I
BP 22 punishes a person "who makes or draws and issues any check on
account or for value, knowing at the time of issue that he does not have
sufficient funds in or credit with the drawee bank for the payment of said check
in full upon presentment, which check is subsequently dishonored by the
drawee bank for insufficiency of funds or credit or would have been dishonored
for the same reason had not the drawer, without any valid reason, ordered the
bank to stop payment." The penalty prescribed for the offense is imprisonment
of not less than 30 days nor more than one year or a fine or not less than the
amount of the check nor more than double said amount, but in no case to
exceed P200,000.00, or both such fine and imprisonment at the discretion of
the court. 3
The statute likewise imposes the same penalty on "any person who, having
sufficient funds in or credit with the drawee bank when he makes or draws and
issues a check, shall fail to keep sufficient funds or to maintain a credit to cover
the full amount of the check if presented within a period of ninety (90) days
from the date appearing thereon, for which reason it is dishonored by the
drawee bank. 4
An essential element of the offense is "knowledge" on the part of the maker or
drawer of the check of the insufficiency of his funds in or credit with the bank
to cover the check upon its presentment. Since this involves a state of mind
difficult to establish, the statute itself creates a prima facie presumption of such
knowledge where payment of the check "is refused by the drawee because of
insufficient funds in or credit with such bank when presented within ninety (90)
days from the date of the check. 5 To mitigate the harshness of the law in its
application, the statute provides that such presumption shall not arise if within
five (5) banking days from receipt of the notice of dishonor, the maker or
drawer makes arrangements for payment of the check by the bank or pays the
holder the amount of the check.
Another provision of the statute, also in the nature of a rule of evidence,
provides that the introduction in evidence of the unpaid and dishonored check
with the drawee bank's refusal to pay "stamped or written thereon or attached
thereto, giving the reason therefor, "shall constitute prima facie proof of "the
making or issuance of said check, and the due presentment to the drawee for
payment and the dishonor thereof ... for the reason written, stamped or
attached by the drawee on such dishonored check." 6
The presumptions being merely prima facie, it is open to the accused of course
to present proof to the contrary to overcome the said presumptions.
II
BP 22 is aimed at putting a stop to or curbing the practice of issuing checks
that are worthless, i.e. checks that end up being rejected or dishonored for
payment. The practice, as discussed later, is proscribed by the state because
of the injury it causes to t public interests.
Before the enactment of BP 22, provisions already existed in our statute books
which penalize the issuance of bouncing or rubber checks. Criminal law has
dealth with the problem within the context of crimes against property punished
as "estafa" or crimes involving fraud and deceit. The focus of these penal
provisions is on the damage caused to the property rights of the victim.
The Penal Code of Spain, which was in force in the Philippines from 1887 until
it was replaced by the Revised Penal Code in 1932, contained provisions
penalizing, among others, the act of defrauding another through false
pretenses. Art. 335 punished a person who defrauded another "by falsely
pretending to possess any power, influence, qualification, property, credit,
agency or business, or by means of similar deceit." Although no explicit
mention was made therein regarding checks, this provision was deemed to
cover within its ambit the issuance of worthless or bogus checks in exchange
for money. 7
In 1926, an amendment was introduced by the Philippine Legislature, which
added a new clause (paragraph 10) to Article 335 of the old Penal Code, this
time referring in explicit terms to the issuance of worthless checks. The
amendment penalized any person who 1) issues a check in payment of a debt
or for other valuable consideration, knowing at the time of its issuance that he
does not have sufficient funds in the bank to cover its amount, or 2) maliciously
signs the check differently from his authentic signature as registered at the
bank in order that the latter would refuse to honor it; or 3) issues a postdated
check and, at the date set for its payment, does not have sufficient deposit to
cover the same.8
In 1932, as already adverted to, the old Penal Code was superseded by the
Revised Penal Code. 9 The above provisions, in amended form, were
incorporated in Article 315 of the Revised Penal Code defining the crime of
estafa. The revised text of the provision read as follows:
Art. 315. Swindling (estafa).—Any person who shall defraud another by any of
the means mentioned hereinbelow shall be punished by:
xxx xxx xxx
2. By means of any of the following false pretenses or fraudulent acts executed
prior to or simultaneously with the commis sion of the fraud:
(a) By using fictitious name, or falsely pretending to possess power, influence,
qualifications, property, credit, agency, business or imaginary transactions, or
by means of other similar deceits;
xxx xxx xxx
(d) By postdating a check, or issuing a check in payment of an obligation the
offender knowing that at the time he had no funds in the bank, or the funds
deposited by him were not sufficient to cover the amount of the cheek without
informing the payee of such circumstances.
The scope of paragraph 2 (d), however, was deemed to exclude checks issued
in payment of pre-existing obligations. 10 The rationale of this interpretation is
that in estafa, the deceit causing the defraudation must be prior to or
simultaneous with the commission of the fraud. In issuing a check as payment
for a pre-existing debt, the drawer does not derive any material benefit in return
or as consideration for its issuance. On the part of the payee, he had already
parted with his money or property before the check is issued to him hence, he
is not defrauded by means of any "prior" or "simultaneous" deceit perpetrated
on him by the drawer of the check.
With the intention of remedying the situation and solving the problem of how
to bring checks issued in payment of pre-existing debts within the ambit of Art.
315, an amendment was introduced by the Congress of the Philippines in
1967, 11 which was enacted into law as Republic Act No. 4885, revising the
aforesaid proviso to read as follows:
(d) By postdating a check, or issuing a check in payment of an obligation when
the offender had no funds in the bank, or his funds deposited therein were not
sufficient to cover the amount of the check. The failure of the drawer of the
check to deposit the amount necessary to cover his check within three (3) days
from receipt of notice from the bank and/or the payee or holder that said check
has been dishonored for lack or insufficiency of funds shall be puma facie
evidence of deceit constituting false pretense or fraudulent act.
However, the adoption of the amendment did not alter the situation materially.
A divided Court held in People vs. Sabio, Jr. 12 that Article 315, as amended
by Republic Act 4885, does not cover checks issued in payment of pre-existing
obligations, again relying on the concept underlying the crime of estafa through
false pretenses or deceit—which is, that the deceit or false pretense must be
prior to or simultaneous with the commission of the fraud.
Since statistically it had been shown that the greater bulk of dishonored checks
consisted of those issued in payment of pre-existing debts, 13 the amended
provision evidently failed to cope with the real problem and to deal effectively
with the evil that it was intended to eliminate or minimize.
With the foregoing factual and legal antecedents as a backdrop, the then
Interim Batasan confronted the problem squarely. It opted to take a bold step
and decided to enact a law dealing with the problem of bouncing or worthless
checks, without attaching the law's umbilical cord to the existing penal
provisions on estafa. BP 22 addresses the problem directly and frontally and
makes the act of issuing a worthless check malum prohibitum. 14
The question now arises: Is B P 22 a valid law?
Previous efforts to deal with the problem of bouncing checks within the ambit
of the law on estafa did not evoke any constitutional challenge. In contrast, BP
22 was challenged promptly.
Those who question the constitutionality of BP 22 insist that: (1) it offends the
constitutional provision forbidding imprisonment for debt; (2) it impairs freedom
of contract; (3) it contravenes the equal protection clause; (4) it unduly
delegates legislative and executive powers; and (5) its enactment is flawed in
that during its passage the Interim Batasan violated the constitutional provision
prohibiting amendments to a bill on Third Reading.
The constitutional challenge to BP 22 posed by petitioners deserves a
searching and thorough scrutiny and the most deliberate consideration by the
Court, involving as it does the exercise of what has been described as "the
highest and most delicate function which belongs to the judicial department of
the government." 15
As we enter upon the task of passing on the validity of an act of a co-equal
and coordinate branch of the government, we need not be reminded of the
time-honored principle, deeply ingrained in our jurisprudence, that a statute is
presumed to be valid. Every presumption must be indulged in favor of its
constitutionality. This is not to say that we approach our task with diffidence or
timidity. Where it is clear that the legislature has overstepped the limits of its
authority under the constitution we should not hesitate to wield the axe and let
it fall heavily, as fall it must, on the offending statute.
III
Among the constitutional objections raised against BP 22, the most serious is
the alleged conflict between the statute and the constitutional provision
forbidding imprisonment for debt. It is contended that the statute runs counter
to the inhibition in the Bill of Rights which states, "No person shall be
imprisoned for debt or non-payment of a poll tax." 16 Petitioners insist that,
since the offense under BP 22 is consummated only upon the dishonor or non-
payment of the check when it is presented to the drawee bank, the statute is
really a "bad debt law" rather than a "bad check law." What it punishes is the
non-payment of the check, not the act of issuing it. The statute, it is claimed,
is nothing more than a veiled device to coerce payment of a debt under the
threat of penal sanction.
First of all it is essential to grasp the essence and scope of the constitutional
inhibition invoked by petitioners. Viewed in its historical context, the
constitutional prohibition against imprisonment for debt is a safeguard that
evolved gradually during the early part of the nineteenth century in the various
states of the American Union as a result of the people's revulsion at the cruel
and inhumane practice, sanctioned by common law, which permitted creditors
to cause the incarceration of debtors who could not pay their debts. At common
law, money judgments arising from actions for the recovery of a debt or for
damages from breach of a contract could be enforced against the person or
body of the debtor by writ of capias ad satisfaciendum. By means of this writ,
a debtor could be seized and imprisoned at the instance of the creditor until he
makes the satisfaction awarded. As a consequence of the popular ground
swell against such a barbarous practice, provisions forbidding imprisonment
for debt came to be generally enshrined in the constitutions of various states
of the Union. 17
This humanitarian provision was transported to our shores by the Americans
at the turn of t0he century and embodied in our organic laws. 18 Later, our
fundamental law outlawed not only imprisonment for debt, but also the
infamous practice, native to our shore, of throwing people in jail for non-
payment of the cedula or poll tax. 19
The reach and scope of this constitutional safeguard have been the subject of
judicial definition, both by our Supreme Court 20 and by American State
courts.21 Mr. Justice Malcolm speaking for the Supreme Court in Ganaway vs.
Queen, 22 stated: "The 'debt' intended to be covered by the constitutional
guaranty has a well-defined meaning. Organic provisions relieving from
imprisonment for debt, were intended to prevent commitment of debtors to
prison for liabilities arising from actions ex contractu The inhibition was never
meant to include damages arising in actions ex delicto, for the reason that
damages recoverable therein do not arise from any contract entered into
between the parties but are imposed upon the defendant for the wrong he has
done and are considered as punishment, nor to fines and penalties imposed
by the courts in criminal proceedings as punishments for crime."
The law involved in Ganaway was not a criminal statute but the Code of
Procedure in Civil Actions (1909) which authorized the arrest of the defendant
in a civil case on grounds akin to those which justify the issuance of a writ of
attachment under our present Rules of Court, such as imminent departure of
the defendant from the Philippines with intent to defraud his creditors, or
concealment, removal or disposition of properties in fraud of creditors, etc. The
Court, in that case, declared the detention of the defendant unlawful, being
violative of the constitutional inhibition against imprisonment for debt, and
ordered his release. The Court, however, refrained from declaring the statutory
provision in question unconstitutional.
Closer to the case at bar is People v. Vera Reyes,23 wherein a statutory
provision which made illegal and punishable the refusal of an employer to pay,
when he can do so, the salaries of his employees or laborers on the fifteenth
or last day of every month or on Saturday every week, was challenged for
being violative of the constitutional prohibition against imprisonment for debt.
The constitutionality of the law in question was upheld by the Court, it being
within the authority of the legislature to enact such a law in the exercise of the
police power. It was held that "one of the purposes of the law is to suppress
possible abuses on the part of the employers who hire laborers or employees
without paying them the salaries agreed upon for their services, thus causing
them financial difficulties. "The law was viewed not as a measure to coerce
payment of an obligation, although obviously such could be its effect, but to
banish a practice considered harmful to public welfare.
IV
Has BP 22 transgressed the constitutional inhibition against imprisonment for
debt? To answer the question, it is necessary to examine what the statute
prohibits and punishes as an offense. Is it the failure of the maker of the check
to pay a debt? Or is it the making and issuance of a worthless check in
payment of a debt? What is the gravamen of the offense? This question lies at
the heart of the issue before us.
The gravamen of the offense punished by BP 22 is the act of making and
issuing a worthless check or a check that is dishonored upon its presentation
for payment. It is not the non-payment of an obligation which the law punishes.
The law is not intended or designed to coerce a debtor to pay his debt. The
thrust of the law is to prohibit, under pain of penal sanctions, the making of
worthless checks and putting them in circulation. Because of its deleterious
effects on the public interest, the practice is proscribed by the law. The law
punishes the act not as an offense against property, but an offense against
public order.
Admittedly, the distinction may seem at first blush to appear elusive and
difficult to conceptualize. But precisely in the failure to perceive the vital
distinction lies the error of those who challenge the validity of BP 22.
It may be constitutionally impermissible for the legislature to penalize a person
for non-payment of a debt ex contractu But certainly it is within the prerogative
of the lawmaking body to proscribe certain acts deemed pernicious and
inimical to public welfare. Acts mala in se are not the only acts which the law
can punish. An act may not be considered by society as inherently wrong,
hence, not malum in se but because of the harm that it inflicts on the
community, it can be outlawed and criminally punished as malum prohibitum.
The state can do this in the exercise of its police power.
The police power of the state has been described as "the most essential,
insistent and illimitable of powers" which enables it to prohibit all things hurtful
to the comfort, safety and welfare of society. 24 It is a power not emanating
from or conferred by the constitution, but inherent in the state, plenary,
"suitably vague and far from precisely defined, rooted in the conception that
man in organizing the state and imposing upon the government limitations to
safeguard constitutional rights did not intend thereby to enable individual
citizens or group of citizens to obstruct unreasonably the enactment of such
salutary measures to ensure communal peace, safety, good order and
welfare." 25
The enactment of BP 22 is a declaration by the legislature that, as a matter of
public policy, the making and issuance of a worthless check is deemed public
nuisance to be abated by the imposition of penal sanctions.
It is not for us to question the wisdom or impolicy of the statute. It is sufficient
that a reasonable nexus exists between means and end. Considering the
factual and legal antecedents that led to the adoption of the statute, it is not
difficult to understand the public concern which prompted its enactment. It had
been reported that the approximate value of bouncing checks per day was
close to 200 million pesos, and thereafter when overdrafts were banned by the
Central Bank, it averaged between 50 minion to 80 million pesos a day. 26
By definition, a check is a bill of exchange drawn on a bank and payable on
demand. 27 It is a written order on a bank, purporting to be drawn against a
deposit of funds for the payment of all events, of a sum of money to a certain
person therein named or to his order or to cash and payable on
demand. 28 Unlike a promissory note, a check is not a mere undertaking to pay
an amount of money. It is an order addressed to a bank and partakes of a
representation that the drawer has funds on deposit against which the check
is drawn, sufficient to ensure payment upon its presentation to the bank. There
is therefore an element of certainty or assurance that the instrument wig be
paid upon presentation. For this reason, checks have become widely accepted
as a medium of payment in trade and commerce. Although not legal tender,
checks have come to be perceived as convenient substitutes for currency in
commercial and financial transactions. The basis or foundation of such
perception is confidence. If such confidence is shakes the usefulness of
checks as currency substitutes would be greatly diminished or may become
nit Any practice therefore tending to destroy that confidence should be
deterred for the proliferation of worthless checks can only create havoc in trade
circles and the banking community.
Recent statistics of the Central Bank show that one-third of the entire money
supply of the country, roughly totalling P32.3 billion, consists of peso demand
deposits; the remaining two. 29 These de deposit thirds consists of currency in
circulation. ma deposits in the banks constitute the funds against which among
others, commercial papers like checks, are drawn. The magnitude of the
amount involved amply justifies the legitimate concern of the state in
preserving the integrity of the banking system. Flooding the system with
worthless checks is like pouring garbage into the bloodstream of the nation's
economy.
The effects of the issuance of a worthless check transcends the private
interests of the parties directly involved in the transaction and touches the
interests of the community at large. The mischief it creates is not only a wrong
to the payee or holder, but also an injury to the public. The harmful practice of
putting valueless commercial papers in circulation, multiplied a thousand fold,
can very wen pollute the channels of trade and commerce, injure the banking
system and eventually hurt the welfare of society and the public interest. As
aptly stated — 30
The 'check flasher' does a great deal more than contract a debt; he shakes the
pillars of business; and to my mind, it is a mistaken charity of judgment to place
him in the same category with the honest man who is unable to pay his debts,
and for whom the constitutional inhibition against' imprisonment for debt,
except in cases of fraud was intended as a shield and not a sword.
In sum, we find the enactment of BP 22 a valid exercise of the police power
and is not repugnant to the constitutional inhibition against imprisonment for
debt.
This Court is not unaware of the conflicting jurisprudence obtaining in the
various states of the United States on the constitutionality of the "worthless
check" acts. 31 It is needless to warn that foreign jurisprudence must be taken
with abundant caution. A caveat to be observed is that substantial differences
exist between our statute and the worthless check acts of those states where
the jurisprudence have evolved. One thing to remember is that BP 22 was not
lifted bodily from any existing statute. Furthermore, we have to consider that
judicial decisions must be read in the context of the facts and the law involved
and, in a broader sense, of the social economic and political environment—in
short, the milieu—under which they were made. We recognize the wisdom of
the old saying that what is sauce for the goose may not be sauce for the
gander.
As stated elsewhere, police power is a dynamic force that enables the state to
meet the exigencies of changing times. There are occasions when the police
power of the state may even override a constitutional guaranty. For example,
there have been cases wherein we held that the constitutional provision on
non-impairment of contracts must yield to the police power of the
state. 32 Whether the police power may override the constitutional inhibition
against imprisonment for debt is an issue we do not have to address. This
bridge has not been reached, so there is no occasion to cross it.
We hold that BP 22 does not conflict with the constitutional inhibition against
imprisonment for debt.
V bill which eventually became BP 22 was amended in that the text of the second
We need not detain ourselves lengthily in the examination of the other
constitutional objections raised by petitioners, some of which are rather flimsy.
We find no valid ground to sustain the contention that BP 22 impairs freedom
of contract. The freedom of contract which is constitutionally protected is
freedom to enter into "lawful" contracts. Contracts which contravene public
policy are not lawful. 33 Besides, we must bear in mind that checks can not be
categorized as mere contracts. It is a commercial instrument which, in this
modem day and age, has become a convenient substitute for money; it forms
part of the banking system and therefore not entirely free from the regulatory
power of the state.
Neither do we find substance in the claim that the statute in question denies
equal protection of the laws or is discriminatory, since it penalizes the drawer
of the check, but not the payee. It is contended that the payee is just as
responsible for the crime as the drawer of the check, since without the
indispensable participation of the payee by his acceptance of the check there
would be no crime. This argument is tantamount to saying that, to give equal
protection, the law should punish both the swindler and the swindled. The
petitioners' posture ignores the well-accepted meaning of the clause "equal
protection of the laws." The clause does not preclude classification of
individuals, who may be accorded different treatment under the law as long as
the classification is no unreasonable or arbitrary. 34
It is also suggested that BP 22 constitutes undue or improper delegation of
legislative powers, on the theory that the offense is not completed by the sole
act of the maker or drawer but is made to depend on the will of the payee. If
the payee does not present the check to the bank for payment but instead
keeps it, there would be no crime. The logic of the argument stretches to
absurdity the meaning of "delegation of legislative power." What cannot be
delegated is the power to legislate, or the power to make laws. 35 which means,
as applied to the present case, the power to define the offense sought to be
punished and to prescribe the penalty. By no stretch of logic or imagination
can it be said that the power to define the crime and prescribe the penalty
therefor has been in any manner delegated to the payee. Neither is there any
provision in the statute that can be construed, no matter how remotely, as
undue delegation of executive power. The suggestion that the statute
unlawfully delegates its enforcement to the offended party is farfetched.
Lastly, the objection has been raised that Section 9 (2) of Article VII of the 1973
Constitution was violated by the legislative body when it enacted BP 22 into
law. This constitutional provision prohibits the introduction of amendments to
a bill during the Third Reading. It is claimed that during its Third Reading, the
paragraph of Section 1 of the bill as adopted on Second Reading was altered
or changed in the printed text of the bill submitted for approval on Third
Reading.
A careful review of the record of the proceedings of the Interim Batasan on this
matter shows that, indeed, there was some confusion among Batasan
Members on what was the exact text of the paragraph in question which the
body approved on Second Reading. 36 Part of the confusion was due
apparently to the fact that during the deliberations on Second Reading (the
amendment period), amendments were proposed orally and approved by the
body or accepted by the sponsor, hence, some members might not have
gotten the complete text of the provisions of the bill as amended and approved
on Second Reading. However, it is clear from the records that the text of the
second paragraph of Section 1 of BP 22 is the text which was actually
approved by the body on Second Reading on February 7, 1979, as reflected
in the approved Minutes for that day. In any event, before the bin was
submitted for final approval on Third Reading, the Interim Batasan created a
Special Committee to investigate the matter, and the Committee in its report,
which was approved by the entire body on March 22, 1979, stated that "the
clause in question was ... an authorized amendment of the bill and the printed
copy thereof reflects accurately the provision in question as approved on
Second Reading. 37 We therefore, find no merit in the petitioners' claim that in
the enactment of BP 22 the provisions of Section 9 (2) of Article VIII of the
1973 Constitution were violated.
WHEREFORE, judgment is rendered granting the petition in G.R. No. 75789
and setting aside the order of the respondent Judge dated August 19, 1986.
The petitions in G.R. Nos. 63419, 66839-42, 71654, 74524-25, 75122-49,
75812-13 and 75765-67 are hereby dismissed and the temporary restraining
order issued in G.R. Nos. 74524-25 is lifted. With costs against private
petitioners.
SO ORDERED.
DEL ROSARIO VS. BENGZON
This is a class suit filed by officers of the Philippine Medical Association, the
national organization of medical doctors in the Philippines, on behalf of their
professional brethren who are of kindred persuasion, wherein this Court is
asked to declare as unconstitutional, hence, null and void, some provisions of
the Generics Act of 1988 (Rep. Act No. 6675), and of the implementing
Administrative Order No. 62 issued pursuant thereto, specifically:
(a) Section 6, Pars. (a) and (b) of the Generics Act which provide:
a) All government health agencies and their personnel as well as other
government agencies shall use generic terminology or generic names in all
transactions related to purchasing, prescribing, dispensing and administering
of drugs and medicines.
b) All medical, dental and veterinary practitioners, including private
practitioners, shall write prescriptions using the generic name. The brand
name may be included if so desired. (p. 6, Rollo.)
(b) Section 12, Pars. (b), (c) and (d) of the same law which provide:
b) For the second conviction, the penalty of file in the amount of not less than
two thousand pesos (P2,000.00) but not exceeding five thousand pesos
(P5,000.00) at the discretion of the court.
c) For the third conviction, the penalty of fine in the amount of not less than
five thousand pesos (P5,000.00) but not exceeding ten thousand pesos
(P10,000.00) and suspension of his license to practice his profession for thirty
(30) days at the discretion of the court.
d) For the fourth and subsequent convictions, the penalty of fine of not less
than ten thousand pesos (P10,000.00) and suspension of his license to
practice his profession for one year or longer at the discretion of the court. (pp.
6-7, Rollo.) and
(c) Sections 4 and 7, Phase 3 of Administrative Order No. 62, Series of 1989
dated March 9, 1989, of the respondent Secretary of Health, which read as
follows:
Section 4. Violative Erroneous, and Impossible Prescriptions.
4.1. Violative Prescriptions:
4.1.1 Where the generic name is not written;
4.1.2 Where the generic name is not legible and a brand name which is legible
is written;
4.1.3 Where the brand name is indicated and instructions added, such as the
phase 'No Substitution' which tend to obstruct, hinder or prevent proper
generic dispensing.
4.2 What to do with Violative Prescriptions.
Violative prescriptions shall not be filled. They shall be kept and reported by
the pharmacist of the drug outlet or any other interested party to the nearest
DOH Officer for appropriate action. The pharmacist shall advise the prescriber
of the problem and/or instruct the customer to get the proper prescription.
4.3 Erroneous Prescriptions:
4.3.1 When the brand name precedes the generic name.
4.3.2 Where the generic name is the one in parenthesis.
4.3.3 Where the brand name in (sic) not in parenthesis.
4.3.4 Where more than one drug product is prescribed in one prescription form.
4.4 What to do with erroneous prescriptions.
Erroneous prescriptions shall be filled. Such prescriptions shall also be kept
and reported by the pharmacist of the drug outlet or any other interested party
to the nearest DOH Office for appropriate action.
xxx xxx xxx
Section 7. Timetable of Implementation.
In order to give all affected parties adequate time for learning and adjustment,
the implementation of these Rules and Regulations shall be in three phases,
as follows:
Phase 1 Education Drive ...
Phase 2 Monitoring of Compliance
xxx xxx xxx
Phase 3 Implementation.
Beginning September 1, 1989 the DOH and the other relevant agencies of
government shall monitor compliance with these Rules and Regulations and
all violations shall be subject to the appropriate sanctions and penalties
provided for under these Rules and Regulations and the Generics Act of 1988.
(pp. 7-9, Rollo.)
On March 15, 1989, the full text of Republic Act No. 6675 was published in two
newspapers of general circulation in the Philippines. The law took effect on
March 30, 1989, fifteen (15) days after its publication, as provided in Section
15 thereof.
Section 7, Phase 3 of Administrative Order No. 62 was amended by
Administrative Order No. 76 dated August 28, 1989 by postponing to January
1, 1990 the effectivity of the sanctions and penalties for violations of the law,
provided in Sections 6 and 12 of the Generics Act and Sections 4 and 7 of the
Administrative Order.
The petitioners allege that "as of this date, there is no breach or violation yet"
of the law (p. 9, Rollo), which took effect on March 30, 1989. However, as the
penal provisions will only take effect on January 1, 1990, it would have been
more accurate to state that "as of this date, no breaches or violations of the
law have been punished yet" (p. 9, Rollo).
The petition is captioned as an action for declaratory relief, over which this
Court does not exercise jurisdiction. Nevertheless, in view of the public interest
involved, we decided to treat it as a petition for prohibition instead.
The petitioner's main argument against paragraphs (a) and (b), Section 6 of
the law, is the alleged unequal treatment of government physicians, dentists,
and veterinarians, on one hand, and those in private practice on the other
hand, in the manner of prescribing generic drugs, for, while the former are
allegedly required to use only generic terminology in their prescriptions, the
latter may write the brand name of the drug in parenthesis below the generic
name. The favored treatment of private doctors, dentists and veterinarians
under the law is allegedly a specie of invalid class legislation.
There is no merit in that argument for it proceeds from a misreading and
misinterpretation of the letter and intent of paragraphs (a) and (b), Section 6 of
the Generics Act. Indeed, as explained by the public respondent:
... while paragraph (a) enumerates the government transactions ('Purchasing,
prescribing, dispensing and administering of drugs and medicines') where the
sole use of generic terminology has been required, the 'prescription' of drugs
is further governed by paragraph (b). And the use of the word 'all' in the latter
provision emphasizes the absence of any distinction between government and
private physicians. In other words, in prescribing drugs, physicians, whether in
government service or in private practice, are both governed by exactly the
same rules, and thus, are both authorized to include the brand name in their
respective prescriptions. (p. 44, Rollo.)
Furthermore, it may be observed that while paragraph (a) refers to "all
government health agencies, and their personnel as well as other government
agencies" (not necessarily physicians, dentists and veterinarians), paragraph
(b) refers to "all medical, dental and veterinary practitioners, including private
practitioners."
Petitioners concede that the requirement for doctors, dentists, and
veterinarians to use the generic terminology in writing their prescriptions,
followed by the brand name in parenthesis, is "well and good" (p. 12, Rollo).
However, they complain that under paragraph (d) of the law which reads:
(d) Drug outlets, including drugstores, hospital and non-hospital pharmacies
and non-traditional outlets such as supermarkets and stores, shall inform any
buyer about any and all other drug products having the same generic name,
together with their corresponding prices so that the buyer may adequately
exercise his option. Within one (1) year after approval of this Act, the drug
outlets referred to herein, shall post in conspicuous places in their
establishments, a list of drug products with the same generic name and their
corresponding prices. (Annex A, p. 23, Rollo.)
the salesgirl at the drugstore counter is authorized to "substitute the prescribed
medicine with another medicine belonging to the same generic group." Since
doctors are not allowed to instruct the druggist not to substitute the
prescription, or to "Dispense only as Prescribed" (per Sec. 4, Adm. Order No.
62), the petitioners argue that "the act of prescribing the correct medicine for
the patient becomes the act of the salesgirl at the drugstore counter, no longer
the act of the physician, dentist, or veterinarian" (p. 12, Rollo).
Here again, the petitioners have distorted the clear provisions of the law and
the implementing administrative order. For it is plain to see that neither
paragraph (d) of Section 6 of the Generics Act, nor Section 4 of Administrative
Order No. 62, gives the salesgirl and/or druggist the discretion to substitute the
doctor's prescription.
On the contrary, Section 4, par. 4.1, of Administrative Order No. 62 directs the
pharmacist not to fill "violative prescriptions" (where the generic name is not
written, or illegibly written, and the prescription of a brand name is
accompanied by the doctor's instruction not to substitute it), as well
as "impossible prescriptions" (par. 4.5). Even a doctor's "erroneous"
prescriptions "shall be filled," not substituted (par. 4.3, Adm. Order No. 62).
And, Sections 3 and 5 of Adm. Order No. 63 enjoin the drug outlets not (to)
favor or suggest" or "impose" a particular brand or product on the customer.
The administrative older provides:
In order to ensure the informed choice and use of drugs by the patient/
buyer, the drug outlet is required to:
3.1.1 Inform the patient/buyer of all available drug products generically
equivalent to the one prescribed with their corresponding prices. In so
doing, the drug outlet shall not favor or suggest any particular product so that
the patient/buyer may fully and adequately exercise his option to choose (Sec.
3, Adm. Order No. 63 s. 1989).
xxx xxx xxx
The following acts or omissions are considered violations of these rules and
regulations:
5.1 Imposing a particular brand or product on the buyer. ... (pp. 46-47, Rollo.)
The salesgirl at the drugstore counter, merely informs the customer, but does
not determine (for she is incompetent to do so) all the other drug products or
brands that have the same generic name, and their corresponding prices. That
information she may obtain from the list of drug products determined by the
Bureau of Food and Drugs to have the same generic name, or which are the
chemical, biological, and therapeutic equivalent of the generic drug. All
drugstores or drug outlets are required by the law to post such list in a
conspicuous place in their premises for the information of the customers, for
the choice of whether to buy the expensive brand name drug, or the less
expensive generic, should be exercised by the customer alone.
The purpose of the Generics Act is to carry out the policy of the State:
To promote, encourage and require the use of generic terminology in the
importation, manufacture, distribution, marketing, advertising and promotion,
prescription and dispensing of drugs;
To ensure the adequate supply of drugs with generic names at the lowest
possible cost and endeavor to make them available for free to indigent
patients;
To encourage the extensive use of drugs with generic names through a
rational system of procurement and distribution;
To emphasize the scientific basis for the use of drugs, in order that health
professionals may become more aware and cognizant of their therapeutic
effectiveness; and
To promote drug safety by minimizing duplication in medications and/or use of
drugs with potentially adverse drug interactions. (pp. 3839, Rollo.)
or, as stated by the public respondent, "to promote and require the use of
generic drug products that are therapeutically equivalent to their brand-name
counter-parts" (p. 39, Rollo) for "the therapeutic effect of a drug does not
depend on its 'brand' but on the 'active ingredients' which it contains." The
medicine that cures is the "active ingredient" of the drug, and not the brand
name by which it has been baptized by the manufacturer.
The public respondent points out that the institution of generics in the
Philippines will compel physicians to prescribe drugs based on their
therapeutic or "active ingredient," instead of their well-known brand names.
Multiple medications which may produce potentially adverse, even lethal,
chemical reactions in the patient will thereby be avoided. Patients with limited
means will be able to buy generic drugs that cost less but possess the same
active ingredients, dosage form, and strength as brand names, many of which
are priced beyond the reach of the common tao because the high costs of
advertising, packaging, royalties, and other inputs of production determine
their pricing for the market.
The Court has been unable to find any constitutional infirmity in the Generics
Act. It, on the contrary, implements the constitutional mandate for the State "to
protect and promote the right to health of the people" and "to make essential
goods, health and other social services available to all the people at affordable
cost" (Section 15, Art. II and Section 11, Art. XIII, 1987 Constitution).
The prohibition against the use by doctors of "no substitution" and/or words of
similar import in their prescription, is a valid regulation to prevent the
circumvention of the law. It secures to the patient the right to choose between
the brand name and its generic equivalent since his doctor is allowed to write
both the generic and the brand name in his prescription form. If a doctor is
allowed to prescribe a brand-name drug with "no substitution," the patient's
option to buy a lower-priced, but equally effective, generic equivalent would
thereby be curtailed. The law aims to benefit the impoverished (and often
sickly) majority of the population in a still developing country like ours, not the
affluent and generally healthy minority.
There is no merit in the petitioners' theory that the Generics Act impairs the
obligation of contract between a physician and his patient, for no contract ever
results from a consultation between patient and physician. A doctor may take
in or refuse a patient, just as the patient may take or refuse the doctor's advice
or prescription. As aptly observed by the public respondent, no doctor has ever
filed an action for breach of contract against a patient who refused to take
prescribed medication, undergo surgery, or follow a recommended course
treatment by his doctor ( p. 53, Rollo). In any event, no private contract
between doctor and patient may be allowed to override the power of the State
to enact laws that are reasonably necessary to secure the health, safety, good
order, comfort, or general welfare of the community. This power can neither
be abdicated nor bargained away. All contractual and property rights are held
subject to its fair exercise (Anglo-Fil Trading Corporation vs. Lazaro, 124
SCRA 495.)
Petitioners have also assailed Section 12, paragraphs b, c and d, of the
Generics Act prescribing graduated penalties (ranging from a reprimand to a
fine of not less that P10,000 and the suspension of the physician's license to
practice his profession for one [1]) year or longer, at the discretion of the court)
for violations of its provisions. Petitioners' allegation that these penalties
violate the constitutional guarantee against excessive fines and cruel and
degrading punishment, has no merit. Penal sanctions are indispensable if the
law is to be obeyed. They are the "teeth" of the law. Without them, the law
would be toothless, not worth the paper it is printed on, for physicians, dentists
and veterinarians may freely ignore its prescriptions and prohibitions. The
penalty of suspension or cancellation of the physician's license is neither cruel,
inhuman, or degrading. It is no different from the penalty of suspension or
disbarment that this Court inflicts on lawyers and judges who misbehave or
violate the laws and the Codes of Professional and Judicial Conduct.
We hold that the Generics Act and the implementing administrative orders of
the Secretary of Health are constitutional. In light of its beneficial provisions,
we cannot heed the petitioners' plea to kill it aborning, i.e., before it has had a
chance to prove its value to our people as envisioned by its makers.
WHEREFORE, the petition is dismissed for lack of merit. Costs against the
petitioners.
SO ORDERED.
TABLARIN VS. JUDGE GUTIERREZ
The petitioners sought admission into colleges or schools of medicine for the
school year 1987-1988. However, the petitioners either did not take or did not
successfully take the National Medical Admission Test (NMAT) required by the
Board of Medical Education, one of the public respondents, and administered
by the private respondent, the Center for Educational Measurement (CEM).
On 5 March 1987, the petitioners filed with the Regional Trial Court, National
Capital Judicial Region, a Petition for Declaratory Judgment and Prohibition
with a prayer for Temporary Restraining Order and Preliminary Injunction. The
petitioners sought to enjoin the Secretary of Education, Culture and Sports,
the Board of Medical Education and the Center for Educational Measurement
from enforcing Section 5 (a) and (f) of Republic Act No. 2382, as amended,
and MECS Order No. 52, series of 1985, dated 23 August 1985 and from
requiring the taking and passing of the NMAT as a condition for securing
certificates of eligibility for admission, from proceeding with accepting
applications for taking the NMAT and from administering the NMAT as
scheduled on 26 April 1987 and in the future. After hearing on the petition for
issuance of preliminary injunction, the trial court denied said petition on 20 April
1987. The NMAT was conducted and administered as previously scheduled.
Petitioners accordingly filed this Special Civil Action for certiorari with this
Court to set aside the Order of the respondent judge denying the petition for
issuance of a writ of preliminary injunction.
Republic Act 2382, as amended by Republic Acts Nos. 4224 and 5946, known
as the "Medical Act of 1959" defines its basic objectives in the following
manner:
Section 1. Objectives. — This Act provides for and shall govern
(a) the standardization and regulation of medical education (b) the
examination for registration of physicians; and (c) the supervision, control and
regulation of the practice of medicine in the Philippines. (Underscoring
supplied)
The statute, among other things, created a Board of Medical Education which
is composed of (a) the Secretary of Education, Culture and Sports or his duly
authorized representative, as Chairman; (b) the Secretary of Health or his duly
authorized representative; (c) the Director of Higher Education or his duly
authorized representative; (d) the Chairman of the Medical Board or his duly
authorized representative; (e) a representative of the Philippine Medical
Association; (f) the Dean of the College of Medicine, University of the
Philippines; (g) a representative of the Council of Deans of Philippine Medical
Schools; and (h) a representative of the Association of Philippine Medical
Colleges, as members. The functions of the Board of Medical Education
specified in Section 5 of the statute include the following:
(a) To determine and prescribe equirements for admission into a recognized
college of medicine;
(b) To determine and prescribe requirements for minimum physical facilities of
colleges of medicine, to wit: buildings, including hospitals, equipment and
supplies, apparatus, instruments, appliances, laboratories, bed capacity for
instruction purposes, operating and delivery rooms, facilities for outpatient
services, and others, used for didactic and practical instruction in accordance
with modern trends;
(c) To determine and prescribe the minimum number and minimum
qualifications of teaching personnel, including student-teachers ratio;
(d) To determine and prescribe the minimum required curriculum leading to
the degree of Doctor of Medicine;
(e) To authorize the implementation of experimental medical curriculum in a
medical school that has exceptional faculty and instrumental facilities. Such an
experimental curriculum may prescribe admission and graduation
requirements other than those prescribed in this Act; Provided, That only
exceptional students shall be enrolled in the experimental curriculum;
(f) To accept applications for certification for admission to a medical school
and keep a register of those issued said certificate; and to collect from said
applicants the amount of twenty-five pesos each which shall accrue to the
operating fund of the Board of Medical Education;
(g) To select, determine and approve hospitals or some departments of the
hospitals for training which comply with the minimum specific physical facilities
as provided in subparagraph (b) hereof; and
(h) To promulgate and prescribe and enforce the necessary rules and
regulations for the proper implementation of the foregoing functions.
(Emphasis supplied)
Section 7 prescribes certain minimum requirements for applicants to medical
schools:
Admission requirements. — The medical college may admit any student who
has not been convicted by any court of competent jurisdiction of any offense
involving moral turpitude and who presents (a) a record of completion of a
bachelor's degree in science or arts; (b) a certificate of eligibility for entrance
to a medical school from the Board of Medical Education; (c) a certificate of
good moral character issued by two former professors in the college of liberal
arts; and (d) birth certificate. Nothing in this act shall be construed to inhibit
any college of medicine from establishing, in addition to the preceding, other
entrance requirements that may be deemed admissible.
xxx xxx x x x (Emphasis supplied)
MECS Order No. 52, s. 1985, issued by the then Minister of Education, Culture
and Sports and dated 23 August 1985, established a uniform admission test
called the National Medical Admission Test (NMAT) as an additional
requirement for issuance of a certificate of eligibility for admission into medical
schools of the Philippines, beginning with the school year 1986-1987. This
Order goes on to state that:
2. The NMAT, an aptitude test, is considered as an instrument toward
upgrading the selection of applicants for admission into the medical schools
and its calculated to improve the quality of medical education in the
country. The cutoff score for the successful applicants, based on the scores
on the NMAT, shall be determined every year by the Board of Medical
Education after consultation with the Association of Philippine Medical
Colleges. The NMAT rating of each applicant, together with the other
admission requirements as presently called for under existing rules, shall serve
as a basis for the issuance of the prescribed certificate of elegibility for
admission into the medical colleges.
3. Subject to the prior approval of the Board of Medical Education, each
medical college may give other tests for applicants who have been issued a
corresponding certificate of eligibility for admission that will yield information
on other aspects of the applicant's personality to complement the information
derived from the NMAT.
xxx xxx xxx
8. No applicant shall be issued the requisite Certificate of Eligibility for
Admission (CEA), or admitted for enrollment as first year student in any
medical college, beginning the school year, 1986-87, without the required
NMAT qualification as called for under this Order. (Underscoring supplied)
Pursuant to MECS Order No. 52, s. 1985, the private respondent Center
conducted NMATs for entrance to medical colleges during the school year
1986-1987. In December 1986 and in April 1987, respondent Center
conducted the NMATs for admission to medical colleges during the school
year 1987.1988.1avvphi1
Petitioners raise the question of whether or not a writ of preliminary injunction
may be issued to enjoin the enforcement of Section 5 (a) and (f) of Republic
Act No. 2382, as amended, and MECS Order No. 52, s. 1985, pending
resolution of the issue of constitutionality of the assailed statute and
administrative order. We regard this issue as entirely peripheral in nature. It
scarcely needs documentation that a court would issue a writ of preliminary
injunction only when the petitioner assailing a statute or administrative order
has made out a case of unconstitutionality strong enough to overcome, in the
mind of the judge, the presumption of constitutionality, aside from showing a
clear legal right to the remedy sought. The fundamental issue is of course the
constitutionality of the statute or order assailed.
1. The petitioners invoke a number of provisions of the 1987 Constitution which
are, in their assertion, violated by the continued implementation of Section 5
(a) and (f) of Republic Act 2381, as amended, and MECS Order No. 52, s.
1985. The provisions invoked read as follows:
(a) Article 11, Section 11: "The state values the dignity of every human person
and guarantees full respect of human rights. "
(b) ArticleII, Section l3: "The State recognizes the vital role of the youth in
nation building and shall promote and protect their physical, moral, spiritual,
intellectual and social well being. It shall inculcate in the youth patriotism and
nationalism, and encourage their involvement in public and civic affairs."
(c) Article II, Section 17: "The State shall give priority to education, science
and technology, arts, culture and sports to foster patriotism and nationalism,
accelerate social progress and to promote total human liberation and
development. "
(d) Article XIV, Section l: "The State shall protect and promote the right of all
citizens to quality education at all levels and take appropriate steps to make
such education accessible to all. "
(e) Article XIV, Section 5 (3): "Every citizen has a right to select a profession
or course of study, subject to fair, reasonable and equitable admission and
academic requirements."
Article II of the 1987 Constitution sets forth in its second half certain "State
policies" which the government is enjoined to pursue and promote. The
petitioners here have not seriously undertaken to demonstrate to what extent
or in what manner the statute and the administrative order they assail collide
with the State policies embodied in Sections 11, 13 and 17. They have not, in
other words, discharged the burden of proof which lies upon them. This burden
is heavy enough where the constitutional provision invoked is relatively
specific, rather than abstract, in character and cast in behavioral or operational
terms. That burden of proof becomes of necessity heavier where the
constitutional provision invoked is cast, as the second portion of Article II is
cast, in language descriptive of basic policies, or more precisely, of basic
objectives of State policy and therefore highly generalized in tenor. The
petitioners have not made their case, even a prima facie case, and we are not
compelled to speculate and to imagine how the legislation and regulation
impugned as unconstitutional could possibly offend the constitutional
provisions pointed to by the petitioners.
Turning to Article XIV, Section 1, of the 1987 Constitution, we note that once
more petitioners have failed to demonstrate that the statute and regulation they
assail in fact clash with that provision. On the contrary we may note-in
anticipation of discussion infra — that the statute and the regulation which
petitioners attack are in fact designed to promote "quality education" at the
level of professional schools. When one reads Section 1 in relation to Section
5 (3) of Article XIV as one must one cannot but note that the latter phrase of
Section 1 is not to be read with absolute literalness. The State is not really
enjoined to take appropriate steps to make quality education " accessible
to all who might for any number of reasons wish to enroll in a professional
school but rather merely to make such education accessible to all who qualify
under "fair, reasonable and equitable admission and academic requirements.
"
2. In the trial court, petitioners had made the argument that Section 5 (a) and
(f) of Republic Act No. 2382, as amended, offend against the constitutional
principle which forbids the undue delegation of legislative power, by failing to
establish the necessary standard to be followed by the delegate, the Board of
Medical Education. The general principle of non-delegation of legislative
power, which both flows from the reinforces the more fundamental rule of the
separation and allocation of powers among the three great departments of
government,1 must be applied with circumspection in respect of statutes which
like the Medical Act of 1959, deal with subjects as obviously complex and
technical as medical education and the practice of medicine in our present day
world. Mr. Justice Laurel stressed this point 47 years ago in Pangasinan
Transportation Co., Inc. vs. The Public Service Commission:2
One thing, however, is apparent in the development of the principle of
separation of powers and that is that the maxim of delegatus non potest
delegare or delegate potestas non potest delegare, adopted this practice
(Delegibus et Consuetudiniis Anglia edited by G.E. Woodbine, Yale University
Press, 1922, Vol. 2, p. 167) but which is also recognized in principle in the
Roman Law (d. 17.18.3) has been made to adapt itself to the complexities of
modern government, giving rise to the adoption, within certain limits of the
principle of "subordinate legislation," not only in the United States and England
but in practically all modern governments. (People vs. Rosenthal and Osmena
[68 Phil. 318, 1939]. Accordingly, with the growing complexity of modern life,
the multiplication of the subjects of governmental regulation and the increased
difficulty of administering the laws, there is a constantly growing
tendency toward the delegation of greater power by the legislature, and toward
the approval of the practice by the courts." 3
The standards set for subordinate legislation in the exercise of rule making
authority by an administrative agency like the Board of Medical Education are
necessarily broad and highly abstract. As explained by then Mr. Justice
Fernando in Edu v. Ericta4 —
The standard may be either expressed or implied. If the former, the non-
delegation objection is easily met. The standard though does not have to be
spelled out specifically. It could be implied from the policy and purpose of the
act considered as a whole. In the Reflector Law, clearly the legislative objective
is public safety. What is sought to be attained as in Calalang v. Williams is
"safe transit upon the roads. 5
We believe and so hold that the necessary standards are set forth in Section
1 of the 1959 Medical Act: "the standardization and regulation of medical
education" and in Section 5 (a) and 7 of the same Act, the body of the statute
itself, and that these considered together are sufficient compliance with the
requirements of the non-delegation principle.
3. The petitioners also urge that the NMAT prescribed in MECS Order No. 52,
s. 1985, is an "unfair, unreasonable and inequitable requirement," which
results in a denial of due process. Again, petitioners have failed to specify just
what factors or features of the NMAT render it "unfair" and "unreasonable" or
"inequitable." They appear to suggest that passing the NMAT is an
unnecessary requirement when added on top of the admission requirements
set out in Section 7 of the Medical Act of 1959, and other admission
requirements established by internal regulations of the various medical
schools, public or private. Petitioners arguments thus appear to relate to utility
and wisdom or desirability of the NMAT requirement. But constitutionality is
essentially a question of power or authority: this Court has neither commission
or competence to pass upon questions of the desirability or wisdom or utility
of legislation or administrative regulation. Those questions must be address to
the political departments of the government not to the courts.
There is another reason why the petitioners' arguments must fail: the
legislative and administrative provisions impugned by them constitute, to the
mind of the Court, a valid exercise of the police power of the state. The police
power, it is commonplace learning, is the pervasive and non-waivable power
and authority of the sovereign to secure and promote an the important interests
and needs — in a word, the public order — of the general community.6 An
important component of that public order is the health and physical safety and
well being of the population, the securing of which no one can deny is a
legitimate objective of governmental effort and regulation.7
Perhaps the only issue that needs some consideration is whether there is
some reasonable relation between the prescribing of passing the NMAT as a
condition for admission to medical school on the one hand, and the securing
of the health and safety of the general community, on the other hand. This
question is perhaps most usefully approached by recalling that the regulation
of the practice of medicine in all its branches has long been recognized as a
reasonable method of protecting the health and safety of the public. 8 That the
power to regulate and control the practice of medicine includes the power to
regulate admission to the ranks of those authorized to practice medicine, is
also well recognized. thus, legislation and administrative regulations requiring
those who wish to practice medicine first to take and pass medical board
examinations have long ago been recognized as valid exercises of
governmental power.9 Similarly, the establishment of minimum medical
educational requirements — i.e., the completion of prescribed courses in a
recognized medical school — for admission to the medical profession, has
also been sustained as a legitimate exercise of the regulatory authority of the
state.10 What we have before us in the instant case is closely related: the
regulation of access to medical schools. MECS Order No. 52, s. 1985, as noted
earlier, articulates the rationale of regulation of this type: the improvement of
the professional and technical quality of the graduates of medical schools, by
upgrading the quality of those admitted to the student body of the medical
schools. That upgrading is sought by selectivity in the process of admission,
selectivity consisting, among other things, of limiting admission to those who
exhibit in the required degree the aptitude for medical studies and eventually
for medical practice. The need to maintain, and the difficulties of maintaining,
high standards in our professional schools in general, and medical schools in
particular, in the current stage of our social and economic development, are
widely known.
We believe that the government is entitled to prescribe an admission test like
the NMAT as a means for achieving its stated objective of "upgrading the
selection of applicants into [our] medical schools" and of "improv[ing] the
quality of medical education in the country." Given the widespread use today
of such admission tests in, for instance, medical schools in the United States
of America (the Medical College Admission Test [MCAT]11 and quite probably
in other countries with far more developed educational resources than our
own, and taking into account the failure or inability of the petitioners to even
attempt to prove otherwise, we are entitled to hold that the NMAT is reasonably
related to the securing of the ultimate end of legislation and regulation in this
area. That end, it is useful to recall, is the protection of the public from the
potentially deadly effects of incompetence and ignorance in those who would
undertake to treat our bodies and minds for disease or trauma.
4. Petitioners have contended, finally, that MECS Order No. 52, s. 1985, is in
conflict with the equal protection clause of the Constitution. More specifically,
petitioners assert that that portion of the MECS Order which provides that
the cutoff score for the successful applicants, based on the scores on the
NMAT, shall be determined every-year by the Board of Medical 11 Education
after consultation with the Association of Philippine Medical Colleges.
(Emphasis supplied)
infringes the requirements of equal protection. They assert, in other words, that
students seeking admission during a given school year, e.g., 1987-1988, when
subjected to a different cutoff score than that established for an, e.g., earlier
school year, are discriminated against and that this renders the MECS Order
"arbitrary and capricious." The force of this argument is more apparent than
real. Different cutoff scores for different school years may be dictated by
differing conditions obtaining during those years. Thus, the appropriate cutoff
score for a given year may be a function of such factors as the number of
students who have reached the cutoff score established the preceding year;
the number of places available in medical schools during the current year; the
average score attained during the current year; the level of difficulty of the test
given during the current year, and so forth. To establish a permanent and
immutable cutoff score regardless of changes in circumstances from year to
year, may wen result in an unreasonable rigidity. The above language in
MECS Order No. 52, far from being arbitrary or capricious, leaves the Board
of Medical Education with the measure of flexibility needed to meet
circumstances as they change.
We conclude that prescribing the NMAT and requiring certain minimum scores
therein as a condition for admission to medical schools in the Philippines, do
not constitute an unconstitutional imposition.
WHEREFORE, the Petition for certiorari is DISMISSED and the Order of the
respondent trial court denying the petition for a writ of preliminary injunction is
AFFIRMED. Costs against petitioners.
SO ORDERED.
ERMITA – MALATE HOTEL & MOTEL OPERATORS VS. CITY MAYOR
The principal question in this appeal from a judgment of the lower court in an
action for prohibition is whether Ordinance No. 4760 of the City of Manila is
violative of the due process clause. The lower court held that it is and adjudged
it "unconstitutional, and, therefore, null and void." For reasons to be more
specifically set forth, such judgment must be reversed, there being a failure of
the requisite showing to sustain an attack against its validity.
The petition for prohibition against Ordinance No. 4760 was filed on July 5,
1963 by the petitioners, Ermita-Malate Hotel and Motel Operators Association,
one of its members, Hotel del Mar Inc., and a certain Go Chiu, who is "the
president and general manager of the second petitioner" against the
respondent Mayor of the City of Manila who was sued in his capacity as such
"charged with the general power and duty to enforce ordinances of the City of
Manila and to give the necessary orders for the faithful execution and
enforcement of such ordinances." (par. 1). It was alleged that the petitioner
non-stock corporation is dedicated to the promotion and protection of the
interest of its eighteen (18) members "operating hotels and motels,
characterized as legitimate businesses duly licensed by both national and city
authorities, regularly paying taxes, employing and giving livelihood to not less
than 2,500 person and representing an investment of more than P3
million."1 (par. 2). It was then alleged that on June 13, 1963, the Municipal
Board of the City of Manila enacted Ordinance No. 4760, approved on June
14, 1963 by the then Vice-Mayor Herminio Astorga, who was at the time acting
as Mayor of the City of Manila. (par. 3).
After which the alleged grievances against the ordinance were set forth in
detail. There was the assertion of its being beyond the powers of the Municipal
Board of the City of Manila to enact insofar as it would regulate motels, on the
ground that in the revised charter of the City of Manila or in any other law, no
reference is made to motels; that Section 1 of the challenged ordinance is
unconstitutional and void for being unreasonable and violative of due process
insofar as it would impose P6,000.00 fee per annum for first class motels and
P4,500.00 for second class motels; that the provision in the same section
which would require the owner, manager, keeper or duly authorized
representative of a hotel, motel, or lodging house to refrain from entertaining
or accepting any guest or customer or letting any room or other quarter to any
person or persons without his filling up the prescribed form in a lobby open to
public view at all times and in his presence, wherein the surname, given name
and middle name, the date of birth, the address, the occupation, the sex, the
nationality, the length of stay and the number of companions in the room, if
any, with the name, relationship, age and sex would be specified, with data
furnished as to his residence certificate as well as his passport number, if any,
coupled with a certification that a person signing such form has personally filled
it up and affixed his signature in the presence of such owner, manager, keeper
or duly authorized representative, with such registration forms and records
kept and bound together, it also being provided that the premises and facilities
of such hotels, motels and lodging houses would be open for inspection either
by the City Mayor, or the Chief of Police, or their duly authorized
representatives is unconstitutional and void again on due process grounds, not
only for being arbitrary, unreasonable or oppressive but also for being vague,
indefinite and uncertain, and likewise for the alleged invasion of the right to
privacy and the guaranty against self-incrimination; that Section 2 of the
challenged ordinance classifying motels into two classes and requiring the
maintenance of certain minimum facilities in first class motels such as a
telephone in each room, a dining room or, restaurant and laundry similarly
offends against the due process clause for being arbitrary, unreasonable and
oppressive, a conclusion which applies to the portion of the ordinance requiring
second class motels to have a dining room; that the provision of Section 2 of
the challenged ordinance prohibiting a person less than 18 years old from
being accepted in such hotels, motels, lodging houses, tavern or common inn
unless accompanied by parents or a lawful guardian and making it unlawful for
the owner, manager, keeper or duly authorized representative of such
establishments to lease any room or portion thereof more than twice every 24
hours, runs counter to the due process guaranty for lack of certainty and for its
unreasonable, arbitrary and oppressive character; and that insofar as the
penalty provided for in Section 4 of the challenged ordinance for a subsequent
conviction would, cause the automatic cancellation of the license of the
offended party, in effect causing the destruction of the business and loss of its
investments, there is once again a transgression of the due process clause.
There was a plea for the issuance of preliminary injunction and for a final
judgment declaring the above ordinance null and void and unenforceable. The
lower court on July 6, 1963 issued a writ of preliminary injunction ordering
respondent Mayor to refrain from enforcing said Ordinance No. 4760 from and
after July 8, 1963.
In the a answer filed on August 3, 1963, there was an admission of the
personal circumstances regarding the respondent Mayor and of the fact that
petitioners are licensed to engage in the hotel or motel business in the City of
Manila, of the provisions of the cited Ordinance but a denial of its alleged
nullity, whether on statutory or constitutional grounds. After setting forth that
the petition did fail to state a cause of action and that the challenged ordinance
bears a reasonable relation, to a proper purpose, which is to curb immorality,
a valid and proper exercise of the police power and that only the guests or
customers not before the court could complain of the alleged invasion of the
right to privacy and the guaranty against self incrimination, with the assertion
that the issuance of the preliminary injunction ex parte was contrary to law,
respondent Mayor prayed for, its dissolution and the dismissal of the petition.
Instead of evidence being offered by both parties, there was submitted a
stipulation of facts dated September 28, 1964, which reads:
1. That the petitioners Ermita-Malate Hotel and Motel Operators Association,
Inc. and Hotel del Mar Inc. are duly organized and existing under the laws of
the Philippines, both with offices in the City of Manila, while the petitioner Go
Chin is the president and general manager of Hotel del Mar Inc., and the
intervenor Victor Alabanza is a resident of Baguio City, all having the capacity
to sue and be sued;
2. That the respondent Mayor is the duly elected and incumbent City Mayor
and chief executive of the City of Manila charged with the general power and
duty to enforce ordinances of the City of Manila and to give the necessary
orders for the faithful execution and enforcement of such ordinances;
3. That the petitioners are duly licensed to engage in the business of operating
hotels and motels in Malate and Ermita districts in Manila;
4. That on June 13, 1963, the Municipal Board of the City of Manila enacted
Ordinance No. 4760, which was approved on June 14, 1963, by Vice-Mayor
Herminio Astorga, then the acting City Mayor of Manila, in the absence of the
respondent regular City Mayor, amending sections 661, 662, 668-a, 668-b and
669 of the compilation of the ordinances of the City of Manila besides inserting
therein three new sections. This ordinance is similar to the one vetoed by the
respondent Mayor (Annex A) for the reasons stated in its 4th Indorsement
dated February 15, 1963 (Annex B);
5. That the explanatory note signed by then Councilor Herminio Astorga was
submitted with the proposed ordinance (now Ordinance 4760) to the Municipal
Board, copy of which is attached hereto as Annex C;
6. That the City of Manila derived in 1963 an annual income of P101,904.05
from license fees paid by the 105 hotels and motels (including herein
petitioners) operating in the City of Manila.1äwphï1.ñët
Thereafter came a memorandum for respondent on January 22, 1965, wherein
stress was laid on the presumption of the validity of the challenged ordinance,
the burden of showing its lack of conformity to the Constitution resting on the
party who assails it, citing not only U.S. v. Salaveria, but likewise applicable
American authorities. Such a memorandum likewise refuted point by point the
arguments advanced by petitioners against its validity. Then barely two weeks
later, on February 4, 1965, the memorandum for petitioners was filed
reiterating in detail what was set forth in the petition, with citations of what they
considered to be applicable American authorities and praying for a judgment
declaring the challenged ordinance "null and void and unenforceable" and
making permanent the writ of preliminary injunction issued.
After referring to the motels and hotels, which are members of the petitioners
association, and referring to the alleged constitutional questions raised by the
party, the lower court observed: "The only remaining issue here being purely
a question of law, the parties, with the nod of the Court, agreed to file
memoranda and thereafter, to submit the case for decision of the Court." It
does appear obvious then that without any evidence submitted by the parties,
the decision passed upon the alleged infirmity on constitutional grounds of the
challenged ordinance, dismissing as is undoubtedly right and proper the
untenable objection on the alleged lack of authority of the City of Manila to
regulate motels, and came to the conclusion that "the challenged Ordinance
No. 4760 of the City of Manila, would be unconstitutional and, therefore, null
and void." It made permanent the preliminary injunction issued against
respondent Mayor and his agents "to restrain him from enforcing the ordinance
in question." Hence this appeal.
As noted at the outset, the judgment must be reversed. A decent regard for
constitutional doctrines of a fundamental character ought to have admonished
the lower court against such a sweeping condemnation of the challenged
ordinance. Its decision cannot be allowed to stand, consistently with what has
hitherto been the accepted standards of constitutional adjudication, in both
procedural and substantive aspects.
Primarily what calls for a reversal of such a decision is the absence of any
evidence to offset the presumption of validity that attaches to a challenged
statute or ordinance. As was expressed categorically by Justice Malcolm: "The
presumption is all in favor of validity x x x . The action of the elected
representatives of the people cannot be lightly set aside. The councilors must,
in the very nature of things, be familiar with the necessities of their particular
municipality and with all the facts and circumstances which surround the
subject and necessitate action. The local legislative body, by enacting the
ordinance, has in effect given notice that the regulations are essential to the
well being of the people x x x . The Judiciary should not lightly set aside
legislative action when there is not a clear invasion of personal or property
rights under the guise of police regulation.2
It admits of no doubt therefore that there being a presumption of validity, the
necessity for evidence to rebut it is unavoidable, unless the statute or
ordinance is void on its face which is not the case here. The principle has been
nowhere better expressed than in the leading case of O'Gorman & Young v.
Hartford Fire Insurance Co.,3 where the American Supreme Court through
Justice Brandeis tersely and succinctly summed up the matter thus: The
statute here questioned deals with a subject clearly within the scope of the
police power. We are asked to declare it void on the ground that the specific
method of regulation prescribed is unreasonable and hence deprives the
plaintiff of due process of law. As underlying questions of fact may condition
the constitutionality of legislation of this character, the resumption of
constitutionality must prevail in the absence of some factual foundation of
record for overthrowing the statute." No such factual foundation being laid in
the present case, the lower court deciding the matter on the pleadings and the
stipulation of facts, the presumption of validity must prevail and the judgment
against the ordinance set aside.
Nor may petitioners assert with plausibility that on its face the ordinance is
fatally defective as being repugnant to the due process clause of the
Constitution. The mantle of protection associated with the due process
guaranty does not cover petitioners. This particular manifestation of a police
power measure being specifically aimed to safeguard public morals is immune
from such imputation of nullity resting purely on conjecture and unsupported
by anything of substance. To hold otherwise would be to unduly restrict and
narrow the scope of police power which has been properly characterized as
the most essential, insistent and the least limitable of powers,4 extending as it
does "to all the great public needs."5 It would be, to paraphrase another leading
decision, to destroy the very purpose of the state if it could be deprived or
allowed itself to be deprived of its competence to promote public health, public
morals, public safety and the genera welfare.6 Negatively put, police power is
"that inherent and plenary power in the State which enables it to prohibit all
that is hurt full to the comfort, safety, and welfare of society. 7
There is no question but that the challenged ordinance was precisely enacted
to minimize certain practices hurtful to public morals. The explanatory note of
the Councilor Herminio Astorga included as annex to the stipulation of facts,
speaks of the alarming increase in the rate of prostitution, adultery and
fornication in Manila traceable in great part to the existence of motels, which
"provide a necessary atmosphere for clandestine entry, presence and exit" and
thus become the "ideal haven for prostitutes and thrill-seekers." The
challenged ordinance then proposes to check the clandestine harboring of
transients and guests of these establishments by requiring these transients
and guests to fill up a registration form, prepared for the purpose, in a lobby
open to public view at all times, and by introducing several other amendatory
provisions calculated to shatter the privacy that characterizes the registration
of transients and guests." Moreover, the increase in the licensed fees was
intended to discourage "establishments of the kind from operating for purpose
other than legal" and at the same time, to increase "the income of the city
government." It would appear therefore that the stipulation of facts, far from
sustaining any attack against the validity of the ordinance, argues eloquently
for it.
It is a fact worth noting that this Court has invariably stamped with the seal of
its approval, ordinances punishing vagrancy and classifying a pimp or procurer
as a vagrant;8 provide a license tax for and regulating the maintenance or
operation of public dance halls;9 prohibiting gambling;10 prohibiting
jueteng;11 and monte;12 prohibiting playing of panguingui on days other than
Sundays or legal holidays;13 prohibiting the operation of pinball
machines;14 and prohibiting any person from keeping, conducting or
maintaining an opium joint or visiting a place where opium is smoked or
otherwise used,15 all of which are intended to protect public morals.
On the legislative organs of the government, whether national or local,
primarily rest the exercise of the police power, which, it cannot be too often
emphasized, is the power to prescribe regulations to promote the health,
morals, peace, good order, safety and general welfare of the people. In view
of the requirements of due process, equal protection and other applicable
constitutional guaranties however, the exercise of such police power insofar
as it may affect the life, liberty or property of any person is subject to judicial
inquiry. Where such exercise of police power may be considered as either
capricious, whimsical, unjust or unreasonable, a denial of due process or a
violation of any other applicable constitutional guaranty may call for correction
by the courts.
We are thus led to considering the insistent, almost shrill tone, in which the
objection is raised to the question of due process.16 There is no controlling and
precise definition of due process. It furnishes though a standard to which the
governmental action should conform in order that deprivation of life, liberty or
property, in each appropriate case, be valid. What then is the standard of due
process which must exist both as a procedural and a substantive requisite to
free the challenged ordinance, or any governmental action for that matter, from
the imputation of legal infirmity sufficient to spell its doom? It is responsiveness
to the supremacy of reason, obedience to the dictates of justice. Negatively
put, arbitrariness is ruled out and unfairness avoided. To satisfy the due
process requirement, official action, to paraphrase Cardozo, must not outrun
the bounds of reason and result in sheer oppression. Due process is thus
hostile to any official action marred by lack of reasonableness. Correctly it has
been identified as freedom from arbitrariness. It is the embodiment of the
sporting idea of fair play.17 It exacts fealty "to those strivings for justice" and
judges the act of officialdom of whatever branch "in the light of reason drawn
from considerations of fairness that reflect [democratic] traditions of legal and
political thought."18 It is not a narrow or "technical conception with fixed content
unrelated to time, place and circumstances,"19 decisions based on such a
clause requiring a "close and perceptive inquiry into fundamental principles of
our society."20 Questions of due process are not to be treated narrowly or
pedantically in slavery to form or phrases.21
It would thus be an affront to reason to stigmatize an ordinance enacted
precisely to meet what a municipal lawmaking body considers an evil of rather
serious proportion an arbitrary and capricious exercise of authority. It would
seem that what should be deemed unreasonable and what would amount to
an abdication of the power to govern is inaction in the face of an admitted
deterioration of the state of public morals. To be more specific, the Municipal
Board of the City of Manila felt the need for a remedial measure. It provided it
with the enactment of the challenged ordinance. A strong case must be found
in the records, and, as has been set forth, none is even attempted here to
attach to an ordinance of such character the taint of nullity for an alleged failure
to meet the due process requirement. Nor does it lend any semblance even of
deceptive plausibility to petitioners' indictment of Ordinance No. 4760 on due
process grounds to single out such features as the increased fees for motels
and hotels, the curtailment of the area of freedom to contract, and, in certain
particulars, its alleged vagueness.
Admittedly there was a decided increase of the annual license fees provided
for by the challenged ordinance for hotels and motels, 150% for the former and
over 200% for the latter, first-class motels being required to pay a P6,000
annual fee and second-class motels, P4,500 yearly. It has been the settled law
however, as far back as 1922 that municipal license fees could be classified
into those imposed for regulating occupations or regular enterprises, for the
regulation or restriction of non-useful occupations or enterprises and for
revenue purposes only.22 As was explained more in detail in the above Cu
Unjieng case: (2) Licenses for non-useful occupations are also incidental to
the police power and the right to exact a fee may be implied from the power to
license and regulate, but in fixing amount of the license fees the municipal
corporations are allowed a much wider discretion in this class of cases than in
the former, and aside from applying the well-known legal principle that
municipal ordinances must not be unreasonable, oppressive, or tyrannical,
courts have, as a general rule, declined to interfere with such discretion. The
desirability of imposing restraint upon the number of persons who might
otherwise engage in non-useful enterprises is, of course, generally an
important factor in the determination of the amount of this kind of license fee.
Hence license fees clearly in the nature of privilege taxes for revenue have
frequently been upheld, especially in of licenses for the sale of liquors. In fact,
in the latter cases the fees have rarely been declared unreasonable.23
Moreover in the equally leading case of Lutz v. Araneta24 this Court affirmed
the doctrine earlier announced by the American Supreme Court that taxation
may be made to implement the state's police power. Only the other day, this
Court had occasion to affirm that the broad taxing authority conferred by the
Local Autonomy Act of 1959 to cities and municipalities is sufficiently plenary
to cover a wide range of subjects with the only limitation that the tax so levied
is for public purposes, just and uniform.25
As a matter of fact, even without reference to the wide latitude enjoyed by the
City of Manila in imposing licenses for revenue, it has been explicitly held in
one case that "much discretion is given to municipal corporations in
determining the amount," here the license fee of the operator of a massage
clinic, even if it were viewed purely as a police power measure. 26 The
discussion of this particular matter may fitly close with this pertinent citation
from another decision of significance: "It is urged on behalf of the plaintiffs-
appellees that the enforcement of the ordinance could deprive them of their
lawful occupation and means of livelihood because they can not rent stalls in
the public markets. But it appears that plaintiffs are also dealers in refrigerated
or cold storage meat, the sale of which outside the city markets under certain
conditions is permitted x x x . And surely, the mere fact, that some individuals
in the community may be deprived of their present business or a particular
mode of earning a living cannot prevent the exercise of the police power. As
was said in a case, persons licensed to pursue occupations which may in the
public need and interest be affected by the exercise of the police power embark
in these occupations subject to the disadvantages which may result from the
legal exercise of that power."27
Nor does the restriction on the freedom to contract, insofar as the challenged
ordinance makes it unlawful for the owner, manager, keeper or duly authorized
representative of any hotel, motel, lodging house, tavern, common inn or the
like, to lease or rent room or portion thereof more than twice every 24 hours,
with a proviso that in all cases full payment shall be charged, call for a different
conclusion. Again, such a limitation cannot be viewed as a transgression
against the command of due process. It is neither unreasonable nor arbitrary.
Precisely it was intended to curb the opportunity for the immoral or illegitimate
use to which such premises could be, and, according to the explanatory note,
are being devoted. How could it then be arbitrary or oppressive when there
appears a correspondence between the undeniable existence of an
undesirable situation and the legislative attempt at correction. Moreover,
petitioners cannot be unaware that every regulation of conduct amounts to
curtailment of liberty which as pointed out by Justice Malcolm cannot be
absolute. Thus: "One thought which runs through all these different
conceptions of liberty is plainly apparent. It is this: 'Liberty' as understood in
democracies, is not license; it is 'liberty regulated by law.' Implied in the term
is restraint by law for the good of the individual and for the greater good of the
peace and order of society and the general well-being. No man can do exactly
as he pleases. Every man must renounce unbridled license. The right of the
individual is necessarily subject to reasonable restraint by general law for the
common good x x x The liberty of the citizen may be restrained in the interest
of the public health, or of the public order and safety, or otherwise within the
proper scope of the police power."28
A similar observation was made by Justice Laurel: "Public welfare, then, lies
at the bottom of the enactment of said law, and the state in order to promote
the general welfare may interfere with personal liberty, with property, and with
business and occupations. Persons and property may be subjected to all kinds
of restraints and burdens, in order to secure the general comfort, health, and
prosperity of the state x x x To this fundamental aim of our Government the
rights of the individual are subordinated. Liberty is a blessing without which life
is a misery, but liberty should not be made to prevail over authority because
then society will fall into anarchy. Neither should authority be made to prevail
over liberty because then the individual will fall into slavery. The citizen should
achieve the required balance of liberty and authority in his mind through
education and personal discipline, so that there may be established the
resultant equilibrium, which means peace and order and happiness for all.29
It is noteworthy that the only decision of this Court nullifying legislation because
of undue deprivation of freedom to contract, People v. Pomar,30 no longer
"retains its virtuality as a living principle. The policy of laissez faire has to some
extent given way to the assumption by the government of the right of
intervention even in contractual relations affected with public interest. 31 What
may be stressed sufficiently is that if the liberty involved were freedom of the
mind or the person, the standard for the validity of governmental acts is much
more rigorous and exacting, but where the liberty curtailed affects at the most
rights of property, the permissible scope of regulatory measure is wider.32 How
justify then the allegation of a denial of due process?
Lastly, there is the attempt to impugn the ordinance on another due process
ground by invoking the principles of vagueness or uncertainty. It would appear
from a recital in the petition itself that what seems to be the gravamen of the
alleged grievance is that the provisions are too detailed and specific rather
than vague or uncertain. Petitioners, however, point to the requirement that a
guest should give the name, relationship, age and sex of the companion or
companions as indefinite and uncertain in view of the necessity for determining
whether the companion or companions referred to are those arriving with the
customer or guest at the time of the registry or entering the room With him at
about the same time or coming at any indefinite time later to join him; a proviso
in one of its sections which cast doubt as to whether the maintenance of a
restaurant in a motel is dependent upon the discretion of its owners or
operators; another proviso which from their standpoint would require a guess
as to whether the "full rate of payment" to be charged for every such lease
thereof means a full day's or merely a half-day's rate. It may be asked, do these
allegations suffice to render the ordinance void on its face for alleged
vagueness or uncertainty? To ask the question is to answer it. From Connally
v. General Construction Co.33 to Adderley v. Florida,34 the principle has been
consistently upheld that what makes a statute susceptible to such a charge is
an enactment either forbidding or requiring the doing of an act that men of
common intelligence must necessarily guess at its meaning and differ as to its
application. Is this the situation before us? A citation from Justice Holmes
would prove illuminating: "We agree to all the generalities about not supplying
criminal laws with what they omit but there is no canon against using common
sense in construing laws as saying what they obviously mean."35
That is all then that this case presents. As it stands, with all due allowance for
the arguments pressed with such vigor and determination, the attack against
the validity of the challenged ordinance cannot be considered a success. Far
from it. Respect for constitutional law principles so uniformly held and so
uninterruptedly adhered to by this Court compels a reversal of the appealed
decision.
Wherefore, the judgment of the lower court is reversed and the injunction
issued lifted forthwith. With costs.
HOMEOWNERS ASSOCIATION OF THE PHILIPPINES VS. MUNICIPAL
BOARD OF MANILA
This is an action, against the Municipal Board and the Mayor of the City of
Manila, for a declaratory relief. It was brought by the Homeowners' Association
of the Philippines, Inc. and its President, Vicente A. Rufino, to nullify Municipal
Ordinance No. 4841 of the City of Manila, approved on December 31, 1963,
to take effect on January 1, 1964. After appropriate proceedings, the Court of
First Instance of Manila rendered judgment declaring said ordinance "ultra
vires, unconstitutional, illegal and void ab initio without pronouncement as to
costs. Hence, this appeal by the Mayor of Manila Said Ordinance reads:
AN ORDINANCE REGULATING RENTALS OF LOTS AND BUILDING FOR
RESIDENTIAL PURPOSES.
WHEREAS, in view of the prevailing scarcity of lands and buildings for
residential purposes in the City of Manila and the present high cost of living, a
state of emergency in the the matter of providing housing accommodations
especially for poor at reasonable rates is hereby declared to exist:
Now, therefore.
SECTION 1. Lessors or sublessors of lands, or parts thereof, primarily devoted
to residential purposes, and persons claiming title or color of title thereto from
such lessors or sublessors, are hereby prohibited from increasing the rental to
an amount in excess of the proportion, percentage wise, in the increase of the
assessed value of the land leased or subleased. If only a portion of the land is
leased or subleased, the proportionate value of the leased premises shall be
the basis for determining the maximum rental to which the same may be
increased.
SEC. 2. Lessors or sublessors of buildings, or parts thereof, primarily devoted
to residential purposes, and persons claiming title or color of title thereto from
such lessors or sublessors, are hereby prohibited from increasing the rentals
to an amount in excess of ten (10) percentum per annum of the assessed value
of the building leased or subleased and of the land on which the building
stands. If only a portion of the building is leased or subleased, the
proportionate assessed value of the building and the land on which the building
stands shall be the basis for determining the maximum rental to which the
same may be increased.
SEC. 3. This Ordinance shall not apply to contracts of lease or sublease
existing upon its approval and to lands used by, or to rooms of, boarding
house, and lodging houses; PROVIDED, HOWEVER, That renewals or
modifications of such contracts made on or after the approval of this Ordinance
shall be governed by the provisions hereof.
SEC. 4. Any person violating the provisions of this Ordinance shall, upon
conviction, be punished by a fine of not less than one hundred (P100.00) pesos
nor more than two hundred (P200.00) pesos and imprisonment for not less
than one (1) month nor more than six (6) months. In the case of juridical
persons, the general manager, director, or any other person in control thereof
shall be liable.
SEC. 5. This Ordinance shall take effect on January 1, 1964.1äwphï1.ñët
The lower court struck down the questioned ordinance upon the ground that
the power to "declare a state of emergency ... exclusively pertains to
Congress"; that "there is no longer any state of emergency" which may justify
the regulation of house rentals; that said ordinance disconstitutes an
unreasonable and unjustified limitation on the use of private properties and
arbitrarily encroaches on the constitutional rights of property owners"; that the
power of the City of Manila to "regulate the business of ... letting or subletting
of lands and buildings" does not include the authority to prohibit what is
forbidden in said ordinance; and that the same cannot be deemed sanctioned
by the general welfare clause in the City Charter.
Although some members of the Court are not prepared either to concede the
alleged power of the City of Manila to declare a state of emergency or to
acknowledge the existence thereof, as a fact, we do not deem it necessary to
pass upon these questions or upon the soundness of the other points relied
upon by His Honor, the trial Judge, on which we express here no opinion
whatsoever. Even if the City had said power and a state of emergency really
existed, the ordinance under consideration would still be illegal and
unconstitutional, for the reasons presently to be stated.
The authority of municipal corporations to regulate is essentially police power.
Inasmuch as the same generally entails a curtailment of the liberty, the rights
and/or the property of persons, which are protected and even guaranteed by
the Constitution, the exercise of police power is necessarily subject to a
qualification, limitation or restriction demanded by the regard, the respect and
the obedience due to the prescriptions of the fundamental law, particularly
those forming part of the Constitution of Liberty, otherwise known as the Bill of
Rights — the police power measure must be "reasonable". In other words,
individual rights may be adversely affected by the exercise of police power to
the extent only — and only to the extent — that may fairly be required by the
legitimate demands of public interest or public welfare. If such demands are
brought about by a state of emergency, the interference upon individual rights,
resulting from the regulations adopted to meet the situation, must be, by and
large, co-extensive, co-equal or co-terminous with the existence thereof. And,
since an emergency is by nature temporary in character, so must the
regulations promulgated therefor be. In the language of Justice
Holmes,1 "circumstances may so change in time or differ in space as to clothe
with such an interest2 what at other times or in other places would be a matter
of purely private concern." Or, as the American Jurisprudence puts it, "a limit
in time to tide over a passing trouble may justify a law that could not be upheld
as a permanent change."3
As a consequence a law or ordinance affecting the rights of individuals, as a
means to tide over a critical condition, to be valid and legal, must be for a
"definite" period of time, the length of which must be "reasonable", in relation
to the nature and duration of the crisis it seeks to overcome or surmount.
Hence, in Rutter v. Esteban4 we declared, on May 18, 1953, that a moratorium
of eight (8) years, given by Republic Act No. 342 to war damage claimants,
from and after the settlement of their war damage claims, for the payment of
their pre-war obligations5 is "unreasonable, if not oppressive", in the light of
"the conditions" then "prevailing in our country", and that, accordingly said Act
was "null and void and without effect". We further held that "what we say here
with respect to said Act holds true as regards Executive Orders Nos. 25 6 and
32,7 perhaps with greater force and reason as to the latter, considering that
said Orders contain no limitation whatsoever in point of time as regards the
suspension of the enforcement and effectivity of monetary obligations". This
ruling, it should be noted, was made deliberately and does not constitute
an obiter dictum, for, in the language of the Court, "there is need to make this
pronouncement in view of the revival clause embodied in said Act if and when
it is declared unconstitutional or invalid".8
The practical reason for the requirement that a statute passed to meet a given
emergency, should limit the period of its effectivity, is that, otherwise, a new
and different law would be necessary to repeal it, and said period would,
accordingly, be "unlimited, indefinite, negative and uncertain", so that "that
which was intended to meet a temporary emergency may become a
permanent law",9 because "Congress might not enact the repeal, and, even if
it would, the repeal might not meet with the approval of the President, and the
Congress might not be able to override the veto". In line with the basic
philosophy underlying the authority to affect individual rights, this Court felt that
Commonwealth Act No. 671, otherwise known as the Emergency Powers Act,
was meant to be and "became inoperative when Congress met in regular
session on May 25, 1946," and that Executive Orders Nos. 62, 192, 225 and
226 — promulgated subsequently thereto — "were issued without authority of
law", because, otherwise, said emergency regulations would purport to be in
force for an indefinite and unlimited period of time, and, hence, would
be unconstitutional. 10
The same considerations impelled the Court to invalidate Executive Order
Nos. 545 and 546, issued on November 10, 1952. Indeed, otherwise "the result
would be obvious unconstitutionality", by making permanent a law intended to
afford a relief for a temporary emergency, the length of which should be "fixed
in the law itself and not dependent upon the arbitrary or elastic will of either
Congress or the President". 11
We have not overlooked the fact that the cases adverted to refer particularly
to the constitutional provision 12 authorizing Congress, "in times of war or other
national emergency", to delegate to the President, "for a limited period", and
subject to specified "restrictions", the power "to promulgate rules and
regulations to carry out a declared national policy". We are inclined to believe,
however, that in providing that the lifetime of the authority given must be "for a
limited period", the framers of our Charter were influenced by the fact that
powers were being delegated to the Executive, as much as by the
circumstance that, since the cause for the grant of power was temporary, so
should the grant be, for the effect cannot remain in existence upon the removal
of its cause. In fact, Congress has, in actual practice, accepted this limitation
upon its exercise of police power to meet a condition of emergency. Thus,
Commonwealth Act No. 499 13 regulated the transfer of vessels and of
shipping facilities, effective until adjournment of the next regular session of the
National Assembly. This was followed by Commonwealth Act No. 689 14 which
penalized speculation on rents of buildings destined for dwelling purposes, but
only "for a period of two (2) years after its approval." This Act was amended
by Republic Act No. 6615 which, inter alia, extended its period of effectivity to
"four (4) years after it approval."
Needless to say, the powers of municipal corporations delegated thereto by
the National Government cannot escape the inherent limitations to which the
latter — as the source of said powers — is subject. Then, again, since our law
on municipal corporations is, in principle, patterned after that of the United
States, the rule therein, to the effect that "in a proper case, emergency
legislation, limited in time, may be enacted under the police power" of a
municipal corporation, 16 should be considered a part of our legal system.
Appellant assails the validity of the proceedings in the lower court upon the
round that, although petitioners herein had assailed Municipal Ordinance No.
4841, not merely as ultra vires, but, also, as unconstitutional, the Solicitor
General had been neither heard nor notified in connection therewith, in
violation of Section 4 of Rule 64 of the Rules of Court.17
It should be noted, however, that appellant did not raise this question or invoke
said Section 4, either in his answer or in a motion to dismiss in the lower court.
Upon the other hand, the City Fiscal of Manila was notified therein. In fact, he
filed a memorandum, apart from the memorandum submitted by counsel for
appellant herein. Neither did his motion for reconsideration of the appealed
decision touch upon said question, which was raised, for the first time, in a
"supplement" to said motion for reconsideration.
At any rate, the determination of the question whether or not the Solicitor
General should be required to appear "in any action involving the validity of
any treaty, law, ordinance or executive order, rules or regulation" is a matter
left to the "discretion" of the Court, pursuant to Section 23 of Rule 3 of the
Rules of Court. 18 Inasmuch as said requirement is not mandatory,
but discretionary, non-compliance therewith and with Section 4 of Rule 64 —
the interpretation of which should be harmonized with said Section 23 of Rule
3 — affected neither the jurisdiction of the trial court nor the validity of the
proceedings therein, in connection with the present case. Thus, in San
Buenaventura vs. Municipality of San Jose, 19 we held:
... that the requirement regarding notification to the Provincial Fiscal of the
pendency of an action involving the validity of a municipal ordinance, as
provided in Sec. 5, Rule 66 of the Rules of Court (now See. 4, Rule 64 of the
Revised Rules of Court), is not jurisdictional; and failure on the part of
petitioner to notify the Provincial Fiscal will not be a sufficient ground to throw
the case out of court. We believe the purpose of the above-quoted rule is
simply to give the Provincial Fiscal, who is the legal officer of the local
governments, a chance to participate in the deliberation to determine the
validity of a questioned municipal ordinance before the competent court. If it
appears, however, that the ordinance in question is patently illegal, as in the
present case, and the matter had already been passed upon by a competent
court, the requirements of Sec. 5 of Rule 66 of the Rules of Court (now See. 4
of Rule 64 of the Revised Rules of Court) may be dispensed with.
WHEREFORE, the decision appealed from should be as it is hereby affirmed,
with costs against the appellant. It is so ordered. 1äwphï1.ñët
CRUZ VS. PARAS
The crucial question posed by this certiorari proceeding is whether or not a
municipal corporation, Bocaue, Bulacan, represented by respondents, 1 can,
prohibit the exercise of a lawful trade, the operation of night clubs, and the
pursuit of a lawful occupation, such clubs employing hostesses. It is contended
that the ordinance assailed as invalid is tainted with nullity, the municipality
being devoid of power to prohibit a lawful business, occupation or calling,
petitioners at the same time alleging that their rights to due process and equal
protection of the laws were violated as the licenses previously given to them
was in effect withdrawn without judicial hearing. 2
The assailed ordinance 3 is worded as follows: "Section 1.— Title of
Ordinance.— This Ordinance shall be known and may be cited as the
[Prohibition and Closure Ordinance] of Bocaue, Bulacan. Section 2.
— Definitions of Terms — (a) 'Night Club' shall include any place or
establishment selling to the public food or drinks where customers are allowed
to dance. (b) 'Cabaret' or 'Dance Hall' shall include any place or establishment
where dancing is permitted to the public and where professional hostesses or
hospitality girls and professional dancers are employed. (c) 'Professional
hostesses' or 'hospitality girls' shall include any woman employed by any of
the establishments herein defined to entertain guests and customers at their
table or to dance with them. (d) 'Professional dancer' shall include any woman
who dances at any of the establishments herein defined for a fee or
remuneration paid directly or indirectly by the operator or by the persons she
dances with. (e) 'Operator' shall include the owner, manager, administrator or
any person who operates and is responsible for the operation of any night club,
cabaret or dance hall. Section 3. — Prohibition in the Issuance and Renewal
of Licenses, Permits. — Being the principal cause in the decadence of morality
and because of their other adverse effects on this community as explained
above, no operator of night clubs, cabarets or dance halls shall henceforth be
issued permits/licenses to operate within the jurisdiction of the municipality and
no license/permit shall be issued to any professional hostess, hospitality girls
and professional dancer for employment in any of the aforementioned
establishments. The prohibition in the issuance of licenses/permits to said
persons and operators of said establishments shall include prohibition in the
renewal thereof. Section 4.— Revocation of Permits and Licenses.— The
licenses and permits issued to operators of night clubs, cabarets or dance halls
which are now in operation including permits issued to professional hostesses,
hospitality girls and professional dancers are hereby revoked upon the
expiration of the thirty-day period given them as provided in Section 8 hereof
and thenceforth, the operation of these establishments within the jurisdiction
of the municipality shall be illegal. Section 5.— Penalty in case of violation. —
Violation of any of the provisions of this Ordinance shall be punishable by
imprisonment not exceeding three (3) months or a fine not exceeding P200.00
or both at the discretion of the Court. If the offense is committed by a juridical
entity, the person charged with the management and/or operation thereof shall
be liable for the penalty provided herein. Section 6. — Separability Clause.—
If, for any reason, any section or provision of this Ordinance is held
unconstitutional or invalid, no other section or provision hereof shall be
affected thereby. Section 7.— Repealing Clause.— All ordinance, resolutions,
circulars, memoranda or parts thereof that are inconsistent with the provisions
of this Ordinance are hereby repealed. Section 8.— Effectivity.— This
Ordinance shall take effect immediately upon its approval; provided, however,
that operators of night clubs, cabarets and dance halls now in operation
including professional hostesses, hospitality girls and professional dancers are
given a period of thirty days from the approval hereof within which to wind up
their businesses and comply with the provisions of this Ordinance." 4
On November 5, 1975, two cases for prohibition with preliminary injunction
were filed with the Court of First Instance of Bulacan. 5 The grounds alleged
follow:
1. Ordinance No. 84 is null and void as a municipality has no authority to
prohibit a lawful business, occupation or calling.
2. Ordinance No. 84 is violative of the petitioners' right to due process and the
equal protection of the law, as the license previously given to petitioners was
in effect withdrawn without judicial hearing. 3. That under Presidential Decree
No. 189, as amended, by Presidential Decree No. 259, the power to license
and regulate tourist-oriented businesses including night clubs, has been
transferred to the Department of Tourism." 6 The cases were assigned to
respondent Judge, now Associate Justice Paras of the Intermediate Appellate
Court, who issued a restraining order on November 7, 1975. The answers were
thereafter filed. It was therein alleged: " 1. That the Municipal Council is
authorized by law not only to regulate but to prohibit the establishment,
maintenance and operation of night clubs invoking Section 2243 of the RAC,
CA 601, Republic Acts Nos. 938, 978 and 1224. 2. The Ordinance No. 84 is
not violative of petitioners' right to due process and the equal protection of the
law, since property rights are subordinate to public interests. 3. That
Presidential Decree No. 189, as amended, did not deprive Municipal Councils
of their jurisdiction to regulate or prohibit night clubs." 7 There was the
admission of the following facts as having been established: "l. That petitioners
Vicente de la Cruz, et al. in Civil Case No. 4755-M had been previously issued
licenses by the Municipal Mayor of Bocaue-petitioner Jose Torres III, since
1958; petitioner Vicente de la Cruz, since 1960; petitioner Renato Alipio, since
1961 and petitioner Leoncio Corpuz, since 1972; 2. That petitioners had
invested large sums of money in their businesses; 3. That the night clubs are
well-lighted and have no partitions, the tables being near each other; 4. That
the petitioners owners/operators of these clubs do not allow the hospitality girls
therein to engage in immoral acts and to go out with customers; 5. That these
hospitality girls are made to go through periodic medical check-ups and not
one of them is suffering from any venereal disease and that those who fail to
submit to a medical check-up or those who are found to be infected with
venereal disease are not allowed to work; 6. That the crime rate there is better
than in other parts of Bocaue or in other towns of Bulacan." 8 Then came on
January 15, 1976 the decision upholding the constitutionality and validity of
Ordinance No. 84 and dismissing the cases. Hence this petition for certiorari
by way of appeal.
In an exhaustive as well as scholarly opinion, the lower court dismissed the
petitions. Its rationale is set forth in the opening paragraph thus: "Those who
lust cannot last. This in essence is why the Municipality of Bocaue, Province
of Bulacan, stigmatized as it has been by innuendos of sexual titillation and
fearful of what the awesome future holds for it, had no alternative except to
order thru its legislative machinery, and even at the risk of partial economic
dislocation, the closure of its night clubs and/or cabarets. This in essence is
also why this Court, obedient to the mandates of good government, and
cognizant of the categorical imperatives of the current legal and social
revolution, hereby [upholds] in the name of police power the validity and
constitutionality of Ordinance No. 84, Series of 1975, of the Municipal Council
of Bocaue, Bulacan. The restraining orders heretofore issued in these two
cases are therefore hereby rifted, effective the first day of February, 1976, the
purpose of the grace period being to enable the petitioners herein to apply to
the proper appellate tribunals for any contemplated redress."9 This Court is,
however, unable to agree with such a conclusion and for reasons herein set
forth, holds that reliance on the police power is insufficient to justify the
enactment of the assailed ordinance. It must be declared null and void.
1. Police power is granted to municipal corporations in general terms as
follows: "General power of council to enact ordinances and make regulations.
- The municipal council shall enact such ordinances and make such
regulations, not repugnant to law, as may be necessary to carry into effect and
discharge the powers and duties conferred upon it by law and such as shall
seem necessary and proper to provide for the health and safety, promote the
prosperity, improve the morals, peace, good order, comfort, and convenience
of the municipality and the inhabitants thereof, and for the protection of
property therein." 10 It is practically a reproduction of the former Section 39 of
Municipal Code.11 An ordinance enacted by virtue thereof, according to Justice
Moreland, speaking for the Court in the leading case of United States v.
Abendan 12 "is valid, unless it contravenes the fundamental law of the
Philippine Islands, or an Act of the Philippine Legislature, or unless it is against
public policy, or is unreasonable, oppressive, partial, discriminating, or in
derogation of common right. Where the power to legislate upon a given
subject, and the mode of its exercise and the details of such legislation are not
prescribed, the ordinance passed pursuant thereto must be a reasonable
exercise of the power, or it will be pronounced invalid." 13 In another leading
case, United States v. Salaveria, 14 the ponente this time being Justice
Malcolm, where the present Administrative Code provision was applied, it was
stated by this Court: "The general welfare clause has two branches: One
branch attaches itself to the main trunk of municipal authority, and relates to
such ordinances and regulations as may be necessary to carry into effect and
discharge the powers and duties conferred upon the municipal council by law.
With this class we are not here directly concerned. The second branch of the
clause is much more independent of the specific functions of the council which
are enumerated by law. It authorizes such ordinances as shall seem necessary
and proper to provide for the health and safety, promote the prosperity,
improve the morals, peace, good order, comfort, and convenience of the
municipality and the inhabitants thereof, and for the protection of property
therein.' It is a general rule that ordinances passed by virtue of the implied
power found in the general welfare clause must be reasonable, consonant with
the general powersand purposes of the corporation, and not inconsistent with
the laws or policy of the State." 15 If night clubs were merely then regulated
and not prohibited, certainly the assailed ordinance would pass the test of
validity. In the two leading cases above set forth, this Court had stressed
reasonableness, consonant with the general powers and purposes of
municipal corporations, as well as consistency with the laws or policy of the
State. It cannot be said that such a sweeping exercise of a lawmaking power
by Bocaue could qualify under the term reasonable. The objective of fostering
public morals, a worthy and desirable end can be attained by a measure that
does not encompass too wide a field. Certainly the ordinance on its face is
characterized by overbreadth. The purpose sought to be achieved could have
been attained by reasonable restrictions rather than by an absolute prohibition.
The admonition in Salaveria should be heeded: "The Judiciary should not
lightly set aside legislative action when there is not a clear invasion of personal
or property rights under the guise of police regulation." 16 It is clear that in the
guise of a police regulation, there was in this instance a clear invasion of
personal or property rights, personal in the case of those individuals desirous
of patronizing those night clubs and property in terms of the investments made
and salaries to be earned by those therein employed.
2. The decision now under review refers to Republic Act No. 938 as
amended. 17 It was originally enacted on June 20, 1953. It is entitled: "AN ACT
GRANTING MUNICIPAL OR CITY BOARDS AND COUNCILS THE POWER
TO REGULATE THE ESTABLISHMENT, MAINTENANCE AND OPERATION
OF CERTAIN PLACES OF AMUSEMENT WITHIN THEIR RESPECTIVE
TERRITORIAL JURISDICTIONS.' 18 Its first section insofar as pertinent reads:
"The municipal or city board or council of each chartered city shall have the
power to regulate by ordinance the establishment, maintenance and operation
of night clubs, cabarets, dancing schools, pavilions, cockpits, bars, saloons,
bowling alleys, billiard pools, and other similar places of amusement within its
territorial jurisdiction: ... " 19 Then on May 21, 1954, the first section was
amended to include not merely "the power to regulate, but likewise "Prohibit ...
" 20 The title, however, remained the same. It is worded exactly as Republic
Act No. 938. It is to be admitted that as thus amended, if only the above portion
of the Act were considered, a municipal council may go as far as to prohibit
the operation of night clubs. If that were all, then the appealed decision is not
devoid of support in law. That is not all, however. The title was not in any way
altered. It was not changed one whit. The exact wording was followed. The
power granted remains that of regulation, not prohibition. There is thus support
for the view advanced by petitioners that to construe Republic Act No. 938 as
allowing the prohibition of the operation of night clubs would give rise to a
constitutional question. The Constitution mandates: "Every bill shall embrace
only one subject which shall be expressed in the title thereof. " 21 Since there
is no dispute as the title limits the power to regulating, not prohibiting, it would
result in the statute being invalid if, as was done by the Municipality of Bocaue,
the operation of a night club was prohibited. There is a wide gap between the
exercise of a regulatory power "to provide for the health and safety, promote
the prosperity, improve the morals, 22 in the language of the Administrative
Code, such competence extending to all "the great public needs, 23 to quote
from Holmes, and to interdict any calling, occupation, or enterprise. In
accordance with the well-settled principle of constitutional construction that
between two possible interpretations by one of which it will be free from
constitutional infirmity and by the other tainted by such grave defect, the former
is to be preferred. A construction that would save rather than one that would
affix the seal of doom certainly commends itself. We have done so before We
do so again. 24
3. There is reinforcement to the conclusion reached by virtue of a specific
provision of the recently-enacted Local Government Code. 25 The general
welfare clause, a reiteration of the Administrative Code provision, is set forth
in the first paragraph of Section 149 defining the powers and duties of
the sangguniang bayan. It read as follows: "(a) Enact such ordinances and
issue such regulations as may be necessary to carry out and discharge the
responsibilities conferred upon it by law, and such as shall be necessary and
proper to provide for the health, safety, comfort and convenience, maintain
peace and order, improve public morals, promote the prosperity and general
welfare of the municipality and the inhabitants thereof, and insure the
protection of property therein; ..." 26 There are in addition provisions that may
have a bearing on the question now before this Court. Thus the sangguniang
bayan shall "(rr) Regulate cafes, restaurants, beer-houses, hotels, motels,
inns, pension houses and lodging houses, except travel agencies, tourist
guides, tourist transports, hotels, resorts, de luxe restaurants, and tourist inns
of international standards which shall remain under the licensing and
regulatory power of the Ministry of Tourism which shall exercise such authority
without infringing on the taxing or regulatory powers of the municipality; (ss)
Regulate public dancing schools, public dance halls, and sauna baths or
massage parlors; (tt) Regulate the establishment and operation of billiard
pools, theatrical performances, circuses and other forms of entertainment;
..." 27 It is clear that municipal corporations cannot prohibit the operation of
night clubs. They may be regulated, but not prevented from carrying on their
business. It would be, therefore, an exercise in futility if the decision under
review were sustained. All that petitioners would have to do is to apply once
more for licenses to operate night clubs. A refusal to grant licenses, because
no such businesses could legally open, would be subject to judicial correction.
That is to comply with the legislative will to allow the operation and continued
existence of night clubs subject to appropriate regulations. In the meanwhile,
to compel petitioners to close their establishments, the necessary result of an
affirmance, would amount to no more than a temporary termination of their
business. During such time, their employees would undergo a period of
deprivation. Certainly, if such an undesirable outcome can be avoided, it
should be. The law should not be susceptible to the reproach that it displays
less than sympathetic concern for the plight of those who, under a mistaken
appreciation of a municipal power, were thus left without employment. Such a
deplorable consequence is to be avoided. If it were not thus, then the element
of arbitrariness enters the picture. That is to pay less, very much less, than full
deference to the due process clause with its mandate of fairness and
reasonableness.
4. The conclusion reached by this Court is not to be interpreted as a retreat
from its resolute stand sustaining police power legislation to promote public
morals. The commitment to such an Ideal forbids such a backward step.
Legislation of that character is deserving of the fullest sympathy from the
judiciary. Accordingly, the judiciary has not been hesitant to lend the weight of
its support to measures that can be characterized as falling within that aspect
of the police power. Reference is made by respondents to Ermita-Malate Hotel
and Motel Operators Association, Inc. v. City Mayor of Manila. 28 There is a
misapprehension as to what was decided by this Court. That was a regulatory
measure. Necessarily, there was no valid objection on due process or equal
protection grounds. It did not prohibit motels. It merely regulated the mode in
which it may conduct business in order precisely to put an end to practices
which could encourage vice and immorality. This is an entirely different case.
What was involved is a measure not embraced within the regulatory power but
an exercise of an assumed power to prohibit. Moreover, while it was pointed
out in the aforesaid Ermita-Malate Hotel and Motel Operators Association, Inc.
decision that there must be a factual foundation of invalidity, it was likewise
made clear that there is no need to satisfy such a requirement if a statute were
void on its face. That it certainly is if the power to enact such ordinance is at
the most dubious and under the present Local Government Code non-existent.
WHEREFORE, the writ of certiorari is granted and the decision of the lower
court dated January 15, 1976 reversed, set aside, and nullied. Ordinance No.
84, Series of 1975 of the Municipality of Bocaue is declared void and
unconstitutional. The temporary restraining order issued by this Court is
hereby made permanent. No costs.
VELASCO VS. VILLEGAS
This is an appeal from an order of the lower court dismissing a suit for
declaratory relief challenging the constitutionality based on Ordinance No.
4964 of the City of Manila, the contention being that it amounts to a deprivation
of property of petitioners-appellants of their means of livelihood without due
process of law. The assailed ordinance is worded thus: "It shall be prohibited
for any operator of any barber shop to conduct the business of massaging
customers or other persons in any adjacent room or rooms of said barber shop,
or in any room or rooms within the same building where the barber shop is
located as long as the operator of the barber shop and the room where
massaging is conducted is the same person." 1 As noted in the appealed
order, petitioners-appellants admitted that criminal cases for the violation of
this ordinance had been previously filed and decided. The lower court,
therefore, held that a petition for declaratory relief did not lie, its availability
being dependent on there being as yet no case involving such issue having
been filed.
Even if such were not the case, the attack against the validity cannot succeed.
As pointed out in the brief of respondents-appellees, it is a police power
measure. The objectives behind its enactment are: "(1) To be able to impose
payment of the license fee for engaging in the business of massage clinic
under Ordinance No. 3659 as amended by Ordinance 4767, an entirely
different measure than the ordinance regulating the business of barbershops
and, (2) in order to forestall possible immorality which might grow out of the
construction of separate rooms for massage of customers." 3 This Court has
been most liberal in sustaining ordinances based on the general welfare
clause. As far back as U.S. v. Salaveria, 4 a 1918 decision, this Court through
Justice Malcolm made clear the significance and scope of such a clause, which
"delegates in statutory form the police power to a municipality. As above
stated, this clause has been given wide application by municipal authorities
and has in its relation to the particular circumstances of the case been liberally
construed by the courts. Such, it is well to really is the progressive view of
Philippine jurisprudence." 5 As it was then, so it has continued to be. 6 There
is no showing, therefore, of the unconstitutionality of such ordinance.
WHEREFORE, the appealed order of the lower court is affirmed. No costs.
MAGTAJAS VS. PRYCE PROPERTIES
There was instant opposition when PAGCOR announced the opening of a
casino in Cagayan de Oro City. Civic organizations angrily denounced the
project. The religious elements echoed the objection and so did the women's
groups and the youth. Demonstrations were led by the mayor and the city
legislators. The media trumpeted the protest, describing the casino as an
affront to the welfare of the city.
The trouble arose when in 1992, flush with its tremendous success in several
cities, PAGCOR decided to expand its operations to Cagayan de Oro City. To
this end, it leased a portion of a building belonging to Pryce Properties
Corporation, Inc., one of the herein private respondents, renovated and
equipped the same, and prepared to inaugurate its casino there during the
Christmas season.
The reaction of the Sangguniang Panlungsod of Cagayan de Oro City was
swift and hostile. On December 7, 1992, it enacted Ordinance No. 3353
reading as follows:
ORDINANCE NO. 3353
AN ORDINANCE PROHIBITING THE ISSUANCE OF BUSINESS PERMIT
AND CANCELLING EXISTING BUSINESS PERMIT TO ANY
ESTABLISHMENT FOR THE USING AND ALLOWING TO BE USED ITS
PREMISES OR PORTION THEREOF FOR THE OPERATION OF CASINO.
BE IT ORDAINED by the Sangguniang Panlungsod of the City of Cagayan de
Oro, in session assembled that:
Sec. 1. — That pursuant to the policy of the city banning the operation of casino
within its territorial jurisdiction, no business permit shall be issued to any
person, partnership or corporation for the operation of casino within the city
limits.
Sec. 2. — That it shall be a violation of existing business permit by any
persons, partnership or corporation to use its business establishment or
portion thereof, or allow the use thereof by others for casino operation and
other gambling activities.
Sec. 3. — PENALTIES. — Any violation of such existing business permit as
defined in the preceding section shall suffer the following penalties, to wit:
a) Suspension of the business permit for sixty (60) days for the first offense
and a fine of P1,000.00/day
b) Suspension of the business permit for Six (6) months for the second offense,
and a fine of P3,000.00/day
c) Permanent revocation of the business permit and imprisonment of One (1)
year, for the third and subsequent offenses.
Sec. 4. — This Ordinance shall take effect ten (10) days from publication
thereof.
Nor was this all. On January 4, 1993, it adopted a sterner Ordinance No. 3375-
93 reading as follows:
ORDINANCE NO. 3375-93
AN ORDINANCE PROHIBITING THE OPERATION OF CASINO AND
PROVIDING PENALTY FOR VIOLATION THEREFOR.
WHEREAS, the City Council established a policy as early as 1990 against
CASINO under its Resolution No. 2295;
WHEREAS, on October 14, 1992, the City Council passed another Resolution
No. 2673, reiterating its policy against the establishment of CASINO;
WHEREAS, subsequently, thereafter, it likewise passed Ordinance No. 3353,
prohibiting the issuance of Business Permit and to cancel existing Business
Permit to any establishment for the using and allowing to be used its premises
or portion thereof for the operation of CASINO;
WHEREAS, under Art. 3, section 458, No. (4), sub paragraph VI of the Local
Government Code of 1991 (Rep. Act 7160) and under Art. 99, No. (4),
Paragraph VI of the implementing rules of the Local Government Code, the
City Council as the Legislative Body shall enact measure to suppress any
activity inimical to public morals and general welfare of the people and/or
regulate or prohibit such activity pertaining to amusement or entertainment in
order to protect social and moral welfare of the community;
NOW THEREFORE,
BE IT ORDAINED by the City Council in session duly assembled that:
Sec. 1. — The operation of gambling CASINO in the City of Cagayan de Oro
is hereby prohibited.
Sec. 2. — Any violation of this Ordinance shall be subject to the following
penalties:
a) Administrative fine of P5,000.00 shall be imposed against the proprietor,
partnership or corporation undertaking the operation, conduct, maintenance of
gambling CASINO in the City and closure thereof;
b) Imprisonment of not less than six (6) months nor more than one (1) year or
a fine in the amount of P5,000.00 or both at the discretion of the court against
the manager, supervisor, and/or any person responsible in the establishment,
conduct and maintenance of gambling CASINO.
Sec. 3. — This Ordinance shall take effect ten (10) days after its publication in
a local newspaper of general circulation.
Pryce assailed the ordinances before the Court of Appeals, where it was joined
by PAGCOR as intervenor and supplemental petitioner. Their challenge
succeeded. On March 31, 1993, the Court of Appeals declared the ordinances
invalid and issued the writ prayed for to prohibit their
enforcement. 1 Reconsideration of this decision was denied on July 13, 1993. 2
Cagayan de Oro City and its mayor are now before us in this petition for review
under Rule 45 of the Rules of Court. 3 They aver that the respondent Court of
Appeals erred in holding that:
1. Under existing laws, the Sangguniang Panlungsod of the City of Cagayan
de Oro does not have the power and authority to prohibit the establishment
and operation of a PAGCOR gambling casino within the City's territorial limits.
2. The phrase "gambling and other prohibited games of chance" found in Sec.
458, par. (a), sub-par. (1) — (v) of R.A. 7160 could only mean "illegal
gambling."
3. The questioned Ordinances in effect annul P.D. 1869 and are therefore
invalid on that point.
4. The questioned Ordinances are discriminatory to casino and partial to
cockfighting and are therefore invalid on that point.
5. The questioned Ordinances are not reasonable, not consonant with the
general powers and purposes of the instrumentality concerned and
inconsistent with the laws or policy of the State.
6. It had no option but to follow the ruling in the case of Basco, et al. v.
PAGCOR, G.R. No. 91649, May 14, 1991, 197 SCRA 53 in disposing of the
issues presented in this present case.
PAGCOR is a corporation created directly by P.D. 1869 to help centralize and
regulate all games of chance, including casinos on land and sea within the
territorial jurisdiction of the Philippines. In Basco v. Philippine Amusements
and Gaming Corporation, 4 this Court sustained the constitutionality of the
decree and even cited the benefits of the entity to the national economy as the
third highest revenue-earner in the government, next only to the BIR and the
Bureau of Customs.
Cagayan de Oro City, like other local political subdivisions, is empowered to
enact ordinances for the purposes indicated in the Local Government Code. It
is expressly vested with the police power under what is known as the General
Welfare Clause now embodied in Section 16 as follows:
Sec. 16. — General Welfare. — Every local government unit shall exercise the
powers expressly granted, those necessarily implied therefrom, as well as
powers necessary, appropriate, or incidental for its efficient and effective
governance, and those which are essential to the promotion of the general
welfare. Within their respective territorial jurisdictions, local government units
shall ensure and support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance the right of the
people to a balanced ecology, encourage and support the development of
appropriate and self-reliant scientific and technological capabilities, improve
public morals, enhance economic prosperity and social justice, promote full
employment among their residents, maintain peace and order, and preserve
the comfort and convenience of their inhabitants.
In addition, Section 458 of the said Code specifically declares that:
Sec. 458. — Powers, Duties, Functions and Compensation. — (a) The
Sangguniang Panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general welfare
of the city and its inhabitants pursuant to Section 16 of this Code and in the
proper exercise of the corporate powers of the city as provided for under
Section 22 of this Code, and shall:
(1) Approve ordinances and pass resolutions necessary for an efficient and
effective city government, and in this connection, shall:
xxx xxx xxx
(v) Enact ordinances intended to prevent, suppress and impose appropriate
penalties for habitual drunkenness in public places, vagrancy, mendicancy,
prostitution, establishment and maintenance of houses of ill
repute, gambling and other prohibited games of chance, fraudulent devices
and ways to obtain money or property, drug addiction, maintenance of drug
dens, drug pushing, juvenile delinquency, the printing, distribution or exhibition
of obscene or pornographic materials or publications, and such other activities
inimical to the welfare and morals of the inhabitants of the city;
This section also authorizes the local government units to regulate properties
and businesses within their territorial limits in the interest of the general
welfare. 5
The petitioners argue that by virtue of these provisions, the Sangguniang
Panlungsod may prohibit the operation of casinos because they involve games
of chance, which are detrimental to the people. Gambling is not allowed by
general law and even by the Constitution itself. The legislative power conferred
upon local government units may be exercised over all kinds of gambling and
not only over "illegal gambling" as the respondents erroneously argue. Even if
the operation of casinos may have been permitted under P.D. 1869, the
government of Cagayan de Oro City has the authority to prohibit them within
its territory pursuant to the authority entrusted to it by the Local Government
Code.
It is submitted that this interpretation is consonant with the policy of local
autonomy as mandated in Article II, Section 25, and Article X of the
Constitution, as well as various other provisions therein seeking to strengthen
the character of the nation. In giving the local government units the power to
prevent or suppress gambling and other social problems, the Local
Government Code has recognized the competence of such communities to
determine and adopt the measures best expected to promote the general
welfare of their inhabitants in line with the policies of the State.
The petitioners also stress that when the Code expressly authorized the local
government units to prevent and suppress gambling and other prohibited
games of chance, like craps, baccarat, blackjack and roulette, it
meant all forms of gambling without distinction. Ubi lex non distinguit, nec nos
distinguere debemos. 6 Otherwise, it would have expressly excluded from the
scope of their power casinos and other forms of gambling authorized by
special law, as it could have easily done. The fact that it did not do so simply
means that the local government units are permitted to prohibit all kinds of
gambling within their territories, including the operation of casinos.
The adoption of the Local Government Code, it is pointed out, had the effect
of modifying the charter of the PAGCOR. The Code is not only a later
enactment than P.D. 1869 and so is deemed to prevail in case of
inconsistencies between them. More than this, the powers of the PAGCOR
under the decree are expressly discontinued by the Code insofar as they do
not conform to its philosophy and provisions, pursuant to Par. (f) of its repealing
clause reading as follows:
(f) All general and special laws, acts, city charters, decrees, executive orders,
proclamations and administrative regulations, or part or parts thereof which
are inconsistent with any of the provisions of this Code are hereby repealed or
modified accordingly.
It is also maintained that assuming there is doubt regarding the effect of the
Local Government Code on P.D. 1869, the doubt must be resolved in favor of
the petitioners, in accordance with the direction in the Code calling for its liberal
interpretation in favor of the local government units. Section 5 of the Code
specifically provides:
Sec. 5. Rules of Interpretation. — In the interpretation of the provisions of this
Code, the following rules shall apply:
(a) Any provision on a power of a local government unit shall be liberally
interpreted in its favor, and in case of doubt, any question thereon shall be
resolved in favor of devolution of powers and of the lower local government
unit. Any fair and reasonable doubt as to the existence of the power shall be
interpreted in favor of the local government unit concerned;
xxx xxx xxx
(c) The general welfare provisions in this Code shall be liberally interpreted to
give more powers to local government units in accelerating economic
development and upgrading the quality of life for the people in the community;
. . . (Emphasis supplied.)
Finally, the petitioners also attack gambling as intrinsically harmful and cite
various provisions of the Constitution and several decisions of this Court
expressive of the general and official disapprobation of the vice. They invoke
the State policies on the family and the proper upbringing of the youth and, as
might be expected, call attention to the old case of U.S. v. Salaveria,7 which
sustained a municipal ordinance prohibiting the playing of panguingue. The
petitioners decry the immorality of gambling. They also impugn the wisdom of
P.D. 1869 (which they describe as "a martial law instrument") in creating
PAGCOR and authorizing it to operate casinos "on land and sea within the
territorial jurisdiction of the Philippines."
This is the opportune time to stress an important point.
The morality of gambling is not a justiciable issue. Gambling is not illegal per
se. While it is generally considered inimical to the interests of the people, there
is nothing in the Constitution categorically proscribing or penalizing gambling
or, for that matter, even mentioning it at all. It is left to Congress to deal with
the activity as it sees fit. In the exercise of its own discretion, the legislature
may prohibit gambling altogether or allow it without limitation or it may prohibit
some forms of gambling and allow others for whatever reasons it may consider
sufficient. Thus, it has prohibited jueteng and monte but permits lotteries,
cockfighting and horse-racing. In making such choices, Congress has
consulted its own wisdom, which this Court has no authority to review, much
less reverse. Well has it been said that courts do not sit to resolve the merits
of conflicting theories. 8 That is the prerogative of the political departments. It
is settled that questions regarding the wisdom, morality, or practicibility of
statutes are not addressed to the judiciary but may be resolved only by the
legislative and executive departments, to which the function belongs in our
scheme of government. That function is exclusive. Whichever way these
branches decide, they are answerable only to their own conscience and the
constituents who will ultimately judge their acts, and not to the courts of justice.
The only question we can and shall resolve in this petition is the validity of
Ordinance No. 3355 and Ordinance No. 3375-93 as enacted by the
Sangguniang Panlungsod of Cagayan de Oro City. And we shall do so only by
the criteria laid down by law and not by our own convictions on the propriety
of gambling.
The tests of a valid ordinance are well established. A long line of
decisions 9 has held that to be valid, an ordinance must conform to the
following substantive requirements:
1) It must not contravene the constitution or any statute.
2) It must not be unfair or oppressive.
3) It must not be partial or discriminatory.
4) It must not prohibit but may regulate trade.
5) It must be general and consistent with public policy.
6) It must not be unreasonable.
We begin by observing that under Sec. 458 of the Local Government Code,
local government units are authorized to prevent or suppress, among others,
"gambling and other prohibited games of chance." Obviously, this provision
excludes games of chance which are not prohibited but are in fact permitted
by law. The petitioners are less than accurate in claiming that the Code could
have excluded such games of chance but did not. In fact it does. The language
of the section is clear and unmistakable. Under the rule of noscitur a sociis, a
word or phrase should be interpreted in relation to, or given the same meaning
of, words with which it is associated. Accordingly, we conclude that since the
word "gambling" is associated with "and other prohibited games of chance,"
the word should be read as referring to only illegal gambling which, like
the other prohibited games of chance, must be prevented or suppressed.
We could stop here as this interpretation should settle the problem quite
conclusively. But we will not. The vigorous efforts of the petitioners on behalf
of the inhabitants of Cagayan de Oro City, and the earnestness of their
advocacy, deserve more than short shrift from this Court.
The apparent flaw in the ordinances in question is that they contravene P.D.
1869 and the public policy embodied therein insofar as they prevent PAGCOR
from exercising the power conferred on it to operate a casino in Cagayan de
Oro City. The petitioners have an ingenious answer to this misgiving. They
deny that it is the ordinances that have changed P.D. 1869 for an ordinance
admittedly cannot prevail against a statute. Their theory is that the change has
been made by the Local Government Code itself, which was also enacted by
the national lawmaking authority. In their view, the decree has been, not really
repealed by the Code, but merely "modified pro tanto" in the sense that
PAGCOR cannot now operate a casino over the objection of the local
government unit concerned. This modification of P.D. 1869 by the Local
Government Code is permissible because one law can change or repeal
another law.
It seems to us that the petitioners are playing with words. While insisting that
the decree has only been "modified pro tanto," they are actually arguing that it
is already dead, repealed and useless for all intents and purposes because
the Code has shorn PAGCOR of all power to centralize and regulate casinos.
Strictly speaking, its operations may now be not only prohibited by the local
government unit; in fact, the prohibition is not only discretionary
but mandated by Section 458 of the Code if the word "shall" as used therein is
to be given its accepted meaning. Local government units have now no choice
but to prevent and suppress gambling, which in the petitioners' view includes
both legal and illegal gambling. Under this construction, PAGCOR will have no
more games of chance to regulate or centralize as they must all be prohibited
by the local government units pursuant to the mandatory duty imposed upon
them by the Code. In this situation, PAGCOR cannot continue to exist except
only as a toothless tiger or a white elephant and will no longer be able to
exercise its powers as a prime source of government revenue through the
operation of casinos.
It is noteworthy that the petitioners have cited only Par. (f) of the repealing
clause, conveniently discarding the rest of the provision which painstakingly
mentions the specific laws or the parts thereof which are repealed (or modified)
by the Code. Significantly, P.D. 1869 is not one of them. A reading of the entire
repealing clause, which is reproduced below, will disclose the omission:
Sec. 534. Repealing Clause. — (a) Batas Pambansa Blg. 337, otherwise
known as the "Local Government Code," Executive Order No. 112 (1987), and
Executive Order No. 319 (1988) are hereby repealed.
(b) Presidential Decree Nos. 684, 1191, 1508 and such other decrees, orders,
instructions, memoranda and issuances related to or concerning the barangay
are hereby repealed.
(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding
hospital fund; Section 3, a (3) and b (2) of Republic Act. No. 5447 regarding
the Special Education Fund; Presidential Decree No. 144 as amended by
Presidential Decree Nos. 559 and 1741; Presidential Decree No. 231 as
amended; Presidential Decree No. 436 as amended by Presidential Decree
No. 558; and Presidential Decree Nos. 381, 436, 464, 477, 526, 632, 752, and
1136 are hereby repealed and rendered of no force and effect.
(d) Presidential Decree No. 1594 is hereby repealed insofar as it governs
locally-funded projects.
(e) The following provisions are hereby repealed or amended insofar as they
are inconsistent with the provisions of this Code: Sections 2, 16, and 29 of
Presidential Decree No. 704; Sections 12 of Presidential Decree No. 87, as
amended; Sections 52, 53, 66, 67, 68, 69, 70, 71, 72, 73, and 74 of Presidential
Decree No. 463, as amended; and Section 16 of Presidential Decree No. 972,
as amended, and
(f) All general and special laws, acts, city charters, decrees, executive orders,
proclamations and administrative regulations, or part or parts thereof which
are inconsistent with any of the provisions of this Code are hereby repealed or
modified accordingly.
Furthermore, it is a familiar rule that implied repeals are not lightly presumed
in the absence of a clear and unmistakable showing of such intention.
In Lichauco & Co. v. Apostol, 10 this Court explained:
The cases relating to the subject of repeal by implication all proceed on the
assumption that if the act of later date clearly reveals an intention on the part
of the lawmaking power to abrogate the prior law, this intention must be given
effect; but there must always be a sufficient revelation of this intention, and it
has become an unbending rule of statutory construction that the intention to
repeal a former law will not be imputed to the Legislature when it appears that
the two statutes, or provisions, with reference to which the question arises bear
to each other the relation of general to special.
There is no sufficient indication of an implied repeal of P.D. 1869. On the
contrary, as the private respondent points out, PAGCOR is mentioned as the
source of funding in two later enactments of Congress, to wit, R.A. 7309,
creating a Board of Claims under the Department of Justice for the benefit of
victims of unjust punishment or detention or of violent crimes, and R.A. 7648,
providing for measures for the solution of the power crisis. PAGCOR revenues
are tapped by these two statutes. This would show that the PAGCOR charter
has not been repealed by the Local Government Code but has in fact been
improved as it were to make the entity more responsive to the fiscal problems
of the government.
It is a canon of legal hermeneutics that instead of pitting one statute against
another in an inevitably destructive confrontation, courts must exert every
effort to reconcile them, remembering that both laws deserve a becoming
respect as the handiwork of a coordinate branch of the government. On the
assumption of a conflict between P.D. 1869 and the Code, the proper action is
not to uphold one and annul the other but to give effect to both by harmonizing
them if possible. This is possible in the case before us. The proper resolution
of the problem at hand is to hold that under the Local Government Code, local
government units may (and indeed must) prevent and suppress all kinds of
gambling within their territories except only those allowed by statutes like P.D.
1869. The exception reserved in such laws must be read into the Code, to
make both the Code and such laws equally effective and mutually
complementary.
This approach would also affirm that there are indeed two kinds of gambling,
to wit, the illegal and those authorized by law. Legalized gambling is not a
modern concept; it is probably as old as illegal gambling, if not indeed more
so. The petitioners' suggestion that the Code authorizes them to prohibit all
kinds of gambling would erase the distinction between these two forms of
gambling without a clear indication that this is the will of the legislature.
Plausibly, following this theory, the City of Manila could, by mere ordinance,
prohibit the Philippine Charity Sweepstakes Office from conducting a lottery as
authorized by R.A. 1169 and B.P. 42 or stop the races at the San Lazaro
Hippodrome as authorized by R.A. 309 and R.A. 983.
In light of all the above considerations, we see no way of arriving at the
conclusion urged on us by the petitioners that the ordinances in question are
valid. On the contrary, we find that the ordinances violate P.D. 1869, which
has the character and force of a statute, as well as the public policy expressed
in the decree allowing the playing of certain games of chance despite the
prohibition of gambling in general.
The rationale of the requirement that the ordinances should not contravene a
statute is obvious. Municipal governments are only agents of the national
government. Local councils exercise only delegated legislative powers
conferred on them by Congress as the national lawmaking body. The delegate
cannot be superior to the principal or exercise powers higher than those of the
latter. It is a heresy to suggest that the local government units can undo the
acts of Congress, from which they have derived their power in the first place,
and negate by mere ordinance the mandate of the statute.
Municipal corporations owe their origin to, and derive their powers and rights
wholly from the legislature. It breathes into them the breath of life, without
which they cannot exist. As it creates, so it may destroy. As it may destroy, it
may abridge and control. Unless there is some constitutional limitation on the
right, the legislature might, by a single act, and if we can suppose it capable of
so great a folly and so great a wrong, sweep from existence all of the municipal
corporations in the State, and the corporation could not prevent it. We know of
no limitation on the right so far as to the corporation themselves are concerned.
They are, so to phrase it, the mere tenants at will of the legislature. 11
This basic relationship between the national legislature and the local
government units has not been enfeebled by the new provisions in the
Constitution strengthening the policy of local autonomy. Without meaning to
detract from that policy, we here confirm that Congress retains control of the
local government units although in significantly reduced degree now than
under our previous Constitutions. The power to create still includes the power
to destroy. The power to grant still includes the power to withhold or recall.
True, there are certain notable innovations in the Constitution, like the direct
conferment on the local government units of the power to tax, 12 which cannot
now be withdrawn by mere statute. By and large, however, the national
legislature is still the principal of the local government units, which cannot defy
its will or modify or violate it.
The Court understands and admires the concern of the petitioners for the
welfare of their constituents and their apprehensions that the welfare of
Cagayan de Oro City will be endangered by the opening of the casino. We
share the view that "the hope of large or easy gain, obtained without special
effort, turns the head of the workman" 13 and that "habitual gambling is a cause
of laziness and ruin." 14 In People v. Gorostiza, 15 we declared: "The social
scourge of gambling must be stamped out. The laws against gambling must
be enforced to the limit." George Washington called gambling "the child of
avarice, the brother of iniquity and the father of mischief." Nevertheless, we
must recognize the power of the legislature to decide, in its own wisdom, to
legalize certain forms of gambling, as was done in P.D. 1869 and impliedly
affirmed in the Local Government Code. That decision can be revoked by this
Court only if it contravenes the Constitution as the touchstone of all official
acts. We do not find such contravention here.
We hold that the power of PAGCOR to centralize and regulate all games of
chance, including casinos on land and sea within the territorial jurisdiction of
the Philippines, remains unimpaired. P.D. 1869 has not been modified by the
Local Government Code, which empowers the local government units to
prevent or suppress only those forms of gambling prohibited by law.
Casino gambling is authorized by P.D. 1869. This decree has the status of a
statute that cannot be amended or nullified by a mere ordinance. Hence, it was
not competent for the Sangguniang Panlungsod of Cagayan de Oro City to
enact Ordinance No. 3353 prohibiting the use of buildings for the operation of
a casino and Ordinance No. 3375-93 prohibiting the operation of casinos. For
all their praiseworthy motives, these ordinances are contrary to P.D. 1869 and
the public policy announced therein and are therefore ultra vires and void.
WHEREFORE, the petition is DENIED and the challenged decision of the
respondent Court of Appeals is AFFIRMED, with costs against the petitioners.
It is so ordered.
TANO VS. SOCRATES
Petitioners caption their petition as one for "Certiorari, Injunction With
Preliminary and Mandatory Injunction, with Prayer for Temporary Restraining
Order" and pray that this Court: (1) declare as unconstitutional: (a) Ordinance
No. 15-92, dated 15 December 1992, of the Sangguniang Panglungsod of
Puerto Princesa; (b) Office Order No. 23, Series of 1993, dated 22 January
1993, issued by Acting City Mayor Amado L. Lucero of Puerto Princesa City;
and (c) Resolution No. 33, Ordinance No. 2, Series of 1993, dated 19 February
1993, of the Sangguniang Panlalawigan of Palawan; (2) enjoin the
enforcement thereof; and (3) restrain respondents Provincial and City
Prosecutors of Palawan and Puerto Princesa City and Judges of the Regional
Trial Courts, Metropolitan Trial Courts 1 and Municipal Circuit Trial Courts in
Palawan from assuming jurisdiction over and hearing cases concerning the
violation of the Ordinances and of the Office Order.
More appropriately, the petition is, and shall be treated as, a special civil action
for certiorari and prohibition.
The following is petitioners' summary of the factual antecedents giving rise to
the petition:
1. On December 15, 1992, the Sangguniang Panlungsod ng Puerto Princesa
City enacted Ordinance No. 15-92 which took effect on January 1, 1993
entitled: "AN ORDINANCE BANNING THE SHIPMENT OF ALL LIVE FISH
AND LOBSTER OUTSIDE PUERTO PRINCESA CITY FROM JANUARY 1,
1993 TO JANUARY 1, 1998 AND PROVIDING EXEMPTIONS, PENALTIES
AND FOR OTHER PURPOSES THEREOF", the full text of which reads as
follows:
Sec. 1. Title of the Ordinance. — This Ordinance is entitled: AN ORDINANCE
BANNING THE SHIPMENT OF ALL LIVE FISH AND LOBSTER OUTSIDE
PUERTO PRINCESA CITY FROM JANUARY 1, 1993 TO JANUARY 1, 1998
AND PROVIDING EXEMPTIONS, PENALTIES AND FOR OTHER
PURPOSES THEREOF.
Sec. 2. Purpose, Scope and Coverage. — To effectively free our City Sea
Waters from Cyanide and other Obnoxious substance[s], and shall cover all
persons and/or entities operating within and outside the City of Puerto
Princesa who is are (sic) directly or indirectly in the business or shipment of
live fish and lobster outside the City.
Sec. 3. Definition of terms. — For purpose of this Ordinance the following are
hereby defined:
A. SEA BASS — A kind of fish under the family of Centropomidae, better
known as APAHAP;
B. CATFISH — A kind of fish under the family of Plotosidae, better known as
HITO-HITO;
C. MUDFISH — A kind of fish under the family of Orphicaphalisae better
known as DALAG;
D. ALL LIVE FISH — All alive, breathing not necessarily moving of all specie[s]
use[d] for food and for aquarium purposes.
E. LIVE LOBSTER — Several relatively, large marine crusteceans [sic] of the
genus Homarus that are alive and breathing not necessarily moving.
Sec. 4. It shall be unlawful [for] any person or any business enterprise or
company to ship out from Puerto Princesa City to any point of destination either
via aircraft or seacraft of any live fish and lobster except SEA BASS, CATFISH,
MUDFISH, AND MILKFISH FRIES.
Sec. 5. Penalty Clause. — Any person/s and or business entity violating this
Ordinance shall be penalized with a fine of not more than P5,000.00 or
imprisonment of not more than twelve (12) months, cancellation of their permit
to do business in the City of Puerto Princesa or all of the herein stated
penalties, upon the discretion of the court.
Sec. 6. If the owner and/or operator of the establishment found violating the
provisions of this ordinance is a corporation or a partnership, the penalty
prescribed in Section 5 hereof shall be imposed upon its president and/or
General Manager or Managing Partner and/or Manager, as the case maybe
[sic].
Sec. 7. Any existing ordinance or any provision of any ordinance inconsistent
to [sic] this ordinance is deemed repealed.
Sec. 8. This Ordinance shall take effect on January 1, 1993.
SO ORDAINED.
xxx xxx xxx
2. To implement said city ordinance, then Acting City Mayor Amado L. Lucero
issued Office Order No. 23, Series of 1993 dated January 22, 1993 which
reads as follows:
In the interest of public service and for purposes of City Ordinance No. PD
426-14-74, otherwise known as "AN ORDINANCE REQUIRING ANY
PERSON ENGAGED OR INTENDING TO ENGAGE IN ANY BUSINESS,
TRADE, OCCUPATION, CALLING OR PROFESSION OR HAVING IN HIS
POSSESSION ANY OF THE ARTICLES FOR WHICH A PERMIT IS
REQUIRED TO BE HAD, TO OBTAIN FIRST A MAYOR'S PERMIT" and "City
Ordinance No. 15-92, AN ORDINANCE BANNING THE SHIPMENT OF ALL
LIVE FISH AND LOBSTER OUTSIDE PUERTO PRINCESA CITY FROM
JANUARY 1, 1993 TO JANUARY 1, 1998, you are hereby authorized and
directed to check or conduct necessary inspections on cargoes containing live
fish and lobster being shipped out from the Puerto Princesa Airport, Puerto
Princesa Wharf or at any port within the jurisdiction of the City to any point of
destinations [sic] either via aircraft or seacraft.
The purpose of the inspection is to ascertain whether the shipper possessed
the required Mayor's Permit issued by this Office and the shipment is covered
by invoice or clearance issued by the local office of the Bureau of Fisheries
and Aquatic Resources and as to compliance with all other existing rules and
regulations on the matter.
Any cargo containing live fish and lobster without the required documents as
stated herein must be held for proper disposition.
In the pursuit of this Order, you are hereby authorized to coordinate with the
PAL Manager, the PPA Manager, the local PNP Station and other offices
concerned for the needed support and cooperation. Further, that the usual
courtesy and diplomacy must be observed at all times in the conduct of the
inspection.
Please be guided accordingly.
xxx xxx xxx
3. On February 19, 1993, the Sangguniang Panlalawigan, Provincial
Government of Palawan enacted Resolution No. 33 entitled: "A RESOLUTION
PROHIBITING THE CATCHING, GATHERING, POSSESSING, BUYING,
SELLING AND SHIPMENT OF LIVE MARINE CORAL DWELLING AQUATIC
ORGANISMS, TO WIT: FAMILY: SCARIDAE (MAMENG), EPINE PHELUS
FASCIATUS (SUNO). CROMILEPTES ALTIVELIS (PANTHER OR
SENORITA), LOBSTER BELOW 200 GRAMS AND SPAWNING, TRIDACNA
GIGAS (TAKLOBO), PINCTADA MARGARITEFERA (MOTHER PEARL,
OYSTERS, GIANT CLAMS AND OTHER SPECIES), PENAEUS
MONODON (TIGER PRAWN-BREEDER SIZE OR
MOTHER), EPINEPHELUS SUILLUS (LOBA OR GREEN GROUPER) AND
FAMILY: BALISTIDAE (TROPICAL AQUARIUM FISHES) FOR A PERIOD
FIVE (5) YEARS IN AND COMING FROM PALAWAN WATERS", the full text
of which reads as follows:
WHEREAS, scientific and factual researches [sic] and studies disclose that
only five (5) percent of the corals of our province remain to be in excellent
condition as [a] habitat of marine coral dwelling aquatic organisms;
WHEREAS, it cannot be gainsaid that the destruction and devastation of the
corals of our province were principally due to illegal fishing activities like
dynamite fishing, sodium cyanide fishing, use of other obnoxious substances
and other related activities;
WHEREAS, there is an imperative and urgent need to protect and preserve
the existence of the remaining excellent corals and allow the devastated ones
to reinvigorate and regenerate themselves into vitality within the span of five
(5) years;
WHEREAS, Sec. 468, Par. 1, Sub-Par. VI of the [sic] R.A. 7160 otherwise
known as the Local Government Code of 1991 empowers the Sangguniang
Panlalawigan to protect the environment and impose appropriate penalties
[upon] acts which endanger the environment such as dynamite fishing and
other forms of destructive fishing, among others.
NOW, THEREFORE, on motion by Kagawad Nelson P. Peneyra and upon
unanimous decision of all the members present;
Be it resolved as it is hereby resolved, to approve Resolution No. 33, Series of
1993 of the Sangguniang Panlalawigan and to enact Ordinance No. 2 for the
purpose, to wit:
ORDINANCE NO. 2
Series of 1993
BE IT ORDAINED BY THE SANGGUNIANG PANLALAWIGAN IN SESSION
ASSEMBLED:
Sec. 1. TITLE — This Ordinance shall be known as an "Ordinance Prohibiting
the catching, gathering, possessing, buying, selling and shipment of live
marine coral dwelling aquatic organisms, to wit: 1. Family: Scaridae (Mameng),
2. Epinephelus Fasciatus (Suno) 3. Cromileptes altivelis (Panther or Senorita),
lobster below 200 grams and spawning), 4. Tridacna Gigas (Taklobo), 5.
Pinctada Margaretefera (Mother Pearl, Oysters, Giant Clams and other
species), 6. Penaeus Monodon (Tiger Prawn-breeder size or mother), 7.
Epinephelus Suillus (Loba or Green Grouper) and 8. Family: Balistidae
(T[r]opical Aquarium Fishes) for a period of five (5) years in and coming from
Palawan Waters.
Sec. II. PRELIMINARY CONSIDERATIONS
1. Sec. 2-A (Rep. Act 7160). It is hereby declared, the policy of the state that
the territorial and political subdivisions of the State shall enjoy genuine and
meaningful local autonomy to enable them to attain their fullest development
as self-reliant communities and make them more effective partners in the
attainment of national goals. Toward this end, the State shall provide for [a]
more responsive and accountable local government structure instituted
through a system of decentralization whereby local government units shall be
given more powers, authority, responsibilities and resources.
2. Sec. 5-A (R.A. 7160). Any provision on a power of [a] local Government Unit
shall be liberally interpreted in its favor, and in case of doubt, any question
thereon shall be resolved in favor of devolution of powers and of the lower
government units. "Any fair and reasonable doubts as to the existence of the
power shall be interpreted in favor of the Local Government Unit concerned."
3. Sec. 5-C (R.A. 7160). The general welfare provisions in this Code shall be
liberally interpreted to give more powers to local government units in
accelerating economic development and upgrading the quality of life for the
people in the community.
4. Sec. 16 (R.A. 7160). General Welfare. — Every local government unit shall
exercise the powers expressly granted, those necessarily implied therefrom,
as well as powers necessary, appropriate, or incidental for its efficient and
effective governance; and those which are essential to the promotion of the
general welfare.
Sec. III. DECLARATION OF POLICY. — It is hereby declared to be the policy
of the Province of Palawan to protect and conserve the marine resources of
Palawan not only for the greatest good of the majority of the present generation
but with [the] proper perspective and consideration of [sic] their prosperity, and
to attain this end, the Sangguniang Panlalawigan henceforth declares that is
(sic) shall be unlawful for any person or any business entity to engage in
catching, gathering, possessing, buying, selling and shipment of live marine
coral dwelling aquatic organisms as enumerated in Section 1 hereof in and
coming out of Palawan Waters for a period of five (5) years;
Sec. IV. PENALTY CLAUSE. — Any person and/or business entity violating
this Ordinance shall be penalized with a fine of not more than Five Thousand
Pesos (P5,000.00), Philippine Currency, and/or imprisonment of six (6) months
to twelve (12) months and confiscation and forfeiture of paraphernalias [sic]
and equipment in favor of the government at the discretion of the Court;
Sec. V. SEPARABILITY CLAUSE. — If for any reason, a Section or provision
of this Ordinance shall be held as unconditional [sic] or invalid, it shall not affect
the other provisions hereof.
Sec. VI. REPEALING CLAUSE. — Any existing Ordinance or a provision of
any ordinance inconsistent herewith is deemed modified, amended or
repealed.
Sec. VII. EFFECTIVITY — This Ordinance shall take effect ten (10) days after
its publication.
SO ORDAINED.
xxx xxx xxx
4. The respondents implemented the said ordinances, Annexes "A" and "C"
hereof thereby depriving all the fishermen of the whole province of Palawan
and the City of Puerto Princesa of their only means of livelihood and the
petitioners Airline Shippers Association of Palawan and other marine
merchants from performing their lawful occupation and trade;
5. Petitioners Alfredo Tano, Baldomero Tano, Teocenes Midello, Angel de
Mesa, Eulogio Tremocha, and Felipe Ongonion, Jr. were even charged
criminally under criminal case no. 93-05-C in the 1st Municipal Circuit Trial
Court of Cuyo-Agutaya-Magsaysay, an original carbon copy of the criminal
complaint dated April 12, 1993 is hereto attached as Annex "D"; while xerox
copies are attached as Annex "D" to the copies of the petition;
6. Petitioners Robert Lim and Virginia Lim, on the other hand, were charged
by the respondent PNP with the respondent City Prosecutor of Puerto Princess
City, a xerox copy of the complaint is hereto attached as Annex "E";
Without seeking redress from the concerned local government units,
prosecutor's office and courts, petitioners directly invoked our original
jurisdiction by filing this petition on 4 June 1993. In sum, petitioners contend
that:
First, the Ordinances deprived them of due process of law, their livelihood, and
unduly restricted them from the practice of their trade, in violation of Section 2,
Article XII and Sections 2 and 7 of Article XIII of the 1987 Constitution.
Second, Office Order No. 23 contained no regulation nor condition under which
the Mayor's permit could be granted or denied; in other words, the Mayor had
the absolute authority to determine whether or not to issue the permit.
Third, as Ordinance No. 2 of the Province of Palawan "altogether prohibited
the catching, gathering, possession, buying, selling and shipping of live marine
coral dwelling organisms, without any distinction whether it was caught or
gathered through lawful fishing method," the Ordinance took away the right of
petitioners-fishermen to earn their livelihood in lawful ways; and insofar as
petitioners-members of Airline Shippers Association are concerned, they were
unduly prevented from pursuing their vocation and entering "into contracts
which are proper, necessary, and essential to carry out their business
endeavors to a successful conclusion."
Finally, as Ordinance No. 2 of the Sangguniang Panlalawigan is null and void,
the criminal cases based thereon against petitioners Tano and the others have
to be dismissed.
In the Resolution of 15 June 1993 we required respondents to comment on the
petition, and furnished the Office of the Solicitor General with a copy thereof.
In their comment filed on 13 August 1993, public respondents Governor
Socrates and Members of the Sangguniang Panlalawigan of Palawan
defended the validity of Ordinance No. 2, Series of 1993, as a valid exercise
of the Provincial Government's power under the general welfare clause
(Section 16 of the Local Government Code of 1991 [hereafter, LGC]), and its
specific power to protect the environment and impose appropriate penalties for
acts which endanger the environment, such as dynamite fishing and other
forms of destructive fishing under Section 447 (a) (1) (vi), Section 458 (a) (1)
(vi), and Section 468 (a) (1) (vi), of the LGC. They claimed that in the exercise
of such powers, the Province of Palawan had "the right and responsibility . . .
to insure that the remaining coral reefs, where fish dwells [sic], within its
territory remain healthy for the future generation." The Ordinance, they further
asserted, covered only live marine coral dwelling aquatic organisms which
were enumerated in the ordinance and excluded other kinds of live marine
aquatic organisms not dwelling in coral reefs; besides the prohibition was for
only five (5) years to protect and preserve the pristine coral and allow those
damaged to regenerate.
Aforementioned respondents likewise maintained that there was no violation
of the due process and equal protection clauses of the Constitution. As to the
former, public hearings were conducted before the enactment of the Ordinance
which, undoubtedly, had a lawful purpose and employed reasonable means;
while as to the latter, a substantial distinction existed "between a fisherman
who catches live fish with the intention of selling it live, and a fisherman who
catches live fish with no intention at all of selling it live," i.e., "the former uses
sodium cyanide while the latter does not." Further, the Ordinance applied
equally to all those belonging to one class.
On 25 October 1993 petitioners filed an Urgent Plea for the Immediate
Issuance of a Temporary Restraining Order, claiming that despite the
pendency of this case, Branch 50 of the Regional Trial Court of Palawan was
bent on proceeding with Criminal Case No. 11223 against petitioners Danilo
Tano, Alfredo Tano, Eulogio Tremocha, Romualdo Tano, Baldomero Tano,
Andres Linijan and Angel de Mesa for violation of Ordinance No. 2 of the
Sangguniang Panlalawigan of Palawan. Acting on said plea, we issued on 11
November 1993 a temporary restraining order directing Judge Angel Miclat of
said court to cease and desist from proceeding with the arraignment and pre-
trial of Criminal Case No. 11223.
On 12 July 1994, we excused the Office of the Solicitor General from filing a
comment, considering that as claimed by said office in its Manifestation of 28
June 1994, respondents were already represented by counsel.
The rest of the respondents did not file any comment on the petition.
In the resolution of 15 September 1994, we resolved to consider the comment
on the petition as the Answer, gave due course to the petition and required the
parties to submit their respective memoranda. 2
On 22 April 1997 we ordered impleaded as party respondents the Department
of Agriculture and the Bureau of Fisheries and Aquatic Resources and required
the Office of the Solicitor General to comment on their behalf. But in light of
the latter's motion of 9 July 1997 for an extension of time to file the comment
which would only result in further delay, we dispensed with said comment.
After due deliberation on the pleadings filed, we resolved to dismiss this
petition for want of merit, and on 22 July 1997, assigned it to the ponente to
write the opinion of the Court.
I
There are actually two sets of petitioners in this case. The first is composed of
Alfredo Tano, Baldomero Tano, Danilo Tano, Romualdo Tano, Teocenes
Midello, Angel de Mesa, Eulogio Tremocha, Felipe Ongonion, Jr., Andres
Linijan, and Felimon de Mesa, who were criminally charged with violating
Sangguniang Panlalawigan Resolution No. 33 and Ordinance No. 2, Series of
1993, of the Province of Palawan, in Criminal Case No. 93-05-C of the 1st
Municipal Circuit Trial Court (MCTC) of Palawan; 3 and Robert Lim and
Virginia Lim who were charged with violating City Ordinance No. 15-92 of
Puerto Princesa City and Ordinance No. 2, Series of 1993, of the Province of
Palawan before the Office of the City Prosecutor of Puerto Princesa. 4 All of
them, with the exception of Teocenes Midello, Felipe Ongonion, Jr., Felimon
de Mesa, Robert Lim and Virginia Lim, are likewise the accused in Criminal
Case No. 11223 for the violation of Ordinance No. 2 of the Sangguniang
Panlalawigan of Palawan, pending before Branch 50 of the Regional Trial
Court of Palawan. 5
The second set of petitioners is composed of the rest of the petitioners
numbering seventy-seven (77), all of whom, except the Airline Shippers
Association of Palawan — an alleged private association of several marine
merchants — are natural persons who claim to be fishermen.
The primary interest of the first set of petitioners is, of course, to prevent the
prosecution, trial and determination of the criminal cases until the
constitutionality or legality of the Ordinances they allegedly violated shall have
been resolved. The second set of petitioners merely claim that being fishermen
or marine merchants, they would be adversely affected by the ordinance's.
As to the first set of petitioners, this special civil for certiorari must fail on the
ground of prematurity amounting to a lack of cause of action. There is no
showing that said petitioners, as the accused in the criminal cases, have filed
motions to quash the informations therein and that the same were denied. The
ground available for such motions is that the facts charged therein do not
constitute an offense because the ordinances in question are
unconstitutional. 6 It cannot then be said that the lower courts acted without or
in excess of jurisdiction or with grave abuse of discretion to justify recourse to
the extraordinary remedy of certiorari or prohibition. It must further be stressed
that even if petitioners did file motions to quash, the denial thereof would not
forthwith give rise to a cause of action under Rule 65 of the Rules of Court.
The general rule is that where a motion to quash is denied, the remedy
therefrom is not certiorari, but for the party aggrieved thereby to go to trial
without prejudice to reiterating special defenses involved in said motion, and
if, after trial on the merits an adverse decision is rendered, to appeal therefrom
in the manner authorized by law. 7 And, even where in an exceptional
circumstance such denial may be the subject of a special civil action
for certiorari, a motion for reconsideration must have to be filed to allow the
court concerned an opportunity to correct its errors, unless such motion may
be dispensed with because of existing exceptional circumstances. 8 Finally,
even if a motion for reconsideration has been filed and denied, the remedy
under Rule 65 is still unavailable absent any showing of the grounds provided
for in Section 1 thereof. 9 For obvious reasons, the petition at bar does not,
and could not have, alleged any of such grounds.
As to the second set of petitioners, the instant petition is obviously one for
DECLARATORY RELIEF, i.e., for a declaration that the Ordinances in
question are a "nullity . . . for being unconstitutional." 10 As such, their petition
must likewise fail, as this Court is not possessed of original jurisdiction over
petitions for declaratory relief even if only questions of law are involved,11 it
being settled that the Court merely exercises appellate jurisdiction over such
petitions.12
II
Even granting arguendo that the first set of petitioners have a cause of action
ripe for the extraordinary writ of certiorari, there is here a clear disregard of the
hierarchy of courts, and no special and important reason or exceptional and
compelling circumstance has been adduced why direct recourse to us should
be allowed. While we have concurrent jurisdiction with Regional Trial courts
and with the Court of Appeals to issue writs of certiorari,
prohibition, mandamus, quo warranto, habeas corpus and injunction, such
concurrence gives petitioners no unrestricted freedom of choice of court forum,
so we held in People v. Cuaresma.13
This concurrence of jurisdiction is not . . . to be taken as according to parties
seeking any of the writs an absolute unrestrained freedom of choice of the
court to which application therefor will be directed. There is after all hierarchy
of courts. That hierarchy is determinative of the venue of appeals, and should
also serve as a general determinant of the appropriate forum for petitions for
the extraordinary writs. A becoming regard for that judicial hierarchy most
certainly indicates that petitions for the issuance of extraordinary writs against
first level ("inferior") courts should be filed with the Regional Trial Court, and
those against the latter, with the Court of Appeals. A direct invocation of the
Supreme Court's original jurisdiction to issue these writs should be allowed
only when there are special and important reasons therefor, clearly and
specifically set out in the petition. This is established policy. It is a policy
necessary to prevent inordinate demands upon the Court's time and attention
which are better devoted to those matters within its exclusive jurisdiction, and
to prevent further over-crowding of the Court's docket. . . .
The Court feels the need to reaffirm that policy at this time, and to enjoin strict
adherence thereto in the light of what it perceives to be a growing tendency on
the part of litigants and lawyers to have their applications for the so-called
extraordinary writs, and sometimes even their appeals, passed upon and
adjudicated directly and immediately by the highest tribunal of the land. . . .
In Santiago v. Vasquez,14 this Court forcefully expressed that the propensity of
litigants and lawyers to disregard the hierarchy of courts must be put to a halt,
not only because of the imposition upon the precious time of this Court, but
also because of the inevitable and resultant delay, intended or otherwise, in
the adjudication of the case which often has to be remanded or referred to the
lower court, the proper forum under the rules of procedure, or as better
equipped to resolve the issues since this Court is not a trier of facts. We
reiterated "the judicial policy that this Court will not entertain direct resort to it
unless the redress desired cannot be obtained in the appropriate courts or
where exceptional and compelling circumstances justify availment of a remedy
within and calling for the exercise of [its] primary jurisdiction."
III
Notwithstanding the foregoing procedural obstacles against the first set of
petitioners, we opt to resolve this case on its merits considering that the lifetime
of the challenged Ordinances is about to end. Ordinance No. 15-92 of the City
of Puerto Princesa is effective only up to 1 January 1998, while Ordinance No.
2 of the Province of Palawan, enacted on 19 February 1993, is effective for
only five (5) years. Besides, these Ordinances were undoubtedly enacted in
the exercise of powers under the new LGC relative to the protection and
preservation of the environment and are thus novel and of paramount
importance. No further delay then may be allowed in the resolution of the
issues raised.
It is of course settled that laws (including ordinances enacted by local
government units) enjoy the presumption of constitutionality. 15 To overthrow
this presumption, there must be a clear and unequivocal breach of the
Constitution, not merely a doubtful or argumentative contradiction. In short, the
conflict with the Constitution must be shown beyond reasonable
doubt.16 Where doubt exists, even if well-founded, there can be no finding of
unconstitutionality. To doubt is to sustain.17
After a scrutiny of the challenged Ordinances and the provisions of the
Constitution petitioners claim to have been violated, we find petitioners'
contentions baseless and so hold that the former do not suffer from any
infirmity, both under the Constitution and applicable laws.
Petitioners specifically point to Section 2, Article XII and Sections 2 and 7,
Article XIII of the Constitution as having been transgressed by the Ordinances.
The pertinent portion of Section 2 of Article XII reads:
Sec. 2. . . .
The State shall protect the nation's marine wealth in its archipelagic waters,
territorial sea, and exclusive economic zone, and reserve its use and
enjoyment exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural resources
by Filipino citizens, as well as cooperative fish farming, with priority to
subsistence fishermen and fishworkers in rivers, lakes, bays, and lagoons.
Sections 2 and 7 of Article XIII provide:
Sec. 2. The promotion of social justice shall include the commitment to create
economic opportunities based on freedom of initiative and self-reliance.
xxx xxx xxx
Sec. 7. The State shall protect the rights of subsistence fishermen, especially
of local communities, to the preferential use of the communal marine and
fishing resources, both inland and offshore. It shall provide support to such
fishermen through appropriate technology and research, adequate financial,
production, and marketing assistance, and other services. The State shall also
protect, develop, and conserve such resources. The protection shall extend to
offshore fishing grounds of subsistence fishermen against foreign intrusion.
Fishworkers shall receive a just share from their labor in the utilization of
marine and fishing resources.
There is absolutely no showing that any of the petitioners qualifies as a
subsistence or marginal fisherman. In their petition, petitioner Airline Shippers
Association of Palawan is self-described as "a private association composed
of Marine Merchants;" petitioners Robert Lim and Virginia Lim, as "merchants;"
while the rest of the petitioners claim to be "fishermen," without any
qualification, however, as to their status.
Since the Constitution does not specifically provide a definition of the terms
"subsistence" or "marginal" fishermen,18 they should be construed in their
general and ordinary sense. A marginal fisherman is an individual engaged in
fishing whose margin of return or reward in his harvest of fish as measured by
existing price levels is barely sufficient to yield a profit or cover the cost of
gathering the fish,19 while a subsistence fisherman is one whose catch yields
but the irreducible minimum for his livelihood. 20 Section 131(p) of the LGC
(R.A. No. 7160) defines a marginal farmer or fisherman as "an individual
engaged in subsistence farming or fishing which shall be limited to the sale,
barter or exchange of agricultural or marine products produced by himself and
his immediate family." It bears repeating that nothing in the record supports a
finding that any petitioner falls within these definitions.
Besides, Section 2 of Article XII aims primarily not to bestow any right to
subsistence fishermen, but to lay stress on the duty of the State to protect the
nation's marine wealth. What the provision merely recognizes is that the State
may allow, by law, cooperative fish farming, with priority to subsistence
fishermen and fishworkers in rivers, lakes, bays and lagoons. Our survey of
the statute books reveals that the only provision of law which speaks of a
preferential right of marginal fishermen is Section 149 of the LGC, which
pertinently provides:
Sec. 149. Fishery Rentals, Fees and Charges. — . . .
(b) The sangguniang bayan may:
(1) Grant fishery privileges to erect fish corrals, oyster, mussels or other
aquatic beds or bangus fry areas, within a definite zone of the municipal
waters, as determined by it: Provided, however, That duly registered
organizations and cooperatives of marginal fishermen shall have the
preferential right to such fishery privileges . . . .
In a Joint Administrative Order No. 3 dated 25 April 1996, the Secretary of the
Department of Agriculture and the Secretary of the Department of Interior and
Local Government prescribed guidelines concerning the preferential treatment
of small fisherfolk relative to the fishery right mentioned in Section 149. This
case, however, does not involve such fishery right.
Anent Section 7 of Article XIII, it speaks not only of the use of communal
marine and fishing resources, but of their protection, development and
conservation. As hereafter shown, the ordinances in question are meant
precisely to protect and conserve our marine resources to the end that their
enjoyment may be guaranteed not only for the present generation, but also for
the generations to come.
The so-called "preferential right" of subsistence or marginal fishermen to the
use of marine resources is not at all absolute. In accordance with the Regalian
Doctrine, marine resources belong to the State, and, pursuant to the first
paragraph of Section 2, Article XII of the Constitution, their "exploration,
development and utilization . . . shall be under the full control and supervision
of the State." Moreover, their mandated protection, development and
conservation as necessarily recognized by the framers of the Constitution,
imply certain restrictions on whatever right of enjoyment there may be in favor
of anyone. Thus, as to the curtailment of the preferential treatment of marginal
fishermen, the following exchange between Commissioner Francisco Rodrigo
and Commissioner Jose F.S. Bengzon, Jr., took place at the plenary session
of the Constitutional Commission:
MR. RODRIGO:
Let us discuss the implementation of this because I would not raise the hopes
of our people, and afterwards fail in the implementation. How will this be
implemented? Will there be a licensing or giving of permits so that government
officials will know that one is really a marginal fisherman? Or if policeman say
that a person is not a marginal fisherman, he can show his permit, to prove
that indeed he is one.
MR. BENGZON:
Certainly, there will be some mode of licensing insofar as this is concerned
and this particular question could be tackled when we discuss the Article on
Local Governments — whether we will leave to the local governments or to
Congress on how these things will be implemented. But certainly, I think our
congressmen and our local officials will not be bereft of ideas on how to
implement this mandate.
xxx xxx xxx
MR. RODRIGO:
So, once one is licensed as a marginal fisherman, he can go anywhere in the
Philippines and fish in any fishing grounds.
MR. BENGZON:
Subject to whatever rules and regulations and local laws that may be passed,
may be existing or will be passed.21 (emphasis supplied)
What must likewise be borne in mind is the state policy enshrined in the
Constitution regarding the duty of the State to protect and advance the right of
the people to a balanced and healthful ecology in accord with the rhythm and
harmony of nature. 22 On this score, in Oposa v. Factoran, 23 this Court
declared:
While the right to a balanced and healthful ecology is to be found under the
Declaration of Principles the State Policies and not under the Bill of Rights, it
does not follow that it is less important than any of the civil and political rights
enumerated in the latter. Such a right belongs to a different category of rights
altogether for it concerns nothing less than self-preservation and self-
perpetuation — aptly and fittingly stressed by the petitioners — the
advancement of which may even be said to predate all governments and
constitutions. As a matter of fact, these basic rights need not even be written
in the Constitution for they are assumed to exist from the inception of
humankind. If they are now explicitly mentioned in the fundamental charter, it
is because of the well-founded fear of its framers that unless the rights to a
balanced and healthful ecology and to health are mandated as state policies
by the Constitution itself, thereby highlighting their continuing importance and
imposing upon the state a solemn obligation to preserve the first and protect
and advance the second, the day would not be too far when all else would be
lost not only for the present generation, but also for those to come —
generations which stand to inherit nothing but parched earth incapable of
sustaining life.
The right to a balanced and healthful ecology carries with it a correlative duty
to refrain from impairing the environment. . . .
The LGC provisions invoked by private respondents merely seek to give flesh
and blood to the right of the people to a balanced and healthful ecology. In
fact, the General Welfare Clause, expressly mentions this right:
Sec. 16. General Welfare. — Every local government unit shall exercise the
powers expressly granted, those necessarily implied therefrom, as well as
powers necessary, appropriate, or incidental for its efficient and effective
governance, and those which are essential to the promotion of the general
welfare. Within their respective territorial jurisdictions, local government units
shall ensure and support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance the right of the
people to a balanced ecology, encourage and support the development of
appropriate and self-reliant scientific and technological capabilities, improve
public morals, enhance economic prosperity and social justice, promote full
employment among their residents, maintain peace and order, and preserve
the comfort and convenience of their inhabitants. (emphasis supplied).
Moreover, Section 5(c) of the LGC explicitly mandates that the general welfare
provisions of the LGC "shall be liberally interpreted to give more powers to the
local government units in accelerating economic development and upgrading
the quality of life for the people of the community."
The LGC vests municipalities with the power to grant fishery privileges in
municipal waters and impose rentals, fees or charges therefor; to penalize, by
appropriate ordinances, the use of explosives, noxious or poisonous
substances, electricity, muro-ami, and other deleterious methods of fishing;
and to prosecute any violation of the provisions of applicable fishery
laws.24 Further, the sangguniang bayan, the sangguniang panlungsod and the
sangguniang panlalawigan are directed to enact ordinances for the general
welfare of the municipality and its inhabitants, which shall include, inter alia,
ordinances that "[p]rotect the environment and impose appropriate penalties
for acts which endanger the environment such as dynamite fishing and other
forms of destructive fishing . . . and such other activities which result in
pollution, acceleration of eutrophication of rivers and lakes, or of ecological
imbalance."25
Finally, the centerpiece of LGC is the system of decentralization26 as expressly
mandated by the Constitution.27 Indispensable to decentralization
is devolution and the LGC expressly provides that "[a]ny provision on a power
of a local government unit shall be liberally interpreted in its favor, and in case
of doubt, any question thereon shall be resolved in favor of devolution of
powers and of the lower local government unit. Any fair and reasonable doubt
as to the existence of the power shall be interpreted in favor of the local
government unit concerned."28 Devolution refers to the act by which the
National Government confers power and authority upon the various local
government units to perform specific functions and responsibilities. 29
One of the devolved powers enumerated in the section of the LGC on
devolution is the enforcement of fishery laws in municipal waters including the
conservation of mangroves.30 This necessarily includes the enactment of
ordinances to effectively carry out such fishery laws within the municipal
waters.
The term "municipal waters," in turn, includes not only streams, lakes, and tidal
waters within the municipality, not being the subject of private ownership and
not comprised within the national parks, public forest, timber lands, forest
reserves, or fishery reserves, but also marine waters included between two
lines drawn perpendicularly to the general coastline from points where the
boundary lines of the municipality or city touch the sea at low tide and a third
line parallel with the general coastline and fifteen kilometers from
it.31 Under P.D. No. 704, the marine waters included in municipal waters is
limited to three nautical miles from the general coastline using the above
perpendicular lines and a third parallel line.
These "fishery laws" which local government units may enforce under Section
17(b)(2)(i) in municipal waters include: (1) P.D. No. 704; (2) P.D. No. 1015
which, inter alia, authorizes the establishment of a "closed season" in any
Philippine water if necessary for conservation or ecological purposes; (3) P.D.
No. 1219 which provides for the exploration, exploitation, utilization and
conservation of coral resources; (4) R.A. No. 5474, as amended by B.P. Blg.
58, which makes it unlawful for any person, association or corporation to catch
or cause to be caught, sell, offer to sell, purchase, or have in possession any
of the fish specie called gobiidae or "ipon" during closed season; and (5) R.A.
No. 6451 which prohibits and punishes electrofishing, as well as various
issuances of the BFAR.
To those specifically devolved insofar as the control and regulation of fishing
in municipal waters and the protection of its marine environment are
concerned, must be added the following:
1. Issuance of permits to construct fish cages within municipal waters;
2. Issuance of permits to gather aquarium fishes within municipal waters;
3. Issuance of permits to gather kapis shells within municipal waters;
4. Issuance of permits to gather/culture shelled mollusks within municipal
waters;
5. Issuance of licenses to establish seaweed farms within municipal waters;
6. Issuance of licenses to establish culture pearls within municipal waters;
7. Issuance of auxiliary invoice to transport fish and fishery products; and
8. Establishment of "closed season" in municipal waters.
These functions are covered in the Memorandum of Agreement of 5 April 1994
between the Department of Agriculture and the Department of Interior and
Local Government.
In light then of the principles of decentralization and devolution enshrined in
the LGC and the powers granted therein to local government units under
Section 16 (the General Welfare Clause), and under Sections 149, 447(a) (1)
(vi), 458 (a) (1) (vi) and 468 (a) (1) (vi), which unquestionably involve the
exercise of police power, the validity of the questioned Ordinances cannot be
doubted.
Parenthetically, we wish to add that these Ordinances find full support under
R.A. No. 7611, otherwise known as the Strategic Environmental Plan (SEP)
for Palawan Act, approved on 19 June 1992. This statute adopts a
"comprehensive framework for the sustainable development of Palawan
compatible with protecting and enhancing the natural resources and
endangered environment of the province," which "shall serve to guide the local
government of Palawan and the government agencies concerned in the
formulation and implementation of plans, programs and projects affecting said
province."32
At this time then, it would be appropriate to determine the relation between the
assailed Ordinances and the aforesaid powers of the Sangguniang
Panlungsod of the City of Puerto Princesa and the Sangguniang Panlalawigan
of the Province of Palawan to protect the environment. To begin, we ascertain
the purpose of the Ordinances as set forth in the statement of purposes or
declaration of policies quoted earlier.
It is clear to the Court that both Ordinances have two principal objectives or
purposes: (1) to establish a "closed season" for the species of fish or aquatic
animals covered therein for a period of five years; and (2) to protect the coral
in the marine waters of the City of Puerto Princesa and the Province of
Palawan from further destruction due to illegal fishing activities.
The accomplishment of the first objective is well within the devolved power to
enforce fishery laws in municipal waters, such as P.D. No. 1015, which allows
the establishment of "closed seasons." The devolution of such power has been
expressly confirmed in the Memorandum of Agreement of 5 April 1994
between the Department of Agriculture and the Department of Interior and
Local Government.
The realization of the second objective clearly falls within both the general
welfare clause of the LGC and the express mandate thereunder to cities and
provinces to protect the environment and impose appropriate penalties for acts
which endanger the environment.33
The destruction of coral reefs results in serious, if not irreparable, ecological
imbalance, for coral reefs are among nature's life-support systems.34 They
collect, retain and recycle nutrients for adjacent nearshore areas such as
mangroves, seagrass beds, and reef flats; provide food for marine plants and
animals; and serve as a protective shelter for aquatic organisms.35 It is said
that "[e]cologically, the reefs are to the oceans what forests are to continents:
they are shelter and breeding grounds for fish and plant species that will
disappear without them."36
The prohibition against catching live fish stems, in part, from the modern
phenomenon of live-fish trade which entails the catching of so-called exotic
species of tropical fish, not only for aquarium use in the West, but also for "the
market for live banquet fish [which] is virtually insatiable in ever more affluent
Asia.37 These exotic species are coral-dwellers, and fishermen catch them by
"diving in shallow water with corraline habitats and squirting sodium cyanide
poison at passing fish directly or onto coral crevices; once affected the fish are
immobilized [merely stunned] and then scooped by hand."38 The diver then
surfaces and dumps his catch into a submerged net attached to the skiff.
Twenty minutes later, the fish can swim normally. Back on shore, they are
placed in holding pens, and within a few weeks, they expel the cyanide from
their system and are ready to be hauled. They are then placed in saltwater
tanks or packaged in plastic bags filled with seawater for shipment by air freight
to major markets for live food fish.39 While the fish are meant to survive, the
opposite holds true for their former home as "[a]fter the fisherman squirts the
cyanide, the first thing to perish is the reef algae, on which fish feed. Days
later, the living coral starts to expire. Soon the reef loses its function as habitat
for the fish, which eat both the algae and invertebrates that cling to the coral.
The reef becomes an underwater graveyard, its skeletal remains brittle,
bleached of all color and vulnerable to erosion from the pounding of the
waves."40 It has been found that cyanide fishing kills most hard and soft corals
within three months of repeated application.41
The nexus then between the activities barred by Ordinance No. 15-92 of the
City of Puerto Princesa and the prohibited acts provided in Ordinance No. 2,
Series of 1993 of the Province of Palawan, on one hand, and the use of sodium
cyanide, on the other, is painfully obvious. In sum, the public purpose and
reasonableness of the Ordinances may not then be controverted.
As to Office Order No. 23, Series of 1993, issued by Acting City Mayor Amado
L. Lucero of the City of Puerto Princesa, we find nothing therein violative of
any constitutional or statutory provision. The Order refers to the
implementation of the challenged ordinance and is not the Mayor's Permit.
The dissenting opinion of Mr. Justice Josue N. Bellosillo relies upon the lack
of authority on the part of the Sangguniang Panglungsod of Puerto Princesa
to enact Ordinance No. 15, Series of 1992, on the theory that the subject
thereof is within the jurisdiction and responsibility of the Bureau of Fisheries
and Aquatic Resources (BFAR) under P.D. No. 704, otherwise known as the
Fisheries Decree of 1975; and that, in any event, the Ordinance is
unenforceable for lack of approval by the Secretary of the Department of
Natural Resources (DNR), likewise in accordance with P.D. No. 704.
The majority is unable to accommodate this view. The jurisdiction and
responsibility of the BFAR under P.D. No. 704, over the management,
conservation, development, protection, utilization and disposition of all fishery
and aquatic resources of the country is not all-encompassing. First, Section 4
thereof excludes from such jurisdiction and responsibility municipal waters,
which shall be under the municipal or city government concerned, except
insofar as fishpens and seaweed culture in municipal centers are concerned.
This section provides, however, that all municipal or city ordinances and
resolutions affecting fishing and fisheries and any disposition thereunder shall
be submitted to the Secretary of the Department of Natural Resources for
appropriate action and shall have full force and effect only upon his approval. 42
Second, it must at once be pointed out that the BFAR is no longer under the
Department of Natural Resources (now Department of Environment and
Natural Resources). Executive Order No. 967 of 30 June 1984 transferred the
BFAR from the control and supervision of the Minister (formerly Secretary) Of
Natural Resources to the Ministry of Agriculture and Food (MAF) and
converted it into a mere staff agency thereof, integrating its functions with the
regional offices of the MAF.
In Executive Order No. 116 of 30 January 1987, which reorganized the MAF,
the BFAR was retained as an attached agency of the MAF. And under the
Administrative Code of 1987,43 the BFAR is placed under the Title concerning
the Department of Agriculture.44
Therefore, it is incorrect to say that the challenged Ordinance of the City of
Puerto Princesa is invalid or unenforceable because it was not approved by
the Secretary of the DENR. If at all, the approval that should be sought would
be that of the Secretary of the Department of Agriculture. However, the
requirement of approval by the Secretary of the Department of Agriculture (not
DENR) of municipal ordinances affecting fishing and fisheries in municipal
waters has been dispensed with in view of the following reasons:
(1) Section 534 (Repealing Clause) of the LGC expressly repeals or amends
Sections 16 and 29 of P.D. No. 70445 insofar as they are inconsistent with the
provisions of the LGC.
(2) As discussed earlier, under the general welfare clause of the LGC, local
government units have the power, inter alia, to enact ordinances to enhance
the right of the people to a balanced ecology. It likewise specifically vests
municipalities with the power to grant fishery privileges in municipal waters,
and impose rentals, fees or charges therefor; to penalize, by appropriate
ordinances, the use of explosives, noxious or poisonous substances,
electricity, muro-ami, and other deleterious methods of fishing; and to
prosecute any violation of the provisions of applicable fishery laws.46 Finally, it
imposes upon the sangguniang bayan, the sangguniang panlungsod, and the
sangguniang panlalawigan the duty to enact ordinances to "[p]rotect the
environment and impose appropriate penalties for acts which endanger the
environment such as dynamite fishing and other forms of destructive fishing .
. . and such other activities which result in pollution, acceleration of
eutrophication of rivers and lakes or of ecological imbalance."47
In closing, we commend the Sangguniang Panlungsod of the City of Puerto
Princesa and Sangguniang Panlalawigan of the Province of Palawan for
exercising the requisite political will to enact urgently needed legislation to
protect and enhance the marine environment, thereby sharing in the herculean
task of arresting the tide of ecological destruction. We hope that other local
government units shall now be roused from their lethargy and adopt a more
vigilant stand in the battle against the decimation of our legacy to future
generations. At this time, the repercussions of any further delay in their
response may prove disastrous, if not, irreversible.
WHEREFORE, the instant petition is DISMISSED for lack of merit and the
temporary restraining order issued on 11 November 1993 is LIFTED.
No pronouncement as to costs.
SO ORDERED.
CITY OF MANILA VS. LAGUIO
I know only that what is moral is what you feel good after and what is immoral
is what you feel bad after.
Ernest Hermingway
Death in the Afternoon, Ch. 1
It is a moral and political axiom that any dishonorable act, if performed by
oneself, is less immoral than if performed by someone else, who would be
well-intentioned in his dishonesty.
J. Christopher Gerald
Bonaparte in Egypt, Ch. I
The Court's commitment to the protection of morals is secondary to its fealty
to the fundamental law of the land. It is foremost a guardian of the Constitution
but not the conscience of individuals. And if it need be, the Court will not
hesitate to "make the hammer fall, and heavily" in the words of Justice Laurel,
and uphold the constitutional guarantees when faced with laws that, though
not lacking in zeal to promote morality, nevertheless fail to pass the test of
constitutionality.
the West, pursuant to P.D. 499 be allowed or authorized to contract and
engage in, any business providing certain forms of amusement,
entertainment, services and facilities where women are used as tools in
entertainment and which tend to disturb the community, annoy the
inhabitants, and adversely affect the social and moral welfare of the
community, such as but not limited to:
1. Sauna Parlors
2. Massage Parlors

The pivotal issue in this Petition1 under Rule 45 (then Rule 42) of the Revised 3. Karaoke Bars
Rules on Civil Procedure seeking the reversal of the Decision2 in Civil Case 4. Beerhouses
No. 93-66511 of the Regional Trial Court (RTC) of Manila, Branch 18 (lower
court),3 is the validity of Ordinance No. 7783 (the Ordinance) of the City of 5. Night Clubs
Manila.4
6. Day Clubs
The antecedents are as follows:
7. Super Clubs
Private respondent Malate Tourist Development Corporation (MTDC) is a
8. Discotheques
corporation engaged in the business of operating hotels, motels, hostels and
lodging houses.5 It built and opened Victoria Court in Malate which was 9. Cabarets
licensed as a motel although duly accredited with the Department of Tourism
as a hotel.6 On 28 June 1993, MTDC filed a Petition for Declaratory Relief with 10. Dance Halls
Prayer for a Writ of Preliminary Injunction and/or Temporary Restraining
11. Motels
Order7 (RTC Petition) with the lower court impleading as defendants, herein
petitioners City of Manila, Hon. Alfredo S. Lim (Lim), Hon. Joselito L. Atienza, 12. Inns
and the members of the City Council of Manila (City Council). MTDC prayed
that the Ordinance, insofar as it includes motels and inns as among its SEC. 2 The City Mayor, the City Treasurer or any person acting in behalf of
prohibited establishments, be declared invalid and unconstitutional.8 the said officials are prohibited from issuing permits, temporary or
otherwise, or from granting licenses and accepting payments for the
Enacted by the City Council9 on 9 March 1993 and approved by petitioner City operation of business enumerated in the preceding section.
Mayor on 30 March 1993, the said Ordinance is entitled–
SEC. 3. Owners and/or operator of establishments engaged in, or devoted
AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR OPERATION to, the businesses enumerated in Section 1 hereof are hereby given three (3)
OF BUSINESSES PROVIDING CERTAIN FORMS OF AMUSEMENT, months from the date of approval of this ordinance within which to wind
ENTERTAINMENT, SERVICES AND FACILITIES IN THE ERMITA-MALATE up business operations or to transfer to any place outside of the Ermita-
AREA, PRESCRIBING PENALTIES FOR VIOLATION THEREOF, AND FOR Malate area or convert said businesses to other kinds of business
OTHER PURPOSES.10 allowable within the area, such as but not limited to:
The Ordinance is reproduced in full, hereunder: 1. Curio or antique shop
SECTION 1. Any provision of existing laws and ordinances to the contrary 2. Souvenir Shops
notwithstanding, no person, partnership, corporation or entity shall, in the
Ermita-Malate area bounded by Teodoro M. Kalaw Sr. Street in the North, 3. Handicrafts display centers
Taft Avenue in the East, Vito Cruz Street in the South and Roxas Boulevard in
4. Art galleries
5. Records and music shops
6. Restaurants
7. Coffee shops
8. Flower shops
9. Music lounge and sing-along restaurants, with well-defined activities for
wholesome family entertainment that cater to both local and foreign clientele.
10. Theaters engaged in the exhibition, not only of motion pictures but also of
cultural shows, stage and theatrical plays, art exhibitions, concerts and the
like.
11. Businesses allowable within the law and medium intensity districts as
provided for in the zoning ordinances for Metropolitan Manila, except new
warehouse or open-storage depot, dock or yard, motor repair shop, gasoline
service station, light industry with any machinery, or funeral establishments.
SEC. 4. Any person violating any provisions of this ordinance, shall upon
conviction, be punished by imprisonment of one (1) year or fine of FIVE
THOUSAND (P5,000.00) PESOS, or both, at the discretion of the Court,
PROVIDED, that in case of juridical person, the President, the General
Manager, or person-in-charge of operation shall be liable thereof; PROVIDED
FURTHER, that in case of subsequent violation and conviction, the
premises of the erring establishment shall be closed and padlocked
permanently.
SEC. 5. This ordinance shall take effect upon approval.
Enacted by the City Council of Manila at its regular session today, March 9,
1993.
Approved by His Honor, the Mayor on March 30, 1993. (Emphasis supplied)
In the RTC Petition, MTDC argued that the Ordinance erroneously and
improperly included in its enumeration of prohibited establishments, motels
and inns such as MTDC's Victoria Court considering that these were not
establishments for "amusement" or "entertainment" and they were not
"services or facilities for entertainment," nor did they use women as "tools for
entertainment," and neither did they "disturb the community," "annoy the
inhabitants" or "adversely affect the social and moral welfare of the
community."11
MTDC further advanced that the Ordinance was invalid and unconstitutional
for the following reasons: (1) The City Council has no power to prohibit the
operation of motels as Section 458 (a) 4 (iv) 12 of the Local Government Code
of 1991 (the Code) grants to the City Council only the power to regulate the
establishment, operation and maintenance of hotels, motels, inns, pension
houses, lodging houses and other similar establishments; (2) The Ordinance
is void as it is violative of Presidential Decree (P.D.) No. 499 13 which
specifically declared portions of the Ermita-Malate area as a commercial zone
with certain restrictions; (3) The Ordinance does not constitute a proper
exercise of police power as the compulsory closure of the motel business has
no reasonable relation to the legitimate municipal interests sought to be
protected; (4) The Ordinance constitutes an ex post facto law by punishing the
operation of Victoria Court which was a legitimate business prior to its
enactment; (5) The Ordinance violates MTDC's constitutional rights in that: (a)
it is confiscatory and constitutes an invasion of plaintiff's property rights; (b) the
City Council has no power to find as a fact that a particular thing is a
nuisance per se nor does it have the power to extrajudicially destroy it; and (6)
The Ordinance constitutes a denial of equal protection under the law as no
reasonable basis exists for prohibiting the operation of motels and inns, but
not pension houses, hotels, lodging houses or other similar establishments,
and for prohibiting said business in the Ermita-Malate area but not outside of
this area.14
In their Answer15 dated 23 July 1993, petitioners City of Manila and Lim
maintained that the City Council had the power to "prohibit certain forms of
entertainment in order to protect the social and moral welfare of the
community" as provided for in Section 458 (a) 4 (vii) of the Local Government
Code,16 which reads, thus:
Section 458. Powers, Duties, Functions and Compensation. (a) The
sangguniang panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general welfare
of the city and its inhabitants pursuant to Section 16 of this Code and in the
proper exercise of the corporate powers of the city as provided for under
Section 22 of this Code, and shall:
....
(4) Regulate activities relative to the use of land, buildings and structures within
the city in order to promote the general welfare and for said purpose shall:
....
(vii) Regulate the establishment, operation, and maintenance of any
entertainment or amusement facilities, including theatrical performances,
circuses, billiard pools, public dancing schools, public dance halls, sauna
baths, massage parlors, and other places for entertainment or amusement;
regulate such other events or activities for amusement or entertainment,
particularly those which tend to disturb the community or annoy the
inhabitants, or require the suspension or suppression of the same; or, prohibit
certain forms of amusement or entertainment in order to protect the social and
moral welfare of the community.
Citing Kwong Sing v. City of Manila,17 petitioners insisted that the power of
regulation spoken of in the above-quoted provision included the power to
control, to govern and to restrain places of exhibition and amusement. 18
Petitioners likewise asserted that the Ordinance was enacted by the City
Council of Manila to protect the social and moral welfare of the community in
conjunction with its police power as found in Article III, Section 18(kk) of
Republic Act No. 409,19 otherwise known as the Revised Charter of the City of
Manila (Revised Charter of Manila)20 which reads, thus:
ARTICLE III
THE MUNICIPAL BOARD
. . .
Section 18. Legislative powers. – The Municipal Board shall have the following
legislative powers:
. . .
(kk) To enact all ordinances it may deem necessary and proper for the
sanitation and safety, the furtherance of the prosperity, and the promotion of
the morality, peace, good order, comfort, convenience, and general welfare of
the city and its inhabitants, and such others as may be necessary to carry into
effect and discharge the powers and duties conferred by this chapter; and to
fix penalties for the violation of ordinances which shall not exceed two hundred
pesos fine or six months' imprisonment, or both such fine and imprisonment,
for a single offense.
Further, the petitioners noted, the Ordinance had the presumption of validity;
hence, private respondent had the burden to prove its illegality or
unconstitutionality.21
Petitioners also maintained that there was no inconsistency between P.D. 499
and the Ordinance as the latter simply disauthorized certain forms of
businesses and allowed the Ermita-Malate area to remain a commercial
zone.22 The Ordinance, the petitioners likewise claimed, cannot be assailed
as ex post facto as it was prospective in operation.23 The Ordinance also did
not infringe the equal protection clause and cannot be denounced as class
legislation as there existed substantial and real differences between the
Ermita-Malate area and other places in the City of Manila.24
On 28 June 1993, respondent Judge Perfecto A.S. Laguio, Jr. (Judge Laguio)
issued an ex-parte temporary restraining order against the enforcement of
the Ordinance.25 And on 16 July 1993, again in an intrepid gesture, he granted
the writ of preliminary injunction prayed for by MTDC.26
After trial, on 25 November 1994, Judge Laguio rendered the
assailed Decision, enjoining the petitioners from implementing the Ordinance.
The dispositive portion of said Decision reads:27
WHEREFORE, judgment is hereby rendered declaring Ordinance No. 778[3],
Series of 1993, of the City of Manila null and void, and making permanent the
writ of preliminary injunction that had been issued by this Court against the
defendant. No costs.
SO ORDERED.28
Petitioners filed with the lower court a Notice of Appeal29 on 12 December
1994, manifesting that they are elevating the case to this Court under then
Rule 42 on pure questions of law.30
On 11 January 1995, petitioners filed the present Petition, alleging that the
following errors were committed by the lower court in its ruling: (1) It erred in
concluding that the subject ordinance is ultra vires, or otherwise, unfair,
unreasonable and oppressive exercise of police power; (2) It erred in holding
that the questioned Ordinance contravenes P.D. 49931 which allows operators
of all kinds of commercial establishments, except those specified therein; and
(3) It erred in declaring the Ordinance void and unconstitutional.32
In the Petition and in its Memorandum,33 petitioners in essence repeat the
assertions they made before the lower court. They contend that the
assailed Ordinance was enacted in the exercise of the inherent and plenary
power of the State and the general welfare clause exercised by local
government units provided for in Art. 3, Sec. 18 (kk) of the Revised Charter of
Manila and conjunctively, Section 458 (a) 4 (vii) of the Code. 34 They allege that
the Ordinance is a valid exercise of police power; it does not contravene P.D.
499; and that it enjoys the presumption of validity.35
In its Memorandum36 dated 27 May 1996, private respondent maintains that
the Ordinance is ultra vires and that it is void for being repugnant to the
general law. It reiterates that the questioned Ordinance is not a valid exercise
of police power; that it is violative of due process, confiscatory and amounts to
an arbitrary interference with its lawful business; that it is violative of the equal
protection clause; and that it confers on petitioner City Mayor or any officer
unregulated discretion in the execution of the Ordinance absent rules to guide
and control his actions.
This is an opportune time to express the Court's deep sentiment and
tenderness for the Ermita-Malate area being its home for several decades. A
long-time resident, the Court witnessed the area's many turn of events. It
relished its glory days and endured its days of infamy. Much as the Court harks
back to the resplendent era of the Old Manila and yearns to restore its lost
grandeur, it believes that the Ordinance is not the fitting means to that
end. The Court is of the opinion, and so holds, that the lower court did not err
in declaring the Ordinance, as it did, ultra vires and therefore null and void.
The Ordinance is so replete with constitutional infirmities that almost every
sentence thereof violates a constitutional provision. The prohibitions and
sanctions therein transgress the cardinal rights of persons enshrined by the
Constitution. The Court is called upon to shelter these rights from attempts at
rendering them worthless.
The tests of a valid ordinance are well established. A long line of decisions has
held that for an ordinance to be valid, it must not only be within the corporate
powers of the local government unit to enact and must be passed according
to the procedure prescribed by law, it must also conform to the following
substantive requirements: (1) must not contravene the Constitution or any
statute; (2) must not be unfair or oppressive; (3) must not be partial or
discriminatory; (4) must not prohibit but may regulate trade; (5) must be
general and consistent with public policy; and (6) must not be unreasonable. 37
Anent the first criterion, ordinances shall only be valid when they are not
contrary to the Constitution and to the laws.38 The Ordinance must satisfy two
requirements: it must pass muster under the test of constitutionality and the
test of consistency with the prevailing laws. That ordinances should be
constitutional uphold the principle of the supremacy of the Constitution. The
requirement that the enactment must not violate existing law gives stress to
the precept that local government units are able to legislate only by virtue of
their derivative legislative power, a delegation of legislative power from the
national legislature. The delegate cannot be superior to the principal or
exercise powers higher than those of the latter.39
This relationship between the national legislature and the local government
units has not been enfeebled by the new provisions in the Constitution
strengthening the policy of local autonomy. The national legislature is still the
principal of the local government units, which cannot defy its will or modify or
violate it.40
The Ordinance was passed by the City Council in the exercise of its police
power, an enactment of the City Council acting as agent of Congress. Local
government units, as agencies of the State, are endowed with police power in
order to effectively accomplish and carry out the declared objects of their
creation.41 This delegated police power is found in Section 16 of the Code,
known as the general welfare clause, viz:
SECTION 16. General Welfare.Every local government unit shall exercise
the powers expressly granted, those necessarily implied therefrom, as well as
powers necessary, appropriate, or incidental for its efficient and effective
governance, and those which are essential to the promotion of the general
welfare. Within their respective territorial jurisdictions, local government units
shall ensure and support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance the right of the
people to a balanced ecology, encourage and support the development of
appropriate and self-reliant scientific and technological capabilities, improve
public morals, enhance economic prosperity and social justice, promote full
employment among their residents, maintain peace and order, and preserve
the comfort and convenience of their inhabitants.
Local government units exercise police power through their respective
legislative bodies; in this case, the sangguniang panlungsod or the city
council. The Code empowers the legislative bodies to "enact ordinances,
approve resolutions and appropriate funds for the general welfare of the
province/city/municipality and its inhabitants pursuant to Section 16 of the
Code and in the proper exercise of the corporate powers of the province/city/
municipality provided under the Code.42 The inquiry in this Petition is
concerned with the validity of the exercise of such delegated power.
The Ordinance contravenes
the Constitution
The police power of the City Council, however broad and far-reaching, is
subordinate to the constitutional limitations thereon; and is subject to the
limitation that its exercise must be reasonable and for the public good. 43 In the
case at bar, the enactment of the Ordinance was an invalid exercise of
delegated power as it is unconstitutional and repugnant to general laws.
The relevant constitutional provisions are the following:
SEC. 5. The maintenance of peace and order, the protection of life, liberty, and
property, and the promotion of the general welfare are essential for the
enjoyment by all the people of the blessings of democracy.44
SEC. 14. The State recognizes the role of women in nation-building, and shall
ensure the fundamental equality before the law of women and men.45
SEC. 1. No person shall be deprived of life, liberty or property without due
process of law, nor shall any person be denied the equal protection of laws.46
Sec. 9. Private property shall not be taken for public use without just
compensation.47
A. The Ordinance infringes
the Due Process Clause
The constitutional safeguard of due process is embodied in the fiat "(N)o
person shall be deprived of life, liberty or property without due process of law.
. . ."48
There is no controlling and precise definition of due process. It furnishes
though a standard to which governmental action should conform in order that
deprivation of life, liberty or property, in each appropriate case, be valid. This
standard is aptly described as a responsiveness to the supremacy of reason,
obedience to the dictates of justice,49 and as such it is a limitation upon the
exercise of the police power.50
The purpose of the guaranty is to prevent governmental encroachment against
the life, liberty and property of individuals; to secure the individual from the
arbitrary exercise of the powers of the government, unrestrained by the
established principles of private rights and distributive justice; to protect
property from confiscation by legislative enactments, from seizure, forfeiture,
and destruction without a trial and conviction by the ordinary mode of judicial
procedure; and to secure to all persons equal and impartial justice and the
benefit of the general law.51
The guaranty serves as a protection against arbitrary regulation, and private
corporations and partnerships are "persons" within the scope of the guaranty
insofar as their property is concerned.52
This clause has been interpreted as imposing two separate limits on
government, usually called "procedural due process" and "substantive due
process."
Procedural due process, as the phrase implies, refers to the procedures that
the government must follow before it deprives a person of life, liberty, or
property. Classic procedural due process issues are concerned with what kind
of notice and what form of hearing the government must provide when it takes
a particular action.53
Substantive due process, as that phrase connotes, asks whether the
government has an adequate reason for taking away a person's life, liberty, or
property. In other words, substantive due process looks to whether there is a
sufficient justification for the government's action.54 Case law in the United
States (U.S.) tells us that whether there is such a justification depends very
much on the level of scrutiny used.55 For example, if a law is in an area where
only rational basis review is applied, substantive due process is met so long
as the law is rationally related to a legitimate government purpose. But if it is
an area where strict scrutiny is used, such as for protecting fundamental rights,
then the government will meet substantive due process only if it can prove that
the law is necessary to achieve a compelling government purpose.56
The police power granted to local government units must always be exercised
with utmost observance of the rights of the people to due process and equal
protection of the law. Such power cannot be exercised whimsically, arbitrarily
or despotically57 as its exercise is subject to a qualification, limitation or
restriction demanded by the respect and regard due to the prescription of the
fundamental law, particularly those forming part of the Bill of Rights. Individual
rights, it bears emphasis, may be adversely affected only to the extent that
may fairly be required by the legitimate demands of public interest or public
welfare.58 Due process requires the intrinsic validity of the law in interfering
with the rights of the person to his life, liberty and property.59
Requisites for the valid exercise
of Police Power are not met
To successfully invoke the exercise of police power as the rationale for the
enactment of the Ordinance, and to free it from the imputation of constitutional
infirmity, not only must it appear that the interests of the public generally, as
distinguished from those of a particular class, require an interference with
private rights, but the means adopted must be reasonably necessary for the
accomplishment of the purpose and not unduly oppressive upon
individuals.60 It must be evident that no other alternative for the
accomplishment of the purpose less intrusive of private rights can work. A
reasonable relation must exist between the purposes of the police measure
and the means employed for its accomplishment, for even under the guise of
protecting the public interest, personal rights and those pertaining to private
property will not be permitted to be arbitrarily invaded.61
Lacking a concurrence of these two requisites, the police measure shall be
struck down as an arbitrary intrusion into private rights 62 a violation of the
due process clause.
The Ordinance was enacted to address and arrest the social ills purportedly
spawned by the establishments in the Ermita-Malate area which are allegedly
operated under the deceptive veneer of legitimate, licensed and tax-paying
nightclubs, bars, karaoke bars, girlie houses, cocktail lounges, hotels and
motels. Petitioners insist that even the Court in the case of Ermita-Malate
Hotel and Motel Operators Association, Inc. v. City Mayor of Manila63 had
already taken judicial notice of the "alarming increase in the rate of prostitution,
adultery and fornication in Manila traceable in great part to existence of motels,
which provide a necessary atmosphere for clandestine entry, presence and
exit and thus become the ideal haven for prostitutes and thrill-seekers."64
The object of the Ordinance was, accordingly, the promotion and protection of
the social and moral values of the community. Granting for the sake of
argument that the objectives of the Ordinance are within the scope of the City
Council's police powers, the means employed for the accomplishment thereof
were unreasonable and unduly oppressive.
It is undoubtedly one of the fundamental duties of the City of Manila to make
all reasonable regulations looking to the promotion of the moral and social
values of the community. However, the worthy aim of fostering public morals
and the eradication of the community's social ills can be achieved through
means less restrictive of private rights; it can be attained by reasonable
restrictions rather than by an absolute prohibition. The closing down and
transfer of businesses or their conversion into businesses "allowed" under
the Ordinance have no reasonable relation to the accomplishment of its
purposes. Otherwise stated, the prohibition of the enumerated establishments
will not per se protect and promote the social and moral welfare of the
community; it will not in itself eradicate the alluded social ills of prostitution,
adultery, fornication nor will it arrest the spread of sexual disease in Manila.
Conceding for the nonce that the Ermita-Malate area teems with houses of ill-
repute and establishments of the like which the City Council may lawfully
prohibit,65 it is baseless and insupportable to bring within that classification
sauna parlors, massage parlors, karaoke bars, night clubs, day clubs, super
clubs, discotheques, cabarets, dance halls, motels and inns. This is not
warranted under the accepted definitions of these terms. The enumerated
establishments are lawful pursuits which are not per se offensive to the moral
welfare of the community.
That these are used as arenas to consummate illicit sexual affairs and as
venues to further the illegal prostitution is of no moment. We lay stress on the
acrid truth that sexual immorality, being a human frailty, may take place in the
most innocent of places that it may even take place in the substitute
establishments enumerated under Section 3 of the Ordinance. If the flawed
logic of the Ordinance were to be followed, in the remote instance that an
immoral sexual act transpires in a church cloister or a court chamber, we would
behold the spectacle of the City of Manila ordering the closure of the church or
court concerned. Every house, building, park, curb, street or even vehicles for
that matter will not be exempt from the prohibition. Simply because there are
no "pure" places where there are impure men. Indeed, even the Scripture and
the Tradition of Christians churches continually recall the presence
and universality of sin in man's history.66
The problem, it needs to be pointed out, is not the establishment, which by its
nature cannot be said to be injurious to the health or comfort of the community
and which in itself is amoral, but the deplorable human activity that may occur
within its premises. While a motel may be used as a venue for immoral sexual
activity, it cannot for that reason alone be punished. It cannot be classified as
a house of ill-repute or as a nuisance per se on a mere likelihood or a naked
assumption. If that were so and if that were allowed, then the Ermita-Malate
area would not only be purged of its supposed social ills, it would be
extinguished of its soul as well as every human activity, reprehensible or not,
in its every nook and cranny would be laid bare to the estimation of the
authorities.
The Ordinance seeks to legislate morality but fails to address the core issues
of morality. Try as the Ordinance may to shape morality, it should not foster
the illusion that it can make a moral man out of it because immorality is not a
thing, a building or establishment; it is in the hearts of men. The City Council
instead should regulate human conduct that occurs inside the establishments,
but not to the detriment of liberty and privacy which are covenants, premiums
and blessings of democracy.
While petitioners' earnestness at curbing clearly objectionable social ills is
commendable, they unwittingly punish even the proprietors and operators of
"wholesome," "innocent" establishments. In the instant case, there is a clear
invasion of personal or property rights, personal in the case of those individuals
desirous of owning, operating and patronizing those motels and property in
terms of the investments made and the salaries to be paid to those therein
employed. If the City of Manila so desires to put an end to prostitution,
fornication and other social ills, it can instead impose reasonable regulations
such as daily inspections of the establishments for any violation of the
conditions of their licenses or permits; it may exercise its authority to suspend
or revoke their licenses for these violations;67 and it may even impose
increased license fees. In other words, there are other means to reasonably
accomplish the desired end.
Means employed are
constitutionally infirm
The Ordinance disallows the operation of sauna parlors, massage parlors,
karaoke bars, beerhouses, night clubs, day clubs, super clubs, discotheques,
cabarets, dance halls, motels and inns in the Ermita-Malate area. In Section 3
thereof, owners and/or operators of the enumerated establishments are given
three (3) months from the date of approval of the Ordinance within which "to
wind up business operations or to transfer to any place outside the Ermita-
Malate area or convert said businesses to other kinds of business allowable
within the area." Further, it states in Section 4 that in cases of subsequent
violations of the provisions of the Ordinance, the "premises of the erring
establishment shall be closed and padlocked permanently."
It is readily apparent that the means employed by the Ordinance for the
achievement of its purposes, the governmental interference itself, infringes on
the constitutional guarantees of a person's fundamental right to liberty and
property.
Liberty as guaranteed by the Constitution was defined by Justice Malcolm to
include "the right to exist and the right to be free from arbitrary restraint or
servitude. The term cannot be dwarfed into mere freedom from physical
restraint of the person of the citizen, but is deemed to embrace the right of man
to enjoy the facilities with which he has been endowed by his Creator, subject
only to such restraint as are necessary for the common welfare." 68 In
accordance with this case, the rights of the citizen to be free to use his faculties
in all lawful ways; to live and work where he will; to earn his livelihood by any
lawful calling; and to pursue any avocation are all deemed embraced in the
concept of liberty.69
The U.S. Supreme Court in the case of Roth v. Board of Regents,70 sought to
clarify the meaning of "liberty." It said:
While the Court has not attempted to define with exactness the liberty. . .
guaranteed [by the Fifth and Fourteenth Amendments], the term denotes not
merely freedom from bodily restraint but also the right of the individual to
contract, to engage in any of the common occupations of life, to acquire useful
knowledge, to marry, establish a home and bring up children, to worship God
according to the dictates of his own conscience, and generally to enjoy those
privileges long recognized…as essential to the orderly pursuit of happiness by
free men. In a Constitution for a free people, there can be no doubt that the
meaning of "liberty" must be broad indeed.
In another case, it also confirmed that liberty protected by the due process
clause includes personal decisions relating to marriage, procreation,
contraception, family relationships, child rearing, and education. In explaining
the respect the Constitution demands for the autonomy of the person in making
these choices, the U.S. Supreme Court explained:
These matters, involving the most intimate and personal choices a person may
make in a lifetime, choices central to personal dignity and autonomy, are
central to the liberty protected by the Fourteenth Amendment. At the heart of
liberty is the right to define one's own concept of existence, of meaning, of
universe, and of the mystery of human life. Beliefs about these matters could
not define the attributes of personhood where they formed under compulsion
of the State.71
Persons desirous to own, operate and patronize the enumerated
establishments under Section 1 of the Ordinance may seek autonomy for
these purposes.
Motel patrons who are single and unmarried may invoke this right to autonomy
to consummate their bonds in intimate sexual conduct within the motel's
premisesbe it stressed that their consensual sexual behavior does not
contravene any fundamental state policy as contained in the
Constitution.72 Adults have a right to choose to forge such relationships with
others in the confines of their own private lives and still retain their dignity as
free persons. The liberty protected by the Constitution allows persons the right
to make this choice.73 Their right to liberty under the due process clause gives
them the full right to engage in their conduct without intervention of the
government, as long as they do not run afoul of the law. Liberty should be the
rule and restraint the exception.
Liberty in the constitutional sense not only means freedom from unlawful
government restraint; it must include privacy as well, if it is to be a repository
of freedom. The right to be let alone is the beginning of all freedomit is the
most comprehensive of rights and the right most valued by civilized men. 74
The concept of liberty compels respect for the individual whose claim to privacy
and interference demands respect. As the case of Morfe v. Mutuc,75 borrowing
the words of Laski, so very aptly stated:
Man is one among many, obstinately refusing reduction to unity. His
separateness, his isolation, are indefeasible; indeed, they are so fundamental
that they are the basis on which his civic obligations are built. He cannot
abandon the consequences of his isolation, which are, broadly speaking, that
his experience is private, and the will built out of that experience personal to
himself. If he surrenders his will to others, he surrenders himself. If his will is
set by the will of others, he ceases to be a master of himself. I cannot believe
that a man no longer a master of himself is in any real sense free.
Indeed, the right to privacy as a constitutional right was recognized in Morfe,
the invasion of which should be justified by a compelling state
interest. Morfe accorded recognition to the right to privacy independently of its
identification with liberty; in itself it is fully deserving of constitutional protection.
Governmental powers should stop short of certain intrusions into the personal
life of the citizen.76
There is a great temptation to have an extended discussion on these civil
liberties but the Court chooses to exercise restraint and restrict itself to the
issues presented when it should. The previous pronouncements of the Court
are not to be interpreted as a license for adults to engage in criminal conduct.
The reprehensibility of such conduct is not diminished. The Court only
reaffirms and guarantees their right to make this choice. Should they be
prosecuted for their illegal conduct, they should suffer the consequences of
the choice they have made. That, ultimately, is their choice.
Modality employed is
unlawful taking
In addition, the Ordinance is unreasonable and oppressive as it substantially
divests the respondent of the beneficial use of its property. 77 The Ordinance in
Section 1 thereof forbids the running of the enumerated businesses in the
Ermita-Malate area and in Section 3 instructs its owners/operators to wind up
business operations or to transfer outside the area or convert said businesses
into allowed businesses. An ordinance which permanently restricts the use of
property that it can not be used for any reasonable purpose goes beyond
regulation and must be recognized as a taking of the property without just
compensation.78 It is intrusive and violative of the private property rights of
individuals.
The Constitution expressly provides in Article III, Section 9, that "private
property shall not be taken for public use without just compensation." The
provision is the most important protection of property rights in the Constitution.
This is a restriction on the general power of the government to take property.
The constitutional provision is about ensuring that the government does not
confiscate the property of some to give it to others. In part too, it is about loss
spreading. If the government takes away a person's property to benefit society,
then society should pay. The principal purpose of the guarantee is "to bar the
Government from forcing some people alone to bear public burdens which, in
all fairness and justice, should be borne by the public as a whole. 79
There are two different types of taking that can be identified. A "possessory"
taking occurs when the government confiscates or physically occupies
property. A "regulatory" taking occurs when the government's regulation
leaves no reasonable economically viable use of the property. 80
In the landmark case of Pennsylvania Coal v. Mahon,81 it was held that a taking
also could be found if government regulation of the use of property went "too
far." When regulation reaches a certain magnitude, in most if not in all cases
there must be an exercise of eminent domain and compensation to support
the act. While property may be regulated to a certain extent, if regulation goes
too far it will be recognized as a taking.82
No formula or rule can be devised to answer the questions of what is too far
and when regulation becomes a taking. In Mahon, Justice Holmes recognized
that it was "a question of degree and therefore cannot be disposed of by
general propositions." On many other occasions as well, the U.S. Supreme
Court has said that the issue of when regulation constitutes a taking is a matter
of considering the facts in each case. The Court asks whether justice and
fairness require that the economic loss caused by public action must be
compensated by the government and thus borne by the public as a whole, or
whether the loss should remain concentrated on those few persons subject to
the public action.83
What is crucial in judicial consideration of regulatory takings is that government
regulation is a taking if it leaves no reasonable economically viable use of
property in a manner that interferes with reasonable expectations for use. 84 A
regulation that permanently denies all economically beneficial or productive
use of land is, from the owner's point of view, equivalent to a "taking" unless
principles of nuisance or property law that existed when the owner acquired
the land make the use prohibitable.85 When the owner of real property has
been called upon to sacrifice all economically beneficial uses in the name of
the common good, that is, to leave his property economically idle, he has
suffered a taking.86
A regulation which denies all economically beneficial or productive use of land
will require compensation under the takings clause. Where a regulation places
limitations on land that fall short of eliminating all economically beneficial use,
a taking nonetheless may have occurred, depending on a complex of factors
including the regulation's economic effect on the landowner, the extent to
which the regulation interferes with reasonable investment-backed
expectations and the character of government action. These inquiries are
informed by the purpose of the takings clause which is to prevent the
government from forcing some people alone to bear public burdens which, in
all fairness and justice, should be borne by the public as a whole. 87
A restriction on use of property may also constitute a "taking" if not reasonably
necessary to the effectuation of a substantial public purpose or if it has an
unduly harsh impact on the distinct investment-backed expectations of the
owner.88
The Ordinance gives the owners and operators of the "prohibited"
establishments three (3) months from its approval within which to "wind up
business operations or to transfer to any place outside of the Ermita-Malate
area or convert said businesses to other kinds of business allowable within the
area." The directive to "wind up business operations" amounts to a closure of
the establishment, a permanent deprivation of property, and is practically
confiscatory. Unless the owner converts his establishment to accommodate
an "allowed" business, the structure which housed the previous business will
be left empty and gathering dust. Suppose he transfers it to another area, he
will likewise leave the entire establishment idle. Consideration must be given
to the substantial amount of money invested to build the edifices which the
owner reasonably expects to be returned within a period of time. It is apparent
that the Ordinance leaves no reasonable economically viable use of property
in a manner that interferes with reasonable expectations for use.
The second and third options to transfer to any place outside of the Ermita-
Malate area or to convert into allowed businessesare confiscatory as well.
The penalty of permanent closure in cases of subsequent violations found in
Section 4 of the Ordinance is also equivalent to a "taking" of private property.
The second option instructs the owners to abandon their property and build
another one outside the Ermita-Malate area. In every sense, it qualifies as a
taking without just compensation with an additional burden imposed on the
owner to build another establishment solely from his coffers. The proffered
solution does not put an end to the "problem," it merely relocates it. Not only
is this impractical, it is unreasonable, onerous and oppressive. The conversion
into allowed enterprises is just as ridiculous. How may the respondent convert
a motel into a restaurant or a coffee shop, art gallery or music lounge without
essentially destroying its property? This is a taking of private property without
due process of law, nay, even without compensation.
The penalty of closure likewise constitutes unlawful taking that should be
compensated by the government. The burden on the owner to convert or
transfer his business, otherwise it will be closed permanently after a
subsequent violation should be borne by the public as this end benefits them
as a whole.
Petitioners cannot take refuge in classifying the measure as a zoning
ordinance. A zoning ordinance, although a valid exercise of police power,
which limits a "wholesome" property to a use which can not reasonably be
made of it constitutes the taking of such property without just
compensation. Private property which is not noxious nor intended for noxious
purposes may not, by zoning, be destroyed without compensation. Such
principle finds no support in the principles of justice as we know them. The
police powers of local government units which have always received broad
and liberal interpretation cannot be stretched to cover this particular taking.
Distinction should be made between destruction from necessity and eminent
domain. It needs restating that the property taken in the exercise of police
power is destroyed because it is noxious or intended for a noxious purpose
while the property taken under the power of eminent domain is intended for a
public use or purpose and is therefore "wholesome."89 If it be of public benefit
that a "wholesome" property remain unused or relegated to a particular
purpose, then certainly the public should bear the cost of reasonable
compensation for the condemnation of private property for public use.90
Further, the Ordinance fails to set up any standard to guide or limit the
petitioners' actions. It in no way controls or guides the discretion vested in
them. It provides no definition of the establishments covered by it and it fails
to set forth the conditions when the establishments come within its ambit of
prohibition. The Ordinance confers upon the mayor arbitrary and unrestricted
power to close down establishments. Ordinances such as this, which make
possible abuses in its execution, depending upon no conditions or
qualifications whatsoever other than the unregulated arbitrary will of the city
authorities as the touchstone by which its validity is to be tested, are
unreasonable and invalid. The Ordinance should have established a rule by
which its impartial enforcement could be secured.91
Ordinances placing restrictions upon the lawful use of property must, in order
to be valid and constitutional, specify the rules and conditions to be observed
and conduct to avoid; and must not admit of the exercise, or of an opportunity
for the exercise, of unbridled discretion by the law enforcers in carrying out its
provisions.92
Thus, in Coates v. City of Cincinnati,93 as cited in People v. Nazario,94 the
U.S. Supreme Court struck down an ordinance that had made it illegal for
"three or more persons to assemble on any sidewalk and there conduct
themselves in a manner annoying to persons passing by." The ordinance was
nullified as it imposed no standard at all "because one may never know in
advance what 'annoys some people but does not annoy others.' "
Similarly, the Ordinance does not specify the standards to ascertain which
establishments "tend to disturb the community," "annoy the inhabitants," and
"adversely affect the social and moral welfare of the community." The cited
case supports the nullification of the Ordinance for lack of comprehensible
standards to guide the law enforcers in carrying out its provisions.
Petitioners cannot therefore order the closure of the enumerated
establishments without infringing the due process clause. These lawful
establishments may be regulated, but not prevented from carrying on their
business. This is a sweeping exercise of police power that is a result of a lack
of imagination on the part of the City Council and which amounts to an
interference into personal and private rights which the Court will not
countenance. In this regard, we take a resolute stand to uphold the
constitutional guarantee of the right to liberty and property.
Worthy of note is an example derived from the U.S. of a reasonable regulation
which is a far cry from the ill-considered Ordinance enacted by the City
Council.
In FW/PBS, INC. v. Dallas,95 the city of Dallas adopted a comprehensive
ordinance regulating "sexually oriented businesses," which are defined to
include adult arcades, bookstores, video stores, cabarets, motels, and theaters
as well as escort agencies, nude model studio and sexual encounter centers.
Among other things, the ordinance required that such businesses be licensed.
A group of motel owners were among the three groups of businesses that filed
separate suits challenging the ordinance. The motel owners asserted that the
city violated the due process clause by failing to produce adequate support for
its supposition that renting room for fewer than ten (10) hours resulted in
increased crime and other secondary effects. They likewise argued than the
ten (10)-hour limitation on the rental of motel rooms placed an unconstitutional
burden on the right to freedom of association. Anent the first contention, the
U.S. Supreme Court held that the reasonableness of the legislative judgment
combined with a study which the city considered, was adequate to support the
city's determination that motels permitting room rentals for fewer than ten (10
) hours should be included within the licensing scheme. As regards the second
point, the Court held that limiting motel room rentals to ten (10) hours will have
no discernible effect on personal bonds as those bonds that are formed from
the use of a motel room for fewer than ten (10) hours are not those that have
played a critical role in the culture and traditions of the nation by cultivating and
transmitting shared ideals and beliefs.
The ordinance challenged in the above-cited case merely regulated the
targeted businesses. It imposed reasonable restrictions; hence, its validity was
upheld.
The case of Ermita Malate Hotel and Motel Operators Association, Inc. v. City
Mayor of Manila,96 it needs pointing out, is also different from this case in that
what was involved therein was a measure which regulated the mode in which
motels may conduct business in order to put an end to practices which could
encourage vice and immorality. Necessarily, there was no valid objection on
due process or equal protection grounds as the ordinance did not prohibit
motels. The Ordinance in this case however is not a regulatory measure but is
an exercise of an assumed power to prohibit.97
The foregoing premises show that the Ordinance is an unwarranted and
unlawful curtailment of property and personal rights of citizens. For being
unreasonable and an undue restraint of trade, it cannot, even under the guise
of exercising police power, be upheld as valid.
B. The Ordinance violates Equal
Protection Clause
Equal protection requires that all persons or things similarly situated should be
treated alike, both as to rights conferred and responsibilities imposed. Similar
subjects, in other words, should not be treated differently, so as to give undue
favor to some and unjustly discriminate against others.98 The guarantee means
that no person or class of persons shall be denied the same protection of laws
which is enjoyed by other persons or other classes in like circumstances. 99 The
"equal protection of the laws is a pledge of the protection of equal laws." 100 It
limits governmental discrimination. The equal protection clause extends to
artificial persons but only insofar as their property is concerned.101
The Court has explained the scope of the equal protection clause in this wise:
… What does it signify? To quote from J.M. Tuason & Co. v. Land Tenure
Administration: "The ideal situation is for the law's benefits to be available to
all, that none be placed outside the sphere of its coverage. Only thus could
chance and favor be excluded and the affairs of men governed by that serene
and impartial uniformity, which is of the very essence of the idea of law." There
is recognition, however, in the opinion that what in fact exists "cannot
approximate the ideal. Nor is the law susceptible to the reproach that it does
not take into account the realities of the situation. The constitutional guarantee
then is not to be given a meaning that disregards what is, what does in fact
exist. To assure that the general welfare be promoted, which is the end of law,
a regulatory measure may cut into the rights to liberty and property. Those
adversely affected may under such circumstances invoke the equal protection
clause only if they can show that the governmental act assailed, far from being
inspired by the attainment of the common weal was prompted by the spirit of
hostility, or at the very least, discrimination that finds no support in reason."
Classification is thus not ruled out, it being sufficient to quote from the Tuason
decision anew "that the laws operate equally and uniformly on all persons
under similar circumstances or that all persons must be treated in the same
manner, the conditions not being different, both in the privileges conferred and
the liabilities imposed. Favoritism and undue preference cannot be allowed.
For the principle is that equal protection and security shall be given to every
person under circumstances which, if not identical, are analogous. If law be
looked upon in terms of burden or charges, those that fall within a class should
be treated in the same fashion, whatever restrictions cast on some in the group
equally binding on the rest.102
Legislative bodies are allowed to classify the subjects of legislation. If the
classification is reasonable, the law may operate only on some and not all of
the people without violating the equal protection clause.103 The classification
must, as an indispensable requisite, not be arbitrary. To be valid, it must
conform to the following requirements:
1) It must be based on substantial distinctions.
2) It must be germane to the purposes of the law.
3) It must not be limited to existing conditions only.
4) It must apply equally to all members of the class.104
In the Court's view, there are no substantial distinctions between motels, inns,
pension houses, hotels, lodging houses or other similar establishments. By
definition, all are commercial establishments providing lodging and usually
meals and other services for the public. No reason exists for prohibiting motels
and inns but not pension houses, hotels, lodging houses or other similar
establishments. The classification in the instant case is invalid as similar
subjects are not similarly treated, both as to rights conferred and obligations
imposed. It is arbitrary as it does not rest on substantial distinctions bearing a
just and fair relation to the purpose of the Ordinance.
The Court likewise cannot see the logic for prohibiting the business and
operation of motels in the Ermita-Malate area but not outside of this area. A
noxious establishment does not become any less noxious if located outside
the area.
The standard "where women are used as tools for entertainment" is also
discriminatory as prostitutionone of the hinted ills the Ordinance aims to
banishis not a profession exclusive to women. Both men and women have
an equal propensity to engage in prostitution. It is not any less grave a sin
when men engage in it. And why would the assumption that there is an ongoing
immoral activity apply only when women are employed and be inapposite
when men are in harness? This discrimination based on gender violates equal
protection as it is not substantially related to important government
objectives.105 Thus, the discrimination is invalid.
Failing the test of constitutionality, the Ordinance likewise failed to pass the
test of consistency with prevailing laws.
C. The Ordinance is repugnant
to general laws; it is ultra vires
The Ordinance is in contravention of the Code as the latter merely empowers
local government units to regulate, and not prohibit, the establishments
enumerated in Section 1 thereof.
The power of the City Council to regulate by ordinances the establishment,
operation, and maintenance of motels, hotels and other similar establishments
is found in Section 458 (a) 4 (iv), which provides that:
Section 458. Powers, Duties, Functions and Compensation. (a) The
sangguniang panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general welfare
of the city and its inhabitants pursuant to Section 16 of this Code and in the
proper exercise of the corporate powers of the city as provided for under
Section 22 of this Code, and shall:
. . .
(4) Regulate activities relative to the use of land, buildings and structures within
the city in order to promote the general welfare and for said purpose shall:
. . .
(iv) Regulate the establishment, operation and maintenance of cafes,
restaurants, beerhouses, hotels, motels, inns, pension houses, lodging
houses, and other similar establishments, including tourist guides and
transports . . . .
While its power to regulate the establishment, operation and maintenance of
any entertainment or amusement facilities, and to prohibit certain forms of
amusement or entertainment is provided under Section 458 (a) 4 (vii) of the
Code, which reads as follows:
Section 458. Powers, Duties, Functions and Compensation. (a) The
sangguniang panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general welfare
of the city and its inhabitants pursuant to Section 16 of this Code and in the
proper exercise of the corporate powers of the city as provided for under
Section 22 of this Code, and shall:
. . .
(4) Regulate activities relative to the use of land, buildings and structures within
the city in order to promote the general welfare and for said purpose shall:
. . .
(vii) Regulate the establishment, operation, and maintenance of any
entertainment or amusement facilities, including theatrical performances,
circuses, billiard pools, public dancing schools, public dance halls, sauna
baths, massage parlors, and other places for entertainment or amusement;
regulate such other events or activities for amusement or entertainment,
particularly those which tend to disturb the community or annoy the
inhabitants, or require the suspension or suppression of the same; or, prohibit
certain forms of amusement or entertainment in order to protect the social and
moral welfare of the community.
Clearly, with respect to cafes, restaurants, beerhouses, hotels, motels, inns,
pension houses, lodging houses, and other similar establishments, the only
power of the City Council to legislate relative thereto is to regulate them to
promote the general welfare. The Code still withholds from cities the power to
suppress and prohibit altogether the establishment, operation and
maintenance of such establishments. It is well to recall the rulings of the Court
in Kwong Sing v. City of Manila106 that:
The word "regulate," as used in subsection (l), section 2444 of the
Administrative Code, means and includes the power to control, to govern, and
to restrain; but "regulate" should not be construed as synonymous with
"suppress" or "prohibit." Consequently, under the power to regulate laundries,
the municipal authorities could make proper police regulations as to the mode
in which the employment or business shall be exercised.107
And in People v. Esguerra,108 wherein the Court nullified an ordinance of the
Municipality of Tacloban which prohibited the selling, giving and dispensing of
liquor ratiocinating that the municipality is empowered only to regulate the
same and not prohibit. The Court therein declared that:
(A)s a general rule when a municipal corporation is specifically given authority
or power to regulate or to license and regulate the liquor traffic, power to
prohibit is impliedly withheld.109
These doctrines still hold contrary to petitioners' assertion110 that they were
modified by the Code vesting upon City Councils prohibitory powers.
Similarly, the City Council exercises regulatory powers over public dancing
schools, public dance halls, sauna baths, massage parlors, and other places
for entertainment or amusement as found in the first clause of Section 458 (a)
4 (vii). Its powers to regulate, suppress and suspend "such other events or
activities for amusement or entertainment, particularly those which tend to
disturb the community or annoy the inhabitants" and to "prohibit certain forms
of amusement or entertainment in order to protect the social and moral welfare
of the community" are stated in the second and third clauses, respectively of
the same Section. The several powers of the City Council as provided in
Section 458 (a) 4 (vii) of the Code, it is pertinent to emphasize, are separated
by semi-colons (;), the use of which indicates that the clauses in which these
powers are set forth are independent of each other albeit closely related to
justify being put together in a single enumeration or paragraph. 111 These
powers, therefore, should not be confused, commingled or consolidated as to
create a conglomerated and unified power of regulation, suppression and
prohibition.112
The Congress unequivocably specified the establishments and forms of
amusement or entertainment subject to regulation among which are
beerhouses, hotels, motels, inns, pension houses, lodging houses, and other
similar establishments (Section 458 (a) 4 (iv)), public dancing schools, public
dance halls, sauna baths, massage parlors, and other places for entertainment
or amusement (Section 458 (a) 4 (vii)). This enumeration therefore cannot be
included as among "other events or activities for amusement or entertainment,
particularly those which tend to disturb the community or annoy the
inhabitants" or "certain forms of amusement or entertainment" which the City
Council may suspend, suppress or prohibit.
The rule is that the City Council has only such powers as are expressly granted
to it and those which are necessarily implied or incidental to the exercise
thereof. By reason of its limited powers and the nature thereof, said powers
are to be construed strictissimi juris and any doubt or ambiguity arising out of
the terms used in granting said powers must be construed against the City
Council.113 Moreover, it is a general rule in statutory construction that the
express mention of one person, thing, or consequence is tantamount to an
express exclusion of all others. Expressio unius est exclusio alterium. This
maxim is based upon the rules of logic and the natural workings of human
mind. It is particularly applicable in the construction of such statutes as create
new rights or remedies, impose penalties or punishments, or otherwise come
under the rule of strict construction.114
The argument that the City Council is empowered to enact the Ordinance by
virtue of the general welfare clause of the Code and of Art. 3, Sec. 18 (kk) of
the Revised Charter of Manila is likewise without merit. On the first point, the
ruling of the Court in People v. Esguerra,115 is instructive. It held that:
The powers conferred upon a municipal council in the general welfare clause,
or section 2238 of the Revised Administrative Code, refers to matters not
covered by the other provisions of the same Code, and therefore it can not be
applied to intoxicating liquors, for the power to regulate the selling, giving away
and dispensing thereof is granted specifically by section 2242 (g) to municipal
councils. To hold that, under the general power granted by section 2238, a
municipal council may enact the ordinance in question, notwithstanding the
provision of section 2242 (g), would be to make the latter superfluous and
nugatory, because the power to prohibit, includes the power to regulate, the
selling, giving away and dispensing of intoxicating liquors.
On the second point, it suffices to say that the Code being a later expression
of the legislative will must necessarily prevail and override the earlier law, the
Revised Charter of Manila. Legis posteriores priores contrarias abrogant, or
later statute repeals prior ones which are repugnant thereto. As between two
laws on the same subject matter, which are irreconcilably inconsistent, that
which is passed later prevails, since it is the latest expression of legislative
will.116 If there is an inconsistency or repugnance between two statutes, both
relating to the same subject matter, which cannot be removed by any fair and
reasonable method of interpretation, it is the latest expression of the legislative
will which must prevail and override the earlier.117
Implied repeals are those which take place when a subsequently enacted law
contains provisions contrary to those of an existing law but no provisions
expressly repealing them. Such repeals have been divided into two general
classes: those which occur where an act is so inconsistent or irreconcilable
with an existing prior act that only one of the two can remain in force and those
which occur when an act covers the whole subject of an earlier act and is
intended to be a substitute therefor. The validity of such a repeal is sustained
on the ground that the latest expression of the legislative will should prevail. 118
In addition, Section 534(f) of the Code states that "All general and special laws,
acts, city charters, decrees, executive orders, proclamations and
administrative regulations, or part or parts thereof which are inconsistent with
any of the provisions of this Code are hereby repealed or modified
accordingly." Thus, submitting to petitioners' interpretation that the Revised
Charter of Manila empowers the City Council to prohibit motels, that portion of
the Charter stating such must be considered repealed by the Code as it is at
variance with the latter's provisions granting the City Council mere regulatory
powers.
It is well to point out that petitioners also cannot seek cover under the general
welfare clause authorizing the abatement of nuisances without judicial
proceedings. That tenet applies to a nuisance per se, or one which affects the
immediate safety of persons and property and may be summarily abated under
the undefined law of necessity. It can not be said that motels are injurious to
the rights of property, health or comfort of the community. It is a legitimate
business. If it be a nuisance per accidens it may be so proven in a hearing
conducted for that purpose. A motel is not per se a nuisance warranting its
summary abatement without judicial intervention.119
Notably, the City Council was conferred powers to prevent and prohibit certain
activities and establishments in another section of the Code which is
reproduced as follows:
Section 458. Powers, Duties, Functions and Compensation. (a) The
sangguniang panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general welfare
of the city and its inhabitants pursuant to Section 16 of this Code and in the
proper exercise of the corporate powers of the city as provided for under
Section 22 of this Code, and shall:
(1) Approve ordinances and pass resolutions necessary for an efficient and
effective city government, and in this connection, shall:
. . .
(v) Enact ordinances intended to prevent, suppress and impose appropriate
penalties for habitual drunkenness in public places, vagrancy,
mendicancy, prostitution, establishment and maintenance of houses of ill
repute, gambling and other prohibited games of chance, fraudulent devices
and ways to obtain money or property, drug addiction, maintenance of drug
dens, drug pushing, juvenile delinquency, the printing, distribution or exhibition
of obscene or pornographic materials or publications, and such other activities
inimical to the welfare and morals of the inhabitants of the city;
. . .
If it were the intention of Congress to confer upon the City Council the power
to prohibit the establishments enumerated in Section 1 of the Ordinance, it
would have so declared in uncertain terms by adding them to the list of the
matters it may prohibit under the above-quoted Section. The Ordinance now
vainly attempts to lump these establishments with houses of ill-repute and
expand the City Council's powers in the second and third clauses of Section
458 (a) 4 (vii) of the Code in an effort to overreach its prohibitory powers. It is
evident that these establishments may only be regulated in their
establishment, operation and maintenance.
It is important to distinguish the punishable activities from the establishments
themselves. That these establishments are recognized legitimate enterprises
can be gleaned from another Section of the Code. Section 131 under the Title
on Local Government Taxation expressly mentioned proprietors or operators
of massage clinics, sauna, Turkish and Swedish baths, hotels, motels and
lodging houses as among the "contractors" defined in paragraph (h)
thereof. The same Section also defined "amusement" as a "pleasurable
diversion and entertainment," "synonymous to relaxation, avocation, pastime
or fun;" and "amusement places" to include "theaters, cinemas, concert halls,
circuses and other places of amusement where one seeks admission to
entertain oneself by seeing or viewing the show or performances." Thus, it can
be inferred that the Code considers these establishments as legitimate
enterprises and activities. It is well to recall the maxim reddendo singula
singulis which means that words in different parts of a statute must be referred
to their appropriate connection, giving to each in its place, its proper force and
effect, and, if possible, rendering none of them useless or superfluous, even if
strict grammatical construction demands otherwise. Likewise, where words
under consideration appear in different sections or are widely dispersed
throughout an act the same principle applies.120
Not only does the Ordinance contravene the Code, it likewise runs counter to
the provisions of P.D. 499. As correctly argued by MTDC, the statute had
already converted the residential Ermita-Malate area into a commercial area.
The decree allowed the establishment and operation of all kinds of commercial
establishments except warehouse or open storage depot, dump or yard, motor
repair shop, gasoline service station, light industry with any machinery or
funeral establishment. The rule is that for an ordinance to be valid and to have
force and effect, it must not only be within the powers of the council to enact
but the same must not be in conflict with or repugnant to the general law.121 As
succinctly illustrated in Solicitor General v. Metropolitan Manila Authority:122
The requirement that the enactment must not violate existing law explains
itself. Local political subdivisions are able to legislate only by virtue of a valid
delegation of legislative power from the national legislature (except only that
the power to create their own sources of revenue and to levy taxes is conferred
by the Constitution itself). They are mere agents vested with what is called the
power of subordinate legislation. As delegates of the Congress, the local
government units cannot contravene but must obey at all times the will of their
principal. In the case before us, the enactment in question, which are merely
local in origin cannot prevail against the decree, which has the force and effect
of a statute.123
Petitioners contend that the Ordinance enjoys the presumption of validity.
While this may be the rule, it has already been held that although the
presumption is always in favor of the validity or reasonableness of the
ordinance, such presumption must nevertheless be set aside when the
invalidity or unreasonableness appears on the face of the ordinance itself or is
established by proper evidence. The exercise of police power by the local
government is valid unless it contravenes the fundamental law of the land, or
an act of the legislature, or unless it is against public policy or is unreasonable,
oppressive, partial, discriminating or in derogation of a common right. 124
Conclusion
All considered, the Ordinance invades fundamental personal and property
rights and impairs personal privileges. It is constitutionally infirm.
The Ordinance contravenes statutes; it is discriminatory and unreasonable in
its operation; it is not sufficiently detailed and explicit that abuses may attend
the enforcement of its sanctions. And not to be forgotten, the City Council
under the Code had no power to enact the Ordinance and is therefore ultra
vires, null and void.
Concededly, the challenged Ordinance was enacted with the best of motives
and shares the concern of the public for the cleansing of the Ermita-Malate
area of its social sins. Police power legislation of such character deserves the
full endorsement of the judiciary we reiterate our support for it. But inspite of
its virtuous aims, the enactment of the Ordinance has no statutory or
constitutional authority to stand on. Local legislative bodies, in this case, the
City Council, cannot prohibit the operation of the enumerated establishments
under Section 1 thereof or order their transfer or conversion without infringing
the constitutional guarantees of due process and equal protection of laws
not even under the guise of police power.
WHEREFORE, the Petition is hereby DENIED and the decision of the
Regional Trial Court declaring the Ordinance void is AFFIRMED. Costs
against petitioners.
SO ORDERED.
MIRASOL VS. DPWH
This petition for review on certiorari1 seeks to reverse the Decision dated 10
March 2003 of the Regional Trial Court, Branch 147, Makati City (RTC) in Civil
Case No. 01-034, as well as the RTC’s Order dated 16 June 2003 which
denied petitioners’ Motion for Reconsideration. Petitioners assert that
Department of Public Works and Highways’ (DPWH) Department Order No.
74 (DO 74), Department Order No. 215 (DO 215), and the Revised Rules and
Regulations on Limited Access Facilities of the Toll Regulatory Board (TRB)
violate Republic Act No. 2000 (RA 2000) or the Limited Access Highway Act.
Petitioners also seek to declare Department Order No. 123 (DO 123) and
Administrative Order No. 1 (AO 1)2 unconstitutional.
Antecedent Facts
The facts are not in dispute. As summarized by the Solicitor General, the facts
are as follows:
1. On January 10, 2001, petitioners filed before the trial court a Petition for
Declaratory Judgment with Application for Temporary Restraining Order and
Injunction docketed as Civil Case No. 01-034. The petition sought the
declaration of nullity of the following administrative issuances for being
inconsistent with the provisions of Republic Act 2000, entitled "Limited Access
Highway Act" enacted in 1957:
a. DPWH Administrative Order No. 1, Series of 1968;
b. DPWH Department Order No. 74, Series of 1993;
c. Art. II, Sec. 3(a) of the Revised Rules on Limited Access Facilities
promulgated in 199[8] by the DPWH thru the Toll Regulatory Board (TRB).
2. Previously, pursuant to its mandate under R.A. 2000, DPWH issued on June
25, 1998 Department Order (DO) No. 215 declaring the Manila-Cavite (Coastal
Road) Toll Expressway as limited access facilities.
3. Accordingly, petitioners filed an Amended Petition on February 8, 2001
wherein petitioners sought the declaration of nullity of the aforesaid
administrative issuances. Moreover, petitioners prayed for the issuance of a
temporary restraining order and/or preliminary injunction to prevent the
enforcement of the total ban on motorcycles along the entire breadth of North
and South Luzon Expressways and the Manila-Cavite (Coastal Road) Toll
Expressway under DO 215.
4. On June 28, 2001, the trial court, thru then Presiding Judge Teofilo Guadiz,
after due hearing, issued an order granting petitioners’ application for
preliminary injunction. On July 16, 2001, a writ of preliminary injunction was
issued by the trial court, conditioned upon petitioners’ filing of cash bond in the
amount of P100,000.00, which petitioners subsequently complied with.
5. On July 18, 2001, the DPWH acting thru the TRB, issued Department Order
No. 123 allowing motorcycles with engine displacement of 400 cubic
centimeters inside limited access facilities (toll ways).
6. Upon the assumption of Honorable Presiding Judge Ma. Cristina Cornejo,
both the petitioners and respondents were required to file their respective
Memoranda. Petitioners likewise filed [their] Supplemental Memorandum.
Thereafter, the case was deemed submitted for decision.
7. Consequently, on March 10, 2003, the trial court issued the assailed
decision dismissing the petition but declaring invalid DO 123. Petitioners
moved for a reconsideration of the dismissal of their petition; but it was denied
by the trial court in its Order dated June 16, 2003.3
Hence, this petition.
The RTC’s Ruling
The dispositive portion of the RTC’s Decision dated 10 March 2003 reads:
WHEREFORE, [t]he Petition is denied/dismissed insofar as petitioners seek to
declare null and void ab initio DPWH Department Order No. 74, Series of 1993,
Administrative Order No. 1, and Art. II, Sec. 3(a) of the Revised Rules on
Limited Access Facilities promulgated by the DPWH thru the TRB, the
presumed validity thereof not having been overcome; but the petition is
granted insofar as DPWH Department Order No. 123 is concerned, declaring
the same to be invalid for being violative of the equal protection clause of the
Constitution.
SO ORDERED.4
The Issues
Petitioners seek a reversal and raise the following issues for resolution:
1. WHETHER THE RTC’S DECISION IS ALREADY BARRED BY RES
JUDICATA;
2. WHETHER DO 74, DO 215 AND THE TRB REGULATIONS
CONTRAVENE RA 2000; AND
3. WHETHER AO 1 AND DO 123 ARE UNCONSTITUTIONAL.5
The Ruling of the Court
The petition is partly meritorious.
Whether the RTC’s Decision Dismissing Petitioners’ Case is Barred by Res
Judicata
Petitioners rely on the RTC’s Order dated 28 June 2001, which granted their
prayer for a writ of preliminary injunction. Since respondents did not appeal
from that Order, petitioners argue that the Order became "a final judgment" on
the issues. Petitioners conclude that the RTC erred when it subsequently
dismissed their petition in its Decision dated 10 March 2003.
Petitioners are mistaken. As the RTC correctly stated, the Order dated 28 June
2001 was not an adjudication on the merits of the case that would
trigger res judicata. A preliminary injunction does not serve as a final
determination of the issues. It is a provisional remedy, which merely serves to
preserve the status quo until the court could hear the merits of the case.6 Thus,
Section 9 of Rule 58 of the 1997 Rules of Civil Procedure requires the issuance
of a final injunction to confirm the preliminary injunction should the court during
trial determine that the acts complained of deserve to be permanently
enjoined. A preliminary injunction is a mere adjunct, an ancillary remedy which
exists only as an incident of the main proceeding. 7
Validity of DO 74, DO 215 and the TRB Regulations
Petitioners claim that DO 74,8 DO 215,9 and the TRB’s Rules and Regulations
issued under them violate the provisions of RA 2000. They contend that the
two issuances unduly expanded the power of the DPWH in Section 4 of RA
2000 to regulate toll ways. Petitioners assert that the DPWH’s regulatory
authority is limited to acts like redesigning curbings or central dividing sections.
They claim that the DPWH is only allowed to re-design the physical structure
of toll ways, and not to determine "who or what can be qualified as toll way
users."10
Section 4 of RA 200011 reads:
SEC. 4. Design of limited access facility. — The Department of Public Works
and Communications is authorized to so design any limited access
facility and to so regulate, restrict, or prohibit access as to best serve the
traffic for which such facility is intended; and its determination of such
design shall be final. In this connection, it is authorized to divide and separate
any limited access facility into separate roadways by the construction of raised
curbings, central dividing sections, or other physical separations, or by
designating such separate roadways by signs, markers, stripes, and the proper
lane for such traffic by appropriate signs, markers, stripes and other devices.
No person, shall have any right of ingress or egress to, from or across limited
access facilities to or from abutting lands, except at such designated points at
which access may be permitted, upon such terms and conditions as may be
specified from time to time. (Emphasis supplied)
On 19 February 1968, Secretary Antonio V. Raquiza of the Department of
Public Works and Communications issued AO 1, which, among others,
prohibited motorcycles on limited access highways. The pertinent provisions
of AO 1 read:
SUBJECT: Revised Rules and Regulations Governing Limited Access
Highways
By virtue of the authority granted the Secretary [of] Public Works and
Communications under Section 3 of R.A. 2000, otherwise known as the
Limited Access Highway Act, the following rules and regulations governing
limited access highways are hereby promulgated for the guidance of all
concerned:
xxxx
Section 3 – On limited access highways, it is unlawful for any person or
group of persons to:
xxxx
(h) Drive any bicycle, tricycle, pedicab, motorcycle or any vehicle (not
motorized);
x x x x12 (Emphasis supplied)
On 5 April 1993, Acting Secretary Edmundo V. Mir of the Department of
Public Works and Highways issued DO 74:
SUBJECT: Declaration of the North Luzon Expressway from Balintawak to
Tabang and the South Luzon Expressway from Nichols to Alabang as Limited
Access Facilities
Pursuant to Section 2 of Republic Act No. 2000, a limited access facility is
defined as "a highway or street especially designed for through traffic, and
over, from, or to which owners or occupants of abutting land or other persons
have no right or easement or only a limited right or easement of access, light,
air or view by reason of the fact that their proper[t]y abuts upon such limited
access facility or for any other reason. Such highways or streets may be
parkways, from which trucks, buses, and other commerical [sic] vehicles shall
be excluded; or they may be free ways open to use by all customary forms of
street and highway traffic."
Section 3 of the same Act authorizes the Department of Public Works and
Communications (now Department of Public Works and Highways) "to plan,
designate, establish, regulate, vacate, alter, improve, maintain, and provide
limited access facilities for public use wherever it is of the opinion that traffic
conditions, present or future, will justify such special facilities."
Therefore, by virtue of the authority granted above, the Department of Public
Works and Highways hereby designates and declares the Balintawak to
Tabang Sections of the North Luzon Expressway, and the Nichols to Alabang
Sections of the South Luzon Expressways, to be LIMITED ACCESS
HIGHWAYS/FACILITIES subject to such rules and regulations that may be
imposed by the DPWH thru the Toll Regulatory Board (TRB).
In view thereof, the National Capital Region (NCR) of this Department is
hereby ordered, after consultation with the TRB and in coordination with the
Philippine National Police (PNP), to close all illegal openings along the said
Limited Access Highways/Facilities. In this connection, the NCR is instructed
to organize its own enforcement and security group for the purpose of assuring
the continued closure of the right-of-way fences and the implementation of the
rules and regulations that may be imposed by the DPWH thru the TRB.
This Order shall take effect immediately.13
On 25 June 1998, then DPWH Secretary Gregorio R. Vigilar issued DO 215:
SUBJECT: Declaration of the R-1 Expressway, from Seaside drive to Zapote,
C-5 Link Expressway, from Zapote to Noveleta, of the Manila Cavite Toll
Expressway as Limited Access Facility.
Pursuant to Section 2 of Republic Act No. 2000, a limited access facility is
defined as "a highway or street especially designed for through traffic, and
over, from, or to which owners or occupants of abutting land or other persons
have no right or easement or only a limited right or easement of access, light,
air or view by reason of the fact that their property abuts upon such limited
access facility or for any other reason. Such highways or streets may be
parkways, from which trucks, buses, and other commercial vehicles shall be
excluded; or they may be free ways open to use by all customary forms of
street and highway traffic."
Section 3 of the same Act authorizes the Department of Public Works and
Communications (now Department of Public Works and Highways) "to plan,
designate, establish, regulate, vacate, alter, improve, maintain, and provide
limited access facilities for public use wherever it is of the opinion that traffic
conditions, present or future, will justify such special facilities."
Therefore, by virtue of the authority granted above, the Department of Public
Works and Highways hereby designates and declares the R-1 Expressway, C-
5 Link Expressway and the R-1 Extension Expressway Sections of the Manila
Cavite Toll Expressway to be LIMITED ACCESS HIGHWAYS/FACILITIES
subject to such rules and regulations that may be imposed by the DPWH thru
the Toll Regulatory Board (TRB).
In view thereof, the National Capital Region (NCR) of this Department is
hereby ordered, after consultation with the TRB and in coordination with the
Philippine National Police (PNP), to close all illegal openings along the said
Limited Access Highways/Facilities. In this connection, the NCR is instructed
to organize its own enforcement and security group for the purpose of assuring
the continued closure of the right-of-way fences and the implementation of the
rules and regulations that may be imposed by the DPWH thru the TRB.
This Order shall take effect immediately.14
The RTC held that Section 4 of RA 2000 expressly authorized the DPWH to
design limited access facilities and to regulate, restrict, or prohibit access as
to serve the traffic for which such facilities are intended. According to the RTC,
such authority to regulate, restrict, or prohibit logically includes the
determination of who and what can and cannot be permitted entry or access
into the limited access facilities. Thus, the RTC concluded that AO 1, DO 74,
and the Revised Rules and Regulations on Limited Access Facilities, which
ban motorcycles’ entry or access to the limited access facilities, are not
inconsistent with RA 2000.
RA 2000, otherwise known as the Limited Access Highway Act, was approved
on 22 June 1957. Section 4 of RA 2000 provides that "[t]he Department of
Public Works and Communications is authorized to so design any limited
access facility and to so regulate, restrict, or prohibit access as to best serve
the traffic for which such facility is intended." The RTC construed this
authorization to regulate, restrict, or prohibit access to limited access facilities
to apply to the Department of Public Works and Highways (DPWH).
The RTC’s ruling is based on a wrong premise. The RTC assumed that the
DPWH derived its authority from its predecessor, the Department of Public
Works and Communications, which is expressly authorized to regulate,
restrict, or prohibit access to limited access facilities under Section 4 of RA
2000. However, such assumption fails to consider the evolution of the
Department of Public Works and Communications.
Under Act No. 2711, otherwise known as the Revised Administrative Code,
approved on 10 March 1917, there were only seven executive departments,
namely: the Department of the Interior, the Department of Finance, the
Department of Justice, the Department of Agriculture and Commerce,
the Department of Public Works and Communications, the Department of
Public Instruction, and the Department of Labor.15 On 20 June 1964, Republic
Act No. 413616 created the Land Transportation Commission under the
Department of Public Works and Communications. Later, the Department of
Public Works and Communications was restructured into the Department of
Public Works, Transportation and Communications.
On 16 May 1974, Presidential Decree No. 458 (PD 458) separated the Bureau
of Public Highways from the Department of Public Works, Transportation and
Communications and created it as a department to be known as Department
of Public Highways. Under Section 3 of PD 458, the Department of Public
Highways is "responsible for developing and implementing programs on the
construction and maintenance of roads, bridges and airport runways."
With the amendment of the 1973 Philippine Constitution in 1976, resulting in
the shift in the form of government, national agencies were renamed from
Departments to Ministries. Thus, the Department of Public Works,
Transportation and Communications became the Ministry of Public Works,
Transportation and Communications.
On 23 July 1979, then President Ferdinand E. Marcos issued Executive Order
No. 546 (EO 546), creating a Ministry of Public Works and a Ministry of
Transportation and Communications.17 Under Section 1 of EO 546,
the Ministry of Public Works assumed the public works functions of
the Ministry of Public Works, Transportation and Communications. The
functions of the Ministry of Public Works were the "construction,
maintenance and repair of port works, harbor facilities, lighthouses,
navigational aids, shore protection works, airport buildings and associated
facilities, public buildings and school buildings, monuments and other related
structures, as well as undertaking harbor and river dredging works,
reclamation of foreshore and swampland areas, water supply, and flood
control and drainage works."18
On the other hand, the Ministry of Transportation and
Communications became the "primary policy, planning, programming,
coordinating, implementing, regulating and administrative entity of the
executive branch of the government in the promotion, development, and
regulation of a dependable and coordinated network of transportation and
communication systems."19 The functions of the Ministry of Transportation
and Communications were:
a. Coordinate and supervise all activities of the Ministry relative to
transportation and communications;
b. Formulate and recommend national policies and guidelines for the
preparation and implementation of an integrated and comprehensive
transportation and communications system at the national, regional and
local levels;
c. Establish and administer comprehensive and integrated programs for
transportation and communication, and for this purpose, may call on any
agency, corporation, or organization, whether government or private, whose
development programs include transportation and communications as an
integral part to participate and assist in the preparation and implementation of
such programs;
d. Regulate, whenever necessary, activities relative to transportation and
communications and prescribe and collect fees in the exercise of such
power;
e. Assess, review and provide direction to transportation and communications
research and development programs of the government in coordination with
other institutions concerned; and
f. Perform such other functions as may be necessary to carry into effect the
provisions of this Executive Order.20 (Emphasis supplied)
On 27 July 1981, then President Marcos issued Executive Order No. 710 (EO
710), which merged the Ministry of Public Works and the Ministry of Public
Highways for "greater simplicity and economy in operations." 21 The
restructured agency became known as the Ministry of Public Works and
Highways. Under Section 1 of EO 710 the functions of the Ministry of Public
Works and the Ministry of Public Highways22 were transferred to the Ministry
of Public Works and Highways.
Upon the ratification of the 1987 Constitution in February 1987, the former
Ministry of Public Works and Highways became the Department of Public
Works and Highways (DPWH) and the former Ministry of Transportation and
Communications became the Department of Transportation and
Communications (DOTC).
DPWH issued DO 74 and DO 215 declaring certain expressways as limited
access facilities on 5 April 1993 and 25 June 1998, respectively. Later, the
TRB, under the DPWH, issued the Revised Rules and Regulations on Limited
Access Facilities. However, on 23 July 1979, long before these department
orders and regulations were issued, the Ministry of Public Works,
Transportation and Communications was divided into two agencies –
the Ministry of Public Works and the Ministry of Transportation and
Communications – by virtue of EO 546. The question is, which of these two
agencies is now authorized to regulate, restrict, or prohibit access to limited
access facilities?23
Under Section 1 of EO 546, the Ministry of Public Works (now DPWH)
assumed the public works functions of the Ministry of Public Works,
Transportation and Communications. On the other hand, among the
functions of the Ministry of Transportation and
Communications (now Department of Transportation and
Communications [DOTC]) were to (1) formulate and recommend national
policies and guidelines for the preparation and implementation of an integrated
and comprehensive transportation and communications systems at the
national, regional, and local levels; and (2) regulate, whenever necessary,
activities relative to transportation and communications and prescribe and
collect fees in the exercise of such power. Clearly, under EO 546, it is the
DOTC, not the DPWH, which has authority to regulate, restrict, or prohibit
access to limited access facilities.
Even under Executive Order No. 125 (EO 125)24 and Executive Order No. 125-
A (EO 125-A),25 which further reorganized the DOTC, the authority to
administer and enforce all laws, rules and regulations relative to transportation
is clearly with the DOTC.26
Thus, DO 74 and DO 215 are void because the DPWH has no authority to
declare certain expressways as limited access facilities. Under the law, it is the
DOTC which is authorized to administer and enforce all laws, rules and
regulations in the field of transportation and to regulate related activities.
Since the DPWH has no authority to regulate activities relative to
transportation, the TRB27 cannot derive its power from the DPWH to issue
regulations governing limited access facilities. The DPWH cannot delegate a
power or function which it does not possess in the first place. Since DO 74 and
DO 215 are void, it follows that the rules implementing them are likewise void.
Whether AO 1 and DO 123 are Unconstitutional
DPWH Secretary Simeon A. Datumanong issued DO 123 on 18 July 2001. DO
123 reads in part:
SUBJECT: Revised Rules and Regulations Governing Limited Access
Highways
By virtue of the authority granted the Secretary of Public Works and
Highways under Section 3 of R.A. 2000, otherwise known as the Limited
Access Highway Act, the following revised rules and regulations governing
limited access highways are hereby promulgated for the guidance of all
concerned:
1. Administrative Order No. 1 dated February 19, 1968, issued by the
Secretary of the then Department of Public Works and Communications, is
hereby amended by deleting the word "motorcycles" mentioned in Section 3(h)
thereof. Therefore, motorcycles are hereby allowed to operate inside the
toll roads and limited access highways, subject to the following:
a. Motorcycles shall have an engine displacement of at least 400 cubic
centimeters (cc) provided that:
x x x x28 (Emphasis supplied)
The RTC’s Decision dated 10 March 2003 declared DO 123 unconstitutional
on the ground that it violates the equal protection clause by allowing only
motorcycles with at least 400 cubic centimeters engine displacement to use
the toll ways. The RTC reasoned that the creation of a distinction within the
class of motorcycles was not based on real differences.
We need not pass upon the constitutionality of the classification of motorcycles
under DO 123. As previously discussed, the DPWH has no authority to
regulate limited access highways since EO 546 has devolved this function to
the DOTC. Thus, DO 123 is void for want of authority of the DPWH to
promulgate it.
On the other hand, the assailed portion of AO 1 states:
Section 3. On limited access highways, it is unlawful for any person or group
of persons to:
xxxx
(h) Drive any bicycle, tricycle, pedicab, motorcycle or any vehicle (not
motorized);
xxxx
Petitioners assail the DPWH’s failure to provide "scientific" and "objective" data
on the danger of having motorcycles plying our highways. They attack this
exercise of police power as baseless and unwarranted. Petitioners belabor the
fact that there are studies that provide proof that motorcycles are safe modes
of transport. They also claim that AO 1 introduces an unreasonable
classification by singling-out motorcycles from other motorized modes of
transport. Finally, petitioners argue that AO 1 violates their right to travel.
Petitioners’ arguments do not convince us.
We emphasize that the Secretary of the Department of Public Works and
Communications issued AO 1 on 19 February 1968.
Section 3 of RA 200029 authorized the issuance of the guidelines. In
contrast, DPWH issued DO 74, DO 215 and DO 123 after EO 546 devolved to
the DOTC the authority to regulate limited access highways.
We now discuss the constitutionality of AO 1. Administrative issuances have
the force and effect of law.30 They benefit from the same presumption of
validity and constitutionality enjoyed by statutes.31 These two precepts place a
heavy burden upon any party assailing governmental regulations. The burden
of proving unconstitutionality rests on such party. 32 The burden becomes
heavier when the police power is at issue.
The use of public highways by motor vehicles is subject to regulation as an
exercise of the police power of the state.33 The police power is far-reaching in
scope and is the "most essential, insistent and illimitable" of all government
powers.34 The tendency is to extend rather than to restrict the use of police
power. The sole standard in measuring its exercise is reasonableness.35 What
is "reasonable" is not subject to exact definition or scientific formulation. No all-
embracing test of reasonableness exists,36 for its determination rests upon
human judgment applied to the facts and circumstances of each particular
case.37
We find that AO 1 does not impose unreasonable restrictions. It merely
outlines several precautionary measures, to which toll way users must adhere.
These rules were designed to ensure public safety and the uninhibited flow of
traffic within limited access facilities. They cover several subjects, from what
lanes should be used by a certain vehicle, to maximum vehicle height. The
prohibition of certain types of vehicles is but one of these. None of these rules
violates reason. The purpose of these rules and the logic behind them are quite
evident. A toll way is not an ordinary road. The special purpose for which a toll
way is constructed necessitates the imposition of guidelines in the manner of
its use and operation. Inevitably, such rules will restrict certain rights. But the
mere fact that certain rights are restricted does not invalidate the rules.
Consider Section 3(g) of AO 1, which prohibits the conduct of rallies inside toll
ways.38 The regulation affects the right to peaceably assemble. The exercise
of police power involves restriction, restriction being implicit in the power itself.
Thus, the test of constitutionality of a police power measure is limited to an
inquiry on whether the restriction imposed on constitutional rights is
reasonable, and not whether it imposes a restriction on those rights.
None of the rules outlined in AO 1 strikes us as arbitrary and capricious. The
DPWH, through the Solicitor General, maintains that the toll ways were not
designed to accommodate motorcycles and that their presence in the toll ways
will compromise safety and traffic considerations. The DPWH points out that
the same study the petitioners rely on cites that the inability of other drivers to
detect motorcycles is the predominant cause of accidents. 39 Arguably,
prohibiting the use of motorcycles in toll ways may not be the "best" measure
to ensure the safety and comfort of those who ply the toll ways.
However, the means by which the government chooses to act is not judged in
terms of what is "best," rather, on simply whether the act is reasonable. The
validity of a police power measure does not depend upon the absolute
assurance that the purpose desired can in fact be probably fully accomplished,
or upon the certainty that it will best serve the purpose intended. 40 Reason, not
scientific exactitude, is the measure of the validity of the governmental
regulation. Arguments based on what is "best" are arguments reserved for the
Legislature’s discussion. Judicial intervention in such matters will only be
warranted if the assailed regulation is patently whimsical. We do not find the
situation in this case to be so.
Neither do we find AO 1 oppressive. Petitioners are not being deprived of their
right to use the limited access facility. They are merely being required, just like
the rest of the public, to adhere to the rules on how to use the facility. AO 1
does not infringe upon petitioners’ right to travel but merely bars motorcycles,
bicycles, tricycles, pedicabs, and any non-
motorized vehicles as the mode of traveling along limited access
highways.41 Several cheap, accessible and practical alternative modes of
transport are open to petitioners. There is nothing oppressive in being required
to take a bus or drive a car instead of one’s scooter, bicycle, calesa, or
motorcycle upon using a toll way.
Petitioners’ reliance on the studies they gathered is misplaced. Police power
does not rely upon the existence of definitive studies to support its use. Indeed,
no requirement exists that the exercise of police power must first be
conclusively justified by research. The yardstick has always been simply
whether the government’s act is reasonable and not oppressive.42 The use of
"reason" in this sense is simply meant to guard against arbitrary and capricious
government action. Scientific certainty and conclusiveness, though desirable,
may not be demanded in every situation. Otherwise, no government will be
able to act in situations demanding the exercise of its residual powers because
it will be tied up conducting studies.
A police power measure may be assailed upon proof that it unduly violates
constitutional limitations like due process and equal protection of the
law.43 Petitioners’ attempt to seek redress from the motorcycle ban under the
aegis of equal protection must fail. Petitioners’ contention that AO 1
unreasonably singles out motorcycles is specious. To begin with, classification
by itself is not prohibited.44
A classification can only be assailed if it is deemed invidious, that is, it is not
based on real or substantial differences. As explained by Chief Justice
Fernando in Bautista v. Juinio:45
x x x To assure that the general welfare be promoted, which is the end of law,
a regulatory measure may cut into the rights to liberty and property. Those
adversely affected may under such circumstances invoked the equal
protection clause only if they can show that the governmental act assailed, far
from being inspired by the attainment of the common weal was prompted by
the spirit of hostility, or at the very least, discrimination that finds no support in
reason. It suffices then that the laws operate equally and uniformly on all
persons under similar circumstances or that all persons must be treated in the
same manner, the conditions not being different, both in the privileges
conferred and the liabilities imposed. Favoritism and undue preference cannot
be allowed. For the principle is that equal protection and security shall be given
to every person under circumstances, which if not identical is analogous. If law
be looked upon in terms of burden or charges, those that fall within a class
should be treated in the same fashion, whatever restrictions cast on some in
the group equally binding the rest.
We find that it is neither warranted nor reasonable for petitioners to say that
the only justifiable classification among modes of transport is the motorized
against the non-motorized. Not all motorized vehicles are created equal. A 16-
wheeler truck is substantially different from other light vehicles. The first may
be denied access to some roads where the latter are free to drive. Old vehicles
may be reasonably differentiated from newer models. 46 We find that real and
substantial differences exist between a motorcycle and other forms of transport
sufficient to justify its classification among those prohibited from plying the toll
ways. Amongst all types of motorized transport, it is obvious, even to a child,
that a motorcycle is quite different from a car, a bus or a truck. The most
obvious and troubling difference would be that a two-wheeled vehicle is less
stable and more easily overturned than a four-wheeled vehicle.
A classification based on practical convenience and common knowledge is not
unconstitutional simply because it may lack purely theoretical or scientific
uniformity. Moreover, we take note that the Philippines is home to a host of
unique motorized modes of transport ranging from modified hand-carts
(kuliglig) to bicycle "sidecars" outfitted with a motor. To follow petitioners’
argument to its logical conclusion would open up toll ways to all these
contraptions. Both safety and traffic considerations militate against any ruling
that would bring about such a nightmare.
Petitioners complain that the prohibition on the use of motorcycles in toll ways
unduly deprive them of their right to travel.
We are not persuaded.
A toll way is not an ordinary road. As a facility designed to promote the fastest
access to certain destinations, its use, operation, and maintenance require
close regulation. Public interest and safety require the imposition of certain
restrictions on toll ways that do not apply to ordinary roads. As a special kind
of road, it is but reasonable that not all forms of transport could use it.
The right to travel does not mean the right to choose any vehicle in traversing
a toll way. The right to travel refers to the right to move from one place to
another. Petitioners can traverse the toll way any time they choose using
private or public four-wheeled vehicles. Petitioners are not denied the right to
move from Point A to Point B along the toll way. Petitioners are free to access
the toll way, much as the rest of the public can. The mode by which petitioners
wish to travel pertains to the manner of using the toll way, a subject that can
be validly limited by regulation.
Petitioners themselves admit that alternative routes are available to them.
Their complaint is that these routes are not the safest and most convenient.
Even if their claim is true, it hardly qualifies as an undue curtailment of their
freedom of movement and travel. The right to travel does not entitle a person
to the best form of transport or to the most convenient route to his destination.
The obstructions found in normal streets, which petitioners complain of (i.e.,
potholes, manholes, construction barriers, etc.), are not suffered by them
alone.
Finally, petitioners assert that their possession of a driver’s license from the
Land Transportation Office (LTO) and the fact that their vehicles are registered
with that office entitle them to use all kinds of roads in the country. Again,
petitioners are mistaken. There exists no absolute right to drive. On the
contrary, this privilege, is heavily regulated. Only a qualified group is allowed
to drive motor vehicles: those who pass the tests administered by the LTO. A
driver’s license issued by the LTO merely allows one to drive a particular mode
of transport. It is not a license to drive or operate any form of transportation on
any type of road. Vehicle registration in the LTO on the other hand merely
signifies the roadworthiness of a vehicle. This does not preclude the
government from prescribing which roads are accessible to certain vehicles.
WHEREFORE, we PARTLY GRANT the petition. We MODIFY the Decision
dated 10 March 2003 of the Regional Trial Court, Branch 147, Makati City and
its Order dated 16 June 2003 in Civil Case No. 01-034. We
declare VOID Department Order Nos. 74, 215, and 123 of the Department of
Public Works and Highways, and the Revised Rules and Regulations on
Limited Access Facilities of the Toll Regulatory Board. We
declare VALID Administrative Order No. 1 of the Department of Public Works
and Communications.
SO ORDERED.
ANGLO-FIL TRADING VS. LAZARO
These two petitioners foe certiorari seek to annul the order of the Court of First
Instance of Manila issued ex-parte, lifting the restraining orders it had
previously issued. The setting aside of the restraining orders enabled the
implementation of the Management Contract executed by and between
respondents, providing for respondent Ocean Terminal Services, Inc. as the
exclusive stevedoring contractor at the South Harbor, Port of Manila.
Involved in these two petitions is the operation of stevedoring work in the South
Harbor of the Port of Manila. Stevedoring, as the term is understood in the port
business, consists of the handling of cargo from the hold of the ship to the
dock, in case of pier-side unloading, or to a barge, in case of unloading at sea.
The loading on the ship of outgoing cargo is also part of stevedoring work.
Stevedoring charges at rates approved by the Government are assessed and
collected for the services.
The Philippines Ports Authority (PPA), the government agency charged with
the management and control of all ports, was created by Presidential Decree
No. 505, promulgated on July 11, 1974, later superseded by Presidential
Decree No. 857 dated December 23, 1975. The PPA’s function is to carry out
an integrated program for the planning, development, financing, and operation
of ports and port districts throughout the country. Among other things, the
powers, duties, and jurisdiction of the Bureau of Customs concerning arrastre
operations were transferred to and vested in the PPA.
The Philippine Integrated Port Services, Inc., (PIPSI), petitioner in G.R. No.
54966, is a stevedoring operator at the Manila South Harbor. Anglo-Fil Trading
Corporation, Aduana Stevedoring Corporation, Anda Stevedoring Corporation,
Ben Paz Port Service, Inc., Manila Stevedoring and Arrastre Services, Inc.,
(Anglo-Fil, et al.,) petitioners in G.R. No. 54958, are stevedoring and arrastre
operators and contractors, likewise at Manila South Harbor, Port of Manila.
Anglo-Fil, et al., are members of the Philippine Association of Stevedoring
Operators and Contractors, Inc. (PASOC).
Prior to the present controversy which arose as a result of the actions of the
PPA, twenty-three (23) contractors competed at the South Harbor for the
performance of stevedoring work. The licenses of these contractors had long
expired when the PPA took over the control and management of ports but they
continued to operate afterwards on the strength of temporary permits and hold-
over authorities issued by PPA.
On May 4, 1976, the Board of Directors of PPA passed Resolution No. 10,
approving and adopting and adopting a set of policies on Port Administration,
Management and Operation. The PPA adopted as its own the own the Bureau
of Customs’ policy of placing on only one organization the responsibility for the
operation of arrastre and stevedoring services in one port.
On April 11, 1980, Presidential Ferdinand E. Marcos issued Letter of
Instruction No. 1005-A which among other things, directed PPA;
To expeditiously evaluate all recognized cargo-handling contractors and port-
related service operators doing business in all Port Districts in the country
under such criteria as PPA may set and to determine the qualified contractor
or operator under said criteria in order to ensure effective utilization of port
facilities, prevent pilferage and/or pinpoint responsibility for its and provide
optimum services to major ports vital to the country’s trade and economy.
This was followed by the President’s memorandum to respondent Bacling
dated April 18, 1980, directing submission of a report on the integrated of the
stevedoring operations in Manila South Harbor and emphasizing the need for
such integration as well as the strengthening of the PPA in order to remedy
the problems therein. In compliance therewith, PPA made a study evaluation
of the arrastre and stevedoring industry in the ports where integration had not
yet been achieved. A special committee was created on April 25, 1980 to make
a final evaluation of existing operators in the South Harbor and to select the
most qualified among them.
On April 28, 1980, the committee submitted its report recommending the award
of an exclusive contract for stevedoring services in the South Harbor to
respondent Ocean Terminal Services, Inc. (OTSI) after finding it the best
qualified among the existing contractors. The committee report and
recommendation were indorsed by respondent Primitivo Solis, Jr., Port
Manager of Manila, to respondent Baclig on April 30, 1980. On May 14, 1980,
the latter approved the recommendation.
In accordance with the President’s memorandum dated April 18, 1980, PPA
submitted the committee report to him. On May 24, 1980, the President
approved the recommendation to award an exclusive management contract to
OTSI.
On June 27, 1980, PPA and OTSI entered into a management contract which
provided, among others, for a five-year exclusive operation by OTSI of
stevedoring services in the South Harbor, renewable for another five (5) years.
The contract set the commencement of the exclusive operation by OTSI upon
proper determination by PPA which shall not be earlier that two (2) months
from the approval of the contract by the Board of Directors of the PPA. The
latter gave its approval on June 27, 1980.
On July 23, 1980, petitioner PIPSI instituted an action against PPA and OTSI
for the nullification of the contract between the two, the annulment of the 10%
of gross stevedoring revenue being collected by PPA, and injunction with
preliminary injunction. The case was docketed as Civil Case No. 133477 in the
Court of First Instance of Manila, provided over by respondent Judge Alfredo
Lazaro. On July 29, 1980, the respondent court issued a restraining order ex-
parte, enjoining respondents PPA and OTSI from implementing the exclusive
contract of stevedoring between them.
On August 21, 1980, with leave of court, petitioners, Anglo-Fil, et al., filed their
complaint in intervention. The motion was granted and on August 22, 1980,
respondent court issued another ex-parte restraining order in the case to
include the petitioners Anglo-Fil et al., under the benefits of such order.
On August 30, 1980, PPA filed an urgent motion to lift the restraining orders
"in view of their long delay in the resolution of the injunction incident and the
countervailing public interest involved." On September 1, 1980, respondent
Judge issued an order, which reads:
"AS PRAYED FOR, the restraining orders issued by the this Court on July 29,
1980 and August 20, 1980, are hereby dissolved, lifted, and set aside without
prejudice to the Court’s resolution on the propriety of issuing the writ of
preliminary injunction prayed for by the petitioners."
On September 5, 1980, PPA sent a letter to the General Manager of PIPSI
informing him that due to the lifting of the temporary restraining order, it was
withdrawing PIPSI’s hold-over authority to operate or provide stevedoring
services at South Harbor effective September 7, 1980.
Petitioners Anglo-Fil, et al., and PIPSI, therefore, filed the present petitions for
certiorari with preliminary injunction alleging that the lifting of the retraining
orders ex-parte by respondent Judge was clearly affected with grave abuse of
discretion amounting to lack of jurisdiction. They also applied for the issuance
in the meantime of a restraining order.
On September 9, 1980, we ordered the consolidation of the two cases and on
August 12, 1980, heard the petitioners’ motions for a restraining order.
On September 15, 1980, the respondent court issued an order in Civil Case
No. 133477 denying the application of petitioners for a writ of preliminary
injunction and affirming its order of September 1, 1980 lifting the temporary
restraining orders issued in the case.
On the same day, the Katipunan ng mga Manggagawa sa Daungan
(KAMADA), a labor federation and its thirteen (13) member labor organizations
filed a petition to intervene in the consolidated cases. According to KAMADA,
its members would lose their jobs if the contract was implemented. It also
alleged that the collective bargaining contract between OTSI and PWUP would
be prejudicial to workers because KAMADA members received greater
benefits from the ousted contractors;
On September 29, 1980, PIPSI filed a supplemental petition to annul the order
of the respondent judge denying the application for preliminary injunction and
affirming the orders issued on July 29 and August 22, 1980.1âwphi1
On October 14, 1980, PPA filed its comment with opposition to preliminary
injunction stating that the lifting of the restraining orders by respondent judge
was intended to preserve the status quo pending resolution of the preliminary
injunction; that said orders were issued without hearing or bond, therefore, the
dissolution was proper considering that it had been in force for one month and
an early resolution of the motion for injunction was not in sight, and that in
dissolving an injunction already issued, the court cannot be considered as
having acted without jurisdiction or in excess thereof even if dissolution had
been made without previous notice to the adverse party and without a hearing.
Furthermore, it argued that when the purpose of an administrative
determination is to decide whether a right or privilege which an applicant does
not possess shall be granted to him or withheld in the exercise of a discretion
vested by statute, notice and hearing are not necessary. It also added that the
policy of integration in the award by PPA to OTSI is impressed with public
interest while what is involved as far as petitioners were concerned was merely
their alleged right to operate stevedoring services, a property right the denial
of which could easily be restored in the event the respondent court decided
that petitioners are entitled to it.
In their consolidated reply, Anglo-Fil, et al., argued that the temporary order in
their favor was not issued ex-parte for the following reasons: a) it was issued
when PIPSI and PPA were already conducting hearings on the petition for
preliminary injunction; b) it was announced in open court; and c) PPA did not
object to such issuance. Likewise, they argued that although a permit to
operate is a privilege, its withdrawal must comply with due process of law just
like the practice of law, medicine, or accountancy, and that not only property
rights are involved but their very livelihood, their right to live.
On October 21, 1980, we issued a resolution granting the temporary
mandatory restraining order "effective immediately ordering respondents to
allow the workers represented by said petitioner-intervenors to render the
stevedoring services performed by them on foreign vessels in the Manila South
Harbor before the execution of the exclusive stevedoring contract of June 27,
1980 until further orders of the Court, the order of respondent Judge, dated
September 1 and 15, 1980 as well as the implementing letter of Philippine
Ports Authority of September 5, 1980 to the contrary notwithstanding."
On October 24, 1980, PPA issued Memorandum Order No. 23 providing for
guidelines in implementing the temporary mandatory restraining order of the
Supreme Court dated October 21, 1980, to wit:
xxx xxx xxx
(1.) The Office of the Harbor Master shall determine which union has serviced
a particular vessel for the period from January 1, 1980 to June 26, 1980. The
number of services performed by a particular union for a given vessel shall be
quantified for the said period after which each union shall be identified whether
they are affiliated with PWUP or KAMADA.
(2.) The most number of times that a union has serviced a particular vessel
with its affiliation properly considered shall continue to service said vessel for
its incoming calls or arrivals.
(3.) If there is a tie in the number of services performed by both PWUP and
KAMADA affiliated unions, the last union that serviced said vessel shall be
allowed to continue servicing the same on all its incoming calls or arrivals.
(4.) Once the union has been properly identified during the berthing meeting,
the Harbor Master shall inform Ocean Terminal Services, Inc. accordingly and
shall be authorized to negotiate with the union or the gang leader concerned
on the number of gangs as may be required by the vessel or its agent.
(5.) All unions in this order shall refer only to South Harbor stevedoring union.
(6.) KAMADA shall have the duty and responsibility to certify that the
stevedores deployed in any given vessel allowed for their work are bona fide
members of their group and that they were the same stevedores who serviced
assigned vessel prior to the stevedoring services integration.
On November 7 and 10, 1980 OTSI and PPA filed their separate answers to
KAMADA’s petition in intervention. They assured this Court that none of the
legitimate stevedores who had joined the KAMADA would be displaced from
work provided he joined PWUP. Written guarantees of this assurance were
separately submitted to this Court by both OTSI and PWUP. OTSI further
alleged in its answer that, contrary to the claim of KAMADA, the CBA signed
by OTSI with PWUP represented the best of employment ever offered to the
stevedores in the South Harbor.
On November 13, 1980, Anglo-Fil, et al., filed an urgent motion to cite PPA
and OTSI in contempt on the following grounds: 1) issuance of PPA-POM
Memorandum No. 23, series of 1980; 2) letter of October 29, 1980 of PPA to
Anglo-Fil, et al., denying a "non-existing" request for permission to operate by
the latter; and 3) refusal of PPA authorities to issue gate passes to KAMADA-
affiliated stevedores to be used and employed by Anglo-Fil, et al., in their
resumption of work, pursuant to the Supreme Court order of October 21, 1980.
On November 20, 1980, PPA filed a motion to lift the temporary mandatory
restraining order but the same was denied by this Court.
On November 26, 1980, an urgent motion for clarification of the resolution of
October 21, 1980 was filed by KAMADA seeking clarification as to which
company its workers should work for, alleging that after Antranco Stevedores
Union (Antranco) a KAMADA member, had received a letter from OTSI to
supply the necessary stevedores gang to service the S/S "Success", Anglo-Fil
Trading Corporation prohibited its employees who are members of Antranco
from working for OTSI in the light of the resolution of this Court and the existing
collective bargaining agreement between said union and Anglo-FilTrading
Corporation. As a consequence, the union was allegedly unable to service S/S
"Success" and from October 21, 1980 up to the present, OTSI failed to allow
members of KAMADA to service several vessels.
A joint manifestation was filed by respondents PPA and OTSI alleging
compliance with the above resolution to the effect that KAMADA workers have
been and are being employed on the vessels they used to serve prior to June
27, 1980, and justifying issuance of PPA-POM Memorandum No. 23, as a
means to avert possible conflict among the competing union groups (PWUP
and KAMADA) involved, to provide a reasonable and fair system for
determining which group had previously worked on a vessel and should work
on its subsequent calls, and to insure that only the bonafide stevedores
contemplated by the order of this Court are allowed to work.
On December 2, 1980, another motion for clarification was filed by KAMADA
regarding the phrase "foreign vessels" which it stated to be inaccurate as
KAMADA members also work on vessels of Philippine registry like those
operated by Sweet Lines and Lorenzo Shipping Lines whose vessels also dock
at the Manila South Harbor. It suggested that the basis should not be the
foreign vessels but the shipping agents or charterers and consignees and that
the basis for determining and quantifying the vessels given to PWUP or
KAMADA should be from January 1, 1978 to September 7, 1980.
This Court in a resolution dated December 9, 1980, granted the motion of
KAMADA to wit:
xxx xxx xxx
x x x (3) GRANT the motion for clarification by petitioners-intervenors issuing
a resolution previously released, the pertinent portion of which reads, ‘for while
the order of October 21, 1980 is on its face quite definite as to what it purports
to require, this resolution may remove any doubt as to its purpose and intent,
thus assuring the utmost fidelity in its compliance. The order requires and
mandates that all workers represented by said petitioners-invtervenors can
continue rendering stevedoring services performed by them on foreign
vessels, in Manila South Harbor before the execution of the exclusive
stevedoring contract of June 27, 1980, until further orders of the Court, without
any reference to any particular vessel, the decisive factor being shipping lines
involved and the fact that they were at that time rendering stevedoring
services, irrespective of the labor unions to which they are affiliated. xxx."
Inspite of our clarificatory order, various problems in its implementation appear
to have beset the parties. Repeated motions and manifestations and
countermotions and countermanifestations were filed with unbroken regularity,
swelling the records of these petitions to unusual proportions. After requiring
the parties to submit their respective positions, we issued on January 6, 1983,
a resolution which modified our earlier orders as follows:
"G.R. No. 54958 (Anglo-Fil Trading Corporation, et al. vs. Hon.Alfredo Lazaro,
et al.); and G.R. No. 54966 (Philippine Integrated Port Services, Inc. vs. Hon.
Alfredo Lazaro, et al.). – Considering the urgent motion and manifestation of
petitioners-intervenors filed on March 20, 1982, the comment of respondent
Ocean Terminal Services, Inc., filed on June 7, 1982, the comment of
respondent Philippine Ports Authority filed on June 8, 1982, the reply of
petitioners-intervenors filed on June 28, 1982, the rejoinder of respondent
Ocean Terminal Services, Inc., filed on July 27, 1982, the rejoinder of
respondent Philippine Ports Authority filed on August 6, 1982 and the
supplemental motion and manifestation filed by petitioners-intervenors on
September 15, 1982, the Court Resolved to direct the parties concerned to
observe the following guidelines in the allocation of stevedoring assignments:
1. Any vessel belonging to a shipping line shall be assigned for stevedoring
work to the union that had served that shipping line the greatest number of
times as appearing in the PPA records for the six-month period immediately
preceding the execution of the stevedoring contract of OTSI. 2. The above
notwithstanding, whenever a vessel destined to or proceeding from the Port of
Manila has been chartered for a particular voyage by a consignee or any
person having interest in the goods carried therein, such vessel shall be
assigned for stevedoring work to the union that served the charterer the
greater number of times as appearing in the PPA records for six-month period
immediately preceding the execution of the stevedoring contract of OTSI. In
case there are two or more charterer who pays the highest freight charges
shall be the determining fact in the assignment. 3. Vessels of new shipping
lines calling at the Port of Manila for the first time as well as vessels contracted
by new charterers shall be assigned to the union of choice of the new shipping
line or charterer as the case may be."
The main issue in these petitions is whether or not the respondent judge acted
with grave abuse of discretion when he lifted ex-parte the temporary
restraining order he had earlier issued also ex-parte.
From the viewpoint of procedure, we see no grave abuse of discretion or want
of jurisdiction. Subsequent to the issuance to the questioned order, the
respondent court heard the parties on the petitioners’ application for a writ of
preliminary injunction and, after hearing the parties’ evidence and arguments,
denied the application for the writ. We also agree the with the respondents that
it is not grave abuse of discretion when a court dissolves ex-parte abuse of
discretion when a court dissolves ex-parte a restraining order also issued ex-
parte. (Calaya v. Ramos, 79 Phil, 640; Clarke v. Philippine Ready Mix
Concrete Co., 88 Phil. 460; Larap Labor Union v. Victoriano, 97 Phil. 435.)
The restraining orders dated July 29, 1980 and August 22, 1980 respectively
provide:
xxx xxx xxx
"Finding the allegations in the complaint to be sufficient in form and in
substance, a temporary restraining order is hereby issued x x x.
xxx xxx xxx
"and to maintain the status quo until further orders from this court.
x x x.
xxx xxx xxx
"It appearing that on July 29, 1980, this Court issued an order granting the
prayer of the original plaintiff for a temporary restraining order, the same order
is hereby reiterated and to include Anglo-Fil Trading Corporation. x x x.
xxx xxx xxx
"plaintiffs-intervenors herein and for the parties to serve the status quo until
further orders from this Court." (Italics supplied)
A restraining order is an order to maintain the subject of controversy in status
quo until the hearing of an application for a temporary injunction. Unless
extended by the court, a restraining order ceases to be operative at the
expiration of the time fixed by its terms. In cases where it has been granted
ex-parte, it may be dissolved upon motion before answer. (See the Revised
Rules of Court, Francisco, pp. 184-186, citing 43 CJS, 28 Am. Jur)
From the aforequoted dispositive portions, it is beyond doubt that the duration
of the restraining orders was "until further orders from the court." In lifting said
restraining orders on September 1, 1980, respondent judge merely exercised
the prerogative he earlier reposed upon himself to terminate such orders when
circumstances so warranted. Considering again that the previous grants of the
restraining orders in favor of petitioners were made ex-parte and without bond,
the need for a notice and hearing in regard to such lifting was not necessary,
much less mandatory.
The petitioners’ contention that the lifting of the restraining order had rendered
moot and academic the injunction case in the trial court is likewise untenable.
A restraining order is distinguished from an injunction in that it is intended as
a restraint on the defendant until the propriety of granting an injunction
pendente lite can be determined, and it goes no further than to preserve the
status quo until such determination. Therefore, the grant, denial, or lifting of a
restraining order does not in anyway pre-empt the court’s power to decide the
issue in the main action which in the case at bar, is the injunction suit. In fact,
the records will show that the trial court proceeded with the main suit for
injunction after the lifting of the restraining orders.
Petitioner PIPSI also maintains that there were no considerations of public
interest which supported the lifting. On the contrary, the lifting allegedly
permitted a situation palpably against public interest, that is, confiscation of
petitioners’ business and those similarly situated. This, again, is untenable.
The streamlining of the stevedoring activities in the various ports of the
Philippines was undertaken by PPA to implement LOI No. 1005-A. The public
interest, public welfare, and public policy sought to be subserved by said LOI
are clearly set forth in its whereas clauses. They areas follows:
xxx xxx xxx
"WHEREAS, it is a declared national policy to support and accelerate the
development of government port facilities as well as vital port development
projects and services;
xxx xxx xxx
"WHEREAS, it is a prime concern of government to protect the interests of
legitimate port workers and port users in the country;
xxx xxx xxx
"WHEREAS, there is need to rationalize and integrate cargo-handling and
other port-related services as may have been contracted out or authorized by
the PPA in the various ports of the country;
"WHEREAS, the procedures of voluntary merger, consolidation and/or bidding
for the awarding or contracting of cargo-handling and other port-related
services have heretofore proven ineffective and resulted in prolonged and
unproductive wrangling, all to the detriment of efficient port operations and
development; and
"WHEREAS, it now become necessary to revitalize and streamline the PPA to
carry out its functions and duties as a vital link in the governmental machinery
and the thrust for national economic development;"
xxx xxx xxx
Clearly, there is a reasonable relation between the undeniable existence of an
undesirable situation and the statutory attempt to avoid it. "Public welfare, then,
lies at the bottom of the enactment of said law, and the state in order to
promote the general welfare may interfere with personal liberty, with property,
and with business and occupations." (See Alalayan v. National Power
Corporation, 24 SCRA 172; Ermita-Malate Hotel and Motel Owners
Association v. City Mayor, 20 SCRA 849) These considerations were
considered by the respondent judge when he issued his questioned order
dated September 1, 1980. He stated:
xxx xxx xxx
"While in the main this Court is not insensitive to the plight of the petitioners,
the overriding considerations of public interest, as impressed by the Office of
the Solicitor General, must be given greater weight and important. This is
compounded by the way and manner by which the parties are now fashioning
and shaping their respective positions. The proceedings, to say the least, have
become accented with a myriad of contentious facts and intercalated with
complex legal issues. For the matter is not a simple determination of right and
wrong but a collision of ideas and viewpoints. All these, indeed, militate against
an early resolution of the application for a writ of preliminary injunction.
xxx xxx xxx
The above statement are sufficient bases for the lifting of the order. It is clear
that not only did the respondent judge base the lifting on consideration of public
interest but also on the fact that the restraining orders were issued ex-parte
without bond and that the resolution of the motion for preliminary injunction
was still far from being decided.
The statement of the respondent judge that "it cannot sit in judgment, without
prejudice to public interest, on the truth and wisdom of the allegation in support
of the Urgent Motion" should not be interpreted to mean that courts cannot
pass upon the greater issue of whether or not public interest is served or is
prejudiced. The determination by PPA that the measure sought to be enforced
is justified by public interest and the PPA manner of implementing a
Presidential Decree and Letters of Instruction are subject to judicial review.
The Constitution defines the powers of government. Who is to determine the
nature, scope, and extent of such powers? The Constitution has provided for
the instrumentality of the judiciary as the rational way. In determining whether
or not the exercise of powers vested by the Constitution truly serves the
general welfare or is affected by public interest, the judiciary does not assert
any superiority over the other departments but only fulfills the solemn and
sacred obligation assigned to it by the Constitutions to determine conflicting
claims of authority and to establish for the parties in an actual controversy the
rights which that instrument secures and guarantees to them. This is in truth
all that is involved in what is termed "judicial supremacy" which properly is the
power of judicial review under the Constitutions. (See Angara vs. Electoral
Commission, 63 Phil. 139) This is why questions of expropriation of private
lands, we have upheld the court’s authority to make inquiry on whether or not
lands were private and whether the purpose was in fact, public. (City of Manila
v. Chinese Community of Manila, 40 Phil. 340). Similarly, in the present cases,
the question of whether or not the lifting of the restraining orders will prejudice
public interest and will run counter to the protection to labor provision of the
Constitution is determinable by the judiciary under the power of judicial review.
From the records of these petitions, it is evident that the writ of certiorari cannot
be granted. The respondent judge’s action was not tainted by any capricious
or whimsical exercise of judgment amounting to lack of jurisdiction.
It is settled to the point of being elementary that the only question involved in
certiorari is jurisdiction, either want of jurisdiction or excess thereof, and abuse
of discretion shall warrant the issuance of the extra-ordinary remedy of
certiorari only when the same is grave as when the power is exercised in an
arbitrary or despotic manner. . . . (FS. Divinagracia Agro Commercial, Inc. v.
Court of Appeals, 104 SCRA 180; Abig v. Constantino, 3 SCRA 299; Abad
Santos v. Province of Tarlac, 67 Phil. 480; Alafriz v. Nable, 72 Phil. 278;
Travers Luna, Inc. v. Nable, 72 Phil. 278; and Villa Rey Transit, Inc. v. Bello,
75 SCRA 735).
It is not sufficient, however, to resolve these petitions on whether or not there
was grave abuse of discretion tantamount to lack or exercise of jurisdiction.
The larger issue remains. Behind the maneuvering and skirmishing of the
parties lies a question of power. Does the PPA have the power and authority
to award an exclusive stevedoring contract in favor of respondent OTSI? Is the
PPA-OTSI Management Contract executed pursuant to P.D. No. 857 and LOI
No. 1005-A, valid?
The facts bearing on this issue are not in dispute and are worth reiterating.
They are summarized by the respondent court as follows:
xxx xxx xxx
"Before the advent of Presidential Decree No. 505, as amended by
Presidential Decree No. 857, the administration and management of the South
Harbor, Port of Manila, was under the Bureau of Customs. It appears that the
plaintiffs, among others, were engaged in and allowed to operate stevedoring
services on the basis of special permits granted by the Bureau of Customs
(Exhibit ‘A’).
"It further developed that the number of stevedoring operators or contractors
made it difficult for the Bureau of Customs to maintain order and discipline
among them to the detriment of efficiency and the desired performance at the
South Harbor. This appears to be true with other ports. Thus, an in-depth study
and analysis of the problems attendant to arrastre and stevedoring operations
was initiated. The only solution appeared to be the integration of contractors
engaged in stevedoring services with the ultimate objective of having only one
stevedoring contractor to engage in cargo-handling service in a given port.
Accordingly, on May 8, 1975, the Bureau of Customs issued Customs
Memorandum Order No. 28-75 providing guidelines for the merger of the multi-
operators in the same ports (Exhibit ‘1’).
"On December 23, 1975, Presidential Decree No. 857 was promulgated
superseding Presidential Decree No. 505 whereby the jurisdiction of the
Bureau of Customs concerning arrastre operations, among others, were
transferred and vested in the PPA.
"On May 4, 1976, the PPA, pursuant to its avowed objectives, approved the
PPA policies on port administration, management and operation, adopting as
a policy the horizontal and vertical integration of existing operators at each port
(Exhibit ‘2’ and ‘3’).
"On January 19, 1977, a memorandum order was issued whereby the different
port operators or contractors who have existing permits, licenses, contracts,
and other kinds of memorandum agreement issued by the Bureau of Customs
were Temporarily allowed the continuance of their services on a hold-over
capacity until such time when the PPA implements its own pertinent policy
guidelines on the matter (Exhibits ‘5’ and ‘6’).
On May 27, 1977, PPA Memorandum Order No. 21, series of 1977, was
passed reiterating the implementation of the policy on integration to ‘insure
efficiency and economic in cargo-handling operation and provide better service
to port users and to amply protect the interest of labor and the government as
well.’ It is the declared policy that there should only be one stevedoring
contractor to engage in cargo-handling services in a given port.
"On April 11, 1980, the Presidential issued Letter of Instruction No. 1005-A
(Exhibit ‘7’) which directed the PPA to accelerate the rationalization of all
cargo-handling services and to expeditiously evaluate all recognized cargo-
handling contractors and port related service operators under such criteria as
the PPA may set and to determine the qualified contractor or operator in order
to insure effective utilization of port facilities, prevent pilferage and/or pinpoint
responsibility for it and provide services major ports vital to the country’s trade
and economy. This Letter of Instruction was dictated by experience where the
‘procedures of voluntary mergers, consolidation and/or bidding for the
awarding or contracting of cargo-handling and other port related services have
heretofore proven ineffective and resulted in prolonged and unproductive
wrangling, all to the detriment of efficient port operations and development.’
"On April 18, 1980, the President issued a memorandum to the PPA (Annex
‘B’ of the Answer and Opposition of OCEAN) to submit its report on the
integration and rationalization of the stevedoring operation in Manila South
Harbor and the submission for his approval of the resolution of the board
regarding contracts entered into in connection therewith. This memorandum
was dictated by ‘heavy losses suffered by shippers as well as the smuggling
of textiles in the South Harbor.’
"Pursuant to and in compliance with the Letter of Instruction of April 11, 1980
and the Memorandum of the President dated April 18, 1980, the PPA created
a Special Evaluation Committee composed of Atty. David R. Simon, member
of the Legal Department of PPA and concurrently Assistant to the Port of
Manila, as Chairman; Mr. Leonardo Mejia, Chief of the Commercial
Development Division, Port of Manila; and, Capt. Jovito G. Tamayo, Harbor
Master and Chief of the Harbor Operations Division of the Port of Manila, as
members. The respective and individual duties of the members of the
Committee taken in their integral entirely could easily sum up to an almost
complete overview of the functions of stevedoring contractors and place them
in a vantage position as to provide proper evaluation and determination of the
individual performance, qualification, and compliance of PPA requirements by
each stevedoring operator.
"The Committee took into account certain factors with their corresponding
percentage weights in its determination, who among the existing operators, is
most qualified for an award of an exclusive contract. In connection therewith,
OCEAN was rated 95% topping all the rest by a wide margin.
"On April 28, 1980, the Evaluation Committee submitted its report
recommending the conclusion of a management contract with OCEAN being
the most qualified (Exhibit ‘8’) which recommendation was adopted by the
PPA.
"On June 27, 1980, a management contract was executed by and between
PPA and OCEAN (Exhibit ‘11’).
"On August 19, 1980, the President approved the exclusive management
contract between PPA and OCEAN (Exhibit ‘10’).
"In the meantime, in letters dated July 13, 1980 (Exhibit ‘N’) and July 14, 1980
(Exhibit ‘F’), PIPSI and INTERVENORS were informed of the management
contract with OCEAN as exclusive operator at the South harbor, Port of Manila,
beginning August 27, 1980."
xxx xxx xxx
The petitioners are on extremely shaky grounds when they invoke the non-
impairment clause to sustain their charge of invalidity. According to the
petitioners, contracts entered into with local and foreign clients or customers
would be impaired.
Even in the United States during the heyday of the laissez faire philosophy, we
are informed that the American Supreme Court’s interpretations have never
allowed the contract clause to be an inflexible barrier to public regulation.
According to Gerald Gunther, Professor of Constitutional Law at Stanford
University, historians have probably exaggerated the impact of the early
contract clause decisions on American economic and legal developments, that
the protected position of corporations in the 19th century was due less to any
shield supplied by the U.S. Supreme Court than to legislative unwillingness to
impose restraints-an unwillingness reflecting the laissez faire philosophy of the
day. After analyzing the leading cases on the contract clause from 1810
(Fletcher v. Peck, 6 Cranch 87) to 1880 (Stone v. Mississippi, 101 U.S. 814)
he cites the 1914 decision in Atlantic Coast Line R. Co. v. Goldsboro (232 U.S.
548) where the U.S. Court ruled "It is settled that neither the contract clause
nor the due process clause has the effect of overriding the power of the State
to establish all regulations that are reasonably necessary to secure the health,
safety, good order, comfort, or general welfare of the community; that this
power can neither be abdicated nor bargained away, and is inalienable even
by express grant; and that all contract and property rights are held subject to
its fair exercise" and Manigault v. Springs (199 U.S. 473) where the same
Court stated that "parties by entering itno contract may not stop the legislature
from enacting laws intended for the public good." (See Gunther, Cases and
Materials On Constitutional Law, 1980 Edition, pp. 554-570).
In the Philippines, the subservience of the contract clause to the police power
enacting public regulations intended for the general welfare of the community
is even more clearcut.
As pointed out by then Senior Associate, now Chief Justice Enrique M.
Fernando, the laissez faire or let alone philosophy has no place in our scheme
of things, not even under the 1935 Constitution. (See Fernando, The
Constitution of the Philippines, Second Edition, pp. 111-114) In his concurring
opinion in Agricultural Credit and Cooperative Financing Administration v.
Confederation of Unions (30 SCRA 649, 682-683) Chief Justice Fernando
stated:
"xxx With the decision reached by us today, the Government is freed from the
compulsion exerted by the Bacani doctrine of the ‘constituent-ministrant’ test
as a criterion for the type of activity in which it may engage. Its constricting
effect is consigned to oblivion. No doubts or misgivings need assail us that
governmental efforts to promote the public weal, whether through regulatory
legislation of vast scope and amplitude or through the undertaking of business
activities, would have to face a searching and rigorous scrutiny. It is clear that
their legitimacy cannot be challenged on the ground alone of their being
offensive to the implications of the laissez-faire concept. Unless there be a
repugnancy then to the limitations expressly set forth in the Constitution to
protect individual rights, the government enjoys a much wider latitude of action
as to the means it chooses to cope with grave social and economic problems
that urgently press for solution. xxx"
The Manila South Harbor is public property owned by the State. The
operations of this premiere port of the country, including stevedoring work, are
affected with public interest. Stevedoring services are subject to regulation and
control for the public good and in the interest of general welfare.
Not only does the PPA, as an agency of the State enjoy the presumption of
validity in favor of its official acts implementing its statutory charter, it has more
than adequately proved that the integration of port services-is far from arbitrary
and is related to the stated governmental objective.
A single contractor furnishing the stevedoring requirements of a port has in its
favor the economy of scale and the maximum utilization of equipment and
manpower. In turn, effective supervision and control as well as collection and
accounting of the government share of revenues are rendered easier for PPA
than where there are 23 contractors for it to oversee. As respondent court
found from the evidence, the multiple-contractor system has bred cut-throat
competitions in the port. Understandably, most contractors had been unable
to acquire sufficient modern facilities, observe labor standards for their
workers, maintain efficiency in services, and pay PPA dues. The questioned
program would accelerate the rationalization and integration of all cargo-
handling activities and port-related services in major ports and the
development of vital port facilities, projects, and services.
The contention of petitioners Anglo-Fil, et al., that due process was violated
resulting to a confiscatory effect on private property is likewise without merit.
In the first place, the petitioners were operating merely on "hold-over" permits.
These permits which were based on PPA memorandum Order No. 1, dated
January 19, 1977 provided:
xxx xxx xxx
"In view thereof and pending proper evaluation by this Office of all existing
permits, licenses, contracts, and other kinds of memorandum agreements
issued by the Bureau of Customs to the different port operators or contractors,
you may temporarily allow the continuance of their services on a hold-over
capacity until such time when the PPA implements its own pertinent policy
guidelines on the matter.
xxx xxx xxx
Clearly, all hold-over permits were by nature temporary and subject to
subsequent policy guidelines as may be implemented by PPA. Such should
have served as sufficient notice to petitioners that, at any time, their authorities
may be terminated.
Petitioners PIPISI would also impress upon this Court that the certification
issued to it and its fellow contractors by PPA, dated August 30, 1979, showed
that they were not only kept in the dark as to PPA’s subsequent move to award
OTSI an exclusive contract, but that they were actually lulled into believing that
their temporary permits were being given pending issuance of their PTO or
Permit to Operate.
We do not believe so. The second paragraph of the certification states that the
hold-over permit was still subject to the memorandum quoted above. The
certification provided that: "In accordance with PPA Memo Circular No. I, dated
January 9, 1977…, the said firm is allowed to continue operating at the South
Harbor, Port manila." (italics supplied.)
Whether or not the petitioners would be issued a PTO depended on the sound
discretion of PPA and on the policies, rules and regulations that the latter may
implement in accordance with the statutory grant of power. Petitioners,
therefore, cannot be said to have been deprived of property without due
process because, in this respect, what was given them was not a property right
but a mere privilege and they should have taken cognizance in the South
Harbor, their permits can be withdrawn anytime the public welfare deems it
best to do so.
The absence of arbitrariness or bad faith is manifest in the selection procedure
adopted. The award in fabvor of OTSI was the result of an evaluation of
performance of existing contractors made by a special committee created by
the PPA. The respondent court found from the evidence that the members of
that committee were "in a vantage position as to provide proper evaluation and
determination of the individual performance, qualification, and compliance of
the PPA requirements by each stevedoring operator." The committee rated
OTSI with the highest grade of 95% in its evaluation.
And significantly, since no less than the President of the Philippines approved
the award of the management contract to OTSI presumptively after through
consideration of all factors relevant to efficient stevedoring services, it is
difficult for this Court to find a violation of due process in the selection
procedure. In the language of the Chief Justice in Lim v. Secretary (34 SCRA
751) if the task of overturning a decision of a department head is attended with
difficulty, the burden of persuasion becomes much heavier when the
challenged action is encased in the armor of an explicit presidential approval.
In the case at bar, there is nothing in the record remotely assailing the motives
of the President in giving his imprimatur to the award.
In seeking the nullification of the management contract, the petitioners also
invoke the constitutional provision on monopolies and combination. Section 2,
Article XIV of the Constitution provides:
The state shall regulate or prohibit private monopolies when the public interest
so requires.1âwphi1 No combinations in restraint of trade or unfair competition
shall be allowed.
Private monopolies are not necessarily prohibited by the Constitution. They
may be allowed to exist but under State regulation. A determination must first
be made whether public interest requires that the State should regulate or
prohibit private monopolies. A distinction prevails as regards combinations in
restraint of trade and unfair competition which are prohibited outright by the
Constitution.
By their very nature, certain public services or public utilities such those which
supply water, electricity, transportation, telephone, telegraph, etc. must me
given exclusive franchises if public interest is to be served. Such exclusive
franchises are not violative of the law against monopolies. (58 Corpus Juris
Segundum 958-964).
Neither is the management contract violative of the Anti-Graft Law. It is a
contract executed in pursuance to law and the instructions of the President to
carry out government objectives to promote public interest. The act did not
cause "undue injury" to the petitioners who as explained earlier had no vested
property rights entitled to protection. There is no undue injury to the
government nor any unwarranted benefit to OTSI consideration for PPA which
is the payment by OTSI of ten percent (10%) of its gross income, something
which petitioner PIPSI is loathe to pay. The rationalization and effective
utilization of port facilities is to the advantage of the Government. Furthermore,
the discretion in choosing the stevedoring contractor for the south Harbor, Port
Manila, belongs by law to PPA. As long as standards are set in determining
the contractor and such standards are reasonable and related to the purpose
for which they are used, the courts should not inquire into the wisdom of PPA’s
choice. The criterion used by PPA namely, the identification of a contractor
with the highest potential for operating an exclusive service, appears
reasonable. The factors which were taken into account in determining the
exclusive contractor are indicia of reasonableness. They are:
Productivity…………………. 25%
Equipment Requirement
Capability…………………… 25%
Financial Capability………… 15%
Promptness in Paying
Government share…………… 25%
Compliance with other
PPA Requirements…………... 20%
100%
It is settled rule that unless the case justifies it, the judiciary will not interfere in
purely administrative matters. (Monark International, Inc. v. Noriel, 83 SCRA
114) Such discretionary power vested in the proper administrative body, in the
absence of arbitrariness and grave abuse so as to go beyond the statutory
authority, is not subject to the contrary judgment or control of others. (See
Meralco Securities Corporation v. Savellano, 117 SCRA 804). In general,
courts have no supervisory power over the proceedings and actions of the
administrative departments of the government. This is particularly true with
respect to acts involving the exercise of judgment or discretion, and to findings
of fact. (Pajo v. Ago and Ortiz, 108 Phil.905)
In view of the foregoing, we find the PPA-OTSI Management Contract
executed on June 27, 1980, valid and devoid of any constitutional or legal
infirmity. The respondents, however, should maintain the policy of absorption
of bona-fide displaced port workers in the integration scheme as mandated not
only by LOI No. 1005-A but by the policy of the State to assure the rights of
workers to security of tenure. (sec. 9, Art. II, Constitution) We note that both
PPA and OTSI have given assurance in their answers that none of the
legitimate stevedores would be displaced from work although they added that
their bonafide stevedores should join PWUP. Which union a worker or various
workers should join cannot be ordained by this Court in these petitions where
the basic issue is the validity of the exclusive stevedoring contract given to one
operator for one port. This matter will have to be eventually threshed out by
the workers themselves and the Ministry of Labor and Employment before it
may be elevated to us, if ever. However, we reiterate the guidelines earlier
issued that no bona fide stevedore or worker should be deprived of
employment he used to enjoy simply because of the execution and
implementation of the disputed Management Contract. This absorption of bona
fide workers is an act of social justice. When a person has no property, his job
may possibly be his only possession or means of livelihood. Therefore, he
should be protected against any arbitrary and unjust deprivation of his job.
(See Bondoc v. People’s Bank and Trust Company, 103 SCRA 599)
As to the contempt charges, we note that the Order of this Court dated October
21, 1980 allowed "petitioners-intervenors" meaning KAMADA workers to work
at the South Harbor pending resolution of this case, "the order of respondent
judge xxx as well as the implementing letter of Philippine Ports Authority xxx
to the contrary notwithstanding." It is not clear from said orders that the
petitioners who are stevedoring operators and contactors were also
specifically included. There was no mention of them being included and
allowed with KAMADA workers to resume operations at the South Harbor. The
petitioners read into the order something which was not there. The only clear
import of the Order was that KAMADA workers must be allowed to work
notwithstanding any contrary provisions in the Management Contract, a
situation brought about by the lifting of the restraining orders, the denial of the
petition for preliminary injunction, and the implementing letter of PPA. It is a
settled rule that a party cannot be punished for contempt unless the act which
is forbidden or required to be done is clearly and exactly defined, so that there
can be no reasonable doubt or uncertainty as to what specific act or thing is
forbidden or required. (Lee Yick Hon v. Collector of Customs, 41 Phil. 548,
citing U.S. v. Achi-son, etc. R. Co., 146 Fed. 176, 183; 13 CJ 15)
WHEREFORE, the petitions in G.R. No. 54958 and G.R. No. 54966 are hereby
DISMISSED for lack of merit. The respondents are, however, directed to
comply with the guidelines in the above decision on the absorption of bonafide
stevedores and as thus modifies, the temporary restraining order dated
October 21, 1980 is made PERMANENT. No costs.
SO ORDERED.
PPA VS. CIPRES STEVEDORING
This is a petition for review on certiorari of the Decision1 of the Court of
Appeals in CA-G.R. SP No. 59553 entitled, "Cipres Stevedoring and Arrastre,
Inc. (CISAI) v. The Honorable Alvin L. Tan in his capacity as Presiding Judge,
Regional Trial Court (RTC), Br. 44, Dumaguete City, Philippine Ports Authority
(PPA), Juan Peña2 & Benjamin Cecilio." Said decision declared as null and
void the Order dated 31 May 20003 of Judge Tan and directed the court a
quo to issue a writ of preliminary injunction enjoining petitioner "from
conducting the scheduled public bidding of cargo handling operations in the
port of Dumaguete City" until the termination of the main case.
The facts follow.
Petitioner PPA is a government entity created by virtue of Presidential Decree
(P.D.) No. 857 and is tasked to implement an integrated program for the
planning, development, financing, and operation of ports and port districts in
the country.4
Respondent CISAI is a domestic corporation primarily engaged in stevedoring,
arrastre, and porterage business, including cargo handling and hauling
services, in the province of Negros Oriental and in the cities of Dumaguete and
Bais. Since the commencement of its corporate existence in 1976, respondent
had been granted permits of varied durations to operate the cargo handling
operations in Dumaguete City. In 1991, petitioner awarded an eight-year
contract5 to respondent allowing the latter to pursue its business endeavor in
the port of Dumaguete City. This contract expired on 31 December 1998.
At about the time respondent was awarded an eight-year contract in 1991 or,
on 12 June 1990, PPA Administrative Order No. 03-90 (PPA AO No. 03-90)
dated 14 May 1990 took effect.6 This administrative order contained the
guidelines and procedures in the selection and award of cargo handling
contracts in all government ports as well as cargo handling services that would
be turned over by petitioner to the private sector. Section 2 of said
administrative order states:
Section 2. – Statement of Policies
As a general rule, cargo handling services in all government ports shall be
awarded through the system of public bidding, except in the following cases:
2.1 Cargo handling contractors in ports with existing or expired contracts
whose performance is satisfactory shall be granted renewal of their contracts.
2.2 Cargo handling operators issued one-year permits and have already been
in operation for at least six (6) months prior to the effectivity of this Order shall
be audited, and if found satisfactory, awarded contracts.
2.3 Cargo handling services in ports with low cargo volume and where
handling operations are primarily manual.7
On 29 May 1996, a Memorandum of Understanding (MOU)8 was entered into
among the National Union of Portworkers of the Philippines/Trade Union
Congress of the Philippines,9 the Department of Transportation and
Communications,10 the PPA,11 the Department of Labor and Employment
(DOLE),12 and the Philippine Chamber of Arrastre and Stevedoring Operators
(PCASO)13 relative to the nationwide protests then being conducted by port
workers. Among the items agreed upon by the parties to the MOU were:
3. The DOTC Secretary shall immediately create a tripartite oversight
committee to review, assess and evaluate current and future issuances
pertaining to Cargo Handling contracts, portworkers’ contracts with employers,
and the like. The oversight committee shall be composed of equal
representatives from the portworkers, the cargo handling operators and the
government including the PPA and the DOTC Undersecretary who shall act as
Chairman.
4. Henceforth, all expiring Cargo Handling contracts shall be reviewed by the
oversight committee referred to in paragraph 3 above for recommendation to
the PPA Board of Directors as to whether the same shall be terminated and
subjected to public bidding, or as may be authorized upon consideration of
paragraph 2 hereof.14
Following the expiration of its contract for cargo handling, respondent was able
to continue with its business by virtue of hold-over permits given by petitioner.
The first of these permits expired on 17 January 200015 and the last was valid
only until 18 April 2000.16 While respondent’s second hold-over permit was still
in effect, petitioner, through its General Manager Juan O. Peña, issued PPA
AO No. 03-200017 dated 15 February 2000 which amended by substitution
PPA AO No. 03-90. PPA AO No. 03-2000 expressly provides that all contract
for cargo handling services of more than three (3) years shall be awarded
through public bidding. With respect to cargo handling permits for a period of
three (3) years and less in ports where the average yearly cargo throughout
for the last five (5) years did not surpass 30,000 metric tons and where the
operations are mainly manual, the same shall be awarded through
comparative evaluation.
Pursuant to PPA AO No. 03-2000, petitioner set the deadline for the
submission of the technical and financial bids for the port of Dumaguete City
at 12:00 noon of 05 July 2000; the opening of the technical bids on 05 July
2000 at 1:00 p.m.; and the dropping of the financial bids on 28 July 2000 at
1:00 p.m. Contending that this action on the part of petitioner was in derogation
of its vested right over the operation of cargo handling enterprise in
Dumaguete City, respondent initiated an action for specific performance,
injunction with application for preliminary mandatory injunction and temporary
restraining order before the RTC of Dumaguete City. 18 This civil action was
filed on 31 March 2000 and was raffled off to Branch 44 of said court wherein
it was docketed as Civil Case No. 12688.
Respondent alleged in its complaint that PPA AO No. 03-90 explicitly provides
that cargo handling contractors with existing or expired contracts but were able
to obtain a "satisfactory" performance rating were entitled to a renewal of their
respective cargo handling contracts with petitioner; thus, as respondent was
given a rating of "very satisfactory"19 in 1998, it follows that its cargo handling
agreement should have been renewed after its expiration. Respondent
likewise claimed that the approval and implementation of PPA AO No. 03-2000
was plainly arbitrary as said administrative order was:
19.1 Obviously unfair to plaintiff and port operators affected because it is an
afterthought. It came about after PCASO20 wrote a letter dated 04 February
2000 demanding for the renewal of the contract of the members with a rating
of Satisfactory…
19.2 Obviously prejudicial to the right to renew the contract vested upon
plaintiff (respondent herein) by virtue of Administrative Order No. 03-90 which
was in force and effect during the period of contractual relations between
defendant PPA and plaintiff.
19.3 Obviously repugnant to the Memorandum of Understanding dated May
29, 1996, which has the force of law between the contracting parties.
19.4 Obviously designed to justify non-compliance of a legal obligation created
under Administrative Order No. 03-90.
19.5 A scheme to accommodate political pressures.
19.6 Arbitrary because it did not treat all port operators alike. For instance the
Asian Terminals, Inc., the operator of South Harbor, had a negotiated
Contract.21
In addition, respondent stated in its complaint that in the event the bidding
would take place as scheduled, a substantial number of workers in the port of
Dumaguete City faced the risk of displacement. Moreover, the possibility
existed that the contract for cargo handling in Dumaguete City would be
awarded to an incompetent and inexperienced participant in the bidding
process unlike respondent which had already invested substantial capital in its
operations in the port of said city. To further support its claim for a preliminary
mandatory injunction, respondent alleged that a fellow PCASO member, Vitas
Port Arrastre Service Corporation, operating at Pier 18, Vitas, Tondo, Manila,
successfully obtained a writ of preliminary injunction from the RTC, Branch 46,
Manila.22
Immediately after the filing of respondent’s complaint, the RTC, Branch 44 of
Dumaguete City, issued an order23 granting respondent’s prayer for a
temporary restraining order. The dispositive portion of the order reads:
WHEREFORE, premises considered, and considering the urgent nature of the
plaintiff’s complaint, that serious and irreparable damage or injury would be
suffered by the plaintiff unless said acts of the defendants complained of, is
restrained; said defendants Philippine Ports Authority, Manila, Juan O. Peña,
Benjamin Cecilio, their agents, representatives or persons acting in their
behalves, are hereby ordered to cease and desist from further conducting the
scheduled public bidding and awards on April 7, 2000, and April 10, 2000,
respectively within twenty (20) days from receipt hereof…24
Petitioner thereafter filed a manifestation with urgent motion for
reconsideration25 to the aforesaid order of the trial court. Petitioner argued that
the court a quo did not have the requisite jurisdiction to issue the assailed
temporary restraining order; that respondent was estopped from seeking
refuge from the court as it had already expressed its intention to join the
bidding process involving the operation of the cargo handling operations in the
port of Dumaguete City; that respondent failed to exhaust administrative
remedies by not seeking relief from petitioner prior to initiating this action
before the court; and that it was in the best interest of the public if the bidding
process proceeds as scheduled because of the "internal squabbling" taking
place within respondent corporation which could affect the quality of its service.
This motion was denied in the order of the court a quo dated 24 April 2000.26
Petitioner seasonably sought the reconsideration 27 of the trial court’s order of
24 April 2000 this time arguing that:
1. PRESIDENTIAL DECREE NO. 1818 PROHIBITS COURTS FROM
ISSUING THE INJUNCTIVE WRIT IN ANY CASE, DISPUTE OR
CONTROVERSY INVOLVING STEVEDORING AND ARRASTRE
CONTRACTS.
2. THE ORDER DATED APRIL 24, 2000 ADJUDICATES THE MERITS OF
THE COMPLAINT EVEN BEFORE THE PARTIES ARE HEARD.
3. THE ISSUANCE OF THE ORDER DATED APRIL 24, 2000 VIOLATES THE
LAW IN CONTRACT MAKING.
4. THE ISSUANCE OF THE ORDER DATED APRIL 24, 2000 IS BEYOND
THE JURISDICTION OF THE HONORABLE COURT.
5. THE ISSUANCE OF THE ORDER DATED APRIL 24, 2000 IS AGAINST
PUBLIC INTEREST.
6. THE ISSUANCE OF THE ORDER DATED APRIL 24, 2000 IS VIOLATION
OF THE 1997 RULES ON CIVIL PROCEDURE.
7. THE ISSUANCE OF THE ORDER DATED APRIL 24, 2000 IS VIOLATIVE
OF DUE PROCESS.
8. THE ISSUANCE OF THE ORDER DATED APRIL 24, 2000 IS
UNSUPPORTED BY THE FACTS OF THIS CASE.28
In its 31 May 2000 Order, the trial court set aside the injunctive writ it previously
issued "to give way to the pronouncements of P.D. No. 1818" as the "function
of the PPA is vested with public interest."29
It was thereafter the turn of respondent to file its motion for reconsideration30 of
the Order of the trial court but the court a quo stood firm on its Order setting
aside the injunctive writ it issued.31 From this adverse ruling, respondent filed
a petition for certiorari under Rule 65 before the Court of Appeals. In said
petition, respondent maintained that P.D. No. 1818 did not cover the
restraining order and preliminary injunction formerly issued by the RTC,
Branch 44, Dumaguete City. According to respondent, as there was no
assurance that the would-be winner of the bidding process possessed the
capacity to operate the cargo handling services in Dumaguete City, there
would have been a cessation of the cargo handling operations in the port of
said city following the expiration of respondent’s second hold-over permit. This,
respondent insisted, was not the situation contemplated by P.D. No. 1818
which was precisely issued to ensure that essential government projects such
as stevedoring and arrastre services would not be disrupted by the issuance
of a temporary restraining order. In this case, the restraining order and
injunction issued by the trial court ensured the continuity of the cargo handling
operations in Dumaguete City. Respondent further argued that as what is
involved in this case is petitioner’s failure to comply with its obligation under
PPA AO No. 03-90 and the validity of PPA AO No. 03-2000, petitioner could
not invoke P.D. No. 1818 which should only apply to matters involving the
exercise of discretion by administrative agencies.32
Respondent likewise claimed that the pre-qualification phase of the bidding
procedure was attended by the following irregularities:
1. Respondents (petitioner herein), then defendants (in Civil Case No. 12688),
set October 15, 1999 as the deadline for the submission of the pre-qualification
documents of prospective bidders. However, they pre-qualified DUMAGUETE
KING PORTS & ILOILO QUEEN PORTS INC. (DUKIQ), which incidentally
tried to intervene in this case, on April 3, 1999, which was not a juridical entity
as of said date. It should be pointed out that it was only registered with the
Securities and Exchange Commission (SEC) on April 4, (2000)… This means
that DUKIQ became only (sic) a juridical entity only three days before the
scheduled dropping of the bids on April 7, 2000 and seven (7) days before the
supposed opening of the bids on April 10, 2000. This is certainly irregular and
only bolsters petitioner’s (respondent herein) apprehensions that there exists
a preferred bidder. Moreover, DUKIQ was only issued a Mayor’s Permit on
April 18, 2000… This is not also in accordance with the rules of the bidding.
2. The composition of the Pre-qualification, Bids, Awards Committee (PBAC)
as composed by the respondents is not in conformity with AO 03-90.
3. PPA Administrative Orders 03-90 … and 03-2000… emanated from the
same PPA Board Resolution No. 912. It should be pointed out that AO 03-
2000 was issued arbitrarily for the purpose of evading the contractual
obligation of respondents to renew the contracts of those cargo handling
operators which obtained a satisfactory performance rating from the PPA. In
other words, the most glaring irregularity committed by respondents here is the
issuance of AO 03-2000, which is diametrically opposed to and inconsistent
with AO 03-90 and PPA Board Resolution 912. This is not to mention that said
AO 03-2000 will also deprive cargo handling operators in general, and CISAI,
in particular, of their proprietary rights.33
Further, respondent insisted that on the basis of the clear language of PPA AO
No. 03-90, it was entitled to the renewal of its cargo handling agreement as it
was able to earn a "very satisfactory" performance rating. The implementation,
therefore, of PPA AO No. 03-2000 transgressed the constitutional guarantee
against non-impairment of contract and ignored respondent’s vested right to
the renewal of its cargo handling pact.
Relying on respondent’s allegation as regards the purported irregularities
which occurred during the pre-qualification part of the bidding process, the
Court of Appeals nullified the 31 May 2000 Order of the trial court. The decretal
portion of the appellate court’s decision, now assailed before us, states:
WHEREFORE, premises considered the petition is GRANTED; and the
assailed 31 May 2000 Order of the respondent Judge is hereby
declared NULL and VOID. In lieu of the same, the Court orders:
1. Subject to the posting of an injunction bond by herein petitioner in the
amount to be determined by the court a quo, respondent Court is directed
to ISSUE a Writ of Preliminary Injunction;
2. Respondent Philippine Ports Authority to (DESIST) from conducting the
scheduled public bidding of cargo handling operations in the port of
Dumaguete City, effective until and after the case a quo shall have been finally
decided.34
Petitioner is now before us seeking the reversal of the aforementioned decision
of the appellate court on the following grounds:
IT WAS GRAVE ERROR FOR RESPONDENT COURT OF APPEALS
[SECOND DIVISION] TO ISSUE ITS QUESTIONED DECISION
CONSIDERING THAT:
(i) P.D. NO. 1818, LATER AMENDED BY R.A. 8975 AND REITERATED IN
ADMINISTRATIVE CIRCULAR NO. 11.2000 OF THIS HONORABLE COURT,
BANS THE ISSUANCE OF WRITS OF PRELIMINARY PROHIBITORY
INJUNCTIONS IN CASES INVOLVING GOVERNMENT INFRASTRUCTURE
PROJECTS AND SERVICE CONTRACTS, WHICH INCLUDES (SIC)
ARRASTRE AND STEVEDORING CONTRACTS.
(ii) CISAI HAS NO CLEAR LEGAL RIGHT TO AN INJUNCTIVE WRIT. IT
ACQUIRED NO VESTED RIGHTS TO ARRASTRE AND STEVEDORING
OPERATIONS AT THE PORT OF DUMAGUETE CITY AS ITS HOLD-OVER
CAPACITY COULD BE REVOKED AT ANY GIVEN TIME.
(iii) CISAI CANNOT COMPEL PPA TO RENEW ITS CONTRACT FOR
CARGO HANDLING SERVICES.35
In our resolution of 12 November 2003, we granted petitioner’s prayer for a
temporary restraining order.36
Petitioner insists that the decision of the Court of Appeals failed to take into
consideration the unequivocal language of Republic Act No. 8975 which
amended P.D. No. 1818.
The main provision of P.D. No. 1818 provides:
SECTION 1. No court in the Philippines shall have jurisdiction to issue any
restraining order, preliminary injunction, or preliminary mandatory injunction in
any case, dispute, or controversy involving an infrastructure project, or a
mining, fishery, forest or other natural resource development project of the
government, or any public utility operated by the government, including among
others public utilities for the transport of the goods or commodities, stevedoring
and arrastre contracts, to prohibit any person or persons, entity or government
official from proceeding with, or continuing the execution or implementation of
any such project, or the operation of such public utility, or pursuing any lawful
activity necessary for such execution, implementation or operation.
On the other hand, the pertinent portion of Rep. Act No. 8975 states:
SEC. 3. Prohibition on the Issuance of Temporary Restraining Orders,
Preliminary Injunctions and Preliminary Mandatory Injunctions. – No court,
except the Supreme Court, shall issue any temporary restraining order,
preliminary injunction or preliminary mandatory injunction against the
government, or any of its subdivision, officials or any person or entity, whether
public or private, acting under the government’s direction, to restrain, prohibit
or compel the following acts:
… baseless. It insists that the contract for cargo handling operations it formerly
(b) Bidding or awarding of contract/project of the national government as
defined under Section 2 hereof; . . .37
Concededly, P.D. No. 1818 which was the law in force at the time of the
institution of this case, applies to the operation of arrastre and stevedoring
contracts such as the one subject of the present case. Notably, the Court of
Appeals’ ruling was based solely on the perceived irregularities which occurred
during the pre-qualification phase of the bidding process. The veracity of these
claimed irregularities, however, are best left for the consideration of the trial
court which has yet to rule on the merits, if there be any, of the main case.
More than this, as the issue presented before us is whether the appellate court
erred in issuing the writ of preliminary injunction, we hew to the general
principles on this subject.
A preliminary injunction is an order granted at any stage of an action prior to
judgment of final order, requiring a party, court, agency, or person to refrain
from a particular act or acts.38 It is a preservative remedy to ensure the
protection of a party’s substantive rights or interests pending the final judgment
in the principal action. A plea for an injunctive writ lies upon the existence of a
claimed emergency or extraordinary situation which should be avoided for
otherwise, the outcome of a litigation would be useless as far as the party
applying for the writ is concerned.
At times referred to as the "Strong Arm of Equity,"39 we have consistently ruled
that there is no power the exercise of which is more delicate and which calls
for greater circumspection than the issuance of an injunction. 40 It should only
be extended in cases of great injury where courts of law cannot afford an
adequate or commensurate remedy in damages;41 "in cases of extreme
urgency; where the right is very clear; where considerations of relative
inconvenience bear strongly in complainant’s favor; where there is a willful and
unlawful invasion of plaintiff’s right against his protest and remonstrance, the
injury being a continuing one, and where the effect of the mandatory injunction
is rather to reestablish and maintain a preexisting continuing relation between
the parties, recently and arbitrarily interrupted by the defendant, than to
establish a new relation."42
For the writ to issue, two requisites must be present, namely, the existence of
the right to be protected, and that the facts against which the injunction is to
be directed are violative of said right.43 It is necessary that one must show an
unquestionable right over the premises.44
Petitioner maintains that respondent’s claim of vested rights or proprietary
rights over the cargo handling services at the port of Dumaguete City is
had with respondent did not amount to a property right; instead, it should be
considered as a mere privilege which can be recalled by the granting authority
at anytime when public welfare so requires.
On the other hand, respondent anchors its application for preliminary injunction
on its alleged vested right over the cargo handling services in the port of
Dumaguete City pursuant to PPA AO No. 03-90. It insists that under this
administrative order, petitioner was bound to renew their cargo handling
services agreement as it was able to meet and, in fact, was able to surpass
the "satisfactory" performance rating requirement contained therein. Further,
respondent posits the argument that PPA AO No. 03-2000 was formulated by
petitioner as a device by which it could avoid its obligation under the
superseded administrative order. Respondent, therefore, concludes that PPA
AO No. 03-2000 contravenes the constitutional precept that "no law impairing
obligations of contracts shall be passed."45
We agree with petitioner and hold that respondent was not able to establish its
claimed right over the renewal of its cargo handling agreement with the former.
To begin with, stevedoring services are imbued with public interest and subject
to the state’s police power as we have declared in Anglo-Fil Trading
Corporation v. Lazaro,46 to wit:
The Manila South Harbor is public property owned by the State. The
operations of this premiere port of the country, including stevedoring work, are
affected with public interest. Stevedoring services are subject to regulation and
control for the public good and in the interest of general welfare.47
As "police power is so far-reaching in scope, that it has become almost
impossible to limit its sweep,"48 whatever proprietary right that respondent may
have acquired must necessarily give way to a valid exercise of police power,
thus:49
4. In the interplay between such a fundamental right and police power,
especially so where the assailed governmental action deals with the use of
one’s property, the latter is accorded much leeway. That is settled law… 50
In connection with the foregoing, we likewise find no arbitrariness nor
irregularity on the part of petitioner as far as PPA AO No. 03-2000 is
concerned. It is worthwhile to remind respondent that petitioner was created
for the purpose of, among other things, promoting the growth of regional port
bodies. In furtherance of this objective, petitioner is empowered, after
consultation with relevant government agencies, to make port regulations
particularly to make rules or regulation for the planning, development,
construction, maintenance, control, supervision and management of any port
or port district in the country. 51 With this mandate, the decision to bid out the
cargo holding services in the ports around the country is properly within the
province and discretion of petitioner which we cannot simply set aside absent
grave abuse of discretion on its part. The discretion to carry out this policy
necessarily required prior study and evaluation and this task is best left to the
judgment of petitioner. While there have been occasions when we have
brushed aside actions on the part of administrative agencies for being beyond
the scope of their authority, the situation at the case at bar does not fall within
this exception.
As for respondent’s claim that PPA AO No. 03-2000 violated the constitutional
provision of non-impairment of contract, suffice it to state here that all contracts
are "subject to the overriding demands, needs, and interests of the greater
number as the State may determine in the legitimate exercise of its police
power."52
Finally, it is settled that the sole object of a preliminary injunction, may it be
prohibitory or mandatory, is to preserve the status quo until the merits of the
case can be heard and the final judgment rendered. 53 The status quo is the
last actual peaceable uncontested status which preceded the controversy.
In the case at bar, respondent sought the issuance of a writ for preliminary
injunction in order to prevent the "cessation of cargo handling services in the
port of Dumaguete City to the detriment and prejudice of the public, shipper,
consignees and port workers."54 However, the factual backdrop of this case
establishes that respondent’s eight-year contract for cargo handling was
already terminated and its continued operation in the port of Dumaguete City
was merely by virtue of a second hold-over permit granted by petitioner
through a letter dated 27 December 1999,55 the pertinent portion of which
reads:
This HOP56 extension shall be valid from January 18, 2000 up to April 18,
2000, unless sooner withdrawn or cancelled or upon the award of the cargo
handling contract thru public bidding.57
By its nature, the hold-over permit was merely temporary in nature and may
be revoked by petitioner at anytime. As we declared in the case of Anglo-Fil
Trading Corporation,58 hold-over permits are merely temporary and subject to
the policy and guidelines as may be implemented by petitioner. The temporary
nature of the hold-over permit should have served as adequate notice to
respondent that, at any time, its authority to remain within the premises of the
port of Dumaguete City may be terminated. Unlike the contract for cargo
handling services previously entered into by petitioner and respondent, whose
terms and conditions were agreed upon by the parties herein and which clearly
provided for a specific period of effectivity as well as a stipulation regarding the
notice of violation, the hold-over permit was unilaterally granted by petitioner
pursuant to its authority under the law.
Based on the foregoing, it is clear that at the time of the institution of this suit,
respondent no longer possessed any contract for its continued operation in
Dumaguete City and its stay in the port of said city was by virtue of a mere
permit extended by petitioner revocable at anytime by the latter. Obviously, the
writ of preliminary injunction issued by the Court of Appeals granted
respondent the authority to maintain its cargo handling services despite the
absence of a valid cargo handling agreement between respondent and
petitioner. For this reason, we hold that the Court of Appeals erred in ordering
the court a quo to issue the writ of preliminary injunction in favor of respondent.
WHEREFORE, premises considered, the present petition is
GRANTED and the Decision of the Court of Appeals dated 24 October 2000
is hereby REVERSED and SET ASIDE. The 31 May 2000 Order of the
Regional Trial Court, Branch 44, Dumaguete City, setting aside the injuctive
relief it previously issued is hereby REINSTATED and the temporary
restraining order We issued in our Resolution dated 12 November 2003,
enjoining, ordering, commanding and directing respondent from implementing
the aforesaid decision of the Court of Appeals, is hereby made PERMANENT.
No costs.
SO ORDERED.
CHAVEZ VS. ROMULO PURPOSE. AND THEY MAY NOT LOAD THEIR GUNS WITH BULLETS
UNTIL THEY ARE IN THE PREMISES OF THE FIRING RANGE.

WE CANNOT DISREGARD THE PARAMOUNT NEED FOR LAW AND

The right of individuals to bear arms is not absolute, but is subject to regulation. ORDER. JUST AS WE CANNOT BE HEEDLESS OF OUR PEOPLE’S
The maintenance of peace and order1 and the protection of the people against ASPIRATIONS FOR PEACE."
violence are constitutional duties of the State, and the right to bear arms is to
be construed in connection and in harmony with these constitutional duties. Acting on President Arroyo’s directive, respondent Ebdane issued the assailed
Guidelines quoted as follows:
Before us is a petition for prohibition and injunction seeking to enjoin the
implementation of the "Guidelines in the Implementation of the Ban on the "TO : All Concerned
Carrying of Firearms Outside of Residence"2 (Guidelines) issued on January
31, 2003, by respondent Hermogenes E. Ebdane, Jr., Chief of the Philippine FROM : Chief, PNP
National Police (PNP). SUBJECT : Guidelines in the Implementation of the Ban on the Carrying
The facts are undisputed: of Firearms Outside of Residence.

In January 2003, President Gloria Macapagal-Arroyo delivered a speech DATE : January 31, 2003
before the members of the PNP stressing the need for a nationwide gun ban 1. Reference: PD 1866 dated June 29, 1983 and its Implementing Rules and
in all public places to avert the rising crime incidents. She directed the then Regulations.
PNP Chief, respondent Ebdane, to suspend the issuance of Permits to Carry
Firearms Outside of Residence (PTCFOR), thus: 2. General:

"THERE IS ALSO NEED TO FOCUS ON THE HIGH PROFILE CRIMES THAT The possession and carrying of firearms outside of residence is a privilege
TEND TO DISTURB THE PSYCHOLOGICAL PERIMETERS OF THE granted by the State to its citizens for their individual protection against all
COMMUNITY – THE LATEST BEING THE KILLING OF FORMER NPA threats of lawlessness and security.
LEADER ROLLY KINTANAR. I UNDERSTAND WE ALREADY HAVE THE
As a rule, persons who are lawful holders of firearms (regular license, special
IDENTITY OF THE CULPRIT. LET US BRING THEM TO THE BAR OF
permit, certificate of registration or MR) are prohibited from carrying their
JUSTICE.
firearms outside of residence. However, the Chief, Philippine National Police
THE NPA WILL FIND IT MORE DIFFICULT TO CARRY OUT THEIR PLOTS may, in meritorious cases as determined by him and under conditions as he
IF OUR LAW ENFORCEMENT AGENCIES CAN RID THEMSELVES OF may impose, authorize such person or persons to carry firearms outside of
RASCALS IN UNIFORM, AND ALSO IF WE ENFORCE A GUN BAN IN residence.
PUBLIC PLACES.
3. Purposes:
THUS, I AM DIRECTING THE PNP CHIEF TO SUSPEND INDEFINITELY
This Memorandum prescribes the guidelines in the implementation of the ban
THE ISSUANCE OF PERMIT TO CARRY FIREARMS IN PUBLIC PLACES.
on the carrying of firearms outside of residence as provided for in the
THE ISSUANCE OF PERMITS WILL NOW BE LIMITED ONLY TO
Implementing Rules and Regulations, Presidential Decree No. 1866,
OWNERSHIP AND POSSESSION OF GUNS AND NOT TO CARRYING
dated June 29, 1983 and as directed by PGMA. It also prescribes the
THEM IN PUBLIC PLACES. FROM NOW ON, ONLY THE UNIFORMED MEN
conditions, requirements and procedures under which exemption from the ban
IN THE MILITARY AND AUTHORIZED LAW ENFORCEMENT OFFICERS
may be granted.
CAN CARRY FIREARMS IN PUBLIC PLACES, AND ONLY PURSUANT TO
EXISTING LAW. CIVILIAN OWNERS MAY NO LONGER BRING THEIR 4. Specific Instructions on the Ban on the Carrying of Firearms:
FIREARMS OUTSIDE THEIR RESIDENCES. THOSE WHO WANT TO USE
THEIR GUNS FOR TARGET PRACTICE WILL BE GIVEN SPECIAL AND
TEMPORARY PERMITS FROM TIME TO TIME ONLY FOR THAT
a. All PTCFOR are hereby revoked. Authorized holders of licensed firearms
covered with valid PTCFOR may re-apply for a new PTCFOR in accordance
with the conditions hereinafter prescribed.
b. All holders of licensed or government firearms are hereby prohibited from
carrying their firearms outside their residence except those covered with
mission/letter orders and duty detail orders issued by competent authority
pursuant to Section 5, IRR, PD 1866, provided, that the said exception shall
pertain only to organic and regular employees.
5. The following persons may be authorized to carry firearms outside of
residence.
a. All persons whose application for a new PTCFOR has been approved,
provided, that the persons and security of those so authorized are under actual
threat, or by the nature of their position, occupation and profession are under
imminent danger.
b. All organic and regular employees with Mission/Letter Orders granted by
their respective agencies so authorized pursuant to Section 5, IRR, PD 1866,
provided, that such Mission/Letter Orders is valid only for the duration of the
official mission which in no case shall be more than ten (10) days.
c. All guards covered with Duty Detail Orders granted by their respective
security agencies so authorized pursuant to Section 4, IRR, PD 1866,
provided, that such DDO shall in no case exceed 24-hour duration. d.
Members of duly recognized Gun Clubs issued Permit to Transport (PTT) by
the PNP for purposes of practice and competition, provided, that such firearms
while in transit must not be loaded with ammunition and secured in an
appropriate box or case detached from the person. e. Authorized members of
the Diplomatic Corps. 6. Requirements for issuance of new PTCFOR: a.
Written request by the applicant addressed to Chief, PNP stating his
qualification to possess firearm and the reasons why he needs to carry firearm
outside of residence. b. Xerox copy of current firearm license duly
authenticated by Records Branch, FED; c. Proof of actual threat, the details of
which should be issued by the Chief of Police/Provincial or City Directors and
duly validated by C, RIID; d. Copy of Drug Test Clearance, duly authenticated
by the Drug Testing Center, if photocopied; e. Copy of DI/ RIID clearance, duly
authenticated by ODI/RIID, if photocopied; f. Copy of Neuro-Psychiatric
Clearance duly authenticated by NP Testing Center, if photocopied; g. Copy
of Certificate of Attendance to a Gun Safety Seminar, duly validated by Chief,
Operations Branch, FED; h. NBI Clearance; i. Two (2) ID pictures (2" x 2")
taken not earlier than one (1) year from date of filing of application; and j. Proof
of Payment
7. Procedures: a. Applications may be filed directly to the Office of the
PTCFOR Secretariat in Camp Crame. In the provinces, the applications may
also be submitted to the Police Regional Offices (PROs) and Provincial/City
Police Offices (P/CPOs) for initial processing before they are forwarded to the
office of the PTCFOR Secretariat. The processors, after ascertaining that the
documentary requirements are in order, shall issue the Order of Payment (OP)
indicating the amount of fees payable by the applicant, who in turn shall pay
the fees to the Land Bank. b. Applications, which are duly processed and
prepared in accordance with existing rules and regulations, shall be forwarded
to the OCPNP for approval. c. Upon approval of the application, OCPNP will
issue PTCFOR valid for one (1) year from date of issue. d. Applications for
renewal of PTCFOR shall be processed in accordance with the provisions of
par. 6 above. e. Application for possession and carrying of firearms by
diplomats in the Philippines shall be processed in accordance with NHQ PNP
Memo dated September 25, 2000, with Subj: Possession and Carrying of
Firearms by Diplomats in the Philippines. 8. Restrictions in the Carrying of
Firearms: a. The firearm must not be displayed or exposed to public view,
except those authorized in uniform and in the performance of their official
duties. b. The firearm shall not be brought inside public drinking and
amusement places, and all other commercial or public establishments."
Petitioner Francisco I. Chavez, a licensed gun owner to whom a PTCFOR has
been issued, requested the Department of Interior and Local Government
(DILG) to reconsider the implementation of the assailed Guidelines. However,
his request was denied. Thus, he filed the present petition impleading public
respondents Ebdane, as Chief of PNP; Alberto G. Romulo, as Executive
Secretary; and Gerry L. Barias, as Chief of the PNP-Firearms and Explosives
Division. He anchored his petition on the following grounds:
"I
THE PRESIDENT HAS NO POWER OR AUTHORITY – MUCH LESS BY A
MERE SPEECH – TO ALTER, MODIFY OR AMEND THE LAW ON
FIREARMS BY IMPOSING A GUN BAN AND CANCELING EXISTING
PERMITS FOR GUNS TO BE CARRIED OUTSIDE RESIDENCES.
II
OFFICIALLY, THERE IS NO PRESIDENTIAL ISSUANCE ON THE GUN BAN;
THE PRESIDENTIAL SPEECH NEVER INVOKED POLICE POWER TO
JUSTIFY THE GUN BAN; THE PRESIDENT’S VERBAL DECLARATION ON
GUN BAN VIOLATED THE PEOPLE’S RIGHT TO PROTECT LIFE AND
THEIR PROPERTY RIGHT TO CARRY FIREARMS.
III
THE PNP CHIEF HAS NO POWER OR AUTHORITY TO ISSUE THE
QUESTIONED GUIDELINES BECAUSE:
1) THERE IS NO LAW, STATUTE OR EXECUTIVE ORDER WHICH GRANTS
THE PNP CHIEF THE AUTHORITY TO PROMULGATE THE PNP
GUIDELINES.
2) THE IMPLEMENTING RULES AND REGULATIONS OF PD 1866 CANNOT
BE THE SUBJECT OF ANOTHER SET OF IMPLEMENTING GUIDELINES.
3) THE PRESIDENT’S SPEECH CANNOT BE A BASIS FOR THE
PROMULGATION OF IMPLEMENTNG GUIDELINES ON THE GUN BAN.
IV
ASSUMING ARGUENDO, THAT THE PNP GUIDELINES IMPLEMENT PD
1866, AND THE AMENDMENTS THERETO, THE PNP CHIEF STILL HAS NO
POWER OR AUTHORITY TO ISSUE THE SAME BECAUSE –
1) PER SEC 6, RA 8294, WHICH AMENDS PD 1866, THE IRR SHALL BE
PROMULGATED JOINTLY BY THE DOJ AND THE DILG.
2) SEC. 8, PD 1866 STATES THAT THE IRR SHALL BE PROMULGATED BY
THE CHIEF OF THE PHILIPPINE CONSTABULARY.
V
THE PNP GUIDELINES VIOLATE THE DUE PROCESS CLAUSE OF THE
CONSTITUTION BECAUSE:
1) THE RIGHT TO OWN AND CARRY A FIREARM IS NECESSARILY
INTERTWINED WITH THE PEOPLE’S INHERENT RIGHT TO LIFE AND TO
PROTECT LIFE. THUS, THE PNP GUIDELINES DEPRIVE PETITIONER OF
THIS RIGHT WITHOUT DUE PROCESS OF LAW FOR:
A) THE PNP GUIDELINES DEPRIVE PETITIONER OF HIS MOST POTENT,
IF NOT HIS ONLY, MEANS TO DEFEND HIMSELF.
B) THE QUESTIONED GUIDELINES STRIPPED PETITIONER OF HIS
MEANS OF PROTECTION AGAINST CRIME DESPITE THE FACT THAT
THE STATE COULD NOT POSSIBLY PROTECT ITS CITIZENS DUE TO
THE INADEQUACY AND INEFFICIENCY OF THE POLICE FORCE.
2) THE OWNESHIP AND CARRYING OF FIREARMS ARE
CONSTITUTIONALLY PROTECTED PROPERTY RIGHTS WHICH CANNOT
BE TAKEN AWAY WITHOUT DUE PROCESS OF LAW AND WITHOUT JUST
CAUSE.
VI
ASSUMING ARGUENDO, THAT THE PNP GUIDELINES WERE ISSUED IN
THE EXERCISE OF POLICE POWER, THE SAME IS AN INVALID
EXERCISE THEREOF SINCE THE MEANS USED THEREFOR ARE
UNREASONABLE AND UNNCESSARY FOR THE ACCOMPLISHMENT OF
ITS PURPOSE – TO DETER AND PREVENT CRIME –THEREBY
BECOMING UNDULY OPPRESSIVE TO LAW-ABIDING GUN-OWNERS.
VII
THE PNP GUIDELINES ARE UNJUST, OPPRESSIVE AND
CONFISCATORY SINCE IT REVOKED ALL EXISTING PERMITS TO CARRY
WITHOUT, HOWEVER, REFUNDING THE PAYMENT THE PNP RECEIVED
FROM THOSE WHO ALREADY PAID THEREFOR.
VIII
THE PNP GUIDELINES VIOLATE THE EQUAL PROTECTION CLAUSE OF
THE CONSTITUTION BECAUSE THEY ARE DIRECTED AT AND
OPPRESSIVE ONLY TO LAW-ABIDING GUN OWNERS WHILE LEAVING
OTHER GUN-OWNERS – THE LAWBREAKERS (KIDNAPPERS, ROBBERS,
HOLD-UPPERS, MNLF, MILF, ABU SAYYAF COLLECTIVELY, AND NPA) –
UNTOUCHED.
IX
THE PNP GUIDELINES ARE UNJUST, OPPRESSIVE AND UNFAIR
BECAUSE THEY WERE IMPLEMENTED LONG BEFORE THEY WERE
PUBLISHED.
X
THE PNP GUIDELINES ARE EFFECTIVELY AN EX POST FACTO LAW
SINCE THEY APPLY RETROACTIVELY AND PUNISH ALL THOSE WHO
WERE ALREADY GRANTED PERMITS TO CARRY OUTSIDE OF
RESIDENCE LONG BEFORE THEIR PROMULGATION."
Petitioner’s submissions may be synthesized into five (5) major issues:
First, whether respondent Ebdane is authorized to issue the assailed
Guidelines;
Second, whether the citizens’ right to bear arms is a constitutional right?;
Third, whether the revocation of petitioner’s PTCFOR pursuant to the assailed
Guidelines is a violation of his right to property?;
Fourth, whether the issuance of the assailed Guidelines is a valid exercise of
police power?; and
Fifth, whether the assailed Guidelines constitute an ex post facto law?
The Solicitor General seeks the dismissal of the petition pursuant to the
doctrine of hierarchy of courts. Nonetheless, in refutation of petitioner’s
arguments, he contends that: (1) the PNP Chief is authorized to issue the
assailed Guidelines; (2) petitioner does not have a constitutional right to own
and carry firearms; (3) the assailed Guidelines do not violate the due process
clause of the Constitution; and (4) the assailed Guidelines do not constitute an
ex post facto law.
Initially, we must resolve the procedural barrier.
On the alleged breach of the doctrine of hierarchy of courts, suffice it to say
that the doctrine is not an iron-clad dictum. In several instances where this
Court was confronted with cases of national interest and of serious
implications, it never hesitated to set aside the rule and proceed with the
judicial determination of the cases.3 The case at bar is of similar import as it
involves the citizens’ right to bear arms.
I
Authority of the PNP Chief
Relying on the principle of separation of powers, petitioner argues that only
Congress can withhold his right to bear arms. In revoking all existing PTCFOR,
President Arroyo and respondent Ebdane transgressed the settled principle
and arrogated upon themselves a power they do not possess – the legislative
power.
We are not persuaded.
It is true that under our constitutional system, the powers of government are
distributed among three coordinate and substantially independent
departments: the legislative, the executive and the judiciary. Each has
exclusive cognizance of the matters within its jurisdiction and is supreme within
its own sphere.4
Pertinently, the power to make laws – the legislative power – is vested in
Congress.5 Congress may not escape its duties and responsibilities by
delegating that power to any other body or authority. Any attempt to abdicate
the power is unconstitutional and void, on the principle that "delegata potestas
non potest delegari" – "delegated power may not be delegated."6
The rule which forbids the delegation of legislative power, however, is
not absolute and inflexible. It admits of exceptions. An exception sanctioned
by immemorial practice permits the legislative body to delegate its licensing
power to certain persons, municipal corporations, towns, boards, councils,
commissions, commissioners, auditors, bureaus and directors. 7 Such
licensing power includes the power to promulgate necessary rules and
regulations.8
The evolution of our laws on firearms shows that since the early days of our
Republic, the legislature’s tendency was always towards the delegation of
power. Act No. 1780,9 delegated upon the Governor-General (now the
President) the authority (1) to approve or disapprove applications of any
person for a license to deal in firearms or to possess the same for personal
protection, hunting and other lawful purposes; and (2) to revoke such license
any time.10 Further, it authorized him to issue regulations which he may deem
necessary for the proper enforcement of the Act.11 With the enactment of Act
No. 2711, the "Revised Administrative Code of 1917," the laws on firearms
were integrated.12 The Act retained the authority of the Governor General
provided in Act No. 1780. Subsequently, the growing complexity in the Office
of the Governor-General resulted in the delegation of his authority to the Chief
of the Constabulary. On January 21, 1919, Acting Governor-General Charles
E. Yeater issued Executive Order No. 813 authorizing and directing the Chief
of Constabulary to act on his behalf in approving and disapproving applications
for personal, special and hunting licenses. This was followed by Executive
Order No. 6114 designating the Philippine Constabulary (PC) as the
government custodian of all firearms, ammunitions and explosives. Executive
Order No. 215,15 issued by President Diosdado Macapagal on December 3,
1965, granted the Chief of the Constabulary, not only the authority to approve
or disapprove applications for personal, special and hunting license, but also
the authority to revoke the same. With the foregoing developments, it is
accurate to say that the Chief of the Constabulary had exercised the authority
for a long time. In fact, subsequent issuances such as Sections 2 and 3 of the
Implementing Rules and Regulations of Presidential Decree No.
186616 perpetuate such authority of the Chief of the Constabulary. Section 2
specifically provides that any person or entity desiring to possess any firearm
"shall first secure the necessary permit/license/authority from the Chief of the
Constabulary." With regard to the issuance of PTCFOR, Section 3 imparts:
"The Chief of Constabulary may, in meritorious cases as determined by him
and under such conditions as he may impose, authorize lawful holders of
firearms to carry them outside of residence." These provisions are issued
pursuant to the general power granted by P.D. No. 1866 empowering him to
promulgate rules and regulations for the effective implementation of the
decree.17 At this juncture, it bears emphasis that P.D. No. 1866 is the chief law
governing possession of firearms in the Philippines and that it was issued by
President Ferdinand E. Marcos in the exercise of his legislative power.18 In an
attempt to evade the application of the above-mentioned laws and regulations,
petitioner argues that the "Chief of the PNP" is not the same as the "Chief of
the Constabulary," the PC being a mere unit or component of the newly
established PNP. He contends further that Republic Act No. 8294 19 amended
P.D. No. 1866 such that the authority to issue rules and regulations regarding
firearms is now jointly vested in the Department of Justice and the DILG, not
the Chief of the Constabulary.20
Petitioner’s submission is bereft of merit.
By virtue of Republic Act No. 6975,21 the Philippine National Police (PNP)
absorbed the Philippine Constabulary (PC). Consequently, the PNP Chief
succeeded the Chief of the Constabulary and, therefore, assumed the latter’s
licensing authority. Section 24 thereof specifies, as one of PNP’s powers, the
issuance of licenses for the possession of firearms and explosives in
accordance with law.22 This is in conjunction with the PNP Chief’s "power to
issue detailed implementing policies and instructions" on such "matters as may
be necessary to effectively carry out the functions, powers and duties" of the
PNP.23
Contrary to petitioner’s contention, R.A. No. 8294 does not divest the Chief of
the Constabulary (now the PNP Chief) of his authority to promulgate rules and
regulations for the effective implementation of P.D. No. 1866. For one, R.A.
No. 8294 did not repeal entirely P.D. No. 1866. It merely provides for the
reduction of penalties for illegal possession of firearms. Thus, the provision of
P.D. No. 1866 granting to the Chief of the Constabulary the authority to issue
rules and regulations regarding firearms remains effective. Correspondingly,
the Implementing Rules and Regulations dated September 15, 1997 jointly
issued by the Department of Justice and the DILG pursuant to Section 6 of
R.A. No. 8294 deal only with the automatic review, by the Director of the
Bureau of Corrections or the Warden of a provincial or city jail, of the records
of convicts for violations of P.D. No. 1866. The Rules seek to give effect to the
beneficent provisions of R.A. No. 8294, thereby ensuring the early release and
reintegration of the convicts into the community.
Clearly, both P.D. No. 1866 and R.A. No. 6975 authorize the PNP Chief to
issue the assailed guidelines.
Corollarily, petitioner disputes President Arroyo’s declaration of a nationwide
gun ban, arguing that "she has no authority to alter, modify, or amend the law
on firearms through a mere speech."
First, it must be emphasized that President Arroyo’s speech was just an
expression of her policy and a directive to her subordinate. It cannot, therefore,
be argued that President Arroyo enacted a law through a mere speech.
Second, at the apex of the entire executive officialdom is the President.
Section 17, Article VII of the Constitution specifies his power as Chief
Executive, thus: "The President shall have control of all the executive
departments, bureaus and offices. He shall ensure that the laws be faithfully
executed." As Chief Executive, President Arroyo holds the steering wheel that
controls the course of her government. She lays down policies in the execution
of her plans and programs. Whatever policy she chooses, she has her
subordinates to implement them. In short, she has the power of
control. Whenever a specific function is entrusted by law or regulation to
her subordinate, she may act directly or merely direct the performance
of a duty.24 Thus, when President Arroyo directed respondent Ebdane to
suspend the issuance of PTCFOR, she was just directing a subordinate to
perform an assigned duty. Such act is well within the prerogative of her office.
II
Right to bear arms: Constitutional or Statutory?
Petitioner earnestly contends that his right to bear arms is a constitutionally-
protected right. This, he mainly anchors on various American authorities. We
therefore find it imperative to determine the nature of the right in light of
American jurisprudence.
The bearing of arms is a tradition deeply rooted in the English and American
society. It antedates not only the American Constitution but also the discovery
of firearms.25
A provision commonly invoked by the American people to justify their
possession of firearms is the Second Amendment of the Constitution of the
United States of America, which reads:
"A well regulated militia, being necessary for the security of free state, the right
of the people to keep and bear Arms, shall not be infringed."
An examination of the historical background of the foregoing provision shows
that it pertains to the citizens’ "collective right" to take arms in defense of the
State, not to the citizens’ "individual right" to own and possess arms. The
setting under which the right was contemplated has a profound connection
with the keeping and maintenance of a militia or an armed citizenry. That this
is how the right was construed is evident in early American cases.
The first case involving the interpretation of the Second Amendment that
reached the United States Supreme Court is United States vs. Miller.26 Here,
the indictment charged the defendants with transporting an unregistered
"Stevens shotgun" without the required stamped written order, contrary to
the National Firearms Act. The defendants filed a demurrer challenging the
facial validity of the indictment on the ground that the National Firearms
Act offends the inhibition of the Second Amendment. The District Court
sustained the demurrer and quashed the indictment. On appeal, the Supreme
Court interpreted the right to bear arms under the Second Amendment as
referring to the collective right of those comprising the Militia – a body of
citizens enrolled for military discipline. It does not pertain to the individual right
of citizen to bear arm. Miller expresses its holding as follows:
"In the absence of any evidence tending to show that possession or use of a
‘shotgun having a barrel of less than eighteen inches in length’ at this time has
some reasonable relationship to the preservation or efficiency of a well
regulated militia, we cannot say that the Second Amendment guarantees
the right to keep and bear such an instrument. Certainly it is not within
judicial notice that this weapon is any part of the ordinary military equipment
or that its use could contribute to the common defense.
The same doctrine was re-echoed in Cases vs. United States.27 Here, the
Circuit Court of Appeals held that the Federal Firearms Act, as applied to
appellant, does not conflict with the Second Amendment. It ruled that:
"While [appellant’s] weapon may be capable of military use, or while at least
familiarity with it might be regarded as of value in training a person to use a
comparable weapon of military type and caliber, still there is no evidence
that the appellant was or ever had been a member of any military
organization or that his use of the weapon under the circumstances
disclosed was in preparation for a military career. In fact, the only
inference possible is that the appellant at the time charged in the
indictment was in possession of, transporting, and using the firearm and
ammunition purely and simply on a frolic of his own and without any
thought or intention of contributing to the efficiency of the well regulated
militia which the Second amendment was designed to foster as
necessary to the security of a free state."
With the foregoing jurisprudence, it is erroneous to assume that the US
Constitution grants upon the American people the right to bear arms. In a more
explicit language, the United States vs. Cruikshank28 decreed: "The right of
the people to keep and bear arms is not a right granted by the
Constitution. Neither is it in any way dependent upon that instrument."
Likewise, in People vs. Persce,29 the Court of Appeals said: "Neither is there
any constitutional provision securing the right to bear arms which prohibits
legislation with reference to such weapons as are specifically before us for
consideration. The provision in the Constitution of the United States that
the right of the people to keep and bear arms shall not be infringed is not
designed to control legislation by the state."
With more reason, the right to bear arms cannot be classified as fundamental
under the 1987 Philippine Constitution. Our Constitution contains no provision
similar to the Second Amendment, as we aptly observed in the early case
of United States vs. Villareal:30
"The only contention of counsel which would appear to necessitate comment
is the claim that the statute penalizing the carrying of concealed weapons and
prohibiting the keeping and the use of firearms without a license, is in violation
of the provisions of section 5 of the Philippine Bill of Rights.
Counsel does not expressly rely upon the prohibition in the United States
Constitution against the infringement of the right of the people of the
United States to keep and bear arms (U. S. Constitution, amendment 2),
which is not included in the Philippine Bill. But it may be well, in passing,
to point out that in no event could this constitutional guaranty have any
bearing on the case at bar, not only because it has not been expressly
extended to the Philippine Islands, but also because it has been
uniformly held that both this and similar provisions in State constitutions
apply only to arms used in civilized warfare (see cases cited in 40 Cyc.,
853, note 18); x x x."
Evidently, possession of firearms by the citizens in the Philippines is the
exception, not the rule. The right to bear arms is a mere statutory privilege, not
a constitutional right. It is a mere statutory creation. What then are the laws
that grant such right to the Filipinos? The first real firearm law is Act No.
1780 enacted by the Philippine Commission on October 12, 1907. It was
passed to regulate the importation, acquisition, possession, use and transfer
of firearms. Section 9 thereof provides:
"SECTION 9. Any person desiring to possess one or more firearms for
personal protection, or for use in hunting or other lawful purposes only,
and ammunition therefor, shall make application for a license to possess
such firearm or firearms or ammunition as hereinafter provided. Upon
making such application, and before receiving the license, the applicant shall
make a cash deposit in the postal savings bank in the sum of one hundred
pesos for each firearm for which the license is to be issued, or in lieu thereof
he may give a bond in such form as the Governor-General may prescribe,
payable to the Government of the Philippine Islands, in the sum of two hundred
pesos for each such firearm: PROVIDED, HOWEVER, That persons who are
actually members of gun clubs, duly formed and organized at the time of the
passage of this Act, who at such time have a license to possess firearms, shall
not be required to make the deposit or give the bond prescribed by this section,
and the bond duly executed by such person in accordance with existing law
shall continue to be security for the safekeeping of such arms."
The foregoing provision was restated in Section 887 31 of Act No. 2711 that
integrated the firearm laws. Thereafter, President Ferdinand E. Marcos issued
P.D. No. 1866. It codified the laws on illegal possession, manufacture, dealing
in, acquisition of firearms, ammunitions or explosives and imposed stiffer
penalties for their violation. R.A. No. 8294 amended some of the provisions of
P.D. No. 1866 by reducing the imposable penalties. Being a mere statutory
creation, the right to bear arms cannot be considered an inalienable or
absolute right.
III
Vested Property Right
Section 1, Article III of the Constitution provides that "no person shall be
deprived of life, liberty or property without due process of law." Petitioner
invokes this provision, asserting that the revocation of his PTCFOR pursuant
to the assailed Guidelines deprived him of his "vested property right" without
due process of law and in violation of the equal protection of law.
Petitioner cannot find solace to the above-quoted Constitutional provision.
In evaluating a due process claim, the first and foremost consideration must
be whether life, liberty or property interest exists.32 The bulk of jurisprudence
is that a license authorizing a person to enjoy a certain privilege is neither a
property nor property right. In Tan vs. The Director of Forestry,33 we ruled that
"a license is merely a permit or privilege to do what otherwise would be
unlawful, and is not a contract between the authority granting it and the person
to whom it is granted; neither is it property or a property right, nor does it create
a vested right." In a more emphatic pronouncement, we held in Oposa vs.
Factoran, Jr.34 that:
"Needless to say, all licenses may thus be revoked or rescinded by
executive action. It is not a contract, property or a property right
protected by the due process clause of the Constitution."
Petitioner, in arguing that his PTCFOR is a constitutionally protected property
right, relied heavily on Bell vs. Burson35 wherein the U.S. Supreme Court ruled
that "once a license is issued, continued possession may become essential in
the pursuit of livelihood. Suspension of issued licenses thus involves state
action that adjudicates important interest of the licensees."
Petitioner’s reliance on Bell is misplaced. This case involves a driver’s license,
not a license to bear arms. The catena of American jurisprudence involving
license to bear arms is perfectly in accord with our ruling that a PTCFOR is
neither a property nor a property right. In Erdelyi vs. O’Brien,36 the plaintiff who
was denied a license to carry a firearm brought suit against the defendant who
was the Chief of Police of the City of Manhattan Beach, on the ground that the
denial violated her constitutional rights to due process and equal protection of
the laws. The United States Court of Appeals Ninth Circuit ruled that Erdelyi
did not have a property interest in obtaining a license to carry a firearm,
ratiocinating as follows:
"Property interests protected by the Due Process Clause of the Fourteenth
Amendment do not arise whenever a person has only ‘an abstract need or
desire for’, or ‘unilateral expectation of a benefit. x x x Rather, they arise from
‘legitimate claims of entitlement… defined by existing rules or understanding
that stem from an independent source, such as state law. x x x Concealed
weapons are closely regulated by the State of California. x x x Whether the
statute creates a property interest in concealed weapons licenses depends
‘largely upon the extent to which the statute contains mandatory language that
restricts the discretion of the [issuing authority] to deny licenses to applicants
who claim to meet the minimum eligibility requirements. x x x Where state law
gives the issuing authority broad discretion to grant or deny license application
in a closely regulated field, initial applicants do not have a property right in
such licenses protected by the Fourteenth Amendment. See Jacobson, supra,
627 F.2d at 180 (gaming license under Nevada law);"
Similar doctrine was announced in Potts vs. City of Philadelphia,37 Conway vs.
King,38 Nichols vs. County of Sta. Clara,39 and Gross vs. Norton.40 These
cases enunciated that the test whether the statute creates a property right or
interest depends largely on the extent of discretion granted to the issuing
authority.
In our jurisdiction, the PNP Chief is granted broad discretion in the issuance of
PTCFOR. This is evident from the tenor of the Implementing Rules and
Regulations of P.D. No. 1866 which state that "the Chief of Constabulary
may, in meritorious cases as determined by him and under such
conditions as he may impose, authorize lawful holders of firearms to carry
them outside of residence." Following the American doctrine, it is indeed
logical to say that a PTCFOR does not constitute a property right protected
under our Constitution.
Consequently, a PTCFOR, just like ordinary licenses in other regulated fields,
may be revoked any time. It does not confer an absolute right, but only a
personal privilege to be exercised under existing restrictions, and such as may
thereafter be reasonably imposed.41 A licensee takes his license subject to
such conditions as the Legislature sees fit to impose, and one of the statutory
conditions of this license is that it might be revoked by the selectmen at
their pleasure. Such a license is not a contract, and a revocation of it does
not deprive the defendant of any property, immunity, or privilege within the
meaning of these words in the Declaration of Rights.42 The US Supreme Court,
in Doyle vs. Continental Ins. Co,43 held: "The correlative power to revoke or
recall a permission is a necessary consequence of the main power. A mere
license by the State is always revocable."
The foregoing jurisprudence has been resonating in the Philippines as early
as 1908. Thus, in The Government of the Philippine Islands vs.
Amechazurra44 we ruled:
"x x x no private person is bound to keep arms. Whether he does or not is
entirely optional with himself, but if, for his own convenience or pleasure, he
desires to possess arms, he must do so upon such terms as the Government
sees fit to impose, for the right to keep and bear arms is not secured to him by
law. The Government can impose upon him such terms as it pleases. If he is
not satisfied with the terms imposed, he should decline to accept them, but, if
for the purpose of securing possession of the arms he does agree to such
conditions, he must fulfill them."
IV
Police Power
At any rate, assuming that petitioner’s PTCFOR constitutes a property right
protected by the Constitution, the same cannot be considered as absolute as
to be placed beyond the reach of the State’s police power. All property in the
state is held subject to its general regulations, necessary to the common good
and general welfare.
In a number of cases, we laid down the test to determine the validity of a police
measure, thus:
(1) The interests of the public generally, as distinguished from those of a
particular class, require the exercise of the police power; and
(2) The means employed are reasonably necessary for the accomplishment of
the purpose and not unduly oppressive upon individuals.
Deeper reflection will reveal that the test merely reiterates the essence of the
constitutional guarantees of substantive due process, equal protection, and
non-impairment of property rights.
It is apparent from the assailed Guidelines that the basis for its issuance was
the need for peace and order in the society. Owing to the proliferation of
crimes, particularly those committed by the New People’s Army (NPA), which
tends to disturb the peace of the community, President Arroyo deemed it best
to impose a nationwide gun ban. Undeniably, the motivating factor in the
issuance of the assailed Guidelines is the interest of the public in general.
The only question that can then arise is whether the means employed are
appropriate and reasonably necessary for the accomplishment of the purpose
and are not unduly oppressive. In the instant case, the assailed Guidelines do
not entirely prohibit possession of firearms. What they proscribe is merely the
carrying of firearms outside of residence. However, those who wish to carry
their firearms outside of their residences may re-apply for a new PTCFOR.
This we believe is a reasonable regulation. If the carrying of firearms is
regulated, necessarily, crime incidents will be curtailed. Criminals carry their
weapon to hunt for their victims; they do not wait in the comfort of their homes.
With the revocation of all PTCFOR, it would be difficult for criminals to roam
around with their guns. On the other hand, it would be easier for the PNP to
apprehend them.
Notably, laws regulating the acquisition or possession of guns have frequently
been upheld as reasonable exercise of the police power.45 In State vs.
Reams,46 it was held that the legislature may regulate the right to bear arms in
a manner conducive to the public peace. With the promotion of public peace
as its objective and the revocation of all PTCFOR as the means, we are
convinced that the issuance of the assailed Guidelines constitutes a
reasonable exercise of police power. The ruling in United States vs.
Villareal,47 is relevant, thus:
"We think there can be no question as to the reasonableness of a statutory
regulation prohibiting the carrying of concealed weapons as a police measure
well calculated to restrict the too frequent resort to such weapons in moments
of anger and excitement. We do not doubt that the strict enforcement of such
a regulation would tend to increase the security of life and limb, and to
suppress crime and lawlessness, in any community wherein the practice of
carrying concealed weapons prevails, and this without being unduly
oppressive upon the individual owners of these weapons. It follows that its
enactment by the legislature is a proper and legitimate exercise of the police
power of the state."
V
Ex post facto law
In Mekin vs. Wolfe,48 an ex post facto law has been defined as one – (a) which
makes an action done before the passing of the law and which was innocent
when done criminal, and punishes such action; or (b) which aggravates a crime
or makes it greater than it was when committed; or (c) which changes the
punishment and inflicts a greater punishment than the law annexed to the
crime when it was committed; or (d) which alters the legal rules of evidence
and receives less or different testimony than the law required at the time of the
commission of the offense in order to convict the defendant.
We see no reason to devote much discussion on the matter. Ex post facto law
prohibits retrospectivity of penal laws.49 The assailed Guidelines cannot be
considered as an ex post facto law because it is prospective in its application.
Contrary to petitioner’s argument, it would not result in the punishment of acts
previously committed.
WHEREFORE, the petition is hereby DISMISSED.
SO ORDERED.
BAUTISTA VS. JUNIO
The validity of an energy conservation measure, Letter of Instruction No. 869,
issued on May 31, 1979 — the response to the protracted oil crisis that dates
back to 1974 — is put in issue in this prohibition proceeding filed by petitioners,
spouses Mary Concepcion Bautista and Enrique D. Bautista, for being
allegedly violative of the due process and equal protection guarantees 1 of the
Constitution. The use of private motor vehicles with H and EH plates on week-
ends and holidays was banned from "[12:00] a.m. Saturday morning to 5:00
a.m. Monday morning, or 1:00 a.m. of the holiday to 5:00 a.m. of the day after
the holiday." 2 Motor vehicles of the following classifications are exempted: (a)
S (Service); (b) T (Truck); (e) DPL (Diplomatic); (d) CC (Consular Corps); (e)
TC (Tourist Cars). 3 Pursuant thereto, respondent Alfredo L. Juinio, then
Minister of Public Works, Transportation and Communications and respondent
Romeo P. Edu, then Commissioner of Land Transportation Commission
issued on June 11, 1979, Memorandum Circular No. 39, which imposed "the
penalties of fine, confiscation of vehicle and cancellation of registration on
owners of the above-specified vehicles" found violating such Letter of
Instruction. 4 It was then alleged by petitioners that "while the purpose for the
issuance of the LOI 869 is laudable, to wit, energy conservation, the provision
banning the use of H and EH [vehicles] is unfair, discriminatory, [amounting to
an] arbitrary classification" and thus in contravention of the equal protection
clause. 5 Moreover, for them, such Letter of Instruction is a denial of due
process, more specifically, "of their right to use and enjoy their private property
and of their freedom to travel and hold family gatherings, reunions and outings
on week-ends and holidays," inviting attention to the fact that others not
included in the ban enjoying "unrestricted freedom." 6 It would follow, so they
contend that Memorandum Circular No. 39 imposing penalties of fine,
confiscation of the vehicle and cancellation of license is likewise
unconstitutional, for being violative of the doctrine of "undue delegation of
legislative power." 7 It is to be noted that such Memorandum Circular does not
impose the penalty of confiscation but merely that of impounding, fine, and for
the third offense that of cancellation of certificate of registration and for the rest
of the year or for ninety days whichever is longer.
This Court gave due course to the petition requiring respondent to answer.
There was admission of the facts as substantially alleged except, as previously
noted, that the ban starts at 12:00 a.m. rather than 1:00 a.m. of a Saturday or
of a holiday and as to the mention of a Willy's Kaiser jeep being registered in
the name of a certain Teresita Urbina, about which respondents had no
knowledge. There was a denial of the allegations that the classification of
vehicles into heavy H and extra heavy (EH) on the other hand and light and
bantam on the other hand was violative of equal protection and the regulation
as to the use of the former cars on the dates specified a transgression of due
process. The answer likewise denied that there was an undue delegation of
legislative power, reference being made to the Land Transportation and Traffic
Code. 8 There was also a procedural objection raised, namely, that what is
sought amounts at most to an advisory opinion rather than an ajudication of a
case or controversy.
Petitioners filed a motion to be allowed to reply to the answer. It was granted.
The reply, considering its exhaustive character serving as its memorandum,
stressed anew what it emphasized as the arbitrary, unreasonable, and
oppressive aspects of the challenged Letter of Instruction and Memorandum
Circular No. 39. It disputed what it characterized as an "erroneous and arbitrary
presumption that heavy car owners unnecessarily use and therefore waste
gasoline whenever they drive their cars on week-ends and holidays;" 9 it
stigmatized the ban as defeating its "avowed purpose in the case of the affluent
who own not only heavy limousines but also many small cars [as] they may be
compelled to use at least two small cars;" 10 referred to the high cost of taxis
or other public transports for those "not able to afford expensive small cars
[possibly] only one heavy and possible old model;" 11 cited the case of "many
eight cylinder vehicles which because of their weight have been registered as
light but in fact consume more or as much gasoline as the banned
vehicles." 12 Their conclusion is that "the ban imposed, in result and effect is
class legislation." 13
The parties were required to submit memoranda. Respondents did so but not
petitioners. They relied on their reply to the answer — as noted, a rather
comprehensive pleading. For reasons to be set forth, this Court holds that the
petition cannot prosper.
1. First as to the procedural objection. In the memorandum for respondents,
one of the issues raised was whether "the power of judicial review may be
invoked considering the inadequacy of the record and the highly abstract and
academic questions raised by the petitioners." 14 It is inaccurate to say that
the record is inadequate. It does not admit of doubt that the ban applies to
petitioners who are "the registered owners of an eight cylinder 1969 Buick, and
the vendees of a six cylinder Willy's kaiser jeep, which are both classified as
heavy or H." 15 To that extent, therefore, the enforcement of the assailed
Letter of Instruction will amount to a deprivation of what otherwise would be a
valid exercise of a property right. Thus they fall squarely within "the
unchallenged rule" as to who may raise a constitutional question, namely, to
quote the language of Justice Laurel in the leading case of People v.
Vera, 16 "that the person who impugns the validity of a statute must have a
personal and substantial interest in the case such that he has sustained, or will
sustain direct injury as a result of its enforcement. 17 Moreover, that rule has
been considerably relaxed. 18 The question then is neither abstract nor
academic as contended by respondents.
2. There is, however, this formidable obstacle that confronts petitioners. What
they seek is for this Court to hold that a Letter of Instruction, a regulatory
measure precisely enacted to cope with the serious and grave problem of
energy conservation, is void on its face. Such a task is rendered unusually
difficult by what has been referred to by Justice Laurel in the leading case
of Angara v. Electoral Commission 19 as the "presumption of constitutionality"
and by the same jurist in the case of People v. Vera 20 in slightly different words
"a presumption that such an act falls within constitutional limitations." There is
need then for a factual foundation of invalidity. In the language of Ermita-
Malate Hotel & Motel Operations Association, Inc. v. City Mayor or Manila: "It
admits of no doubt therefore that there being a presumption of validity, the
necessity for evidence to rebut it is unavoidable, unless the statute or
ordinance is void on its face, which is not the case here. The principle has
been nowhere better expressed than in the leading case of O'Gorman & Young
v. Hartford Fire Insurance Co., where the American Supreme Court through
Justice Brandeis tersely and succinctly summed up the matter thus: 'The
statute here questioned deals with a subject clearly within the scope of the
police power. We are asked to declare it void on the ground that the specific
method of regulation prescribed is unreasonable and hence deprives the
plaintiff of due process of law. As underlying questions of fact may condition
the constitutionality of legislation of this character, the presumption of
constitutionality must prevail in the absence of some factual foundation of
record for overthrowing the statute.' " 21
3. It is true, of course, that there may be instances where a police power
measure may, because of its arbitrary, oppressive or unjust character, be held
offensive to the due process clause and, therefore, may, when challenged in
an appropriate legal proceeding, be declared void on its face. This is not one
of them. A recital of the whereas clauses of the Letter of Instruction makes it
clear. Thus: "[Whereas], developments in the international petroleum supply
situation continue to follow a trend of limited production and spiralling prices
thereby precluding the possibility of immediate relief in supplies within the
foreseeable future; [Whereas], the uncertainty of fuel supply availability
underscores a compelling need for the adoption of positive measures designed
to insure the viability of the country's economy and sustain its developmental
growth; [Whereas], to cushion the effect of increasing oil prices and avoid fuel
supply disruptions, it is imperative to adopt a program directed towards the
judicious use of our energy resources complemented with intensified
conservation efforts and efficient utilization thereof; * * *." 22 That is undeniable
is that the action taken is an appropriate response to a problem that presses
urgently for solution. It may not be the only alternative, but its reasonableness
is immediately apparent. Thus, to repeat, substantive due process, which is
the epitome of reasonableness and fair play, is not ignored, much less
infringed.
4. In the interplay between such a fundamental right and police power,
especially so where the assailed governmental action deals with the use of
one's property, the latter is accorded much leeway. That is settled law. What
is more, it is good law. Due process, therefore, cannot be validly invoked. As
stressed in the cited Ermita-Malate Hotel decision: "To hold otherwise would
be to unduly restrict and narrow the scope of police power which has been
properly characterized as the most essential, insistent and the least limitable
of powers, extending as it does 'to all the great public needs.' It would be, to
paraphrase another leading decision, to destroy the very purpose of the state
if it could be deprived or allowed itself to be deprived of its competence to
promote public health, public morals, public safety and the general welfare.
Negatively put, police power is 'that inherent and plenary power in the State
which enables it to prohibit all that is hurtful to the comfort, safety, and welfare
of society.' " 23
5. The due process question having been disposed of, there is still the
objection based on the equal protection clause to be considered. A
governmental act may not be offensive to the due process clause, but may run
counter to such a guarantee. Such is the case when there is no rational basis
for the classification followed. That is the point raised by petitioners. For them,
there is no rational justification for the ban being imposed on vehicles classified
as heavy (H) and extra-heavy (EH), for precisely those owned by them fall
within such category. Tested by the applicable standard that must be satisfied
to avoid the charge of a denial of equal protection, the objection of petitioners
is shown to be lacking in merit. Such a classification on its face cannot be
characterized as an affront to reason. A legal norm according to J.M. Tuason
& Co., Inc. vs. Land Tenure Administration, 24 "whether embodied in a rule,
principle, or standard, constitutes a defense against anarchy at one extreme
and tyranny at the other. Thereby, people living together in a community with
its myriad and complex problems can minimize the friction and reduce the
conflicts, to assure, at the very least, a peaceful ordering of existence. The
Ideal situation is for the law's benefits to be available to all, that none be placed
outside the sphere of its coverage. Only thus could chance and favor be
excluded and the affairs of men governed by that serene and impartial
uniformity, which is of the very essence of the Idea of law. The actual, given
things as they are and likely to continue to be, cannot approximate the Ideal.
Nor is the law susceptible to the reproach that it does not take into account the
realties of the situation. * * * To assure that the general welfare be promoted,
which is the end of law, a regulatory measure may cut into the rights to liberty
and property. Those adversely affected may under such circumstances invoke
the equal protection clause only if they can show that the governmental act
assailed, far from being inspired by the attainment of the common weal was
prompted by the spirit of hostility, or at the very least, discrimination that finds
no support in reason. It suffices then that the laws operate equally and
uniformly on all persons under similar circumstances or that all persons must
be treated in the same manner, the conditions not being different, both in the
privileges conferred and the liabilities imposed. Favoritism and undue
preference cannot be allowed. For the principle is that equal protection and
security shall be given to every person under circumstances, which if not
Identical are analogous. If law be looked upon in terms of burden or charges,
those that fall within a class should be treated in the same fashion, whatever
restrictions cast on some in the group equally binding on the rest." 25
6. Nor does it militate against the validity of the Letter of Instruction just
because the ban imposed does not go as far as it could have and therefore
could be less efficacious in character. That was the solution which for the
President expressing a power validly lodged in him, recommended itself. There
was a situation that called for a corrective measure. He decided that what was
issued by him would do just that or, at the very least, help in easing the
situation. That it did not cover other matters which could very well have been
regulated does not call for a declaration of nullity. The President, to
paraphrase Lutz v. Araneta, 26 "is not required by the Constitution to adhere to
the policy of all or none." 27 It is quite obvious then that no equal protection
question arises.
7. It may not be amiss to refer to a 1981 American Supreme Court
decision, Minnesota v. Clover Leaf Creamery Company. 28 Respondent along
with several other business corporations adversely affected involved in the
manufacture and utilization of plastic milk containers filed suit in a Minnesota
district court seeking to enjoin enforcement of a Minnesota statute banning the
retail sale of milk in plastic nonreturnable, nonrefillable containers, but
permitting such sale in other nonreturnable, nonrefillable containers, such as
paperboard, milk cartons. After conducting extensive evidentiary hearings, the
Minnesota court enjoined enforcement of the statute, finding that it violated
among others the equal protection clause of the Fourteenth Amendment to the
Federal Constitution. The Minnesota Supreme Court affirmed. On certiorari,
the United States Supreme Court reversed, with only Justice Stevens
dissenting. The opinion by Justice Brennan noted that "proponents of the
legislation argued that it would promote resource conservation, ease solid
waste disposal problems, and conserve energy." 29 That sufficed for the Court
to conclude "that the ban on plastic nonreturnable milk containers bears a
rational relation to the State's objectives, and must be sustained under the
Equal Protection Clause." 30 It does show that notwithstanding the "new equal
protection approach" with its emphasis on "suspect classification" and
"fundamental rights and interests standard," a concept so ably expounded by
professor Gunther, the "rational relation test" 31 still retains its validity. Not that
there could be any objection to the classification here followed as being in any
way susceptible to such a pejorative expression as "suspect" or that the
assailed Letter of Instruction does not qualify under "the fundamental rights
and interests" standard
8. There was set forth in the petition what were referred to as "other reasonable
measures which the authorities concerned with energy conservation can take
immediately, which are in fact acceptable and obviously called for and should
have been done long ago, to wit: 1. require and establish taxi stands equipped
with efficient telephone and communication systems; 2. strict implementation
and observance of cargo truck hours on main arteries; 3. strict observance of
traffic rules; 4. effective solution of traffic problems and decongestion of traffic
through rerouting and quick repair of roads and efficient operation of double
decker buses; 5. rationing of gasoline to avoid panic buying and give the
private car owner the option and responsibility of deciding on the use of his
allocation; 6. allow neon and electrically devised advertising signs only from
five o'clock p.m. to nine o'clock p.m. 7. prohibit immediately the importation of
heavy and luxury cars and seriously re-examine the car manufacturing
program." 32 Admittedly, such measures are conducive to energy
conservation. The question before us however is limited to whether or not
Letter of Instruction 869 as implemented by Memorandum Circular No. 39 is
violative of certain constitutional rights. It goes no further than that. The
determination of the mode and manner through which the objective of
minimizing the consumption of oil products may be attained is left to the
discretion of the political branches. 33 Absent therefore the alleged
infringement of constitutional rights, more precisely the due process and equal
protection guarantees, this Court cannot adjudge Letter of Instruction No. 869
as tainted by unconstitutionality.
9. It was likewise contended that Memorandum Circular No. 39, issued by the
then respondent Minister of Public Works, Transportation and
Communications, and then respondent Land Transportation Commissioner,
imposing the penalties "of fine, confiscation of vehicle and cancellation of
license is likewise unconstitutional," petitioners invoking the principle of non-
delegation of legislative power. 34 To that extent that a Letter of Instruction may
be viewed as an exercise of the decree-making power of the President, then
such an argument is futile. If, however, viewed as a compliance with the duty
to take care that the laws be faithfully executed, as a consequence of which
subordinate executive officials may in turn issue implementing rules and
regulations, then the objection would properly be considered as an ultra
vires allegation. There is this relevant excerpt from Teoxon v. Member of the
Board of Administrators: 35 "1. The recognition of the power of administrative
officials to promulgate rules in the implementation of the statute, necessarily
limited to what is provided for in the legislative enactment, may be found in the
early case of United States v. Barrias decided in 1908. Then came, in a 1914
decision, United States v. Tupasi Molina, a delineation of the scope of such
competence. Thus: 'Of course the regulations adopted under legislative
authority by a particular department must be in harmony with the provisions of
the law, and for the sole purpose of carrying into effect its general provisions.
By such regulations, of course, the law itself can not be extended. So long,
however, as the regulations relate solely to carrying into effect the provisions
of the law, they are valid.' In 1936, in People v. Santos, this Court expressed
its disapproval of an administrative order that would amount to an excess of
the regulatory power vested in an administrative official. We reaffirmed such a
doctrine in a 1951 decision, where we again made clear that where an
administrative order betrays inconsistency or repugnancy to the provisions of
the Act, 'the mandate of the Act must prevail and must be followed.' Justice
Barrera, speaking for the Court in Victorias Milling Company, Inc. v. Social
Security Commission, citing Parker as well as Davis did tersely sum up the
matter thus: 'A rule is binding on tile courts so long as the procedure fixed for
its promulgation is followed and its scope is within the statutory granted by the
legislature, even if the courts are not in agreement with the policy stated therein
or its innate wisdom * * *. On the other hand, administrative interpretation of
the law is at best merely advisory, for it is the courts that finally determine what
the law means.' It cannot be otherwise as the Constitution limits the authority
of the President, in whom all executive power resides, to take care that the
laws be faithfully executed. No lesser administrative executive office or agency
then can, contrary to the express language of the Constitution, assert for itself
a more extensive prerogative." 36 It was alleged in the Answer of Solicitor
General Estelito P. Mendoza that Letter of Instruction 869 and Memorandum
Circular No. 39 were adopted pursuant to the Land Transportation and Traffic
Code. 37 It contains a specific provision as to penalties. 38 Thus: "For violation
of any provisions of this Act or regulations promulgated pursuant hereto, not
hereinbefore specifically punished, a fine of not less than ten nor more than
fifty pesos shall be imposed." 39 Memorandum Circular No. 39 cannot be held
to be ultra vires as long as the fine imposed is not less than ten nor more than
fifty pesos. As to suspension of registration, 40 the Code, insofar as applicable,
provides: "Whenever it shall appear from the records of the Commission that
during any twelve-month period more than three warnings for violations of this
Act have been given to the owner of a motor vehicle, or that the said owner
has been convicted by a competent court more than once for violation of such
laws, the Commissioner may, in his discretion, suspend the certificate of
registration for a period not exceeding ninety days and, thereupon, shall
require the immediate surrender of the number plates * * *." 41 It follows that
while the imposition of a fine or the suspension of registration under the
conditions therein set forth is valid under the Land Transportation and Traffic
Code, the impounding of a vehicle finds no statutory justification. To apply that
portion of Memorandum Circular No. 39 would be ultra vires. It must likewise
be made clear that a penalty even if warranted can only be imposed in
accordance with the procedure required by law. 42
WHEREFORE, the petition is dismissed.
TAXICAB OPERATORS OF METRO MANILA VS. BOT
This Petition for "Certiorari, Prohibition and mandamus with Preliminary
Injunction and Temporary Restraining Order" filed by the Taxicab Operators of
Metro Manila, Inc., Felicisimo Cabigao and Ace Transportation, seeks to
declare the nullity of Memorandum Circular No. 77-42, dated October 10,
1977, of the Board of Transportation, and Memorandum Circular No. 52, dated
August 15, 1980, of the Bureau of Land Transportation.
Petitioner Taxicab Operators of Metro Manila, Inc. (TOMMI) is a domestic
corporation composed of taxicab operators, who are grantees of Certificates
of Public Convenience to operate taxicabs within the City of Manila and to any
other place in Luzon accessible to vehicular traffic. Petitioners Ace
Transportation Corporation and Felicisimo Cabigao are two of the members of
TOMMI, each being an operator and grantee of such certificate of public
convenience.
On October 10, 1977, respondent Board of Transportation (BOT) issued
Memorandum Circular No. 77-42 which reads:
SUBJECT: Phasing out and Replacement of
Old and Dilapidated Taxis
WHEREAS, it is the policy of the government to insure that only safe and
comfortable units are used as public conveyances;
WHEREAS, the riding public, particularly in Metro-Manila, has, time and again,
complained against, and condemned, the continued operation of old and
dilapidated taxis;
WHEREAS, in order that the commuting public may be assured of comfort,
convenience, and safety, a program of phasing out of old and dilapidated taxis
should be adopted;
WHEREAS, after studies and inquiries made by the Board of Transportation,
the latter believes that in six years of operation, a taxi operator has not only
covered the cost of his taxis, but has made reasonable profit for his
investments;
NOW, THEREFORE, pursuant to this policy, the Board hereby declares that
no car beyond six years shall be operated as taxi, and in implementation of the
same hereby promulgates the following rules and regulations:
1. As of December 31, 1977, all taxis of Model 1971 and earlier are ordered
withdrawn from public service and thereafter may no longer be registered and
operated as taxis. In the registration of cards for 1978, only taxis of Model 1972
and later shall be accepted for registration and allowed for operation;
2. As of December 31, 1978, all taxis of Model 1972 are ordered withdrawn
from public service and thereafter may no longer be registered and operated
as taxis. In the registration of cars for 1979, only taxis of Model 1973 and later
shall be accepted for registration and allowed for operation; and every year
thereafter, there shall be a six-year lifetime of taxi, to wit:
1980 — Model 1974
1981 — Model 1975, etc.
All taxis of earlier models than those provided above are hereby ordered
withdrawn from public service as of the last day of registration of each
particular year and their respective plates shall be surrendered directly to the
Board of Transportation for subsequent turnover to the Land Transportation
Commission.
For an orderly implementation of this Memorandum Circular, the rules herein
shall immediately be effective in Metro-Manila. Its implementation outside
Metro- Manila shall be carried out only after the project has been implemented
in Metro-Manila and only after the date has been determined by the Board. 1
Pursuant to the above BOT circular, respondent Director of the Bureau of Land
Transportation (BLT) issued Implementing Circular No. 52, dated August 15,
1980, instructing the Regional Director, the MV Registrars and other personnel
of BLT, all within the National Capitol Region, to implement said Circular, and
formulating a schedule of phase-out of vehicles to be allowed and accepted
for registration as public conveyances. To quote said Circular:
Pursuant to BOT Memo-Circular No. 77-42, taxi units with year models over
six (6) years old are now banned from operating as public utilities in Metro
Manila. As such the units involved should be considered as automatically
dropped as public utilities and, therefore, do not require any further dropping
order from the BOT.
Henceforth, taxi units within the National Capitol Region having year models
over 6 years old shall be refused registration. The following schedule of phase-
out is herewith prescribed for the guidance of all concerned:
Year Model Automatic Phase-Out Year
1980
1974 1981
1975 1982
1976 1983
1977
etc. etc.
Strict compliance here is desired. 2
In accordance therewith, cabs of model 1971 were phase-out in registration
year 1978; those of model 1972, in 1979; those of model 1973, in 1980; and
those of model 1974, in 1981.
On January 27, 1981, petitioners filed a Petition with the BOT, docketed as
Case No. 80-7553, seeking to nullify MC No. 77-42 or to stop its
implementation; to allow the registration and operation in 1981 and
subsequent years of taxicabs of model 1974, as well as those of earlier models
which were phased-out, provided that, at the time of registration, they are
roadworthy and fit for operation.
On February 16, 1981, petitioners filed before the BOT a "Manifestation and
Urgent Motion", praying for an early hearing of their petition. The case was
heard on February 20, 1981. Petitioners presented testimonial and
documentary evidence, offered the same, and manifested that they would
submit additional documentary proofs. Said proofs were submitted on March
27, 1981 attached to petitioners' pleading entitled, "Manifestation,
Presentation of Additional Evidence and Submission of the Case for
Resolution." 3
On November 28, 1981, petitioners filed before the same Board a
"Manifestation and Urgent Motion to Resolve or Decide Main Petition" praying
that the case be resolved or decided not later than December 10, 1981 to
enable them, in case of denial, to avail of whatever remedy they may have
under the law for the protection of their interests before their 1975 model cabs
are phased-out on January 1, 1982.
Petitioners, through its President, allegedly made personal follow-ups of the
case, but was later informed that the records of the case could not be located.
On December 29, 1981, the present Petition was instituted wherein the
following queries were posed for consideration by this Court:
A. Did BOT and BLT promulgate the questioned memorandum circulars in
accord with the manner required by Presidential Decree No. 101, thereby
safeguarding the petitioners' constitutional right to procedural due process?
B. Granting, arguendo, that respondents did comply with the procedural
requirements imposed by Presidential Decree No. 101, would the
implementation and enforcement of the assailed memorandum circulars
violate the petitioners' constitutional rights to.
(1) Equal protection of the law;
(2) Substantive due process; and
(3) Protection against arbitrary and unreasonable classification and standard?
On Procedural and Substantive Due Process:
Presidential Decree No. 101 grants to the Board of Transportation the power
4. To fix just and reasonable standards, classification, regulations, practices,
measurements, or service to be furnished, imposed, observed, and followed
by operators of public utility motor vehicles.
Section 2 of said Decree provides procedural guidelines for said agency to
follow in the exercise of its powers:
Sec. 2. Exercise of powers. — In the exercise of the powers granted in the
preceding section, the Board shag proceed promptly along the method of
legislative inquiry.
Apart from its own investigation and studies, the Board, in its discretion, may
require the cooperation and assistance of the Bureau of Transportation, the
Philippine Constabulary, particularly the Highway Patrol Group, the support
agencies within the Department of Public Works, Transportation and
Communications, or any other government office or agency that may be able
to furnish useful information or data in the formulation of the Board of any
policy, plan or program in the implementation of this Decree.
The Board may also can conferences, require the submission of position
papers or other documents, information, or data by operators or other persons
that may be affected by the implementation of this Decree, or employ any other
suitable means of inquiry.
In support of their submission that they were denied procedural due process,
petitioners contend that they were not caged upon to submit their position
papers, nor were they ever summoned to attend any conference prior to the
issuance of the questioned BOT Circular.
It is clear from the provision aforequoted, however, that the leeway accorded
the Board gives it a wide range of choice in gathering necessary information
or data in the formulation of any policy, plan or program. It is not mandatory
that it should first call a conference or require the submission of position papers
or other documents from operators or persons who may be affected, this being
only one of the options open to the Board, which is given wide discretionary
authority. Petitioners cannot justifiably claim, therefore, that they were
deprived of procedural due process. Neither can they state with certainty that
public respondents had not availed of other sources of inquiry prior to issuing
the challenged Circulars. operators of public conveyances are not the only
primary sources of the data and information that may be desired by the BOT.
Dispensing with a public hearing prior to the issuance of the Circulars is neither
violative of procedural due process. As held in Central Bank vs. Hon. Cloribel
and Banco Filipino, 44 SCRA 307 (1972):
Pevious notice and hearing as elements of due process, are constitutionally
required for the protection of life or vested property rights, as well as of liberty,
when its limitation or loss takes place in consequence of a judicial or quasi-
judicial proceeding, generally dependent upon a past act or event which has
to be established or ascertained. It is not essential to the validity of general
rules or regulations promulgated to govern future conduct of a class or persons
or enterprises, unless the law provides otherwise. (Emphasis supplied)
Petitioners further take the position that fixing the ceiling at six (6) years is
arbitrary and oppressive because the roadworthiness of taxicabs depends
upon their kind of maintenance and the use to which they are subjected, and,
therefore, their actual physical condition should be taken into consideration at
the time of registration. As public contend, however, it is impractical to subject
every taxicab to constant and recurring evaluation, not to speak of the fact that
it can open the door to the adoption of multiple standards, possible collusion,
and even graft and corruption. A reasonable standard must be adopted to
apply to an vehicles affected uniformly, fairly, and justly. The span of six years
supplies that reasonable standard. The product of experience shows that by
that time taxis have fully depreciated, their cost recovered, and a fair return on
investment obtained. They are also generally dilapidated and no longer fit for
safe and comfortable service to the public specially considering that they are
in continuous operation practically 24 hours everyday in three shifts of eight
hours per shift. With that standard of reasonableness and absence of
arbitrariness, the requirement of due process has been met.
On Equal Protection of the Law:
Petitioners alleged that the Circular in question violates their right to equal
protection of the law because the same is being enforced in Metro Manila only
and is directed solely towards the taxi industry. At the outset it should be
pointed out that implementation outside Metro Manila is also envisioned in
Memorandum Circular No. 77-42. To repeat the pertinent portion:
For an orderly implementation of this Memorandum Circular, the rules herein
shall immediately be effective in Metro Manila. Its implementation outside
Metro Manila shall be carried out only after the project has been implemented
in Metro Manila and only after the date has been determined by the Board. 4
In fact, it is the understanding of the Court that implementation of the Circulars
in Cebu City is already being effected, with the BOT in the process of
conducting studies regarding the operation of taxicabs in other cities.
The Board's reason for enforcing the Circular initially in Metro Manila is that
taxicabs in this city, compared to those of other places, are subjected to
heavier traffic pressure and more constant use. This is of common knowledge.
Considering that traffic conditions are not the same in every city, a substantial
distinction exists so that infringement of the equal protection clause can hardly
be successfully claimed.
As enunciated in the preambular clauses of the challenged BOT Circular, the
overriding consideration is the safety and comfort of the riding public from the
dangers posed by old and dilapidated taxis. The State, in the exercise, of its
police power, can prescribe regulations to promote the health, morals, peace,
good order, safety and general welfare of the people. It can prohibit all things
hurtful to comfort, safety and welfare of society. 5 It may also regulate property
rights. 6 In the language of Chief Justice Enrique M. Fernando "the necessities
imposed by public welfare may justify the exercise of governmental authority
to regulate even if thereby certain groups may plausibly assert that their
interests are disregarded". 7
In so far as the non-application of the assailed Circulars to other transportation
services is concerned, it need only be recalled that the equal protection clause
does not imply that the same treatment be accorded all and sundry. It applies
to things or persons Identically or similarly situated. It permits of classification
of the object or subject of the law provided classification is reasonable or based
on substantial distinction, which make for real differences, and that it must
apply equally to each member of the class. 8 What is required under the equal
protection clause is the uniform operation by legal means so that all persons
under Identical or similar circumstance would be accorded the same treatment
both in privilege conferred and the liabilities imposed. 9 The challenged
Circulars satisfy the foregoing criteria.
Evident then is the conclusion that the questioned Circulars do not suffer from
any constitutional infirmity. To declare a law unconstitutional, the infringement
of constitutional right must be clear, categorical and undeniable. 10
WHEREFORE, the Writs prayed for are denied and this Petition is hereby
dismissed. No costs.
SO ORDERED.
AUGUSTIN VS. EDU
The validity of a letter of Instruction 1 providing for an early seaming device for
motor vehicles is assailed in this prohibition proceeding as being violative of
the constitutional guarantee of due process and, insofar as the rules and
regulations for its implementation are concerned, for transgressing the
fundamental principle of non- delegation of legislative power. The Letter of
Instruction is stigmatized by petitioner who is possessed of the requisite
standing, as being arbitrary and oppressive. A temporary restraining order as
issued and respondents Romeo F. Edu, Land Transportation Commissioner
Juan Ponce Enrile, Minister of National Defense; Alfredo L. Juinio, Minister of
Public Works, Transportation and Communications; and Baltazar Aquino,
Minister of Public Highways; were to answer. That they did in a pleading
submitted by Solicitor General Estelito P. Mendoza. 2 Impressed with a highly
persuasive quality, it makes devoid clear that the imputation of a constitutional
infirmity is devoid of justification The Letter of Instruction on is a valid police
power measure. Nor could the implementing rules and regulations issued by
respondent Edu be considered as amounting to an exercise of legislative
power. Accordingly, the petition must be dismissed.
The facts are undisputed. The assailed Letter of Instruction No. 229 of
President Marcos, issued on December 2, 1974, reads in full: "[Whereas],
statistics show that one of the major causes of fatal or serious accidents in
land transportation is the presence of disabled, stalled or parked motor
vehicles along streets or highways without any appropriate early warning
device to signal approaching motorists of their presence; [Whereas], the
hazards posed by such obstructions to traffic have been recognized by
international bodies concerned with traffic safety, the 1968 Vienna Convention
on Road Signs and Signals and the United Nations Organization (U.N.);
[Whereas], the said Vienna Convention which was ratified by the Philippine
Government under P.D. No. 207, recommended the enactment of local
legislation for the installation of road safety signs and devices; [Now, therefore,
I, Ferdinand E. Marcos], President of the Philippines, in the interest of safety
on all streets and highways, including expressways or limited access roads,
do hereby direct: 1. That all owners, users or drivers of motor vehicles shall
have at all times in their motor vehicles at least one (1) pair of early warning
device consisting of triangular, collapsible reflectorized plates in red and yellow
colors at least 15 cms. at the base and 40 cms. at the sides. 2. Whenever any
motor vehicle is stalled or disabled or is parked for thirty (30) minutes or more
on any street or highway, including expressways or limited access roads, the
owner, user or driver thereof shall cause the warning device mentioned herein
to be installed at least four meters away to the front and rear of the motor
vehicle staged, disabled or parked. 3. The Land Transportation Commissioner
shall cause Reflectorized Triangular Early Warning Devices, as herein
described, to be prepared and issued to registered owners of motor vehicles,
except motorcycles and trailers, charging for each piece not more than 15 %
of the acquisition cost. He shall also promulgate such rules and regulations as
are appropriate to effectively implement this order. 4. All hereby concerned
shall closely coordinate and take such measures as are necessary or
appropriate to carry into effect then instruction. 3 Thereafter, on November 15,
1976, it was amended by Letter of Instruction No. 479 in this wise. "Paragraph
3 of Letter of Instruction No. 229 is hereby amended to read as follows: 3. The
Land transportation Commissioner shall require every motor vehicle owner to
procure from any and present at the registration of his vehicle, one pair of a
reflectorized early warning device, as d bed of any brand or make chosen by
mid motor vehicle . The Land Transportation Commissioner shall also
promulgate such rule and regulations as are appropriate to effectively
implement this order.'" 4 There was issued accordingly, by respondent Edu,
the implementing rules and regulations on December 10, 1976. 5 They were
not enforced as President Marcos on January 25, 1977, ordered a six-month
period of suspension insofar as the installation of early warning device as a
pre-registration requirement for motor vehicle was concerned. 6 Then on June
30, 1978, another Letter of Instruction 7 the lifting of such suspension and
directed the immediate implementation of Letter of Instruction No. 229 as
amended. 8 It was not until August 29, 1978 that respondent Edu issued
Memorandum Circular No. 32, worded thus: "In pursuance of Letter of
Instruction No. 716, dated June 30, 1978, the implementation of Letter of
Instruction No. 229, as amended by Letter of Instructions No. 479, requiring
the use of Early Warning Devices (EWD) on motor vehicle, the following rules
and regulations are hereby issued: 1. LTC Administrative Order No. 1, dated
December 10, 1976; shall now be implemented provided that the device may
come from whatever source and that it shall have substantially complied with
the EWD specifications contained in Section 2 of said administrative order; 2.
In order to insure that every motor vehicle , except motorcycles, is equipped
with the device, a pair of serially numbered stickers, to be issued free of charge
by this Commission, shall be attached to each EWD. The EWD. serial number
shall be indicated on the registration certificate and official receipt of payment
of current registration fees of the motor vehicle concerned. All Orders,
Circulars, and Memoranda in conflict herewith are hereby superseded, This
Order shall take effect immediately. 9 It was for immediate implementation by
respondent Alfredo L. Juinio, as Minister of Public Works, transportation, and
Communications. 10
Petitioner, after setting forth that he "is the owner of a Volkswagen Beetle Car,
Model 13035, already properly equipped when it came out from the assembly
lines with blinking lights fore and aft, which could very well serve as an early
warning device in case of the emergencies mentioned in Letter of Instructions
No. 229, as amended, as well as the implementing rules and regulations in
Administrative Order No. 1 issued by the land transportation
Commission," 11 alleged that said Letter of Instruction No. 229, as amended,
"clearly violates the provisions and delegation of police power, [sic] * * *: " For
him they are "oppressive, unreasonable, arbitrary, confiscatory, nay
unconstitutional and contrary to the precepts of our compassionate New
Society." 12 He contended that they are "infected with arbitrariness because it
is harsh, cruel and unconscionable to the motoring public;" 13 are "one-sided,
onerous and patently illegal and immoral because [they] will make
manufacturers and dealers instant millionaires at the expense of car owners
who are compelled to buy a set of the so-called early warning device at the
rate of P 56.00 to P72.00 per set." 14 are unlawful and unconstitutional and
contrary to the precepts of a compassionate New Society [as being]
compulsory and confiscatory on the part of the motorists who could very well
provide a practical alternative road safety device, or a better substitute to the
specified set of EWD's." 15 He therefore prayed for a judgment both the
assailed Letters of Instructions and Memorandum Circular void and
unconstitutional and for a restraining order in the meanwhile.
A resolution to this effect was handed down by this Court on October 19, 1978:
"L-49112 (Leovillo C. Agustin v. Hon. Romeo F. Edu, etc., et al.) —
Considering the allegations contained, the issues raised and the arguments
adduced in the petition for prohibition with writ of p prohibitory and/or
mandatory injunction, the Court Resolved to (require) the respondents to file
an answer thereto within ton (10) days from notice and not to move to dismiss
the petition. The Court further Resolved to [issue] a [temporary restraining
order] effective as of this date and continuing until otherwise ordered by this
Court.16
Two motions for extension were filed by the Office of the Solicitor General and
granted. Then on November 15, 1978, he Answer for respondents was
submitted. After admitting the factual allegations and stating that they lacked
knowledge or information sufficient to form a belief as to petitioner owning a
Volkswagen Beetle car," they "specifically deny the allegations and stating
they lacked knowledge or information sufficient to form a belief as to petitioner
owning a Volkswagen Beetle Car, 17 they specifically deny the allegations in
paragraphs X and XI (including its subparagraphs 1, 2, 3, 4) of Petition to the
effect that Letter of Instruction No. 229 as amended by Letters of Instructions
Nos. 479 and 716 as well as Land transportation Commission Administrative
Order No. 1 and its Memorandum Circular No. 32 violates the constitutional
provisions on due process of law, equal protection of law and undue delegation
of police power, and that the same are likewise oppressive, arbitrary,
confiscatory, one-sided, onerous, immoral unreasonable and illegal the truth
being that said allegations are without legal and factual basis and for the
reasons alleged in the Special and Affirmative Defenses of this
Answer."18 Unlike petitioner who contented himself with a rhetorical recital of
his litany of grievances and merely invoked the sacramental phrases of
constitutional litigation, the Answer, in demonstrating that the assailed Letter
of Instruction was a valid exercise of the police power and implementing rules
and regulations of respondent Edu not susceptible to the charge that there was
unlawful delegation of legislative power, there was in the portion captioned
Special and Affirmative Defenses, a citation of what respondents believed to
be the authoritative decisions of this Tribunal calling for application. They
are Calalang v. Williams, 19 Morfe v. Mutuc, 20 and Edu v. Ericta. 21 Reference
was likewise made to the 1968 Vienna Conventions of the United Nations on
road traffic, road signs, and signals, of which the Philippines was a signatory
and which was duly ratified. 22 Solicitor General Mendoza took pains to refute
in detail, in language calm and dispassionate, the vigorous, at times
intemperate, accusation of petitioner that the assailed Letter of Instruction and
the implementing rules and regulations cannot survive the test of rigorous
scrutiny. To repeat, its highly-persuasive quality cannot be denied.
This Court thus considered the petition submitted for decision, the issues being
clearly joined. As noted at the outset, it is far from meritorious and must be
dismissed.
1. The Letter of Instruction in question was issued in the exercise of the police
power. That is conceded by petitioner and is the main reliance of respondents.
It is the submission of the former, however, that while embraced in such a
category, it has offended against the due process and equal protection
safeguards of the Constitution, although the latter point was mentioned only in
passing. The broad and expansive scope of the police power which was
originally Identified by Chief Justice Taney of the American Supreme Court in
an 1847 decision as "nothing more or less than the powers of government
inherent in every sovereignty" 23 was stressed in the aforementioned case
of Edu v. Ericta thus: "Justice Laurel, in the first leading decision after the
Constitution came into force, Calalang v. Williams, Identified police power with
state authority to enact legislation that may interfere with personal liberty or
property in order to promote the general welfare. Persons and property could
thus 'be subjected to all kinds of restraints and burdens in order to we the
general comfort, health and prosperity of the state.' Shortly after independence
in 1948, Primicias v. Fugoso reiterated the doctrine, such a competence being
referred to as 'the power to prescribe regulations to promote the health, morals,
peace, education, good order or safety, and general welfare of the people. The
concept was set forth in negative terms by Justice Malcolm in a pre-
Commonwealth decision as 'that inherent and plenary power in the State which
enables it to prohibit all things hurtful to the comfort, safety and welfare of
society. In that sense it could be hardly distinguishable as noted by this Court
in Morfe v. Mutuc with the totality of legislative power. It is in the above sense
the greatest and most powerful at. tribute of government. It is, to quote Justice
Malcolm anew, 'the most essential, insistent, and at least table powers, I
extending as Justice Holmes aptly pointed out 'to all the great public needs.'
Its scope, ever-expanding to meet the exigencies of the times, even to
anticipate the future where it could be done, provides enough room for an
efficient and flexible response to conditions and circumstances thus assuring
the greatest benefits. In the language of Justice Cardozo: 'Needs that were
narrow or parochial in the past may be interwoven in the present with the well-
being of the nation. What is critical or urgent changes with the time.' The police
power is thus a dynamic agency, suitably vague and far from precisely defined,
rooted in the conception that men in organizing the state and imposing upon
its government limitations to safeguard constitutional rights did not intend
thereby to enable an individual citizen or a group of citizens to obstruct
unreasonably the enactment of such salutary measures calculated to
communal peace, safety, good order, and welfare." 24
2. It was thus a heavy burden to be shouldered by petitioner, compounded by
the fact that the particular police power measure challenged was clearly
intended to promote public safety. It would be a rare occurrence indeed for this
Court to invalidate a legislative or executive act of that character. None has
been called to our attention, an indication of its being non-existent. The latest
decision in point, Edu v. Ericta, sustained the validity of the Reflector
Law, 25 an enactment conceived with the same end in view. Calalang v.
Williams found nothing objectionable in a statute, the purpose of which was:
"To promote safe transit upon, and. avoid obstruction on roads and streets
designated as national roads * * *. 26 As a matter of fact, the first law sought to
be nullified after the effectivity of the 1935 Constitution, the National Defense
Act, 27 with petitioner failing in his quest, was likewise prompted by the
imperative demands of public safety.
3. The futility of petitioner's effort to nullify both the Letter of Instruction and the
implementing rules and regulations becomes even more apparent considering
his failure to lay the necessary factual foundation to rebut the presumption of
validity. So it was held in Ermita-Malate Hotel and Motel Operators
Association, Inc. v. City Mayor of Manila. 28 The rationale was clearly set forth
in an excerpt from a decision of Justice Branders of the American Supreme
Court, quoted in the opinion: "The statute here questioned deals with a subject
clearly within the scope of the police power. We are asked to declare it void on
the ground that the specific method of regulation prescribed is unreasonable
and hence deprives the plaintiff of due process of law. As underlying questions
of fact may condition the constitutionality of legislation of this character, the
presumption of constitutionality must prevail in the absence of some factual
foundation of record in overthrowing the statute. 29
4. Nor did the Solicitor General as he very well could, rely solely on such
rebutted presumption of validity. As was pointed out in his Answer "The
President certainly had in his possession the necessary statistical information
and data at the time he issued said letter of instructions, and such factual
foundation cannot be defeated by petitioner's naked assertion that early
warning devices 'are not too vital to the prevention of nighttime vehicular
accidents' because allegedly only 390 or 1.5 per cent of the supposed 26,000
motor vehicle accidents that in 1976 involved rear-end collisions (p. 12 of
petition). Petitioner's statistics is not backed up by demonstrable data on
record. As aptly stated by this Honorable Court: Further: "It admits of no doubt
therefore that there being a presumption of validity, the necessity for evidence
to rebut it is unavoidable, unless the statute or ordinance is void on its face,
which is not the case here"' * * *. But even as g the verity of petitioner's
statistics, is that not reason enough to require the installation of early warning
devices to prevent another 390 rear-end collisions that could mean the death
of 390 or more Filipinos and the deaths that could likewise result from head-
on or frontal collisions with stalled vehicles?" 30 It is quite manifest then that
the issuance of such Letter of Instruction is encased in the armor of prior,
careful study by the Executive Department. To set it aside for alleged
repugnancy to the due process clause is to give sanction to conjectural claims
that exceeded even the broadest permissible limits of a pleader's well known
penchant for exaggeration.
5. The rather wild and fantastic nature of the charge of oppressiveness of this
Letter of Instruction was exposed in the Answer of the Solicitor General thus:
"Such early warning device requirement is not an expensive redundancy, nor
oppressive, for car owners whose cars are already equipped with 1) blinking
lights in the fore and aft of said motor vehicles,' 2) "battery-powered blinking
lights inside motor vehicles," 3) "built-in reflectorized tapes on front and rear
bumpers of motor vehicles," or 4) "well-lighted two (2) petroleum lamps
(the Kinke) * * * because: Being universal among the signatory countries to the
said 1968 Vienna Conventions, and visible even under adverse conditions at
a distance of at least 400 meters, any motorist from this country or from any
part of the world, who sees a reflectorized rectangular early seaming device
installed on the roads, highways or expressways, will conclude, without
thinking, that somewhere along the travelled portion of that road, highway, or
expressway, there is a motor vehicle which is stationary, stalled or disabled
which obstructs or endangers passing traffic. On the other hand, a motorist
who sees any of the aforementioned other built in warning devices or the
petroleum lamps will not immediately get adequate advance warning because
he will still think what that blinking light is all about. Is it an emergency vehicle?
Is it a law enforcement car? Is it an ambulance? Such confusion or uncertainty
in the mind of the motorist will thus increase, rather than decrease, the danger
of collision. 31
6. Nor did the other extravagant assertions of constitutional deficiency go
unrefuted in the Answer of the Solicitor General "There is nothing in the
questioned Letter of Instruction No. 229, as amended, or in Administrative
Order No. 1, which requires or compels motor vehicle owners to purchase the
early warning device prescribed thereby. All that is required is for motor vehicle
owners concerned like petitioner, to equip their motor vehicles with a pair of
this early warning device in question, procuring or obtaining the same from
whatever source. In fact, with a little of industry and practical ingenuity, motor
vehicle owners can even personally make or produce this early warning device
so long as the same substantially conforms with the specifications laid down
in said letter of instruction and administrative order. Accordingly the early
warning device requirement can neither be oppressive, onerous, immoral, nor
confiscatory, much less does it make manufacturers and dealers of said
devices 'instant millionaires at the expense of car owners' as petitioner so
sweepingly concludes * * *. Petitioner's fear that with the early warning device
requirement 'a more subtle racket may be committed by those called upon to
enforce it * * * is an unfounded speculation. Besides, that unscrupulous officials
may try to enforce said requirement in an unreasonable manner or to an
unreasonable degree, does not render the same illegal or immoral where, as
in the instant case, the challenged Letter of Instruction No. 229 and
implementing order disclose none of the constitutional defects alleged against
it.32
7 It does appear clearly that petitioner's objection to this Letter of Instruction is
not premised on lack of power, the justification for a finding of
unconstitutionality, but on the pessimistic, not to say negative, view he
entertains as to its wisdom. That approach, it put it at its mildest, is
distinguished, if that is the appropriate word, by its unorthodoxy. It bears
repeating "that this Court, in the language of Justice Laurel, 'does not pass
upon questions of wisdom justice or expediency of legislation.' As expressed
by Justice Tuason: 'It is not the province of the courts to supervise legislation
and keep it within the bounds of propriety and common sense. That is primarily
and exclusively a legislative concern.' There can be no possible objection then
to the observation of Justice Montemayor. 'As long as laws do not violate any
Constitutional provision, the Courts merely interpret and apply them regardless
of whether or not they are wise or salutary. For they, according to Justice
Labrador, 'are not supposed to override legitimate policy and * * * never inquire
into the wisdom of the law.' It is thus settled, to paraphrase Chief Justice
Concepcion in Gonzales v. Commission on Elections, that only congressional
power or competence, not the wisdom of the action taken, may be the basis
for declaring a statute invalid. This is as it ought to be. The principle of
separation of powers has in the main wisely allocated the respective authority
of each department and confined its jurisdiction to such a sphere. There would
then be intrusion not allowable under the Constitution if on a matter left to the
discretion of a coordinate branch, the judiciary would substitute its own. If there
be adherence to the rule of law, as there ought to be, the last offender should
be courts of justice, to which rightly litigants submit their controversy precisely
to maintain unimpaired the supremacy of legal norms and prescriptions. The
attack on the validity of the challenged provision likewise insofar as there may
be objections, even if valid and cogent on is wisdom cannot be sustained. 33
8. The alleged infringement of the fundamental principle of non-delegation of
legislative power is equally without any support well-settled legal doctrines.
Had petitioner taken the trouble to acquaint himself with authoritative
pronouncements from this Tribunal, he would not have the temerity to make
such an assertion. An exempt from the aforecited decision of Edu v.
Ericta sheds light on the matter: "To avoid the taint of unlawful delegation,
there must be a standard, which implies at the very least that the legislature
itself determines matters of principle and lays down fundamental policy.
Otherwise, the charge of complete abdication may be hard to repel A standard
thus defines legislative policy, marks its maps out its boundaries and specifies
the public agency to apply it. It indicates the circumstances under which the
legislative command is to be effected. It is the criterion by which legislative
purpose may be carried out. Thereafter, the executive or administrative office
designated may in pursuance of the above guidelines promulgate
supplemental rules and regulations. The standard may be either express or
implied. If the former, the non-delegation objection is easily met. The standard
though does not have to be spelled out specifically. It could be implied from
the policy and purpose of the act considered as a whole. In the Reflector Law
clearly, the legislative objective is public safety. What is sought to be attained
as in Calalang v. Williams is "safe transit upon the roads.' This is to adhere to
the recognition given expression by Justice Laurel in a decision announced
not too long after the Constitution came into force and effect that the principle
of non-delegation "has been made to adapt itself to the complexities of modern
governments, giving rise to the adoption, within certain limits, of the principle
of "subordinate legislation" not only in the United States and England but in
practically all modern governments.' He continued: 'Accordingly, with the
growing complexity of modern life, the multiplication of the subjects of
governmental regulation, and the increased difficulty of administering the laws,
there is a constantly growing tendency toward the delegation of greater powers
by the legislature and toward the approval of the practice by the courts.'
Consistency with the conceptual approach requires the reminder that what is
delegated is authority non-legislative in character, the completeness of the
statute when it leaves the hands of Congress being assumed." 34

9. The conclusion reached by this Court that this petition must be dismissed is
reinforced by this consideration. The petition itself quoted these two whereas
clauses of the assailed Letter of Instruction: "[Whereas], the hazards posed by
such obstructions to traffic have been recognized by international bodies
concerned with traffic safety, the 1968 Vienna Convention on Road Signs and
Signals and the United Nations Organization (U.N.); [Whereas], the said
Vionna Convention, which was ratified by the Philippine Government under
P.D. No. 207, recommended the enactment of local legislation for the
installation of road safety signs and devices; * * * " 35 It cannot be disputed then
that this Declaration of Principle found in the Constitution possesses
relevance: "The Philippines * * * adopts the generally accepted principles of
international law as part of the law of the land * * *." 36 The 1968 Vienna
Convention on Road Signs and Signals is impressed with such a character. It
is not for this country to repudiate a commitment to which it had pledged its
word. The concept of Pacta sunt servanda stands in the way of such an
attitude, which is, moreover, at war with the principle of international morality.

10. That is about all that needs be said. The rather court reference to equal
protection did not even elicit any attempt on the Part of Petitioner to
substantiate in a manner clear, positive, and categorical why such a casual
observation should be taken seriously. In no case is there a more appropriate
occasion for insistence on what was referred to as "the general rule"
in Santiago v. Far Eastern Broadcasting Co., 37 namely, "that the
constitutionality of a law wig not be considered unless the point is specially
pleaded, insisted upon, and adequately argued." 38 "Equal protection" is not a
talismanic formula at the mere invocation of which a party to a lawsuit can
rightfully expect that success will crown his efforts. The law is anything but
that.

WHEREFORE, this petition is dismissed. The restraining order is lifted. This

decision is immediately executory. No costs.
EMINENT DOMAIN
CITY OF MANILA VS. CHIENESE CEMETERY OF MANILA
The important question presented by this appeal is: In expropriation
proceedings by the city of Manila, may the courts inquire into, and hear proof
upon, the necessity of the expropriation?
That question arose in the following manner:
On the 11th day of December, 1916, the city of Manila presented a petition in
the Court of First Instance of said city, praying that certain lands, therein
particularly described, be expropriated for the purpose of constructing a public
improvement. The petitioner, in the second paragraph of the petition, alleged:
That for the purpose of constructing a public improvement, namely, the
extension of Rizal Avenue, Manila, it is necessary for the plaintiff to acquire
ownership in fee simple of certain parcels of land situated in the district of
Binondo of said city within Block 83 of said district, and within the jurisdiction
of this court.
The defendant, the Comunidad de Chinos de Manila [Chinese Community of
Manila], answering the petition of the plaintiff, alleged that it was a corporation
organized and existing under and by virtue of the laws of the Philippine Islands,
having for its purpose the benefit and general welfare of the Chinese
Community of the City of Manila; that it was the owner of parcels one and two
of the land described in paragraph 2 of the complaint; that it denied that it
was either necessary or expedient that the said parcels be expropriated for
street purposes; that existing street and roads furnished ample means of
communication for the public in the district covered by such proposed
expropriation; that if the construction of the street or road should be considered
a public necessity, other routes were available, which would fully satisfy the
plaintiff's purposes, at much less expense and without disturbing the resting
places of the dead; that it had a Torrens title for the lands in question; that the
lands in question had been used by the defendant for cemetery purposes; that
a great number of Chinese were buried in said cemetery; that if said
expropriation be carried into effect, it would disturb the resting places of the
dead, would require the expenditure of a large sum of money in the transfer or
removal of the bodies to some other place or site and in the purchase of such
new sites, would involve the destruction of existing monuments and the
erection of new monuments in their stead, and would create irreparable loss
and injury to the defendant and to all those persons owning and interested in
the graves and monuments which would have to be destroyed; that the plaintiff
was without right or authority to expropriate said cemetery or any part or
portion thereof for street purposes; and that the expropriation, in fact, was not
necessary as a public improvement.
The defendant Ildefonso Tambunting, answering the petition, denied each and
every allegation of the complaint, and alleged that said expropriation was not
a public improvement; that it was not necessary for the plaintiff to acquire the
parcels of land in question; that a portion of the lands in question was used as
a cemetery in which were the graves of his ancestors; that monuments and
tombstones of great value were found thereon; that the land had
become quasi-public property of a benevolent association, dedicated and
used for the burial of the dead and that many dead were buried there; that if
the plaintiff deemed it necessary to extend Rizal Avenue, he had offered and
still offers to grant a right of way for the said extension over other land, without
cost to the plaintiff, in order that the sepulchers, chapels and graves of his
ancestors may not be disturbed; that the land so offered, free of charge, would
answer every public necessity on the part of the plaintiff.
The defendant Feliza Concepcion de Delgado, with her husband, Jose Maria
Delgado, and each of the other defendants, answering separately, presented
substantially the same defense as that presented by the Comunidad de Chinos
de Manila and Ildefonso Tambunting above referred to.
The foregoing parts of the defense presented by the defendants have been
inserted in order to show the general character of the defenses presented by
each of the defendants. The plaintiff alleged that the expropriation was
necessary. The defendants each alleged (a) that no necessity existed for said
expropriation and (b) that the land in question was a cemetery, which had been
used as such for many years, and was covered with sepulchres and
monuments, and that the same should not be converted into a street for public
purposes.
Upon the issue thus presented by the petition and the various answers, the
Honorable Simplicio del Rosario, judge, in a very elucidated opinion, with very
clear and explicit reasons, supported by ambulance of authorities, decided that
there was no necessity for the expropriation of the particular strip of land in
question, and absolved each and all of the defendants from all liability under
the complaint, without any finding as to costs.
From that judgment the plaintiff appealed and presented the above question
as its principal ground of appeal.
The theory of the plaintiff is, that once it has established the fact, under the
law, that it has authority to expropriate land, it may expropriate any land it may
desire; that the only function of the court in such proceedings is to ascertain
the value of the land in question; that neither the court nor the owners of the
land can inquire into the advisible purpose of purpose of the expropriation or
ask any questions concerning the necessities therefor; that
the courts are mere appraisers of the land involved in expropriation
proceedings, and, when the value of the land is fixed by the method adopted
by the law, to render a judgment in favor of the defendant for its value.
That the city of Manila has authority to expropriate private lands
for public purposes, is not denied. Section 2429 of Act No. 2711 (Charter of
the city of Manila) provides that "the city (Manila) . . . may
condemn private property for public use."
The Charter of the city of Manila contains no procedure by which the said
authority may be carried into effect. We are driven, therefore, to the procedure
marked out by Act No. 190 to ascertain how the said authority may be
exercised. From an examination of Act No. 190, in its section 241, we
find how the right of eminent domain may be exercised. Said section 241
provides that, "The Government of the Philippine Islands, or of any province
or department thereof, or of any municipality, and any person, or public or
private corporation having, by law, the right to condemn private property for
public use, shall exercise that right in the manner hereinafter prescribed."
Section 242 provides that a complaint in expropriation proceeding shall be
presented; that the complaint shall state with certainty the right of
condemnation, with a description of the property sought to be condemned
together with the interest of each defendant separately.
Section 243 provides that if the court shall find upon trial that the right to
expropriate the land in question exists, it shall then appoint commissioners.
Sections 244, 245 and 246 provide the method of procedure and duty of the
commissioners. Section 248 provides for an appeal from the judgment of the
Court of First Instance to the Supreme Court. Said section 248 gives the
Supreme Court authority to inquire into the right of expropriation on the part of
the plaintiff. If the Supreme Court on appeal shall determine that no right of
expropriation existed, it shall remand the cause to the Court of First Instance
with a mandate that the defendant be replaced in the possession of the
property and that he recover whatever damages he may have sustained by
reason of the possession of the plaintiff.
It is contended on the part of the plaintiff that the phrase in said section, "and
if the court shall find the right to expropriate exists," means simply that, if the
court finds that there is some law authorizing the plaintiff to expropriate, then
the courts have no other function than to authorize the expropriation and to
proceed to ascertain the value of the land involved; that the necessity for the
expropriation is a legislative and not a judicial question.
Upon the question whether expropriation is a legislative function exclusively,
and that the courts cannot intervene except for the purpose of determining the
value of the land in question, there is much legal legislature. Much has been
written upon both sides of that question. A careful examination of the
discussions pro and con will disclose the fact that the decisions depend largely
upon particular constitutional or statutory provisions. It cannot be denied, if the
legislature under proper authority should grant the expropriation of
a certain or particular parcel of land for some specified public purpose, that the
courts would be without jurisdiction to inquire into the purpose of that
legislation.
If, upon the other hand, however, the Legislature should grant general
authority to a municipal corporation to expropriate private
land for public purposes, we think the courts have ample authority in this
jurisdiction, under the provisions above quoted, to make inquiry and to hear
proof, upon an issue properly presented, concerning whether or not the lands
were private and whether the purpose was, in fact, public. In other words, have
no the courts in this jurisdiction the right, inasmuch as the questions relating
to expropriation must be referred to them (sec. 241, Act No. 190) for final
decision, to ask whether or not the law has been complied with? Suppose in a
particular case, it should be denied that the property is not private property
but public, may not the courts hear proof upon that question? Or, suppose the
defense is, that the purpose of the expropriation is not public but private, or
that there exists no public purpose at all, may not the courts make inquiry and
hear proof upon that question?
The city of Manila is given authority to expropriate private lands
for public purposes. Can it be possible that said authority confers the right to
determine for itself that the land is private and that the purpose is public, and
that the people of the city of Manila who pay the taxes for its support, especially
those who are directly affected, may not question one or the other, or both, of
these questions? Can it be successfully contended that the phrase used in Act
No. 190, "and if the court upon trial shall find that such right exists," means
simply that the court shall examine the statutes simply for the purpose of
ascertaining whether a law exists authorizing the petitioner to exercise the right
of eminent domain? Or, when the case arrives in the Supreme Court, can it be
possible that the phrase, "if the Supreme Court shall determine that no right of
expropriation exists," that that simply means that the Supreme Court shall also
examine the enactments of the legislature for the purpose of determining
whether or not a law exists permitting the plaintiff to expropriate?
We are of the opinion that the power of the court is not limited to that question.
The right of expropriation is not an inherent power in a municipal corporation,
and before it can exercise the right some law must exist conferring the power
upon it. When the courts come to determine the question, they must only find
(a) that a law or authority exists for the exercise of the right of eminent domain,
but (b) also that the right or authority is being exercised in accordance with the
law. In the present case there are two conditions imposed upon the authority
conceded to the City of Manila: First, the land must be private; and, second,
the purpose must be public. If the court, upon trial, finds that neither of these
conditions exists or that either one of them fails, certainly it cannot be
contended that the right is being exercised in accordance with law.
Whether the purpose for the exercise of the right of eminent domain is public,
is a question of fact. Whether the land is public, is a question of fact; and, in
our opinion, when the legislature conferred upon the courts of the Philippine
Islands the right to ascertain upon trial whether the right exists for the exercise
of eminent domain, it intended that the courts should inquire into, and hear
proof upon, those questions. Is it possible that the owner of valuable land in
this jurisdiction is compelled to stand mute while his land is being expropriated
for a use not public, with the right simply to beg the city of Manila to pay him
the value of his land? Does the law in this jurisdiction permit municipalities to
expropriate lands, without question, simply for the purpose of satisfying the
aesthetic sense of those who happen for the time being to be in authority?
Expropriation of lands usually calls for public expense. The taxpayers are
called upon to pay the costs. Cannot the owners of land question the public
use or the public necessity?
As was said above, there is a wide divergence of opinion upon the authority of
the court to question the necessity or advisability of the exercise of the right of
eminent domain. The divergence is usually found to depend upon particular
statutory or constitutional provisions.
It has been contended — and many cases are cited in support of that
contention, and section 158 of volume 10 of Ruling Case Law is cited as
conclusive — that the necessity for taking property under the right of eminent
domain is not a judicial question. But those who cited said section evidently
overlooked the section immediately following (sec. 159), which adds: "But it is
obvious that if the property is taken in the ostensible behalf of a public
improvement which it can never by any possibility serve, it is being taken for a
use not public, and the owner's constitutional rights call for protection by the
courts. While many courts have used sweeping expression in the decisions in
which they have disclaimed the power of supervising the power of supervising
the selection of the sites of public improvements, it may be safely said that the
courts of the various states would feel bound to interfere to prevent an abuse
of the discretion delegated by the legislature, by an attempted appropriation of
land in utter disregard of the possible necessity of its use, or when the alleged
purpose was a cloak to some sinister scheme." (Norwich City vs. Johnson, 86
Conn., 151; Bell vs. Mattoon Waterworks, etc. Co., 245 Ill., 544; Wheeling, etc.
R. R. Co. vs. Toledo Ry. etc. Co., 72 Ohio St., 368; State vs. Stewart, 74 Wis.,
620.)
Said section 158 (10 R. C. L., 183) which is cited as conclusive authority in
support of the contention of the appellant, says:
The legislature, in providing for the exercise of the power of eminent
domain, may directly determine the necessity for appropriating private
property for a particular improvement for public use, and it may select the exact
location of the improvement. In such a case, it is well settled that the utility of
the proposed improvement, the extent of the public necessity for its
construction, the expediency of constructing it, the suitableness of the location
selected and the consequent necessity of taking the land selected for its site,
are all questions exclusively for the legislature to determine, and the courts
have no power to interfere, or to substitute their own views for those of the
representatives of the people.
Practically every case cited in support of the above doctrine has been
examined, and we are justified in making the statement that in each case the
legislature directly determined the necessity for the exercise of the right of
eminent domain in the particular case. It is not denied that if the necessity for
the exercise of the right of eminent domain is presented to the legislative
department of the government and that department decides that there exists a
necessity for the exercise of the right in a particular case, that then and in that
case, the courts will not go behind the action of the legislature and make inquiry
concerning the necessity. But, in the case of Wheeling, etc. R. R. Co. vs.
Toledo, Ry, etc., Co. (72 Ohio St., 368 [106 Am. St. rep., 622, 628]), which
was cited in support of the doctrine laid down in section 158 above quoted, the
court said:
But when the statute does not designate the property to be taken nor how may
be taken, then the necessity of taking particular property is a question for the
courts. Where the application to condemn or appropriate is made directly to
the court, the question (of necessity) should be raised and decided in limene.
The legislative department of the government was rarely undertakes to
designate the precise property which should be taken for public use. It has
generally, like in the present case, merely conferred general authority to take
land for public use when a necessity exists therefor. We believe that it can be
confidently asserted that, under such statute, the allegation of the necessity
for the appropriation is an issuable allegation which it is competent for the
courts to decide. (Lynch vs. Forbes, 161 Mass., 302 [42 Am. St. Rep., 402,
407].)
There is a wide distinction between a legislative declaration that a municipality
is given authority to exercise the right of eminent domain, and a decision by
the municipality that there exist a necessity for the exercise of that right in a
particular case. The first is a declaration simply that there exist reasons why
the right should be conferred upon municipal corporation, while the second is
the application of the right to a particular case. Certainly, the legislative
declaration relating to the advisability of granting the power cannot be
converted into a declaration that a necessity exists for its exercise in a
particular case, and especially so when, perhaps, the land in question was not
within the territorial authority was granted.
Whether it was wise, advisable, or necessary to confer upon a municipality the
power to exercise the right of eminent domain, is a question with which the
courts are not concerned. But when that right or authority is exercised for the
purpose of depriving citizens of their property, the courts are authorized, in this
jurisdiction, to make inquiry and to hear proof upon the necessity in the
particular case, and not the general authority.
Volume 15 of the Cyclopedia of Law and Procedure (Cyc.), page 629, is cited
as a further conclusive authority upon the question that the necessity for the
exercise of the right of eminent domain is a legislative and not a judicial
question. Cyclopedia, at the page stated, says:
In the absence of some constitutional or statutory provision to the contrary,
the necessity and expediency of exercising the right of eminent domain are
questions essentially political and not judicial in their character. The
determination of those questions (the necessity and the expediency) belongs
to the sovereign power; the legislative department is final and conclusive, and
the courts have no power to review it (the necessity and the expediency) . . . .
It (the legislature) may designate the particular property to be condemned, and
its determination in this respect cannot be reviewed by the courts.
The volume of Cyclopedia, above referred to, cites many cases in support of
the doctrine quoted. While time has not permitted an examination of all of said
citations, many of them have been examined, and it can be confidently
asserted that said cases which are cited in support of the assertion that, "the
necessity and expediency of exercising the right of eminent domain are
questions essentially political and not judicial," show clearly and invariably that
in each case the legislature itself usually, by a special law, designated
the particular case in which the right of eminent domain might be exercised by
the particular municipal corporation or entity within the state. (Eastern R.
Co. vs. Boston, etc., R. Co., 11 Mass., 125 [15 Am. Rep., 13]; Brooklyn Park
Com'rs vs. Armstrong, 45 N.Y., 234 [6 Am. Rep., 70]; Hairston vs. Danville,
etc. Ry. Co., 208 U. S. 598; Cincinnati vs. Louisville, etc. Ry. Co., 223 U. S.,
390; U.S. vs. Chandler-Dunbar Water Power Co., 229 U. S., 53;
U.S. vs. Gettysburg, etc. Co., 160 U. S., 668; Traction Co. vs. Mining Co., 196
U.S., 239; Sears vs. City of Akron, 246 U.S., 351 [erroneously cited as 242
U.S.].)
In the case of Traction Co. vs. Mining Co. (196 U.S., 239), the Supreme Court
of the United States said: "It is erroneous to suppose that the legislature is
beyond the control of the courts in exercising the power of eminent domain,
either as to the nature of the use or the necessity to the use of any particular
property. For if the use be not public or no necessity for the taking exists, the
legislature cannot authorize the taking of private property against the will of the
owner, notwithstanding compensation may be required."
In the case of School Board of Carolina vs. Saldaña (14 Porto Rico, 339, 356),
we find the Supreme Court of Porto Rico, speaking through Justice MacLeary,
quoting approvingly the following, upon the question which we are discussing:
"It is well settled that although the legislature must necessarily determine in
the first instance whether the use for which they (municipalities, etc.) attempt
to exercise the power is a public one or not, their (municipalities, etc.)
determination is not final, but is subject to correction by the courts, who may
undoubtedly declare the statute unconstitutional, if it shall clearly appear that
the use for which it is proposed to authorize the taking of private property is in
reality not public but private." Many cases are cited in support of that doctrine.
Later, in the same decision, we find the Supreme Court of Porto Rico says: "At
any rate, the rule is quite well settled that in the cases under consideration the
determination of the necessity of taking a particular piece or a certain amount
of land rests ultimately with the courts." (Spring Valley etc. Co. vs. San Mateo,
etc. Co., 64 Cal., 123.) .
In the case of Board of Water Com'rs., etc. vs. Johnson (86 Conn., 571 [41 L.
R. A., N. S., 1024]), the Supreme Court of Connecticut approvingly quoted the
following doctrine from Lewis on Eminent Domain (3d ed.), section 599: "In all
such cases the necessity of public utility of the proposed work or improvement
is a judicial question. In all such cases, where the authority is to take property
necessary for the purpose, the necessity of taking particular property for a
particular purpose is a judicial one, upon which the owner is entitled to be
heard." (Riley vs. Charleston, etc. Co., 71 S. C., 457, 489 [110 Am. St. Rep.,
579]; Henderson vs. Lexington 132 Ky., 390, 403.)
The taking of private property for any use which is not required by the
necessities or convenience of the inhabitants of the state, is an unreasonable
exercise of the right of eminent domain, and beyond the power of the
legislature to delegate. (Bennett vs. Marion, 106 Iowa, 628, 633;
Wilson vs. Pittsburg, etc. Co., 222 Pa. St., 541, 545; Greasy, etc. Co. vs. Ely,
etc. Co., 132 Ky., 692, 697.)
In the case of New Central Coal Co. vs. George's etc. Co. (37 Md., 537, 564),
the Supreme Court of the State of Maryland, discussing the question before
us, said: "To justify the exercise of this extreme power (eminent domain) where
the legislature has left it to depend upon the necessity that may be found to
exist, in order to accomplish the purpose of the incorporation, as in this case,
the party claiming the right to the exercise of the power should be required to
show at least a reasonable degree of necessity for its exercise. Any rule less
strict than this, with the large and almost indiscriminate delegation of the right
to corporations, would likely lead to oppression and the sacrifice of private right
to corporate power."
In the case of Dewey vs. Chicago, etc. Co. (184 Ill., 426, 433), the court said:
"Its right to condemn property is not a general power of condemnation, but is
limited to cases where a necessity for resort to private property is shown to
exist. Such necessity must appear upon the face of the petition to condemn. If
the necessary is denied the burden is upon the company (municipality) to
establish it." (Highland, etc. Co. vs. Strickley, 116 Fed., 852, 856;
Kiney vs. Citizens' Water & Light Co., 173 Ind., 252, 257 ; Bell vs. Mattoon
Waterworks, etc. Co., 245 Ill., 544 [137 Am. St. Rep. 338].)
It is true that naby decisions may be found asserting that what is a public use
is a legislative question, and many other decisions declaring with equal
emphasis that it is a judicial question. But, as long as there is a constitutional
or statutory provision denying the right to take land for any use other than a
public use, it occurs to us that the question whether any particular use is a
public one or not is ultimately, at least, a judicial question. The legislative may,
it is true, in effect declare certain uses to be public, and, under the operation
of the well-known rule that a statute will not be declared to be unconstitutional
except in a case free, or comparatively free, from doubt, the courts will certainly
sustain the action of the legislature unless it appears that the particular use is
clearly not of a public nature. The decisions must be understood with this
limitation; for, certainly, no court of last resort will be willing to declare that any
and every purpose which the legislative might happen to designate as a public
use shall be conclusively held to be so, irrespective of the purpose in question
and of its manifestly private character Blackstone in his Commentaries on the
English Law remarks that, so great is the regard of the law for private property
that it will not authorize the least violation of it, even for the public good, unless
there exists a very great necessity therefor.
In the case of Wilkinson vs. Leland (2 Pet. [U.S.], 657), the Supreme Court of
the United States said: "That government can scarcely be deemed free where
the rights of property are left solely defendant on the legislative body, without
restraint. The fundamental maxims of free government seem to require that
the rights of personal liberty and private property should be held sacred. At
least no court of justice in this country would be warranted in assuming that
the power to violate and disregard them — a power so repugnant to the
common principles of justice and civil liberty — lurked in any general grant of
legislature authority, or ought to be implied from any general expression of the
people. The people ought no to be presumed to part with rights so vital to their
security and well-being without very strong and direct expression of such
intention." (Lewis on Eminent Domain, sec. 603; Lecoul vs. Police Jury 20 La.
Ann., 308; Jefferson vs. Jazem, 7 La. Ann., 182.)
Blackstone, in his Commentaries on the English Law said that the right to own
and possess land — a place to live separate and apart from others — to retain
it as a home for the family in a way not to be molested by others — is one of
the most sacred rights that men are heirs to. That right has been written into
the organic law of every civilized nation. The Acts of Congress of July 1, 1902,
and of August 29, 1916, which provide that "no law shall be enacted in the
Philippine Islands which shall deprive any person of his property without due
process of law," are but a restatement of the time-honored protection of the
absolute right of the individual to his property. Neither did said Acts of
Congress add anything to the law already existing in the Philippine Islands.
The Spaniard fully recognized the principle and adequately protected the
inhabitants of the Philippine Islands against the encroachment upon the private
property of the individual. Article 349 of the Civil Code provides that: "No one
may be deprived of his property unless it be by competent authority, for some
purpose of proven public utility, and after payment of the proper compensation
Unless this requisite (proven public utility and payment) has been complied
with, it shall be the duty of the courts to protect the owner of such property in
its possession or to restore its possession to him , as the case may be."
The exercise of the right of eminent domain, whether directly by the State, or
by its authorized agents, is necessarily in derogation of private rights, and the
rule in that case is that the authority must be strictly construed. No species of
property is held by individuals with greater tenacity, and none is guarded by
the constitution and laws more sedulously, than the right to the freehold of
inhabitants. When the legislature interferes with that right, and, for greater
public purposes, appropriates the land of an individual without his consent, the
plain meaning of the law should not be enlarged by doubtly interpretation.
(Bensely vs. Mountainlake Water Co., 13 Cal., 306 and cases cited [73 Am.
Dec., 576].)
The statutory power of taking property from the owner without his consent is
one of the most delicate exercise of government authority. It is to be watched
with jealous scrutiny. Important as the power may be to the government, the
inviolable sanctity which all free constitutions attach to the right of property of
the citizens, constrains the strict observance of the substantial provisions of
the law which are prescribed as modes of the exercise of the power, and to
protect it from abuse. Not only must the authority of municipal corporations to
take property be expressly conferred and the use for which it is taken specified,
but the power, with all constitutional limitation and directions for its exercise,
must be strictly pursued. (Dillon on Municipal Corporations [5th Ed.], sec.
1040, and cases cited; Tenorio vs. Manila Railroad Co., 22 Phil., 411.)
It can scarcely be contended that a municipality would be permitted to take
property for some public use unless some public necessity existed therefor.
The right to take private property for public use originates in the necessity, and
the taking must be limited by such necessity. The appellant contends that
inasmuch as the legislature has given it general authority to take private
property for public use, that the legislature has, therefore, settled the question
of the necessity in every case and that the courts are closed to the owners of
the property upon that question. Can it be imagined, when the legislature
adopted section 2429 of Act No. 2711, that it thereby declared that it was
necessary to appropriate the property of Juan de la Cruz, whose property,
perhaps, was not within the city limits at the time the law was adopted? The
legislature, then, not having declared the necessity, can it be contemplated
that it intended that a municipality should be the sole judge of the necessity in
every case, and that the courts, in the face of the provision that "if upon trial
they shall find that a right exists," cannot in that trial inquire into and hear proof
upon the necessity for the appropriation in a particular case?
The Charter of the city of Manila authorizes the taking of private property
for public use. Suppose the owner of the property denies and successfully
proves that the taking of his property serves no public use: Would the courts
not be justified in inquiring into that question and in finally denying the petition
if no public purpose was proved? Can it be denied that the courts have a right
to inquire into that question? If the courts can ask questions and decide, upon
an issue properly presented, whether the use is public or not, is not that
tantamount to permitting the courts to inquire into the necessity of the
appropriation? If there is no public use, then there is no necessity, and if there
is no necessity, it is difficult to understand how a public use can necessarily
exist. If the courts can inquire into the question whether a public use exists or
not, then it seems that it must follow that they can examine into the question
of the necessity.
The very foundation of the right to exercise eminent domain is a genuine
necessity, and that necessity must be of a public character. The ascertainment
of the necessity must precede or accompany, and not follow, the taking of the
land. (Morrison vs. Indianapolis, etc. Ry. Co., 166 Ind., 511; Stearns vs. Barre,
73 Vt., 281; Wheeling, etc. R. R. Co. vs. Toledo, Ry. etc. Co., 72 Ohio St.,
368.)
The general power to exercise the right of eminent domain must not be
confused with the right to exercise it in a particular case. The power of the
legislature to confer, upon municipal corporations and other entities within the
State, general authority to exercise the right of eminent domain cannot be
questioned by the courts, but that general authority of municipalities or entities
must not be confused with the right to exercise it in particular instances. The
moment the municipal corporation or entity attempts to exercise the authority
conferred, it must comply with the conditions accompanying the authority. The
necessity for conferring the authority upon a municipal corporation to exercise
the right of eminent domain is admittedly within the power of the legislature.
But whether or not the municipal corporation or entity is exercising the right in
a particular case under the conditions imposed by the general authority, is a
question which the courts have the right to inquire into.
The conflict in the authorities upon the question whether the necessity for the
exercise of the right of eminent domain is purely legislative and not
judicial, arises generally in the wisdom and propriety of the legislature in
authorizing the exercise of the right of eminent domain instead of in the
question of the right to exercise it in a particular case. (Creston Waterworks
Co. vs. McGrath, 89 Iowa, 502.)
By the weight of authorities, the courts have the power of restricting the
exercise of eminent domain to the actual reasonable necessities of the case
and for the purposes designated by the law. (Fairchild vs. City of St. Paul. 48
Minn., 540.)
And, moreover, the record does not show conclusively that the plaintiff has
definitely decided that their exists a necessity for the appropriation of the
particular land described in the complaint. Exhibits 4, 5, 7, and E clearly
indicate that the municipal board believed at one time that other land might be
used for the proposed improvement, thereby avoiding the necessity of
distributing the quiet resting place of the dead.
Aside from insisting that there exists no necessity for the alleged
improvements, the defendants further contend that the street in question
should not be opened through the cemetery. One of the defendants alleges
that said cemetery is public property. If that allegations is true, then, of course,
the city of Manila cannot appropriate it for public use. The city of Manila can
only expropriate private property.
It is a well known fact that cemeteries may be public or private. The former is
a cemetery used by the general community, or neighborhood, or church, while
the latter is used only by a family, or a small portion of the community or
neighborhood. (11 C. J., 50.)
Where a cemetery is open to public, it is a public use and no part of the ground
can be taken for other public uses under a general authority. And this immunity
extends to the unimproved and unoccupied parts which are held in good faith
for future use. (Lewis on Eminent Domain, sec. 434, and cases cited.)
The cemetery in question seems to have been established under
governmental authority. The Spanish Governor-General, in an order creating
the same, used the following language:
The cemetery and general hospital for indigent Chinese having been founded
and maintained by the spontaneous and fraternal contribution of their
protector, merchants and industrials, benefactors of mankind, in consideration
of their services to the Government of the Islands its internal administration,
government and regime must necessarily be adjusted to the taste and
traditional practices of those born and educated in China in order that the
sentiments which animated the founders may be perpetually effectuated.
It is alleged, and not denied, that the cemetery in question may be used by the
general community of Chinese, which fact, in the general acceptation of the
definition of a public cemetery, would make the cemetery in question public
property. If that is true, then, of course, the petition of the plaintiff must be
denied, for the reason that the city of Manila has no authority or right under the
law to expropriate public property.
But, whether or not the cemetery is public or private property, its appropriation
for the uses of a public street, especially during the lifetime of those specially
interested in its maintenance as a cemetery, should be a question of great
concern, and its appropriation should not be made for such purposes until it is
fully established that the greatest necessity exists therefor.
While we do not contend that the dead must not give place to the living, and
while it is a matter of public knowledge that in the process of time sepulchres
may become the seat of cities and cemeteries traversed by streets and daily
trod by the feet of millions of men, yet, nevertheless such sacrifices and such
uses of the places of the dead should not be made unless and until it is fully
established that there exists an eminent necessity therefor. While cemeteries
and sepulchres and the places of the burial of the dead are still within
the memory and command of the active care of the living; while they are still
devoted to pious uses and sacred regard, it is difficult to believe that even the
legislature would adopt a law expressly providing that such places, under such
circumstances, should be violated.
In such an appropriation, what, we may ask, would be the measure of damages
at law, for the wounded sensibilities of the living, in having the graves of
kindred and loved ones blotted out and desecrated by a common highway or
street for public travel? The impossibility of measuring the damage and
inadequacy of a remedy at law is too apparent to admit of argument. To disturb
the mortal remains of those endeared to us in life sometimes becomes the sad
duty of the living; but, except in cases of necessity, or for laudable purposes,
the sanctity of the grave, the last resting place of our friends, should be
maintained, and the preventative aid of the courts should be invoked for that
object. (Railroad Company vs. Cemetery Co., 116 Tenn., 400; Evergreen
Cemetery Association vs. The City of New Haven, 43 Conn., 234;
Anderson vs. Acheson, 132 Iowa, 744; Beatty vs. Kurtz, 2 Peters, 566.)
In the present case, even granting that a necessity exists for the opening of
the street in question, the record contains no proof of the necessity of opening
the same through the cemetery. The record shows that adjoining and adjacent
lands have been offered to the city free of charge, which will answer every
purpose of the plaintiff.
For all of the foregoing, we are fully persuaded that the judgment of the lower
court should be and is hereby affirmed, with costs against the appellant. So
ordered.
MODAY VS. CA
The main issue presented in this case is whether a municipality may
expropriate private property by virtue of a municipal resolution which was
disapproved by the Sangguniang Panlalawigan. Petitioner seeks the reversal
of the Court of Appeals decision and resolution, promulgated on July 15, 1992
and October 22, 1992 respectively, 1 and a declaration that Municipal
Resolution No. 43-89 of the Bunawan Sangguniang Bayan is null and void.
On July 23, 1989, the Sangguniang Bayan of the Municipality of Bunawan in
Agusan del Sur passed Resolution No. 43-89, "Authorizing the Municipal
Mayor to Initiate the Petition for Expropriation of a One (1) Hectare Portion of
Lot No. 6138-Pls-4 Along the National Highway Owned by Percival Moday for
the Site of Bunawan Farmers Center and Other Government Sports
Facilities." 2
In due time, Resolution No. 43-89 was approved by then Municipal Mayor
Anuncio C. Bustillo and transmitted to the Sangguniang Panlalawigan for its
approval. On September 11, 1989, the Sangguniang Panlalawigan
disapproved said Resolution and returned it with the comment that
"expropriation is unnecessary considering that there are still available lots in
Bunawan for the establishment of the government center." 3
The Municipality of Bunawan, herein public respondent, subsequently filed a
petition for Eminent Domain against petitioner Percival Moday before the
Regional Trial Court at Prosperidad, Agusan del Sur. 4 The complaint was later
amended to include the registered owners, Percival Moday's parents, Zotico
and Leonora Moday, as party defendants.
On March 6, 1991, public respondent municipality filed a Motion to Take or
Enter Upon the Possession of Subject Matter of This Case stating that it had
already deposited with the municipal treasurer the necessary amount in
accordance with Section 2, Rule 67 of the Revised Rules of Court and that it
would be in the government's best interest for public respondent to be allowed
to take possession of the property.
Despite petitioners' opposition and after a hearing on the merits, the Regional
Trial Court granted respondent municipality's motion to take possession of the
land. The lower court held that the Sangguniang Panlalawigan's failure to
declare the resolution invalid leaves it effective. It added that the duty of the
Sangguniang Panlalawigan is merely to review the ordinances and resolutions
passed by the Sangguniang Bayan under Section 208 (1) of B.P. Blg. 337, old
Local Government Code and that the exercise of eminent domain is not one
of the two acts enumerated in Section 19 thereof requiring the approval of the
Sangguniang Panlalawigan. 5 The dispositive portion of the lower court's
Order dated July 2, 1991 reads:
WHEREFORE, it appearing that the amount of P632.39 had been deposited
as per Official Receipt No. 5379647 on December 12, 1989 which this Court
now determines as the provisional value of the land, the Motion to Take or
Enter Upon the Possession of the Property filed by petitioner through counsel
is hereby GRANTED. The Sheriff of this Court is ordered to forthwith place the
plaintiff in possession of the property involved.
Let the hearing be set on August 9, 1991 at 8:30 o'clock in the morning for the
purpose of ascertaining the just compensation or fair market value of the
property sought to be taken, with notice to all the parties concerned.
SO ORDERED. 6
Petitioners' motion for reconsideration was denied by the trial court on October
31, 1991.
Petitioners elevated the case in a petition for certiorari alleging grave abuse of
discretion on the part of the trial court, but the same was dismissed by
respondent appellate court on July 15, 1992. 7 The Court of Appeals held that
the public purpose for the expropriation is clear from Resolution No. 43-89 and
that since the Sangguniang Panlalawigan of Agusan del Sur did not declare
Resolution No. 43-89 invalid, expropriation of petitioners' property could
proceed.
Respondent appellate court also denied petitioners' motion for reconsideration
on October 22, 1992. 8
Meanwhile, the Municipality of Bunawan had erected three buildings on the
subject property: the Association of Barangay Councils (ABC) Hall, the
Municipal Motorpool, both wooden structures, and the Bunawan Municipal
Gymnasium, which is made of concrete.
In the instant petition for review filed on November 23, 1992, petitioner seeks
the reversal of the decision and resolution of the Court of Appeals and a
declaration that Resolution No. 43-89 of the Municipality of Bunawan is null
and void.
On December 8, 1993, the Court issued a temporary restraining order
enjoining and restraining public respondent Judge Evangeline Yuipco from
enforcing her July 2, 1991 Order and respondent municipality from using and
occupying all the buildings constructed and from further constructing any
building on the land subject of this petition. 9
Acting on petitioners' Omnibus Motion for Enforcement of Restraining Order
and for Contempt, the Court issued a Resolution on March 15, 1995, citing
incumbent municipal mayor Anuncio C. Bustillo for contempt, ordering him to
pay the fine and to demolish the "blocktiendas" which were built in violation of
the restraining order. 10
Former Mayor Anuncio C. Bustillo paid the fine and manifested that he lost in
the May 8, 1995 election. 11 The incumbent Mayor Leonardo Barrios, filed a
Manifestation, Motion to Resolve "Urgent Motion for Immediate Dissolution of
the Temporary Restraining Order" and Memorandum on June 11, 1996 for the
Municipality of Bunawan. 12
Petitioners contend that the Court of Appeals erred in upholding the legality of
the condemnation proceedings initiated by the municipality. According to
petitioners, the expropriation was politically motivated and Resolution No. 43-
89 was correctly disapproved by the Sangguniang Panlalawigan, there being
other municipal properties available for the purpose. Petitioners also pray that
the former Mayor Anuncio C. Bustillo be ordered to pay damages for insisting
on the enforcement of a void municipal resolution.
The Court of Appeals declared that the Sangguniang Panlalawigan's reason
for disapproving the resolution "could be baseless, because it failed to point
out which and where are those available lots.'" Respondent court also
concluded that since the Sangguniang Panlalawigan did not declare the
municipal board's resolution as invalid, expropriation of petitioners' property
could
proceed. 13
The Court finds no merit in the petition and affirms the decision of the Court of
Appeals.
Eminent domain, the power which the Municipality of Bunawan exercised in
the instant case, is a fundamental State power that is inseparable from
sovereignty. 14 It is government's right to appropriate, in the nature of a
compulsory sale to the State, private property for public use or
purpose. 15 Inherently possessed by the national legislature, the power of
eminent domain may be validly delegated to local governments, other public
entities and public utilities. 16 For the taking of private property by the
government to be valid, the taking must be for public use and there must be
just compensation. 17
The Municipality of Bunawan's power to exercise the right of eminent domain
is not disputed as it is expressly provided for in Batas Pambansa Blg. 337, the
local Government Code 18 in force at the time expropriation proceedings were
initiated. Section 9 of said law states:
Sec. 9. Eminent Domain. — A local government unit may, through its head and
acting pursuant to a resolution of its sanggunian, exercise the right of eminent
domain and institute condemnation proceedings for public use or purpose.
What petitioners question is the lack of authority of the municipality to exercise
this right since the Sangguniang Panlalawigan disapproved Resolution No. 43-
89.
Section 153 of B.P. Blg. 337 provides:
Sec. 153. Sangguniang Panlalawigan Review. — (1) Within thirty days after
receiving copies of approved ordinances, resolutions and executive orders
promulgated by the municipal mayor, the sangguniang panlalawigan shall
examine the documents or transmit them to the provincial attorney, or if there
be none, to the provincial fiscal, who shall examine them promptly and inform
the sangguniang panlalawigan in writing of any defect or impropriety which he
may discover therein and make such comments or recommendations as shall
appear to him proper.
(2) If the sangguniang panlalawigan shall find that any municipal ordinance,
resolution or executive order is beyond the power conferred upon the
sangguniang bayan or the mayor, it shall declare such ordinance, resolution
or executive order invalid in whole or in part, entering its actions upon the
minutes and advising the proper municipal authorities thereof. The effect of
such an action shall be to annul the ordinance, resolution or executive order in
question in whole or in part. The action of the sangguniang panlalawigan shall
be final.
xxx xxx xxx (Emphasis supplied.)
The Sangguniang Panlalawigan's disapproval of Municipal Resolution No. 43-
89 is an infirm action which does not render said resolution null and void. The
law, as expressed in Section 153 of B.P. Blg. 337, grants the Sangguniang
Panlalawigan the power to declare a municipal resolution invalid on the sole
ground that it is beyond the power of the Sangguniang Bayan or the Mayor to
issue. Although pertaining to a similar provision of law but different factual
milieu then obtaining, the Court's pronouncements in Velazco v. Blas, 19 where
we cited significant early jurisprudence, are applicable to the case at bar.
The only ground upon which a provincial board may declare any municipal
resolution, ordinance, or order invalid is when such resolution, ordinance, or
order is "beyond the powers conferred upon the council or president making
the same." Absolutely no other ground is recognized by the law. A strictly legal
question is before the provincial board in its consideration of a municipal
resolution, ordinance, or order. The provincial (board's) disapproval of any
resolution, ordinance, or order must be premised specifically upon the fact that
such resolution, ordinance, or order is outside the scope of the legal powers
conferred by law. If a provincial board passes these limits, it usurps the
legislative function of the municipal council or president. Such has been the
consistent course of executive authority. 20
Thus, the Sangguniang Panlalawigan was without the authority to disapprove
Municipal Resolution No. 43-89 for the Municipality of Bunawan clearly has the
power to exercise the right of eminent domain and its Sangguniang Bayan the
capacity to promulgate said resolution, pursuant to the earlier-quoted Section
9 of B.P. Blg. 337. Perforce, it follows that Resolution No. 43-89 is valid and
binding and could be used as lawful authority to petition for the condemnation
of petitioners' property.
As regards the accusation of political oppression, it is alleged that Percival
Moday incurred the ire of then Mayor Anuncio C. Bustillo when he refused to
support the latter's candidacy for mayor in previous elections. Petitioners claim
that then incumbent Mayor C. Bustillo used the expropriation to retaliate by
expropriating their land even if there were other properties belonging to the
municipality and available for the purpose. Specifically, they allege that the
municipality owns a vacant seven-hectare property adjacent to petitioners'
land, evidenced by a sketch plan. 21
The limitations on the power of eminent domain are that the use must be
public, compensation must be made and due process of law must be
observed. 22 The Supreme Court, taking cognizance of such issues as the
adequacy of compensation, necessity of the taking and the public use
character or the purpose of the taking, 23 has ruled that the necessity of
exercising eminent domain must be genuine and of a public
character. 24 Government may not capriciously choose what private property
should be taken.
After a careful study of the records of the case, however, we find no evidentiary
support for petitioners' allegations. The uncertified photocopy of the sketch
plan does not conclusively prove that the municipality does own vacant land
adjacent to petitioners' property suited to the purpose of the expropriation. In
the questioned decision, respondent appellate court similarly held that the
pleadings and documents on record have not pointed out any of respondent
municipality's "other available properties available for the same
purpose." 25 The accusations of political reprisal are likewise unsupported by
competent evidence. Consequently, the Court holds that petitioners' demand
that the former municipal mayor be personally liable for damages is without
basis.
WHEREFORE, the instant petition is hereby DENIED. The questioned
Decision and Resolution of the Court of Appeals in the case of "Percival
Moday." et al. v. Municipality of Bunawan, et al." (CA G.R. SP No. 26712) are
AFFIRMED. The Temporary Restraining Order issued by the Court on
December 8, 1993 is LIFTED.
SO ORDERED.
REPUBLIC VS. PLDT
Direct appeals, upon a joint record on appeal, by both the plaintiff and the
defendant from the dismissal, after hearing, by the Court of First Instance of
Manila, in its Civil Case No. 35805, of their respective complaint and
counterclaims, but making permanent a preliminary mandatory injunction
theretofore issued against the defendant on the interconnection of telephone
facilities owned and operated by said parties.
The plaintiff, Republic of the Philippines, is a political entity exercising
governmental powers through its branches and instrumentalities, one of which
is the Bureau of Telecommunications. That office was created on 1 July 1947,
under Executive Order No. 94, with the following powers and duties, in addition
to certain powers and duties formerly vested in the Director of
Posts: 1awphil.ñêt
SEC. 79. The Bureau of Telecommunications shall exercise the following
powers and duties:
(a) To operate and maintain existing wire-telegraph and radio-telegraph
offices, stations, and facilities, and those to be established to restore the pre-
war telecommunication service under the Bureau of Posts, as well as such
additional offices or stations as may hereafter be established to provide
telecommunication service in places requiring such service;
(b) To investigate, consolidate, negotiate for, operate and maintain wire-
telephone or radio telephone communication service throughout the
Philippines by utilizing such existing facilities in cities, towns, and provinces as
may be found feasible and under such terms and conditions or arrangements
with the present owners or operators thereof as may be agreed upon to the
satisfaction of all concerned;
(c) To prescribe, subject to approval by the Department Head, equitable rates
of charges for messages handled by the system and/or for time calls and other
services that may be rendered by said system;
(d) To establish and maintain coastal stations to serve ships at sea or aircrafts
and, when public interest so requires, to engage in the international
telecommunication service in agreement with other countries desiring to
establish such service with the Republic of the Philippines; and
(e) To abide by all existing rules and regulations prescribed by the International
Telecommunication Convention relative to the accounting, disposition and
exchange of messages handled in the international service, and those that
may hereafter be promulgated by said convention and adhered to by the
Government of the Republic of the Philippines. 1
The defendant, Philippine Long Distance Telephone Company (PLDT for
short), is a public service corporation holding a legislative franchise, Act 3426,
as amended by Commonwealth Act 407, to install, operate and maintain a
telephone system throughout the Philippines and to carry on the business of
electrical transmission of messages within the Philippines and between the
Philippines and the telephone systems of other countries. 2 The RCA
Communications, Inc., (which is not a party to the present case but has
contractual relations with the parties) is an American corporation authorized to
transact business in the Philippines and is the grantee, by assignment, of a
legislative franchise to operate a domestic station for the reception and
transmission of long distance wireless messages (Act 2178) and to operate
broadcasting and radio-telephone and radio-telegraphic communications
services (Act 3180). 3
Sometime in 1933, the defendant, PLDT, and the RCA Communications, Inc.,
entered into an agreement whereby telephone messages, coming from the
United States and received by RCA's domestic station, could automatically be
transferred to the lines of PLDT; and vice-versa, for calls collected by the PLDT
for transmission from the Philippines to the United States. The contracting
parties agreed to divide the tolls, as follows: 25% to PLDT and 75% to RCA.
The sharing was amended in 1941 to 30% for PLDT and 70% for RCA, and
again amended in 1947 to a 50-50 basis. The arrangement was later extended
to radio-telephone messages to and from European and Asiatic countries.
Their contract contained a stipulation that either party could terminate it on a
24-month notice to the other. 4 On 2 February 1956, PLDT gave notice to RCA
to terminate their contract on 2 February 1958. 5
Soon after its creation in 1947, the Bureau of Telecommunications set up its
own Government Telephone System by utilizing its own appropriation and
equipment and by renting trunk lines of the PLDT to enable government offices
to call private parties. 6 Its application for the use of these trunk lines was in the
usual form of applications for telephone service, containing a statement, above
the signature of the applicant, that the latter will abide by the rules and
regulations of the PLDT which are on file with the Public Service
Commission. 7 One of the many rules prohibits the public use of the service
furnished the telephone subscriber for his private use. 8 The Bureau has
extended its services to the general public since 1948, 9 using the same trunk
lines owned by, and rented from, the PLDT, and prescribing its (the Bureau's)
own schedule of rates. 10 Through these trunk lines, a Government Telephone
System (GTS) subscriber could make a call to a PLDT subscriber in the same
way that the latter could make a call to the former.
On 5 March 1958, the plaintiff, through the Director of Telecommunications,
entered into an agreement with RCA Communications, Inc., for a joint
overseas telephone service whereby the Bureau would convey radio-
telephone overseas calls received by RCA's station to and from local
residents. 11 Actually, they inaugurated this joint operation on 2 February 1958,
under a "provisional" agreement. 12
On 7 April 1958, the defendant Philippine Long Distance Telephone
Company, complained to the Bureau of Telecommunications that said bureau
was violating the conditions under which their Private Branch Exchange (PBX)
is inter-connected with the PLDT's facilities, referring to the rented trunk lines,
for the Bureau had used the trunk lines not only for the use of government
offices but even to serve private persons or the general public, in competition
with the business of the PLDT; and gave notice that if said violations were not
stopped by midnight of 12 April 1958, the PLDT would sever the telephone
connections. 13 When the PLDT received no reply, it disconnected the trunk
lines being rented by the Bureau at midnight on 12 April 1958. 14 The result
was the isolation of the Philippines, on telephone services, from the rest of the
world, except the United States. 15
At that time, the Bureau was maintaining 5,000 telephones and had 5,000
pending applications for telephone connection. 16 The PLDT was also
maintaining 60,000 telephones and had also 20,000 pending
applications. 17 Through the years, neither of them has been able to fill up the
demand for telephone service.
The Bureau of Telecommunications had proposed to the PLDT on 8 January
1958 that both enter into an interconnecting agreement, with the government
paying (on a call basis) for all calls passing through the interconnecting
facilities from the Government Telephone System to the PLDT. 18 The PLDT
replied that it was willing to enter into an agreement on overseas telephone
service to Europe and Asian countries provided that the Bureau would submit
to the jurisdiction and regulations of the Public Service Commission and in
consideration of 37 1/2% of the gross revenues. 19 In its memorandum in lieu
of oral argument in this Court dated 9 February 1964, on page 8, the defendant
reduced its offer to 33 1/3 % (1/3) as its share in the overseas telephone
service. The proposals were not accepted by either party.
On 12 April 1958, plaintiff Republic commenced suit against the defendant,
Philippine Long Distance Telephone Company, in the Court of First Instance
of Manila (Civil Case No. 35805), praying in its complaint for judgment
commanding the PLDT to execute a contract with plaintiff, through the Bureau,
for the use of the facilities of defendant's telephone system throughout the
Philippines under such terms and conditions as the court might consider
reasonable, and for a writ of preliminary injunction against the defendant
company to restrain the severance of the existing telephone connections
and/or restore those severed.
Acting on the application of the plaintiff, and on the ground that the severance
of telephone connections by the defendant company would isolate the
Philippines from other countries, the court a quo, on 14 April 1958, issued an
order for the defendant:
(1) to forthwith reconnect and restore the seventy-eight (78) trunk lines that it
has disconnected between the facilities of the Government Telephone System,
including its overseas telephone services, and the facilities of defendant; (2)
to refrain from carrying into effect its threat to sever the existing telephone
communication between the Bureau of Telecommunications and defendant,
and not to make connection over its telephone system of telephone calls
coming to the Philippines from foreign countries through the said Bureau's
telephone facilities and the radio facilities of RCA Communications, Inc.; and
(3) to accept and connect through its telephone system all such telephone calls
coming to the Philippines from foreign countries — until further order of this
Court.
On 28 April 1958, the defendant company filed its answer, with counterclaims.
It denied any obligation on its part to execute a contrary of services with the
Bureau of Telecommunications; contested the jurisdiction of the Court of First
Instance to compel it to enter into interconnecting agreements, and averred
that it was justified to disconnect the trunk lines heretofore leased to the
Bureau of Telecommunications under the existing agreement because its
facilities were being used in fraud of its rights. PLDT further claimed that the
Bureau was engaging in commercial telephone operations in excess of
authority, in competition with, and to the prejudice of, the PLDT, using
defendants own telephone poles, without proper accounting of revenues.
After trial, the lower court rendered judgment that it could not compel the
PLDT to enter into an agreement with the Bureau because the parties were
not in agreement; that under Executive Order 94, establishing the Bureau of
Telecommunications, said Bureau was not limited to servicing government
offices alone, nor was there any in the contract of lease of the trunk lines, since
the PLDT knew, or ought to have known, at the time that their use by the
Bureau was to be public throughout the Islands, hence the Bureau was neither
guilty of fraud, abuse, or misuse of the poles of the PLDT; and, in view of
serious public prejudice that would result from the disconnection of the trunk
lines, declared the preliminary injunction permanent, although it dismissed
both the complaint and the counterclaims.
Both parties appealed.
Taking up first the appeal of the Republic, the latter complains of the action
of the trial court in dismissing the part of its complaint seeking to compel the
defendant to enter into an interconnecting contract with it, because the parties
could not agree on the terms and conditions of the interconnection, and of its
refusal to fix the terms and conditions therefor.
We agree with the court below that parties can not be coerced to enter into a
contract where no agreement is had between them as to the principal terms
and conditions of the contract. Freedom to stipulate such terms and conditions
is of the essence of our contractual system, and by express provision of the
statute, a contract may be annulled if tainted by violence, intimidation, or undue
influence (Articles 1306, 1336, 1337, Civil Code of the Philippines). But the
court a quo has apparently overlooked that while the Republic may not compel
the PLDT to celebrate a contract with it, the Republic may, in the exercise of
the sovereign power of eminent domain, require the telephone company to
permit interconnection of the government telephone system and that of the
PLDT, as the needs of the government service may require, subject to the
payment of just compensation to be determined by the court. Nominally, of
course, the power of eminent domain results in the taking or appropriation of
title to, and possession of, the expropriated property; but no cogent reason
appears why the said power may not be availed of to impose only a burden
upon the owner of condemned property, without loss of title and possession. It
is unquestionable that real property may, through expropriation, be subjected
to an easement of right of way. The use of the PLDT's lines and services to
allow inter-service connection between both telephone systems is not much
different. In either case private property is subjected to a burden for public use
and benefit. If, under section 6, Article XIII, of the Constitution, the State may,
in the interest of national welfare, transfer utilities to public ownership upon
payment of just compensation, there is no reason why the State may not
require a public utility to render services in the general interest, provided just
compensation is paid therefor. Ultimately, the beneficiary of the
interconnecting service would be the users of both telephone systems, so that
the condemnation would be for public use.
The Bureau of Telecommunications, under section 78 (b) of Executive Order
No. 94, may operate and maintain wire telephone or radio telephone
communications throughout the Philippines by utilizing existing facilities in
cities, towns, and provinces under such terms and conditions or arrangement
with present owners or operators as may be agreed upon to the satisfaction of
all concerned; but there is nothing in this section that would exclude resort to
condemnation proceedings where unreasonable or unjust terms and
conditions are exacted, to the extent of crippling or seriously hampering the
operations of said Bureau.
A perusal of the complaint shows that the Republic's cause of action is
predicated upon the radio telephonic isolation of the Bureau's facilities from
the outside world if the severance of interconnection were to be carried out by
the PLDT, thereby preventing the Bureau of Telecommunications from
properly discharging its functions, to the prejudice of the general public. Save
for the prayer to compel the PLDT to enter into a contract (and the prayer is
no essential part of the pleading), the averments make out a case for
compulsory rendering of inter-connecting services by the telephone company
upon such terms and conditions as the court may determine to be just. And
since the lower court found that both parties "are practically at one that
defendant (PLDT) is entitled to reasonable compensation from plaintiff for the
reasonable use of the former's telephone facilities" (Decision, Record on
Appeal, page 224), the lower court should have proceeded to treat the case
as one of condemnation of such services independently of contract and
proceeded to determine the just and reasonable compensation for the same,
instead of dismissing the petition.
This view we have taken of the true nature of the Republic's petition
necessarily results in overruling the plea of defendant-appellant PLDT that the
court of first instance had no jurisdiction to entertain the petition and that the
proper forum for the action was the Public Service Commission. That body,
under the law, has no authority to pass upon actions for the taking of private
property under the sovereign right of eminent domain. Furthermore, while the
defendant telephone company is a public utility corporation whose franchise,
equipment and other properties are under the jurisdiction, supervision and
control of the Public Service Commission (Sec. 13, Public Service Act), yet the
plaintiff's telecommunications network is a public service owned by the
Republic and operated by an instrumentality of the National Government,
hence exempt, under Section 14 of the Public Service Act, from such
jurisdiction, supervision and control. The Bureau of Telecommunications was
created in pursuance of a state policy reorganizing the government offices —
to meet the exigencies attendant upon the establishment of the free and
independent Government of the Republic of the Philippines, and for the
purpose of promoting simplicity, economy and efficiency in its operation
(Section 1, Republic Act No. 51) —
and the determination of state policy is not vested in the Commission (Utilities
Com. vs. Bartonville Bus Line, 290 Ill. 574; 124 N.E. 373).
Defendant PLDT, as appellant, contends that the court below was in error in
not holding that the Bureau of Telecommunications was not empowered to
engage in commercial telephone business, and in ruling that said defendant
was not justified in disconnecting the telephone trunk lines it had previously
leased to the Bureau. We find that the court a quo ruled correctly in rejecting
both assertions.
Executive Order No. 94, Series of 1947, reorganizing the Bureau of
Telecommunications, expressly empowered the latter in its Section 79,
subsection (b), to "negotiate for, operate and maintain wire telephone or radio
telephone communication service throughout the Philippines", and, in
subsection (c), "to prescribe, subject to approval by the Department Head,
equitable rates of charges for messages handled by the system and/or for time
calls and other services that may be rendered by the system". Nothing in these
provisions limits the Bureau to non-commercial activities or prevents it from
serving the general public. It may be that in its original prospectuses the
Bureau officials had stated that the service would be limited to government
offices: but such limitations could not block future expansion of the system, as
authorized by the terms of the Executive Order, nor could the officials of the
Bureau bind the Government not to engage in services that are authorized by
law. It is a well-known rule that erroneous application and enforcement of the
law by public officers do not block subsequent correct application of the statute
(PLDT vs. Collector of Internal Revenue, 90 Phil. 676), and that the
Government is never estopped by mistake or error on the part of its agents
(Pineda vs. Court of First Instance of Tayabas, 52 Phil. 803, 807; Benguet
Consolidated Mining Co. vs. Pineda, 98 Phil. 711, 724).
The theses that the Bureau's commercial services constituted unfair
competition, and that the Bureau was guilty of fraud and abuse under its
contract, are, likewise, untenable.
First, the competition is merely hypothetical, the demand for telephone
service being very much more than the supposed competitors can supply. As
previously noted, the PLDT had 20,000 pending applications at the time, and
the Bureau had another 5,000. The telephone company's inability to meet the
demands for service are notorious even now. Second, the charter of the
defendant expressly provides:
SEC. 14. The rights herein granted shall not be exclusive, and the rights and
power to grant to any corporation, association or person other than the grantee
franchise for the telephone or electrical transmission of message or signals
shall not be impaired or affected by the granting of this franchise: — (Act 3436)
And third, as the trial court correctly stated, "when the Bureau of
Telecommunications subscribed to the trunk lines, defendant knew or should
have known that their use by the subscriber was more or less public and all
embracing in nature, that is, throughout the Philippines, if not abroad"
(Decision, Record on Appeal, page 216).
The acceptance by the defendant of the payment of rentals, despite its
knowledge that the plaintiff had extended the use of the trunk lines to
commercial purposes, continuously since 1948, implies assent by the
defendant to such extended use. Since this relationship has been maintained
for a long time and the public has patronized both telephone systems, and their
interconnection is to the public convenience, it is too late for the defendant to
claim misuse of its facilities, and it is not now at liberty to unilaterally sever the
physical connection of the trunk lines.
..., but there is high authority for the position that, when such physical
connection has been voluntarily made, under a fair and workable arrangement
and guaranteed by contract and the continuous line has come to be patronized
and established as a great public convenience, such connection shall not in
breach of the agreement be severed by one of the parties. In that case, the
public is held to have such an interest in the arrangement that its rights must
receive due consideration. This position finds approval in State ex rel. vs.
Cadwaller, 172 Ind. 619, 636, 87 N.E. 650, and is stated in the elaborate and
learned opinion of Chief Justice Myers as follows: "Such physical connection
cannot be required as of right, but if such connection is voluntarily made by
contract, as is here alleged to be the case, so that the public acquires an
interest in its continuance, the act of the parties in making such connection is
equivalent to a declaration of a purpose to waive the primary right of
independence, and it imposes upon the property such a public status that it
may not be disregarded" — citing Mahan v. Mich. Tel. Co., 132 Mich. 242, 93
N.W. 629, and the reasons upon which it is in part made to rest are referred to
in the same opinion, as follows: "Where private property is by the consent of
the owner invested with a public interest or privilege for the benefit of the
public, the owner can no longer deal with it as private property only, but must
hold it subject to the right of the public in the exercise of that public interest or
privilege conferred for their benefit." Allnut v. Inglis (1810) 12 East, 527. The
doctrine of this early case is the acknowledged law. (Clinton-Dunn Tel. Co. v.
Carolina Tel. & Tel. Co., 74 S.E. 636, 638).
It is clear that the main reason for the objection of the PLDT lies in the fact
that said appellant did not expect that the Bureau's telephone system would
expand with such rapidity as it has done; but this expansion is no ground for
the discontinuance of the service agreed upon.
The last issue urged by the PLDT as appellant is its right to compensation for
the use of its poles for bearing telephone wires of the Bureau of
Telecommunications. Admitting that section 19 of the PLDT charter reserves
to the Government —
the privilege without compensation of using the poles of the grantee to attach
one ten-pin cross-arm, and to install, maintain and operate wires of its
telegraph system thereon; Provided, however, That the Bureau of Posts shall
have the right to place additional cross-arms and wires on the poles of the
grantee by paying a compensation, the rate of which is to be agreed upon by
the Director of Posts and the grantee; —
the defendant counterclaimed for P8,772.00 for the use of its poles by the
plaintiff, contending that what was allowed free use, under the aforequoted
provision, was one ten-pin cross-arm attachment and only for plaintiff's
telegraph system, not for its telephone system; that said section could not refer
to the plaintiff's telephone system, because it did not have such telephone
system when defendant acquired its franchise. The implication of the argument
is that plaintiff has to pay for the use of defendant's poles if such use is for
plaintiff's telephone system and has to pay also if it attaches more than one
(1) ten-pin cross-arm for telegraphic purposes.
As there is no proof that the telephone wires strain the poles of the PLDT
more than the telegraph wires, nor that they cause more damage than the
wires of the telegraph system, or that the Government has attached to the
poles more than one ten-pin cross-arm as permitted by the PLDT charter, we
see no point in this assignment of error. So long as the burden to be borne by
the PLDT poles is not increased, we see no reason why the reservation in
favor of the telegraph wires of the government should not be extended to its
telephone lines, any time that the government decided to engage also in this
kind of communication.
In the ultimate analysis, the true objection of the PLDT to continue the link
between its network and that of the Government is that the latter competes
"parasitically" (sic) with its own telephone services. Considering, however, that
the PLDT franchise is non-exclusive; that it is well-known that defendant PLDT
is unable to adequately cope with the current demands for telephone service,
as shown by the number of pending applications therefor; and that the PLDT's
right to just compensation for the services rendered to the Government
telephone system and its users is herein recognized and preserved, the
objections of defendant-appellant are without merit. To uphold the PLDT's
contention is to subordinate the needs of the general public to the right of the
PLDT to derive profit from the future expansion of its services under its non-
exclusive franchise.
WHEREFORE, the decision of the Court of First Instance, now under appeal,
is affirmed, except in so far as it dismisses the petition of the Republic of the
Philippines to compel the Philippine Long Distance Telephone Company to
continue servicing the Government telephone system upon such terms, and
for a compensation, that the trial court may determine to be just, including the
period elapsed from the filing of the original complaint or petition. And for this
purpose, the records are ordered returned to the court of origin for further
hearings and other proceedings not inconsistent with this opinion. No costs.
BRGY. SAN ROQUE VS. HEIRS OF PASTOR
An expropriation suit is incapable of pecuniary estimation. Accordingly, it falls
within the jurisdiction of the regional trial courts, regardless of the value of the
subject property.
The Case
Before us is a Petition for Review on Certiorari assailing the March 29, 1999
Order1 of the Regional Trial Court (RTC) of Cebu City (Branch 58) in Civil Case
No. CEB-21978, in which it dismissed a Complaint for eminent domain. It ruled
as follows:
Premises considered, the motion to dismiss is hereby granted on the ground
that this Court has no jurisdiction over the case. Accordingly, the Orders dated
February 19, 1999 and February 26, 1999, as well as the Writ of Possession
issued by virtue of the latter Order are hereby recalled for being without force
and effect.2
Petitioner also challenges the May 14, 1999 Order of the RTC denying
reconsideration.
The Facts
Petitioner filed before the Municipal Trial Court (MTC) of Talisay, Cebu (Branch
1)3 a Complaint to expropriate a property of the respondents. In an Order dated
April 8, 1997, the MTC dismissed the Complaint on the ground of lack of
jurisdiction. It reasoned that "[e]minent domain is an exercise of the power to
take private property for public use after payment of just compensation. In an
action for eminent domain, therefore, the principal cause of action is the
exercise of such power or right. The fact that the action also involves real
property is merely incidental. An action for eminent domain is therefore within
the exclusive original jurisdiction of the Regional Trial Court and not with this
Court."4
Assailed RTC Ruling
The RTC also dismissed the Complaint when filed before it, holding that an
action for eminent domain affected title to real property; hence, the value of
the property to be expropriated would determine whether the case should be
filed before the MTC or the RTC. Concluding that the action should have been
filed before the MTC since the value of the subject property was less than
P20,000, the RTC ratiocinated in this wise:
The instant action is for eminent domain. It appears from the current Tax
Declaration of the land involved that its assessed value is only One Thousand
Seven Hundred Forty Pesos (P1,740.00). Pursuant to Section 3, paragraph
(3), of Republic Act No. 7691, all civil actions involving title to, or possession
of, real property with an assessed value of less than P20,000.00 are within the
exclusive original jurisdiction of the Municipal Trial Courts. In the case at bar,
it is within the exclusive original jurisdiction of the Municipal Trial Court of
Talisay, Cebu, where the property involved is located.
The instant action for eminent domain or condemnation of real property is a
real action affecting title to or possession of real property, hence, it is the
assessed value of the property involved which determines the jurisdiction of
the court. That the right of eminent domain or condemnation of real, property
is included in a real action affecting title to or possession of real property, is
pronounced by retired Justice Jose Y. Feria, thus, "Real actions are those
affecting title to or possession of real property. These include partition or
condemnation of, or foreclosures of mortgage on, real property. . . ."5
Aggrieved, petitioner appealed directly to this Court, raising a pure question of
law.6 In a Resolution dated July 28, 1999, the Court denied the Petition for
Review "for being posted out of time on July 2, 1999, the due date being June
2, 1999, as the motion for extension of time to file petition was denied in the
resolution of July 14, 1999."7 In a subsequent Resolution dated October 6,
1999, the Court reinstated the Petition.8
Issue
In its Memorandum, petitioner submits this sole issue for the consideration of
this Court:
Which court, MTC or RTC, has jurisdiction over cases for eminent domain or
expropriation where the assessed value of the subject property is below
Twenty Thousand (P20,000.00) Pesos?9
This Court's Ruling
The Petition is meritorious.
Main Issue:
Jurisdiction over an Expropriation Suit
In support of its appeal, petitioner cites Section 19 (1) of BP 129, which
provides that RTCs shall exercise exclusive original jurisdiction over "all civil
actions in which the subject of the litigation is incapable of pecuniary
estimation; . . . . ." It argues that the present action involves the exercise of the
right to eminent domain, and that such right is incapable of pecuniary
estimation.
Respondents, on the other hand, contend that the Complaint for Eminent
Domain affects the title to or possession of real property. Thus, they argue that
the case should have been brought before the MTC, pursuant to BP 129 as
amended by Section 3 (3) of RA 7691. This law provides that MTCs shall have
exclusive original jurisdiction over all civil actions that involve title to or
possession of real property, the assessed value of which does not exceed
twenty thousand pesos or, in civil actions in Metro Manila, fifty thousand pesos
exclusive of interest, damages of whatever kind, attorney's fees, litigation
expenses and costs.
We agree with the petitioner that an expropriation suit is incapable of pecuniary
estimation. The test to determine whether it is so was laid down by the Court
in this wise:
A review of the jurisprudence of this Court indicates that in determining
whether an action is one the subject matter of which is not capable of pecuniary
estimation, this Court has adopted the criterion of first ascertaining the nature
of the principal action or remedy sought. If it is primarily for the recovery of a
sum of money, the claim is considered capable of pecuniary estimation, and
whether jurisdiction is in the municipal courts or in the courts of first instance
would depend on the amount of the claim. However, where the basic issue is
something other than the right to recover a sum of money, or where the money
claim is purely incidental to, or a consequence of, the principal relief sought,
like in suits to have the defendant perform his part of the contract (specific
performance) and in actions for support, or for annulment of a judgment or to
foreclose a mortgage, this Court has considered such actions as cases where
the subject of the litigation may not be estimated in terms of money, and are
cognizable exclusively by courts of first instance. The rationale of the rule is
plainly that the second class cases, besides the determination of damages,
demand an inquiry into other factors which the law has deemed to be more
within the competence of courts of first instance, which were the lowest courts
of record at the time that the first organic laws of the Judiciary were enacted
allocating jurisdiction (Act 136 of the Philippine Commission of June 11,
1901). 10
In the present case, an expropriation suit does not involve the recovery of a
sum of money. Rather, it deals with the exercise by the government of its
authority and right to take private property for public use. 11 In National Power
Corporation v. Jocson, 12 the Court ruled that expropriation proceedings have
two phases:
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." An order of dismissal,
if this be ordained, would be a final one, of course, since it finally disposes of
the action and leaves nothing more to be done by the Court on the merits. So,
too, would an order of condemnation be a final one, for thereafter as the Rules
expressly state, in the proceedings before the Trial Court, "no objection to the
exercise of the right of condemnation (or the propriety thereof) shall be filed or
heard."
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. The order fixing the just compensation on the basis of the
evidence before, and findings of, the commissioners would be final, too. It
would finally dispose of the second stage of the suit, and leave nothing more
to be done by the Court regarding the issue. . . .
It should be stressed that the primary consideration in an expropriation suit is
whether the government or any of its instrumentalities has complied with the
requisites for the taking of private property. Hence, the courts determine the
authority of the government entity, the necessity of the expropriation, and the
observance of due process. 1 In the main, the subject of an expropriation suit
is the government's exercise of eminent domain, a matter that is incapable of
pecuniary estimation.
True, the value of the property to be expropriated is estimated in monetary
terms, for the court is duty-bound to determine the just compensation for
it.1avvphi1 This, however, is merely incidental to the expropriation suit.
Indeed, that amount is determined only after the court is satisfied with the
propriety of the expropriation.
Verily, the Court held in Republic of the Philippines v. Zurbano that
"condemnation proceedings are within the jurisdiction of Courts of First
Instance," 14 the forerunners of the regional trial courts. The said case was
decided during the effectivity of the Judiciary Act of 1948 which, like BP 129 in
respect to RTCs, provided that courts of first instance had original jurisdiction
over "all civil actions in which the subject of the litigation is not capable of
pecuniary estimation." 15 The 1997 amendments to the Rules of Court were
not intended to change these jurisprudential precedents.
We are not persuaded by respondents' argument that the present action
involves the title to or possession of a parcel of land. They cite the observation
of retired Justice Jose Y. Feria, an eminent authority in remedial law, that
condemnation or expropriation proceedings are examples of real actions that
affect the title to or possession of a parcel of land. 16
Their reliance is misplaced. Justice Feria sought merely to distinguish between
real and personal actions. His discussion on this point pertained to the nature
of actions, not to the jurisdiction of courts. In fact, in his pre-bar lectures, he
emphasizes that jurisdiction over eminent domain cases is still within the RTCs
under the 1997 Rules.
To emphasize, the question in the present suit is whether the government may
expropriate private property under the given set of circumstances. The
government does not dispute respondents' title to or possession of the same.
Indeed, it is not a question of who has a better title or right, for the government
does not even claim that it has a title to the property. It merely asserts its
inherent sovereign power to "appropriate and control individual property for the
public benefit, as the public necessity, convenience or welfare may
demand." 17
WHEREFORE, the Petition is hereby GRANTED and the assailed Orders SET
ASIDE. The Regional Trial Court is directed to HEAR the case. No costs.
SO ORDERED.
OFFICE OF SOLICITOR GENERAL VS. AYALA LAND
Before this Court is a Petition for Review on Certiorari,1 under Rule 45 of the
Revised Rules of Court, filed by petitioner Office of the Solicitor General
(OSG), seeking the reversal and setting aside of the Decision2 dated 25
January 2007 of the Court of Appeals in CA-G.R. CV No. 76298, which
affirmed in toto the Joint Decision3 dated 29 May 2002 of the Regional Trial
Court (RTC) of Makati City, Branch 138, in Civil Cases No. 00-1208 and No.
00-1210; and (2) the Resolution4 dated 14 March 2007 of the appellate court
in the same case which denied the Motion for Reconsideration of the OSG.
The RTC adjudged that respondents Ayala Land Incorporated (Ayala Land),
Robinsons Land Corporation (Robinsons), Shangri-la Plaza Corporation
(Shangri-la), and SM Prime Holdings, Inc. (SM Prime) could not be obliged to
provide free parking spaces in their malls to their patrons and the general
public.
Respondents Ayala Land, Robinsons, and Shangri-la maintain and operate
shopping malls in various locations in Metro Manila. Respondent SM Prime
constructs, operates, and leases out commercial buildings and other
structures, among which, are SM City, Manila; SM Centerpoint, Sta. Mesa,
Manila; SM City, North Avenue, Quezon City; and SM Southmall, Las Piñas.
The shopping malls operated or leased out by respondents have parking
facilities for all kinds of motor vehicles, either by way of parking spaces inside
the mall buildings or in separate buildings and/or adjacent lots that are solely
devoted for use as parking spaces. Respondents Ayala Land, Robinsons, and
SM Prime spent for the construction of their own parking facilities. Respondent
Shangri-la is renting its parking facilities, consisting of land and building
specifically used as parking spaces, which were constructed for the lessor’s
account.
Respondents expend for the maintenance and administration of their
respective parking facilities. They provide security personnel to protect the
vehicles parked in their parking facilities and maintain order within the area. In
turn, they collect the following parking fees from the persons making use of
their parking facilities, regardless of whether said persons are mall patrons or
not:
Respondent Parking Fees
Ayala Land On weekdays, ₱25.00 for the first four hours and ₱
for every succeeding hour; on weekends, flat r
₱25.00 per day
Robinsons ₱20.00 for the first three hours and ₱10.00 for
succeeding hour
Shangri-la Flat rate of ₱30.00 per day
SM Prime ₱10.00 to ₱20.00 (depending on whether the p
space is outdoors or indoors) for the first three hou
59 minutes, and ₱10.00 for every succeeding h
fraction thereof
The parking tickets or cards issued by respondents to vehicle owners contain
the stipulation that respondents shall not be responsible for any loss or
damage to the vehicles parked in respondents’ parking facilities.
In 1999, the Senate Committees on Trade and Commerce and on Justice and
Human Rights conducted a joint investigation for the following purposes: (1) to
inquire into the legality of the prevalent practice of shopping malls of charging
parking fees; (2) assuming arguendo that the collection of parking fees was
legally authorized, to find out the basis and reasonableness of the parking
rates charged by shopping malls; and (3) to determine the legality of the policy
of shopping malls of denying liability in cases of theft, robbery, or carnapping,
by invoking the waiver clause at the back of the parking tickets. Said Senate
Committees invited the top executives of respondents, who operate the major
malls in the country; the officials from the Department of Trade and Industry
(DTI), Department of Public Works and Highways (DPWH), Metro Manila
Development Authority (MMDA), and other local government officials; and the
Philippine Motorists Association (PMA) as representative of the consumers’
group.
After three public hearings held on 30 September, 3 November, and 1
December 1999, the afore-mentioned Senate Committees jointly issued
Senate Committee Report No. 2255 on 2 May 2000, in which they concluded:
In view of the foregoing, the Committees find that the collection of parking fees
by shopping malls is contrary to the National Building Code and is therefor [sic]
illegal. While it is true that the Code merely requires malls to provide parking
spaces, without specifying whether it is free or not, both Committees believe
that the reasonable and logical interpretation of the Code is that the parking
spaces are for free. This interpretation is not only reasonable and logical but
finds support in the actual practice in other countries like the United States of
America where parking spaces owned and operated by mall owners are free
of charge.
Figuratively speaking, the Code has "expropriated" the land for parking –
something similar to the subdivision law which require developers to devote so
much of the land area for parks.
Moreover, Article II of R.A. No. 9734 (Consumer Act of the Philippines)
provides that "it is the policy of the State to protect the interest of the
consumers, promote the general welfare and establish standards of conduct
for business and industry." Obviously, a contrary interpretation (i.e., justifying
the collection of parking fees) would be going against the declared policy of
R.A. 7394.
Section 201 of the National Building Code gives the responsibility for the
administration and enforcement of the provisions of the Code, including the
imposition of penalties for administrative violations thereof to the Secretary of
Public Works. This set up, however, is not being carried out in reality.
In the position paper submitted by the Metropolitan Manila Development
Authority (MMDA), its chairman, Jejomar C. Binay, accurately pointed out that
the Secretary of the DPWH is responsible for the implementation/enforcement
of the National Building Code. After the enactment of the Local Government
Code of 1991, the local government units (LGU’s) were tasked to discharge
the regulatory powers of the DPWH. Hence, in the local level, the Building
Officials enforce all rules/ regulations formulated by the DPWH relative to all
building plans, specifications and designs including parking space
requirements. There is, however, no single national department or agency
directly tasked to supervise the enforcement of the provisions of the Code on
parking, notwithstanding the national character of the law.6
Senate Committee Report No. 225, thus, contained the following
recommendations:
In light of the foregoing, the Committees on Trade and Commerce and Justice
and Human Rights hereby recommend the following:
1. The Office of the Solicitor General should institute the necessary action to
enjoin the collection of parking fees as well as to enforce the penal sanction
provisions of the National Building Code. The Office of the Solicitor General
should likewise study how refund can be exacted from mall owners who
continue to collect parking fees.
2. The Department of Trade and Industry pursuant to the provisions of R.A.
No. 7394, otherwise known as the Consumer Act of the Philippines should
enforce the provisions of the Code relative to parking. Towards this end, the
DTI should formulate the necessary implementing rules and regulations on
parking in shopping malls, with prior consultations with the local government
units where these are located. Furthermore, the DTI, in coordination with the
DPWH, should be empowered to regulate and supervise the construction and
maintenance of parking establishments.
3. Finally, Congress should amend and update the National Building Code to
expressly prohibit shopping malls from collecting parking fees by at the same
time, prohibit them from invoking the waiver of liability.7
Respondent SM Prime thereafter received information that, pursuant to Senate
Committee Report No. 225, the DPWH Secretary and the local building
officials of Manila, Quezon City, and Las Piñas intended to institute, through
the OSG, an action to enjoin respondent SM Prime and similar establishments
from collecting parking fees, and to impose upon said establishments penal
sanctions under Presidential Decree No. 1096, otherwise known as the
National Building Code of the Philippines (National Building Code), and its
Implementing Rules and Regulations (IRR). With the threatened action against
it, respondent SM Prime filed, on 3 October 2000, a Petition for Declaratory
Relief8 under Rule 63 of the Revised Rules of Court, against the DPWH
Secretary and local building officials of Manila, Quezon City, and Las Piñas.
Said Petition was docketed as Civil Case No. 00-1208 and assigned to the
RTC of Makati City, Branch 138, presided over by Judge Sixto Marella, Jr.
(Judge Marella). In its Petition, respondent SM Prime prayed for judgment:
a) Declaring Rule XIX of the Implementing Rules and Regulations of the
National Building Code as ultra vires, hence, unconstitutional and void;
b) Declaring [herein respondent SM Prime]’s clear legal right to lease parking
spaces appurtenant to its department stores, malls, shopping centers and
other commercial establishments; and
c) Declaring the National Building Code of the Philippines Implementing Rules
and Regulations as ineffective, not having been published once a week for
three (3) consecutive weeks in a newspaper of general circulation, as
prescribed by Section 211 of Presidential Decree No. 1096.
[Respondent SM Prime] further prays for such other reliefs as may be deemed
just and equitable under the premises.9
The very next day, 4 October 2000, the OSG filed a Petition for Declaratory
Relief and Injunction (with Prayer for Temporary Restraining Order and Writ of
Preliminary Injunction)10 against respondents. This Petition was docketed as
Civil Case No. 00-1210 and raffled to the RTC of Makati, Branch 135, presided
over by Judge Francisco B. Ibay (Judge Ibay). Petitioner prayed that the RTC:
1. After summary hearing, a temporary restraining order and a writ of
preliminary injunction be issued restraining respondents from collecting
parking fees from their customers; and
2. After hearing, judgment be rendered declaring that the practice of
respondents in charging parking fees is violative of the National Building Code
and its Implementing Rules and Regulations and is therefore invalid, and
making permanent any injunctive writ issued in this case.
Other reliefs just and equitable under the premises are likewise prayed for. 11
On 23 October 2000, Judge Ibay of the RTC of Makati City, Branch 135, issued
an Order consolidating Civil Case No. 00-1210 with Civil Case No. 00-1208
pending before Judge Marella of RTC of Makati, Branch 138.
As a result of the pre-trial conference held on the morning of 8 August 2001,
the RTC issued a Pre-Trial Order12 of even date which limited the issues to be
resolved in Civil Cases No. 00-1208 and No. 00-1210 to the following:
1. Capacity of the plaintiff [OSG] in Civil Case No. 00-1210 to institute the
present proceedings and relative thereto whether the controversy in the
collection of parking fees by mall owners is a matter of public welfare.
2. Whether declaratory relief is proper.
3. Whether respondent Ayala Land, Robinsons, Shangri-La and SM Prime are
obligated to provide parking spaces in their malls for the use of their patrons
or the public in general, free of charge.
4. Entitlement of the parties of [sic] award of damages.13
On 29 May 2002, the RTC rendered its Joint Decision in Civil Cases No. 00-
1208 and No. 00-1210.
The RTC resolved the first two issues affirmatively. It ruled that the OSG can
initiate Civil Case No. 00-1210 under Presidential Decree No. 478 and the
Administrative Code of 1987.14 It also found that all the requisites for an action
for declaratory relief were present, to wit:
The requisites for an action for declaratory relief are: (a) there is a justiciable
controversy; (b) the controversy is between persons whose interests are
adverse; (c) the party seeking the relief has a legal interest in the controversy;
and (d) the issue involved is ripe for judicial determination.
SM, the petitioner in Civil Case No. 001-1208 [sic] is a mall operator who
stands to be affected directly by the position taken by the government officials
sued namely the Secretary of Public Highways and the Building Officials of the
local government units where it operates shopping malls. The OSG on the
other hand acts on a matter of public interest and has taken a position adverse
to that of the mall owners whom it sued. The construction of new and bigger
malls has been announced, a matter which the Court can take judicial notice
and the unsettled issue of whether mall operators should provide parking
facilities, free of charge needs to be resolved.15
As to the third and most contentious issue, the RTC pronounced that:
The Building Code, which is the enabling law and the Implementing Rules and
Regulations do not impose that parking spaces shall be provided by the mall
owners free of charge. Absent such directive[,] Ayala Land, Robinsons,
Shangri-la and SM [Prime] are under no obligation to provide them for free.
Article 1158 of the Civil Code is clear:
"Obligations derived from law are not presumed. Only those expressly
determined in this Code or in special laws are demandable and shall be
regulated by the precepts of the law which establishes them; and as to what
has not been foreseen, by the provisions of this Book (1090).["]
xxxx
The provision on ratios of parking slots to several variables, like shopping floor
area or customer area found in Rule XIX of the Implementing Rules and
Regulations cannot be construed as a directive to provide free parking spaces,
because the enabling law, the Building Code does not so provide. x x x.
To compel Ayala Land, Robinsons, Shangri-La and SM [Prime] to provide
parking spaces for free can be considered as an unlawful taking of property
right without just compensation.
Parking spaces in shopping malls are privately owned and for their use, the
mall operators collect fees. The legal relationship could be either lease or
deposit. In either case[,] the mall owners have the right to collect money which
translates into income. Should parking spaces be made free, this right of mall
owners shall be gone. This, without just compensation. Further, loss of
effective control over their property will ensue which is frowned upon by law.
The presence of parking spaces can be viewed in another light. They can be
looked at as necessary facilities to entice the public to increase patronage of
their malls because without parking spaces, going to their malls will be
inconvenient. These are[,] however[,] business considerations which mall
operators will have to decide for themselves. They are not sufficient to justify
a legal conclusion, as the OSG would like the Court to adopt that it is the
obligation of the mall owners to provide parking spaces for free.16
The RTC then held that there was no sufficient evidence to justify any award
for damages.
The RTC finally decreed in its 29 May 2002 Joint Decision in Civil Cases No.
00-1208 and No. 00-1210 that:
FOR THE REASONS GIVEN, the Court declares that Ayala Land[,] Inc.,
Robinsons Land Corporation, Shangri-la Plaza Corporation and SM Prime
Holdings[,] Inc. are not obligated to provide parking spaces in their malls for
the use of their patrons or public in general, free of charge.
All counterclaims in Civil Case No. 00-1210 are dismissed.
No pronouncement as to costs.17
CA-G.R. CV No. 76298 involved the separate appeals of the OSG 18 and
respondent SM Prime19 filed with the Court of Appeals. The sole assignment
of error of the OSG in its Appellant’s Brief was:
THE TRIAL COURT ERRED IN HOLDING THAT THE NATIONAL BUILDING
CODE DID NOT INTEND MALL PARKING SPACES TO BE FREE OF
CHARGE[;]20
while the four errors assigned by respondent SM Prime in its Appellant’s Brief
were:
I where the question in dispute is purely a legal one, and nothing of an
THE TRIAL COURT ERRED IN FAILING TO DECLARE RULE XIX OF THE
IMPLEMENTING RULES AS HAVING BEEN ENACTED ULTRA VIRES,
HENCE, UNCONSTITUTIONAL AND VOID.
II
THE TRIAL COURT ERRED IN FAILING TO DECLARE THE
IMPLEMENTING RULES INEFFECTIVE FOR NOT HAVING BEEN
PUBLISHED AS REQUIRED BY LAW.
III
THE TRIAL COURT ERRED IN FAILING TO DISMISS THE OSG’S PETITION
FOR DECLARATORY RELIEF AND INJUNCTION FOR FAILURE TO
EXHAUST ADMINISTRATIVE REMEDIES.
IV
THE TRIAL COURT ERRED IN FAILING TO DECLARE THAT THE OSG HAS
NO LEGAL CAPACITY TO SUE AND/OR THAT IT IS NOT A REAL PARTY-
IN-INTEREST IN THE INSTANT CASE.21
Respondent Robinsons filed a Motion to Dismiss Appeal of the OSG on the
ground that the lone issue raised therein involved a pure question of law, not
reviewable by the Court of Appeals.
The Court of Appeals promulgated its Decision in CA-G.R. CV No. 76298 on
25 January 2007. The appellate court agreed with respondent Robinsons that
the appeal of the OSG should suffer the fate of dismissal, since "the issue on
whether or not the National Building Code and its implementing rules require
shopping mall operators to provide parking facilities to the public for free" was
evidently a question of law. Even so, since CA-G.R. CV No. 76298 also
included the appeal of respondent SM Prime, which raised issues worthy of
consideration, and in order to satisfy the demands of substantial justice, the
Court of Appeals proceeded to rule on the merits of the case.
In its Decision, the Court of Appeals affirmed the capacity of the OSG to initiate
Civil Case No. 00-1210 before the RTC as the legal representative of the
government,22 and as the one deputized by the Senate of the Republic of the
Philippines through Senate Committee Report No. 225.
The Court of Appeals rejected the contention of respondent SM Prime that the
OSG failed to exhaust administrative remedies. The appellate court explained
that an administrative review is not a condition precedent to judicial relief
administrative nature is to be or can be done.
The Court of Appeals likewise refused to rule on the validity of the IRR of the
National Building Code, as such issue was not among those the parties had
agreed to be resolved by the RTC during the pre-trial conference for Civil
Cases No. 00-1208 and No. 00-1210. Issues cannot be raised for the first time
on appeal. Furthermore, the appellate court found that the controversy could
be settled on other grounds, without touching on the issue of the validity of the
IRR. It referred to the settled rule that courts should refrain from passing upon
the constitutionality of a law or implementing rules, because of the principle
that bars judicial inquiry into a constitutional question, unless the resolution
thereof is indispensable to the determination of the case.
Lastly, the Court of Appeals declared that Section 803 of the National Building
Code and Rule XIX of the IRR were clear and needed no further construction.
Said provisions were only intended to control the occupancy or congestion of
areas and structures. In the absence of any express and clear provision of law,
respondents could not be obliged and expected to provide parking slots free
of charge.
The fallo of the 25 January 2007 Decision of the Court of Appeals reads:
WHEREFORE, premises considered, the instant appeals are DENIED.
Accordingly, appealed Decision is hereby AFFIRMED in toto.23
In its Resolution issued on 14 March 2007, the Court of Appeals denied the
Motion for Reconsideration of the OSG, finding that the grounds relied upon
by the latter had already been carefully considered, evaluated, and passed
upon by the appellate court, and there was no strong and cogent reason to
modify much less reverse the assailed judgment.
The OSG now comes before this Court, via the instant Petition for Review, with
a single assignment of error:
THE COURT OF APPEALS SERIOUSLY ERRED IN AFFIRMING THE
RULING OF THE LOWER COURT THAT RESPONDENTS ARE NOT
OBLIGED TO PROVIDE FREE PARKING SPACES TO THEIR CUSTOMERS
OR THE PUBLIC.24
The OSG argues that respondents are mandated to provide free parking by
Section 803 of the National Building Code and Rule XIX of the IRR.
According to Section 803 of the National Building Code:
SECTION 803. Percentage of Site Occupancy
(a) Maximum site occupancy shall be governed by the use, type of
construction, and height of the building and the use, area, nature, and location
of the site; and subject to the provisions of the local zoning requirements and
in accordance with the rules and regulations promulgated by the Secretary.
In connection therewith, Rule XIX of the old IRR,25 provides:
RULE XIX – PARKING AND LOADING SPACE REQUIREMENTS
Pursuant to Section 803 of the National Building Code (PD 1096) providing for
maximum site occupancy, the following provisions on parking and loading
space requirements shall be observed:
1. The parking space ratings listed below are minimum off-street requirements
for specific uses/occupancies for buildings/structures:
1.1 The size of an average automobile parking slot shall be computed as 2.4
meters by 5.00 meters for perpendicular or diagonal parking, 2.00 meters by
6.00 meters for parallel parking. A truck or bus parking/loading slot shall be
computed at a minimum of 3.60 meters by 12.00 meters. The parking slot shall
be drawn to scale and the total number of which shall be indicated on the plans
and specified whether or not parking accommodations, are attendant-
managed. (See Section 2 for computation of parking requirements).
xxxx
1.7 Neighborhood shopping center – 1 slot/100 sq. m. of shopping floor area
The OSG avers that the aforequoted provisions should be read together with
Section 102 of the National Building Code, which declares:
SECTION 102. Declaration of Policy
It is hereby declared to be the policy of the State to safeguard life, health,
property, and public welfare, consistent with the principles of sound
environmental management and control; and to this end, make it the purpose
of this Code to provide for all buildings and structures, a framework of minimum
standards and requirements to regulate and control their location, site, design,
quality of materials, construction, use, occupancy, and maintenance.
The requirement of free-of-charge parking, the OSG argues, greatly
contributes to the aim of safeguarding "life, health, property, and public
welfare, consistent with the principles of sound environmental management
and control." Adequate parking spaces would contribute greatly to alleviating
traffic congestion when complemented by quick and easy access thereto
because of free-charge parking. Moreover, the power to regulate and control
the use, occupancy, and maintenance of buildings and structures carries with
it the power to impose fees and, conversely, to control -- partially or, as in this
case, absolutely -- the imposition of such fees.
The Court finds no merit in the present Petition.
The explicit directive of the afore-quoted statutory and regulatory provisions,
garnered from a plain reading thereof, is that respondents, as
operators/lessors of neighborhood shopping centers, should provide parking
and loading spaces, in accordance with the minimum ratio of one slot per 100
square meters of shopping floor area. There is nothing therein pertaining to
the collection (or non-collection) of parking fees by respondents. In fact, the
term "parking fees" cannot even be found at all in the entire National Building
Code and its IRR.
Statutory construction has it that if a statute is clear and unequivocal, it must
be given its literal meaning and applied without any attempt at
interpretation.26 Since Section 803 of the National Building Code and Rule XIX
of its IRR do not mention parking fees, then simply, said provisions do not
regulate the collection of the same. The RTC and the Court of Appeals
correctly applied Article 1158 of the New Civil Code, which states:
Art. 1158. Obligations derived from law are not presumed. Only those
expressly determined in this Code or in special laws are demandable, and shall
be regulated by the precepts of the law which establishes them; and as to what
has not been foreseen, by the provisions of this Book. (Emphasis ours.)
Hence, in order to bring the matter of parking fees within the ambit of the
National Building Code and its IRR, the OSG had to resort to specious and
feeble argumentation, in which the Court cannot concur.
The OSG cannot rely on Section 102 of the National Building Code to expand
the coverage of Section 803 of the same Code and Rule XIX of the IRR, so as
to include the regulation of parking fees. The OSG limits its citation to the first
part of Section 102 of the National Building Code declaring the policy of the
State "to safeguard life, health, property, and public welfare, consistent with
the principles of sound environmental management and control"; but totally
ignores the second part of said provision, which reads, "and to this end, make
it the purpose of this Code to provide for all buildings and structures, a
framework of minimum standards and requirements to regulate and control
their location, site, design, quality of materials, construction, use, occupancy,
and maintenance." While the first part of Section 102 of the National Building
Code lays down the State policy, it is the second part thereof that explains how
said policy shall be carried out in the Code. Section 102 of the National Building
Code is not an all-encompassing grant of regulatory power to the DPWH
Secretary and local building officials in the name of life, health, property, and
public welfare. On the contrary, it limits the regulatory power of said officials to
ensuring that the minimum standards and requirements for all buildings and
structures, as set forth in the National Building Code, are complied with.
Consequently, the OSG cannot claim that in addition to fixing the minimum
requirements for parking spaces for buildings, Rule XIX of the IRR also
mandates that such parking spaces be provided by building owners free of
charge. If Rule XIX is not covered by the enabling law, then it cannot be added
to or included in the implementing rules. The rule-making power of
administrative agencies must be confined to details for regulating the mode or
proceedings to carry into effect the law as it has been enacted, and it cannot
be extended to amend or expand the statutory requirements or to embrace
matters not covered by the statute. Administrative regulations must always be
in harmony with the provisions of the law because any resulting discrepancy
between the two will always be resolved in favor of the basic law. 27
From the RTC all the way to this Court, the OSG repeatedly referred to
Republic v. Gonzales28 and City of Ozamis v. Lumapas29 to support its position
that the State has the power to regulate parking spaces to promote the health,
safety, and welfare of the public; and it is by virtue of said power that
respondents may be required to provide free parking facilities. The OSG,
though, failed to consider the substantial differences in the factual and legal
backgrounds of these two cases from those of the Petition at bar.
In Republic, the Municipality of Malabon sought to eject the occupants of two
parcels of land of the public domain to give way to a road-widening project. It
was in this context that the Court pronounced:
Indiscriminate parking along F. Sevilla Boulevard and other main
thoroughfares was prevalent; this, of course, caused the build up of traffic in
the surrounding area to the great discomfort and inconvenience of the public
who use the streets. Traffic congestion constitutes a threat to the health,
welfare, safety and convenience of the people and it can only be substantially
relieved by widening streets and providing adequate parking areas.
The Court, in City of Ozamis, declared that the City had been clothed with full
power to control and regulate its streets for the purpose of promoting public
health, safety and welfare. The City can regulate the time, place, and manner
of parking in the streets and public places; and charge minimal fees for the
street parking to cover the expenses for supervision, inspection and control, to
ensure the smooth flow of traffic in the environs of the public market, and for
the safety and convenience of the public.
Republic and City of Ozamis involved parking in the local streets; in contrast,
the present case deals with privately owned parking facilities available for use
by the general public. In Republic and City of Ozamis, the concerned local
governments regulated parking pursuant to their power to control and regulate
their streets; in the instant case, the DPWH Secretary and local building
officials regulate parking pursuant to their authority to ensure compliance with
the minimum standards and requirements under the National Building Code
and its IRR. With the difference in subject matters and the bases for the
regulatory powers being invoked, Republic and City of Ozamis do not
constitute precedents for this case.
Indeed, Republic and City of Ozamis both contain pronouncements that
weaken the position of the OSG in the case at bar. In Republic, the Court,
instead of placing the burden on private persons to provide parking facilities to
the general public, mentioned the trend in other jurisdictions wherein the
municipal governments themselves took the initiative to make more parking
spaces available so as to alleviate the traffic problems, thus:
Under the Land Transportation and Traffic Code, parking in designated areas
along public streets or highways is allowed which clearly indicates that
provision for parking spaces serves a useful purpose. In other jurisdictions
where traffic is at least as voluminous as here, the provision by municipal
governments of parking space is not limited to parking along public streets or
highways. There has been a marked trend to build off-street parking facilities
with the view to removing parked cars from the streets. While the provision of
off-street parking facilities or carparks has been commonly undertaken by
private enterprise, municipal governments have been constrained to put up
carparks in response to public necessity where private enterprise had failed to
keep up with the growing public demand. American courts have upheld the
right of municipal governments to construct off-street parking facilities as
clearly redounding to the public benefit.30
In City of Ozamis, the Court authorized the collection by the City of minimal
fees for the parking of vehicles along the streets: so why then should the Court
now preclude respondents from collecting from the public a fee for the use of
the mall parking facilities? Undoubtedly, respondents also incur expenses in
the maintenance and operation of the mall parking facilities, such as electric
consumption, compensation for parking attendants and security, and upkeep
of the physical structures.
It is not sufficient for the OSG to claim that "the power to regulate and control
the use, occupancy, and maintenance of buildings and structures carries with
it the power to impose fees and, conversely, to control, partially or, as in this
case, absolutely, the imposition of such fees." Firstly, the fees within the power
of regulatory agencies to impose are regulatory fees. It has been settled law
in this jurisdiction that this broad and all-compassing governmental
competence to restrict rights of liberty and property carries with it the
undeniable power to collect a regulatory fee. It looks to the enactment of
specific measures that govern the relations not only as between individuals but
also as between private parties and the political society. 31 True, if the
regulatory agencies have the power to impose regulatory fees, then
conversely, they also have the power to remove the same. Even so, it is worthy
to note that the present case does not involve the imposition by the DPWH
Secretary and local building officials of regulatory fees upon respondents; but
the collection by respondents of parking fees from persons who use the mall
parking facilities. Secondly, assuming arguendo that the DPWH Secretary and
local building officials do have regulatory powers over the collection of parking
fees for the use of privately owned parking facilities, they cannot allow or
prohibit such collection arbitrarily or whimsically. Whether allowing or
prohibiting the collection of such parking fees, the action of the DPWH
Secretary and local building officials must pass the test of classic
reasonableness and propriety of the measures or means in the promotion of
the ends sought to be accomplished.32
Keeping in mind the aforementioned test of reasonableness and propriety of
measures or means, the Court notes that Section 803 of the National Building
Code falls under Chapter 8 on Light and Ventilation. Evidently, the Code
deems it necessary to regulate site occupancy to ensure that there is proper
lighting and ventilation in every building. Pursuant thereto, Rule XIX of the IRR
requires that a building, depending on its specific use and/or floor area, should
provide a minimum number of parking spaces. The Court, however, fails to
see the connection between regulating site occupancy to ensure proper light
and ventilation in every building vis-à-vis regulating the collection by building
owners of fees for the use of their parking spaces. Contrary to the averment of
the OSG, the former does not necessarily include or imply the latter. It totally
escapes this Court how lighting and ventilation conditions at the malls could
be affected by the fact that parking facilities thereat are free or paid for.
The OSG attempts to provide the missing link by arguing that:
Under Section 803 of the National Building Code, complimentary parking
spaces are required to enhance light and ventilation, that is, to avoid traffic
congestion in areas surrounding the building, which certainly affects the
ventilation within the building itself, which otherwise, the annexed parking
spaces would have served. Free-of-charge parking avoids traffic congestion
by ensuring quick and easy access of legitimate shoppers to off-street parking
spaces annexed to the malls, and thereby removing the vehicles of these
legitimate shoppers off the busy streets near the commercial establishments. 33
The Court is unconvinced. The National Building Code regulates buildings, by
setting the minimum specifications and requirements for the same. It does not
concern itself with traffic congestion in areas surrounding the building. It is
already a stretch to say that the National Building Code and its IRR also intend
to solve the problem of traffic congestion around the buildings so as to ensure
that the said buildings shall have adequate lighting and ventilation. Moreover,
the Court cannot simply assume, as the OSG has apparently done, that the
traffic congestion in areas around the malls is due to the fact that respondents
charge for their parking facilities, thus, forcing vehicle owners to just park in
the streets. The Court notes that despite the fees charged by respondents,
vehicle owners still use the mall parking facilities, which are even fully occupied
on some days. Vehicle owners may be parking in the streets only because
there are not enough parking spaces in the malls, and not because they are
deterred by the parking fees charged by respondents. Free parking spaces at
the malls may even have the opposite effect from what the OSG envisioned:
more people may be encouraged by the free parking to bring their own
vehicles, instead of taking public transport, to the malls; as a result, the parking
facilities would become full sooner, leaving more vehicles without parking
spaces in the malls and parked in the streets instead, causing even more traffic
congestion.
Without using the term outright, the OSG is actually invoking police power to
justify the regulation by the State, through the DPWH Secretary and local
building officials, of privately owned parking facilities, including the collection
by the owners/operators of such facilities of parking fees from the public for
the use thereof. The Court finds, however, that in totally prohibiting
respondents from collecting parking fees from the public for the use of the mall
parking facilities, the State would be acting beyond the bounds of police power.
Police power is the power of promoting the public welfare by restraining and
regulating the use of liberty and property. It is usually exerted in order to merely
regulate the use and enjoyment of the property of the owner. The power to
regulate, however, does not include the power to prohibit. A fortiori, the power
to regulate does not include the power to confiscate. Police power does not
involve the taking or confiscation of property, with the exception of a few cases
where there is a necessity to confiscate private property in order to destroy it
for the purpose of protecting peace and order and of promoting the general
welfare; for instance, the confiscation of an illegally possessed article, such as
opium and firearms. 34
When there is a taking or confiscation of private property for public use, the
State is no longer exercising police power, but another of its inherent powers,
namely, eminent domain. Eminent domain enables the State to forcibly acquire
private lands intended for public use upon payment of just compensation to
the owner.35
Normally, of course, the power of eminent domain results in the taking or
appropriation of title to, and possession of, the expropriated property; but no
cogent reason appears why the said power may not be availed of only to
impose a burden upon the owner of condemned property, without loss of title
and possession.36 It is a settled rule that neither acquisition of title nor total
destruction of value is essential to taking. It is usually in cases where title
remains with the private owner that inquiry should be made to determine
whether the impairment of a property is merely regulated or amounts to a
compensable taking. A regulation that deprives any person of the profitable
use of his property constitutes a taking and entitles him to compensation,
unless the invasion of rights is so slight as to permit the regulation to be
justified under the police power. Similarly, a police regulation that
unreasonably restricts the right to use business property for business purposes
amounts to a taking of private property, and the owner may recover
therefor.371avvphi1
Although in the present case, title to and/or possession of the parking facilities
remain/s with respondents, the prohibition against their collection of parking
fees from the public, for the use of said facilities, is already tantamount to a
taking or confiscation of their properties. The State is not only requiring that
respondents devote a portion of the latter’s properties for use as parking
spaces, but is also mandating that they give the public access to said parking
spaces for free. Such is already an excessive intrusion into the property rights
of respondents. Not only are they being deprived of the right to use a portion
of their properties as they wish, they are further prohibited from profiting from
its use or even just recovering therefrom the expenses for the maintenance
and operation of the required parking facilities.
The ruling of this Court in City Government of Quezon City v. Judge Ericta38 is
edifying. Therein, the City Government of Quezon City passed an ordinance
obliging private cemeteries within its jurisdiction to set aside at least six percent
of their total area for charity, that is, for burial grounds of deceased paupers.
According to the Court, the ordinance in question was null and void, for it
authorized the taking of private property without just compensation:
There is no reasonable relation between the setting aside of at least six (6)
percent of the total area of all private cemeteries for charity burial grounds of
deceased paupers and the promotion of' health, morals, good order, safety, or
the general welfare of the people. The ordinance is actually a taking without
compensation of a certain area from a private cemetery to benefit paupers who
are charges of the municipal corporation. Instead of' building or maintaining a
public cemetery for this purpose, the city passes the burden to private
cemeteries.
'The expropriation without compensation of a portion of private cemeteries is
not covered by Section 12(t) of Republic Act 537, the Revised Charter of
Quezon City which empowers the city council to prohibit the burial of the dead
within the center of population of the city and to provide for their burial in a
proper place subject to the provisions of general law regulating burial grounds
and cemeteries. When the Local Government Code, Batas Pambansa Blg. 337
provides in Section 177(q) that a sangguniang panlungsod may "provide for
the burial of the dead in such place and in such manner as prescribed by law
or ordinance" it simply authorizes the city to provide its own city owned land or
to buy or expropriate private properties to construct public cemeteries. This
has been the law, and practise in the past. It continues to the present.
Expropriation, however, requires payment of just compensation. The
questioned ordinance is different from laws and regulations requiring owners
of subdivisions to set aside certain areas for streets, parks, playgrounds, and
other public facilities from the land they sell to buyers of subdivision lots. The
necessities of public safety, health, and convenience are very clear from said
requirements which are intended to insure the development of communities
with salubrious and wholesome environments. The beneficiaries of the
regulation, in turn, are made to pay by the subdivision developer when
individual lots are sold to homeowners.
In conclusion, the total prohibition against the collection by respondents of
parking fees from persons who use the mall parking facilities has no basis in
the National Building Code or its IRR. The State also cannot impose the same
prohibition by generally invoking police power, since said prohibition amounts
to a taking of respondents’ property without payment of just compensation.
Given the foregoing, the Court finds no more need to address the issue
persistently raised by respondent SM Prime concerning the unconstitutionality
of Rule XIX of the IRR. In addition, the said issue was not among those that
the parties, during the pre-trial conference for Civil Cases No. 12-08 and No.
00-1210, agreed to submit for resolution of the RTC. It is likewise axiomatic
that the constitutionality of a law, a regulation, an ordinance or an act will not
be resolved by courts if the controversy can be, as in this case it has been,
settled on other grounds.39
WHEREFORE, the instant Petition for Review on Certiorari is hereby DENIED.
The Decision dated 25 January 2007 and Resolution dated 14 March 2007 of
the Court of Appeals in CA-G.R. CV No. 76298, affirming in toto the Joint
Decision dated 29 May 2002 of the Regional Trial Court of Makati City, Branch
138, in Civil Cases No. 00-1208 and No. 00-1210 are hereby AFFIRMED. No
costs.
SO ORDERED.
MACTAN CEBU INTERNATIONAL AIRPORT VS. LOZADA
This is a petition for review on certiorari under Rule 45 of the Rules of Court,
seeking to reverse, annul, and set aside the Decision1 dated February 28,
2006 and the Resolution2 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.
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 ₱3.00 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 ₱3,018.00 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.
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 purpose 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 into what is now known
as the Ayala I.T. Park, a commercial area.1avvphi1
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 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;
(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;
(i) Since the public purpose for the expropriation no longer exists, the property
must be returned to the plaintiffs.4
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;
(2) The property was expropriated among several 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;
(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:
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,
Bernardo 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.
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 x x x 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 x x x 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. x x x. If, upon the contrary, however,
the decree of expropriation gives to the entity a fee simple title, then, of course,
the land becomes the absolute property of the expropriator, 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. x x
x.
When land has been acquired for public use in fee simple, unconditionally,
either by the exercise of eminent domain or by purchase, the former owner
retains no 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. x x x.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—
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
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.15 It 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 to enable the
condemnor to keep the property expropriated.16
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—
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 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.
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.:
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 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.
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. 1190 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 x x x 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 x x x."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.
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 118724 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 119025 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 x x x," 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:
1. Respondents are ORDERED to return to petitioners 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;
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.
SO ORDERED.
CITY GOVERNMENT OF QC VS. ERICTA
This is a petition for review which seeks the reversal of the decision of the
Court of First Instance of Rizal, Branch XVIII declaring Section 9 of Ordinance
No. 6118, S-64, of the Quezon City Council null and void.
Section 9 of Ordinance No. 6118, S-64, entitled "ORDINANCE REGULATING
THE ESTABLISHMENT, MAINTENANCE AND OPERATION OF PRIVATE
MEMORIAL TYPE CEMETERY OR BURIAL GROUND WITHIN THE
JURISDICTION OF QUEZON CITY AND PROVIDING PENALTIES FOR THE
VIOLATION THEREOF" provides:
Sec. 9. At least six (6) percent of the total area of the memorial park cemetery
shall be set aside for charity burial of deceased persons who are paupers and
have been residents of Quezon City for at least 5 years prior to their death, to
be determined by competent City Authorities. The area so designated shall
immediately be developed and should be open for operation not later than six
months from the date of approval of the application.
For several years, the aforequoted section of the Ordinance was not enforced
by city authorities but seven years after the enactment of the ordinance, the
Quezon City Council passed the following resolution:
RESOLVED by the council of Quezon assembled, to request, as it does hereby
request the City Engineer, Quezon City, to stop any further selling and/or
transaction of memorial park lots in Quezon City where the owners thereof
have failed to donate the required 6% space intended for paupers burial.
Pursuant to this petition, the Quezon City Engineer notified respondent
Himlayang Pilipino, Inc. in writing that Section 9 of Ordinance No. 6118, S-64
would be enforced
Respondent Himlayang Pilipino reacted by filing with the Court of First
Instance of Rizal Branch XVIII at Quezon City, a petition for declaratory relief,
prohibition and mandamus with preliminary injunction (Sp. Proc. No. Q-16002)
seeking to annul Section 9 of the Ordinance in question The respondent
alleged that the same is contrary to the Constitution, the Quezon City Charter,
the Local Autonomy Act, and the Revised Administrative Code.
There being no issue of fact and the questions raised being purely legal both
petitioners and respondent agreed to the rendition of a judgment on the
pleadings. The respondent court, therefore, rendered the decision declaring
Section 9 of Ordinance No. 6118, S-64 null and void.
A motion for reconsideration having been denied, the City Government and
City Council filed the instant petition.
Petitioners argue that the taking of the respondent's property is a valid and
reasonable exercise of police power and that the land is taken for a public use
as it is intended for the burial ground of paupers. They further argue that the
Quezon City Council is authorized under its charter, in the exercise of local
police power, " to make such further ordinances and resolutions not repugnant
to law as may be necessary to carry into effect and discharge the powers and
duties conferred by this Act and such as it shall deem necessary and proper
to provide for the health and safety, promote the prosperity, improve the
morals, peace, good order, comfort and convenience of the city and the
inhabitants thereof, and for the protection of property therein."
On the other hand, respondent Himlayang Pilipino, Inc. contends that the
taking or confiscation of property is obvious because the questioned ordinance
permanently restricts the use of the property such that it cannot be used for
any reasonable purpose and deprives the owner of all beneficial use of his
property.
The respondent also stresses that the general welfare clause is not available
as a source of power for the taking of the property in this case because it refers
to "the power of promoting the public welfare by restraining and regulating the
use of liberty and property." The respondent points out that if an owner is
deprived of his property outright under the State's police power, the property
is generally not taken for public use but is urgently and summarily destroyed
in order to promote the general welfare. The respondent cites the case of a
nuisance per se or the destruction of a house to prevent the spread of a
conflagration.
We find the stand of the private respondent as well as the decision of the
respondent Judge to be well-founded. We quote with approval the lower court's
ruling which declared null and void Section 9 of the questioned city ordinance:
The issue is: Is Section 9 of the ordinance in question a valid exercise of the
police power?
An examination of the Charter of Quezon City (Rep. Act No. 537), does not
reveal any provision that would justify the ordinance in question except the
provision granting police power to the City. Section 9 cannot be justified under
the power granted to Quezon City to tax, fix the license fee, and regulate such
other business, trades, and occupation as may be established or practised in
the City.' (Subsections 'C', Sec. 12, R.A. 537).
The power to regulate does not include the power to prohibit (People vs.
Esguerra, 81 PhiL 33, Vega vs. Municipal Board of Iloilo, L-6765, May 12,
1954; 39 N.J. Law, 70, Mich. 396). A fortiori, the power to regulate does not
include the power to confiscate. The ordinance in question not only confiscates
but also prohibits the operation of a memorial park cemetery, because under
Section 13 of said ordinance, 'Violation of the provision thereof is punishable
with a fine and/or imprisonment and that upon conviction thereof the permit to
operate and maintain a private cemetery shall be revoked or cancelled.' The
confiscatory clause and the penal provision in effect deter one from operating
a memorial park cemetery. Neither can the ordinance in question be justified
under sub- section "t", Section 12 of Republic Act 537 which authorizes the
City Council to-
'prohibit the burial of the dead within the center of population of the city and
provide for their burial in such proper place and in such manner as the council
may determine, subject to the provisions of the general law regulating burial
grounds and cemeteries and governing funerals and disposal of the dead.'
(Sub-sec. (t), Sec. 12, Rep. Act No. 537).
There is nothing in the above provision which authorizes confiscation or as
euphemistically termed by the respondents, 'donation'
We now come to the question whether or not Section 9 of the ordinance in
question is a valid exercise of police power. The police power of Quezon City
is defined in sub-section 00, Sec. 12, Rep. Act 537 which reads as follows:
(00) To make such further ordinance and regulations not repugnant to law as
may be necessary to carry into effect and discharge the powers and duties
conferred by this act and such as it shall deem necessary and proper to provide
for the health and safety, promote, the prosperity, improve the morals, peace,
good order, comfort and convenience of the city and the inhabitants thereof,
and for the protection of property therein; and enforce obedience thereto with
such lawful fines or penalties as the City Council may prescribe under the
provisions of subsection (jj) of this section.
We start the discussion with a restatement of certain basic principles.
Occupying the forefront in the bill of rights is the provision which states that 'no
person shall be deprived of life, liberty or property without due process of law'
(Art. Ill, Section 1 subparagraph 1, Constitution).
On the other hand, there are three inherent powers of government by which
the state interferes with the property rights, namely-. (1) police power, (2)
eminent domain, (3) taxation. These are said to exist independently of the
Constitution as necessary attributes of sovereignty.
Police power is defined by Freund as 'the power of promoting the public
welfare by restraining and regulating the use of liberty and property' (Quoted
in Political Law by Tanada and Carreon, V-11, p. 50). It is usually exerted in
order to merely regulate the use and enjoyment of property of the owner. If he
is deprived of his property outright, it is not taken for public use but rather to
destroy in order to promote the general welfare. In police power, the owner
does not recover from the government for injury sustained in consequence
thereof (12 C.J. 623). It has been said that police power is the most essential
of government powers, at times the most insistent, and always one of the least
limitable of the powers of government (Ruby vs. Provincial Board, 39 PhiL 660;
Ichong vs. Hernandez, 1,7995, May 31, 1957). This power embraces the whole
system of public regulation (U.S. vs. Linsuya Fan, 10 PhiL 104). The Supreme
Court has said that police power is so far-reaching in scope that it has almost
become impossible to limit its sweep. As it derives its existence from the very
existence of the state itself, it does not need to be expressed or defined in its
scope. Being coextensive with self-preservation and survival itself, it is the
most positive and active of all governmental processes, the most essential
insistent and illimitable Especially it is so under the modern democratic
framework where the demands of society and nations have multiplied to almost
unimaginable proportions. The field and scope of police power have become
almost boundless, just as the fields of public interest and public welfare have
become almost all embracing and have transcended human foresight. Since
the Courts cannot foresee the needs and demands of public interest and
welfare, they cannot delimit beforehand the extent or scope of the police power
by which and through which the state seeks to attain or achieve public interest
and welfare. (Ichong vs. Hernandez, L-7995, May 31, 1957).
The police power being the most active power of the government and the due
process clause being the broadest station on governmental power, the conflict
between this power of government and the due process clause of the
Constitution is oftentimes inevitable.
It will be seen from the foregoing authorities that police power is usually
exercised in the form of mere regulation or restriction in the use of liberty or
property for the promotion of the general welfare. It does not involve the taking
or confiscation of property with the exception of a few cases where there is a
necessity to confiscate private property in order to destroy it for the purpose of
protecting the peace and order and of promoting the general welfare as for
instance, the confiscation of an illegally possessed article, such as opium and
firearms.
It seems to the court that Section 9 of Ordinance No. 6118, Series of 1964 of
Quezon City is not a mere police regulation but an outright confiscation. It
deprives a person of his private property without due process of law, nay, even
without compensation.
In sustaining the decision of the respondent court, we are not unmindful of the
heavy burden shouldered by whoever challenges the validity of duly enacted
legislation whether national or local As early as 1913, this Court ruled in Case
v. Board of Health (24 PhiL 250) that the courts resolve every presumption in
favor of validity and, more so, where the ma corporation asserts that the
ordinance was enacted to promote the common good and general welfare.
In the leading case of Ermita-Malate Hotel and Motel Operators Association
Inc. v. City Mayor of Manila (20 SCRA 849) the Court speaking through the
then Associate Justice and now Chief Justice Enrique M. Fernando stated
Primarily what calls for a reversal of such a decision is the a of any evidence
to offset the presumption of validity that attaches to a statute or ordinance. As
was expressed categorically by Justice Malcolm 'The presumption is all in
favor of validity. ... The action of the elected representatives of the people
cannot be lightly set aside. The councilors must, in the very nature of things,
be familiar with the necessities of their particular ... municipality and with all
the facts and lances which surround the subject and necessitate action. The
local legislative body, by enacting the ordinance, has in effect given notice that
the regulations are essential to the well-being of the people. ... The Judiciary
should not lightly set aside legislative action when there is not a clear invasion
of personal or property rights under the guise of police regulation. (U.S. v.
Salaveria (1918], 39 Phil. 102, at p. 111. There was an affirmation of the
presumption of validity of municipal ordinance as announced in the leading
Salaveria decision in Ebona v. Daet, [1950]85 Phil. 369.)
We have likewise considered the principles earlier stated in Case v. Board of
Health supra :
... Under the provisions of municipal charters which are known as the general
welfare clauses, a city, by virtue of its police power, may adopt ordinances to
the peace, safety, health, morals and the best and highest interests of the
municipality. It is a well-settled principle, growing out of the nature of well-
ordered and society, that every holder of property, however absolute and may
be his title, holds it under the implied liability that his use of it shall not be
injurious to the equal enjoyment of others having an equal right to the
enjoyment of their property, nor injurious to the rights of the community. An
property in the state is held subject to its general regulations, which are
necessary to the common good and general welfare. Rights of property, like
all other social and conventional rights, are subject to such reasonable
limitations in their enjoyment as shall prevent them from being injurious, and
to such reasonable restraints and regulations, established by law, as the
legislature, under the governing and controlling power vested in them by the
constitution, may think necessary and expedient. The state, under the police
power, is possessed with plenary power to deal with all matters relating to the
general health, morals, and safety of the people, so long as it does not
contravene any positive inhibition of the organic law and providing that such
power is not exercised in such a manner as to justify the interference of the
courts to prevent positive wrong and oppression.
but find them not applicable to the facts of this case.
There is no reasonable relation between the setting aside of at least six (6)
percent of the total area of an private cemeteries for charity burial grounds of
deceased paupers and the promotion of health, morals, good order, safety, or
the general welfare of the people. The ordinance is actually a taking without
compensation of a certain area from a private cemetery to benefit paupers who
are charges of the municipal corporation. Instead of building or maintaining a
public cemetery for this purpose, the city passes the burden to private
cemeteries.
The expropriation without compensation of a portion of private cemeteries is
not covered by Section 12(t) of Republic Act 537, the Revised Charter of
Quezon City which empowers the city council to prohibit the burial of the dead
within the center of population of the city and to provide for their burial in a
proper place subject to the provisions of general law regulating burial grounds
and cemeteries. When the Local Government Code, Batas Pambansa Blg. 337
provides in Section 177 (q) that a Sangguniang panlungsod may "provide for
the burial of the dead in such place and in such manner as prescribed by law
or ordinance" it simply authorizes the city to provide its own city owned land or
to buy or expropriate private properties to construct public cemeteries. This
has been the law and practise in the past. It continues to the present.
Expropriation, however, requires payment of just compensation. The
questioned ordinance is different from laws and regulations requiring owners
of subdivisions to set aside certain areas for streets, parks, playgrounds, and
other public facilities from the land they sell to buyers of subdivision lots. The
necessities of public safety, health, and convenience are very clear from said
requirements which are intended to insure the development of communities
with salubrious and wholesome environments. The beneficiaries of the
regulation, in turn, are made to pay by the subdivision developer when
individual lots are sold to home-owners.
As a matter of fact, the petitioners rely solely on the general welfare clause or
on implied powers of the municipal corporation, not on any express provision
of law as statutory basis of their exercise of power. The clause has always
received broad and liberal interpretation but we cannot stretch it to cover this
particular taking. Moreover, the questioned ordinance was passed after
Himlayang Pilipino, Inc. had incorporated. received necessary licenses and
permits and commenced operating. The sequestration of six percent of the
cemetery cannot even be considered as having been impliedly acknowledged
by the private respondent when it accepted the permits to commence
operations.
WHEREFORE, the petition for review is hereby DISMISSED. The decision of
the respondent court is affirmed.
SO ORDERED.
REPUBLIC VS. CASTELVI
Appeal from the decision of the Court of First Instance of Pampanga in its Civil
Case No. 1623, an expropriation proceeding.
Plaintiff-appellant, the Republic of the Philippines, (hereinafter referred to as
the Republic) filed, on June 26, 1959, a complaint for eminent domain against
defendant-appellee, Carmen M. Vda. de Castellvi, judicial administratrix of the
estate of the late Alfonso de Castellvi (hereinafter referred to as Castellvi), over
a parcel of land situated in the barrio of San Jose, Floridablanca, Pampanga,
described as follows:
A parcel of land, Lot No. 199-B Bureau of Lands Plan Swo 23666. Bounded
on the NE by Maria Nieves Toledo-Gozun; on the SE by national road; on the
SW by AFP reservation, and on the NW by AFP reservation. Containing an
area of 759,299 square meters, more or less, and registered in the name of
Alfonso Castellvi under TCT No. 13631 of the Register of Pampanga ...;
and against defendant-appellee Maria Nieves Toledo Gozun (hereinafter
referred to as Toledo-Gozun over two parcels of land described as follows:
A parcel of land (Portion Lot Blk-1, Bureau of Lands Plan Psd, 26254. Bounded
on the NE by Lot 3, on the SE by Lot 3; on the SW by Lot 1-B, Blk. 2 (equivalent
to Lot 199-B Swo 23666; on the NW by AFP military reservation. Containing
an area of 450,273 square meters, more or less and registered in the name of
Maria Nieves Toledo-Gozun under TCT No. 8708 of the Register of Deeds of
Pampanga. ..., and
A parcel of land (Portion of lot 3, Blk-1, Bureau of Lands Plan Psd 26254.
Bounded on the NE by Lot No. 3, on the SE by school lot and national road,
on the SW by Lot 1-B Blk 2 (equivalent to Lot 199-B Swo 23666), on the NW
by Lot 1-B, Blk-1. Containing an area of 88,772 square meters, more or less,
and registered in the name of Maria Nieves Toledo Gozun under TCT No. 8708
of the Register of Deeds of Pampanga, ....
In its complaint, the Republic alleged, among other things, that the fair market
value of the above-mentioned lands, according to the Committee on Appraisal
for the Province of Pampanga, was not more than P2,000 per hectare, or a
total market value of P259,669.10; and prayed, that the provisional value of
the lands be fixed at P259.669.10, that the court authorizes plaintiff to take
immediate possession of the lands upon deposit of that amount with the
Provincial Treasurer of Pampanga; that the court appoints three
commissioners to ascertain and report to the court the just compensation for
the property sought to be expropriated, and that the court issues thereafter a
final order of condemnation.
On June 29, 1959 the trial court issued an order fixing the provisional value of
the lands at P259,669.10.
In her "motion to dismiss" filed on July 14, 1959, Castellvi alleged, among other
things, that the land under her administration, being a residential land, had a
fair market value of P15.00 per square meter, so it had a total market value of
P11,389,485.00; that the Republic, through the Armed Forces of the
Philippines, particularly the Philippine Air Force, had been, despite repeated
demands, illegally occupying her property since July 1, 1956, thereby
preventing her from using and disposing of it, thus causing her damages by
way of unrealized profits. This defendant prayed that the complaint be
dismissed, or that the Republic be ordered to pay her P15.00 per square meter,
or a total of P11,389,485.00, plus interest thereon at 6% per annum from July
1, 1956; that the Republic be ordered to pay her P5,000,000.00 as unrealized
profits, and the costs of the suit.
By order of the trial court, dated August, 1959, Amparo C. Diaz, Dolores G.
viuda de Gil, Paloma Castellvi, Carmen Castellvi, Rafael Castellvi, Luis
Castellvi, Natividad Castellvi de Raquiza, Jose Castellvi and Consuelo
Castellvi were allowed to intervene as parties defendants. Subsequently,
Joaquin V. Gozun, Jr., husband of defendant Nieves Toledo Gozun, was also
allowed by the court to intervene as a party defendant.
After the Republic had deposited with the Provincial Treasurer of Pampanga
the amount of P259,669.10, the trial court ordered that the Republic be placed
in possession of the lands. The Republic was actually placed in possession of
the lands on August 10,
1959.1
In her "motion to dismiss", dated October 22, 1959, Toledo-Gozun alleged,
among other things, that her two parcels of land were residential lands, in fact
a portion with an area of 343,303 square meters had already been subdivided
into different lots for sale to the general public, and the remaining portion had
already been set aside for expansion sites of the already completed
subdivisions; that the fair market value of said lands was P15.00 per square
meter, so they had a total market value of P8,085,675.00; and she prayed that
the complaint be dismissed, or that she be paid the amount of P8,085,675.00,
plus interest thereon at the rate of 6% per annum from October 13, 1959, and
attorney's fees in the amount of P50,000.00.
Intervenors Jose Castellvi and Consuelo Castellvi in their answer, filed on
February 11, 1960, and also intervenor Joaquin Gozun, Jr., husband of
defendant Maria Nieves Toledo-Gozun, in his motion to dismiss, dated May
27, 1960, all alleged that the value of the lands sought to be expropriated was
at the rate of P15.00 per square meter.
On November 4, 1959, the trial court authorized the Provincial Treasurer of
Pampanga to pay defendant Toledo-Gozun the sum of P107,609.00 as
provisional value of her lands.2 On May 16, 1960 the trial Court authorized the
Provincial Treasurer of Pampanga to pay defendant Castellvi the amount of
P151,859.80 as provisional value of the land under her administration, and
ordered said defendant to deposit the amount with the Philippine National
Bank under the supervision of the Deputy Clerk of Court. In another order of
May 16, 1960 the trial Court entered an order of condemnation.3
The trial Court appointed three commissioners: Atty. Amadeo Yuzon, Clerk of
Court, as commissioner for the court; Atty. Felicisimo G. Pamandanan,
counsel of the Philippine National Bank Branch at Floridablanca, for the
plaintiff; and Atty. Leonardo F. Lansangan, Filipino legal counsel at Clark Air
Base, for the defendants. The Commissioners, after having qualified
themselves, proceeded to the performance of their duties.
On March 15,1961 the Commissioners submitted their report and
recommendation, wherein, after having determined that the lands sought to be
expropriated were residential lands, they recommended unanimously that the
lowest price that should be paid was P10.00 per square meter, for both the
lands of Castellvi and Toledo-Gozun; that an additional P5,000.00 be paid to
Toledo-Gozun for improvements found on her land; that legal interest on the
compensation, computed from August 10, 1959, be paid after deducting the
amounts already paid to the owners, and that no consequential damages be
awarded.4 The Commissioners' report was objected to by all the parties in the
case — by defendants Castellvi and Toledo-Gozun, who insisted that the fair
market value of their lands should be fixed at P15.00 per square meter; and
by the Republic, which insisted that the price to be paid for the lands should
be fixed at P0.20 per square meter.5
After the parties-defendants and intervenors had filed their respective
memoranda, and the Republic, after several extensions of time, had adopted
as its memorandum its objections to the report of the Commissioners, the trial
court, on May 26, 1961, rendered its decision6 the dispositive portion of which
reads as follows:
WHEREFORE, taking into account all the foregoing circumstances, and that
the lands are titled, ... the rising trend of land values ..., and the lowered
purchasing power of the Philippine peso, the court finds that the unanimous
recommendation of the commissioners of ten (P10.00) pesos per square meter
for the three lots of the defendants subject of this action is fair and just.
xxx xxx xxx
The plaintiff will pay 6% interest per annum on the total value of the lands of
defendant Toledo-Gozun since (sic) the amount deposited as provisional value
from August 10, 1959 until full payment is made to said defendant or deposit
therefor is made in court.
In respect to the defendant Castellvi, interest at 6% per annum will also be
paid by the plaintiff to defendant Castellvi from July 1, 1956 when plaintiff
commenced its illegal possession of the Castellvi land when the instant action
had not yet been commenced to July 10, 1959 when the provisional value
thereof was actually deposited in court, on the total value of the said (Castellvi)
land as herein adjudged. The same rate of interest shall be paid from July 11,
1959 on the total value of the land herein adjudged minus the amount
deposited as provisional value, or P151,859.80, such interest to run until full
payment is made to said defendant or deposit therefor is made in court. All the
intervenors having failed to produce evidence in support of their respective
interventions, said interventions are ordered dismissed.
The costs shall be charged to the plaintiff.
On June 21, 1961 the Republic filed a motion for a new trial and/or
reconsideration, upon the grounds of newly-discovered evidence, that the
decision was not supported by the evidence, and that the decision was against
the law, against which motion defendants Castellvi and Toledo-Gozun filed
their respective oppositions. On July 8, 1961 when the motion of the Republic
for new trial and/or reconsideration was called for hearing, the Republic filed a
supplemental motion for new trial upon the ground of additional newly-
discovered evidence. This motion for new trial and/or reconsideration was
denied by the court on July 12, 1961.
On July 17, 1961 the Republic gave notice of its intention to appeal from the
decision of May 26, 1961 and the order of July 12, 1961. Defendant Castellvi
also filed, on July 17, 1961, her notice of appeal from the decision of the trial
court.
The Republic filed various ex-parte motions for extension of time within which
to file its record on appeal. The Republic's record on appeal was finally
submitted on December 6, 1961.
Defendants Castellvi and Toledo-Gozun filed not only a joint opposition to the
approval of the Republic's record on appeal, but also a joint memorandum in
support of their opposition. The Republic also filed a memorandum in support
of its prayer for the approval of its record on appeal. On December 27, 1961
the trial court issued an order declaring both the record on appeal filed by the
Republic, and the record on appeal filed by defendant Castellvi as having been
filed out of time, thereby dismissing both appeals.
On January 11, 1962 the Republic filed a "motion to strike out the order of
December 27, 1961 and for reconsideration", and subsequently an amended
record on appeal, against which motion the defendants Castellvi and Toledo-
Gozun filed their opposition. On July 26, 1962 the trial court issued an order,
stating that "in the interest of expediency, the questions raised may be properly
and finally determined by the Supreme Court," and at the same time it ordered
the Solicitor General to submit a record on appeal containing copies of orders
and pleadings specified therein. In an order dated November 19, 1962, the trial
court approved the Republic's record on appeal as amended.
Defendant Castellvi did not insist on her appeal. Defendant Toledo-Gozun did
not appeal.
The motion to dismiss the Republic's appeal was reiterated by appellees
Castellvi and Toledo-Gozun before this Court, but this Court denied the
motion.
In her motion of August 11, 1964, appellee Castellvi sought to increase the
provisional value of her land. The Republic, in its comment on Castellvi's
motion, opposed the same. This Court denied Castellvi's motion in a resolution
dated October 2,1964.
The motion of appellees, Castellvi and Toledo-Gozun, dated October 6, 1969,
praying that they be authorized to mortgage the lands subject of expropriation,
was denied by this Court or October 14, 1969.
On February 14, 1972, Attys. Alberto Cacnio, and Associates, counsel for the
estate of the late Don Alfonso de Castellvi in the expropriation proceedings,
filed a notice of attorney's lien, stating that as per agreement with the
administrator of the estate of Don Alfonso de Castellvi they shall receive by
way of attorney's fees, "the sum equivalent to ten per centum of whatever the
court may finally decide as the expropriated price of the property subject matter
of the case."
---------
Before this Court, the Republic contends that the lower court erred:
1. In finding the price of P10 per square meter of the lands subject of the instant
proceedings as just compensation;
2. In holding that the "taking" of the properties under expropriation commenced
with the filing of this action;
3. In ordering plaintiff-appellant to pay 6% interest on the adjudged value of
the Castellvi property to start from July of 1956;
4. In denying plaintiff-appellant's motion for new trial based on newly
discovered evidence.
In its brief, the Republic discusses the second error assigned as the first issue
to be considered. We shall follow the sequence of the Republic's discussion.
1. In support of the assigned error that the lower court erred in holding that the
"taking" of the properties under expropriation commenced with the filing of the
complaint in this case, the Republic argues that the "taking" should be
reckoned from the year 1947 when by virtue of a special lease agreement
between the Republic and appellee Castellvi, the former was granted the "right
and privilege" to buy the property should the lessor wish to terminate the lease,
and that in the event of such sale, it was stipulated that the fair market value
should be as of the time of occupancy; and that the permanent improvements
amounting to more that half a million pesos constructed during a period of
twelve years on the land, subject of expropriation, were indicative of an agreed
pattern of permanency and stability of occupancy by the Philippine Air Force
in the interest of national Security.7
Appellee Castellvi, on the other hand, maintains that the "taking" of property
under the power of eminent domain requires two essential elements, to wit: (1)
entrance and occupation by condemn or upon the private property for more
than a momentary or limited period, and (2) devoting it to a public use in such
a way as to oust the owner and deprive him of all beneficial enjoyment of the
property. This appellee argues that in the instant case the first element is
wanting, for the contract of lease relied upon provides for a lease from year to
year; that the second element is also wanting, because the Republic was
paying the lessor Castellvi a monthly rental of P445.58; and that the contract
of lease does not grant the Republic the "right and privilege" to buy the
premises "at the value at the time of occupancy."8
Appellee Toledo-Gozun did not comment on the Republic's argument in
support of the second error assigned, because as far as she was concerned
the Republic had not taken possession of her lands prior to August 10, 1959.9
In order to better comprehend the issues raised in the appeal, in so far as the
Castellvi property is concerned, it should be noted that the Castellvi property
had been occupied by the Philippine Air Force since 1947 under a contract of
lease, typified by the contract marked Exh. 4-Castellvi, the pertinent portions
of which read:
CONTRACT OF LEASE
This AGREEMENT OF LEASE MADE AND ENTERED into by and between
INTESTATE ESTATE OF ALFONSO DE CASTELLVI, represented by
CARMEN M. DE CASTELLVI, Judicial Administratrix ... hereinafter called the
LESSOR and THE REPUBLIC OF THE PHILIPPINES represented by MAJ.
GEN. CALIXTO DUQUE, Chief of Staff of the ARMED FORCES OF THE
PHILIPPINES, hereinafter called the LESSEE,
WITNESSETH:
1. For and in consideration of the rentals hereinafter reserved and the mutual
terms, covenants and conditions of the parties, the LESSOR has, and by these
presents does, lease and let unto the LESSEE the following described land
together with the improvements thereon and appurtenances thereof, viz:
Un Terreno, Lote No. 27 del Plano de subdivision Psu 34752, parte de la
hacienda de Campauit, situado en el Barrio de San Jose, Municipio de
Floridablanca Pampanga. ... midiendo una extension superficial de cuatro
milliones once mil cuatro cientos trienta y cinco (4,001,435) [sic] metros
cuadrados, mas o menos.
Out of the above described property, 75.93 hectares thereof are actually
occupied and covered by this contract. .
Above lot is more particularly described in TCT No. 1016, province of
Pampanga ...
of which premises, the LESSOR warrants that he/she/they/is/are the
registered owner(s) and with full authority to execute a contract of this nature.
2. The term of this lease shall be for the period beginning July 1, 1952 the date
the premises were occupied by the PHILIPPINE AIR FORCE, AFP until June
30, 1953, subject to renewal for another year at the option of the LESSEE or
unless sooner terminated by the LESSEE as hereinafter provided.
3. The LESSOR hereby warrants that the LESSEE shall have quiet, peaceful
and undisturbed possession of the demised premises throughout the full term
or period of this lease and the LESSOR undertakes without cost to the
LESSEE to eject all trespassers, but should the LESSOR fail to do so, the
LESSEE at its option may proceed to do so at the expense of the LESSOR.
The LESSOR further agrees that should he/she/they sell or encumber all or
any part of the herein described premises during the period of this lease, any
conveyance will be conditioned on the right of the LESSEE hereunder.
4. The LESSEE shall pay to the LESSOR as monthly rentals under this lease
the sum of FOUR HUNDRED FIFTY-FIVE PESOS & 58/100 (P455.58) ...
5. The LESSEE may, at any time prior to the termination of this lease, use the
property for any purpose or purposes and, at its own costs and expense make
alteration, install facilities and fixtures and errect additions ... which facilities or
fixtures ... so placed in, upon or attached to the said premises shall be and
remain property of the LESSEE and may be removed therefrom by the
LESSEE prior to the termination of this lease. The LESSEE shall surrender
possession of the premises upon the expiration or termination of this lease and
if so required by the LESSOR, shall return the premises in substantially the
same condition as that existing at the time same were first occupied by the
AFP, reasonable and ordinary wear and tear and damages by the elements or
by circumstances over which the LESSEE has no control excepted:
PROVIDED, that if the LESSOR so requires the return of the premises in such
condition, the LESSOR shall give written notice thereof to the LESSEE at least
twenty (20) days before the termination of the lease and provided, further, that
should the LESSOR give notice within the time specified above, the LESSEE
shall have the right and privilege to compensate the LESSOR at the fair value
or the equivalent, in lieu of performance of its obligation, if any, to restore the
premises. Fair value is to be determined as the value at the time of occupancy
less fair wear and tear and depreciation during the period of this lease.
6. The LESSEE may terminate this lease at any time during the term hereof
by giving written notice to the LESSOR at least thirty (30) days in advance ...
7. The LESSEE should not be responsible, except under special legislation for
any damages to the premises by reason of combat operations, acts of GOD,
the elements or other acts and deeds not due to the negligence on the part of
the LESSEE.
8. This LEASE AGREEMENT supersedes and voids any and all agreements
and undertakings, oral or written, previously entered into between the parties
covering the property herein leased, the same having been merged herein.
This AGREEMENT may not be modified or altered except by instrument in
writing only duly signed by the parties. 10
It was stipulated by the parties, that "the foregoing contract of lease (Exh. 4,
Castellvi) is 'similar in terms and conditions, including the date', with the annual
contracts entered into from year to year between defendant Castellvi and the
Republic of the Philippines (p. 17, t.s.n., Vol. III)". 11 It is undisputed, therefore,
that the Republic occupied Castellvi's land from July 1, 1947, by virtue of the
above-mentioned contract, on a year to year basis (from July 1 of each year
to June 30 of the succeeding year) under the terms and conditions therein
stated.
Before the expiration of the contract of lease on June 30, 1956 the Republic
sought to renew the same but Castellvi refused. When the AFP refused to
vacate the leased premises after the termination of the contract, on July 11,
1956, Castellvi wrote to the Chief of Staff, AFP, informing the latter that the
heirs of the property had decided not to continue leasing the property in
question because they had decided to subdivide the land for sale to the
general public, demanding that the property be vacated within 30 days from
receipt of the letter, and that the premises be returned in substantially the same
condition as before occupancy (Exh. 5 — Castellvi). A follow-up letter was sent
on January 12, 1957, demanding the delivery and return of the property within
one month from said date (Exh. 6 Castellvi). On January 30, 1957, Lieutenant
General Alfonso Arellano, Chief of Staff, answered the letter of Castellvi,
saying that it was difficult for the army to vacate the premises in view of the
permanent installations and other facilities worth almost P500,000.00 that
were erected and already established on the property, and that, there being
no other recourse, the acquisition of the property by means of expropriation
proceedings would be recommended to the President (Exhibit "7" — Castellvi).
Defendant Castellvi then brought suit in the Court of First Instance of
Pampanga, in Civil Case No. 1458, to eject the Philippine Air Force from the
land. While this ejectment case was pending, the Republic instituted these
expropriation proceedings, and, as stated earlier in this opinion, the Republic
was placed in possession of the lands on August 10, 1959, On November 21,
1959, the Court of First Instance of Pampanga, dismissed Civil Case No. 1458,
upon petition of the parties, in an order which, in part, reads as follows:
1. Plaintiff has agreed, as a matter of fact has already signed an agreement
with defendants, whereby she has agreed to receive the rent of the lands,
subject matter of the instant case from June 30, 1966 up to 1959 when the
Philippine Air Force was placed in possession by virtue of an order of the Court
upon depositing the provisional amount as fixed by the Provincial Appraisal
Committee with the Provincial Treasurer of Pampanga;
2. That because of the above-cited agreement wherein the administratrix
decided to get the rent corresponding to the rent from 1956 up to 1959 and
considering that this action is one of illegal detainer and/or to recover the
possession of said land by virtue of non-payment of rents, the instant case now
has become moot and academic and/or by virtue of the agreement signed by
plaintiff, she has waived her cause of action in the above-entitled case. 12
The Republic urges that the "taking " of Castellvi's property should be deemed
as of the year 1947 by virtue of afore-quoted lease agreement. In American
Jurisprudence, Vol. 26, 2nd edition, Section 157, on the subject of "Eminent
Domain, we read the definition of "taking" (in eminent domain) as follows:
Taking' under the power of eminent domain may be defined generally as
entering upon private property for more than a momentary period, and, under
the warrant or color of legal authority, devoting it to a public use, or otherwise
informally appropriating or injuriously affecting it in such a way as substantially
to oust the owner and deprive him of all beneficial enjoyment thereof. 13
Pursuant to the aforecited authority, a number of circumstances must be
present in the "taking" of property for purposes of eminent domain.
First, the expropriator must enter a private property. This circumstance is
present in the instant case, when by virtue of the lease agreement the
Republic, through the AFP, took possession of the property of Castellvi.
Second, the entrance into private property must be for more than a momentary
period. "Momentary" means, "lasting but a moment; of but a moment's
duration" (The Oxford English Dictionary, Volume VI, page 596); "lasting a very
short time; transitory; having a very brief life; operative or recurring at every
moment" (Webster's Third International Dictionary, 1963 edition.) The word
"momentary" when applied to possession or occupancy of (real) property
should be construed to mean "a limited period" — not indefinite or permanent.
The aforecited lease contract was for a period of one year, renewable from
year to year. The entry on the property, under the lease, is temporary, and
considered transitory. The fact that the Republic, through the AFP, constructed
some installations of a permanent nature does not alter the fact that the entry
into the land was transitory, or intended to last a year, although renewable from
year to year by consent of 'The owner of the land. By express provision of the
lease agreement the Republic, as lessee, undertook to return the premises in
substantially the same condition as at the time the property was first occupied
by the AFP. It is claimed that the intention of the lessee was to occupy the land
permanently, as may be inferred from the construction of permanent
improvements. But this "intention" cannot prevail over the clear and express
terms of the lease contract. Intent is to be deduced from the language
employed by the parties, and the terms 'of the contract, when unambiguous,
as in the instant case, are conclusive in the absence of averment and proof of
mistake or fraud — the question being not what the intention was, but what is
expressed in the language used. (City of Manila v. Rizal Park Co., Inc., 53 Phil.
515, 525); Magdalena Estate, Inc. v. Myrick, 71 Phil. 344, 348). Moreover, in
order to judge the intention of the contracting parties, their contemporaneous
and subsequent acts shall be principally considered (Art. 1371, Civil Code). If
the intention of the lessee (Republic) in 1947 was really to occupy permanently
Castellvi's property, why was the contract of lease entered into on year to year
basis? Why was the lease agreement renewed from year to year? Why did not
the Republic expropriate this land of Castellvi in 1949 when, according to the
Republic itself, it expropriated the other parcels of land that it occupied at the
same time as the Castellvi land, for the purpose of converting them into a jet
air base? 14 It might really have been the intention of the Republic to
expropriate the lands in question at some future time, but certainly mere notice
- much less an implied notice — of such intention on the part of the Republic
to expropriate the lands in the future did not, and could not, bind the landowner,
nor bind the land itself. The expropriation must be actually commenced in court
(Republic vs. Baylosis, et al., 96 Phil. 461, 484).
Third, the entry into the property should be under warrant or color of legal
authority. This circumstance in the "taking" may be considered as present in
the instant case, because the Republic entered the Castellvi property as
lessee.
Fourth, the property must be devoted to a public use or otherwise informally
appropriated or injuriously affected. It may be conceded that the circumstance
of the property being devoted to public use is present because the property
was used by the air force of the AFP.
Fifth, the utilization of the property for public use must be in such a way as to
oust the owner and deprive him of all beneficial enjoyment of the property. In
the instant case, the entry of the Republic into the property and its utilization
of the same for public use did not oust Castellvi and deprive her of all beneficial
enjoyment of the property. Castellvi remained as owner, and was continuously
recognized as owner by the Republic, as shown by the renewal of the lease
contract from year to year, and by the provision in the lease contract whereby
the Republic undertook to return the property to Castellvi when the lease was
terminated. Neither was Castellvi deprived of all the beneficial enjoyment of
the property, because the Republic was bound to pay, and had been paying,
Castellvi the agreed monthly rentals until the time when it filed the complaint
for eminent domain on June 26, 1959.
It is clear, therefore, that the "taking" of Catellvi's property for purposes of
eminent domain cannot be considered to have taken place in 1947 when the
Republic commenced to occupy the property as lessee thereof. We find merit
in the contention of Castellvi that two essential elements in the "taking" of
property under the power of eminent domain, namely: (1) that the entrance
and occupation by the condemnor must be for a permanent, or indefinite
period, and (2) that in devoting the property to public use the owner was ousted
from the property and deprived of its beneficial use, were not present when the
Republic entered and occupied the Castellvi property in 1947.
Untenable also is the Republic's contention that although the contract between
the parties was one of lease on a year to year basis, it was "in reality a more
or less permanent right to occupy the premises under the guise of lease with
the 'right and privilege' to buy the property should the lessor wish to terminate
the lease," and "the right to buy the property is merged as an integral part of
the lease relationship ... so much so that the fair market value has been agreed
upon, not, as of the time of purchase, but as of the time of occupancy" 15 We
cannot accept the Republic's contention that a lease on a year to year basis
can give rise to a permanent right to occupy, since by express legal provision
a lease made for a determinate time, as was the lease of Castellvi's land in the
instant case, ceases upon the day fixed, without need of a demand (Article
1669, Civil Code). Neither can it be said that the right of eminent domain may
be exercised by simply leasing the premises to be expropriated (Rule 67,
Section 1, Rules of Court). Nor can it be accepted that the Republic would
enter into a contract of lease where its real intention was to buy, or why the
Republic should enter into a simulated contract of lease ("under the guise of
lease", as expressed by counsel for the Republic) when all the time the
Republic had the right of eminent domain, and could expropriate Castellvi's
land if it wanted to without resorting to any guise whatsoever. Neither can we
see how a right to buy could be merged in a contract of lease in the absence
of any agreement between the parties to that effect. To sustain the contention
of the Republic is to sanction a practice whereby in order to secure a low price
for a land which the government intends to expropriate (or would eventually
expropriate) it would first negotiate with the owner of the land to lease the land
(for say ten or twenty years) then expropriate the same when the lease is about
to terminate, then claim that the "taking" of the property for the purposes of the
expropriation be reckoned as of the date when the Government started to
occupy the property under the lease, and then assert that the value of the
property being expropriated be reckoned as of the start of the lease, in spite
of the fact that the value of the property, for many good reasons, had in the
meantime increased during the period of the lease. This would be sanctioning
what obviously is a deceptive scheme, which would have the effect of depriving
the owner of the property of its true and fair market value at the time when the
expropriation proceedings were actually instituted in court. The Republic's
claim that it had the "right and privilege" to buy the property at the value that it
had at the time when it first occupied the property as lessee nowhere appears
in the lease contract. What was agreed expressly in paragraph No. 5 of the
lease agreement was that, should the lessor require the lessee to return the
premises in the same condition as at the time the same was first occupied by
the AFP, the lessee would have the "right and privilege" (or option) of paying
the lessor what it would fairly cost to put the premises in the same condition
as it was at the commencement of the lease, in lieu of the lessee's
performance of the undertaking to put the land in said condition. The "fair
value" at the time of occupancy, mentioned in the lease agreement, does not
refer to the value of the property if bought by the lessee, but refers to the cost
of restoring the property in the same condition as of the time when the lessee
took possession of the property. Such fair value cannot refer to the purchase
price, for purchase was never intended by the parties to the lease contract. It
is a rule in the interpretation of contracts that "However general the terms of a
contract may be, they shall not be understood to comprehend things that are
distinct and cases that are different from those upon which the parties intended
to agree" (Art. 1372, Civil Code).
We hold, therefore, that the "taking" of the Castellvi property should not be
reckoned as of the year 1947 when the Republic first occupied the same
pursuant to the contract of lease, and that the just compensation to be paid for
the Castellvi property should not be determined on the basis of the value of
the property as of that year. The lower court did not commit an error when it
held that the "taking" of the property under expropriation commenced with the
filing of the complaint in this case.
Under Section 4 of Rule 67 of the Rules of Court, 16 the "just compensation" is
to be determined as of the date of the filing of the complaint. This Court has
ruled that when the taking of the property sought to be expropriated coincides
with the commencement of the expropriation proceedings, or takes place
subsequent to the filing of the complaint for eminent domain, the just
compensation should be determined as of the date of the filing of the
complaint. (Republic vs. Philippine National Bank, L-14158, April 12, 1961, 1
SCRA 957, 961-962). In the instant case, it is undisputed that the Republic
was placed in possession of the Castellvi property, by authority of the court,
on August 10, 1959. The "taking" of the Castellvi property for the purposes of
determining the just compensation to be paid must, therefore, be reckoned as
of June 26, 1959 when the complaint for eminent domain was filed.
Regarding the two parcels of land of Toledo-Gozun, also sought to be
expropriated, which had never been under lease to the Republic, the Republic
was placed in possession of said lands, also by authority of the court, on
August 10, 1959, The taking of those lands, therefore, must also be reckoned
as of June 26, 1959, the date of the filing of the complaint for eminent domain.
2. Regarding the first assigned error — discussed as the second issue — the
Republic maintains that, even assuming that the value of the expropriated
lands is to be determined as of June 26, 1959, the price of P10.00 per square
meter fixed by the lower court "is not only exhorbitant but also unconscionable,
and almost fantastic". On the other hand, both Castellvi and Toledo-Gozun
maintain that their lands are residential lands with a fair market value of not
less than P15.00 per square meter.
The lower court found, and declared, that the lands of Castellvi and Toledo-
Gozun are residential lands. The finding of the lower court is in consonance
with the unanimous opinion of the three commissioners who, in their report to
the court, declared that the lands are residential lands.
The Republic assails the finding that the lands are residential, contending that
the plans of the appellees to convert the lands into subdivision for residential
purposes were only on paper, there being no overt acts on the part of the
appellees which indicated that the subdivision project had been commenced,
so that any compensation to be awarded on the basis of the plans would be
speculative. The Republic's contention is not well taken. We find evidence
showing that the lands in question had ceased to be devoted to the production
of agricultural crops, that they had become adaptable for residential purposes,
and that the appellees had actually taken steps to convert their lands into
residential subdivisions even before the Republic filed the complaint for
eminent domain. In the case of City of Manila vs. Corrales (32 Phil. 82, 98) this
Court laid down basic guidelines in determining the value of the property
expropriated for public purposes. This Court said:
In determining the value of land appropriated for public purposes, the same
consideration are to be regarded as in a sale of property between private
parties. The inquiry, in such cases, must be what is the property worth in the
market, viewed not merely with reference to the uses to which it is at the time
applied, but with reference to the uses to which it is plainly adapted, that is to
say, What is it worth from its availability for valuable uses?
So many and varied are the circumstances to be taken into account in
determining the value of property condemned for public purposes, that it is
practically impossible to formulate a rule to govern its appraisement in all
cases. Exceptional circumstances will modify the most carefully guarded rule,
but, as a general thing, we should say that the compensation of the owner is
to be estimated by reference to the use for which the property is suitable,
having regard to the existing business or wants of the community, or such as
may be reasonably expected in the immediate future. (Miss. and Rum River
Boom Co. vs. Patterson, 98 U.S., 403).
In expropriation proceedings, therefore, the owner of the land has the right to
its value for the use for which it would bring the most in the market. 17 The
owner may thus show every advantage that his property possesses, present
and prospective, in order that the price it could be sold for in the market may
be satisfactorily determined. 18 The owner may also show that the property is
suitable for division into village or town lots. 19
The trial court, therefore, correctly considered, among other circumstances,
the proposed subdivision plans of the lands sought to be expropriated in
finding that those lands are residential lots. This finding of the lower court is
supported not only by the unanimous opinion of the commissioners, as
embodied in their report, but also by the Provincial Appraisal Committee of the
province of Pampanga composed of the Provincial Treasurer, the Provincial
Auditor and the District Engineer. In the minutes of the meeting of the
Provincial Appraisal Committee, held on May 14, 1959 (Exh. 13-Castellvi) We
read in its Resolution No. 10 the following:
3. Since 1957 the land has been classified as residential in view of its proximity
to the air base and due to the fact that it was not being devoted to agriculture.
In fact, there is a plan to convert it into a subdivision for residential purposes.
The taxes due on the property have been paid based on its classification as
residential land;
The evidence shows that Castellvi broached the idea of subdividing her land
into residential lots as early as July 11, 1956 in her letter to the Chief of Staff
of the Armed Forces of the Philippines. (Exh. 5-Castellvi) As a matter of fact,
the layout of the subdivision plan was tentatively approved by the National
Planning Commission on September 7, 1956. (Exh. 8-Castellvi). The land of
Castellvi had not been devoted to agriculture since 1947 when it was leased
to the Philippine Army. In 1957 said land was classified as residential, and
taxes based on its classification as residential had been paid since then (Exh.
13-Castellvi). The location of the Castellvi land justifies its suitability for a
residential subdivision. As found by the trial court, "It is at the left side of the
entrance of the Basa Air Base and bounded on two sides by roads (Exh. 13-
Castellvi), paragraphs 1 and 2, Exh. 12-Castellvi), the poblacion, (of
Floridablanca) the municipal building, and the Pampanga Sugar Mills are
closed by. The barrio schoolhouse and chapel are also near (T.S.N. November
23,1960, p. 68)." 20
The lands of Toledo-Gozun (Lot 1-B and Lot 3) are practically of the same
condition as the land of Castellvi. The lands of Toledo-Gozun adjoin the land
of Castellvi. They are also contiguous to the Basa Air Base, and are along the
road. These lands are near the barrio schoolhouse, the barrio chapel, the
Pampanga Sugar Mills, and the poblacion of Floridablanca (Exhs. 1, 3 and 4-
Toledo-Gozun). As a matter of fact, regarding lot 1-B it had already been
surveyed and subdivided, and its conversion into a residential subdivision was
tentatively approved by the National Planning Commission on July 8, 1959
(Exhs. 5 and 6 Toledo-Gozun). As early as June, 1958, no less than 32 man
connected with the Philippine Air Force among them commissioned officers,
non-commission officers, and enlisted men had requested Mr. and Mrs.
Joaquin D. Gozun to open a subdivision on their lands in question (Exhs. 8, 8-
A to 8-ZZ-Toledo-Gozun). 21
We agree with the findings, and the conclusions, of the lower court that the
lands that are the subject of expropriation in the present case, as of August
10, 1959 when the same were taken possession of by the Republic, were
residential lands and were adaptable for use as residential subdivisions.
Indeed, the owners of these lands have the right to their value for the use for
which they would bring the most in the market at the time the same were taken
from them. The most important issue to be resolved in the present case relates
to the question of what is the just compensation that should be paid to the
appellees.
The Republic asserts that the fair market value of the lands of the appellees is
P.20 per square meter. The Republic cites the case of Republic vs. Narciso,
et al., L-6594, which this Court decided on May 18, 1956. The Narciso case
involved lands that belonged to Castellvi and Toledo-Gozun, and to one
Donata Montemayor, which were expropriated by the Republic in 1949 and
which are now the site of the Basa Air Base. In the Narciso case this Court
fixed the fair market value at P.20 per square meter. The lands that are sought
to be expropriated in the present case being contiguous to the lands involved
in the Narciso case, it is the stand of the Republic that the price that should be
fixed for the lands now in question should also be at P.20 per square meter.
We can not sustain the stand of the Republic. We find that the price of P.20
per square meter, as fixed by this Court in the Narciso case, was based on the
allegation of the defendants (owners) in their answer to the complaint for
eminent domain in that case that the price of their lands was P2,000.00 per
hectare and that was the price that they asked the court to pay them. This
Court said, then, that the owners of the land could not be given more than what
they had asked, notwithstanding the recommendation of the majority of the
Commission on Appraisal — which was adopted by the trial court — that the
fair market value of the lands was P3,000.00 per hectare. We also find that the
price of P.20 per square meter in the Narciso case was considered the fair
market value of the lands as of the year 1949 when the expropriation
proceedings were instituted, and at that time the lands were classified as sugar
lands, and assessed for taxation purposes at around P400.00 per hectare, or
P.04 per square meter. 22 While the lands involved in the present case, like
the lands involved in the Narciso case, might have a fair market value of P.20
per square meter in 1949, it can not be denied that ten years later, in 1959,
when the present proceedings were instituted, the value of those lands had
increased considerably. The evidence shows that since 1949 those lands were
no longer cultivated as sugar lands, and in 1959 those lands were already
classified, and assessed for taxation purposes, as residential lands. In 1959
the land of Castellvi was assessed at P1.00 per square meter. 23
The Republic also points out that the Provincial Appraisal Committee of
Pampanga, in its resolution No. 5 of February 15, 1957 (Exhibit D),
recommended the sum of P.20 per square meter as the fair valuation of the
Castellvi property. We find that this resolution was made by the Republic the
basis in asking the court to fix the provisional value of the lands sought to be
expropriated at P259,669.10, which was approved by the court. 24 It must be
considered, however, that the amount fixed as the provisional value of the
lands that are being expropriated does not necessarily represent the true and
correct value of the land. The value is only "provisional" or "tentative", to serve
as the basis for the immediate occupancy of the property being expropriated
by the condemnor. The records show that this resolution No. 5 was repealed
by the same Provincial Committee on Appraisal in its resolution No. 10 of May
14, 1959 (Exhibit 13-Castellvi). In that resolution No. 10, the appraisal
committee stated that "The Committee has observed that the value of the land
in this locality has increased since 1957 ...", and recommended the price of
P1.50 per square meter. It follows, therefore, that, contrary to the stand of the
Republic, that resolution No. 5 of the Provincial Appraisal Committee can not
be made the basis for fixing the fair market value of the lands of Castellvi and
Toledo-Gozun.
The Republic further relied on the certification of the Acting Assistant Provincial
Assessor of Pampanga, dated February 8, 1961 (Exhibit K), to the effect that
in 1950 the lands of Toledo-Gozun were classified partly as sugar land and
partly as urban land, and that the sugar land was assessed at P.40 per square
meter, while part of the urban land was assessed at P.40 per square meter
and part at P.20 per square meter; and that in 1956 the Castellvi land was
classified as sugar land and was assessed at P450.00 per hectare, or P.045
per square meter. We can not also consider this certification of the Acting
Assistant Provincial Assessor as a basis for fixing the fair market value of the
lands of Castellvi and Toledo-Gozun because, as the evidence shows, the
lands in question, in 1957, were already classified and assessed for taxation
purposes as residential lands. The certification of the assessor refers to the
year 1950 as far as the lands of Toledo-Gozun are concerned, and to the year
1956 as far as the land of Castellvi is concerned. Moreover, this Court has held
that the valuation fixed for the purposes of the assessment of the land for
taxation purposes can not bind the landowner where the latter did not intervene
in fixing it. 25
On the other hand, the Commissioners, appointed by the court to appraise the
lands that were being expropriated, recommended to the court that the price
of P10.00 per square meter would be the fair market value of the lands. The
commissioners made their recommendation on the basis of their observation
after several ocular inspections of the lands, of their own personal knowledge
of land values in the province of Pampanga, of the testimonies of the owners
of the land, and other witnesses, and of documentary evidence presented by
the appellees. Both Castellvi and Toledo-Gozun testified that the fair market
value of their respective land was at P15.00 per square meter. The
documentary evidence considered by the commissioners consisted of deeds
of sale of residential lands in the town of San Fernando and in Angeles City,
in the province of Pampanga, which were sold at prices ranging from P8.00 to
P20.00 per square meter (Exhibits 15, 16, 17, 18, 19, 20, 21, 22, 23-Castellvi).
The commissioners also considered the decision in Civil Case No. 1531 of the
Court of First Instance of Pampanga, entitled Republic vs. Sabina Tablante,
which was expropriation case filed on January 13, 1959, involving a parcel of
land adjacent to the Clark Air Base in Angeles City, where the court fixed the
price at P18.00 per square meter (Exhibit 14-Castellvi). In their report, the
commissioners, among other things, said:
... This expropriation case is specially pointed out, because the circumstances
and factors involved therein are similar in many respects to the defendants'
lands in this case. The land in Civil Case No. 1531 of this Court and the lands
in the present case (Civil Case No. 1623) are both near the air bases, the Clark
Air Base and the Basa Air Base respectively. There is a national road fronting
them and are situated in a first-class municipality. As added advantage it may
be said that the Basa Air Base land is very near the sugar mill at Del Carmen,
Floridablanca, Pampanga, owned by the Pampanga Sugar Mills. Also just
stone's throw away from the same lands is a beautiful vacation spot at Palacol,
a sitio of the town of Floridablanca, which counts with a natural swimming pool
for vacationists on weekends. These advantages are not found in the case of
the Clark Air Base. The defendants' lands are nearer to the poblacion of
Floridablanca then Clark Air Base is nearer (sic) to the poblacion of Angeles,
Pampanga.
The deeds of absolute sale, according to the undersigned commissioners, as
well as the land in Civil Case No. 1531 are competent evidence, because they
were executed during the year 1959 and before August 10 of the same year.
More specifically so the land at Clark Air Base which coincidentally is the
subject matter in the complaint in said Civil Case No. 1531, it having been filed
on January 13, 1959 and the taking of the land involved therein was ordered
by the Court of First Instance of Pampanga on January 15, 1959, several
months before the lands in this case were taken by the plaintiffs ....
From the above and considering further that the lowest as well as the highest
price per square meter obtainable in the market of Pampanga relative to
subdivision lots within its jurisdiction in the year 1959 is very well known by the
Commissioners, the Commission finds that the lowest price that can be
awarded to the lands in question is P10.00 per square meter. 26
The lower court did not altogether accept the findings of the Commissioners
based on the documentary evidence, but it considered the documentary
evidence as basis for comparison in determining land values. The lower court
arrived at the conclusion that "the unanimous recommendation of the
commissioners of ten (P10.00) pesos per square meter for the three lots of the
defendants subject of this action is fair and just". 27 In arriving at its conclusion,
the lower court took into consideration, among other circumstances, that the
lands are titled, that there is a rising trend of land values, and the lowered
purchasing power of the Philippine peso.
In the case of Manila Railroad Co. vs. Caligsihan, 40 Phil. 326, 328, this Court
said:
A court of first instance or, on appeal, the Supreme Court, may change or
modify the report of the commissioners by increasing or reducing the amount
of the award if the facts of the case so justify. While great weight is attached
to the report of the commissioners, yet a court may substitute therefor its
estimate of the value of the property as gathered from the record in certain
cases, as, where the commissioners have applied illegal principles to the
evidence submitted to them, or where they have disregarded a clear
preponderance of evidence, or where the amount allowed is either palpably
inadequate or excessive. 28
The report of the commissioners of appraisal in condemnation proceedings
are not binding, but merely advisory in character, as far as the court is
concerned. 29 In our analysis of the report of the commissioners, We find points
that merit serious consideration in the determination of the just compensation
that should be paid to Castellvi and Toledo-Gozun for their lands. It should be
noted that the commissioners had made ocular inspections of the lands and
had considered the nature and similarities of said lands in relation to the lands
in other places in the province of Pampanga, like San Fernando and Angeles
City. We cannot disregard the observations of the commissioners regarding
the circumstances that make the lands in question suited for residential
purposes — their location near the Basa Air Base, just like the lands in Angeles
City that are near the Clark Air Base, and the facilities that obtain because of
their nearness to the big sugar central of the Pampanga Sugar mills, and to
the flourishing first class town of Floridablanca. It is true that the lands in
question are not in the territory of San Fernando and Angeles City, but,
considering the facilities of modern communications, the town of Floridablanca
may be considered practically adjacent to San Fernando and Angeles City. It
is not out of place, therefore, to compare the land values in Floridablanca to
the land values in San Fernando and Angeles City, and form an idea of the
value of the lands in Floridablanca with reference to the land values in those
two other communities.
The important factor in expropriation proceeding is that the owner is awarded
the just compensation for his property. We have carefully studied the record,
and the evidence, in this case, and after considering the circumstances
attending the lands in question We have arrived at the conclusion that the price
of P10.00 per square meter, as recommended by the commissioners and
adopted by the lower court, is quite high. It is Our considered view that the
price of P5.00 per square meter would be a fair valuation of the lands in
question and would constitute a just compensation to the owners thereof. In
arriving at this conclusion We have particularly taken into consideration the
resolution of the Provincial Committee on Appraisal of the province of
Pampanga informing, among others, that in the year 1959 the land of Castellvi
could be sold for from P3.00 to P4.00 per square meter, while the land of
Toledo-Gozun could be sold for from P2.50 to P3.00 per square meter. The
Court has weighed all the circumstances relating to this expropriations
proceedings, and in fixing the price of the lands that are being expropriated the
Court arrived at a happy medium between the price as recommended by the
commissioners and approved by the court, and the price advocated by the
Republic. This Court has also taken judicial notice of the fact that the value of
the Philippine peso has considerably gone down since the year
1959. 30 Considering that the lands of Castellvi and Toledo-Gozun are
adjoining each other, and are of the same nature, the Court has deemed it
proper to fix the same price for all these lands.
3. The third issue raised by the Republic relates to the payment of interest.
The Republic maintains that the lower court erred when it ordered the Republic
to pay Castellvi interest at the rate of 6% per annum on the total amount
adjudged as the value of the land of Castellvi, from July 1, 1956 to July 10,
1959. We find merit in this assignment of error.
In ordering the Republic to pay 6% interest on the total value of the land of
Castellvi from July 1, 1956 to July 10, 1959, the lower court held that the
Republic had illegally possessed the land of Castellvi from July 1, 1956, after
its lease of the land had expired on June 30, 1956, until August 10, 1959 when
the Republic was placed in possession of the land pursuant to the writ of
possession issued by the court. What really happened was that the Republic
continued to occupy the land of Castellvi after the expiration of its lease on
June 30, 1956, so much so that Castellvi filed an ejectment case against the
Republic in the Court of First Instance of Pampanga. 31 However, while that
ejectment case was pending, the Republic filed the complaint for eminent
domain in the present case and was placed in possession of the land on
August 10, 1959, and because of the institution of the expropriation
proceedings the ejectment case was later dismissed. In the order dismissing
the ejectment case, the Court of First Instance of Pampanga said:
Plaintiff has agreed, as a matter of fact has already signed an agreement with
defendants, whereby she had agreed to receive the rent of the lands, subject
matter of the instant case from June 30, 1956 up to 1959 when the Philippine
Air Force was placed in possession by virtue of an order of the Court upon
depositing the provisional amount as fixed by the Provincial Appraisal
Committee with the Provincial Treasurer of
Pampanga; ...
If Castellvi had agreed to receive the rentals from June 30, 1956 to August 10,
1959, she should be considered as having allowed her land to be leased to the
Republic until August 10, 1959, and she could not at the same time be entitled
to the payment of interest during the same period on the amount awarded her
as the just compensation of her land. The Republic, therefore, should pay
Castellvi interest at the rate of 6% per annum on the value of her land, minus
the provisional value that was deposited, only from July 10, 1959 when it
deposited in court the provisional value of the land.
4. The fourth error assigned by the Republic relates to the denial by the lower
court of its motion for a new trial based on nearly discovered evidence. We do
not find merit in this assignment of error.
After the lower court had decided this case on May 26, 1961, the Republic filed
a motion for a new trial, supplemented by another motion, both based upon
the ground of newly discovered evidence. The alleged newly discovered
evidence in the motion filed on June 21, 1961 was a deed of absolute sale-
executed on January 25, 1961, showing that a certain Serafin Francisco had
sold to Pablo L. Narciso a parcel of sugar land having an area of 100,000
square meters with a sugar quota of 100 piculs, covered by P.A. No. 1701,
situated in Barrio Fortuna, Floridablanca, for P14,000, or P.14 per square
meter.
In the supplemental motion, the alleged newly discovered evidence were: (1)
a deed of sale of some 35,000 square meters of land situated at Floridablanca
for P7,500.00 (or about P.21 per square meter) executed in July, 1959, by the
spouses Evelyn D. Laird and Cornelio G. Laird in favor of spouses Bienvenido
S. Aguas and Josefina Q. Aguas; and (2) a deed of absolute sale of a parcel
of land having an area of 4,120,101 square meters, including the sugar quota
covered by Plantation Audit No. 161 1345, situated at Floridablanca,
Pampanga, for P860.00 per hectare (a little less than P.09 per square meter)
executed on October 22, 1957 by Jesus Toledo y Mendoza in favor of the Land
Tenure Administration.
We find that the lower court acted correctly when it denied the motions for a
new trial.
To warrant the granting of a new trial based on the ground of newly discovered
evidence, it must appear that the evidence was discovered after the trial; that
even with the exercise of due diligence, the evidence could not have been
discovered and produced at the trial; and that the evidence is of such a nature
as to alter the result of the case if admitted. 32 The lower court correctly ruled
that these requisites were not complied with.
The lower court, in a well-reasoned order, found that the sales made by Serafin
Francisco to Pablo Narciso and that made by Jesus Toledo to the Land Tenure
Administration were immaterial and irrelevant, because those sales covered
sugarlands with sugar quotas, while the lands sought to be expropriated in the
instant case are residential lands. The lower court also concluded that the land
sold by the spouses Laird to the spouses Aguas was a sugar land.
We agree with the trial court. In eminent domain proceedings, in order that
evidence as to the sale price of other lands may be admitted in evidence to
prove the fair market value of the land sought to be expropriated, the lands
must, among other things, be shown to be similar.
But even assuming, gratia argumenti, that the lands mentioned in those deeds
of sale were residential, the evidence would still not warrant the grant of a new
trial, for said evidence could have been discovered and produced at the trial,
and they cannot be considered newly discovered evidence as contemplated in
Section 1(b) of Rule 37 of the Rules of Court. Regarding this point, the trial
court said:
The Court will now show that there was no reasonable diligence employed.
The land described in the deed of sale executed by Serafin Francisco, copy of
which is attached to the original motion, is covered by a Certificate of Title
issued by the Office of the Register of Deeds of Pampanga. There is no
question in the mind of the court but this document passed through the Office
of the Register of Deeds for the purpose of transferring the title or annotating
the sale on the certificate of title. It is true that Fiscal Lagman went to the Office
of the Register of Deeds to check conveyances which may be presented in the
evidence in this case as it is now sought to be done by virtue of the motions at
bar, Fiscal Lagman, one of the lawyers of the plaintiff, did not exercise
reasonable diligence as required by the rules. The assertion that he only went
to the office of the Register of Deeds 'now and then' to check the records in
that office only shows the half-hazard [sic] manner by which the plaintiff looked
for evidence to be presented during the hearing before the Commissioners, if Unfortunately the Court cannot classify it as newly-discovered evidence,
it is at all true that Fiscal Lagman did what he is supposed to have done because tinder the circumstances, the correct qualification that can be given
according to Solicitor Padua. It would have been the easiest matter for plaintiff is 'forgotten evidence'. Forgotten however, is not newly-discovered
to move for the issuance of a subpoena duces tecum directing the Register of evidence. 33
Deeds of Pampanga to come to testify and to bring with him all documents
found in his office pertaining to sales of land in Floridablanca adjacent to or The granting or denial of a motion for new trial is, as a general rule,
near the lands in question executed or recorded from 1958 to the present. discretionary with the trial court, whose judgment should not be disturbed
Even this elementary precaution was not done by plaintiff's numerous unless there is a clear showing of abuse of discretion. 34 We do not see any
attorneys. abuse of discretion on the part of the lower court when it denied the motions
for a new trial.
The same can be said of the deeds of sale attached to the supplementary
motion. They refer to lands covered by certificate of title issued by the Register WHEREFORE, the decision appealed from is modified, as follows:
of Deeds of Pampanga. For the same reason they could have been easily (a) the lands of appellees Carmen Vda. de Castellvi and Maria Nieves Toledo-
discovered if reasonable diligence has been exerted by the numerous lawyers Gozun, as described in the complaint, are declared expropriated for public use;
of the plaintiff in this case. It is noteworthy that all these deeds of sale could
be found in several government offices, namely, in the Office of the Register (b) the fair market value of the lands of the appellees is fixed at P5.00 per
of Deeds of Pampanga, the Office of the Provincial Assessor of Pampanga, square meter;
the Office of the Clerk of Court as a part of notarial reports of notaries public
(c) the Republic must pay appellee Castellvi the sum of P3,796,495.00 as just
that acknowledged these documents, or in the archives of the National Library.
compensation for her one parcel of land that has an area of 759,299 square
In respect to Annex 'B' of the supplementary motion copy of the document
meters, minus the sum of P151,859.80 that she withdrew out of the amount
could also be found in the Office of the Land Tenure Administration, another
that was deposited in court as the provisional value of the land, with interest at
government entity. Any lawyer with a modicum of ability handling this
the rate of 6% per annum from July 10, 1959 until the day full payment is made
expropriation case would have right away though [sic] of digging up documents
or deposited in court;
diligently showing conveyances of lands near or around the parcels of land
sought to be expropriated in this case in the offices that would have naturally (d) the Republic must pay appellee Toledo-Gozun the sum of P2,695,225.00
come to his mind such as the offices mentioned above, and had counsel for as the just compensation for her two parcels of land that have a total area of
the movant really exercised the reasonable diligence required by the Rule' 539,045 square meters, minus the sum of P107,809.00 that she withdrew out
undoubtedly they would have been able to find these documents and/or of the amount that was deposited in court as the provisional value of her lands,
caused the issuance of subpoena duces tecum. ... with interest at the rate of 6%, per annum from July 10, 1959 until the day full
payment is made or deposited in court; (e) the attorney's lien of Atty. Alberto
It is also recalled that during the hearing before the Court of the Report and
Cacnio is enforced; and
Recommendation of the Commissioners and objection thereto, Solicitor Padua
made the observation: (f) the costs should be paid by appellant Republic of the Philippines, as
provided in Section 12, Rule 67, and in Section 13, Rule 141, of the Rules of
I understand, Your Honor, that there was a sale that took place in this place of
Court.
land recently where the land was sold for P0.20 which is contiguous to this
land. IT IS SO ORDERED.
The Court gave him permission to submit said document subject to the
approval of the Court. ... This was before the decision was rendered, and later
promulgated on May 26, 1961 or more than one month after Solicitor Padua
made the above observation. He could have, therefore, checked up the alleged
sale and moved for a reopening to adduce further evidence. He did not do so.
He forgot to present the evidence at a more propitious time. Now, he seeks to
introduce said evidence under the guise of newly-discovered evidence.
HERMANO OIL MANUFACTURING AND SUGAR CORP. VS TOLL
REGULATORY BOARD
The issue to be determined concerns the demand of the petitioner to have
access to the North Luzon Expressway (NLEX) by way of an easement of right
of way. The demand was rebuffed by the respondents, and upheld by both the
trial and appellate courts.
The Case
On appeal by review on certiorari is the decision promulgated on October 27,
2004,1 whereby the Court of Appeals (CA) affirmed the dismissal of the
petitioner’s complaint for specific performance by the Regional Trial Court
(RTC) in Malolos, Bulacan, Branch 7, through the order issued on March 6,
2002.2
Thereafter, the petitioner sued the TRB and Engr. Jaime S. Dumlao, the TRB’s
Executive Director, in the RTC,6 demanding specific performance, the grant of
the easement of right of way and damages (Civil Case No. 37-M-2002). The
petitioner amended its complaint to implead the Philippine National
Construction Corporation (PNCC) and the Department of Public Works and
Highways (DPWH) as indispensable parties.7
The petitioner alleged in its amended complaint that the access fence had
totally deprived it of the use and enjoyment of its property by preventing ingress
and egress to its property; that the only access leading to its property was the
road network situated in front of its property; that it was thereby deprived of its
property without due process of law and just compensation; and that it was
also denied equal protection of the law because adjacent property owners had
been given ingress and egress access to their properties. It prayed that the
RTC:chanroblesvirtuallawlibrary
1. Immediately issue a writ of preliminary injunction/temporary restraining
order enjoining the defendants, its agents and/or representatives from
depriving plaintiff to ingress and egress of its property;

2. After due hearing:chanroblesvirtuallawlibrary

Antecedents
a) Render the foregoing writ of preliminary injunction perpetual;
The petitioner owned a parcel of land located at the right side of the Sta. Rita
b) Granting plaintiff a right of way;
Exit of the NLEX situated at Barangay Sta. Rita, Guiguinto, Bulacan and
covered by Transfer Certificate of Title (TCT) No. T-134222 in its name issued
c) Declare the condemnation of plaintiff’s property as null and void.
by the Registry of Deeds of Bulacan.3 The parcel of land was bounded by an
Alternatively, plaintiff prays that defendants be ordered to pay plaintiff a just
access fence along the NLEX. In its letter dated September 7, 2001, 4 the
and fair compensation of the latter’s property in the amount of not less than
petitioner requested that respondent Toll Regulatory Board (TRB) grant an
Four Thousand Pesos (Ps. 4,000.00) per square meter;
easement of right of way, contending that it had been totally deprived of the
enjoyment and possession of its property by the access fence that had barred
d) To pay plaintiff the amount of THREE HUNDRED THOUSAND PESOS (Ps.
its entry into and exit from the NLEX. On September 26, 2001, however, the
300,000.00) and Ps. 5,000.00 per court appearance by way of Attorney’s fees;
TRB denied the petitioner’s request, explaining
thusly:chanroblesvirtuallawlibrary
e) To pay plaintiff Moral and Exemplary Damages in the amount of Ps.
200,000.00; and
It is with regret that we cannot favorably consider your client’s request at this
point in time. Said request is inconsistent with the provision of Section 7.0 of f) To pay plaintiff the costs of suit.
Republic Act No. 2000, also known as the Limited Access Highway Act.
Plaintiff further prays for such other reliefs and remedies as may be deemed
Moreover, allowing easement of right-of-way may have detrimental/adverse
just and equitable under the premises.8
effect on the scheduled rehabilitation and improvement of the North Luzon
Expressway Interchanges, as well as on the operational problems, i.e. traffic Appearing for the TRB, the Office of the Solicitor General (OSG) filed a Motion
conflicts that may arise, if approved.5 to Dismiss with Opposition to the Application for the Issuance of Temporary
Restraining Order and/or Writ of Preliminary Injunction based on the following instant complaint against him is tantamount to a claim against the state which
grounds:9 cannot be sued without its consent.

This principle applies with equal force as regards new defendant Department
I. of Public Works and Highways (DPWH).

THE HONORABLE COURT HAS NO JURISDICTION OVER THE CASE
II.
THE PETITION STATES NO CAUSE OF ACTION CONSIDERING THAT:
A. PLAINTIFF IS NOT THE REAL PARTY IN INTEREST
Defendant Philippine National Construction Corporation (PNCC), on the other
hand, was impleaded as additional defendant being the entity that operates
the North Luzon Expressway and was primarily responsible in depriving the
plaintiff of the use and enjoyment of its property by reason of the construction
of the access or right of way fence that prevents ingress to and egress from
the subject property, considering further that the other defendants had refused
to grant plaintiff’s request for an easement of right of way.

B. EASEMENT WILL NOT LIE BECAUSE THE LIMITED ACCESS TO
THE NORTH LUZON EXPRESSWAY IS ALLOWED UNDER
REPUBLIC ACT 2000
C. THE STATE CANNOT BE SUED WITHOUT ITS CONSENT
III.
THE REQUISITES FOR THE ISSUANCE OF TEMPORARY RESTRAINING
ORDER AND/OR WRIT OF INJUNCTION ARE NOT PRESENT
IV.
The main objective and prayer of the plaintiff is for this court to issue a writ of
injunction that will restrain the defendants from depriving it of ingress and
egress to its property in question or to grant to it a right of way to its property.
Suffice it to say that the main relief sought by the plaintiff is beyond the
jurisdiction of this court to grant as provided for under Presidential Decree No.
1818 and Republic Act No. 8975 which essentially prohibit the courts from
issuing temporary restraining orders and/or writs of injunction against
government infrastructure projects, and which expressly declares any such
TRO or writ of injunction void under Section 3 of R.A. No. 8975.
In view of all the foregoing, the motion to dismiss is hereby GRANTED.

THE COMPLAINT HAS NO LEGAL BASIS, THE PROPER REMEDY WHEREFORE, the instant complaint is hereby DISMISSED.
AVAILABLE IN THIS CASE IS NOT COMPLAINT BUT A PETITION FOR
CERTIORARI UNDER RULE 65 OF THE RULES OF COURT. SO ORDERED.11

In its order dated March 6, 2002,10 the RTC granted the motion to dismiss, The petitioner sought reconsideration, but the RTC denied its motion on July
observing as follows:chanroblesvirtuallawlibrary 25, 2002.12

The petitioner appealed.13

The present action against the defendants Toll Regulatory Board and its
Executive Director, Engr. Jaime S. Dumlao, Jr., could be considered as a suit
against the state without its consent as among the reliefs prayed for in the
complaint is to require the said defendants to pay, jointly and severally, a just Judgment of the CA
and reasonable compensation of the plaintiff’s property which, if awarded in
the judgment against said defendants, would ultimately involve an
On October 27, 2004, the CA promulgated its assailed judgment, affirming the
appropriation by the state of the amount needed to pay the compensation and
RTC’s dismissal of the complaint, to wit:chanroblesvirtuallawlibrary
damages so awarded. Moreover, as pointed out by the defendants-movants,
defendant Jaime S. Dumlao, Jr. is sued in his official capacity so that the
The law is clear. Plaintiff-appellant does not deny that the NLEX is a limited
access facility. Neither did it put forward any reason why it should not be
covered by the said law. Plaintiff-appellant, therefore, cannot expect any court
to issue a decision in its favor in violation of an existing law. The Court further
notes that plaintiff-appellant skirted this issue in its pleadings perhaps because
it recognizes the fact that its prayers in the complaint before the trial court is in
violation of the said law.
Moreover, as pointed out by defendants-appellees (Rollo, p. 19 and 127-128),
when plaintiff-appellant acquired the property on December 14, 1999 (See:
Records, p. 33), the NLEX was already in existence and as a matter of fact
Entry No. 189568 in the title indicated that a portion of the property was already
sold to the Republic of the Philippines (See: Dorsal portion, Records, p. 33). It
is basic that a person cannot demand an easement of right of way if the
isolation of the property was due to owner’s own act (Art. 649, NCC; Villanueva
v Velasco, 346 SCRA 99 [2000]). In the present case, when the plaintiff-
appellant bought the property in 1999, the NLEX was already in existence and
so was the access fence. In short, its predecessors-in-interest allowed the
property to be isolated. Plaintiff-appellant is now bound by the acts of its
predecessors-in-interest.
Moreover, as admitted by plaintiff-appellant in its amended complaint, there is
a road network in front of the property which serves as its access (Records, p.
28). It is settled that to be able to demand a compulsory right of way, the
dominant estate must not have adequate access to a public highway
(Villanueva v Velasco, supra). Plaintiff-appellant did not complaint about the
adequacy of the existing road works.
Also, as pointed out by defendants-appellees, the action below was one for
specific performance which is proper only in case of contractual breach. In the
present case, plaintiff-appellant cannot claim that defendants-appellees
committed a breach of contract because there is precisely no contract between
them.
As to the matter of non-suability, the Court notes that while defendant-appellee
PNCC is a government owned and controlled corporation, the other
defendants-appellees are either agencies of the State (DPWH and TRB) or an
employee of a government agency. Plaintiff-appellant argued that the principle
of non-suability of the state does not apply when the government acted in a
non-governmental capacity. The Court, however, notes that plaintiff-appellant
merely cites cases to this effect but did not put forward any argument why the
maintenance of NLEX should be considered as a non-governmental function.
It cannot be denied that the maintenance of the highways is part of the
necessary functions of the government of maintaining public infrastructures.
Coming now to PNCC although it is not strictly a government agency, its
function is a necessary incident to a government function and, hence, it should
likewise enjoy immunity from suit (See: Union Insurance Society of Canton,
Ltd. v Republic of the Philippines, 46 SCRA 120 [1972]).
As to the assertion that no expropriation proceeding was taken against the
subject property, the Court agrees with the PNCC that these arguments were
not raised in the Court below and, hence, is no longer proper at this stage.
Moreover, the Court notes that the proper party to complain against the alleged
lack of proper expropriation proceeding is the previous owner, when portion of
the property was sold to the Republic of the Philippines in 1979.
WHEREFORE, the appealed Order dated March 6, 2002 of the Regional Trial
Court of Malolos, Bulacan, Branch 7, in Civil Case No. 37-M-2002 is
hereby AFFIRMED.
SO ORDERED.14
Issues
The present appeal is anchored on the following grounds,
namely:chanroblesvirtuallawlibrary
FIRST
THE DECISION OF THE COURT OF APPEALS IS REPUGNANT TO THE
DUE PROCESS AND EQUAL PROTECTION CLAUSE ENSHRINED IN OUR
CONSTITUTION AND PREVAILING JURISPRUDENCE.
SECOND
THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF
DISCRETION IN DECLARING THAT ENTRY NO. 189568 IN THE TITLE OF
HEREIN PETITIONER WAS ALREADY IN EXISTENCE WHICH SHOWED
THAT EVEN BEFORE THE ACQUISITION OF THE PROPERTY IN 1999,
THE NLEX WAS ALREADY IN EXISTENCE AND SO WAS THE ACCESS
FENCE. THUS, ITS PREDECESSORS-IN-INTEREST ALLOWED THE
PROPERTY TO BE ISOLATED.
THIRD

THE COURT OF APPEALS SERIOUSLY ERRED IN DECLARING THAT
RESPONDENT PNCC, ALTHOUGH NOT STRICTLY A GOVERNMENT
AGENCY, SHOULD LIKEWISE ENJOY IMMUNITY FROM SUIT.15
The foregoing grounds boil down to the issue of whether Civil Case No. 37-M-
2002 was properly dismissed.
Ruling
We concur with both lower courts.
In our view, the TRB, Dumlao and the DPWH correctly invoked the doctrine of
sovereign immunity in their favor. The TRB and the DPWH performed purely
or essentially government or public functions. As such, they were invested with
the inherent power of sovereignty. Being unincorporated agencies or entities
of the National Government, they could not be sued as such. On his part,
Dumlao was acting as the agent of the TRB in respect of the matter concerned.
In Air Transportation Office v. Ramos,16 we expounded on the doctrine of
sovereign immunity in the following manner:chanroblesvirtuallawlibrary
An unincorporated government agency without any separate juridical
personality of its own enjoys immunity from suit because it is invested with an
inherent power of sovereignty. Accordingly, a claim for damages against the
agency cannot prosper; otherwise, the doctrine of sovereign immunity is
violated. However, the need to distinguish between an unincorporated
government agency performing governmental function and one performing
proprietary functions has arisen. The immunity has been upheld in favor of the
former because its function is governmental or incidental to such function; it
has not been upheld in favor of the latter whose function was not in pursuit of
a necessary function of government but was essentially a business.
Nonetheless, the petitioner properly argued that the PNCC, being a private
business entity, was not immune from suit. The PNCC was incorporated in
1966 under its original name of Construction Development Corporation of the
Philippines (CDCP) for a term of fifty years pursuant to the Corporation
Code.17 In 1983, the CDCP changed its corporate name to the PNCC to reflect
the extent of the Government’s equity investment in the company, a situation
that came about after the government financial institutions converted their
loans into equity following the CDCP’s inability to pay the loans. 18 Hence, the
Government owned 90.3% of the equity of the PNCC, and only 9.70% of the
PNCC’s voting equity remained under private ownership. 19 Although the
majority or controlling shares of the PNCC belonged to the Government, the
PNCC was essentially a private corporation due to its having been created in
accordance with the Corporation Code, the general corporation statute.20 More
specifically, the PNCC was an acquired asset corporation under Administrative
Order No. 59, and was subject to the regulation and jurisdiction of the
Securities and Exchange Commission.21 Consequently, the doctrine of
sovereign immunity had no application to the PNCC.
The foregoing conclusion as to the PNCC notwithstanding, the Court affirms
the dismissal of the complaint due to lack of jurisdiction and due to lack of
cause of action.
It appears that the petitioner’s complaint principally sought to restrain the
respondents from implementing an access fence on its property, and to direct
them to grant it a right of way to the NLEX. Clearly, the reliefs being sought by
the petitioner were beyond the jurisdiction of the RTC because no court except
the Supreme Court could issue an injunction against an infrastructure project
of the Government. This is because Presidential Decree No. 1818, issued on
January 16, 1981, prohibited judges from issuing restraining orders against
government infrastructure projects, stating in its sole provision: “No court in the
Philippines shall have jurisdiction to issue any restraining order, preliminary
injunction or preliminary order, preliminary mandatory injunction in any case,
dispute or controversy involving an infrastructure project.” Presidential Decree
No. 1818 was amended by Republic Act No. 8975,22 approved on November
7, 2000, whose pertinent parts provide:chanroblesvirtuallawlibrary
Section 3. Prohibition on the Issuance of Temporary Restraining Orders,
Preliminary Injunctions and Preliminary Mandatory Injunctions.- No court,
except the Supreme Court, shall issue any temporary restraining order,
preliminary injunction or preliminary mandatory injunction against the
government, or any of its subdivisions, officials or any person or entity, whether
public or private, acting under the government's direction, to restrain, prohibit
or compel the following acts:
(a) Acquisition, clearance and development of the right-of-way and/or site or
location of any national government project;
(b) Bidding or awarding of contract/project of the national government as
defined under Section 2 hereof;
(c) Commencement, prosecution, execution, implementation, operation of any
such contract or project;
(d) Termination or rescission of any such contract/project; and
(e) The undertaking or authorization of any other lawful activity necessary for
such contract/project.
This prohibition shall apply in all cases, disputes or controversies instituted by
a private party, including but not limited to cases filed by bidders or those
claiming to have rights through such bidders involving such contract/project.
This prohibition shall not apply when the matter is of extreme urgency involving
a constitutional issue, such that unless a temporary restraining order is issued,
grave injustice and irreparable injury will arise. The applicant shall file a bond,
in an amount to be fixed by the court, which bond shall accrue in favor of the
government if the court should finally decide that the applicant was not entitled
to the relief sought.
If after due hearing the court finds that the award of the contract is null and
void, the court may, if appropriate under the circumstances, award the contract
to the qualified and winning bidder or order a rebidding of the same, without
prejudice to any liability that the guilty party may incur under existing laws.
Section 4. Nullity of Writs and Orders.- Any temporary restraining order,
preliminary injunction or preliminary mandatory injunction issued in violation of
Section 3 hereof is void and of no force and effect.
Section 5. Designation of Regional Trial Courts.- The Supreme Court may
designate regional trial courts to act as commissioners with the sole function
of receiving facts of the case involving acquisition, clearance and development
of right-of-way for government infrastructure projects. The designated regional
trial court shall within thirty (30) days from the date of receipt of the referral,
forward its findings of facts to the Supreme Court for appropriate action. x x x
As to what was embraced by the term infrastructure project as used in
Presidential Decree No. 1818, the Court has ruled in Francisco, Jr. v. UEM-
MARA Philippines Corporation:23
PD 1818 proscribes the issuance of a writ of preliminary injunction in any case
involving an infrastructure project of the government. The aim of the
prohibition, as expressed in its second whereas clause, is to prevent delay in
the implementation or execution of government infrastructure projects
(particularly through the use of provisional remedies) to the detriment of the
greater good since it disrupts the pursuit of essential government projects and
frustrates the economic development effort of the nation.
Petitioner argues that the collection of toll fees is not an infrastructure project
of the government. He cites the definition of “infrastructure projects” we used
in Republic v. Silerio:chanroblesvirtuallawlibrary
The term “infrastructure projects” means “construction, improvement and
rehabilitation of roads, and bridges, railways, airports, seaports,
communication facilities, irrigation, flood control and drainage, water supply
and sewage systems, shore protection, power facilities, national buildings,
school buildings, hospital buildings, and other related construction projects that
form part of the government capital investment.”
xxxx
The definition of infrastructure projects specifically includes the
improvement and rehabilitation of roads and not just its
construction. Accordingly, even if the Coastal Road was merely upgraded
and not constructed from scratch, it is still covered by the definition. Moreover,
PD 1818 itself states that any person, entity or governmental official
cannot be prohibited from continuing the execution or implementation of
such project or pursuing any lawful activity necessary for such
execution or implementation. Undeniably, the collection of toll fees is part of
the execution or implementation of the MCTEP as agreed upon in the TOA.
The TOA is valid since it has not been nullified. Thus it is a legitimate source
of rights and obligations. It has the force and effect of law between the
contracting parties and is entitled to recognition by this Court. The MCTEP is
an infrastructure project of the government forming part of the government
capital investment considering that under the TOA, the government owns the
expressways comprising the project. (Emphasis supplied.)
There can be no question that the respondents’ maintenance of safety
measures, including the establishment of the access fence along the NLEX,
was a component of the continuous improvement and development of the
NLEX. Consequently, the lower courts could not validly restrain the
implementation of the access fence by granting the petitioner its right of way
without exceeding its jurisdiction.
Nor did the establishment of the access fence violate the petitioner’s
constitutional and legal rights.
It is relevant to mention that the access fence was put up pursuant to Republic
Act No. 2000 (Limited Access Highway Act), the enforcement of which was
under the authority of the DOTC. Clarifying the DOTC’s jurisdiction under this
law in Mirasol v. Department of Public Works and Highways,24 the Court has
said–
RA 2000, otherwise known as the Limited Access Highway Act, was approved
on 22 June 1957. Section 4 of RA 2000 provides that “[t]he Department of
Public Works and Communications is authorized to do so design any limited
access facility and to so regulate, restrict, or prohibit access as to best serve
the traffic for which such facility is intended.” The RTC construed this
authorization to regulate, restrict, or prohibit access to limited access facilities
to apply to the Department of Public Works and Highways (DPWH).
The RTC’s ruling is based on a wrong premise. The RTC assumed that the
DPWH derived its authority from its predecessor, the Department of Public
Works and Communications, which is expressly authorized to regulate,
restrict, or prohibit access to limited access facilities under Section 4 of RA
2000. However, such assumption fails to consider the evolution of the
Department of Public Works and Communications.
x x x x
Upon the ratification of the 1987 Constitution in February 1987, the former
Ministry of Public Works and Highways became the Department of Public
Works and Highways (DPWH) and the former Ministry of Transportation and
Communications became the Department of Transportation and
Communications (DOTC).
DPWH issued DO 74 and DO 215 declaring certain expressways as limited
access facilities on 5 April 1993 and 25 June 1998, respectively. Later, the
TRB, under the DPWH, issued the Revised Rules and Regulations on Limited
Access Facilities. However, on 23 July 1979, long before these department
orders and regulations were issued, the Ministry of Public Works,
Transportation and Communications was divided into two agencies –
the Ministry of Public Works and the Ministry of Transportation and
Communications – by virtue of EO 546. The question is, which of these two
agencies is now authorized to regulate, restrict, or prohibit access to limited
access facilities?
Under Section 1 of EO 546, the Ministry of Public Works (now DPWH)
assumed the public works functions of the Ministry of Public Works,
Transportation and Communications. On the other hand, among the
functions of the Ministry of Transportation and Communications (now
Department of Transportation and Communications [DOTC]) were to (1)
formulate and recommend national policies and guidelines for the
preparation and implementation of an integrated and comprehensive
transportation and communications systems at the national, regional,
and local levels; and (2) regulate, whenever necessary, activities relative
to transportation and communications and prescribe and collect fees in
the exercise of such power. Clearly, under EO 546, it is the DOTC, not the
DPWH, which has authority to regulate, restrict, or prohibit access to
limited access facilities.
Even under Executive Order No. 125 (EO 125) and Executive Order No.
125-A (EO 125-A), which further reorganized the DOTC, the authority to
administer and enforce all laws, rules and regulations relative to
transportation is clearly with the DOTC.
Thus, DO 74 and DO 215 are void because the DPWH has no authority to
declare certain expressways as limited access facilities. Under the law,
it is the DOTC which is authorized to administer and enforce all laws,
rules and regulations in the field of transportation and to regulate related
activities. (Emphasis supplied.)
Moreover, the putting up of the access fence on the petitioner’s property was
in the valid exercise of police power, assailable only upon proof that such
putting up unduly violated constitutional limitations like due process and equal
protection of the law.25 In Mirasol v. Department of Public Works and
Highways, the Court has further noted that:chanroblesvirtuallawlibrary
A toll way is not an ordinary road. As a facility designed to promote the fastest
access to certain destinations, its use, operation, and maintenance require
close regulation. Public interest and safety require the imposition of certain
restrictions on toll ways that do not apply to ordinary roads. As a special kind
of road, it is but reasonable that not all forms of transport could use it. 26
Clearly, therefore, the access fence was a reasonable restriction on the
petitioner’s property given the location thereof at the right side of Sta. Rita Exit
of the NLEX. Although some adjacent properties were accorded unrestricted
access to the expressway, there was a valid and reasonable classification for
doing so because their owners provided ancillary services to motorists using
the NLEX, like gasoline service stations and food stores.27 A classification
based on practical convenience and common knowledge is not
unconstitutional simply because it may lack purely theoretical or scientific
uniformity.28
Lastly, the limited access imposed on the petitioner’s property did not partake The payment voucher for the residential portion of the lot valued
of a compensable taking due to the exercise of the power of eminent domain. at P6,000,000.00 (at P600.00 per square meter) was then
There is no question that the property was not taken and devoted for public processed.7 However, the NPC Board of Directors approved Board Resolution
use. Instead, the property was subjected to a certain restraint, i.e. the access No. 97-2468 stating that it would pay only P230.00 per sq m for the residential
fence, in order to secure the general safety and welfare of the motorists using portion and P89.00 per sq m for the agricultural portion, on the following
the NLEX. There being a clear and valid exercise of police power, the petitioner premises:
was certainly not entitled to any just compensation. 29
A) The proposed land valuations were evaluated and analyzed using the joint
WHEREFORE, the Court DENIES the petition for review appraisal report on fair market value of lands by Cuervo Appraisal, Inc.,
on certiorari; AFFIRMS the decision promulgated on October 27, 2004; Development Bank of the Philippines, and the Land Bank of the Philippines
and ORDERS the petitioner to pay the costs of suit. and the fair market values established by the respective Provincial Appraisal
Committee (PAC) of Zambales, Pangasinan, Nueva Ecija, Pampanga and
SO ORDERED. Bulacan as well as the City Appraisal Committee (CAC) of San Carlos and
Cabanatuan.

B) For lot acquisition, adopt PAC or CUERVO Appraisal, whichever is lower; if

NAPOCOR VS SAN PEDRO there is a problem of acceptance, refer same to the Board;

C) For easement over agricultural lands, adopt median or average if there are
several amounts involved; and
Before the Court is a Petition for Review on Certiorari under Rule 45 of the
Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 72860, and its D) Always oppose any proposals for conversion of agricultural lands.9
Resolution2 denying the motion for reconsideration thereof.
On January 15, 1998, the NPC filed a complaint10 for eminent domain in the
The Antecedents Regional Trial Court (RTC) of Bulacan against Maria and other landowners.
The case was docketed as Civil Case No. 28-M-98. According to NPC, in order
The National Power Corporation (NPC) is a government-owned-and-controlled to construct and maintain its Northwestern Luzon Transmission Line Project
corporation created to undertake the development of hydro-electric generation (San Manuel-San Jose 500 KV Transmission Line Project), it was necessary
of power and the production of electricity from any and all sources; and to acquire several lots in the Municipalities of San Jose del Monte and
particularly the construction, operation, and maintenance of power plants, Norzagaray, Bulacan for an easement of right of way in the total area of more
auxiliary plants, dams, reservoirs, pipes, mains, transmission lines, power or less 35,288.5 sq m. The owners of the affected areas and their
stations and substations, and other works for the purpose of developing corresponding assessed values are:
hydraulic power from any river, lake, creek, spring and waterfalls in the
Philippines and supplying such power to the inhabitants thereof. 3 Under OWNER/ LOT/ TAX TITLE TOTAL AREA
Republic Act No. 6395, as amended, the NPC is authorized to enter private CLAIMANT BLK. DEC. NO. AREA AFFECTED
property provided that the owners thereof shall be indemnified for any actual NO. NO. IN SQ. M.
damage caused thereby.4

For the construction of its San Manuel-San Jose 500 KV Transmission Line Ma. Mendoza San 2076 00386 122,821.32 17,195
and Tower No. SMJ-389, NPC negotiated with Maria Mendoza San Pedro, Pedro rep. by Vicente
then represented by her son, Vicente, for an easement of right of way over her San Pedro 10,000 6,565
property, Lot No. 2076. The property, which was partly agricultural and partly
residential land, was located in Barangay Partida, Norzagaray, Bulacan and Lorenza Manuel / 1250 96- T- 5,700 51,666.5
covered by Tax Declaration No. 00386. On June 19, 1997, Maria executed a Sps. Raul & Edna 21017- 28392-
Right of Way Grant5 in favor of NPC over the lot for P1,277,886.90. The NPC Lagula P-(M)
paid her P524,635.50 for the damaged improvements thereon.6
 00084
Sps. Segundo & 1251 96- P-3965 6,362 6,362
Maxima Manuel / 21017-
Sps. Raul & Edna (M)
Lagula 00083
Maria San Pedro filed her Answer11 on February 2, 1998, alleging that there
had already been an agreement as to the just compensation for her property.
She prayed, among others, that she should be paid the consideration stated
in the Right of Way Grant, P600.00 per sq m for the residential portion of the
land as agreed upon by her and NPC, and to base the values from Resolution
No. 97-00512 of the Provincial Appraisal Committee.
Meanwhile, Maria San Pedro filed an Amended Answer 13 in which she alleged
that NPC had resorted to deceit, trickery and machination to induce her to
grant a right of way by assuring her that it would also pay for the residential
portion of the property at P600.00 per sq m.
On August 10, 1998, the RTC issued a writ of possession against Maria San
Pedro.14 When she passed away on August 22, 1998, 15 she was substituted
by her heirs, Vicente, Herminia and Francisco, all surnamed San Pedro, on
September 11, 1998.16
During the pre-trial on January 25, 1999, the parties agreed that the only issue
for resolution was the just compensation for the property. The court appointed
a committee of commissioners to ascertain and recommend to the trial court
the just compensation for the properties, composed of Atty. Josephine L.
Sineneng-Baltazar, the Clerk of Court, as chairperson; and Engr. Oscar C.
Cruz, Provincial Assessor of Bulacan, and Atty. Henry P. Alog of the Litigation
Department of NPC to serve as members-commissioners thereof.17
On July 12, 1999, Atty. Baltazar and Engr. Cruz submitted their
report,18 recommending as payment for just compensation P800.00 per sq m
for the residential lot and P700.00 per sq m for the agricultural lot.19 The
majority report reads:
I. Description of the Property
A parcel of land with a total area of 132,821.32 square meters located at
Partida, Norzagaray, Bulacan and declared for taxation purposes in the name
of Maria Mendoza San Pedro is sought to be expropriated by plaintiff National
Power Corporation for the construction and maintenance of its Northwestern
Luzon Transmission Line Project (San Miguel-San Jose 500 KV Transmission
Line Project), to wit:
Lot No. Tax Dec. No. Total Area Area Affected Clas
in sq. m.
P 16,210.00 Agricultural
2076 01337 122,821.32 17,195 Agri
10,000.00 6,565 Res
The pertinent tax declaration is hereto attached as Annex "A."
The residential lot is not affected by NPC's project in its entirety. Around 2,000
sq. m. remains on each side of the residential lot.
Likewise, only a portion or 17,195 sq. m. of (sic) more than 12 hectares
agricultural land, (sic) is affected by the project. A sketch plan of the affected
area is attached hereto as Annex "B."
II. Claims of the Parties
Defendants allege that they had signed a Right of Way Grant Contract dated
June 19, 1997 which plaintiff itself prepared and was notarized by Atty.
Marcelo Aure; that, among others, defendants and plaintiff agreed that the
price of the residential land is P600.00 per square meter, based on the
Provincial Appraisals Committee (PAC) Resolution No. 97-005; that, on
December 6, 1997, plaintiff informed them that the NPC Board passed
Resolution No. 97-246 dated October 27, 1997, pursuant to which the board
approved price for acquisition of subject property is P230.00 per sq. m. for
residential and P89.00 per sq. m. for agricultural lot. Defendants did not accept
the new offer.
On the other hand, plaintiff alleges that the price for residential land is P230.00
per sq. m. as approved by NPC's Board and not P600.00 per sq. m. being
asked by defendants. It further recommended the appointment of
commissioners to report to the Court the just compensation to be paid to the
defendants.
III. Observations
The Commissioners went to the site on May 11, 1999 and were able to observe
that:
(1) The residential lot of Vicente San Pedro is not affected by NPC's project in
its entirety. Around 2,000 sq. m. remains on each side of the residential lot.
There are no existing structures or improvements on said residential lot, which
is situated along the all-weather (gravel) road. Defendants are afraid to utilize
the said remaining portions for residential purposes because of the reported
constant loud buzzing and exploding sounds emanating from the towers and
transmission lines, especially on rainy days. The two children of Vicente San
Pedro had wanted to construct their residential houses on said land, but
decided against it now because of fear that the large transmission lines
looming not far above their land and the huge tower in front of their lot will
affect their safety and health. Moreover, there is a slim chance now that
somebody will still buy the remaining portions on each side of the residential
lot affected by the project, to the damage of the defendant, both as to future
actual use of the land and financial gains to be derived therefrom.
(2) Likewise only a portion, or 17,195 sq. m. of the 122,821.32 square meter
agricultural land, is affected by the transmission line project. It was not planted
with palay at the time of the inspection. According to the defendants, their farm
helpers are already afraid to work on the land because of the buzzing and
cracking sounds coming from the tower and transmission lines.
(3) The site is located in a highly developed area about 1.5 kms. away from
Norzagaray Municipal Building. The vast land owned by Jesus Is Lord
congregation is on the same side of the road as subject property. Opposite the
road is an ongoing resort project, the Falcon Crest Resort about ½ kilometers
away, and the proposed Catholic Retreat House about 200 meters away.
Attached as Annex "C" is the Location Plan of said lot.
IV. Available Data
(1) Based on the Zoning Certificate issued by the Municipal Mayor, subject
parcel of land has been classified as residential pursuant to the proposed
Comprehensive Land Use Plan of local government unit. Copy of said Zoning
Certificate is hereto attached as Annex "D."
(2) Based on the BIR Zonal Valuation attached as Annex "E," subject land has
a zonal value of P60.00/sq. m. for residential and P30.00/sq. m. for agricultural
lot. However, it is common knowledge that zonal valuation provided by BIR
cannot be made as basis for the purpose of determining just compensation in
eminent domain cases because it is only for the purpose of computing internal
revenue taxes.
(3) Opinion values gathered by the Provincial Assessor on the price of the
property are as follows:
Residential - P1,075.00 / sq. m.
Agricultural - P 643.00 / sq. m.
The summary of Opinion Values is hereto attached as Annex "F."
(4) There are no available sales data on properties within the vicinity of subject
land for the years 1996 and 1997, approximate time of the taking.
IV. Recommendation
The Commissioners, after considering the location of the subject property in a
highly developed area and accessibility thru the all-weather road (gravel); its
potential for full development as shown by the existence of building projects in
the vicinity; and the long-term effect the expropriation will have on the lives,
comfort and financial condition of herein defendants, respectfully recommend
the following amounts as payment for the affected portions of subject property.
P800. / sq. m. - for the residential lot
P700. / sq. m. - for the agricultural lot20
However, Atty. Alog, who represented NPC, dissented from the report,
claiming that it was merely based on "opinion values," and the self-serving
declarations and opinions of defendants. He maintained that, in determining
just compensation, the trial court should instead consider the appraisal report
of Cuervo Appraisers, Inc., upon which Resolution No. 97-246 of NPC was
based. He likewise argued that the property involved was actually and
principally used as agricultural, though declared as agricultural/residential lots;
hence, only the easement fee of right of way should be paid, as the principal
purpose for which the lot was devoted would not be impaired by the
construction of transmission lines. His report reads:
I. FINDINGS
The ocular inspection and research conducted by the undersigned
Commissioner on May 12, 1999 disclosed the following pertinent information
and data:
1) The subject lots can be reached through a 1.4 km two lane concrete road,
from the Sta. Maria-Norzagaray National Highway intersection at Poblacion,
Norzagaray, Bulacan (refer to Annex "B");
2) The low lying northern portion of the property is presently used
as riceland and the rest planted with assorted trees (refer to Annex "C,"
pictures);
3) The property is a portion of hill in the area with sides sloping downward on
the northern eastern boundaries (refer to Annex "C");
4) There is no visible structural development in the area except for:
a) a two lane concrete road adjacent to the property at the northwest One Million Five Hundred Nine Thousand Nine - Payment for residenti
boundaries going to San Jose Del Monte, Bulacan; Hundred Fifty Pesos (P1,509,950.00) portion of lot
b) newly constructed steel towers of NPC;
One Hundred Fifty One Thousand Six Hundred - Easement fee fo
c) barbed wire fence with wooden post covering the northwestern portion of Ninety One Pesos and 60/100 (P151,691.60) agricultural portion of lot
the lot adjacent to the concrete road to San Jose Del Monte, Bulacan and a
bamboo fence that covers the southern portion (refer to Annex "C"); and Thirteen Thousand Three Hundred Ninety- - Tower Occupancy Fee
Eight and 95/100 (P13,398.95)22
d) residential house approximately 200 meters from affected area.
On October 28, 1999, the RTC rendered judgment,23 declaring as well-
5) During the ocular inspection, it is noted that they still use the affected area
grounded, fair and reasonable the compensation for the property as
for agricultural purposes;
recommended by Atty. Baltazar and Engr. Cruz. The fallo of the RTC decision
6) The Falcon Crest Resort is approximately 1 km. from the affected property; reads:

7) Price data gathered are as follows (in square meter unless specified): WHEREFORE, premises considered, this Court hereby orders the above-
described 5,700-square meter lot from Lot No. 1250 of defendants Spouse
Agri-Orchard Riceland (sic) Raul (sic) Res'l
Subd. and the afore-described
Agr'l 6,362-square meter lot from Lot No.
(Interior) unirrigated 1251 of same
along Sta. defendants, subject to the covering Compromise Agreements;
(Interior) and the above-described 17,195-square meter lot from Lot No. 2076 of
Maria
defendant
(Garay) Maria Mendoza San Pedro, CONDEMNED and/or
EXPROPRIATED for the construction and maintenance of plaintiff's
Provincial Appraisal Northwestern Luzon Transmission
P600.00 P400.00 Line Project (San Manuel - San Jose 500
Committee – KV Transmission Line Project), a project for public purpose.
Bulacan (Res. No. 97-005)
Accordingly, this Court hereby fixes the just compensation for the expropriated
(Annex "D")
lots, as follows:
NP Board Resolution No. 97- P89.00 P80.00 P230.00
OWNERS LOT AREA PRICE/ S.Q.
246
NO. EXPROPRIATED METER
(Annex "E")

Cuervo Appraisers, Inc. P890,000/ha. P800,000/ha. P230.0021 Sps. Raul & Edna 1250 5,700 sq. m. P499.00
(Annex "F") Lagula

Atty. Alog also recommended that only P2,640,274.70 be paid to defendants

Sps. Raul & Edna 1251 6,362 sq. m. 499.00
by way of just compensation, broken down as follows:
Lagula
Eight Hundred Two Thousand Three Hundred - Payment for damaged
Sixty Eight Pesos and 50/100 (P802,368.50) crops/plants/trees Ma. Mendoza San 2076 17,195 sq. m. 800.00
Pedro her heirs
One Hundred Sixty Two Thousand Eight - Payment for structures
Hundred Sixty Five Pesos and 65/100 Hence, plaintiff is ordered to pay, as soon as possible, herein defendants the
(P162,865.65) just compensation enumerated above for their respective lots aforementioned.
For this purpose, plaintiff may withdraw the sum of money deposited with the
Land Bank of the Philippines or any other banks pursuant to Section 2 of Rule
67 of the Rules of Court, as amended by P.D. No. 42.
FURTHER, defendants are ordered to clear and vacate the lots in question
within 30 days from receipt hereof and to surrender possession thereof to the
plaintiff.
The fees for the 3 Commissioners of the Appraisal Committee in the sum
of P6,000.00 for the Chairman and P5,000.00 each for the 2 members, shall
be paid by the plaintiff.
SO ORDERED.24
by her heirs, are 17,195 square meters more or less of agricultural land and
6,565 square meters of residential land, while the area of the land sought to
be expropriated from the two lots of defendants Sps. Raul and Edna Lagula
are only 5,166.50 square meters, more or less, from Lot No. 1250 and 6,363
(sic) square meters, more or less, from Lot No. 1251.
Furthermore, the second paragraph of the dispositive portion of the Decision
should be amended as follows:
"Accordingly, this Court hereby fixes the just compensation for the
expropriated lots, as follows:

On November 19, 1999, the heirs of Maria San Pedro filed a Manifestation and OWNERS LOT AREA PRICE
Motion25 for the partial reconsideration of the decision on the ground that the NO. EXPROPRIATED METE
court failed to include in its decision the just compensation for the 6,565-
square-meter residential portion of their land, with prayer for attorney's fees Sps. Raul & Edna
equivalent to 10% of the total amount to be awarded to them. Lagula 1250 5,700 sq. m. P499.
On December 3, 1999, NPC filed its motion for reconsideration,26 insisting that
the just compensation awarded to defendants was without legal and factual Sps. Raul & Edna
basis, and that it should only be made to pay an easement fee. Lagula 1251 6,362 sq. m. 499.00
On June 6, 2001, the trial court issued an Order granting the motion of the
heirs and denied that of NPC.27 The RTC declared that the just compensation Ma. Mendoza San
for the residential portion of the property should be the same as that of the Pedro her heirs 2076 17,195 sq. m. 499.00
spouses Lagula's property, which was P499.00 per sq m. On the claim of NPC
in its motion for reconsideration that it should be made to pay only an easement
Ma. Mendoza San
fee, the trial court ruled that Lot No. 2076 should be treated the same way as
Pedro her heirs 6,565 sq. m. 800.00
NPC treated the properties of the spouses Lagula. It was pointed out that in
the compromise agreements executed by plaintiff and spouses Lagula, plaintiff
2. Denies the plaintiff's Motion for Reconsideration for lack of merit.
paid P499.00 per sq m on the basis of a straight sale of their agricultural land,
and not merely an easement fee for a right of way thereon. The fallo of the SO ORDERED.28
amended decision reads:
NPC appealed the amended decision to the CA, asserting that:
WHEREFORE, in the light of the foregoing, the Court hereby:
THE LOWER COURT GRAVELY ERRED IN FIXING P800.00 AND P499.00
1. Grants the motion of defendant Maria Mendoza San Pedro and thus orders PER SQUARE METER AS JUST COMPENSATION FOR APPELLEE'S 6,565
that the 1st paragraph of page 8 of the Decision be amended to read as SQUARE METERS OF RESIDENTIAL LAND AND 17,195 SQUARE
follows: METERS OF AGRICULTURAL LAND, RESPECTIVELY.29
"Plaintiff is expropriating portions of defendants' above-described properties to On September 28, 2005, the CA rendered judgment dismissing the appeal.
give way to the construction and maintenance of its Northern Luzon The CA ruled that the July 12, 1999 majority report was based on
Transmission Line Project (San Manuel - San Jose 500 KV Transmission Line uncontroverted facts, supported by documentary evidence and confirmed by
Project), a project for public purpose. The area of the lots sought to be the commissioners' ocular inspection of the subject properties. To arrive at a
expropriated from the lot of defendant Maria Mendoza San Pedro, represented reasonable estimate of just compensation, the commissioners considered
factors such as the location, the most profitable likely use of the remaining
area, size, shape, accessibility, as well as listings of other properties within the
vicinity. Citing National Power Corporation v. Manubay Agro-Industrial
Development Corporation,30 the CA found as unpersuasive NPC's argument
that it should only pay an easement fee. It ruled that considering the nature
and effect of the installation of power lines, the limitations on the use of land
for an indefinite period deprives the owner of its normal use. The fallo of the
CA decision reads:
WHEREFORE, the Appeal is hereby DENIED. The assailed Decision and
Order dated 28 October 1999 and 6 June 2001, respectively, are AFFIRMED.
SO ORDERED.31
NPC filed a Motion for Reconsideration,32 which the CA denied in its
Resolution33 dated December 22, 2005; hence, the instant petition based on
the following ground:
THE COURT OF APPEALS COMMITTED A GRAVE ERROR WHEN IT
UPHELD THE DECISION OF THE TRIAL COURT FIXING THE JUST
COMPENSATION FOR RESPONDENT'S 6,565 SQ. METERS OF
RESIDENTIAL LAND AND 17,195 SQUARE METERS OF AGRICULTURAL
LAND, AT PHP800.00 AND PHP499.00 PER SQUARE METER
RESPECTIVELY, INSTEAD OF THE EASEMENT FEE AS PRAYED FOR IN
THE COMPLAINT AND PROVIDED UNDER REPUBLIC ACT NO. 6395, AS
AMENDED, OTHERWISE KNOWN AS THE REVISED NPC CHARTER.34
The Ruling of the Court
The petition is denied for lack of merit.
The CA found no reversible error in the trial court's finding of just
compensation. Inasmuch as the determination of just compensation in eminent
domain cases is a judicial function and factual findings of the CA are conclusive
on the parties and reviewable only when the case falls within the recognized
exceptions, which does not obtain in this case, we see no reason to disturb the
factual findings as to the valuation of the subject property. 35
Petitioner avers that the rulings of the trial court affirmed by the appellate court,
based on the majority report on the subject property's just compensation, is
not supported by documentary evidence. It avers that in the majority report,
Commissioners Atty. Baltazar and Engr. Cruz, even admit that there were no
available sales data on properties within the vicinity of the subject property for
the years 1996 and 1997. Moreover, the Bureau of Internal Revenue (BIR)
valued the property at P60.00 per sq m for residential, and P30.00 per sq m
for agricultural lot.36
Petitioner further argues that respondents have not shown that the condition
of the adjoining properties or improvements thereon had increased their land's
economic value.37 The valuation, thus, of the trial court, as affirmed by the CA,
was exorbitant and devoid of factual and legal basis.38
We are not persuaded.
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, fixed at the time of the actual
taking by the government.39 To determine the just compensation to be paid to
the landowner, the nature and character of the land at the time of its taking is
the principal criterion.40
In the July 12, 1999 Majority Report, the commissioners found that the property
was located in a highly-developed area and was accessible through an all-
weather road. The fact that the property had potential for full development as
shown by the existence of building projects in the vicinity, and the long-term
effect of the expropriation on the lives, comfort and financial condition of
petitioners was likewise considered. The report also took into account the
ocular inspection conducted by the commissioners on May 11, 1999. The tax
declaration of the subject property,41 the NPC sketch plan,42 the location
plan,43 the zoning certificates,44 the zonal valuation of the BIR,45 and the
opinion values46 were also considered.
The lone fact that there was no available sales data on properties within the
vicinity of respondent's land for 1996 and 1997 and that the BIR zonal value
was P60.00 per sq m for residential and P30.00 per sq m for agricultural did
not proscribe the commissioners and the trial court from making their own
reasonable estimates of just compensation, after considering all the facts as
to the condition of the property and its surroundings, its improvements and
capabilities. As had been amply explained by this Court in Export Processing
Zone Authority v. Dulay:47
Various factors can come into play in the valuation of specific properties
singled out for expropriation. The values given by provincial assessors are
usually uniform for very wide areas covering several barrios or even an entire
town with the exception of the poblacion. Individual differences are never taken
into account. The value of land is based on such generalities as its possible
cultivation for rice, corn, coconuts, or other crops. Very often land described
as "cogonal" has been cultivated for generations. Buildings are described in
terms of only two or three classes of building materials and estimates of areas
are more often inaccurate than correct. Tax values can serve as guides but
cannot be absolute substitutes for just compensation.
To say that the owners are estopped to question the valuations made by
assessors since they had the opportunity to protest is illusory. The
overwhelming mass of land owners accept unquestioningly what is found in
the tax declarations prepared by local assessors or municipal clerks for them.
They do not even look at, much less analyze, the statements. The idea of
expropriation simply never occurs until a demand is made or a case filed by
an agency authorized to do so.
It is violative of due process to deny to the owner the opportunity to prove that
the valuation in the tax documents is unfair or wrong. And it is repulsive to
basic concepts of justice and fairness to allow the haphazard work of a minor
bureaucrat or clerk to absolutely prevail over the judgment of a court
promulgated only after expert commissioners have actually viewed the
property, after evidence and arguments pro and con have been presented, and
after all factors and considerations essential to a fair and just determination
have been judiciously evaluated.48
Conformably with the rulings of this Court, the majority report took into account
the most profitable likely use of the remaining area; and the size, shape,
accessibility, as well as listings of other properties within the vicinity. 49
As gleaned from the location plan50 of the property in the case at bar, Lot No.
2076 is connected via a cemented road to the National Road, 1.5 kilometers
away. The same is likewise strategically located at a junction of the barrio road
leading to the Provincial Road, the National Road and to Sapang Palay. The
lot is also on the same side of the road as the land owned by the Jesus Is Lord
Congregation and the Partida Elementary School. The ocular inspection of the
commissioners also reveals that opposite the road, about half a km away, is
an ongoing resort project, the Falcon Crest Resort, and, about 200 meters
away, the proposed Catholic Retreat House. While there are no existing
structures or improvements on the residential portion of the lot, the same is
situated along the all-weather (gravel) road and is fronting the property. On the
agricultural portion thereof, the same appears to have been cultivated prior to
the taking, as petitioner offered to compensate respondent's heirs' damages
to the crops, plants and trees.
The trial court fixed the just compensation for the property as follows:
(1) P499.00 per sq m on the 17,195 sq m agricultural portion of the subject
land; and (2) P800.00 per sq m on the 6,565 sq m residential portion of the lot.
Noticeably, the trial court did not blindly accept the recommendation of majority
of the commissioners of P800.00 per sq m for the residential lot and P700.00
per sq m for the agricultural lot. Indeed, the trial court took into account the
evidence of the parties, in tandem with the findings and recommendation of
the majority of the commissioners. Considering that such valuation of the trial
court as affirmed by the CA is reasonable as it is and supported by the
evidence on record, we find no compelling reason to disturb the same.51
The Court is not persuaded by petitioner's argument that respondents had not
shown that the condition of the adjoining properties, i.e., improvements, had
increased their land's economic value. It bears stressing that there is absence
of any available sales data on properties within the vicinity of respondent's land
for the years 1996 and 1997, the time of the taking. The property of respondent
was the first to be sold. It is thus an exercise in futility for respondents to require
evidence of sales of properties in the vicinity when no such transactions took
place.
Petitioner's contention that the trial court should have based the fixing of just
compensation on the appraisal report of Cuervo Appraisers, Inc. (where
petitioner based its Resolution No. 97-246) is likewise untenable. Petitioner
failed to present the so-called report of the Cuervo Appraisers, Inc. as
evidence. We note that annexed to NPC Resolution No. 97-246 is a data of
the NPC Board Appraisal on the Fair Market Value of residential lands along
the concrete road in Sapang Palay, San Jose Del Monte, valued at P499.00
per sq m, which, however, is not signed nor authenticated. If, at all, the values
indicated therein are self-serving to petitioner.
Parenthetically, petitioner has not explained why it agreed on paying just
compensation of P499.00 per sq m on the agricultural lands of the spouses
Lagula, when the purported Cuervo Appraisal Report indicates that the fair
market value of unirrigated riceland along the road is only P110.00 per sq m,
and for an unirrigated interior only P85.00 per sq m.52 Had petitioner really
believed Cuervo's appraisal, then, it should have likewise insisted on the
values therein when it dealt with the spouses Lagulas.
Notably, the lower court's valuations of respondent's property –P499.00 per sq
m on the agricultural portion and P800.00 per sq m on the residential portion
of the lot – are near the estimates made by the following: (1) the Provincial
Appraisal Committee, in its Resolution No. 97-005, which are P400.00 for
agricultural and P600.00 for residential;53 (2) the recommendation in the
majority report of the commissioners (P700.00 for agricultural and P800.00 for
residential); and (3) the opinion values, which are P643.00 for agricultural
and P1,075.00 for residential. On the other hand, the valuations made by Atty.
Alog, P89.00 for agricultural and P230.00 for residential, are unconscionably
low, understandably so because he works for petitioner.
On the question as to whether petitioner shall pay only an easement fee to
respondent's heirs, the following pronouncement in National Power
Corporation v. Aguirre-Paderanga54 is enlightening:
Indeed, expropriation is not limited to the acquisition of real property with a
corresponding transfer of title or possession. The right-of-way easement
resulting in a restriction or limitation on property rights over the land traversed
by transmission lines, as in the present case, also falls within the ambit of the
term "expropriation." As explained in National Power Corporation v. Gutierrez,
viz:
The trial court's observation shared by the appellate court show that "x x x
While it is true that plaintiff [is] only after a right-of-way easement, it
nevertheless perpetually deprives defendants of their proprietary rights as
manifested by the imposition by the plaintiff upon defendants that below said
transmission lines no plant higher than three (3) meters is allowed.
Furthermore, because of the high-tension current conveyed through said
transmission lines, danger to life and limbs that may be caused beneath said
wires cannot altogether be discounted, and to cap it all, plaintiff only pays the
fee to defendants once, while the latter shall continually pay the taxes due on
said affected portion of their property."
The foregoing facts considered, the acquisition of the right-of-way easement
falls within the purview of the power of eminent domain. Such conclusion finds
support in similar cases of easement of right-of-way where the Supreme Court
sustained the award of just compensation for private property condemned for
public use (See National Power Corporation v. Court of Appeals, 129 SCRA
665, 1984; Garcia v. Court of Appeals, 102 SCRA 597, 1981). The Supreme
Court, in Republic of the Philippines v. PLDT, thus held that:
"Normally, of course, the power of eminent domain results in the taking or
appropriation of title to, and possession of, the expropriated property; but no
cogent reason appears why said power may not be availed of to impose only
a burden upon the owner of condemned property, without loss of title and
possession. It is unquestionable that real property may, through expropriation,
be subjected to an easement of right-of-way."
In the case at bar, the easement of right-of-way is definitely a taking under the
power of eminent domain. Considering the nature and effect of the installation
of the 230 KV Mexico-Limay transmission lines, the limitation imposed by NPC
against the use of the land for an indefinite period deprives private respondents
of its ordinary use.55
Similarly, in this case, the commissioners' observation on the reported
constant loud buzzing and exploding sounds emanating from the towers and
transmission lines, especially on rainy days; the constant fear on the part of
the landowners that the large transmission lines looming not far above their
land and the huge tower in front of their lot will affect their safety and health;
and the slim chance that no one would be interested to buy the remaining
portions on each side of the residential lot affected by the project, to the
damage of the landowners, both as to future actual use of the land and
financial gains to be derived therefrom, makes the instant case fall within the
ambit of expropriation.
WHEREFORE, premises considered, the appeal is hereby DENIED for lack of
merit. The ruling of the Court of Appeals in CA-G.R. CV No. 72860
is AFFIRMED.
SO ORDERED.
REPUBLIC VS FAJARDO
Appeal from the decision of the Court of First Instance of Camarines Sur
convicting defendants-appellants Juan F. Fajardo and Pedro Babilonia of a
violation of Ordinance No. 7, Series of 1950, of the Municipality of Baao,
Camarines Sur, for having constructed without a permit from the municipal
mayor a building that destroys the view of the public plaza.
It appears that on August 15, 1950, during the incumbency of defendant-
appellant Juan F. Fajardo as mayor of the municipality of Baao, Camarines
Sur, the municipal council passed the ordinance in question providing as
follows:
SECTION 1. Any person or persons who will construct or repair a building
should, before constructing or repairing, obtain a written permit from the
Municipal Mayor.
SEC. 2. A fee of not less than P2.00 should be charged for each building permit
and P1.00 for each repair permit issued.
SEC. 3. PENALTY — Any violation of the provisions of the above, this
ordinance, shall make the violation liable to pay a fine of not less than P25 nor
more than P50 or imprisonment of not less than 12 days nor more than 24
days or both, at the discretion of the court. If said building destroys the view of
the Public Plaza or occupies any public property, it shall be removed at the
expense of the owner of the building or house.
SEC. 4. EFFECTIVITY — This ordinance shall take effect on its approval.
(Orig. Recs., P. 3)
Four years later, after the term of appellant Fajardo as mayor had expired, he
and his son in-law, appellant Babilonia, filed a written request with the
incumbent municipal mayor for a permit to construct a building adjacent to their
gasoline station on a parcel of land registered in Fajardo's name, located along
the national highway and separated from the public plaza by a creek (Exh. D).
On January 16, 1954, the request was denied, for the reason among others
that the proposed building would destroy the view or beauty of the public plaza
(Exh. E). On January 18, 1954, defendants reiterated their request for a
building permit (Exh. 3), but again the request was turned down by the mayor.
Whereupon, appellants proceeded with the construction of the building without
a permit, because they needed a place of residence very badly, their former
house having been destroyed by a typhoon and hitherto they had been living
on leased property.
On February 26, 1954, appellants were charged before and convicted by the
justice of the peace court of Baao, Camarines Sur, for violation of the
ordinance in question. Defendants appealed to the Court of First Instance,
which affirmed the conviction, and sentenced appellants to pay a fine of P35
each and the costs, as well as to demolish the building in question because it
destroys the view of the public plaza of Baao, in that "it hinders the view of
travelers from the National Highway to the said public plaza." From this
decision, the accused appealed to the Court of Appeals, but the latter
forwarded the records to us because the appeal attacks the constitutionality of
the ordinance in question.
We find that the appealed conviction can not stand.
A first objection to the validity of the ordinance in question is that under it the
mayor has absolute discretion to issue or deny a permit. The ordinance fails
to state any policy, or to set up any standard to guide or limit the mayor's action.
No purpose to be attained by requiring the permit is expressed; no conditions
for its grant or refusal are enumerated. It is not merely a case of deficient
standards; standards are entirely lacking. The ordinance thus confers upon the
mayor arbitrary and unrestricted power to grant or deny the issuance of
building permits, and it is a settled rule that such an undefined and unlimited
delegation of power to allow or prevent an activity, per se lawful, is invalid
(People vs. Vera, 65 Phil., 56; Primicias vs. Fugoso, 80 Phil., 71; Schloss
Poster Adv. Co. vs. Rock Hill, 2 SE (2d) 392)
The ordinance in question in no way controls or guides the discretion vested
thereby in the respondents. It prescribes no uniform rule upon which the
special permission of the city is to be granted. Thus the city is clothed with the
uncontrolled power to capriciously grant the privilege to some and deny it
others; to refuse the application of one landowner or lessee and to grant that
of another, when for all material purposes, the two applying for precisely the
same privileges under the same circumstances. The danger of such an
ordinance is that it makes possible arbitrary discriminations and abuses in its
execution, depending upon no conditions or qualifications whatever, other than
the unregulated arbitrary will of the city authorities as the touchstone by which
its validity is to be tested. Fundamental rights under our government do not
depend for their existence upon such a slender and uncertain thread.
Ordinances which thus invest a city council with a discretion which is purely
arbitrary, and which may be exercised in the interest of a favored few, are
unreasonable and invalid. The ordinance should have established a rule by
which its impartial enforcement could be secured. All of the authorities cited
above sustain this conclusion.
As was said in City of Richmond vs. Dudley, 129 Ind. 112,28 N. E. 312, 314
13 L. R. A. 587, 28 Am. St. Rep. 180: "It seems from the foregoing authorities
to be well established that municipal ordinances placing restrictions upon
lawful conduct or the lawful use of property must, in order to be valid, specify
the rules and conditions to be observed in such conduct or business; and must
admit of the exercise of the privilege of all citizens alike who will comply with
such rules and conditions; and must not admit of the exercise, or of an
opportunity for the exercise, of any arbitrary discrimination by the municipal
authorities between citizens who will so comply. (Schloss Poster Adv. Co., Inc.
vs. City of Rock Hill, et al., 2 SE (2d), pp. 394-395).
It is contended, on the other hand, that the mayor can refuse a permit solely in
case that the proposed building "destroys the view of the public plaza or
occupies any public property" (as stated in its section 3); and in fact, the refusal
of the Mayor of Baao to issue a building permit to the appellant was predicated
on the ground that the proposed building would "destroy the view of the public
plaza" by preventing its being seen from the public highway. Even thus
interpreted, the ordinance is unreasonable and oppressive, in that it operates
to permanently deprive appellants of the right to use their own property; hence,
it oversteps the bounds of police power, and amounts to a taking of appellants
property without just compensation. We do not overlook that the modern
tendency is to regard the beautification of neighborhoods as conducive to the
comfort and happiness of residents. But while property may be regulated in
the interest of the general welfare, and in its pursuit, the State may prohibit
structures offensive to the sight (Churchill and Tait vs. Rafferty, 32 Phil. 580),
the State may not, under the guise of police power, permanently divest owners
of the beneficial use of their property and practically confiscate them solely to
preserve or assure the aesthetic appearance of the community. As the case
now stands, every structure that may be erected on appellants' land,
regardless of its own beauty, stands condemned under the ordinance in
question, because it would interfere with the view of the public plaza from the
highway. The appellants would, in effect, be constrained to let their land remain
idle and unused for the obvious purpose for which it is best suited, being urban
in character. To legally achieve that result, the municipality must give
appellants just compensation and an opportunity to be heard.
An ordinance which permanently so restricts the use of property that it can not
be used for any reasonable purpose goes, it is plain, beyond regulation and
must be recognized as a taking of the property. The only substantial difference,
in such case, between restriction and actual taking, is that the restriction leaves
the owner subject to the burden of payment of taxation, while outright
confiscation would relieve him of that burden. (Arverne Bay Constr. Co. vs.
Thatcher (N.Y.) 117 ALR. 1110, 1116).
A regulation which substantially deprives an owner of all beneficial use of his
property is confiscation and is a deprivation within the meaning of the 14th
Amendment. (Sundlum vs. Zoning Bd., 145 Atl. 451; also Eaton vs. Sweeny,
177 NE 412; Taylor vs. Jacksonville, 133 So. 114).
Zoning which admittedly limits property to a use which can not reasonably be
made of it cannot be said to set aside such property to a use but constitutes
the taking of such property without just compensation. Use of property is an
element of ownership therein. Regardless of the opinion of zealots that
property may properly, by zoning, be utterly destroyed without compensation,
such principle finds no support in the genius of our government nor in the
principles of justice as we known them. Such a doctrine shocks the sense of
justice. If it be of public benefit that property remain open and unused, then
certainly the public, and not the private individuals, should bear the cost of
reasonable compensation for such property under the rules of law governing
the condemnation of private property for public use. (Tews vs. Woolhiser
(1933) 352 I11. 212, 185 N.E. 827) (Emphasis supplied.)
The validity of the ordinance in question was justified by the court below under
section 2243, par. (c), of the Revised Administrative Code, as amended. This
section provides:
SEC. 2243. Certain legislative powers of discretionary character. — The
municipal council shall have authority to exercise the following discretionary
powers:
xxx xxx xxx
(c) To establish fire limits in populous centers, prescribe the kinds of buildings
that may be constructed or repaired within them, and issue permits for the
creation or repair thereof, charging a fee which shall be determined by the
municipal council and which shall not be less than two pesos for each building
permit and one peso for each repair permit issued. The fees collected under
the provisions of this subsection shall accrue to the municipal school fund.
Under the provisions of the section above quoted, however, the power of the
municipal council to require the issuance of building permits rests upon its first
establishing fire limits in populous parts of the town and prescribing the kinds
of buildings that may be constructed or repaired within them. As there is
absolutely no showing in this case that the municipal council had either
established fire limits within the municipality or set standards for the kind or
kinds of buildings to be constructed or repaired within them before it passed
the ordinance in question, it is clear that said ordinance was not conceived and
promulgated under the express authority of sec. 2243 (c) aforequoted.
We rule that the regulation in question, Municipal Ordinance No. 7, Series of
1950, of the Municipality of Baao, Camarines Sur, was beyond the authority of
said municipality to enact, and is therefore null and void. Hence, the conviction
of herein appellants is reversed, and said accused are acquitted, with costs de
oficio. So ordered.
US VS CAUSBY
Thomas Lee Causby owned a chicken farm outside of Greensboro, North
Carolina. The farm was located near an airport used regularly by the United
States military. According to Causby, noise from the airport regularly frightened
the animals on his farm, resulting in the deaths of several chickens. The
problem became so severe that Causby was forced to abandon his business.
Under an ancient doctrine of the common law, land ownership extended to the
space above and below the earth. Using this doctrine as a basis, Causby sued
the United States, arguing that he owned the airspace above his farm. By flying
planes in this airspace, he argued, the government had confiscated his
property without compensation, thus violating the Takings Clause of the Fifth
Amendment. The United States Court of Claims accepted Causby's argument,
and ordered the government to pay compensation.
Question
Did the flying of planes by the United States military over Causby's farm
constitute a violation of the Takings Clause of the Fifth Amendment?
Conclusion
Yes, to an extent. In a 5-2 opinion authored by Justice William O. Douglas, the
Court concluded that the ancient common law doctrine "has no place in the
modern world." Justice Douglas noted that, were the Court to accept the
doctrine as valid, "every transcontinental flight would subject the operator to
countless trespass suits. Common sense revolts at the idea." However, while
the Court rejected the unlimited reach above and below the earth described in
the common law doctrine, it also ruled that, "if the landowner is to have full
enjoyment of the land, he must have exclusive control of the immediate
reaches of the enveloping atmosphere." Without defining a specific limit, the
Court stated that flights over the land could be considered a violation of the
Takings Clause if they led to "a direct and immediate interference with the
enjoyment and use of the land." Given the damage caused by the particularly
low, frequent flights over his farm, the Court determined that the government
had violated Causby's rights, and he was entitled to compensation. (Chief
Justice Harlan Fiske Stone died on April 22; Justice Robert H. Jackson took
no part in the consideration or decision in the case, leaving the court with 7
members.)
LAGCAO VS JUDGE LABRA
Before us is a petition for review of the decision dated July 1, 2002 of the
Regional Trial Court, Branch 23, Cebu City1 upholding the validity of the City
of Cebu’s Ordinance No. 1843, as well as the lower court’s order dated August
26, 2002 denying petitioner’s motion for reconsideration.
In 1964, the Province of Cebu donated 210 lots to the City of Cebu. One of
these lots was Lot 1029, situated in Capitol Hills, Cebu City, with an area of
4,048 square meters. In 1965, petitioners purchased Lot 1029 on installment
basis. But then, in late 1965, the 210 lots, including Lot 1029, reverted to the
Province of Cebu.2 Consequently, the province tried to annul the sale of Lot
1029 by the City of Cebu to the petitioners. This prompted the latter to sue the
province for specific performance and damages in the then Court of First
Instance.
On July 9, 1986, the court a quo ruled in favor of petitioners and ordered the
Province of Cebu to execute the final deed of sale in favor of petitioners. On
June 11, 1992, the Court of Appeals affirmed the decision of the trial court.
Pursuant to the ruling of the appellate court, the Province of Cebu executed
on June 17, 1994 a deed of absolute sale over Lot 1029 in favor of petitioners.
Thereafter, Transfer Certificate of Title (TCT) No. 129306 was issued in the
name of petitioners and Crispina Lagcao.3
After acquiring title, petitioners tried to take possession of the lot only to
discover that it was already occupied by squatters. Thus, on June 15, 1997,
petitioners instituted ejectment proceedings against the squatters. The
Municipal Trial Court in Cities (MTCC), Branch 1, Cebu City, rendered a
decision on April 1, 1998, ordering the squatters to vacate the lot. On appeal,
the RTC affirmed the MTCC’s decision and issued a writ of execution and order
of demolition.1avvphi1
However, when the demolition order was about to be implemented, Cebu City
Mayor Alvin Garcia wrote two letters4 to the MTCC, requesting the deferment
of the demolition on the ground that the City was still looking for a relocation
site for the squatters. Acting on the mayor’s request, the MTCC issued two
orders suspending the demolition for a period of 120 days from February 22,
1999. Unfortunately for petitioners, during the suspension period,
the Sangguniang Panlungsod (SP) of Cebu City passed a resolution which
identified Lot 1029 as a socialized housing site pursuant to RA 7279. 5 Then,
on June 30, 1999, the SP of Cebu City passed Ordinance No. 17726 which
included Lot 1029 among the identified sites for socialized housing. On July,
19, 2000, Ordinance No. 18437 was enacted by the SP of Cebu City
authorizing the mayor of Cebu City to initiate expropriation proceedings for the
acquisition of Lot 1029 which was registered in the name of petitioners. The
intended acquisition was to be used for the benefit of the homeless after its
subdivision and sale to the actual occupants thereof. For this purpose, the
ordinance appropriated the amount of ₱6,881,600 for the payment of the
subject lot. This ordinance was approved by Mayor Garcia on August 2, 2000.
On August 29, 2000, petitioners filed with the RTC an action for declaration of
nullity of Ordinance No. 1843 for being unconstitutional. The trial court
rendered its decision on July 1, 2002 dismissing the complaint filed by
petitioners whose subsequent motion for reconsideration was likewise denied
on August 26, 2002.
In this appeal, petitioners argue that Ordinance No. 1843 is unconstitutional as
it sanctions the expropriation of their property for the purpose of selling it to the
squatters, an endeavor contrary to the concept of "public use" contemplated
in the Constitution.8 They allege that it will benefit only a handful of people.
The ordinance, according to petitioners, was obviously passed for politicking,
the squatters undeniably being a big source of votes.1avvphi1
In sum, this Court is being asked to resolve whether or not the intended
expropriation by the City of Cebu of a 4,048-square-meter parcel of land
owned by petitioners contravenes the Constitution and applicable laws.
Under Section 48 of RA 7160,9 otherwise known as the Local Government
Code of 1991,10 local legislative power shall be exercised by the Sangguniang
Panlungsod of the city. The legislative acts of the Sangguniang Panlungsod in
the exercise of its lawmaking authority are denominated ordinances.
Local government units have no inherent power of eminent domain and can
exercise it only when expressly authorized by the legislature.11 By virtue of RA
7160, Congress conferred upon local government units the power to
expropriate. Ordinance No. 1843 was enacted pursuant to Section 19 of RA
7160:
SEC. 19. Eminent Domain. − A local government unit may, through its chief
executive and acting pursuant to an ordinance, exercise the power of eminent
domain for public use, or purpose, or welfare for the benefit of the poor and
the landless, upon payment of just compensation, pursuant to the provisions
of the Constitution and pertinent laws xxx. (italics supplied).
Ordinance No. 1843 which authorized the expropriation of petitioners’ lot was
enacted by the SP of Cebu City to provide socialized housing for the homeless
and low-income residents of the City.
However, while we recognize that housing is one of the most serious social
problems of the country, local government units do not possess unbridled
authority to exercise their power of eminent domain in seeking solutions to this
problem.
There are two legal provisions which limit the exercise of this power: (1) no
person shall be deprived of life, liberty, or property without due process of law,
nor shall any person be denied the equal protection of the laws; 12 and (2)
private property shall not be taken for public use without just
compensation.13 Thus, the exercise by local government units of the power of
eminent domain is not absolute. In fact, Section 19 of RA 7160 itself explicitly
states that such exercise must comply with the provisions of the Constitution
and pertinent laws.
The exercise of the power of eminent domain drastically affects a landowner’s
right to private property, which is as much a constitutionally-protected right
necessary for the preservation and enhancement of personal dignity and
intimately connected with the rights to life and liberty. 14 Whether directly
exercised by the State or by its authorized agents, the exercise of eminent
domain is necessarily in derogation of private rights. 15 For this reason, the
need for a painstaking scrutiny cannot be overemphasized.
The due process clause cannot be trampled upon each time an ordinance
orders the expropriation of a private individual’s property. The courts cannot
even adopt a hands-off policy simply because public use or public purpose is
invoked by an ordinance, or just compensation has been fixed and determined.
In De Knecht vs. Bautista,16 we said:
It is obvious then that a land-owner is covered by the mantle of protection due
process affords. It is a mandate of reason. It frowns on arbitrariness, it is the
antithesis of any governmental act that smacks of whim or caprice. It negates
state power to act in an oppressive manner. It is, as had been stressed so
often, the embodiment of the sporting idea of fair play. In that sense, it stands
as a guaranty of justice. That is the standard that must be met by any
governmental agency in the exercise of whatever competence is entrusted to
it. As was so emphatically stressed by the present Chief Justice, "Acts of
Congress, as well as those of the Executive, can deny due process only under
pain of nullity. xxx.
The foundation of the right to exercise eminent domain is genuine necessity
and that necessity must be of public character.17 Government may not
capriciously or arbitrarily choose which private property should be
expropriated. In this case, there was no showing at all why petitioners’ property
was singled out for expropriation by the city ordinance or what necessity
impelled the particular choice or selection. Ordinance No. 1843 stated no
reason for the choice of petitioners’ property as the site of a socialized housing
project.
Condemnation of private lands in an irrational or piecemeal fashion or the
random expropriation of small lots to accommodate no more than a few
tenants or squatters is certainly not the condemnation for public use
contemplated by the Constitution. This is depriving a citizen of his property for
the convenience of a few without perceptible benefit to the public.18
RA 7279 is the law that governs the local expropriation of property for purposes
of urban land reform and housing. Sections 9 and 10 thereof provide:
SEC 9. Priorities in the Acquisition of Land. − Lands for socialized housing
shall be acquired in the following order:
(a) Those owned by the Government or any of its subdivisions,
instrumentalities, or agencies, including government-owned or controlled
corporations and their subsidiaries;
(b) Alienable lands of the public domain;
(c) Unregistered or abandoned and idle lands;
(d) Those within the declared Areas or Priority Development, Zonal
Improvement Program sites, and Slum Improvement and Resettlement
Program sites which have not yet been acquired;
(e) Bagong Lipunan Improvement of Sites and Services or BLISS which have
not yet been acquired; and
(f) Privately-owned lands.
Where on-site development is found more practicable and advantageous to
the beneficiaries, the priorities mentioned in this section shall not apply. The
local government units shall give budgetary priority to on-site development of
government lands. (Emphasis supplied).
SEC. 10. Modes of Land Acquisition. − The modes of acquiring lands for
purposes of this Act shall include, among others, community mortgage, land
swapping, land assembly or consolidation, land banking, donation to the
Government, joint venture agreement, negotiated purchase, and
expropriation: Provided, however, That expropriation shall be resorted to
only when other modes of acquisition have been exhausted: Provided
further, That where expropriation is resorted to, parcels of land owned by small
property owners shall be exempted for purposes of this Act: xxx. (Emphasis
supplied).
In the recent case of Estate or Heirs of the Late Ex-Justice Jose B.L. Reyes et
al. vs. City of Manila,19 we ruled that the above-quoted provisions are strict
limitations on the exercise of the power of eminent domain by local government
units, especially with respect to (1) the order of priority in acquiring land for
socialized housing and (2) the resort to expropriation proceedings as a means
to acquiring it. Private lands rank last in the order of priority for purposes of
socialized housing. In the same vein, expropriation proceedings may be
resorted to only after the other modes of acquisition are exhausted.
Compliance with these conditions is mandatory because these are the only
safeguards of oftentimes helpless owners of private property against what may
be a tyrannical violation of due process when their property is forcibly taken
from them allegedly for public use.
We have found nothing in the records indicating that the City of Cebu complied
strictly with Sections 9 and 10 of RA 7279. Ordinance No. 1843 sought to
expropriate petitioners’ property without any attempt to first acquire the lands
listed in (a) to (e) of Section 9 of RA 7279. Likewise, Cebu City failed to
establish that the other modes of acquisition in Section 10 of RA 7279 were
first exhausted. Moreover, prior to the passage of Ordinance No. 1843, there
was no evidence of a valid and definite offer to buy petitioners’ property as
required by Section 19 of RA 7160.20 We therefore find Ordinance No. 1843 to
be constitutionally infirm for being violative of the petitioners’ right to due
process.
It should also be noted that, as early as 1998, petitioners had already obtained
a favorable judgment of eviction against the illegal occupants of their property.
The judgment in this ejectment case had, in fact, already attained finality, with
a writ of execution and an order of demolition. But Mayor Garcia requested the
trial court to suspend the demolition on the pretext that the City was still
searching for a relocation site for the squatters. However, instead of looking
for a relocation site during the suspension period, the city council suddenly
enacted Ordinance No. 1843 for the expropriation of petitioners’ lot. It was
trickery and bad faith, pure and simple. The unconscionable manner in which
the questioned ordinance was passed clearly indicated that respondent City
transgressed the Constitution, RA 7160 and RA 7279.
For an ordinance to be valid, it must not only be within the corporate powers
of the city or municipality to enact but must also be passed according to the
procedure prescribed by law. It must be in accordance with certain well-
established basic principles of a substantive nature. These principles require
that an ordinance (1) must not contravene the Constitution or any statute (2)
must not be unfair or oppressive (3) must not be partial or discriminatory (4)
must not prohibit but may regulate trade (5) must be general and consistent
with public policy, and (6) must not be unreasonable.21
Ordinance No. 1843 failed to comply with the foregoing substantive
requirements. A clear case of constitutional infirmity having been thus
established, this Court is constrained to nullify the subject ordinance. We
recapitulate:
first, as earlier discussed, the questioned ordinance is repugnant to the
pertinent provisions of the Constitution, RA 7279 and RA 7160;
second, the precipitate manner in which it was enacted was plain oppression
masquerading as a pro-poor ordinance;
third, the fact that petitioners’ small property was singled out for expropriation
for the purpose of awarding it to no more than a few squatters indicated
manifest partiality against petitioners, and
fourth, the ordinance failed to show that there was a reasonable relation
between the end sought and the means adopted. While the objective of the
City of Cebu was to provide adequate housing to slum dwellers, the means it
employed in pursuit of such objective fell short of what was legal, sensible and
called for by the circumstances.
Indeed, experience has shown that the disregard of basic liberties and the use
of short-sighted methods in expropriation proceedings have not achieved the
desired results. Over the years, the government has tried to remedy the
worsening squatter problem. Far from solving it, however, government’s kid-
glove approach has only resulted in the multiplication and proliferation of
squatter colonies and blighted areas. A pro-poor program that is well-studied,
adequately funded, genuinely sincere and truly respectful of everyone’s basic
rights is what this problem calls for, not the improvident enactment of politics-
based ordinances targeting small private lots in no rational fashion.
WHEREFORE, the petition is hereby GRANTED. The July 1, 2002 decision of
Branch 23 of the Regional Trial Court of Cebu City is REVERSED and SET
ASIDE.
SO ORDERED.
CITY OF MANDALUYONG VS FRANCISCO
This is a petition for review under Rule 45 of the Rules of Court of the Orders
dated September 17, 1998 and December 29, 1998 of the Regional Trial
Court, Branch 168, Pasig City1 dismissing the petitioner's Amended Complaint
in SCA No. 1427 for expropriation of two (2) parcels of land in Mandaluyong
City. 1âwphi1.nêt
The antecedent facts are as follows:
On August 4, 1997, petitioner filed with the Regional Trial Court, Branch 168,
Pasig City a complaint for expropriation entitled "City of Mandaluyong, plaintiff
v. Antonio N., Francisco N, Thelma N, Eusebio N, Rodolfo N., all surnamed
Aguilar, defendants." Petitioner sought to expropriate three (3) adjoining
parcels of land with an aggregate area of 1,847 square meters registered
under Transfer Certificates of Title Nos. 59780, 63766 and 63767 in the names
of the defendants, herein respondents, located at 9 de Febrero Street,
Barangay Mauwag, City of Mandaluyong; on a portion of the 3 lots,
respondents constructed residential houses several decades ago which they
had since leased out to tenants until the present; on the vacant portion of the
lots, other families constructed residential structures which they likewise
occupied; in 1983, the lots were classified by Resolution No. 125 of the Board
of the Housing and Urban Development Coordinating Council as an Area for
Priority Development for urban land reform under Proclamation Nos. 1967 and
2284 of then President Marcos; as a result of this classification, the tenants
and occupants of the lots offered to purchase the land from respondents, but
the latter refused to sell; on November 7, 1996, the Sangguniang Panlungsod
of petitioner, upon petition of the Kapitbisig, an association of tenants and
occupants of the subject land, adopted Resolution No. 516, Series of 1996
authorizing Mayor Benjamin Abalos of the City of Mandaluyong to initiate
action for the expropriation of the subject lots and construction of a medium-
rise condominium for qualified occupants of the land; on January 10, 1996,
Mayor Abalos sent a letter to respondents offering to purchase the said
property at P3,000.00 per square meter; respondents did not answer the letter.
Petitioner thus prayed for the expropriation of the said lots and the fixing of just
compensation at the fair market value of P3,000.00 per square meter.2
In their answer, respondents, except Eusebio N. Aguilar who died in 1995,
denied having received a copy of Mayor Abalos' offer to purchase their lots.
They alleged that the expropriation of their land is arbitrary and capricious, and
is not for a public purpose; the subject lots are their only real property and are
too small for expropriation, while petitioner has several properties inventoried
for socialized housing; the fair market value of P3,000.00 per square meter is
arbitrary because the zonal valuation set by the Bureau of Internal Revenue is
P7,000.00 per square meter. As counterclaim, respondents prayed for
damages of P21 million.3
Respondents filed a "Motion for Preliminary Hearing" claiming that the
defenses alleged in their Answer are valid grounds for dismissal of the
complaint for lack of jurisdiction over the person of the defendants and lack of
cause of action. Respondents prayed that the affirmative defenses be set for
preliminary hearing and that the complaint be dismissed.4 Petitioner replied.
On November 5, 1997, petitioner filed an Amended Complaint and named as
an additional defendant Virginia N. Aguilar and, at the same time, substituted
Eusebio Aguilar with his heirs. Petitioner also excluded from expropriation TCT
No. 59870 and thereby reduced the area sought to be expropriated from three
(3) parcels of land to two (2) parcels totalling 1,636 square meters under TCT
Nos. 63766 and 63767.5
The Amended Complaint was admitted by the trial court on December 18,
1997. Respondents, who, with the exception of Virginia Aguilar and the Heirs
of Eusebio Aguilar had yet to be served with summons and copies of the
Amended Complaint, filed a "Manifestation and Motion" adopting their "Answer
with Counterclaim" and "Motion for Preliminary Hearing" as their answer to the
Amended Complaint.6
The motion was granted. At the hearing of February 25, 1998, respondents
presented Antonio Aguilar who testified and identified several documentary
evidence. Petitioner did not present any evidence. Thereafter, both parties filed
their respective memoranda.7
On September 17, 1998, the trial court issued an order dismissing the
Amended Complaint after declaring respondents as "small property owners"
whose land is exempt from expropriation under Republic Act No. 7279. The
court also found that the expropriation was not for a public purpose for
petitioner's failure to present any evidence that the intended beneficiaries of
the expropriation are landless and homeless residents of Mandaluyong. The
court thus disposed of as follows:
"WHEREFORE, the Amended Complaint is hereby ordered dismissed without
pronouncement as to cost.
SO ORDERED."8
Petitioner moved for reconsideration. On December 29, 1998, the court denied
the motion. Hence this petition.
Petitioner claims that the trial court erred
"IN UPHOLDING RESPONDENT'S CONTENTION THAT THEY QUALIFY AS
SMALL PROPERTY OWNERS AND ARE THUS EXEMPT FROM
EXPROPRIATION."9
Petitioner mainly claims that the size of the lots in litigation does not exempt
the same from expropriation in view of the fact that the said lots have been
declared to be within the Area for Priority Development (APD) No. 5 of
Mandaluyong by virtue of Proclamation No. 1967, as amended by
Proclamation No. 2284 in relation to Presidential Decree No. 1517.10 This
declaration allegedly authorizes petitioner to expropriate the property, ipso
facto, regardless of the area of the land.
Presidential Decree (P.D.) No. 1517, the Urban Land Reform Act, was issued
by then President Marcos in 1978. The decree adopted as a State policy the
liberation of human communities from blight, congestion and hazard, and
promotion of their development and modernization, the optimum use of land
as a national resource for public welfare.11 Pursuant to this law, Proclamation
No. 1893 was issued in 1979 declaring the entire Metro Manila as Urban Land
Reform Zone for purposes of urban land reform. This was amended in 1980
by Proclamation No. 1967 and in 1983 by Proclamation No. 2284 which
identified and specified 245 sites in Metro Manila as Areas for Priority
Development and Urban Land Reform Zones.
In 1992, the Congress of the Philippines passed Republic Act No. 7279, the
"Urban Development and Housing Act of 1992." The law lays down as a policy
that the state, in cooperation with the private sector, undertake a
comprehensive and continuing Urban Development and Housing Program;
uplift the conditions of the underprivileged and homeless citizens in urban,
areas and resettlement areas by making available to them decent housing at
affordable cost, basic services and employment opportunities and provide for
the rational use and development of urban land to bring about, among others,
equitable utilization of residential lands; encourage more effective people's
participation in the urban development process and improve the capability of
local government units in undertaking urban development and housing
programs and projects.12 Towards this end, all city and municipal governments
are mandated to conduct an inventory of all lands and improvements within
their respective localities, and in coordination with the National Housing
Authority, the Housing and Land Use Regulatory Board, the National Mapping
Resource Information Authority, and the Land Management
Bureau, identify lands for socialized housing and resettlement areas for the
immediate and future needs of the underprivileged and homeless in the urban
areas, acquire the lands, and dispose of said lands to the beneficiaries of the
program.13
The acquisition of lands for socialized housing is governed by several
provisions in the law. Section 9 of R.A. 7279 provides:
"Sec. 9. Priorities in the Acquisition of Land. — Lands for socialized housing
shall be acquired in the following order:
(a) Those owned by the Government or any of its subdivisions,
instrumentalities, or agencies, including government-owned or controlled
corporations and their subsidiaries;
(b) Alienable lands of the public domain;
(c) Unregistered or abandoned and idle lands;
(d) Those within the declared Areas for Priority Development, Zonal
Improvement Program sites, and Slum Improvement and Resettlement
Program sites which have not yet been acquired;
(e) Bagong Lipunan Improvement of Sites and Services or BLISS Sites which
have not yet been acquired;
(f) Privately-owned lands.
Where on-site development is found more practicable and advantageous to
the beneficiaries, the priorities mentioned in this section shall not apply. The
local government units shall give budgetary priority to on-site development of
government lands."
Lands for socialized housing are to be acquired in the following order: (1)
government lands; (2) alienable lands of the public domain; (3) unregistered
or abandoned or idle lands; (4) lands within the declared Areas for Priority
Development (APD), Zonal Improvement Program (ZIP) sites, Slum
Improvement and Resettlement (SIR) sites which have not yet been acquired;
(5) BLISS sites which have not yet been acquired; and (6) privately-owned
lands.
There is no dispute that the two lots in litigation are privately-owned and
therefore last in the order of priority acquisition. However, the law also provides
that lands within the declared APD's which have not yet been acquired by the
government are fourth in the order of priority. According to petitioner, since the
subject lots lie within the declared APD, this fact mandates that the lots be
given priority in acquisition.14
Section 9, however, is not a single provision that can be read separate from
the other provisions of the law. It must be read together with Section 10 of R.A.
7279 which also provides:
"Section 10. Modes of Land Acquisition. — The modes of acquiring lands for
purposes of this Act shall include, among others, community mortgage, land
swapping, land assembly or consolidation, land banking, donation to the
Government, joint-venture agreement, negotiated purchase, and
expropriation: Provided, however, That expropriation shall be resorted to
only when other modes of acquisition have been exhausted: Provided,
further, That where expropriation is resorted to, parcels of land owned by
small property owners shall be exempted for purposes of this
Act: Provided, finally, That abandoned property, as herein defined, shall be
reverted and escheated to the State in a proceeding analogous to the
procedure laid down in Rule 91 of the Rules of Court.15
For the purposes of socialized housing, government-owned and foreclosed
properties shall be acquired by the local government units, or by the National
Housing Authority primarily through negotiated purchase: Provided, That
qualified beneficiaries who are actual occupants of the land shall be given the
right of first refusal."
Lands for socialized housing under R.A. 7279 are to be acquired in several
modes. Among these modes are the following: (1) community mortgage; (2)
land swapping, (3) land assembly or consolidation; (4) land banking; (5)
donation to the government; (6) joint venture agreement; (7) negotiated
purchase; and (8) expropriation. The mode of expropriation is subject to two
conditions: (a) it shall be resorted to only when the other modes of acquisition
have been exhausted; (b) parcels of land owned by small property owners are
exempt from such acquisition.
Section 9 of R.A. 7279 speaks of priorities in the acquisition of lands. It
enumerates the type of lands to be acquired and the heirarchy in their
acquisition. Section 10 deals with the modes of land acquisition or the process
of acquiring lands for socialized housing. These are two different things. They
mean that the type of lands that may be acquired in the order of priority
in Section 9 are to be acquired only in the modes authorized under
Section 10. The acquisition of the lands in the priority list must be made
subject to the modes and conditions set forth in the next provision. In other
words, land that lies within the APD, such as in the instant case, may be
acquired only in the modes under, and subject to the conditions of, Section 10.
Petitioner claims that it had faithfully observed the different modes of land
acquisition for socialized housing under R.A. 7279 and adhered to the priorities
in the acquisition for socialized housing under said law. 16 It, however, did not
state with particularity whether it exhausted the other modes of acquisition in
Section 9 of the law before it decided to expropriate the subject lots. The law
states "expropriation shall be resorted to when other modes of acquisition have
been exhausted." Petitioner alleged only one mode of acquisition, i.e., by
negotiated purchase. Petitioner, through the City Mayor, tried to purchase the
lots from respondents but the latter refused to sell. 17 As to the other modes of
acquisition, no mention has been made. Not even Resolution No. 516, Series
of 1996 of the Sangguniang Panlungsod authorizing the Mayor of
Mandaluyong to effect the expropriation of the subject property states whether
the city government tried to acquire the same by community mortgage, land
swapping, land assembly or consolidation, land banking, donation to the
government, or joint venture agreement under Section 9 of the law.
Section 9 also exempts from expropriation parcels of land owned by small
property owners.18 Petitioner argues that the exercise of the power of eminent
domain is not anymore conditioned on the size of the land sought to be
expropriated.19 By the expanded notion of public use, present jurisprudence
has established the concept that expropriation is not anymore confined to the
vast tracts of land and landed estates, but also covers small parcels of
land.20 That only a few could actually benefit from the expropriation of the
property does not diminish its public use character. 21 It simply is not possible
to provide, in one instance, land and shelter for all who need them.22
While we adhere to the expanded notion of public use, the passage of R.A.
No. 7279, the "Urban Development and Housing Act of 1992" introduced a
limitation on the size of the land sought to be expropriated for socialized
housing. The law expressly exempted "small property owners" from
expropriation of their land for urban land reform. R.A. No. 7279 originated as
Senate Bill No. 234 authored by Senator Joey Lina 23 and House Bill No.
34310. Senate Bill No. 234 then provided that one of those lands not covered
by the urban land reform and housing program was "land actually used by
small property owners within the just and equitable retention limit as provided
under this Act."24 "Small property owners" were defined in Senate Bill No. 234
as:
"4. Small Property Owners — are those whose rights are protected under
Section 9, Article XIII of the Constitution of the Philippines, who own small
parcels of land within the fair and just retention limit provided under this Act
and which are adequate to meet the reasonable needs of the small property
owner's family and their means of livelihood.25
The exemption from expropriation of lands of small-property owners was never
questioned on the Senate floor.26 This exemption, although with a modified
definition, was actually retained in the consolidation of Senate Bill No. 234 and
House Bill No. 34310 which became R.A. No. 7279.27
The question now is whether respondents qualify as "small property owners"
as defined in Section 3 (q) of R.A. 7279. Section 3 (q) provides:
"Section 3 x x x (q). "Small property owners" refers to those whose only real
property consists of residential lands not exceeding three hundred square
meters (300 sq.m.) in highly urbanized cities and eight hundred square meters
(800 sq.m.) in other urban areas."
"Small-property owners" are defined by two elements: (1) those owners of real
property whose property consists of residential lands with an area of not more
than 300 square meters in highly urbanized cities and 800 square meters in
other urban areas; and (2) that they do not own real property other than the
same.
The case at bar involves two (2) residential lots in Mandaluyong City, a highly
urbanized city. The lot under TCT No. 63766 is 687 square meters in area and
the second under TCT No. 63767 is 949 square meters, both totalling 1,636
square meters in area. TCT No. 63766 was issued in the names of herein five
(5) respondents, viz:
"FRANCISCO N. AGUILAR, widower; THELMA N. AGUILAR, single;
EUSEBIO N. AGUILAR, JR., widower; RODOLFO N. AGUILAR, single and
ANTONIO N. AGUILAR, married to Teresita Puig; all of legal age, Filipinos."28
TCT No. 63767 was issued in the names of the five (5)
respondents plus Virginia Aguilar, thus:
"FRANCISCO N. AGUILAR, widower; THELMA N. AGUILAR, single;
EUSEBIO N. AGUILAR, JR., widower; RODOLFO N. AGUILAR, single and
ANTONIO N. AGUILAR, married to Teresita Puig; and VIRGINIA N. AGUILAR,
single, all of legal age, Filipinos."29
Respondent Antonio Aguilar testified that he and the other registered owners
are all siblings who inherited the subject property by intestate succession from
their parents.30 Their father died in 1945 and their mother in 1976. 31 Both
TCT's were issued in the siblings' names on September 2, 1987. 31 In 1986,
however, the siblings agreed to extrajudicially partition the lots among
themselves, but no action was taken by them to this end. It was only eleven
(11) years later, on November 28, 1997 that a survey of the two lots was
made33 and on February 10, 1998, a consolidation subdivision plan was
approved by the Lands Management Service of the Department of
Environment and Natural Resources.34 The co-owners signed a Partition
Agreement on February 24, 199835 and on May 21, 1998, TCT Nos. 63766
and 63767 were cancelled and new titles issued in the names of the individual
owners pursuant to the Partition Agreement.
Petitioner argues that the consolidation of the subject lots and their partition
was made more than six (6) months after the complaint for expropriation was
filed on August 4, 1997, hence, the partition was made in bad faith, for the
purpose of circumventing the provisions of R.A. 7279. 36
At the time of filing of the complaint for expropriation, the lots subject of this
case were owned in common by respondents; Under a co-ownership, the
ownership of an undivided thing or right belongs to different persons.37 During
the existence of the co-ownership, no individual can claim title to any definite
portion of the community property until the partition thereof; and prior to the
partition, all that the co-owner has is an ideal or abstract quota or proportionate
share in the entire land or thing.38 Article 493 of the Civil Code however
provides that:
"Art. 493. Each co-owner shall have the full ownership of his part and of the
fruits and benefits pertaining thereto, and he may therefore alienate, assign or
mortgage it, and even substitute another person in its enjoyment, except when
personal rights are involved. But the effect of the alienation or the mortgage,
with respect to the co-owners shall be limited to the portion which may be
allotted to him in the division upon termination of the co-ownership.39
Before partition in a co-ownership, every co-owner has the absolute ownership
of his undivided interest in the common property. The co-owner is free to
alienate, assign or mortgage his interest, except as to purely personal
rights.40 He may also validly lease his undivided interest to a third party
independently of the other co-owners.41 The effect of any such transfer is
limited to the portion which may be awarded to him upon the partition of the
property.42
Article 493 therefore gives the owner of an undivided interest in the property
the right to freely sell and dispose of his undivided interest. 43 The co-owner,
however, has no right to sell or alienate a concrete specific or determinate part
of the thing owned in common, because his right over the thing is represented
by a quota or ideal portion without any physical adjudication.44 If the co-owner
sells a concrete portion, this, nonetheless, does not render the sale void. Such
a sale affects only his own share, subject to the results of the partition but not
those of the other co-owners who did not consent to the sale.45
In the instant case, the titles to the subject lots were issued in respondents'
names as co-owners in 1987—ten (10) years before the expropriation case
was filed in 1997. As co-owners, all that the respondents had was an ideal or
abstract quota or proportionate share in the lots. This, however, did not mean
that they could not separately exercise any rights over the lots. Each
respondent had the full ownership of his undivided interest in the property. He
could freely sell or dispose of his interest independently of the other co-owners.
And this interest could have even been attached by his creditors. 46 The
partition in 1998, six (6) months after the filing of the expropriation case,
terminated the co-ownership by converting into certain and definite parts the
respective undivided shares of the co-owners.47 The subject property is not a
thing essentially indivisible. The rights of the co-owners to have the property
partitioned and their share in the same delivered to them cannot be questioned
for "[n]o co-owner shall be obliged to remain in the co-ownership."48 The
partition was merely a necessary incident of the co-ownership;49 and absent
any evidence to the contrary, this partition is presumed to have been done in
good faith.
Upon partition, four (4) co-owners, namely, Francisco, Thelma, Rodolfo and
Antonio Aguilar each had a share of 300 square meters under TCT Nos.
13849, 13852, 13850, 13851.50 Eusebio Aguilar's share was 347 square
meters under TCT No. 1385351 while Virginia Aguilar's was 89 square meters
under TCT No. 13854.52
It is noted that Virginia Aguilar, although granted 89 square meters only of the
subject lots, is, at the same time, the sole registered owner of TCT No. 59780,
one of the three (3) titles initially sought to be expropriated in the original
complaint. TCT No. 59780, with a land area of 211 square meters, was
dropped in the amended complaint. Eusebio Aguilar was granted 347 square
meters, which is 47 square meters more than the maximum of 300 square
meters set by R.A. 7279 for small property owners. In TCT No. 13853,
Eusebio's title, however, appears the following annotation:
"... subject to x x x, and to the prov. of Sec. 4 Rule 74 of the Rules of Court
with respect to the inheritance left by the deceased Eusebio N. Aguilar."53
Eusebio died on March 23, 1995,54 and, according to Antonio's testimony, the
former was survived by five (5) children.55 Where there are several co-owners,
and some of them die, the heirs of those who die, with respect to that part
belonging to the deceased, become also co-owners of the property together
with those who survive.56 After Eusebio died, his five heirs became co-owners
of his 347 square-meter portion. Dividing the 347 square meters among the
five entitled each heir to 69.4 square meters of the land subject of litigation.
Consequently, the share of each co-owner did not exceed the 300 square
meter limit set in R.A. 7279. The second question, however, is whether the
subject property is the only real property of respondents for them to comply
with the second requisite for small property owners.
Antonio Aguilar testified that he and most of the original co-owners do not
reside on the subject property but in their ancestral home in Paco,
Manila.57 Respondents therefore appear to own real property other than the
lots in litigation. Nonetheless, the records do not show that the ancestral home
in Paco, Manila and the land on which it stands are owned by respondents or
anyone of them. Petitioner did not present any title or proof of this fact despite
Antonio Aguilar's testimony.
On the other hand, respondents claim that the subject lots are their only real
property58 and that they, particularly two of the five heirs of Eusebio Aguilar,
are merely renting their houses and therefore do not own any other real
property in Metro Manila.59 To prove this, they submitted certifications from the
offices of the City and Municipal Assessors in Metro Manila attesting to the fact
that they have no registered real property declared for taxation purposes in the
respective cities. Respondents were certified by the City Assessor of
Manila;60 Quezon City;61 Makati City;62 Pasay City;63 Paranaque;64 Caloocan
City;65 Pasig City;66 Muntinlupa;67 Marikina;68 and the then municipality of Las
Piñas69 and the municipality of San Juan del Monte70 as having no real
property registered for taxation in their individual names.1âwphi1.nêt
Finally, this court notes that the subject lots are now in the possession of
respondents. Antonio Aguilar testified that he and the other co-owners filed
ejectment cases against the occupants of the land before the Metropolitan Trial
Court, Mandaluyong, Branches 59 and 60. Orders of eviction were issued and
executed on September 17, 1997 which resulted in the eviction of the tenants
and other occupants from the land in question.71
IN VIEW WHEREOF, the petition is DENIED and the orders dated September
17. 1998 and December 29, 1998 of the Regional Trial Court, Branch 168,
Pasig City in SCA No. 1427 are AFFIRMED.
SO ORDERED.
FILSTREAM INTERNATIONAL VS CA
In resolving the instant petitions, the Court is tasked to strike a balance
between the contending interests when the state exercises its power of
eminent domain. On one side we have the owners of the property to be
expropriated who must be duly compensated for the loss of their property,
while on the other is the State which must take the property for public use.
Petitioner, Filstream International, Inc., is the registered owner of the
properties subject of this dispute consisting of adjacent parcels of land situated
in Antonio Rivera Street, Tondo II, Manila, with a total area of 3,571.10 square
meters and covered by T.C.T. Nos. 203937, 203936, 169198, 169199, 169200
and 169202 of the Register of Deeds of Manila.
On January 7, 1993, petitioner filed an ejectment suit before the Metropolitan
Trial Court of Manila (Branch 15) docketed as Civil Case No. 140817-CV
against the occupants of the abovementioned parcels of land (herein private
respondents in G. R. No. 128077) on the grounds of termination of the lease
contract and non-payment of rentals. Judgment was rendered by the MTC on
September 14, 1993 ordering private respondents to vacate the premises and
pay back rentals to petitioner.1
Not satisfied, private respondents appealed the decision to the Regional Trial
Court of Manila, Branch 4 (Civil Case No. 93-68130) which in turn affirmed the
decision of the MTC in its decision dated February 22, 1994. Still not content,
private respondents proceeded to the Court of Appeals via a petition for review
(CA-G.R. SP No. 33714). The result however remained the same as the CA
affirmed the decision of the RTC in its decision dated August 25,
1994.2 Thereafter, no further action was taken by the private respondents, as
a result of which the decision in the ejectment suit became final and executory.
However, it appeared that during the pendency of the ejectment proceedings
private respondents filed on May 25, 1993, a complaint for Annulment of Deed
of Exchange against petitioner Filstream which was docketed in Civil Case No.
93-66059 before the RTC of Manila, Branch 43. It was at this stage that
respondent City of Manila came into the picture when the city government
approved Ordinance No. 78133 on November 5, 1993, authorizing Mayor
Alfredo S. Lim to initiate the acquisition by negotiation, expropriation,
purchase, or other legal means certain parcels of land registered under T.C.T.
Nos. 169193, 169198, 169190, 169200, 169202 and 169192 of the Registry
of Deeds of Manila which formed part of the properties of petitioner then
occupied by private respondents. Subsequently, the City of Manila approved
Ordinance No. 7855 4 declaring the expropriation of certain parcels of land
situated along Antonio Rivera and Fernando Ma. Guerrero streets in Tondo,
Manila which were owned by Mr. Enrique Quijano Gutierrez, petitioner's
predecessor-in-interest. The said properties were to be sold and distributed to
qualified tenants of the area pursuant to the Land Use Development Program
of the City of Manila.
On May 23, 1994, respondent City of Manila filed a complaint for eminent
domain (Civil Case No. 94-70560) before the RTC of Manila, Branch
42,5 seeking to expropriate the aforecited parcels of land owned by petitioner
Filstream which are situated at Antonio Rivera Street, Tondo II, Manila.6
Pursuant to the complaint filed by respondent City of Manila, the trial court
issued a Writ of Possession 7 in favor of the former which ordered the transfer
of possession over the disputed premises to the City of Manila.
At this juncture, petitioner Filstream filed a motion to dismiss the complaint for
eminent domain as well as a motion to quash the writ of possession. The
motion to dismiss was premised on the following grounds: no valid cause of
action; the petition does not satisfy the requirements of public use and a mere
clandestine maneuver to circumvent the writ of execution issued by the RTC
of Manila, Branch 4 in the ejectment suit; violation of the constitutional
guarantee against non-impairment of obligations and contracts; price offered
was too low hence violative of the just compensation provision of the
constitution and the said amount is without the certification of the City
Treasurer for availability of funds.8 With respect to the motion to quash the
writ of possession, petitioner raised the following objections: failure to
comply with Section 2 of Rule 67 of the Rules of Court, Ordinance No.
7813 is a void enactment for it was approved without a public hearing
and violative of the constitutional guarantee against impairment of
obligations and contracts; the price is too low and unconscionable
violating the just compensation provision of the constitution, and the
said writ is tainted with infirmity considering the absence of a
certification from the City of Manila that there is an immediately available
fund for the subject expropriation.9
Respondent City of Manila filed its opposition 10 to petitioner Filstream's
two motions and to which petitioner accordingly filed a reply. 11 On
September 30, 1994, the RTC of Manila, Branch 42, issued an order
denying petitioner Filstream's motion to dismiss and the motion to quash
the Writ of Possession and declared as follows:
IN FINE, the defendant's motion to dismiss and motion to quash writ of
possession are both without merit and are hereby DENIED and the
subject parcels of lands covered by TCT Nos. 203937, 203936, 169198,
169199, 169200 and 169202 (of the Register of Deeds of Manila) located
at Antonio Rivera Street, Tondo II, Manila with a total area of 3,571.10
square meters are hereby declared CONDEMNED in favor of the City of
Manila for distribution and resale to all poor and landless qualified
residents/tenants in the said area under the city's "land-for-the landless"
program upon payment of just compensation which is yet to be
determined by this Court.12
Petitioner filed a motion for reconsideration 13 as well as a supplemental
motion for reconsideration 14 seeking the reversal of the above-quoted
order but the same were denied. 15 Still, petitioner filed a subsequent
motion to be allowed to file a second motion for reconsideration but it
was also denied.
Aggrieved, petitioner filed on March 31, 1996, a Petition
for Certiorari with the Court of Appeals (CA-G.R. SP No. 36904) seeking
to set aside the September 30, 1994 order of the RTC of Manila, Branch
42. However, on March 18, 1996, respondent CA issued a resolution
dismissing the petition in this wise:
It appearing that the above-entitled petition is insufficient in form and
substance — it does not comply with Section 2(a), Rule 6 of the Revised
Internal Rules of the Court of Appeals which requires that the "petition
shall be . . . accompanied by . . . other pertinent documents and papers,"
aside from the fact that copies of the pleadings attached to the petition
are blurred and unreadable — this Court resolved to summarily DISMISS
the same (petition).16
Petitioner filed a motion for reconsideration and attached clearer copies
of the pertinent documents and papers pursuant to Section 2(a), Rule 6
of the Revised Internal Rules of the Court of Appeals. But on May 20,
1996, respondent CA issued a resolution denying the motion as
petitioner failed to submit clearer and readable copies of the
pleadings. 17 This prompted petitioner to proceed to this Court giving
rise to the instant petition for review on certiorari under Rule 45 and
docketed herein as G.R. No. 125218, assailing the dismissal of its petition
by the CA in its resolution dated March 18, 1996 as well as that of its
motion for reconsideration in the resolution dated May 20, 1996.
Meanwhile, owing to the finality of the decision in the ejectment suit (Civil
Case No. 140817-CV), the MTC of Manila, Branch 15, upon motion of
petitioner Filstream, issued a Writ of Execution as well as a Notice to
Vacate the disputed premises. 18 Private respondents filed a Motion to
Recall/Quash the Writ of Execution and Notice to Vacate 19 alleging the
existence of a supervening event in that the properties subject of the
dispute have already been ordered condemned in an expropriation
proceeding in favor of the City of Manila for the benefit of the qualified
occupants thereof, thus execution shall be stayed. Petitioner opposed
the motion, reiterating that the decision in the ejectment case is already
final and executory and disputed private respondents' right to interpose
the expropriation proceedings as a defense because the latter were not
parties to the same.
For its part, the City of Manila filed on March 13, 1996, a motion for
intervention with prayer to stay/quash the writ of execution on the
ground that it is the present possessor of the property subject of
execution.
In its order dated March 14, 1996, the MTC of Manila, Branch 14, denied
private respondents' motion as it found the allegations therein bereft of
merit and upheld the issuance of the Writ of Execution and Notice to
Vacate in petitioner's favor. 20 Subsequently, the trial court also denied
the motion filed by the City of Manila.
On April 22, 1996, the trial court issued an order commanding the
demolition of the structure erected on the disputed premises. To avert
the demolition, private respondents filed before the RTC of Manila,
Branch 14, a Petition for Certiorari and Prohibition with prayer for the
issuance of a temporary restraining order and preliminary injunction
(docketed as Civil Case No. 96-78098). On April 29, 1996, the RTC of
Manila, Branch 33, issued a TRO enjoining the execution of the writ
issued in Civil Case No. 140817-CV by the MTC of Manila, Branch
14. 21 Subsequently, the RTC issued a writ of preliminary injunction on
May 14, 1996.22
On May 15, 1996, the City of Manila filed its Petition for Certiorari and
Prohibition with prayer for the issuance of a temporary restraining order
and preliminary injunction which was raffled to Branch 23 of the RTC of
Manila (docketed as Civil Case No. 96-78382), seeking the reversal of the
orders issued by the MTC of Manila, Branch 14, which denied its motion
to intervene and quash the writ of execution in Civil Case No. 140817-CV.
Thereafter, upon motion filed by the City of Manila, an order was issued
by the RTC of Manila, Branch 10, ordering the consolidation of Civil Case
No. 96-78382 with Civil Case No. 96-78098 pending before Branch 14 of
the RTC of Manila. 23 On May 21, 1996, the RTC of Manila, Branch 14,
issued an injunction in Civil Case No. 96-78098 enjoining the
implementation of the writ of execution until further orders from the
court. 24 Petitioner Filstream filed a Motion to Dissolve the Writ of
Preliminary Injunction and to be allowed to post a counter-bond but the
trial court denied the same. Filstream then filed a motion for
reconsideration from the order of denial but pending resolution of this
motion, it filed a motion for voluntary inhibition of the presiding judge of
the RTC of Manila, Branch 14. The motion for inhibition was
granted 25 and as a result, the consolidated cases (Civil Case No. 96-
78382 and 96-78098) were re-raffled to the RTC of Manila, Branch 33.
During the proceedings before the RTC of Manila, Branch 33, petitioner
Filstream moved for the dismissal of the consolidated cases (Civil Case
No. 96-78382 and No. 96-78098) for violation of Supreme Court Circular
No. 04-94 (forum shopping) because the same parties, causes of action
and subject matter involved therein have already been disposed of in the
decision in the ejectment case (Civil Case No. 140817) which has already
became final and executory prior to the filing of these consolidated
cases.
On December 9, 1996, an order was issued by the RTC of Manila, Branch
33, ordering the dismissal of Civil Case Nos. 96-78382 and 96-78098 for
violation of Supreme Court Circular No. 04-94. 26 Immediately thereafter,
petitioner Filstream filed an Ex-parte Motion for Issuance of an Alias Writ
of Demolition and Ejectment and a supplemental motion to the same
dated January 10 and 13, 1997, respectively, 27 before the MTC of Manila,
Branch 15, which promulgated the decision in the ejectment suit (Civil
Case No. 140817-CV). On January 23, 1997, the court granted the motion
and issued the corresponding writ of demolition.
As a consequence of the dismissal of the consolidated cases, herein
private respondents filed a Petition for Certiorari and Prohibition with
prayer for the issuance of a temporary restraining order and preliminary
injunction before the Court of Appeals (docketed as CA-G.R. SP No.
43101) 28 assailing the above-mentioned order of dismissal by the RTC
of Manila, Branch 33, as having been issued with grave abuse of
discretion tantamount to lack or in excess of jurisdiction.
In a resolution dated January 28, 1997, the Court of Appeals granted
herein private respondents prayer for the issuance of a temporary
restraining order and directed the MTC of Manila, Branch 15, to desist
from implementing the order of demolition dated January 23, 1997,
unless otherwise directed. 29
At the conclusion of the hearing for the issuance of a writ of preliminary
injunction, the Court of Appeals, in its resolution dated February 18,
1997, found merit in private respondents' allegations in support of their
application of the issuance of the writ and granted the same, to wit:
Finding that the enforcement or implementation of the writ of execution
and notice to vacate issued in Civil Case No. 140817-CV, the ejectment
case before respondent Judge Jiro, during the pendency of the instant
petition, would probably be in violation of petitioners' right, and would
tend to render the judgment in the instant case ineffectual, and probably
work injustice to the petitioners, the application for the issuance of a writ
of preliminary injunction is hereby GRANTED.
WHEREFORE, upon the filing of a bond in the amount of P150,000.00, let
a writ of preliminary injunction be issued enjoining respondents, their
employees, agents, representatives and anyone acting in their behalf
from enforcing or executing the writ of execution and notice to vacate
issued in Civil Case No. 140817-CV of the court of respondent Judge Jiro,
or otherwise disturbing the status quo, until further orders of this
Court.30
In turn, petitioner Filstream is now before this Court via a Petition
for Certiorari under Rule 65 (G.R. No. 128077), seeking to nullify the
Resolutions of the Court of Appeals dated January 28, 1997 and February
18, 1997 which granted herein private respondents' prayer for a TRO and
Writ of Preliminary Injunction, the same being null and void for having
been issued in grave abuse of discretion.
Upon motion filed by petitioner Filstream, in order to avoid any
conflicting decisions on the legal issues raised in the petitions, the Court
ordered that the later petition, G.R. No. 128077 be consolidated with G.R.
No. 128077 in the resolution of March 5, 1997.31
The issue raised in G.R. No. 125218 is purely a procedural and technical
matter. Petitioner takes exception to the resolutions of respondent CA
dated March 18, 1996 and May 20, 1996 which ordered the dismissal of
its Petition for Certiorari for non-compliance with Sec. 2(a) of Rule 6 of
the Revised Internal Rules of the Court of Appeals by failing to attach to
its petition other pertinent documents and papers and for attaching
copies of pleadings which are blurred and unreadable. Petitioner argues
that respondent appellate court seriously erred in giving more premium
to form rather than substance.
We agree with the petitioner. A strict adherence to the technical and
procedural rules in this case would defeat rather than meet the ends of
justice as it would result in the violation of the substantial rights of
petitioner. At stake in the appeal filed by petitioner before the CA is the
exercise of their property rights over the disputed premises which have
been expropriated and have in fact been ordered condemned in favor of
the City of Manila. In effect, the dismissal of their appeal in the
expropriation proceedings based on the aforementioned grounds is
tantamount to a deprivation of property without due process of law as it
would automatically validate the expropriation proceedings which the
petitioner is still disputing. It must be emphasized that where substantial
rights are affected, as in this case, the stringent application of procedural
rules may be relaxed if only to meet the ends of substantial justice.
In these instances, respondent CA can exercise its discretion to suspend
its internal rules and allow the parties to present and litigate their causes
of action so that the Court can make an actual and complete disposition
of the issues presented in the case. Rather than simply dismissing the
petition summarily for non-compliance with respondent court's internal
rules, respondent CA should have instead entertained petitioner
Filstream's petition for review on certiorari, and ordered petitioner to
submit the corresponding pleadings which it deems relevant and replace
those which are unreadable. This leniency could not have caused any
prejudice to the rights of the other parties.
With regard to the other petition, G.R. No. 128077, petitioner Filstream
objects to the issuance by respondent CA of the restraining order and
the preliminary injunction enjoining the execution of the writ of
demolition issued in the ejectment suit (Civil Case No. 140817-CV) as an
incident to private respondents' pending petition assailing the dismissal
by the RTC of Manila, Branch 33, of the consolidated petitions
for certiorari filed by private respondents and the City of Manila on the
ground of forum shopping.
The propriety of the issuance of the restraining order and the writ of
preliminary injunction is but a mere incident to the actual controversy
which is rooted in the assertion of the conflicting rights of the parties in
this case over the disputed premises. In order to determine whether
private respondents are entitled to the injunctive reliefs granted by
respondent CA, we deemed it proper to extract the source of discord.
Petitioner Filstream anchors its claim by virtue of its ownership over the
properties and the existence of a final and executory judgment against
private respondents ordering the latter's ejectment from the premises
(Civil Case No. 140817-CV).
Private respondents' claim on the other hand hinges on an alleged
supervening event which has rendered the enforcement of petitioner's
rights moot, that is, the expropriation proceedings (Civil Case No. 94-
70560) undertaken by the City of Manila over the disputed premises for
the benefit of herein private respondents. For its part, the City of Manila
is merely exercising its power of eminent domain within its jurisdiction
by expropriating petitioner's properties for public use.
There is no dispute as to the existence of a final and executory judgment
in favor of petitioner Filstream ordering the ejectment of private
respondents from the properties subject of this dispute. The judgment in
the ejectment suit became final and executory after private respondents
failed to interpose any appeal from the adverse decision of the Court of
Appeals dated August 25, 1994 in CA-G.R. SP No. 33714. Thus, petitioner
has every right to assert the execution of this decision as it had already
become final and executory.
However, it must also be conceded that the City of Manila has an
undeniable right to exercise its power of eminent domain within its
jurisdiction. The right to expropriate private property for public use is
expressly granted to it under Section 19 of the 1991 Local Government
Code, to wit:
Sec. 19. Eminent Domain. — A local government unit may, through its
chief executive and acting pursuant to an ordinance, exercise the power
of eminent domain for public use, or purpose, or welfare for the benefit
of the poor and the landless, upon payment of just compensation,
pursuant to the provisions of the Constitution and pertinent laws:
Provided, however, That the power of eminent domain may not be
exercised unless a valid and definite offer has been previously made to
the owner, and such offer was not accepted; Provided, further, That the
local government unit may immediately take possession of the property
upon the filing of the expropriation proceedings and upon making a
deposit with the proper court of at least fifteen (15%) of the fair market
value of the property based on the current tax declaration of the property
to be expropriated: Provided, finally, That, the amount to be paid for the
expropriated property shall be determined by the proper court, based on
the fair market value at the time of the taking of the property. (Emphasis
supplied).
More specifically, the City of Manila has the power to expropriate private
property in the pursuit of its urban land reform and housing program as
explicitly laid out in the Revised Charter of the City of Manila (R.A. No.
409) as follows:
General powers. — The city may have a common seal and alter the same
at pleasure, and may take, purchase, receive, hold, lease, convey, and
dispose of real and personal property for the general interest of the city,
condemn private property for public use, contract and be contracted
with, sue and be sued, and prosecute and defend to final judgment and
execution, and exercise all the powers hereinafter conferred. (R.A. 409,
Sec. 3; Emphasis supplied).
xxx xxx xxx
Sec. 100. The City of Manila is authorized to acquire private lands in the
city and to subdivide the same into home lots for sale on easy terms to
city residents, giving first priority to the bona fide tenants or occupants
of said lands, and second priority to laborers and low-salaried
employees. For the purpose of this section, the city may raise the
necessary funds by appropriations of general funds, by securing loans
or by issuing bonds, and, if necessary, may acquire the lands through
expropriation proceedings in accordance with law, with the approval of
the President . . . . (Emphasis supplied).
In fact, the City of Manila's right to exercise these prerogatives
notwithstanding the existence of a final and executory judgment over the
property to be expropriated has been upheld by this Court in the case
of Philippine Columbian Association vs. Panis, G.R. No. 106528,
December 21, 1993. 32 Relying on the aforementioned provisions of the
Revised Charter of the City of Manila, the Court declared that:
The City of Manila, acting through its legislative branch, has the express
power to acquire private lands in the city and subdivide these lands into
home lots for sale to bona-fide tenants or occupants thereof, and to
laborers and low-salaried employees of the city.
That only a few could actually benefit from the expropriation of the
property does not diminish its public use character. It is simply not
possible to provide all at once land and shelter for all who need them
(Sumulong v. Guerrero, 154 SCRA 461 [1987]).
Corollary to the expanded notion of public use, expropriation is not
anymore confined to vast tracts of land and landed estates (Province of
Camarines Sur v. Court of Appeals, G. R. No. 103125, May 17, 1993; J. M.
Tuason and Co., Inc. v. Land Tenure Administration, 31 SCRA 413
[1970]). It is therefore of no moment that the land sought to be
expropriated in this case is less than half a hectare only (Pulido v. Court
of Appeals, 122 SCRA 63 [1983]).
Through the years, the public use requirement in eminent domain has
evolved into a flexible concept, influenced by changing conditions
(Sumulong v. Guerrero, supra; Manotok v. National Housing Authority,
150 SCRA 89 [1987]; Heirs of Juancho Ardona v. Reyes, 125 SCRA 220
[1983]). Public use now includes the broader notion of indirect public
benefit or advantage, including in particular, urban land reform and
housing.33
We take judicial notice of the fact that urban land reform has become a
paramount task in view of the acute shortage of decent housing in urban
areas particularly in Metro Manila. Nevertheless, despite the existence of
a serious dilemma, local government units are not given an unbridled
authority when exercising their power of eminent domain in pursuit of
solutions to these problems. The basic rules still have to be followed,
which are as follows: "no person shall be deprived of life, liberty, or
property without due process of law, nor shall any person be denied the
equal protection of the laws (Art. 3, Sec. 1, 1987 Constitution); private
property shall not be taken for public use without just compensation (Art.
3, Section 9, 1987 Constitution)". Thus, the exercise by local government
units of the power of eminent domain is not without limitations. Even
Section 19 of the 1991 Local Government Code is very explicit that it
must comply with the provisions of the Constitution and pertinent laws,
to wit:
Sec. 19. Eminent Domain. — A local government unit may, through its
chief executive and acting pursuant to an ordinance, exercise the power
of eminent domain for public use, or purpose, or welfare for the benefit
of the poor and the landless, upon payment of just
compensation, pursuant to the provisions of the Constitution and
pertinent laws: . . . (Emphasis supplied).
The governing law that deals with the subject of expropriation for
purposes of urban land reform and housing is Republic Act No. 7279
(Urban Development and Housing Act of 1992) and Sections 9 and 10 of
which specifically provide as follows:
Sec. 9. Priorities in the acquisition of Land. — Lands for socialized
housing shall be acquired in the following order:
(a) Those owned by the Government or any of its subdivisions,
instrumentalities, or agencies, including government-owned or
controlled corporations and their subsidiaries;
(b) Alienable lands of the public domain;
(c) Unregistered or abandoned and idle lands;
(d) Those within the declared Areas for Priority Development, Zonal
Improvement sites, and Slum Improvement and Resettlement Program
sites which have not yet been acquired;
(e) Bagong Lipunan Improvement of Sites and Services or BLISS sites
which have not yet been acquired; and
(f) Privately-owned lands.
Where on-site development is found more practicable and advantageous
to the beneficiaries, the priorities mentioned in this section shall not
apply. The local government units shall give budgetary priority to on-site
development of government lands.
Sec. 10. Modes of Land Acquisition. — The modes of acquiring lands for
purposes of this Act shall include, among others, community mortgage,
land swapping, land assembly or consolidation, land banking, donation
to the Government, joint-venture agreement, negotiated purchase, and
expropriation. Provided, however, That expropriation shall be resorted to
only when other modes of acquisition have been exhausted. Provided
further, That where expropriation is resorted to, parcels of land owned
by small property owners shall be exempted for purposes of this Act.
Provided, finally, That abandoned property, as herein defined, shall be
reverted and escheated to the State in a proceeding analogous to the
procedure laid down in Rule 91 of the Rules of Court.
For the purpose of socialized housing, government-owned and
foreclosed properties shall be acquired by the local government units, or
by the National Housing Authority primarily through negotiated
purchase: Provided, That qualified beneficiaries who are actual
occupants of the land shall be given the right of first refusal. (Emphasis
supplied).
Very clear from the abovequoted provisions are the limitations with
respect to the order of priority in acquiring private lands and in resorting
to expropriation proceedings as a means to acquire the same. Private
lands rank last in the order of priority for purposes of socialized housing.
In the same vein, expropriation proceedings are to be resorted to only
when the other modes of acquisition have been exhausted. Compliance
with these conditions must be deemed mandatory because these are the
only safeguards in securing the right of owners of private property to due
process when their property is expropriated for public use.
Proceeding from the parameters laid out in the above disquisitions, we
now pose the crucial question: Did the City of Manila comply with the
abovementioned conditions when it expropriated petitioner Filstream's
properties? We have carefully scrutinized the records of this case and
found nothing that would indicate that respondent City of Manila
complied with Sec. 9 and Sec. 10 of R.A. 7279. Petitioner Filstream's
properties were expropriated and ordered condemned in favor of the City
of Manila sans any showing that resort to the acquisition of other lands
listed under Sec. 9 of RA 7279 have proved futile. Evidently, there was a
violation of petitioner Filstream's right to due process which must
accordingly be rectified.
Indeed, it must be emphasized that the State has a paramount interest in
exercising its power of eminent domain for the general good considering
that the right of the State to expropriate private property as long as it is
for public use always takes precedence over the interest of private
property owners. However we must not lose sight of the fact that the
individual rights affected by the exercise of such right are also entitled
to protection, bearing in mind that the exercise of this superior right
cannot override the guarantee of due process extended by the law to
owners of the property to be expropriated. In this regard, vigilance over
compliance with the due process requirements is in order.
WHEREFORE, the petitions are hereby GRANTED. In G.R. 125218, the
resolutions of the Court of Appeals in CA-G. R. SP NO. 36904 dated
March 18, 1996 and May 20, 1996 are hereby REVERSED and SET ASIDE.
In G.R. No. 128077, the resolution of the Court of Appeals in CA-G.R. SP
No. 43101 dated January 28, 1997 and February 18, 1997 are REVERSED
and SET ASIDE.
SO ORDERED.
JIL VS. MUNICIPALITY OF PASIG
Before us is a petition for review of the Decision1 of the Court of Appeals (CA)
in CA-G.R. CV No. 59050, and its Resolution dated February 18, 2002,
denying the motion for reconsideration thereof. The assailed decision affirmed
the order of the Regional Trial Court (RTC) of Pasig, Branch 160, declaring the
respondent Municipality (now City) of Pasig as having the right to expropriate
and take possession of the subject property.
The Antecedents
The Municipality of Pasig needed an access road from E. R. Santos Street, a
municipal road near the Pasig Public Market, to Barangay Sto. Tomas Bukid,
Pasig, where 60 to 70 houses, mostly made of light materials, were located.
The road had to be at least three meters in width, as required by the Fire Code,
so that fire trucks could pass through in case of conflagration. 2 Likewise, the
residents in the area needed the road for water and electrical outlets. 3 The
municipality then decided to acquire 51 square meters out of the 1,791-square
meter property of Lorenzo Ching Cuanco, Victor Ching Cuanco and Ernesto
Ching Cuanco Kho covered by Transfer Certificate of Title (TCT) No. PT-
66585,4 which is abutting E. R. Santos Street.
On April 19, 1993, the Sangguniang Bayan of Pasig approved an
Ordinance5 authorizing the municipal mayor to initiate expropriation
proceedings to acquire the said property and appropriate the fund therefor.
The ordinance stated that the property owners were notified of the
municipality’s intent to purchase the property for public use as an access road
but they rejected the offer.
On July 21, 1993, the municipality filed a complaint, amended on August 6,
1993, against the Ching Cuancos for the expropriation of the property under
Section 19 of Republic Act (R.A.) No. 7160, otherwise known as the Local
Government Code. The plaintiff alleged therein that it notified the defendants,
by letter, of its intention to construct an access road on a portion of the property
but they refused to sell the same portion. The plaintiff appended to the
complaint a photocopy of the letter addressed to defendant Lorenzo Ching
Cuanco.6
The plaintiff deposited with the RTC 15% of the market value of the property
based on the latest tax declaration covering the property. On plaintiff’s motion,
the RTC issued a writ of possession over the property sought to be
expropriated. On November 26, 1993, the plaintiff caused the annotation of a
notice of lis pendens at the dorsal portion of TCT No. PT-92579 under the
name of the Jesus Is Lord Christian School Foundation, Incorporated
(JILCSFI) which had purchased the property. 7 Thereafter, the plaintiff
constructed therein a cemented road with a width of three meters; the road
was called Damayan Street.
In their answer,8 the defendants claimed that, as early as February 1993, they
had sold the said property to JILCSFI as evidenced by a deed of sale9 bearing
the signature of defendant Ernesto Ching Cuanco Kho and his wife.
When apprised about the complaint, JILCSFI filed a motion for leave to
intervene as defendant-in-intervention, which motion the RTC granted on
August 26, 1994.10
In its answer-in-intervention, JILCSFI averred, by way of special and
affirmative defenses, that the plaintiff’s exercise of eminent domain was only
for a particular class and not for the benefit of the poor and the landless. It
alleged that the property sought to be expropriated is not the best portion for
the road and the least burdensome to it. The intervenor filed a crossclaim
against its co-defendants for reimbursement in case the subject property is
expropriated.11 In its amended answer, JILCSFI also averred that it has been
denied the use and enjoyment of its property because the road was
constructed in the middle portion and that the plaintiff was not the real party-
in-interest. The intervenor, likewise, interposed counterclaims against the
plaintiff for moral damages and attorney’s fees.12
During trial, Rolando Togonon, the plaintiff’s messenger, testified on direct
examination that on February 23, 1993, he served a letter of Engr. Jose Reyes,
the Technical Assistant to the Mayor on Infrastructure, to Lorenzo Ching
Cuanco at his store at No. 18 Alkalde Jose Street, Kapasigan, Pasig. A lady
received the same and brought it inside the store. When she returned the letter
to him, it already bore the signature of Luz Bernarte. He identified a photocopy
of the letter as similar to the one he served at the store. On cross-examination,
he admitted that he never met Luz Bernarte. 13
Edgardo del Rosario, a resident of Sto. Tomas Bukid since 1982 declared that
he would pass through a wooden bridge to go to E. R. Santos Street. At times,
the bridge would be slippery and many had met accidents while walking along
the bridge. Because of this, they requested Mayor Vicente Eusebio to
construct a road therein. He attested that after the construction of the
cemented access road, the residents had water and electricity.14
Augusto Paz of the City Engineer’s Office testified that, sometime in 1992, the
plaintiff constructed a road perpendicular from E. R. Santos Street to Sto.
Tomas Bukid; he was the Project Engineer for the said undertaking. Before the
construction of the road, the lot was raw and they had to put filling materials
so that vehicles could use it. According to him, the length of the road which
they constructed was 70 meters long and 3 meters wide so that a fire truck
could pass through. He averred that there is no other road through which a fire
truck could pass to go to Sto. Tomas Bukid.15
Manuel Tembrevilla, the Fire Marshall, averred that he had seen the new road,
that is, Damayan Street, and found that a fire truck could pass through it. He
estimated the houses in the area to be around 300 to 400. Tembrevilla also
stated that Damayan Street is the only road in the area.16
Finally, Bonifacio Maceda, Jr., Tax Mapper IV, testified that, according to their
records, JILCSFI became the owner of the property only on January 13,
1994.17
The plaintiff offered in evidence a photocopy of the letter of Engr. Jose Reyes
addressed to Lorenzo Ching Cuanco to prove that the plaintiff made a definite
and valid offer to acquire the property to the co-owners. However, the RTC
rejected the same letter for being a mere photocopy.18
For the defendant-intervenor, Normita del Rosario, owner of the property
located across the subject property, testified that there are other roads leading
to E. R. Santos Street. She asserted that only about ten houses of the urban
poor are using the new road because the other residents are using an
alternative right-of-way. She averred that she did not actually occupy her
property; but there were times that she visited it.19
Danilo Caballero averred that he had been a resident of Sto. Tomas Bukid for
seven years. From his house, he could use three streets to go to E. R. Santos
Street, namely, Catalina Street, Damayan Street and Bagong Taon Street. On
cross-examination, he admitted that no vehicle could enter Sto. Tomas Bukid
except through the newly constructed Damayan Street.20
Eduardo Villanueva, Chairman of the Board of Trustees and President of
JILCSFI, testified that the parcel of land was purchased for purposes of
constructing a school building and a church as worship center. He averred that
the realization of these projects was delayed due to the passing of the
ordinance for expropriation.21
The intervenor adduced documentary evidence that on February 27, 1993,
Lorenzo Ching Cuanco and the co-owners agreed to sell their property
covered by TCT No. PT-66585 for ₱1,719,000.00.22 It paid a down payment of
₱1,000,000.00 for the property. After payment of the total purchase price, the
Ching Cuancos executed a Deed of Absolute Sale23 over the property on
December 13, 1993. On December 21, 1993, TCT No. PT-92579 was issued
in the name of JILCSFI.24 It declared the property for taxation purposes under
its name.25
On September 3, 1997, the RTC issued an Order in favor of the plaintiff, the
dispositive portion of which reads:
WHEREFORE, in view of the foregoing and in accordance with Section 4, Rule
67 of the Revised Rules of Court, the Court Resolves to DECLARE the plaintiff
as having a lawful right to take the property in question for purposes for which
the same is expropriated.
The plaintiff and intervenor are hereby directed to submit at least two (2)
names of their recommended commissioners for the determination of just
compensation within ten (10) days from receipt hereof.
SO ORDERED.26
The RTC held that, as gleaned from the declaration in Ordinance No. 21, there
was substantial compliance with the definite and valid offer requirement of
Section 19 of R.A. No. 7160, and that the expropriated portion is the most
convenient access to the interior of Sto. Tomas Bukid.
Dissatisfied, JILCSFI elevated the case to the CA on the following assignment
of errors:
First Assignment of Error
THE LOWER COURT SERIOUS[LY] ERRED WHEN IT RULED THAT
PLAINTIFF-APPELLEE SUBSTANTIALLY COMPLIED WITH THE LAW
WHEN IT EXPROPRIATED JIL’S PROPERTY TO BE USED AS A RIGHT OF
WAY.
Second Assignment of Error
THE LOWER COURT ERRED IN DISREGARDING JIL’S EVIDENCE
PROVING THAT THERE WAS NO PUBLIC NECESSITY TO WARRANT THE
EXPROPRIATION OF THE SUBJECT PROPERTY.27
The Court of Appeals’ Decision
In a Decision dated March 13, 2001, the CA affirmed the order of the
RTC.28 The CA agreed with the trial court that the plaintiff substantially
complied with Section 19 of R.A. No. 7160, particularly the requirement that a
valid and definite offer must be made to the owner. The CA declared that the
letter of Engr. Reyes, inviting Lorenzo Ching Cuanco to a conference to
discuss with him the road project and the price of the lot, was a substantial
compliance with the "valid and definite offer" requirement under said Section
19. In addition, the CA noted that there was also constructive notice to the
defendants of the expropriation proceedings since a notice of lis pendens was
annotated at the dorsal portion of TCT No. PT-92579 on November 26, 1993.29
Finally, the CA upheld the public necessity for the subject property based on
the findings of the trial court that the portion of the property sought to be
expropriated appears to be, not only the most convenient access to the interior
of Sto. Tomas Bukid, but also an easy path for vehicles entering the area,
particularly fire trucks. Moreover, the CA took into consideration the provision
of Article 33 of the Rules and Regulations Implementing the Local Government
Code, which regards the "construction or extension of roads, streets,
sidewalks" as public use, purpose or welfare.30
On April 6, 2001, JILCSFI filed a motion for reconsideration of the said decision
alleging that the CA erred in relying on the photocopy of Engr. Reyes’ letter to
Lorenzo Ching Cuanco because the same was not admitted in evidence by
the trial court for being a mere photocopy. It also contended that the CA erred
in concluding that constructive notice of the expropriation proceeding, in the
form of annotation of the notice of lis pendens, could be considered as a
substantial compliance with the requirement under Section 19 of the Local
Government Code for a valid and definite offer. JILCSFI also averred that no
inspection was ever ordered by the trial court to be conducted on the property,
and, if there was one, it had the right to be present thereat since an inspection
is considered to be part of the trial of the case.31
The CA denied the motion for reconsideration for lack of merit. It held that it
was not precluded from considering the photocopy32 of the letter,
notwithstanding that the same was excluded by the trial court, since the fact of
its existence was duly established by corroborative evidence. This
corroborative evidence consisted of the testimony of the plaintiff’s messenger
that he personally served the letter to Lorenzo Ching Cuanco, and Municipal
Ordinance No. 21 which expressly stated that the property owners were
already notified of the expropriation proceeding. The CA noted that JILCSFI
failed to adduce controverting evidence, thus the presumption of regularity was
not overcome.33
The Present Petition
In this petition, petitioner JILCSFI raises the following issues: (1) whether the
respondent complied with the requirement, under Section 19 of the Local
Government Code, of a valid and definite offer to acquire the property prior to
the filing of the complaint; (2) whether its property which is already intended to
be used for public purposes may still be expropriated by the respondent; and
(3) whether the requisites for an easement for right-of-way under Articles 649
to 657 of the New Civil Code may be dispensed with.
The petitioner stresses that the law explicitly requires that a valid and definite
offer be made to the owner of the property and that such offer was not
accepted. It argues that, in this case, there was no evidence to show that such
offer has been made either to the previous owner or the petitioner, the present
owner. The petitioner contends that the photocopy of the letter of Engr. Reyes,
notifying Lorenzo Ching Cuanco of the respondent’s intention to construct a
road on its property, cannot be considered because the trial court did not admit
it in evidence. And assuming that such letter is admissible in evidence, it would
not prove that the offer has been made to the previous owner because mere
notice of intent to purchase is not equivalent to an offer to purchase. The
petitioner further argues that the offer should be made to the proper party, that
is, to the owner of the property. It noted that the records in this case show that
as of February 1993, it was already the owner of the property. Assuming,
therefore, that there was an offer to purchase the property, the same should
have been addressed to the petitioner, as present owner.34
The petitioner maintains that the power of eminent domain must be strictly
construed since its exercise is necessarily in derogation of the right to property
ownership. All the requirements of the enabling law must, therefore, be strictly
complied with. Compliance with such requirements cannot be presumed but
must be proved by the local government exercising the power. The petitioner
adds that the local government should, likewise, comply with the requirements
for an easement of right-of-way; hence, the road must be established at a point
least prejudicial to the owner of the property. Finally, the petitioner argues that,
if the property is already devoted to or intended to be devoted to another public
use, its expropriation should not be allowed.35
For its part, the respondent avers that the CA already squarely resolved the
issues raised in this petition, and the petitioner failed to show valid and
compelling reason to reverse the CA’s findings. Moreover, it is not the function
of the Supreme Court to weigh the evidence on factual issues all over
again.36 The respondent contends that the Ching Cuancos were deemed to
have admitted that an offer to purchase has been made and that they refused
to accept such offer considering their failure to specifically deny such allegation
in the complaint. In light of such admission, the exclusion of the photocopy of
the letter of Engr. Reyes, therefore, is no longer significant.37
The Ruling of the Court
The petition is meritorious.
At the outset, it must be stressed that only questions of law may be raised by
the parties and passed upon by the Supreme Court in petitions for review
on certiorari.38 Findings of fact of the CA, affirming those of the trial court, are
final and conclusive and may not be reviewed on appeal.39
Nonetheless, where it is shown that the conclusion is a finding grounded on
speculations, surmises or conjectures or where the judgment is based on
misapprehension of facts, the Supreme Court may reexamine the evidence on
record.40
Eminent Domain: Nature and Scope
The right of eminent domain is usually understood to be an ultimate right of the
sovereign power to appropriate any property within its territorial sovereignty for
a public purpose. The nature and scope of such power has been
comprehensively described as follows:
… It is an indispensable attribute of sovereignty; a power grounded in the
primary duty of government to serve the common need and advance the
general welfare. Thus, the right of eminent domain appertains to every
independent government without the necessity for constitutional recognition.
The provisions found in modern constitutions of civilized countries relating to
the taking of property for the public use do not by implication grant the power
to the government, but limit the power which would, otherwise, be without limit.
Thus, our own Constitution provides that "[p]rivate property shall not be taken
for public use without just compensation." Furthermore, the due process and
equal protection clauses act as additional safeguards against the arbitrary
exercise of this governmental power.41
Strict Construction and Burden of Proof
The exercise of the right of eminent domain, whether directly by the State or
by its authorized agents, is necessarily in derogation of private rights. 42 It is
one of the harshest proceedings known to the law. Consequently, when the
sovereign delegates the power to a political unit or agency, a strict construction
will be given against the agency asserting the power. 43 The authority to
condemn is to be strictly construed in favor of the owner and against the
condemnor.44 When the power is granted, the extent to which it may be
exercised is limited to the express terms or clear implication of the statute in
which the grant is contained.45
Corollarily, the respondent, which is the condemnor, has the burden of proving
all the essentials necessary to show the right of condemnation. 46 It has the
burden of proof to establish that it has complied with all the requirements
provided by law for the valid exercise of the power of eminent domain.
The grant of the power of eminent domain to local government units is
grounded on Section 19 of R.A. No. 7160 which reads:
SEC. 19. Eminent Domain. – A local government unit may, through its chief
executive and acting pursuant to an ordinance, exercise the power of eminent
domain for public use, or purpose, or welfare for the benefit of the poor and
the landless, upon payment of just compensation, pursuant to the provisions
of the Constitution and pertinent laws; Provided, however, That the power of
eminent domain may not be exercised unless a valid and definite offer has
been previously made to the owner, and such offer was not
accepted: Provided, further, That the local government unit may immediately
take possession of the property upon the filing of the expropriation proceedings
and upon making a deposit with the proper court of at least fifteen percent
(15%) of the fair market value of the property based on the current tax
declaration of the property to be expropriated: Provided, finally, That the
amount to be paid for the expropriated property shall be determined by the
proper court based on the fair market value at the time of the taking of the
property.
The Court declared that the following requisites for the valid exercise of the
power of eminent domain by a local government unit must be complied with:
1. An ordinance is enacted by the local legislative council authorizing the local
chief executive, in behalf of the local government unit, to exercise the power
of eminent domain or pursue expropriation proceedings over a particular
private property.
2. The power of eminent domain is exercised for public use, purpose or
welfare, or for the benefit of the poor and the landless.
3. There is payment of just compensation, as required under Section 9, Article
III of the Constitution, and other pertinent laws.
4. A valid and definite offer has been previously made to the owner of the
property sought to be expropriated, but said offer was not accepted. 47
Valid and Definite Offer
Article 35 of the Rules and Regulations Implementing the Local Government
Code provides:
ARTICLE 35. Offer to Buy and Contract of Sale. – (a) The offer to buy private
property for public use or purpose shall be in writing. It shall specify the
property sought to be acquired, the reasons for its acquisition, and the price
offered.
(b) If the owner or owners accept the offer in its entirety, a contract of sale shall
be executed and payment forthwith made.
(c) If the owner or owners are willing to sell their property but at a price higher
than that offered to them, the local chief executive shall call them to a
conference for the purpose of reaching an agreement on the selling price. The
chairman of the appropriation or finance committee of the sanggunian, or in
his absence, any member of the sanggunian duly chosen as its representative,
shall participate in the conference. When an agreement is reached by the
parties, a contract of sale shall be drawn and executed.
(d) The contract of sale shall be supported by the following documents:
(1) Resolution of the sanggunian authorizing the local chief executive to enter
into a contract of sale. The resolution shall specify the terms and conditions to
be embodied in the contract;
(2) Ordinance appropriating the amount specified in the contract; and
(3) Certification of the local treasurer as to availability of funds together with a
statement that such fund shall not be disbursed or spent for any purpose other
than to pay for the purchase of the property involved.
The respondent was burdened to prove the mandatory requirement of a valid
and definite offer to the owner of the property before filing its complaint and
the rejection thereof by the latter.48 It is incumbent upon the condemnor to
exhaust all reasonable efforts to obtain the land it desires by
agreement.49 Failure to prove compliance with the mandatory requirement will
result in the dismissal of the complaint.50
An offer is a unilateral proposition which one party makes to the other for the
celebration of a contract.51 It creates a power of acceptance permitting the
offeree, by accepting the offer, to transform the offeror’s promise into a
contractual obligation.52 Corollarily, the offer must be complete, indicating with
sufficient clearness the kind of contract intended and definitely stating the
essential conditions of the proposed contract.53 An offer would require, among
other things, a clear certainty on both the object and the cause or consideration
of the envisioned contract.54
The purpose of the requirement of a valid and definite offer to be first made to
the owner is to encourage settlements and voluntary acquisition of property
needed for public purposes in order to avoid the expense and delay of a court
action.55 The law is designed to give to the owner the opportunity to sell his
land without the expense and inconvenience of a protracted and expensive
litigation. This is a substantial right which should be protected in every
instance.56 It encourages acquisition without litigation and spares not only the
landowner but also the condemnor, the expenses and delays of litigation. It
permits the landowner to receive full compensation, and the entity acquiring
the property, immediate use and enjoyment of the property. A reasonable offer
in good faith, not merely perfunctory or pro forma offer, to acquire the property
for a reasonable price must be made to the owner or his privy.57 A single bona
fide offer that is rejected by the owner will suffice.
The expropriating authority is burdened to make known its definite and valid
offer to all the owners of the property. However, it has a right to rely on what
appears in the certificate of title covering the land to be expropriated. Hence,
it is required to make its offer only to the registered owners of the property.
After all, it is well-settled that persons dealing with property covered by a
Torrens certificate of title are not required to go beyond what appears on its
face.58
In the present case, the respondent failed to prove that before it filed its
complaint, it made a written definite and valid offer to acquire the property for
public use as an access road. The only evidence adduced by the respondent
to prove its compliance with Section 19 of the Local Government Code is the
photocopy of the letter purportedly bearing the signature of Engr. Jose Reyes,
to only one of the co-owners, Lorenzo Ching Cuanco. The letter reads:
MR. LORENZO CHING CUANCO
18 Alcalde Jose Street
Capasigan, Pasig
Metro Manila
Dear Mr. Cuanco:
This refers to your parcel of land located along E. Santos Street, Barangay
Palatiw, Pasig, Metro Manila embraced in and covered by TCT No. 66585, a
portion of which with an area of fifty-one (51) square meters is needed by the
Municipal Government of Pasig for conversion into a road-right of way for the
benefit of several residents living in the vicinity of your property. Attached
herewith is the sketch plan for your information.
In this connection, may we respectfully request your presence in our office to
discuss this project and the price that may be mutually agreed upon by you
and the Municipality of Pasig.
Thank you.
Very truly yours,
(Sgd.)
ENGR. JOSE L. REYES
Technical Asst. to the Mayor
on Infrastructure59
It bears stressing, however, that the respondent offered the letter only to prove
its desire or intent to acquire the property for a right-of-way.60 The document
was not offered to prove that the respondent made a definite and valid offer to
acquire the property. Moreover, the RTC rejected the document because the
respondent failed to adduce in evidence the original copy thereof. 61 The
respondent, likewise, failed to adduce evidence that copies of the letter were
sent to and received by all the co-owners of the property, namely, Lorenzo
Ching Cuanco, Victor Ching Cuanco and Ernesto Kho.
The respondent sought to prove, through the testimony of its messenger,
Rolando Togonon, that Lorenzo Ching Cuanco received the original of the said
letter. But Togonon testified that he merely gave the letter to a lady, whom he
failed to identify. He stated that the lady went inside the store of Lorenzo Ching
Cuanco, and later gave the letter back to him bearing the signature purportedly
of one Luz Bernarte. However, Togonon admitted, on cross-examination, that
he did not see Bernarte affixing her signature on the letter. Togonon also
declared that he did not know and had never met Lorenzo Ching Cuanco and
Bernarte:
Q And after you received this letter from that lady, what did you do afterwards?
A I brought it with me, that letter, and then I went to Caruncho.
Q So, [M]r. Witness, you are telling this Honorable Court that this letter
intended to Mr. Lorenzo was served at Pasig Trading which was situated at
No. 18 Alkalde Jose Street on February 23, 1993?
A Yes, Ma’am. There is no legal and factual basis to the CA’s ruling that the annotation of a
notice of lis pendens at the dorsal portion of petitioner’s TCT No. PT-92579 is
ATTY. TAN: a substantial compliance with the requisite offer. A notice of lis pendens is a
That is all for the witness, Your Honor. notice to the whole world of the pendency of an action involving the title to or
possession of real property and a warning that those who acquire an interest
COURT: in the property do so at their own risk and that they gamble on the result of the
litigation over it.63 Moreover, the lis pendens was annotated at the dorsal
Do you have any cross-examination?
portion of the title only on November 26, 1993, long after the complaint had
ATTY. JOLO: been filed in the RTC against the Ching Cuancos.

Just a few cross, Your Honor, please. With the kind permission of the Neither is the declaration in one of the whereas clauses of the ordinance that
Honorable Court. "the property owners were already notified by the municipality of the intent to
purchase the same for public use as a municipal road," a substantial
COURT: compliance with the requirement of a valid and definite offer under Section 19
of R.A. No. 7160. Presumably, the Sangguniang Bayan relied on the
Proceed.
erroneous premise that the letter of Engr. Reyes reached the co-owners of the
CROSS-EXAMINATION property. In the absence of competent evidence that, indeed, the respondent
made a definite and valid offer to all the co-owners of the property, aside from
BY ATTY. JOLO: the letter of Engr. Reyes, the declaration in the ordinance is not a compliance
with Section 19 of R.A. No. 7160.
Q Mr. Witness, do you know Mr. Lorenzo Ching [Cuanco]
The respondent contends, however, that the Ching Cuancos, impliedly
A I do not know him.
admitted the allegation in its complaint that an offer to purchase the property
Q As a matter of fact, you have not seen him even once, isn’t not (sic)? was made to them and that they refused to accept the offer by their failure to
specifically deny such allegation in their answer. This contention is wrong. As
A Yes, Sir. gleaned from their answer to the complaint, the Ching Cuancos specifically
Q This Luz Bernarte, do you know her? denied such allegation for want of sufficient knowledge to form a belief as to
its correctness. Under Section 10,64 Rule 8 of the Rules of Court, such form of
A I do not know her. denial, although not specific, is sufficient.

Q As a matter of fact, you did not see Mrs. Bernarte even once? Public Necessity

A That is correct.
Q And as a matter of fact, [M]r. Witness, you did not see Mrs. Luz Bernarte
affixing her signature on the bottom portion of this demand letter, marked as
Exh. "C-2"?
A Yes, Sir.62
Even if the letter was, indeed, received by the co-owners, the letter is not a
valid and definite offer to purchase a specific portion of the property for a price
certain. It is merely an invitation for only one of the co-owners, Lorenzo Ching
Cuanco, to a conference to discuss the project and the price that may be
mutually acceptable to both parties.
We reject the contention of the petitioner that its property can no longer be
expropriated by the respondent because it is intended for the construction of a
place for religious worship and a school for its members. As aptly explained by
this Court in Manosca v. Court of Appeals,65 thus:
It has been explained as early as Seña v. Manila Railroad Co., that:
… A historical research discloses the meaning of the term "public use" to be
one of constant growth. As society advances, its demands upon the individual
increases and each demand is a new use to which the resources of the
individual may be devoted. … for "whatever is beneficially employed for the
community is a public use."
Chief Justice Enrique M. Fernando states:
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 so any more. 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 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
requirements of public use.
Chief Justice Fernando, writing the ponencia in J.M. Tuason & Co. vs. Land
Tenure Administration, has viewed the Constitution a dynamic instrument and
one that "is not to be construed narrowly or pedantically so as to enable it to
meet adequately whatever problems the future has in store." Fr. Joaquin
Bernas, a noted constitutionalist himself, has aptly observed that what, in fact,
has ultimately emerged is a concept of public use which is just as broad as
"public welfare."
Petitioners ask: But "(w)hat is the so-called unusual interest that the
expropriation of (Felix Manalo’s) birthplace become so vital as to be a public
use appropriate for the exercise of the power of eminent domain" when only
members of the Iglesia ni Cristo would benefit? This attempt to give some
religious perspective to the case deserves little consideration, for what should
be significant is the principal objective of, not the casual consequences that
might follow from, the exercise of the power. The purpose in setting up the
marker is essentially to recognize the distinctive contribution of the late Felix
Manalo to the culture of the Philippines, rather than to commemorate his
founding and leadership of the Iglesia ni Cristo. The practical reality that
greater benefit may be derived by members of the Iglesia ni Cristo than by
most others could well be true but such a peculiar advantage still remains to
be merely incidental and secondary in nature. Indeed, that only a few would
actually benefit from the expropriation of property, does not necessarily
diminish the essence and character of public use.
The petitioner asserts that the respondent must comply with the requirements
for the establishment of an easement of right-of-way, more specifically, the
road must be constructed at the point least prejudicial to the servient state, and
that there must be no adequate outlet to a public highway. The petitioner
asserts that the portion of the lot sought to be expropriated is located at the
middle portion of the petitioner’s entire parcel of land, thereby splitting the lot
into two halves, and making it impossible for the petitioner to put up its school
building and worship center.
The subject property is expropriated for the purpose of constructing a road.
The respondent is not mandated to comply with the essential requisites for an
easement of right-of-way under the New Civil Code. Case law has it that in the
absence of legislative restriction, the grantee of the power of eminent domain
may determine the location and route of the land to be taken66 unless such
determination is capricious and wantonly injurious.67 Expropriation is justified
so long as it is for the public good and there is genuine necessity of public
character.68 Government may not capriciously choose what private property
should be taken.69
The respondent has demonstrated the necessity for constructing a road from
E. R. Santos Street to Sto. Tomas Bukid. The witnesses, who were residents
of Sto. Tomas Bukid, testified that although there were other ways through
which one can enter the vicinity, no vehicle, however, especially fire trucks,
could enter the area except through the newly constructed Damayan Street.
This is more than sufficient to establish that there is a genuine necessity for
the construction of a road in the area. After all, absolute necessity is not
required, only reasonable and practical necessity will suffice. 70
Nonetheless, the respondent failed to show the necessity for constructing the
road particularly in the petitioner’s property and not elsewhere. 71 We note that
the whereas clause of the ordinance states that the 51-square meter lot is the
shortest and most suitable access road to connect Sto. Tomas Bukid to E. R.
Santos Street. The respondent’s complaint also alleged that the said portion
of the petitioner’s lot has been surveyed as the best possible ingress and
egress. However, the respondent failed to adduce a preponderance of
evidence to prove its claims.
On this point, the trial court made the following findings:
… The contention of the defendants that there is an existing alley that can
serve the purpose of the expropriator is not accurate. An inspection of the
vicinity reveals that the alley being referred to by the defendants actually
passes thru Bagong Taon St. but only about one-half (1/2) of its entire length
is passable by vehicle and the other half is merely a foot-path. It would be more
inconvenient to widen the alley considering that its sides are occupied by
permanent structures and its length from the municipal road to the area sought
to be served by the expropriation is considerably longer than the proposed
access road. The area to be served by the access road is composed of
compact wooden houses and literally a slum area. As a result of the
expropriation of the 51-square meter portion of the property of the intervenor,
a 3-meter wide road open to the public is created. This portion of the property
of the intervenor is the most convenient access to the interior of Sto. Tomas
Bukid since it is not only a short cut to the interior of the Sto. Tomas Bukid but
also an easy path for vehicles entering the area, not to mention the 3-meter
wide road requirement of the Fire Code.72
However, as correctly pointed out by the petitioner, there is no showing in the
record that an ocular inspection was conducted during the trial. If, at all, the
trial court conducted an ocular inspection of the subject property during the
trial, the petitioner was not notified thereof. The petitioner was, therefore,
deprived of its right to due process. It bears stressing that an ocular inspection
is part of the trial as evidence is thereby received and the parties are entitled
to be present at any stage of the trial.73 Consequently, where, as in this case,
the petitioner was not notified of any ocular inspection of the property, any
factual finding of the court based on the said inspection has no probative
weight. The findings of the trial court based on the conduct of the ocular
inspection must, therefore, be rejected.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision
and Resolution of the Court of Appeals are REVERSED AND SET ASIDE. The
RTC is ordered to dismiss the complaint of the respondent without prejudice
to the refiling thereof.
SO ORDERED.
ESTATE OF JIMENEZ VS PEZA
Before us is a petition for review on certiorari of the Decision 1 and the
Resolution2 of the Court of Appeals3 dated March 25, 1998 and January 14,
1999, respectively, which ordered the Presiding Judge of the Regional trial
Court of Cavite City, Branch 17, to proceed with the hearing of the
expropriation proceedings regarding the determination of just compensation
for Lot 1406-B while setting aside the Orders dated August 4, 1997 4 and
November 3, 1997 of the said Regional Trial Court which ordered the peaceful
turnover to petitioner Estate of Salud Jimenez of said Lot 1406-B.
The facts are as follows:
On may 15, 1981, private respondent Philippines Export Processing Zone
(PEZA), then called as the Export Processing Zone Authority (EPZA), initiated
before the Regional Trial Court of Cavite expropriation proceedings 5 on three
(3) parcels of irrigated riceland in Rosario, Cavite. One of the lots, Lot 1406 (A
and B) of the San Francisco de Malabon Estate, with an approximate area of
29,008 square meters, is registered in the name of Salud Jimenez under TCT
No. T-113498 of the Registry of Deeds of Cavite.
More than ten (10) years later6, the said trial court in an Order7 dated July 11,
1991 upheld the right of private respondent PEZA to expropriate, among
others, Lot 1406 (A and B). Reconsideration of the said order was sought by
petitioner contending that said lot would only be transferred to a private
corporation, Philippines Vinyl Corp., and hence would not be utilized for a
public purpose.
In an Order8 dated October 25, 19997, the trial court reconsidered the Order
dated July 11, 1991 and released Lot 1406-A from expropriation while the
expropriation of Lot 1406-B was maintained. Finding the said order
unacceptable, private respondent PEZA interposed an appeal to the Court of
Appeals.
Meanwhile, petitioner wrote a letter to private respondent offering two (2)
proposals, namely:
1. Withdrawal of private respondent's appeal with respect to Lot 1406-A I
consideration of the waiver of claim for damages and lass of income for the
possession of said lot by private respondent.
2. The swap of Lot 1406-B with Lot 434 covered by TCT No. T-14772 since
private respondent has no money yet to pay for the lot.
Private respondent's Board approved the "proposal" and the compromise
agreement was signed by private respondent through its then administrator
Tagumpay Jadiniano assisted by Government Corporate Counsel Oscar I.
Garcia. Said compromise agreement9 dated January 4, 1993 is quoted
hereunder:
1. That plaintiff agrees to withdraw its appeal from the Order of the Honorable
Court dated October 25, 1991 which released lot 1406-A from the
expropriation proceedings. On the other hand, defendant Estate of Salud
Jimenez agrees to waive, quit claim and forfeit its claim for damages and loss
of income which it sustained by person of the possession of said lot by plaintiff
from 1981 up to the present.
2. That the parties agree that defendant Estate of Salud Jimenez shall transfer
lot 1406-B with an area of 13,118 square meters which forms part of the lot
registered under TCT No. 113498 of the Registry of Deeds of Cavite to the
name of the plaintiff and the same shall be swapped and exchanged with lot
434 with an area of 14,167 square meters and covered by Transfer Certificate
of Title No. 14772 of the Registry of Deeds of Cavite which lot will be
transferred to the name of Estate of Salud Jimenez.1âwphi1.nêt
3. That the swap arrangement recognized the fact that the lot 1406-B covered
by TCT No. T-113498 of the state of defendant Salud Jimenez is considered
expropriated in favor of the government based on Order of the Honorable
Court dated July 11, 1991. However, instead of being paid the just
compensation for said lot, the estate of said defendant shall be paid with lot
434 covered by TCT No. T-14772.
4. That the parties agree that they will abide by the terms of the foregoing
agreement in good faith and the Decision to be rendered based on this
Compromise Agreement is immediately final and executory.
The Court of Appeals remanded the case to the trial court for the approval of
the said compromise agreement entered into between the parties, consequent
with the withdrawal of the appeal with the Court of Appeals. In the
Order10 dated August 23, 1993, the trial court approved the compromise
agreement.
However, private respondent failed to transfer the title of Lot 434 to petitioner
inasmuch as it was not the registered owner of the covering TCT No. T-14772
but Progressive Realty Estate, Inc. Thus, on March 13, 1997, petitioner Estate
filed a "Motion to Partially Annul the Order dated August 23, 1993."11
In the Order12 dated August 4, 1997, the trial court annulled the said
compromise agreement entered into between the parties and directed private
respondent to peacefully turn over Lot 1406-A to the petitioner. Disagreeing
with the said Order of the trial court, respondent PEZA moved 13 for its
reconsideration. The same proved futile since the trial court denied
reconsideration in its Order 14 dated November 3, 1997.
On December 4, 1997, the trial court, at the instance15 of petitioner, corrected
the Orders dated August 4, 1997 and November 3, 1997 by declaring that it is
Lot 1406-B and Lot 1406-A that should be surrendered and returned to
petitioner.
On November 27, 1997, respondent interposed before the Court of Appeals a
petition for certiorari and prohibition16 seeking to nullify the Orders dated
August 4, 1997 and November 3, 1997 of the court. Petitioner filed its
Comment17 on January 16, 1998.
Acting on the petition, the Court of Appeals in a Decision18 dated March 25,
1998 upheld the rescission of the compromise agreement, ratiocinating thus:
A judicial compromise may be enforced by a writ of execution, and if a party
fails or refuses to abide by the compromise, the other party may regard it as
rescinded and insist upon his original demand. This is in accordance with
Article 2041 of the Civil Code, which provides:
If one of the parties fails or refuses to abide by the compromise, the other party
may either enforce the compromise or regard it as rescinded and insist upon
his original demand."
The Supreme Court had the occasion to explain this provision of law in the
case of Leonor v. Syip (1 SCRA 1215). It ruled that the language of the above
mentioned provision denotes that no action for rescission is required and that
the aggrieved party by the breach of compromise agreement, may regard the
compromise agreement already rescinded, to wit:
It is worthy of notice, in this connection, that, unlike article 2039 of the same
Code, which speaks of "a cause of annulment or rescission of the compromise"
and provides that "the compromise may be annulled or rescinded" for the
cause therein specified, thus suggesting an action for annulment or rescission,
said Article 2041 confers upon the party concerned not a "cause" for
rescission, or the right to "demand" rescission, of a compromise, but the
authority, not only to "regard it as rescinded," but, also, to 'insist upon his
original demand." The language of this Article 2041, particularly when
contrasted with that of Article 2039, denotes that no action for rescission is
required in said Article 2041, and that to party aggrieved by the breach of a
compromise agreement may, if he chooses, bring the suit contemplated or
involved in his original demand, as if there had never been any compromise
agreement, without bringing an action for rescission thereof. He need not seek
a judicial declaration of rescission, for he may "regard" the compromise
agreement already, "rescinded".
Nonetheless, it held that:
Having upheld the rescission of the compromise agreement, what is then the
status of the expropriation proceedings? As succinctly discussed in the case
of Leonor vs. Sycip, the aggrieved party may insist on his original demand as
if there had never been any compromise agreement. This means that the
situation of the parties will revert back to status before the execution of the
compromise agreement, that is, the second stage of the expropriation
proceedings, which is the determination of the just compensation.19
xxx
Thus, the appellate court partially granted the petition by setting aside the
order of the trial court regarding "the peaceful turn over to the Estate of Salud
Jimenez of Lot No. 1406-B" and instead ordered the trial judge to "proceed
with the hearing of the expropriation proceedings regarding the determination
of just compensation over Lot 1406-B."20
Petitioner sought21 reconsideration of the Decision dated March 25, 1998.
However, public respondent in a resolution22 dated January 14, 1999 denied
petitioner's motion for reconsideration.
Hence, this petition anchored on the following assignment of errors, to wit:
I The Court of Appeal did not err in entertaining the petition for certiorari under
THE COURT OF APPEALS COMMITTED GRAVE AND REVERSIBLE
ERROR IN GIVING DUE COURSE TO THE SPECIAL CIVIL ACTION FILED
BY RESPONDENT PEZA IN CA-G.R. SP. NO. 46112 WHEN IT WAS MADE
SUBSTITUTE FOR LOST APPEAL IN CLEAR CONTRAVENTION OF THE
HONORABLE COURT'S RULING IN SEMPIO VS. COURT OF APPEALS
(263 SCRA 617) AND ONGSITCO VS. COURT OF APPEALS (255 SCRA
703) AND DESPITE THE FACT THAT THE ORDER OF THE CAVITE
REGIONAL TRIAL COURT IS ALREADY FINAL AND EXECUTORY.
II
GRANTING IN GRATIA ARGUMENTI THAT THE SPECIAL CIVIL ACTION
OF CERTIONRARI IS PROPER, THE COURT OF APPEALS
NEVERTHELESS WRONGLY INTERPRETED THE PHRASE "ORIGINAL
DEMAND" CONTAINED IN ARTICLE 2041 OF PETITIONER ESTATE IS
THE RETURN OF THE SUBJECT LOT (LOT 1406-B) WHICH IS SOUGHT
TO BE EXPROPRIATED AND NOT THE DETERMINATION OF JUST
COMPENSATION FOR THE LOT. FURTHERMORE, EVEN IF THE
INTERPRETATION OF THE COURT OF APPEALS OR THE IMPORT OF
THE PHRASE IN QUESTION IS CORRECT, IT IS ARTICLE 2039 OF THE
CIVIL CODE AND NOT ARTICLE 2041 WHICH IS APPLICABLE TO
COMPROMISE AGREEMENTS APPROVED BY THE COURTS.23
We rule in favor of the respondent.
Petitioner contends that the Court of Appeals erred in entertaining the petition
for certiorari files by respondent under Rule 65 of the Rules of Court, the same
being actually a substitute for lost appeal. It appeared that on August 11, 1997,
respondent received the Order of the trial court dated August 4, 1997 annulling
the compromise agreement. On August 26, 1997, that last day for the filling of
a notice of appeal, respondent filed instead a motion for reconsideration. The
Order of the trial court denying the motion for reconsideration was received by
respondent on November 23, 1997. The reglementary period to appeal
therefore lapsed on November 24, 1997. On November 27, 1997, however,
respondent filed with the Court of Appeals a petition for certiorari docketed as
CA-G.R. SP. No. 46112. Petitioner claims that appeal is the proper remedy
inasmuch as the Order dated August 4, 1997 of the Regional Trial Court is a
final order that completely disposes of the case. Besides, according to
petitioner, respondent is estopped in asserting that certiorari is the proper
remedy inasmuch as it invoked the fifteen (15) day reglementary period for
appeal when if filed a motion for reconsideration on August 26, 1997 and not
the sixty (60) day period for filing for certiorari under Rule 65 of the Rules of
Court.
Rule 65 of The Rules of Court. A petition for certiorari is the proper remedy
when any tribunal, board, or officer exercising judicial or quasi-judicial
functions has acted without or in excess of its jurisdiction, or with grave abuse
of discretion amounting to lack or excess of jurisdiction and there is no appeal,
nor any plain, speedy, and adequate remedy at law.24 Grave abuse of
discretion is defined as the capricious and whimsical exercise of judgment as
is equivalent to lack of jurisdiction. An error of judgment committed in the
exercise of its legitimate jurisdiction is not the same as "grave abuse of
discretion." An abuse of discretion is not sufficient by itself to justify the
issuance of a writ of certiorari. The abuse must be grave and patent, and it
must be shown that the discretion was exercised arbitrarily and despotically. 25
As a general rule, a petition for certiorari will not lie if an appeal is the proper
remedy thereto such as when an error of judgment as well as of procedure are
involved. As long as a court acts within its jurisdiction and does not gravely
abuse its discretion in the exercise thereof, any supposed error committed by
it will amount to nothing more than an error of judgment reviewable by a timely
appeal and not assailable by a special civil action of certiorari. However, in
certain exceptional cases, where the rigid application of such rule will result in
a manifest failure or miscarriage of justice, the provisions of the Rules of Court
which are technical rules may be relaxed. Certiorari has been deemed to be
justified, for instance, in order to prevent irreparable damage and injury to a
party where the trial judge has capriciously and whimsically exercised his
judgment, or where there may be danger of clear failure of justice, or where
and ordinary appeal would simply be inadequate to relieve a party form the
injurious effects of the judgment complained of.26
Expropriation proceedings involve two (2) phases. The first phase ends either
with an order of expropriation (when the right of plaintiff to take the land and
the public purpose to which they are to be devoted are upheld) or an order of
dismissal. Either order would be a final one since if finally disposes of the case.
The second phase concerns the determination of just compensation to be
ascertained by three (3) commissioners. It ends with an order fixing the amount
to be paid to the dependant. Inasmuch as it leaves nothing more to be done,
this order finally disposes of the second stage. To both orders the remedy
therefrom is an appeal.27
In the case at bar, the first phase was terminated when the July 11, 1991 order
of expropriation became final and the parties subsequently entered into a
compromise agreement regarding the mode of payment of just compensation.
When respondent failed to abide by the terms of the compromise agreement,
petitioner filed and action to partially rescind the same. Obviously, the trial
could only validly order the rescission of the compromise agreement anent the
payment of just compensation inasmuch as that was the subject of the
compromise. However, on August 4, 1991, the trial court gravely abused its
discretion when it ordered the return of Lot 1406-B. It, in effect, annulled the
Order of Expropriation dated July 11, 1991 which was already final and
executory.
We affirm the appellate court's reliance on the cases of Aguilar v. Tan 28 and
Bautista v. Sarmiento29 wherein it was ruled that the remedies of certiorari and
appeal are not mutually exclusive remedies in certain exceptional cases, such
as when there is grave abuse of discretion, or when public welfare so requires.
The trial court gravely abused its discretion by setting aside the order of
expropriation which has long become final and executory and by ordering the
return of Lot 1406-B to the petitioner. Its action was clearly beyond its
jurisdiction for it cannot modify a final and executory order. A final and
executory order can only be annulled by petition to annual the same on the
ground of extrinsic fraud and lack of jurisdiction30 or a petition for relief from a
final order or judgment under Rule 38 of the Rules of Court. However, no
petition to that effect was filed. Hence, though an order completely and finally
disposes of the case, if appeal is not a plain, speedy and adequate remedy at
law of the interest of substantial justice requires, a petition for certiorari may
be availed of upon showing of lack or excess of jurisdiction or grave abuse of
discretion on the part of the trial court.
According to petitioner the rule that a petition for certiorari can be availed of
despite the fact that the proper remedy is an appeal only apples in cases where
the petition is filed within the reglementary period for appeal. Inasmuch as the
petition in the case at bar was filed after the fifteen (15) day regulatory period
to appeal, said exceptional rule as enshrined in the cases of Aguilar v.
Tan31 and Bautista v. Sarmiento32 is not applicable. We find this interpretation
too restrictive. The said cases do not set as a condition sine qua non the filing
of a petition for certiorari within the fifteen (15) day period to appeal in order
for the said petition to be entertained by the court. To espouse petitioner's
contention would render inutile the sixty (60) day period to file a petition for
certiorari under Rule 65. In Republic v. Court of Appeals33, which also involved
an expropriation case where the parties entered in a compromise agreement
on just compensation, this Court entertained the petition for certiorari despite
the existence of an appeal and despite its being filed after the lapse of the
fifteen (15) day period to appeal the same. We ruled that the Court has not too
infrequently given due course to a petition for certiorari, even when the proper
remedy would have been an appeal, where valid and compelling
considerations would warrant such a recourse.34 If compelled to return the
subject parcel of land, the respondent would divert its budget already allocated
for economic development in order to pay petitioner the rental payments from
the lessee banks. Re-adjusting its budget would hamper and disrupt the
operation of the economic zone. We believe that the grave abuse of discretion
committed by the trial court and the consequent disruption in the operation of
the economic zone constitutes valid and compelling reasons to entertain the
petition.
Petitioner next argues that the instances cited under Section 1 of Rule 41 of
the Rules of Court35 whereby an appeal is not allowed are exclusive grounds
for a petition for certiorari. Inasmuch as the August 4, 1997 Order rescinding
the compromise agreement does not fall under any of the instances
enumerated therein, a petition for certiorari will not prosper. This reasoning is
severely flawed. The said section is not phrased to make the instances
mentioned therein the sole grounds for a petition for certiorari. It only states
that Rule 65 may be availed of under the grounds mentioned therein, but it
never intended said enumeration to be exclusive. It must be remembered that
a wide breadth of discretion is granted a court of justice in certiorari
proceeding.36
In the second assignment of error, petitioner assails the interpretation by the
Court of appeals of the phrase "original demand" in Article 2041 of the New
Civil Code vis-à-vis the case at bar. Article 2041 provides that, "if one of the
parties fails or refuses to abide by the compromise, the other party may either
enforce the compromise or regard it as rescinded and insist upon his "original
demand" According to petitioner, the appellate court erred in interpreting
"original demand" as the fixing of just compensation. Petitioner claims that the
original demand is the return of Lot 1406-B as stated in petitioner's motion to
dismiss37 the complaint for expropriation inasmuch as the incorporation of the
expropriation order in the compromise agreement subjected the said order to
rescission. Since the order of expropriation was rescinded, the authority of
respondent to expropriate and the purpose of expropriation have again
become subject to dispute.
Petitioner cites cases38 which provide that upon the failure to pay by the
lessee, the lessor can ask for the return of the lot and the ejectment of the
former, this being the lessor's original demand in the complaint. We find said
cases to be inapplicable to this instant case for the reason that the case at bar
is not a simple ejectment case. This is an expropriation case which involves
two (2) orders: an expropriation order and an order fixing just compensation.
Once the first order becomes final and no appeal thereto is taken, the authority
to expropriate and its public use cannot anymore be questioned.
Contrary to petitioner's contention, the incorporation of the expropriation order
in the compromise agreement did not subject said to rescission but instead
constituted an admission by petitioner of respondent's authority to expropriate
the subject parcel of land and the public purpose for which it was expropriated.
This is evident from paragraph three (3) of the compromise agreement which
states that the "swap arrangement recognizes the fact that Lot 1406-B covered
by TCT No. T-113498 of the estate of defendant Salud Jimenez is considered
expropriated in favor of the government based on the Order of the Honorable
Court dated July 11, 1991." It is crystal clear from the contents of the
agreement that the parties limited the compromise agreement to matter of just
compensation to petitioner. Said expropriate order is not closely intertwined
with the issue of payment such that failure to pay by respondent will also nullify
the right of respondent to expropriate. No statement to this effect was
mentioned in the agreement. The Order was mentioned in the agreement only
to clarify what was subject to payment.1âwphi1.nêt
This court therefore finds that the Court of Appeals did not err in interpreting
"original demand" to mean the fixing of just compensation. The authority of
respondent and the nature of the purpose thereof have been put to rest when
the Expropriation Order dated July 11, 1991 became final and was duly
admitted by petitioner in the compromise agreement. The only issue for
consideration is the manner and amount of payment due to petitioner. In fact,
aside from the withdrawal of private respondent's appeal to the Court of
Appeals concerning Lot 1406-A, the matter of payment of just compensation
was the only subject of the compromise agreement dated January 4, 1993.
Under the compromise agreement, petitioner was supposed to receive
respondent's Lot No. 434 in exchange for Lot 1406-B. When respondent failed
to fulfill its obligation to deliver Lot 434, petitioner can again demand for the
payment but not the return of the expropriated Lot 1406-B. This interpretation
by the Court of Appeals is in according with Section 4 to 8, Rule 67 of the Rules
of Court.
We also find as inapplicable the ruling in Gatchalian v. Arlegui39 , a case cited
by petitioner, where we held that even a final judgment can still be
compromised so long as it is full satisfied. As already stated, the expropriation
order was not the subject of the compromise agreement. It was only the mode
of payment which was the subject of the compromise agreement. Hence, the
Order of Expropriation dated July 11, 1991 can no longer be annulled.
After having invoked the provisions of Article 2041, petitioner inconsistently
contends that said article does not apply to the case at bar inasmuch as it is
only applicable to cases where a compromise has not been approved by a
court. In the case at bar, the trial court approved the compromise agreement.
Petitioner insists that Articles 2038, 2039 and 1330 of the New Civil Code
should apply. Said articles provide that:
Article 2038. A compromise, in which there is mistake, fraud, violence,
intimidation, undue influence, or falsity of documents, is subject to the
provisions of Article 1330 of this Code.
However, one of the parties cannot set up a mistake of fact as against the
other if the latter, by virtue of the compromise, has withdrawn from a litigation
already commenced.
Article 2039. When the parties compromise generally on all differences which
they might have with each other, the discovery of documents referring to one
or more but not to all of the questions settled shall not itself be a cause for
annulment or rescission of the compromise, unless said documents have been
concealed by one of the parties.
But the compromise may be annulled or rescinded if it refers only to one thing
to which one of the parties has no right, as shown by the newly discovered
documents.(n)"
Article 1330. A contract where consent is given through mistake, violence,
intimidation, undue influence, or fraud is voidable.40
The applicability of the above-quoted legal provisions will not change the
outcome of the subject of the rescission. Since the compromise agreement
was only about the mode of payment by swapping of lots and not about the
right and purpose to expropriate the subject Lot 1406-B, only the originally
agreed for of compensation that is by cash payment, was rescinded.
This court holds that respondent has the legal authority to expropriate the
subject Lot 1406-B and that the same was for a valid public purpose.
In Sumulong v. Guerrero41 , this Court has ruled that,
the "public use" requirement for a valid exercise of the power of eminent
domain is a flexible and evolving concept influenced by changing conditions.
In this jurisdiction, the statutory and judicial trend has been summarized as
follows:
this court has ruled that 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…It is accurate to beneficially employed for
the general welfare satisfies the requirement of public use. [Heirs of Juancho
Ardona v. Reyes, 125 SCRA 220 (1983) at 234-235 quoting E. Fernando, the
Constitution of the Philippines 523-4(2nd Ed. 1977)
The term "public use" has acquired a more comprehensive coverage. To the
literal import of the term signifying strict use or employment by the public has
been added the broader notion of indirect public benefit or advantage.
In Manosca v. Court of Appeals, this Court has also held that what ultimately
emerged is a concept of public use which is just as abroad as "public
welfare."42
Respondent PEZA expropriated the subject parcel of land pursuant to
Proclamation No. 1980 dated May 30, 1980 issued by former President
Ferdinand Marcos. Meanwhile, the power of eminent domain of respondent is
contained in its original charter, Presidential Decree No. 66, which provides
that:
Section 23. Eminent Domain. – For the acquisition of rights of way, or of any
property for the establishment of export processing zones, or of low-cost
housing projects for the employees working in such zones, or for the protection
of watershed areas, or for the construction of dams, reservoirs, wharves, piers,
docks, quays, warehouses and other terminal facilities, structures and
approaches thereto, the Authority shall have the right and power to acquire the
same by purchase, by negotiation, or by condemnation proceedings. Should
the authority elect to exercise the right of eminent domain, comdemnation
proceedings shall be maintained by and in the name of the Authority and it
may proceed in the manner provided for by law. (italics supplied)
Accordingly, subject Lot 1406-B was expropriated "for the construction…of
terminal facilities, structures and approaches thereto." The authority is broad
enough to give the respondent substantial leeway in deciding for what public
use the expropriated property would be utilized. Pursuant to this broad
authority, respondent leased a portion of the lot to commercial banks while the
rest was made a transportation terminal. Said public purposes were even
reaffirmed by Republic Act No. 7916, a law amending respondent PEZA's
original charter, which provides that:
Sec. 7 ECOZONE to be a Decentralized Agro-Industrial, industrial,
Commercial/Trading, Tourist, Investment and financial Community. Within the
framework of the Constitution, the interest of national sovereignty and territorial
integrity of the Republic, ECOZONE shall be developed, as much as possible,
into a decentralized, self-reliant and self-sustaining industrial,
commercial/trading, agro-industrial, tourist, banking, financial and investment
center with minimum government intervention. Each ECOZONE shall be
provided with transportation, telecommunications and other facilities needed
to generate linkage with industries and employment opportunities for its own
habitants and those of nearby towns and cities.
The ECOZONE shall administer itself on economic, financial, industrial,
tourism development and such other matters within the exclusive competence
of the national government. (italics supplied)
Among the powers of PEZA enumerated by the same law are:
Sec.12. Functions and Powers of PEZA Board. ---- The Philippines Economic
Zone Authority (PEZA) Board shall have the following function and powers:
(a) Set the general policies on the establishment and operations of the
ECOZONE, Industrial estate, exports processing zones, free trade zones, and
the like:
xxx
(b) Regulate and undertake the establishment, operation and maintenance of
utilities, other services and infrastructure in the ECOZONE, such as heat, light
and power, water supply, telecommunications, transport, toll roads and
bridges, port services, etc. and to fix just, reasonable and competitive rates,
fares, charges and fees thereof.43
In Manila Railroad Co. v. Mitchel44 , this Court has ruled that in the exercise of
eminent domain, only as much land can be taken as is necessary for the
legitimate purpose of the condemnation, the term "necessary", in this
connection, does not mean absolutely indispensable but requires only a
reasonable necessity of the taking for the stated purpose, growth and future
needs of the enterprise. The respondent cannot attain a self-sustaining and
viable ECOZONE if inevitable needs in the expansion in the surrounding areas
are hampered by the mere refusal of the private landowners to part with their
properties. The purpose of creating an ECOZONE and other facilities is better
served if respondent directly owns the areas subject of the expansion program.
The contention of petitioner that the leasing of the subject lot to banks and
building terminals was not expressly mentioned in the original charter of
respondent PEZA and that it was only after PEZA devoted the lot to said
purpose the Republic Act No. 7916 took effect, is not impressed with merit. It
should be pointed out that Presidential Decree No. 66 created the respondent
PEZA to be a viable commercial, industrial and investment area. According to
the comprehensive wording of Presidential Decree No. 66, the said decree did
not intend to limit respondent PEZA to the establishment of an export
processing zone but it was also bestowed with authority to expropriate parcels
of land "for the construction … of terminal facilities, structures and approaches
thereto." Republic Act No. 7916 simply particularized the broad language
employed by Presidential Decree No. 66 by specifying the purposes for which
PEZA shall devote the condemned lots, that is, for the construction and
operation of an industrial estate, an export processing zone, free trade zones,
and the like. The expropriation of Lot 1406-B for the purpose of being leased
to banks and for the construction of a terminal has the purpose of making
banking and transportation facilities easily accessible to the persons working
at the industries located in PEZA. The expropriation of adjacent areas
therefore comes as a matter of necessity to bring life to the purpose of the law.
In such a manner, PEZA's goal of being a major force in the economic
development of the country would be realized. Furthermore, this Court has
already ruled that:
…(T)he Legislature may directly determine the necessity for appropriating
private property for a particular improvement for public use, and it may select
the exact location of the improvement. In such a case, it is well-settled that the
utility of the proposed improvement, the existence of the public necessity for
its construction, the expediency of constructing it, the suitableness of the
location selected, are all questions exclusively for the legislature to determine,
and the courts have no power to interfere or to substitute their own for those
of the representatives of the people.
In the absence of some constitutional or statutory provision to the contrary, the
necessity and expediency of exercising the right of eminent domain are
questions essentially political and not judicial in their character. 45
Inasmuch as both Presidential Decree No. 66 and Republic Act No. 7916,
bestow respondent with authority to develop terminal facilities and banking
centers, this Court will not question the respondent's lease of certain portions
of the expropriated lot to banks, as well as the construction of terminal facilities.
Petitioner contends that respondent is bound by the representations of its
Chief Civil Engineer when the latter testified before the trial court that the lot
was to be devoted for the construction of government offices. Anent this issue,
suffice it to say that PEZA can vary the purpose for which a condemned lot will
be devoted to provided that the same is for public use. Petitioner cannot
impose or dictate on the respondent what facilities to establish for as long as
the same are for public purpose.
Lastly, petitioner appeals to the sense of justice and equity to this Court in
restoring the said lot to its possession. From the time of the filing of the
expropriation case in 1981 up to the present, respondent has not yet
remunerated the petitioner although respondent has already received earnings
from the rental payments by lessees of the subject property.
We have rules that 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 of the land within a reasonable time from its taking. Without
prompt payment, compensation cannot be considered "just" inasmuch as the
property owner is made to suffer the consequences of being immediately
deprived of his land while being made to wait for a decade or more before
actually receiving the amount necessary to cope with his loss.46 Payment of
just compensation should follow as a matter of right immediately after the order
of expropriation is issued. Any delay in payment must be counted from said
order. However, the delay to constitute a violation of due process must be
unreasonable and inexcusable: it must be deliberately done by a party in order
to defeat the ends of justice.
We find that respondent capriciously evaded its duty of giving what is due to
petitioner. In the case at bar, the expropriation order was issued by the trial
court in 1991. The compromise agreement between the parties was approved
by the trial court in 1993. However, from 1993 up to the present, respondent
has failed in its obligation to pay petitioner to the prejudice of the latter.
Respondent caused damage to petitioner in making the latter to expect that it
had a good title to the property to be swapped with Lot 1406-B; and meanwhile,
respondent has been reaping benefits from the lease or rental income of the
said expropriated lot. We cannot tolerate this oppressive exercise of the power
of eminent domain by respondent. As we have ruled in Cosculluela vs. Court
of Appeals:47
In the present case, the irrigation project was completed and has been in
operation since 1976. The project is benefiting the farmers specifically and the
community in general. Obviously, the petitioner's land cannot be returned to
him. However, it is high time that the petitioner be paid what was due him
eleven years ago. It is high time that the petitioner be paid what was due him
eleven years ago. It is arbitrary and capricious for a government agency to
initiate expropriation proceedings, seize a person's property, allow the
judgment of the court to become final and executory and then refuse to pay on
the ground that there are no appropriations for the property earlier taken and
profitably used. We condemn in the strongest possible terms the cavalier
attitude of government officials who adopt such a despotic and irresponsible
stance.
Though the respondent has committed a misdeed to petitioner, we cannot,
however, grant the petitioner's prayer for the return of the expropriated Lot No.
1406-B. The Order of expropriation dated July 11, 1991, has long become final
and executory. Petitioner cited Provincial Government of Sorsogon v. Rosa E.
Vda. De Villaroya48 to support its contention that it is entitled to a return of the
lot where this court ruled that "under ordinary circumstance, immediate return
of the owners of the unpaid property is the obvious remedy." However, the said
statement was not the ruling in that case. As in order cases where there was
no prompt payment by the government, this Court declared in Sorsogon that
"the Provincial Government of Sorsogon is expected to immediately pay as
directed should any further delay be encountered, the trial court is directed to
seize any patrimonial property or cash saving of the province in the amount
necessary to implement this decision." However, this Court also stressed and
declared in that case that "In cases where land is taken for public use, public
interest, however, must be considered."
In view of all the foregoing, justice and equity dictate that this case be
remanded to the trial court for hearing of the expropriation proceedings on the
determination of just compensation for Lot 1406-B and for its prompt payment
to the petitioner.
WHEREFORE, the instant petition is hereby denied. The Regional Trial Court
of Cavite City is hereby ordered to proceed with the hearing of the
expropriation proceedings, docketed as Civil Case No. N-4029, regarding the
determination of just compensation for Lot 1406-B, covered and described in
TCT No. T-113498-Cavite, and to resolve the same with dispatch.
SO ORDERED.
MANOSCA VS CA
In this appeal, via a petition for review on certiorari, from the decision1 of the
Court of Appeals, dated 15 January 1992, in CA-G.R. SP No. 24969 (entitled
"Alejandro Manosca, et al. v. Hon. Benjamin V. Pelayo, et al."), this Court is
asked to resolve whether or not the "public use" requirement of Eminent
Domain is extant in the attempted expropriation by the Republic of a 492-
square-meter parcel of land so declared by the National Historical Institute
("NHI") as a national historical landmark.
The facts of the case are not in dispute.
Petitioners inherited a piece of land located at P. Burgos Street, Calzada,
Taguig. Metro Manila, with an area of about four hundred ninety-two (492)
square meters. When the parcel was ascertained by the NHI to have been the
birthsite of Felix Y. Manalo, the founder of Iglesia Ni Cristo, it passed
Resolution No. 1, Series of 1986, pursuant to Section 4 2 of Presidential Decree
No. 260, declaring the land to be a national historical landmark. The resolution
was, on 06 January 1986, approved by the Minister of Education, Culture and
Sports. Later, the opinion of the Secretary of Justice was asked on the legality
of the measure. In his Opinion No. 133, Series of 1987, the Secretary of Justice
replied in the affirmative; he explained:
According to your guidelines, national landmarks are places or objects that are
associated with an event, achievement, characteristic, or modification that
makes a turning point or stage in Philippine history. Thus, the birthsite of the
founder of the Iglesia ni Cristo, the late Felix Y. Manalo, who, admittedly, had
made contributions to Philippine history and culture has been declared as a
national landmark. It has been held that places invested with unusual historical
interest is a public use for which the power of eminent domain may be
authorized . . . .
In view thereof, it is believed that the National Historical Institute as an agency
of the Government charged with the maintenance and care of national shrines,
monuments and landmarks and the development of historical sites that may
be declared as national shrines, monuments and/or landmarks, may initiate
the institution of condemnation proceedings for the purpose of acquiring the
lot in question in accordance with the procedure provided for in Rule 67 of the
Revised Rules of Court. The proceedings should be instituted by the Office of
the Solicitor General in behalf of the Republic.
Accordingly, on 29 May 1989, the Republic, through the Office of the Solicitor-
General, instituted a complaint for expropriation3 before the Regional Trial
Court of Pasig for and in behalf of the NHI alleging, inter alia, that:
Pursuant to Section 4 of Presidential Decree No. 260, the National Historical
Institute issued Resolution No. 1, Series of 1986, which was approved on
January, 1986 by the then Minister of Education, Culture and Sports, declaring
the above described parcel of land which is the birthsite of Felix Y. Manalo,
founder of the "Iglesia ni Cristo," as a National Historical Landrnark. The
plaintiff perforce needs the land as such national historical landmark which is
a public purpose.
At the same time, respondent Republic filed an urgent motion for the issuance
of an order to permit it to take immediate possession of the property. The
motion was opposed by petitioners. After a hearing, the trial court issued, on
03 August 1989,4 an order fixing the provisional market (P54,120.00) and
assessed (P16,236.00) values of the property and authorizing the Republic to
take over the property once the required sum would have been deposited with
the Municipal Treasurer of Taguig, Metro Manila.
Petitioners moved to dismiss the complaint on the main thesis that the
intended expropriation was not for a public purpose and, incidentally, that the
act would constitute an application of public funds, directly or indirectly, for the
use, benefit, or support of Iglesia ni Cristo, a religious entity, contrary to the
provision of Section 29(2), Article VI, of the 1987 Constitution. 5 Petitioners
sought, in the meanwhile, a suspension in the implementation of the 03rd
August 1989 order of the trial court.
On 15 February 1990, following the filing by respondent Republic of its reply
to petitioners' motion seeking the dismissal of the case, the trial court issued
its denial of said motion to dismiss.6 Five (5) days later, or on 20 February
1990,7 another order was issued by the trial court, declaring moot and
academic the motion for reconsideration and/or suspension of the order of 03
August 1989 with the rejection of petitioners' motion to dismiss. Petitioners'
motion for the reconsideration of the 20th February 1990 order was likewise
denied by the trial court in its 16th April 1991 order.8
Petitioners then lodged a petition for certiorari and prohibition with the Court of
Appeals. In its now disputed 15th January 1992 decision, the appellate court
dismissed the petition on the ground that the remedy of appeal in the ordinary
course of law was an adequate remedy and that the petition itself, in any case,
had failed to show any grave abuse of discretion or lack of jurisdictional
competence on the part of the trial court. A motion for the reconsideration of
the decision was denied in the 23rd July 1992 resolution of the appellate court.
We begin, in this present recourse of petitioners, with a few known postulates.
Eminent domain, also often referred to as expropriation and, with less
frequency, as condemnation, is, like police power and taxation, an inherent
power of sovereignty. It need not be clothed with any constitutional gear to
exist; instead, provisions in our Constitution on the subject are meant more to
regulate, rather than to grant, the exercise of the power. Eminent domain is
generally so described as "the highest and most exact idea of property
remaining in the government" that may be acquired for some public purpose
through a method in the nature of a forced purchase by the State. 9 It is a right
to take or reassert dominion over property within the state for public use or to
meet a public exigency. It is said to be an essential part of governance even
in its most primitive form and thus inseparable from sovereignty. 10 The only
direct constitutional qualification is that "private property shall not be taken for
public use without just compensation." 11 This proscription is intended to
provide a safeguard against possible abuse and so to protect as well the
individual against whose property the power is sought to be enforced.
Petitioners assert that the expropriation has failed to meet the guidelines set
by this Court in the case of Guido v. Rural Progress Administration, 12 to wit:
(a) the size of the land expropriated; (b) the large number of people benefited;
and, (c) the extent of social and economic reform. 13 Petitioners suggest that
we confine the concept of expropriation only to the following public uses, 14 i.e.,
the —
. . . taking of property for military posts, roads, streets, sidewalks, bridges,
ferries, levees, wharves, piers, public buildings including schoolhouses, parks,
playgrounds, plazas, market places, artesian wells, water supply and
sewerage systems, cemeteries, crematories, and railroads.
This view of petitioners is much too limitative and restrictive.
The court, in Guido, merely passed upon the issue of the extent of the
President's power under Commonwealth Act No. 539 to, specifically, acquire
private lands for subdivision into smaller home lots or farms for resale to bona
fide tenants or occupants. It was in this particular context of the statute that the
Court had made the pronouncement. The guidelines in Guido were not meant
to be preclusive in nature and, most certainly, the power of eminent domain
should not now be understood as being confined only to the expropriation of
vast tracts of land and landed estates. 15
The term "public use," not having been otherwise defined by the constitution,
must be considered in its general concept of meeting a public need or a public
exigency. 16 Black summarizes the characterization given by various courts to
the term; thus:
Public Use. Eminent domain. The constitutional and statutory basis for taking
property by eminent domain. For condemnation purposes, "public use" is one
which confers same benefit or advantage to the public; it is not confined to
actual use by public. It is measured in terms of right of public to use proposed
facilities for which condemnation is sought and, as long as public has right of
use, whether exercised by one or many members of public, a "public
advantage" or "public benefit" accrues sufficient to constitute a public use.
Montana Power Co. vs. Bokma, Mont. 457 P. 2d 769, 772, 773.
Public use, in constitutional provisions restricting the exercise of the right to
take private property in virtue of eminent domain, means a use concerning the
whole community as distinguished from particular individuals. But each and
every member of society need not be equally interested in such use, or be
personally and directly affected by it; if the object is to satisfy a great public
want or exigency, that is sufficient. Rindge Co. vs. Los Angeles County, 262
U.S. 700, 43 S.Ct. 689, 692, 67 L.Ed. 1186. The term may be said to mean
public usefulness, utility, or advantage, or what is productive of general benefit.
It may be limited to the inhabitants of a small or restricted locality, but must be
in common, and not for a particular individual. The use must be a needful one
for the public, which cannot be surrendered without obvious general loss and
inconvenience. A "public use" for which land may be taken defies absolute
definition for it changes with varying conditions of society, new appliances in
the sciences, changing conceptions of scope and functions of government,
and other differing circumstances brought about by an increase in population
and new modes of communication and transportation. Katz v. Brandon, 156
Conn., 521, 245 A.2d 579,586. 17
The validity of the exercise of the power of eminent domain for traditional
purposes is beyond question; it is not at all to be said, however, that public use
should thereby be restricted to such traditional uses. The idea that "public use"
is strictly limited to clear cases of "use by the public" has long been discarded.
This Court in Heirs of Juancho Ardona v. Reyes,18 quoting from Berman
v. Parker (348 U.S. 25; 99 L. ed. 27), held:
We do not sit to determine whether a particular housing project is or is not
desirable. The concept of the public welfare is broad and inclusive. See
DayBrite Lighting, Inc. v. Missouri, 342 US 421, 424, 96 L. Ed. 469, 472, 72 S
Ct 405. The values it represents are spiritual as well as physical, aesthetic as
well as monetary. It is within the power of the legislature to determine that the
community should be beautiful as well as healthy, spacious as well as clean,
well-balanced as well as carefully patrolled. In the present case, the Congress
and its authorized agencies have made determinations that take into account
a wide variety of values. It is no for us to reappraise them. If those who govern
the District of Columbia decide that the Nation's Capital should be beautiful as
well as sanitary, there is nothing in the Fifth Amendment that stands in the
way.
Once the object is within the authority of Congress, the right to realize it
through the exercise of eminent domain is clear. For the power of eminent
domain is merely the means to the end. See Luxton v. North River Bridge Co.
153 US 525, 529, 530, 38 L. ed. 808, 810, 14 S Ct 891; United States v.
Gettysburg Electric R. Co. 160 US 668, 679, 40 L. ed. 576, 580, 16 S Ct 427.
It has been explained as early as Seña v. Manila Railroad Co., 19 that:
. . . A historical research discloses the meaning of the term "public use" to be
one of constant growth. As society advances, its demands upon the individual
increase and each demand is a new use to which the resources of the
individual may be devoted. . . . for "whatever is beneficially employed for the
community is a public use.
Chief Justice Enrique M. Fernando states:
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 so any more. 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 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. 20
Chief Justice Fernando, writing the ponencia in J.M. Tuason & Co. vs. Land
Tenure Administration, 21 has viewed the Constitution a dynamic instrument
and one that "is not to be construed narrowly or pedantically" so as to enable
it "to meet adequately whatever problems the future has in store." Fr. Joaquin
Bernas, a noted constitutionalist himself, has aptly observed that what, in fact,
has ultimately emerged is a concept of public use which is just as broad as
"public welfare." 22
Petitioners ask: But "(w)hat is the so-called unusual interest that the
expropriation of (Felix Manalo's) birthplace become so vital as to be a public
use appropriate for the exercise of the power of eminent domain" when only
members of the Iglesia ni Cristo would benefit? This attempt to give some
religious perspective to the case deserves little consideration, for what should
be significant is the principal objective of, not the casual consequences that
might follow from, the exercise of the power. The purpose in setting up the
marker is essentially to recognize the distinctive contribution of the late Felix
Manalo to the culture of the Philippines, rather than to commemorate his
founding and leadership of the Iglesia ni Cristo.
The practical reality that greater benefit may be derived by members of
the Iglesia ni Cristo than by most others could well be true but such a peculiar
advantage still remains to be merely incidental and secondary in nature.
Indeed, that only a few would actually benefit from the expropriation of property
does not necessarily diminish the essence and character of public use. 23
Petitioners contend that they have been denied due process in the fixing of the
provisional value of their property. Petitioners need merely to be reminded that
what the law prohibits is the lack of opportunity to be heard; 24 contrary to
petitioners' argument, the records of this case are replete with pleadings 25 that
could have dealt, directly or indirectly, with the provisional value of the
property.
Petitioners, finally, would fault respondent appellate court in sustaining the trial
court's order which considered inapplicable the case of Noble v. City of
Manila. 26 Both courts held correctly. The Republic was not a party to the
alleged contract of exchange between the Iglesia ni Cristo and petitioners
which (the contracting parties) alone, not the Republic, could properly be
bound.
All considered, the Court finds the assailed decision to be in accord with law
and jurisprudence.
WHEREFORE, the petition is DENIED. No costs.
SO ORDERED.
HEIRS OF JUANCHO ARDONA VS REYES
This is a petition for certiorari with preliminary injunction challenging the
constitutionality of Presidential Decree No. 564, the Revised Charter of the
Philippine Tourism Authority, and Proclamation No. 2052 declaring the
barangays of Sibugay, Malubog, Babag and Sirao including the proposed
Lusaran Dam in the City of Cebu and in the municipalities of Argao and
Dalaguete in the province of Cebu as tourist zones. The petitioners ask that
we restrain respondent Court of First Instance of Cebu and the Philippine
Tourism Authority (PTA) from enforcing and implementing the writs of
possession issued in four (4) expropriation cases filed by PTA against the
petitioners: Civil Cases Nos. R-19562, R-19684, R-20701, and R-21608 of the
Court of First Instance of Cebu (Branch 1).
The Philippine Tourism Authority filed four (4) Complaints with the Court of
First Instance of Cebu City for the expropriation of some 282 hectares of rolling
land situated in barangays Malubog and Babag, Cebu City, under PTA's
express authority "to acquire by purchase, by negotiation or by condemnation
proceedings any private land within and without the tourist zones" for the
purposes indicated in Section 5, paragraph B(2), of its Revised Charter (PD
564), more specifically, for the development into integrated resort complexes
of selected and well-defined geographic areas with potential tourism value. As
uniformly alleged in the complaints, the purposes of the expropriation are:
xxx xxx xxx
V National Bank, Cebu City Branch, an amount equivalent to 10% of the value
Plaintiff, in line with the policy of the government to promote tourism and
development of tourism projects will construct in Barangays Malubog, Busay
and Babag, all of Cebu City, a sports complex (basketball courts, tennis courts,
volleyball courts, track and field, baseball and softball diamonds, and
swimming pools), clubhouse, gold course, children's playground and a nature
area for picnics and horseback riding for the use of the public.
The development plan, covering approximately 1,000 hectares, includes the
establishment of an electric power grid in the area by the National Power
Corporation, thus assuring the supply of electricity therein for the benefit of the
whole community. Deep wells will also be constructed to generate water
supply within the area. Likewise, a complex sewerage and drainage system
will be devised and constructed to protect the tourists and nearby residents
from the dangers of pollution.
Complimentary and support facilities for the project will be constructed,
including public rest houses, lockers, dressing rooms, coffee shops, shopping
malls, etc. Said facilities will create and offer employment opportunities to
residents of the community and further generate income for the whole of Cebu
City.
Plaintiff needs the property above described which is directly covered by the
proposed golf court.
xxx xxx xxx
The defendants in Civil Cases Nos. R-20701 and R-21608 filed their respective
Opposition with Motion to Dismiss and/or Reconsideration. The defendants in
Civil Case No. R-19562 filed a manifestation adopting the answer of
defendants in Civil Case No. R-19864. The defendants, now petitioners, had
a common allegation in that the taking is allegedly not impressed with public
use under the Constitution.
In their motions to dismiss, the petitioners alleged, in addition to the issue of
public use, that there is no specific constitutional provision authorizing the
taking of private property for tourism purposes; that assuming that PTA has
such power, the intended use cannot be paramount to the determination of the
land as a land reform area; that limiting the amount of compensation by
Legislative fiat is constitutionally repugnant; and that since the land is under
the land reform program, it is the Court of Agrarian Relations and not the Court
of First Instance that has jurisdiction over the expropriation cases.
The Philippine Tourism Authority having deposited with The Philippine
of the properties pursuant to Presidential Decree No. 1533. the lower court
issued separate orders authorizing PTA to take immediate possession of the
premises and directing the issuance of writs of possession.
On May 25, 1982, petitioners filed this petition questioning the orders of the
respondent Judge, The respondents have correctly restated the grounds in the
petition as follows:
xxx xxx xxx
A. The complaints for expropriation lack basis because the Constitution does
not provide for the expropriation of private property for tourism or other related
purposes;
B. The writs of possession or orders authorizing PTA to take immediate
possession is premature because the "public use" character of the taking has
not been previously demonstrated;
C. The taking is not for public use in contemplation of eminent domain law;
D. The properties in question have been previously declared a land reform
area; consequently, the implementation of the social justice pro- ,vision of the
Constitution on agrarian reform is paramount to the right of the State to
expropriate for the purposes intended;
E. Proclamation No. 2052 declaring certain barangays in Cebu City, which
include the lands subject of expropriation as within a tourist zone, is
unconstitutional for it impairs the obligation of contracts; "F. Since the
properties are within a land reform area, it is the Court of Agrarian Relations,
not the lower court, that has jurisdiction pursuant to Pres. Decree No. 946;
F. The forcible ejectment of defendants from the premises constitutes a
criminal act under Pres. Decree No. 583;
In their memorandum, the petitioners have summarized the issues as follows:
I. Enforcement of the Writ of Possession is Premature:
II. Presidential Decree 564 Amending Presidential Decree l89 is
Constitutionally Repugnant:
III. The Condemnation is not for Public Use, Therefore, Unconstitutional:
IV. The Expropriation for Tourism Purposes of Lands Covered by the Land
Reform Program Violates the Constitution:
V. Presidential Proclamation 2052 is Unconstitutional:
VI. Presidential Decree No 1533 is Unconstitutional:
VII. The Court of First Instance has no Jurisdiction:
VIII. The Filing of the Present Petition is not Premature.
The issues raised by the petitioners revolve around the proposition that the
actions to expropriate their properties are constitutionally infirm because
nowhere in the Constitution can a provision be found which allows the taking
of private property for the promotion of tourism.
The petitioners' arguments in their pleadings in support of the above
proposition are subsumed under the following headings:
1. Non-compliance with the "public use" requirement under the eminent
domain provision of the Bill of Rights.
2. Disregard of the land reform nature of the property being expropriated.
3. Impairment of the obligation of contracts.
There are three provisions of the Constitution which directly provide for the
exercise of the power of eminent domain. Section 2, Article IV states that
private property shall not be taken for public use without just compensation.
Section 6, Article XIV allows the State, in the interest of national welfare or
defense and upon payment of just compensation to transfer to public
ownership, utilities and other private enterprises to be operated by the
government. Section 13, Article XIV states that the Batasang Pambansa may
authorize upon payment of just compensation the expropriation of private
lands to be subdivided into small lots and conveyed at cost to deserving
citizens.
While not directly mentioning the expropriation of private properties upon
payment of just compensation, the provisions on social justice and agrarian
reforms which allow the exercise of police power together with the power of
eminent domain in the implementation of constitutional objectives are even
more far-reaching insofar as taking of private property is concerned.
Section 6, Article II provides:
Sec. 6. The State shall promote social justice to ensure the dignity, welfare,
and security of all the people. Towards its end, the State shall regulate the
acquisition, ownership, use, enjoyment, and disposition of private property,
and equitably diffuse property ownership and profits.
xxx xxx xxx
Section 12, Article XIV provides:
See. 12. The State shall formulate and implement an agrarian reform program
aimed at emancipating the tenant from the bondage of the soil and achieving
the goals enunciated in this Constitution.
The equitable diffusion of property ownership in the promotion of social justice
implies the exercise, whenever necessary, of the power to expropriate private
property. Likewise there can be no meaningful agrarian reform program unless
the power to expropriate is utilized.
We cite all the above provisions on the power to expropriate because of the
petitioners' insistence on a restrictive view of the eminent domain provision.
The thrust of all constitutional provisions on expropriation is in the opposite
direction.
As early as 1919, this Court in Visayan Refining Co. v. Samus (40 Phil. 550)
categorized the restrictive view as wholly erroneous and based on a
misconception of fundamentals.
The petitioners look for the word "tourism" in the Constitution. Understandably
the search would be in vain. The policy objectives of the framers can be
expressed only in general terms such as social justice, local autonomy,
conservation and development of the national patrimony, public interest, and
general welfare, among others. The programs to achieve these objectives vary
from time to time and according to place, To freeze specific programs like
Tourism into express constitutional provisions would make the Constitution
more prolix than a bulky code and require of the framers a prescience beyond
Delphic proportions. The particular mention in the Constitution of agrarian
reform and the transfer of utilities and other private enterprises to public
ownership merely underscores the magnitude of the problems sought to be
remedied by these programs. They do not preclude nor limit the exercise of
the power of eminent domain for such purposes like tourism and other
development programs.
In the leading case of Visayan Refining Co. v. Camus (supra), this Court
emphasized that the power of eminent domain is inseparable from sovereignty
being essential to the existence of the State and inherent in government even
in its most primitive forms. The only purpose of the provision in the Bill of Rights
is to provide some form of restraint on the sovereign power. It is not a grant of
authority -
The power of eminent domain does not depend for its existence on a specific
grant in the constitution. It is inherent in sovereignty and exists in a sovereign
state without any recognition of it in the constitution. The provision found in
most of the state constitutions relating to the taking of property for the public
use do not by implication grant the power to the government of the state, but
limit a power which would otherwise be without limit.
The constitutional restraints are public use and just compensation.
Do the purposes of the taking in this case constitute "public use"?
The petitioners ask us to adopt a strict construction and declare that "public
use" means literally use by the public and that "public use" is not synonymous
with "public interest", "public benefit", or "public welfare" and much less "public
convenience. "
The petitioners face two major obstacles. First, their contention which is rather
sweeping in its call for a retreat from the public welfare orientation is unduly
restrictive and outmoded. Second, no less than the lawmaker has made a
policy determination that the power of eminent domain may be exercised in
the promotion and development of Philippine tourism.
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.
Certain aspects of parliamentary government were introduced by the 1973
amendments to the Constitution with further modifications in the 1976 and
1981 amendments. Insofar as the executive and legislative departments are
concerned, the traditional concept of checks and balances in a presidential
form was considerably modified to remove some roadblocks in the expeditious
implementation of national policies. There was no such change for the
judiciary. We remain as a checking and balancing department even as all strive
to maintain respect for constitutional boundaries. At the same time, the
philosophy of coordination in the pursuit of developmental goals implicit in the
amendments also constrains in the judiciary to defer to legislative discretion iii
the judicial review of programs for economic development and social progress
unless a clear case of constitutional infirmity is established. We cannot stop
the legitimate exercise of power on an invocation of grounds better left interred
in a bygone age and time.* As we review the efforts of the political departments
to bring about self-sufficiency, if not eventual abundance, we continue to
maintain the liberal approach because the primary responsibility and the
discretion belong to them.
There can be no doubt that expropriation for such traditions' purposes as the
construction of roads, bridges, ports, waterworks, schools, electric and
telecommunications systems, hydroelectric power plants, markets and
slaughterhouses, parks, hospitals, government office buildings, and flood
control or irrigation systems is valid. However, the concept of public use is not
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 discarded.
In the United States, the rule was enunciated in Berman v. Parker (348 U.S.
25; 99 L. ed. 27) as follows:
We do not sit to determine whether a particular housing project is or is not
desirable. The concept of the public welfare is broad and inclusive. See
DayBrite Lighting, Inc. v. Missouri, 342 US 421, 424, 96 L ed 469, 472, 72 S
Ct 405. The values it represents are spiritual as well as physical, aesthetic as
well as monetary. It is within the power of the legislature to determine that the
community should be beautiful as well as healthy, spacious as well as clean,
well-balanced as well as carefully patrolled. In the present case, the Congress
and its authorized agencies have made determinations that take into account
a wide variety of values. It is not for us to reappraise them. If those who govern
the District of Columbia decide that the Nation's Capital should be beautiful as
well as sanitary, there is nothing in the Fifth Amendment that stands in the
way.
Once the object is within the authority of Congress, the right to realize it
through the exercise of eminent domain is clear. For the power of eminent
domain is merely the means to the end. See Luxton v. North River Bridge Co.
153 US 525, 529, 530, 38 L ed 808, 810, 14 S Ct 891; United States v.
Gettysburg Electric R. Co. 160 US 668, 679, 40 L ed 576, 580, 16 S Ct 427.
In an earlier American case, where a village was isolated from the rest of North
Carolina because of the flooding of the reservoir of a dam thus making the
provision of police, school, and health services unjustifiably expensive, the
government decided to expropriate the private properties in the village and the
entire area was made part of an adjoining national park. The district court and
the appellate court ruled against the expropriation or excess condemnation.
The Court of Appeals applied the "use by the public" test and stated that the
only land needed for public use was the area directly flooded by the reservoir.
The village may have been cut off by the dam but to also condemn it was
excess condemnation not valid under the "Public use" requirement. The U.S.
Supreme Court in United States ex rel TVA v. Welch (327 U.S, 546; 90 L. ed
843) unanimously reversed the lower courts. It stated:
The Circuit Court of Appeals, without expressly relying on a compelling rule of
construction that would give the restrictive scope to the T.V.A. Act given it by
the district court, also interpreted the statute narrowly. It first analyzed the facts
by segregating the total problem into distinct parts, and thus came to the
conclusion that T.V.A.'s purpose in condemning the land in question was only
one to reduce its liability arising from the destruction of the highway. The Court
held that use of the lands for that purpose is a "private" and not a "public use"
or, at best, a "public use" not authorized by the statute. we are unable to agree
with the reasoning and conclusion of the Circuit Court of Appeals.
We think that it is the function of Congress to decide what type of taking is for
a public use and that the agency authorized to do the taking may do so to the
still extent of its statutory authority, United States v. Gettysburg Electric R. Co.
160 US 668, 679, 40 L ed 576, 580, 16 S Ct 427. ...
xxx xxx xxx
... But whatever may be the scope of the judicial power to determine what is a
"public use" in Fourteenth Amendment controversies, this Court has said that
when Congress has spoken on this subject "Its decision is entitled to deference
until it is shown to involve an impossibility." Old Dominion Land Co. v. United
States, 269, US 55, 66, 70 L ed 162, 46 S Ct 39. Any departure from this
judicial restraint would result in courts deciding on what is and is not a
governmental function and in their invalidating legislation on the basis of their
view on that question at the moment of decision, a practice which has proved
impracticable in other fields. See Case v. Bowles decided February 4, 1946,
437 US 92, 101, ante, 552, 559, 66 S Ct 438. New York v. United States, 326
US 572 ante 326, 66 S Ct 310). We hold that the T.V.A. took the tracts here
involved for a public purpose, if, as we think is the case, Congress authorized
the Authority to acquire, hold, and use the lands to carry out the purposes of
the T.V.A. Act.
In the Philippines, Chief Justice Enrique M. Fernando has aptly summarized
the statutory and judicial trend as follows:
The taking to be valid must be for public use. There was a time when it was
felt that a literal meaning should be attached to such a requirement. Whatever
project is undertaken must be for the public to enjoy, as in the case of streets
or parks. Otherwise, expropriation is not allowable. It is not any more. 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. (Fernando, The Constitution of the Philippines, 2nd
ed., pp. 523-524)
The petitioners' contention that the promotion of tourism is not "public use"
because private concessioners would be allowed to maintain various facilities
such as restaurants, hotels, stores, etc. inside the tourist complex is impressed
with even less merit. Private bus firms, taxicab fleets, roadside restaurants,
and other private businesses using public streets end highways do not
diminish in the least bit the public character of expropriations for roads and
streets. The lease of store spaces in underpasses of streets built on
expropriated land does not make the taking for a private purpose. Airports and
piers catering exclusively to private airlines and shipping companies are still
for public use. 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, commercial firms, entertainment and service companies,
and other private concerns.
The petitioners have also failed to overcome the deference that is
appropriately accorded to formulations of national policy expressed in
legislation. The rule in Berman u. Parker (supra) of deference to legislative
policy even if such policy might mean taking from one private person and
conferring on another private person applies as well as in the Philippines.
... Once the object is within the authority of Congress, the means by which it
will be attained is also for Congress to determine. Here one of the means
chosen is the use of private enterprise for redevelopment of the area.
Appellants argue that this makes the project a taking from one businessman
for the benefit of another businessman. But the means of executing the project
are for Congress and Congress alone to determine, once the public purpose
has been established. Selb Luxton v. North River Bridge Co. (US) supra; cf.
Highland v. Russel Car & Snow Plow Co. 279 US 253, 73 L ed 688, 49 S Ct
314. The public end may be as well or better served through an agency of
private enterprise than through a department of government-or so the
Congress might conclude. We cannot say that public ownership is the sole
method of promoting the public purposes of community redevelopment
projects. What we have said also disposes of any contention concerning the
fact that certain property owners in the area may be permitted to repurchase
their properties for redevelopment in harmony with the over-all plan. That, too,
is a legitimate means which Congress and its agencies may adopt, if they
choose. (Berman v. Parker, 99 L ed 38, 348 US 33, 34)
An examination of the language in the 1919 cases of City of Manila v. Chinese
Community of Manila (40 Phil, 349) and Visayan Refining Co. vs.
Camus, earlier cited, shows that from the very start of constitutional
government in our country judicial deference to legislative policy has been
clear and manifest in eminent domain proceedings.
The expressions of national policy are found in the revised charter of the
Philippine Tourism Authority, Presidential Decree No. 564:
WHEREAS, it is the avowed aim of the government to promote Philippine
tourism and work for its accelerated and balanced growth as well as for
economy and expediency in the development of the tourism plant of the
country;
xxx xxx xxx
SECTION 1. Declaration of Policy. - It is hereby declared to be the policy of
the State to promote, encourage, and develop Philippine tourism as an
instrument in accelerating the development of the country, of strengthening the
country's foreign exchange reserve position, and of protecting Philippine
culture, history, traditions and natural beauty, internationally as well as
domestically.
The power of eminent domain is expressly provided for under Section 5 B(2)
as follows:
xxx xxx xxx
2. Acquisition of Private Lands, Power of Eminent Domain. — To acquire by
purchase, by negotiation or by condemnation proceedings any private land
within and without the tourist zones for any of the following reasons: (a)
consolidation of lands for tourist zone development purposes, (b) prevention
of land speculation in areas declared as tourist zones, (c) acquisition of right
of way to the zones, (d) protection of water shed areas and natural assets with
tourism value, and (e) for any other purpose expressly authorized under this
Decree and accordingly, to exercise the power of eminent domain under its
own name, which shall proceed in the manner prescribed by law and/or the
Rules of Court on condemnation proceedings. The Authority may use any
mode of payment which it may deem expedient and acceptable to the land
owners: Provided, That in case bonds are used as payment, the conditions
and restrictions set forth in Chapter III, Section 8 to 13 inclusively, of this
Decree shall apply.
xxx xxx xxx
The petitioners rely on the Land Reform Program of the government in raising
their second argument. According to them, assuming that PTA has the right to
expropriate, the properties subject of expropriation may not be taken for the
purposes intended since they are within the coverage of "operation land
transfer" under the land reform program. Petitioners claim that certificates of
land transfer (CLT'S) and emancipation patents have already been issued to
them thereby making the lands expropriated within the coverage of the land
reform area under Presidential Decree No. 2; that the agrarian reform program
occupies a higher level in the order of priorities than other State policies like
those relating to the health and physical well- being of the people; and that
property already taken for public use may not be taken for another public use.
We have considered the above arguments with scrupulous and thorough
circumspection. For indeed any claim of rights under the social justice and land
reform provisions of the Constitution deserves the most serious consideration.
The Petitioners, however, have failed to show that the area being developed
is indeed a land reform area and that the affected persons have emancipation
patents and certificates of land transfer.
The records show that the area being developed into a tourism complex
consists of more than 808 hectares, almost all of which is not affected by the
land reform program. The portion being expropriated is 282 hectares of hilly
and unproductive land where even subsistence farming of crops other than
rice and corn can hardly survive. And of the 282 disputed hectares, only 8,970
square meters-less than one hectare-is affected by Operation Land Transfer.
Of the 40 defendants, only two have emancipation patents for the less than
one hectare of land affected. And this 8,970 square meters parcel of land is
not even within the sports complex proper but forms part of the 32 hectares
resettlement area where the petitioners and others similarly situated would be
provided with proper housing, subsidiary employment, community centers,
schools, and essential services like water and electricity-which are non-
existent in the expropriated lands. We see no need under the facts of this
petition to rule on whether one public purpose is superior or inferior to another
purpose or engage in a balancing of competing public interests. The petitioners
have also failed to overcome the showing that the taking of the 8,970 square
meters covered by Operation Land Transfer forms a necessary part of an
inseparable transaction involving the development of the 808 hectares tourism
complex. And certainly, the human settlement needs of the many beneficiaries
of the 32 hectares resettlement area should prevail over the property rights of
two of their compatriots.
The invocation of the contracts clause has no merit. The non-impairment
clause has never been a barrier to the exercise of police power and likewise
eminent domain. As stated in Manigault v. Springs (199 U.S. 473) "parties by
entering into contracts may not stop the legislature from enacting laws
intended for the public good."
The applicable doctrine is expressed in Arce v. Genato (69 SCRA 544) which
involved the expropriation of land for a public plaza. The Court stated:
xxx xxx xxx
... What is claimed is that there must be a showing of necessity for such
condemnation and that it was not done in this case in support of such a view,
reliance is placed on City of Manila v. Arenano Law Colleges. (85 Phil. 663
[1950]) That doctrine itself is based on the earlier case of City of Manila v.
Chinese Community of Manila, (50 Phil. 349) also, like Camus, a 1919
decision. As could be discerned, however, in the Arellano Law Colleges
decision. it was the antiquarian view of Blackstone with its sanctification of the
right to one's estate on which such an observation was based. As did appear
in his Commentaries: "So great is the regard of the law for private property that
it will not, authorize the least violation of it, even for the public good, unless
there exists a very great necessity thereof." Even the most , cursory glance at
such well-nigh absolutist concept of property would show its obsolete
character at least for Philippine constitutional law. It cannot survive the test of
the 1935 Constitution with its mandates on social justice and protection to
labor. (Article II, Section 5 of the 1935 Constitution reads: "The promotion of
social justice to unsure the well-being and economic security of all the people
should be the concern of the State." Article XI, Section 6 of the same
Constitution provides: "The State shall afford protection to labor, especially to
working women and minors, and shall regulate the relation between landowner
and tenant, and between labor and capital in industry and in agriculture. The
State may provide for compulsory arbitration.") What is more, the present
Constitution pays even less heed to the claims of property and rightly so. After
stating that the State shall promote social justice, it continues: "Towards this
end, the State shall regulate the acquisition, ownership, use, enjoyment, and
disposition of private property, and equitably diffuse property ownership and
profits." (That is the second sentence of Article II, Section 6 of the Constitution)
If there is any need for explicit confirmation of what was set forth in Presidential
Decree No. 42, the above provision supplies it. Moreover, that is merely to
accord to what of late has been the consistent course of decisions of this Court
whenever property rights are pressed unduly. (Cf. Alalayan v. National Power
Corporation, L-24396, July 29, 1968, 24 SCRA 172; Agricultural Credit and
Cooperative Financing Administration v. Confederation of Unions, L-21484,
Nov. 29, 1969, 30 SCRA 649; Edu v. Ericta, L-32096, Oct. 24, 1970, 35 SCRA
481; Phil. Virginia Tobacco Administration v. Court of Industrial Relations, L-
32052, July 25, 1975, 65 SCRA 416) The statement therefore, that there could
be discerned a constitutional objection to a lower court applying a Presidential
Decree, when it leaves no doubt that a grantee of the power of eminent domain
need not prove the necessity for the expropriation, carries its own refutation.
xxx xxx xxx
The issue of prematurity is also raised by the petitioners. They claim that since
the necessity for the taking has not been previously established, the issuance
of the orders authorizing the PTA to take immediate possession of the
premises, as well as the corresponding writs of possession was premature.
Under Presidential Decree No. 42, as amended by Presidential Decree No.
1533, the government, its agency or instrumentality, as plaintiff in an
expropriation proceedings is authorized to take immediate possession, control
and disposition of the property and the improvements, with power of
demolition, notwithstanding the pendency of the issues before the court, upon
deposit with the Philippine National Bank of an amount equivalent to 10% of
the value of the property expropriated. The issue of immediate possession has
been settled in Arce v. Genato (supra). In answer to the issue:
... whether the order of respondent Judge in an expropriation case allowing the
other respondent, ... to take immediate possession of the parcel of land sought
to be condemned for the beautification of its public plaza, without a prior
hearing to determine the necessity for the exercise of the power of eminent
domain, is vitiated by jurisdictional defect, ...
this Court held that:
... It is not disputed that in issuing such order, respondent Judge relied on
Presidential Decree No. 42 issued on the 9th of November, 1972. (Presidential
Decree No. 42 is entitled "Authorizing the Plaintiff in Eminent Domain
Proceedings to Take Possession of the Property involved Upon Depositing the
Assessed Value for Purposes of Taxation.") The question as thus posed does
not occasion any difficulty as to the answer to be given. This petition for
certiorari must fail, there being no showing that compliance with the
Presidential Decree, which under the Transitory Provisions is deemed a part
of the law of the land, (According to Article XVII, Section 3 par. (2) of the
Constitution: "All proclamations, orders, decrees, instructions and acts
promulgated, issued, or done by the incumbent President shall be part of the
law of the land, and shall remain valid, legal, binding, and effective even after
lifting of martial law or the ratification of this Constitution, unless modified,
revoked, or superseded by subsequent proclamations. orders, decrees
instructions, or other acts of the incumbent President, or unless expressly and
explicitly modified or repealed by the regular National Assembly") would be
characterized as either an act in excess of jurisdiction or a grave abuse of
discretion. So we rule.
Likewise in Ramos v. Philippine Tourism Authority (G.R. Nos. 52449-50, June
9, 1980), this Court held:
... condemnation or expropriation proceedings is in the nature of one that is
quasi-in-rem wherein the fact that the owner of the property is made a party is
not essentially indispensable insofar was least as it conncerns is the
immediate taking of possession of the property and the preliminary
determination of its value, including the amount to be deposited.
In their last argument, the petitioners claim that a consequence of the
expropriation proceedings would be their forcible ejectment. They contend that
such forcible ejectment is a criminal act under Presidential Decree No. 583.
This contention is not valid. Presidential Decree No. 583 prohibits the taking
cognizance or implementation of orders designed to obstruct the land reform
program. It refers to the harassment of tenant- farmers who try to enforce
emancipation rights. It has nothing to do with the expropriation by the State of
lands needed for public purposes. As a matter of fact, the expropriated area
does not appear in the master lists of the Ministry of Agrarian Reforms as a
teranted area. The petitioners' bare allegations have not been supported with
particulars pointing to specific parcels which are subject of tenancy contracts.
The petitioners may be owner-tillers or may have some form of possessory or
ownership rights but there has been no showing of their being tenants on the
disputed lands.
The petitioners have failed to overcome the burden of anyone trying to strike
down a statute or decree whose avowed purpose is the legislative perception
is the public good. A statute has in its favor the presumption of validity. All
reasonable doubts should be resolved in favor of the constitutionality of a law.
The courts will not set aside a law as violative of the Constitution except in a
clear case (People v. Vera, 65 Phil. 56). And in the absence of factual findings
or evidence to rebut the presumption of validity, the presumption prevails
(Ermita-Malate Hotel, etc. v. Mayor of Manila, 20 SCRA 849; Morfe v. Mutuc,
22 SCRA 424).
The public respondents have stressed that the development of the 808
hectares includes plans that would give the petitioners and other displaced
persons productive employment, higher incomes, decent housing, water and
electric facilities, and better living standards. Our dismissing this petition is, in
part, predicated on those assurances. The right of the PTA to proceed with the
expropriation of the 282 hectares already Identified as fit for the establishment
of a resort complex to promote tourism is, therefore, sustained.
WHEREFORE, the instant petition for certiorari is hereby DISMISSE D for lack
of merit.
SO ORDERED.
PROVICE OF CAMARINES SUR VS CA
In this appeal by certiorari from the decision of the Court of Appeals in AC-
G.R. SP No. 20551 entitled "Ernesto N. San Joaquin, et al., v. Hon. Benjamin
V. Panga, et al.," this Court is asked to decide whether the expropriation of
agricultural lands by local government units is subject, to the prior approval of
the Secretary of the Agrarian Reform, as the implementator of the agrarian
reform program.
On December 22, 1988, the Sangguniang Panlalawigan of the Province of
Camarines Sur passed Resolution No. 129, Series of 1988, authorizing the
Provincial Governor to purchase or expropriate property contiguous to the
provincial capitol site, in order to establish a pilot farm for non-food and non-
traditional agricultural crops and a housing project for provincial government
employees.
The "WHEREAS" clause o:f the Resolution states:
WHEREAS, the province of Camarines Sur has adopted a five-year
Comprehensive Development plan, some of the vital components of which
includes the establishment of model and pilot farm for non-food and non-
traditional agricultural crops, soil testing and tissue culture laboratory centers,
15 small scale technology soap making, small scale products of plaster of
paris, marine biological and sea farming research center,and other progressive
feasibility concepts objective of which is to provide the necessary scientific and
technology know-how to farmers and fishermen in Camarines Sur and to
establish a housing project for provincial government employees;
WHEREAS, the province would need additional land to be acquired either by
purchase or expropriation to implement the above program component;
WHEREAS, there are contiguous/adjacent properties to be (sic) present
Provincial Capitol Site ideally suitable to establish the same pilot development
center;
WHEREFORE . . . .
Pursuant to the Resolution, the Province of Camarines Sur, through its
Governor, Hon. Luis R.Villafuerte, filed two separate cases for expropriation
against Ernesto N. San Joaquin and Efren N. San Joaquin, docketed as
Special Civil Action Nos. P-17-89 and P-19-89 of the Regional Trial Court, Pili,
Camarines Sur, presided by the Hon. Benjamin V. Panga.
Forthwith, the Province of Camarines Sur filed a motion for the issuance of writ
of possession. The San Joaquins failed to appear at the hearing of the motion.
The San Joaquins moved to dismiss the complaints on the ground of
inadequacy of the price offered for their property. In an order dated December
6, 1989, the trial court denied the motion to dismiss and authorized the
Province of Camarines Sur to take possession of the property upon the deposit
with the Clerk of Court of the amount of P5,714.00, the amount provisionally
fixed by the trial court to answer for damages that private respondents may
suffer in the event that the expropriation cases do not prosper. The trial court
issued a writ of possession in an order dated January18, 1990.
The San Joaquins filed a motion for relief from the order, authorizing the
Province of Camarines Sur to take possession of their property and a motion
to admit an amended motion to dismiss. Both motions were denied in the order
dated February 1990.
In their petition before the Court of Appeals, the San Joaquins asked: (a) that
Resolution No. 129, Series of 1988 of the Sangguniang Panlalawigan be
declared null and void; (b) that the complaints for expropriation be dismissed;
and (c) that the order dated December 6, 1989 (i) denying the motion to
dismiss and (ii) allowing the Province of Camarines Sur to take possession of
the property subject of the expropriation and the order dated February 26,
1990, denying the motion to admit the amended motion to dismiss, be set
aside. They also asked that an order be issued to restrain the trial court from
enforcing the writ of possession, and thereafter to issue a writ of injunction.
In its answer to the petition, the Province of Camarines Sur claimed that it has
the authority to initiate the expropriation proceedings under Sections 4 and 7
of Local Government Code (B.P. Blg. 337) and that the expropriations are for
a public purpose.
Asked by the Court of Appeals to give his Comment to the petition, the Solicitor
General stated that under Section 9 of the Local Government Code (B.P. Blg.
337), there was no need for the approval by the Office of the President of the
exercise by the Sangguniang Panlalawigan of the right of eminent domain.
However, the Solicitor General expressed the view that the Province of
Camarines Sur must first secure the approval of the Department of Agrarian
Reform of the plan to expropriate the lands of petitioners for use as a housing
project.
The Court of Appeals set aside the order of the trial court, allowing the Province
of Camarines Sur to take possession of private respondents' lands and the
order denying the admission of the amended motion to dismiss. It also ordered
the trial court to suspend the expropriation proceedings until after the Province
of Camarines Sur shall have submitted the requisite approval of the
Department of Agrarian Reform to convert the classification of the property of
the private respondents from agricultural to non-agricultural land.
Hence this petition.
It must be noted that in the Court of Appeals, the San Joaquins asked for: (i)
the dismissal of the complaints for expropriation on the ground of the
inadequacy of the compensation offered for the property and (ii) the
nullification of Resolution No. 129, Series of 1988 of the Sangguniang
Panlalawigan of the Province of Camarines Sur.
The Court of Appeals did not rule on the validity of the questioned resolution;
neither did it dismiss the complaints. However, when the Court of Appeals
ordered the suspension of the proceedings until the Province of Camarines
Sur shall have obtained the authority of the Department of Agrarian Reform to
change the classification of the lands sought to be expropriated from
agricultural to non-agricultural use, it assumed that the resolution is valid and
that the expropriation is for a public purpose or public use.
Modernly, there has been a shift from the literal to a broader interpretation of
"public purpose" or "public use" for which the power of eminent domain may
be exercised. The old concept was that the condemned property must actually
be used by the general public (e.g. roads, bridges, public plazas, etc.) before
the taking thereof could satisfy the constitutional requirement of "public use".
Under the new concept, "public use" means public advantage, convenience or
benefit, which tends to contribute to the general welfare and the prosperity of
the whole community, like a resort complex for tourists or housing project
(Heirs of Juancho Ardano v. Reyes, 125 SCRA 220 [1983]; Sumulong v.
Guerrero, 154 SC.RA 461 [1987]).
The expropriation of the property authorized by the questioned resolution is for
a public purpose. The establishment of a pilot development center would inure
to the direct benefit and advantage of the people of the Province of Camarines
Sur. Once operational, the center would make available to the community
invaluable information and technology on agriculture, fishery and the cottage
industry. Ultimately, the livelihood of the farmers, fishermen and craftsmen
would be enhanced. The housing project also satisfies the public purpose
requirement of the Constitution. As held in Sumulong v. Guerrero, 154 SCRA
461, "Housing is a basic human need. Shortage in housing is a matter of state
concern since it directly and significantly affects public health, safety, the
environment and in sum the general welfare."
It is the submission of the Province of Camarines Sur that its exercise of the
power of eminent domain cannot be restricted by the provisions of the
Comprehensive Agrarian Reform Law (R.A. No. 6657), particularly Section 65
thereof, which requires the approval of the Department of Agrarian Reform
before a parcel of land can be reclassified from an agricultural to a non-
agricultural land.
The Court of Appeals, following the recommendation of the Solicitor General,
held that the Province of Camarines Sur must comply with the provision of
Section 65 of the Comprehensive Agrarian Reform Law and must first secure
the approval of the Department of Agrarian Reform of the plan to expropriate
the lands of the San Joaquins.
In Heirs of Juancho Ardana v. Reyes, 125 SCRA 220, petitioners raised the
issue of whether the Philippine Tourism Authority can expropriate lands
covered by the "Operation Land Transfer" for use of a tourist resort complex.
There was a finding that of the 282 hectares sought to be expropriated, only
an area of 8,970 square meters or less than one hectare was affected by the
land reform program and covered by emancipation patents issued by the
Ministry of Agrarian Reform. While the Court said that there was "no need
under the facts of this petition to rule on whether the public purpose is superior
or inferior to another purpose or engage in a balancing of competing public
interest," it upheld the expropriation after noting that petitioners had failed to
overcome the showing that the taking of 8,970 square meters formed part of
the resort complex. A fair and reasonable reading of the decision is that this
Court viewed the power of expropriation as superior to the power to distribute
lands under the land reform program.
The Solicitor General denigrated the power to expropriate by the Province of
Camarines Sur by stressing the fact that local government units exercise such
power only by delegation. (Comment, pp. 14-15; Rollo, pp. 128-129)
It is true that local government units have no inherent power of eminent domain
and can exercise it only when expressly authorized by the legislature (City of
Cincinnati v. Vester, 28l US 439, 74 L.ed. 950, 50 SCt. 360). It is also true that
in delegating the power to expropriate, the legislature may retain certain
control or impose certain restraints on the exercise thereof by the local
governments (Joslin Mfg. Co. v. Providence, 262 US 668 67 L. ed. 1167, 43 S
Ct. 684). While such delegated power may be a limited authority, it is complete
within its limits. Moreover, the limitations on the exercise of the delegated
power must be clearly expressed, either in the law conferring the power or in
other legislations.
Resolution No. 129, Series of 1988, was promulgated pursuant to Section 9 of
B.P. Blg. 337, the Local Government Code, which provides:
A local government unit may, through its head and acting pursuant to a
resolution of its sanggunian exercise the right of eminent domain and institute
condemnation proceedings for public use or purpose.
Section 9 of B.P. Blg. 337 does not intimate in the least that local government,
units must first secure the approval of the Department of Land Reform for the
conversion of lands from agricultural to non-agricultural use, before they can
institute the necessary expropriation proceedings. Likewise, there is no
provision in the Comprehensive Agrarian Reform Law which expressly
subjects the expropriation of agricultural lands by local government units to the
control of the Department of Agrarian Reform. The closest provision of law that
the Court of Appeals could cite to justify the intervention of the Department of
Agrarian Reform in expropriation matters is Section 65 of the Comprehensive
Agrarian Reform Law, which reads:
Sec. 65. Conversion of Lands. — After the lapse of five (5) years from its
award, when the land ceases to be economically feasible and sound for,
agricultural purposes, or the locality has become urbanized and the land will
have a greater economic value for residential, commercial or industrial
purposes, the DAR, upon application of the beneficiary or the landowner, with
due notice to the affected parties, and subject to existing laws, may authorize
the reclassification or conversion of the land and its disposition: Provided, That
the beneficiary shall have fully paid his obligation.
The opening, adverbial phrase of the provision sends signals that it applies to
lands previously placed under the agrarian reform program as it speaks of "the
lapse of five (5) years from its award."
The rules on conversion of agricultural lands found in Section 4 (k) and 5 (1)
of Executive Order No. 129-A, Series of 1987, cannot be the source of the
authority of the Department of Agrarian Reform to determine the suitability of
a parcel of agricultural land for the purpose to which it would be devoted by
the expropriating authority. While those rules vest on the Department of
Agrarian Reform the exclusive authority to approve or disapprove conversions
of agricultural lands for residential, commercial or industrial uses, such
authority is limited to the applications for reclassification submitted by the land
owners or tenant beneficiaries.
Statutes conferring the power of eminent domain to political subdivisions
cannot be broadened or constricted by implication (Schulman v. People, 10
N.Y. 2d. 249, 176 N.E. 2d. 817, 219 NYS 2d. 241).
To sustain the Court of Appeals would mean that the local government units
can no longer expropriate agricultural lands needed for the construction of
roads, bridges, schools, hospitals, etc, without first applying for conversion of
the use of the lands with the Department of Agrarian Reform, because all of
these projects would naturally involve a change in the land use. In effect, it
would then be the Department of Agrarian Reform to scrutinize whether the
expropriation is for a public purpose or public use.
Ordinarily, it is the legislative branch of the local government unit that shall
determine whether the use of the property sought to be expropriated shall be
public, the same being an expression of legislative policy. The courts defer to
such legislative determination and will intervene only when a particular
undertaking has no real or substantial relation to the public use (United States
Ex Rel Tennessee Valley Authority v. Welch, 327 US 546, 90 L. ed. 843, 66 S
Ct 715; State ex rel Twin City Bldg. and Invest. Co. v. Houghton, 144 Minn. 1,
174 NW 885, 8 ALR 585).
There is also an ancient rule that restrictive statutes, no matter how broad their
terms are, do not embrace the sovereign unless the sovereign is specially
mentioned as subject thereto (Alliance of Government Workers v. Minister of
Labor and Employment, 124 SCRA 1 [1983]). The Republic of the Philippines,
as sovereign, or its political subdivisions, as holders of delegated sovereign
powers, cannot be bound by provisions of law couched in general term.
The fears of private respondents that they will be paid on the basis of the
valuation declared in the tax declarations of their property, are unfounded. This
Court has declared as unconstitutional the Presidential Decrees fixing the just
compensation in expropriation cases to be the value given to the condemned
property either by the owners or the assessor, whichever was lower ([Export
Processing Zone Authority v. Dulay, 149 SCRA 305 [1987]). As held
in Municipality of Talisay v. Ramirez, 183 SCRA 528 [1990], the rules for
determining just compensation are those laid down in Rule 67 of the Rules of
Court, which allow private respondents to submit evidence on what they
consider shall be the just compensation for their property.
WHEREFORE, the petition is GRANTED and the questioned decision of the
Court of Appeals is set aside insofar as it (a) nullifies the trial court's order
allowing the Province of Camarines Sur to take possession of private
respondents' property; (b) orders the trial court to suspend the expropriation
proceedings; and (c) requires the Province of Camarines Sur to obtain the
approval of the Department of Agrarian Reform to convert or reclassify private
respondents' property from agricultural to non-agricultural use.
The decision of the Court of Appeals is AFFIRMED insofar as it sets aside the
order of the trial court, denying the amended motion to dismiss of the private
respondents.
SO ORDERED.
SUMULONG VS GUERRERO
On December 5, 1977 the National Housing Authority (NIIA) filed a complaint
for expropriation of parcels of land covering approximately twenty five (25)
hectares, (in Antipolo, Rizal) including the lots of petitioners Lorenzo Sumulong
and Emilia Vidanes-Balaoing with an area of 6,667 square meters and 3,333
square meters respectively. The land sought to be expropriated were valued
by the NHA at one peso (P1.00) per square meter adopting the market value
fixed by the provincial assessor in accordance with presidential decrees
prescribing the valuation of property in expropriation proceedings.
Together with the complaint was a motion for immediate possession of the
properties. The NHA deposited the amount of P158,980.00 with the Philippine
National Bank, representing the "total market value" of the subject twenty five
hectares of land, pursuant to Presidential Decree No. 1224 which defines "the
policy on the expropriation of private property for socialized housing upon
payment of just compensation."
On January 17, 1978, respondent Judge issued the following Order:
Plaintiff having deposited with the Philippine National Bank, Heart Center
Extension Office, Diliman, Quezon City, Metro Manila, the amount of
P158,980.00 representing the total market value of the subject parcels of land,
let a writ of possession be issued.
SO ORDERED.
Pasig, Metro Manila, January 17, 1978.
(SGD) BUENAVENTURA S. GUERRERO
Judge
Petitioners filed a motion for reconsideration on the ground that they had been
deprived of the possession of their property without due process of law. This
was however, denied.
Hence, this petition challenging the orders of respondent Judge and assailing
the constitutionality of Pres. Decree No. 1224, as amended. Petitioners argue
that:
1) Respondent Judge acted without or in excess of his jurisdiction or with grave
abuse of discretion by issuing the Order of January 17, 1978 without notice
and without hearing and in issuing the Order dated June 28, 1978 denying the
motion for reconsideration.
2) Pres. Decree l224, as amended, is unconstitutional for being violative of the
due process clause, specifically:
a) The Decree would allow the taking of property regardless of size and no
matter how small the area to be expropriated;
b) "Socialized housing" for the purpose of condemnation proceeding, as
defined in said Decree, is not really for a public purpose;
c) The Decree violates procedural due process as it allows immediate taking
of possession, control and disposition of property without giving the owner his
day in court;
d) The Decree would allow the taking of private property upon payment of
unjust and unfair valuations arbitrarily fixed by government assessors;
e) The Decree would deprive the courts of their judicial discretion to determine
what would be the "just compensation" in each and every raise of
expropriation.
Indeed, the exercise of the power of eminent domain is subject to certain
limitations imposed by the constitution, to wit:
Private property shall not be taken for public use without just compensation
(Art. IV, Sec. 9);
No person shall be deprived of life, liberty, or property without due process of
law, nor shall any person be denied the equal protection of the laws (Art. IV,
sec. 1).
Nevertheless, a clear case of constitutional infirmity has to be established for
this Court to nullify legislative or executive measures adopted to implement
specific constitutional provisions aimed at promoting the general welfare.
Petitioners' objections to the taking of their property subsumed under the
headings of public use, just compensation, and due process have to be
balanced against competing interests of the public recognized and sought to
be served under declared policies of the constitution as implemented by
legislation.
1. Public use
a) Socialized Housing
Petitioners contend that "socialized housing" as defined in Pres. Decree No.
1224, as amended, for the purpose of condemnation proceedings is not "public
use" since it will benefit only "a handful of people, bereft of public character."
"Socialized housing" is defined as, "the construction of dwelling units for the
middle and lower class members of our society, including the construction of
the supporting infrastructure and other facilities" (Pres. Decree No. 1224, par.
1). This definition was later expanded to include among others:
a) The construction and/or improvement of dwelling units for the middle and
lower income groups of the society, including the construction of the supporting
infrastructure and other facilities;
b) Slum clearance, relocation and resettlement of squatters and slum dwellers
as well as the provision of related facilities and services;
c) Slum improvement which consists basically of allocating homelots to the
dwellers in the area or property involved, rearrangemeant and re-alignment of
existing houses and other dwelling structures and the construction and
provision of basic community facilities and services, where there are none,
such as roads, footpaths, drainage, sewerage, water and power system
schools, barangay centers, community centers, clinics, open spaces, parks,
playgrounds and other recreational facilities;
d) The provision of economic opportunities, including the development of
commercial and industrial estates and such other facilities to enhance the total
community growth; and
e) Such other activities undertaken in pursuance of the objective to provide
and maintain housing for the greatest number of people under Presidential
Decree No, 757, (Pres. Decree No. 1259, sec. 1)
The "public use" requirement for a and exercise of the power of eminent
domain is a flexible and evolving concept influenced by changing conditions.
In this jurisdiction, the statutory and judicial trend has been summarized as
follows:
The taking to be valid must be for public use. There was a time when it was
felt that a literal meaning should be attached to such a requirement. Whatever
project is undertaken must be for the public to enjoy, as in the case of streets
or parks. Otherwise, expropriation is not allowable. It is not anymore. As long
as the purpose of the taking is public, then the power of eminent domain comes
into play. As just noted, the constitution in at least two cases, to remove any
doubt, determines what is public use. One is the expropriation of lands to be
subdivided into small lots for resale at cost to individuals. The other is in the
transfer, through the exercise of this power, of utilities and other private
enterprise to the government. It is accurate to state then that at present
whatever may be beneficially employed for the general welfare satisfies the
requirement of public use [Heirs of Juancho Ardona v. Reyes, G.R. Nos.
60549, 60553-60555 October 26, 1983, 125 SCRA 220 (1983) at 234-5
quoting E. FERNANDO, THE CONSTITUTION OF THE PHILIPPINES 523-4,
(2nd ed., 1977) Emphasis supplied].
The term "public use" has acquired a more comprehensive coverage. To the
literal import of the term signifying strict use or employment by the public has
been added the broader notion of indirect public benefit or advantage. As
discussed in the above cited case of Heirs of Juancho Ardona:
The restrictive view of public use may be appropriate for a nation which
circumscribes the scope of government activities and public concerns and
which possesses big and correctly located public lands that obviate the need
to take private property for public purposes. Neither circumstance applies to
the Philippines. We have never been a laissez faire State. And the necessities
which impel the exertion of sovereign power are all too often found in areas of
scarce public land or limited government resources. (p. 231)
Specifically, urban renewal or redevelopment and the construction of low-cost
housing is recognized as a public purpose, not only because of the expanded
concept of public use but also because of specific provisions in the
Constitution. The 1973 Constitution made it incumbent upon the State to
establish, maintain and ensure adequate social services including housing
[Art. 11, sec. 7]. The 1987 Constitution goes even further by providing that:
The State shall promote a just and dynamic social order that will ensure the
prosperity and independence of the nation and free the people from poverty
through policies that provide adequate social services, promote full
employment, a rising standard of living and an improved quality of life for all.
[Art. II, sec. 9]
The state shall by law, and for the common good, undertake, in cooperation
with the private sector, a continuing program of urban land reform and housing
which will make available at affordable cost decent housing and basic services
to underprivileged and homeless citizens in urban centers and resettlement
areas. It shall also promote adequate employment opportunities to such
citizens. In the implementation of such program the State shall respect the
rights of small property owners. (Art. XIII, sec. 9, Emphaisis supplied)
Housing is a basic human need. Shortage in housing is a matter of state
concern since it directly and significantly affects public health, safety, the
environment and in sum, the general welfare. The public character of housing
measures does not change because units in housing projects cannot be
occupied by all but only by those who satisfy prescribed qualifications. A
beginning has to be made, for it is not possible to provide housing for are who
need it, all at once.
Population growth, the migration to urban areas and the mushrooming of
crowded makeshift dwellings is a worldwide development particularly in
developing countries. So basic and urgent are housing problems that the
United Nations General Assembly proclaimed 1987 as the "International Year
of Shelter for the Homeless" "to focus the attention of the international
community on those problems". The General Assembly is Seriously concerned
that, despite the efforts of Governments at the national and local levels and of
international organizations, the driving conditions of the majority of the people
in slums and squatter areas and rural settlements, especially in developing
countries, continue to deteriorate in both relative and absolute terms." [G.A.
Res. 37/221, Yearbook of the United Nations 1982, Vol. 36, p. 1043-4]
In the light of the foregoing, this Court is satisfied that "socialized housing" fans
within the confines of "public use". It is, particularly important to draw attention
to paragraph (d) of Pres. Dec. No. 1224 which opportunities inextricably linked
with low-cost housing, or slum clearance, relocation and resettlement, or slum
improvement emphasize the public purpose of the project.
In the case at bar, the use to which it is proposed to put the subject parcels of
land meets the requisites of "public use". The lands in question are being
expropriated by the NHA for the expansion of Bagong Nayon Housing Project
to provide housing facilities to low-salaried government employees. Quoting
respondents:
1. The Bagong Nayong Project is a housing and community development
undertaking of the National Housing Authority. Phase I covers about 60
hectares of GSIS property in Antipolo, Rizal; Phase II includes about 30
hectares for industrial development and the rest are for residential housing
development.
It is intended for low-salaried government employees and aims to provide
housing and community services for about 2,000 families in Phase I and about
4,000 families in Phase II.
It is situated on rugged terrain 7.5 kms. from Marikina Town proper; 22 Kms.
east of Manila; and is within the Lungs Silangan Townsite Reservation (created
by Presidential Proclamation No. 1637 on April 18, 1977).
The lands involved in the present petitions are parts of the expanded/additional
areas for the Bagong Nayon Project totalling 25.9725 hectares. They likewise
include raw, rolling hills. (Rollo, pp. 266-7)
The acute shortage of housing units in the country is of public knowledge.
Official data indicate that more than one third of the households nationwide do
not own their dwelling places. A significant number live in dwellings of
unacceptable standards, such as shanties, natural shelters, and structures
intended for commercial, industrial, or agricultural purposes. Of these
unacceptable dwelling units, more than one third is located within the National
Capital Region (NCR) alone which lies proximate to and is expected to be the
most benefited by the housing project involved in the case at bar [See, National
Census and Statistics Office, 1980 Census of Population and Housing].
According to the National Economic and Development Authority at the time of
the expropriation in question, about "50 per cent of urban families, cannot
afford adequate shelter even at reduced rates and will need government
support to provide them with social housing, subsidized either partially or
totally" [NEDA, FOUR YEAR DEVELOPMENT PLAN For 1974-1977, p. 357].
Up to the present, housing some remains to be out of the reach of a sizable
proportion of the population" [NEDA, MEDIUM-TERM PHILIPPINE
DEVELOPMENT PLAN 1987-1992, p. 240].
The mushrooming of squatter colonies in the Metropolitan Manila area as well
as in other cities and centers of population throughout the country, and, the
efforts of the government to initiate housing and other projects are matters of
public knowledge [See NEDA, FOUR YEAR DEVELOPMENT PLAN For 1974-
1977, pp. 357-361; NEDA, FIVE-YEAR PHILIPPINE DEVELOPMENT PLAN
1978-1982, pp. 215-228 NEDA, FIVE YEAR PHILIPPINE DEVELOPMENT
PLAN 1983-1987, pp. 109-117; NEDA, MEDIUM TERM PHILIPPINE
DEVELOPMENT PLAN 1987-1992, pp. 240-254].
b) Size of Property
Petitioners further contend that Pres. Decree 1224, as amended, would allow
the taking of "any private land" regardless of the size and no matter how small
the area of the land to be expropriated. Petitioners claim that "there are vast
areas of lands in Mayamot, Cupang, and San Isidro, Antipolo, Rizal hundred
of hectares of which are owned by a few landowners only. It is surprising
[therefore] why respondent National Housing Authority [would] include [their]
two man lots ..."
In J.M. Tuason Co., Inc. vs. Land Tenure Administration [G. R. No. L-21064,
February 18, 1970, 31 SCRA 413 (1970) at 428] this Court earlier ruled that
expropriation is not confined to landed estates. This Court, quoting the
dissenting opinion of Justice J.B.L. Reyes in Republic vs. Baylosis, [96 Phil.
461 (1955)], held that:
The propriety of exercising the power of eminent domain under Article XIII,
section 4 of our Constitution cannot be determined on a purely quantitative or
area basis. Not only does the constitutional provision speak of lands instead
of landed estates, but I see no cogent reason why the government, in its quest
for social justice and peace, should exclusively devote attention to conflicts of
large proportions, involving a considerable number of individuals, and eschew
small controversies and wait until they grow into a major problem before taking
remedial action.
The said case of J.M. Tuason Co., Inc. departed from the ruling in Guido vs.
Rural Progress Administration [84 Phil. 847 (1949)] which held that the test to
be applied for a valid expropriation of private lands was the area of the land
and not the number of people who stood to be benefited. Since then "there has
evolved a clear pattern of adherence to the "number of people to be benefited
test" " [Mataas na Lupa Tenants Association, Inc. v. Dimayuga, G.R. No.
32049, June 25,1984, 130 SCRA 30 (1984) at 39]. Thus, in Pulido vs. Court of
Appeals [G.R. No. 57625, May 3, 1983, 122 SCRA 63 (1983) at 73], this Court
stated that, "[i]t is unfortunate that the petitioner would be deprived of his
landholdings, but his interest and that of his family should not stand in the way
of progress and the benefit of the greater may only of the inhabitants of the
country."
The State acting through the NHA is vested with broad discretion to designate
the particular property/properties to be taken for socialized housing purposes
and how much thereof may be expropriated. Absent a clear showing of fraud,
bad faith, or gross abuse of discretion, which petitioners herein failed to
demonstrate, the Court will give due weight to and leave undisturbed the
NHA's choice and the size of the site for the project. The property owner may
not interpose objections merely because in their judgment some other property
would have been more suitable, or just as suitable, for the purpose. The right
to the use, enjoyment and disposal of private property is tempered by and has
to yield to the demands of the common good. The Constitutional provisions on
the subject are clear:
The State shall promote social justice in all phases of national development.
(Art. II, sec. 10)
The Congress shall give highest priority to the enactment of measures that
protect and enhance the right of all the people to human dignity, reduce social,
economic, and political inequalities, and remove cultural inequities by equitably
diffusing wealth and political power for the common good. To this end, the
State shall regulate the acquisition, ownership, use and disposition of property
and its increments. (Art, XIII, sec. 1)
Indeed, the foregoing provisions, which are restatements of the provisions in
the 1935 and 1973 Constitutions, emphasize:
...the stewardship concept, under which private property is supposed to be
held by the individual only as a trustee for the people in general, who are its
real owners. As a mere steward, the individual must exercise his rights to the
property not for his own exclusive and selfish benefit but for the good of the
entire community or nation [Mataas na Lupa Tenants Association, Inc. supra at
42-3 citing I. CRUZ, PHILIPPINE POLITICAL LAW, 70 (1983 ed.)].
2. Just Compensation
Petitioners maintain that Pres. Decree No. 1224, as amended, would allow the
taking of private property upon payment of unjust and unfair valuations
arbitrarily fixed by government assessors. In addition, they assert that the
Decree would deprive the courts of their judicial discretion to determine what
would be "just compensation".
The foregoing contentions have already been ruled upon by this Court in the
case of Ignacio vs. Guerrero (G.R. No. L-49088, May 29, 1987) which,
incidentally, arose from the same expropriation complaint that led to this
instant petition. The provisions on just compensation found in Presidential
Decree Nos. 1224, 1259 and 1313 are the same provisions found in
Presidential Decree Nos. 76, 464, 794 and 1533 which were declared
unconstitutional in Export Processing Zone All thirty vs. Dulay (G.R. No. 5960
April 29, 1987) for being encroachments on prerogatives.
This Court abandoned the ruling in National Housing Authority vs. Reyes [G.R.
No. 49439, June 29,1983, 123 SCRA 245 (1983)] which upheld Pres. Decree
No. 464, as amended by - Presidential Decree Nos. 794, 1224 and 1259.
In said case of Export Processing Zone Authority, this Court pointed out that:
The basic unfairness of the decrees is readily apparent.
Just compensation means the value of the property at the time of the taking. It
means a fair and full equivalent for the loss sustained. ALL the facts as to the
condition of the property and its surroundings, its improvements and
capabilities, should be considered.
xxx xxx xxx
Various factors can come into play in the valuation of specific properties
singled out for expropriation. The values given by provincial assessors are
usually uniform for very wide areas covering several barrios or even an entire
total with the exception of the poblacion. Individual differences are never taken
into account. The value of land is based on such generalities as its possible
cultivation for rice, corn, coconuts, or other crops. Very often land described
as directional has been cultivated for generations. Buildings are described in
terms of only two or three classes of building materials and estimates of areas
are more often inaccurate than correct. Tax values can serve as guides but
cannot be absolute substitutes for just compensation.
To say that the owners are estopped to question the valuations made by
assessors since they had the opportunity to protest is illusory. The
overwhelming mass of landowners accept unquestioningly what is found in the
tax declarations prepared by local assessors or municipal clerks for them.
They do not even look at, much less analyze, the statements. The Idea of
expropriation simply never occurs until a demand is made or a case filed by
an agency authorized to do so. (pp. 12-3)
3. Due Process
Petitioners assert that Pres. Decree 1224, as amended, violates procedural
due process as it allows immediate taking of possession, control and
disposition of property without giving the owner his day in court. Respondent
Judge ordered the issuance of a writ of possession without notice and without
hearing.
The constitutionality of this procedure has also been ruled upon in the Export
Processing Zone Authority case, viz:
It is violative of due process to deny to the owner the opportunity to prove that
the valuation in the tax documents is unfair or wrong. And it is repulsive to
basic concepts of justice and fairness to allow the haphazard work of minor
bureaucrat or clerk to absolutely prevail over the judgment of a court
promulgated only after expert commissioners have actually viewed the
property, after evidence and arguments pro and con have been presented, and
after all factors and considerations essential to a fair and just determination
have been judiciously evaluated. (p. 13)
On the matter of the issuance of a writ of possession, the ruling in
the Ignacio case is reiterated, thus:
[I]t is imperative that before a writ of possession is issued by the Court in
expropriation proceedings, the following requisites must be met: (1) There
must be a Complaint for expropriation sufficient in form and in substance; (2)
A provisional determination of just compensation for the properties sought to
be expropriated must be made by the trial court on the basis of judicial (not
legislative or executive) discretion; and (3) The deposit requirement under
Section 2, Rule 67 must be complied with. (p. 14)
This Court holds that "socialized housing" defined in Pres. Decree No. 1224,
as amended by Pres. Decree Nos. 1259 and 1313, constitutes "public use" for
purposes of expropriation. However, as previously held by this Court, the
provisions of such decrees on just compensation are unconstitutional; and in
the instant case the Court finds that the Orders issued pursuant to the corollary
provisions of those decrees authorizing immediate taking without notice and
hearing are violative of due process.
WHEREFORE, the Orders of the lower court dated January 17, 1978 and June
28, 1978 issuing the writ of possession on the basis of the market value
appearing therein are annulled for having been issued in excess of jurisdiction.
Let this case be remanded to the court of origin for further proceedings to
determine the compensation the petitioners are entitled to be paid. No costs.
SO ORDERED.
DELA PAZ MASIKIP VS JUDGE LEGASPI
Where the taking by the State of private property is done for the benefit of a
small community which seeks to have its own sports and recreational facility,
notwithstanding that there is such a recreational facility only a short distance
away, such taking cannot be considered to be for public use. Its expropriation
is not valid. In this case, the Court defines what constitutes a genuine necessity
for public use.
This petition for review on certiorari assails the Decision1 of the Court of
Appeals dated October 31, 1997 in CA-G.R. SP No. 41860 affirming the
Order2 of the Regional Trial Court, Branch 165, Pasig City, dated May 7, 1996
in S.C.A. No. 873. Likewise assailed is the Resolution3 of the same court dated
November 20, 1998 denying petitioner’s Motion for Reconsideration.
The facts of the case are:
Petitioner Lourdes Dela Paz Masikip is the registered owner of a parcel of land
with an area of 4,521 square meters located at Pag-Asa, Caniogan, Pasig City,
Metro Manila.
In a letter dated January 6, 1994, the then Municipality of Pasig, now City of
Pasig, respondent, notified petitioner of its intention to expropriate a 1,500
square meter portion of her property to be used for the "sports development
and recreational activities" of the residents of Barangay Caniogan. This was
pursuant to Ordinance No. 42, Series of 1993 enacted by the
then Sangguniang Bayan of Pasig.
Again, on March 23, 1994, respondent wrote another letter to petitioner, but
this time the purpose was allegedly "in line with the program of the Municipal
Government to provide land opportunities to deserving poor sectors of our
community."
On May 2, 1994, petitioner sent a reply to respondent stating that the intended
expropriation of her property is unconstitutional, invalid, and oppressive, as the
area of her lot is neither sufficient nor suitable to "provide land opportunities to
deserving poor sectors of our community."
In its letter of December 20, 1994, respondent reiterated that the purpose of
the expropriation of petitioner’s property is "to provide sports and recreational
facilities to its poor residents."
Subsequently, on February 21, 1995, respondent filed with the trial court a
complaint for expropriation, docketed as SCA No. 873. Respondent prayed
that the trial court, after due notice and hearing, issue an order for the
condemnation of the property; that commissioners be appointed for the
purpose of determining the just compensation; and that judgment be rendered
based on the report of the commissioners.
On April 25, 1995, petitioner filed a Motion to Dismiss the complaint on the
following grounds:
I in its Order of July 31, 1996. Forthwith, it appointed the City Assessor and City
PLAINTIFF HAS NO CAUSE OF ACTION FOR THE EXERCISE OF THE
POWER OF EMINENT DOMAIN, CONSIDERING THAT:
(A) THERE IS NO GENUINE NECESSITY FOR THE TAKING OF THE
PROPERTY SOUGHT TO BE EXPROPRIATED.
(B) PLAINTIFF HAS ARBITRARILY AND CAPRICIOUSLY CHOSEN THE
PROPERTY SOUGHT TO BE EXPROPRIATED.
(C) EVEN ASSUMING ARGUENDO THAT DEFENDANT’S PROPERTY MAY
BE EXPROPRIATED BY PLAINTIFF, THE FAIR MARKET VALUE OF THE
PROPERTY TO BE EXPROPRIATED FAR EXCEEDS SEVENTY-EIGHT
THOUSAND PESOS (P78,000.00)
II
PLAINTIFF’S COMPLAINT IS DEFECTIVE IN FORM AND SUBSTANCE,
CONSIDERING THAT:
(A) PLAINTIFF FAILS TO ALLEGE WITH CERTAINTY THE PURPOSE OF
THE EXPROPRIATION.
(B) PLAINTIFF HAS FAILED TO COMPLY WITH THE PREREQUISITES
LAID DOWN IN SECTION 34, RULE VI OF THE RULES AND REGULATIONS
IMPLEMENTING THE LOCAL GOVERNMENT CODE; THUS, THE INSTANT
EXPROPRIATION PROCEEDING IS PREMATURE.
III
THE GRANTING OF THE EXPROPRIATION WOULD VIOLATE SECTION
261 (V) OF THE OMNIBUS ELECTION CODE.
IV
PLAINTIFF CANNOT TAKE POSSESSION OF THE SUBJECT PROPERTY
BY MERELY DEPOSITING AN AMOUNT EQUAL TO FIFTEEN PERCENT
(15%) OF THE VALUE OF THE PROPERTY BASED ON THE CURRENT
TAX DECLARATION OF THE SUBJECT PROPERTY.4
On May 7, 1996, the trial court issued an Order denying the Motion to
Dismiss,5 on the ground that there is a genuine necessity to expropriate
the property for the sports and recreational activities of the residents of
Pasig. As to the issue of just compensation, the trial court held that the same
is to be determined in accordance with the Revised Rules of Court.
Petitioner filed a motion for reconsideration but it was denied by the trial court
Treasurer of Pasig City as commissioners to ascertain the just compensation.
This prompted petitioner to file with the Court of Appeals a special civil action
for certiorari, docketed as CA-G.R. SP No. 41860. On October 31, 1997, the
Appellate Court dismissed the petition for lack of merit. Petitioner’s Motion for
Reconsideration was denied in a Resolution dated November 20, 1998.
Hence, this petition anchored on the following grounds:
THE QUESTIONED DECISION DATED 31 OCTOBER 1997 (ATTACHMENT
"A") AND RESOLUTION DATED 20 NOVEMBER 1998 (ATTACHMENT "B")
ARE CONTRARY TO LAW, THE RULES OF COURT AND
JURISPRUDENCE CONSIDERING THAT:
I
A. THERE IS NO EVIDENCE TO PROVE THAT THERE IS GENUINE
NECESSITY FOR THE TAKING OF THE PETITIONER’S PROPERTY.
B. THERE IS NO EVIDENCE TO PROVE THAT THE PUBLIC USE
REQUIREMENT FOR THE EXERCISE OF THE POWER OF EMINENT
DOMAIN HAS BEEN COMPLIED WITH.
C. THERE IS NO EVIDENCE TO PROVE THAT RESPONDENT CITY OF
PASIG HAS COMPLIED WITH ALL CONDITIONS PRECEDENT FOR THE
EXERCISE OF THE POWER OF EMINENT DOMAIN.
THE COURT A QUO’S ORDER DATED 07 MAY 1996 AND 31 JULY 1996,
WHICH WERE AFFIRMED BY THE COURT OF APPEALS, EFFECTIVELY
AMOUNT TO THE TAKING OF PETITIONER’S PROPERTY WITHOUT DUE
PROCESS OF LAW:
II
THE COURT OF APPEALS GRAVELY ERRED IN APPLYING OF RULE ON
ACTIONABLE DOCUMENTS TO THE DOCUMENTS ATTACHED TO
RESPONDENT CITY OF PASIG’S COMPLAINT DATED 07 APRIL 1995 TO
JUSTIFY THE COURT A QUO’S DENIAL OF PETITIONER’S RESPONSIVE
PLEADING TO THE COMPLAINT FOR EXPROPRIATION (THE MOTION TO
DISMISS DATED 21 APRIL 1995).
III
THE COURT OF APPEALS GRAVELY ERRED IN APPLYING THE RULE ON
HYPOTHETICAL ADMISSION OF FACTS ALLEGED IN A COMPLAINT
CONSIDERING THAT THE MOTION TO DISMISS FILED BY PETITIONER
IN THE EXPROPRIATION CASE BELOW WAS THE RESPONSIVE
PLEADING REQUIRED TO BE FILED UNDER THE THEN RULE 67 OF THE
RULES OF COURT AND NOT AN ORIDNARY MOTION TO DISMISS
UNDER RULE 16 OF THE RULES OF COURT.
The foregoing arguments may be synthesized into two main issues – one
substantive and one procedural. We will first address the procedural issue.
Petitioner filed her Motion to Dismiss the complaint for expropriation on April
25, 1995. It was denied by the trial court on May 7, 1996. At that time, the rule
on expropriation was governed by Section 3, Rule 67 of the Revised Rules of
Court which provides:
"SEC. 3. Defenses and objections. – Within the time specified in the summons,
each defendant, in lieu of an answer, shall present in a single motion to dismiss
or for other appropriate relief, all his objections and defenses to the right of the
plaintiff to take his property for the use or purpose specified in the complaint.
All such objections and defenses not so presented are waived. A copy of the
motion shall be served on the plaintiff’s attorney of record and filed with the
court with proof of service."
The motion to dismiss contemplated in the above Rule clearly constitutes the
responsive pleading which takes the place of an answer to the complaint for
expropriation. Such motion is the pleading that puts in issue the right of the
plaintiff to expropriate the defendant’s property for the use specified in the
complaint. All that the law requires is that a copy of the said motion be served
on plaintiff’s attorney of record. It is the court that at its convenience will set
the case for trial after the filing of the said pleading.6
The Court of Appeals therefore erred in holding that the motion to dismiss filed
by petitioner hypothetically admitted the truth of the facts alleged in the
complaint, "specifically that there is a genuine necessity to expropriate
petitioner’s property for public use." Pursuant to the above Rule, the motion is
a responsive pleading joining the issues. What the trial court should have done
was to set the case for the reception of evidence to determine whether there
is indeed a genuine necessity for the taking of the property, instead of
summarily making a finding that the taking is for public use and appointing
commissioners to fix just compensation. This is especially so considering that
the purpose of the expropriation was squarely challenged and put in issue by
petitioner in her motion to dismiss.
Significantly, the above Rule allowing a defendant in an expropriation case to
file a motion to dismiss in lieu of an answer was amended by the 1997 Rules
of Civil Procedure, which took effect on July 1, 1997. Section 3, Rule 67 now
expressly mandates that any objection or defense to the taking of the property
of a defendant must be set forth in an answer.
The fact that the Court of Appeals rendered its Decision in CA-G.R. SP No.
41860 on October 31, after the 1997 Rules of Civil Procedure took effect, is of
no moment. It is only fair that the Rule at the time petitioner filed her motion to
dismiss should govern. The new provision cannot be applied retroactively to
her prejudice.
We now proceed to address the substantive issue.
In the early case of US v. Toribio,7 this Court defined the power of eminent
domain as "the right of a government to take and appropriate private property
to public use, whenever the public exigency requires it, which can be done only
on condition of providing a reasonable compensation therefor." It has also
been described as the power of the State or its instrumentalities to take private
property for public use and is inseparable from sovereignty and inherent in
government.8
The power of eminent domain is lodged in the legislative branch of the
government. It delegates the exercise thereof to local government units, other
public entities and public utility corporations,9 subject only to Constitutional
limitations. Local governments have no inherent power of eminent domain and
may exercise it only when expressly authorized by statute.10 Section 19 of the
Local Government Code of 1991 (Republic Act No. 7160) prescribes the
delegation by Congress of the power of eminent domain to local government
units and lays down the parameters for its exercise, thus:
"SEC. 19. Eminent Domain. – A local government unit may, through its chief
executive and acting pursuant to an ordinance, exercise the power of eminent
domain for public use, purpose or welfare for the benefit of the poor and the
landless, upon payment of just compensation, pursuant to the provisions of the
Constitution and pertinent laws: Provided, however, That, the power of
eminent domain may not be exercised unless a valid and definite offer has
been previously made to the owner and such offer was not
accepted: Provided, further, That, the local government unit may immediately
take possession of the property upon the filing of expropriation proceedings
and upon making a deposit with the proper court of at least fifteen percent
(15%) of the fair market value of the property based on the current tax
declaration of the property to be expropriated: Provided, finally, That, the
amount to be paid for expropriated property shall be determined by the proper
court, based on the fair market value at the time of the taking of the property."
Judicial review of the exercise of eminent domain is limited to the following
areas of concern: (a) the adequacy of the compensation, (b) the necessity of
the taking, and (c) the public use character of the purpose of the taking.11
In this case, petitioner contends that respondent City of Pasig failed to
establish a genuine necessity which justifies the condemnation of her property.
While she does not dispute the intended public purpose, nonetheless, she
insists that there must be a genuine necessity for the proposed use and
purposes. According to petitioner, there is already an established sports
development and recreational activity center at Rainforest Park in Pasig City,
fully operational and being utilized by its residents, including those from
Barangay Caniogan. Respondent does not dispute this. Evidently, there is no
"genuine necessity" to justify the expropriation.
The right to take private property for public purposes necessarily originates
from "the necessity" and the taking must be limited to such necessity. In City
of Manila v. Chinese Community of Manila,12 we held that the very
foundation of the right to exercise eminent domain is a genuine
necessity and that necessity must be of a public character. Moreover, the
ascertainment of the necessity must precede or accompany and not follow, the
taking of the land. In City of Manila v. Arellano Law College,13 we ruled that
"necessity within the rule that the particular property to be expropriated must
be necessary, does not mean an absolute but only a reasonable or practical
necessity, such as would combine the greatest benefit to the public with the
least inconvenience and expense to the condemning party and the property
owner consistent with such benefit."
Applying this standard, we hold that respondent City of Pasig has failed to
establish that there is a genuine necessity to expropriate petitioner’s property.
Our scrutiny of the records shows that the Certification 14 issued by the
Caniogan Barangay Council dated November 20, 1994, the basis for the
passage of Ordinance No. 42 s. 1993 authorizing the expropriation, indicates
that the intended beneficiary is the Melendres Compound Homeowners
Association, a private, non-profit organization, not the residents of Caniogan.
It can be gleaned that the members of the said Association are desirous of
having their own private playground and recreational facility. Petitioner’s lot is
the nearest vacant space available. The purpose is, therefore, not clearly and
categorically public. The necessity has not been shown, especially considering
that there exists an alternative facility for sports development and community
recreation in the area, which is the Rainforest Park, available to all residents
of Pasig City, including those of Caniogan.
The right to own and possess property is one of the most cherished rights of
men. It is so fundamental that it has been written into organic law of every
nation where the rule of law prevails. Unless the requisite of genuine necessity
for the expropriation of one’s property is clearly established, it shall be the duty
of the courts to protect the rights of individuals to their private property.
Important as the power of eminent domain may be, the inviolable sanctity
which the Constitution attaches to the property of the individual requires not
only that the purpose for the taking of private property be specified. The
genuine necessity for the taking, which must be of a public character, must
also be shown to exist.
WHEREFORE, the petition for review is GRANTED. The challenged Decision
and Resolution of the Court of Appeals in CA-G.R. SP No. 41860
are REVERSED. The complaint for expropriation filed before the trial court by
respondent City of Pasig, docketed as SCA No. 873, is ordered DISMISSED.
SO ORDERED.
DE KNECHT VS BAUTISTA
This is a petition for certiorari and prohibition filed by Cristina de Knecht
against the Honorable Pedro JL. Bautista, as Judge presiding over Branch III
of the Court of First Instance of Rizal (Pasay City), and the Republic of the
Philippines pines seeking the following relief:
WHEREFORE, petitioner respectfully prays that judgment be rendered
annulling the order for immediate possession issued by respondent court in
the expropriation proceedings and commanding respondents to desist from
further proceedings in the expropriation action or the order for immediate
possession issued in said action, with costs.
Petitioner prays that a restraint order or writ of preliminary injunction be
issued ex-parte enjoining respondents, their representative representative and
agents from enforcing the here questioned order for mediate posession
petitioner offering to post a bond executed to the parties enjoined in an amount
to be fixed by the Court to the effect that she will pay to such parties all
damages which they may sustain by reason of the injunction if the Court should
finally decide she is not entitled there
She prays for such other remedy as the Court may deem just and equitable in
the premises.
Quezon City for July 1979. 1
The petitioner alleges that than ten (10) years ago, the government through
the Department of Public Workmen's and Communication (now MPH)
prepared a to Epifanio de los Santos Avenue (EDSA) to Roxas Boulevard; that
the proposed extension, an adjunct of building program, the Manila — Cavite
Coastal Read Project, would pass through Cuneta Avenue up to Roxas
Boulevard that this route would be a straight one taking into account the
direction of EDSA; that preparation to the implementation of the aforesaid plan,
or on December 13, 1974, then Secretary Baltazar Aquino of the Department
of Public Highways directed the City Engineer of Pasay City not to issue
temporary or permanent permits for the construction and/or improvement of
buildings and other structures located within the proposed extension through
Cuneta Avenue that shortly thereafter the Department of Public Highways
decided to make the proposed extension go through Fernando Rein and Del
Pan Streets which are lined with old substantial houses; that upon learning of
the changed the owners of the residential houses that would be affected, the
herein petitioner being one of them, filed on April 15, 1977 a formal petition to
President Ferdinand E. Marcos asking him to order the Ministry of Public
Highways to adoption, the original plan of making the extension of EDSA
through Araneta Avenue instead of the new plan going through Fernando Rein
and Del Pan Streets; that President Marcos directed then Minister Baltazar
Aquino to explain within twenty-four (24) hours why the proposed project
should not be suspended; that on April 21, 1977 then Minister Aquino
submitted his explanation defending the new proposed route; that the
President then referred the matter to the Human Settlements Commission for
investigation and recommendation; that after formal hearings to which all the
parties proponents and oppositors were given full opportunity to ventilate their
views and to present their evidence, the Settlements Commission submitted a
report recommending the reversion of the extension of EDSA to the original
plan passing through Cuneta Avenue; and that notwithstanding the said report
and recommendation, the Ministry of Public Highways insisted on
implementing the plan to make the extension of EDSA go through Fernando
Rein and Del Pan Streets. 2
In February 1979, the government filed in the Court of First Instance of Rizal,
Branch III, Pascual City presided by the respondent Judge, a complaint for
expropriation against the owners of the houses standing along Fernando Rein
and Del Pan Streets, among them the herein petitioner. The complaint was
docketed as Civil Case No. 7001-P and entitled "Republic of the Philippines
vs. Concepcion Cabarrus Vda. de Santos, etc."
The herein petitioner filed a motion to dismiss dated March 19, 1979 on the
following grounds:
(a) court had no jurisdiction over the subject matter of the action because the
complaint failed to allege that the instant project for expropriation bore the
approval of the Ministry of Human Settlements and the Metro Manila
Government nor pursuant to Presidential Decrees Nos. 824, 1396 and 1517;
(b) The choice of properties to be expropriated made by the Ministry of Public
Highways was arbitrary and erroneous;
(c) The complaint was premature as the plaintiff never really had gone through
serious negotiations with the defendant for the purchase of her property; and
(d) The complaint relied on an arbitrary and erroneous valuation of properties
and disregarded consequential damages.
An urgent motion dated March 28, 1979 for preliminary junction was also filed.
In June 1979 the Republic of the Philippines filed a motion for the issuance of
a writ of possession of the property sought to be expropriated on the ground
that said Republic had made the required deposit with the Philippine National
Bank.
The respondent judge issued a writ of possession dated June 14, 1979
authorizing the Republic of the Philippines to take and enter upon the
possession of the properties sought be condemned. 3
The petitioner contends that "Respondent court lacked or exceeded its
jurisdiction or gravely abused its discretion in issuing the order to take over
and enter upon the possession of the properties sought to be expropriated-
petitioner having raised a constitutional question which respondent court must
resolve before it can issue an order to take or enter upon the possession of
properties sought to be expropriated." 4
The petitioner assails the choice of the Fernando Rein and Del Pan Streets
route on the following grounds:
The choice of property to be expropriated cannot be without rhyme or reason.
The condemnor may not choose any property it wants. Where the legislature
has delegated a power of eminent do-main, the question of the necessity for
taking a particular fine for the intended improvement rests in the discretion of
the grantee power subject however to review by the courts in case of fraud,
bad faith or gross abuse of discretion. The choice of property must be
examined for bad faith, arbitrariness or capriciousness and due process
determination as to whether or not the proposed location was proper in terms
of the public interests. Even the claim of respondent's Secretary Baltazar
Aquino that there would be a saving of P2 million under his new plan must be
reviewed for it bears no relation to the site of the proposed EDSA extension
As envisioned by the government, the EDSA extension would be linked to the
Cavite Expressway. Logically then, the proposed extension must point to the
south and not detour to the north.
Also, the equal protection of the law must be accorded, not on to the motel
owners along Cuneta (Fisher) Avenue, but also to the owners of solid and
substantial homes and quality residential lands occupied for generations. 5
The respondents maintain that the respondent court did not act without
jurisdiction or exceed its jurisdiction or gravel abuse its discretion in issuing the
order dated June 14, 1979 authorizing the Republic of the Philippines to take
over and enter the possession of the properties sought to be appropriated
because the Republic has complied with all the statutory requirements which
entitled it to have immediate possession of the properties involved. 6
Defending the change of the EDSA extension to pass through Fernando Rein
— Del Pan Streets, the respondents aver:
'There was no sudden change of plan in the selection of the site of the EDSA
Extension to Roxas Blvd. As a matter of fact, when the Ministry of Public
Highways decided to change the site of EDSA Ex- tension to Roxas Boulevard
from Cuneta Avenue to the Del Pan — Fernando Item Streets the residents of
Del Pan and Fernando Rein Streets who were to be adversely affected by the
construction of ED — SA Extension to Roxas Boulevard along Del Pan -
Fernando Rein Streets were duly notified of such proposed project. Petitioner
herein was one of those notified Annex 1). It be conceded that the Cuneta
Avenue line goes southward and outward (from the city center while the Del
Pan — Fernando Rein Streets line follows northward and inward direction. It
must be stated that both lines, Cuneta Avenue and Del Pan — Fernando Rein
Streets lines, meet satisfactorily planning and design criteria and therefore are
both acceptable. In selecting the Del Pan — Fernando Rein Streets line the
Government did not do so because it wanted to save the motel located along
Cuneta Avenue but because it wanted to minimize the social impact factor or
problem involved. 7
There is no question as to the right of the Republic of the Philippines to take
private property for public use upon the payment of just compensation. Section
2, Article IV of the Constitution of the Philippines provides: "Private property
shall not be taken for public use without just compensation."
It is recognized, was, that the government may not capriciously or arbitrarily'
choose what private property should be taken. In J. M. Tuazon & Co., Inc. vs.
Land Tenure administration 31 SCRA, 413, 433, the Supreme Court said:
For the purpose of obtaining a judicial declaration of nullity, it is enough if the
respondents or defendants named be the government officials who would give
operation and effect to official action allegedly tainted with unconstitutionality.
Thus, where the statute assailed was sought to be enforced by the Land
Tenure Administrative and the Solicitor General, the two officials may be made
respondents in the action without need of including the Executive Secretary as
a party in the action
The failure to meet tile exacting standard of due process would likewise
constitute a valid objection to the exercise of this congressional power. That
was so intimated in the above leading Guido Case. There was an earlier
pronouncement to that effect in a decision rendered long before the adoption
of the Constitution under the previous organic law then in force, while the
Philippines was still an unincorporated territory of the United States.
It is obvious then that a landowner is covered by the mantle of protection due
process affords. It is a mandate of reason. It frowns on arbitrariness, it is the
antithesis of any governmental act that smacks of whim or caprice. It negates
state power to act in an impressive manner. It is, as had been stressed so
often, the embodiment of the sporting Idea of fair play. In that sense, it stands
as a guaranty of justice. That is the standard that must be met by any
government talk agency in the exercise of whatever competence is entrusted
to it. As was so emphatically stressed by the present Chief Justice, 'Acts of
Congress, as well as those of the Executive, can deny due process only under
pain of nullity, ...
In the same case the Supreme Court concluded:
With due recognition then of the power of Congress to designate the particular
property to be taken and how much thereof may be condemned in the exercise
of the power of expropriation, it is still a judicial question whether in the
exercise of such competence, the party adversely affected is the victim of
partiality and prejudice. That the equal protection clause will not allow. (p. 436)
In the instant case, it is a fact that the Department of Public Highways originally
establish the extension of EDSA along Cuneta Avenue. It is to be presumed
that the Department of Public Highways made studies before deciding on
Cuneta Avenue. It is indeed odd why suddenly the proposed extension of
EDSA to Roxas Boulevard was changed to go through Fernando Rein-Del Pan
Streets which the Solicitor General con- cedes "... the Del Pan — Fernando
Rein Streets line follows northward and inward direction. While admit "that both
lines, Cuneta Avenue and Del Pan — Fernando Rein Streets lines, meet
satisfactorily planning and design criteria and therefore are both acceptable ...
the Solicitor General justifies the change to Del Pan — Fernando Rein Streets
on the ground that the government "wanted to the social impact factor or
problem involved." 8
It is doubtful whether the extension of EDSA along Cuneta Avenue can be
(1) Number of property owners:
objected to on the ground of social impact. The improvements and buildings
along Cuneta Avenue to be affected by the extension are mostly motels. Even
granting, arguendo, that more people be affected, the Human Setlements Alignment 1 73
Commission has suggested coordinative efforts of said Commission with the
National Housing Authority and other government agencies in the relocation
Alignment 2 49
and resettlement of those adversely affected. 9

The Human Settlements Commission considered conditionality social impact (2) Incidence of non-resident owner:
and cost. The pertinent portion of its report reads:

Comparison of Alignment 1 (Cuneta Fisher) and Alignment 2 (Del Pan — Alignment 1 25 (34.3%)
Fernando Rein) based on the criteria of functionality, social impact and cost

A. Functionality Alignment 2 31 (63.3%)

This issue has to do with the physical design of a highway, inclusive of

engineering factors and management consideration (3) Number of actually affected residents:

From both engineering and traffic management viewpoints, it is incontestable

that the straighter and shorter alignment is preferable to one which is not. Alignment 1 547
Systematically and diagramatically, alignment 1 is straighter than alignment 2.
In fact, Director Antonio Goco of the Department of Public Highways admitted Alignment 2 290 (estimated)
that alignment 2 is three (3) meters longer than alignment 1. Furthermore,
alignment 1 is definitely the contour conforming alignment to EDSA whereas
alignment 2 affords a greater radius of unnatural curvature as it hooks slightly (4) Average income of residents:
northward before finally joining with Roxas Boulevard. Besides, whichever
alignment is adopted, there will be a need for a grade separator or interchange Alignment 2:
at the Roxas Boulevard junction. From the of highway design, it is imperative
to have interchanges as far apart as possible to avoid traffic from slow down Below P350 P350 – P500 P 500 – P 800 P800 – Pl000 Over P1000 16 (28%)
in negotiating the slope on the interchanges. Up north would be the future 24 (42%) 0 (14%) 5 (9%) 4 (7%)
Buendia Avenue- Roxas Boulevard Interchange. Consequently, alignment 1
which is farther away from Buendia Avenue than alignment 2 is the better Alignment 2: Figures not available.
alignment from the viewpoint of the construction of the grade separator or
It is evident from the foregoing figures that social impact is greater on the
interchange, a necessary corollary to the extension project. Finally, the choice
residents of alignment 1.
of alignment 2 which is longer by three (3) meters than alignment 1 could have
serious repercussions on our energy conservation drive and from the larger C. Cost
perspective of the national economy, considering that, by ad- statistical data,
no less than fifty thousand (50,000) vehicles a day will have to traverse an The resolution of the issue of right-of-way acquisition cost depends to a large
extra three (3) meters. extend on the nature of the properties to be affected and the relative value
thereof. A comparison of alignment 1 and alignment 2 on these two points has
B. Social Impact produced the following results:
The following factual data which have a direct bearing on the issue of social (1) Nature and number of properties involved:
impact were culled from the records of the case and the evidence presented
during the public hearings: Line I Line 2
 1. The EDSA extension to Roxas Boulevard is necessary and desirable from
Lots Lots Improvement Lots Improvements
the strictly technical viewpoint and the overall perspective of the Metro Manila
transport system.
Residential 41 46 38 34
2. The right-of-way acquisition cost difference factor is so minimal as to
influence in any way the choice of either alignment as the extension of EDSA
Commercial 25 24 11 13 to Roxas Boulevard.

3. The negotiated sale approach to compensation as proposed should apply

Industrial 5 3 1 1 to a whichever alignment is selected.

4. The factor of functionality states strongly against the selection of alignment

Church 1 1 1 1
2 while the factor of great social and economic impact bears grieviously on the
residents of alignment 1.
Educational _ _ _ _
The course of the decision in this case consequently boils down to the soul-
searching and heart-rending choice between people on one hand and
TOTAL 72 75 51 49 progress and development on the other. In deciding in favor of the latter, the
Hearing Board is not unmindful that progress and development are carried out
(2) Relative value of properties affected: by the State precisely and ultimately for the benefit of its people and therefore,
recommends the reverend of the extension project to alignment 1. However,
Lots Improvements Total before the Government, through its implementing agencies, particularly the
Department of Public Highways, undertakes the actual step of appropriating
properties on alignment I to pave the way for the extension the hearing Board
Alignment 1 P9,300,136 P5,928,680 P15,228,816
recommends the following as absolute. binding and imperative preconditions:

Alignment 2 8,314,890 6,644,130 14,959,020
Difference P269,796
It is obvious from the immediately table that the right- of-way acquisition cost
difference factor of the two alignment is only P269,196 and not P2M as alleged
by the Department of Public Highways and P1.2M as claimed by the
oppositors. Consequently, the cost difference factor between the two
alignments is so minimal as to be practically nil in the consideration of the
issues involved in this case. 10
After considering all the issues and factors, the Human Setlements
Commission made the following recommendations:
Weighing in the balance the issues and factors of necessity, functionality,
impact, cost and property valuation as basis for scheme of compensation to
be adopted in the instant case, the Hearing Board takes cognizance of the
following points:
1. The preparation, and ignore importantly, the execution of a comprehensive
and detailed plan for the relocation and resettlement of the adversely and
genuinely affected residents of alignment I which will necessitate the
coordinative efforts of such agencies as the Human Settlements Commission,
the National Housing Authority and other such governmental agencies. To be
concrete, a self sufficient community or human settlement complete with
infrastructure capture market, school, church and industries for employment
should be set up to enable the affected residents of alignment 1 to maintain,
their present social and economic standing.
2. The prompt payment of fair and just compensation through the negotiated
sale approach.
Finally, the Hearing Board recommends that the Department of Public
Highways conduct public hearings before undertaking on future expropriations
of private properties for public use.
Respectfully submitted to the Human Settlements Commission
Commissioners for consideration, final disposition and endorsement thereof to
His Excellency, the President of the Philippines.
Makati, Metro Manila, July 4, 1977. 11
... From all the foregoing, the facts of record and recommendations of the
Human Settlements Commission, it is clear that the choice of Fernando Rein
— Del Pan Streets as the line through which the Epifanio de los Santos Avenue
should be extended to Roxas Boulevard is arbitrary and should not receive
judicial approval. The respondent judge committed a grave abuse of discretion
in allowing the Republic of the Philippines to take immediate possession of the
properties sought to be expropriated.
WHEREFORE, the petition for certiorari and prohibition is hereby granted. The
order of June 14, 1979 authorizing the Republic of the Philippines to take or
enter upon the possession of the properties sought to be condemned is set
aside and the respondent Judge is permanently enjoined from taking any
further action on Civil Case No. 7001-P, entitled "Republic of the Philippines
vs. Concepcion Cabarrus Vda. de Santos, etc." except to dismiss said case.
SO ORDERED.
REPUBLIC VS DE KNECHT
The issue posed in this case is whether an expropriation proceeding that was
determined by a final judgment of this Court may be the subject of a
subsequent legislation for expropriation.
On February 20, 1979 the Republic of the Philippines filed in the Court of First
Instance (CFI) of Rizal in Pasay City an expropriation proceedings against the
owners of the houses standing along Fernando Rein-Del Pan streets among
them Cristina De Knecht (de Knecht for short) together with Concepcion
Cabarrus, and some fifteen other defendants, docketed as Civil Case No.
7001-P.
On March 19, 1979 de Knecht filed a motion to dismiss alleging lack of
jurisdiction, pendency of appeal with the President of the Philippines,
prematureness of complaint and arbitrary and erroneous valuation of the
properties. On March 29, 1979 de Knecht filed an ex parte urgent motion for
the issuance by the trial court of a restraining order to restrain the Republic
from proceeding with the taking of immediate possession and control of the
property sought to be condemned. In June, 1979 the Republic filed a motion
for the issuance of a writ of possession of the property to be expropriated on
the ground that it had made the required deposit with the Philippine National
Bank (PNB) of 10% of the amount of compensation stated in the complaint. In
an order dated June 14, 1979 the lower court issued a writ of possession
authorizing the Republic to enter into and take possession of the properties
sought to be condemned, and created a Committee of three to determine the
just compensation for the lands involved in the proceedings.
On July 16, 1979 de Knecht filed with this Court a petition for certiorari and
prohibition docketed as G.R. No. L-51078 and directed against the order of the
lower court dated June 14, 1979 praying that the respondent be commanded
to desist from further proceeding in the expropriation action and from
implementing said order. On October 30, 1980 this Court rendered a decision,
the dispositive part of which reads as follows:
WHEREFORE, the petition for certiorari and prohibition is hereby granted. The
order of June 14, 1979 authorizing the Republic of the Philippines to take c
enter upon the possession of the properties sought to be condemned is set
aside and the respondent Judge is permanently enjoined from taking any
further action on Civil Case No. 7001-P, entitled 'Republic of the Philippines
vs. Concepcion Cabarrus Vda. de Santos, et al.' except to dismiss said case. 1
On August 8, 1981 defendants Maria Del Carmen Roxas Vda. de Elizalde,
Francisco Elizalde and Antonio Roxas moved to dismiss the expropriation
action in compliance with the dispositive portion of the aforesaid decision of
this Court which had become final and in order to avoid further damage to
same defendants who were denied possession of their properties. The
Republic filed a manifestation on September 7, 1981 stating, among others,
that it had no objection to the said motion to dismiss as it was in accordance
with the aforestated decision.
On September 2, 1983, the Republic filed a motion to dismiss said case due
to the enactment of the Batas Pambansa Blg. 340 expropriating the same
properties and for the same purpose. The lower court in an order of September
2, 1983 dismissed the case by reason of the enactment of the said law. The
motion for reconsideration thereof was denied in the order of the lower court
dated December 18, 1986.
De Knecht appealed from said order to the Court of Appeals wherein in due
course a decision was rendered on December 28, 1988, 2 the dispositive part
of which reads as follows:
PREMISES CONSIDERED, the order appealed from is hereby SET ASIDE.
As prayed for in the appellant's brief another Order is hereby issued dismissing
the expropriation proceedings (Civil Case No. 51078) before the lower court
on the ground that the choice of Fernando Rein-Del Pan Streets as the line
through which the Epifanio de los Santos Avenue should be extended is
arbitrary and should not receive judicial approval.
No pronouncement as to Costs. 3
Hence the Republic filed that herein petition for review of the A aforestated
decision whereby the following issues were raised:
I of the Fernando Rein-Del Pan streets as the line through which the EDSA
WHETHER OR NOT THE ENACTMENT OF BATAS PAMBANSA BLG. 340
IS THE PROPER GROUND FOR THE DISMISSAL OF THE
EXPROPRIATION CASE. (PROPERLY PUT, WHETHER OR NOT THE
LOWER COURT COMMITTED GRAVE ABUSE OF DIS CRETION IN
DISMISSING CIVIL CASE NO. 7001-P UPON JUDICIAL NOTICE OF B.P.
BLG. 340).
II
WHETHER OR NOT THE DPWH'S "CHOICE" OF LAND TO BE
EXPROPRIATED IS STILL AN ISSUE UNDER THE CIRCUMSTANCES,
SAID "CHOICE" HAVING BEEN SUPPLANTED BY THE LEGISLATURE'S
CHOICE.
III
WHETHER OR NOT THE LAW OF THE CASE THEORY SHOULD BE
APPLIED TO THE CASE AT BAR. 4
The petition is impressed with merit. There is no question that as early as 1977,
pursuant to the Revised Administrative Code, the national government,
through the Department of Public Works and Highways began work on what
was to be the westward extension of Epifanio de los Santos Avenue (EDSA)
outfall (or outlet) of the Manila and suburbs flood control and drainage project
and the Estero Tripa de Gallina. These projects were aimed at: (1) easing
traffic congestion in the Baclaran and outlying areas; (2) controlling flood by
the construction of the outlet for the Estero Tripa de Gallina (which drains the
area of Marikina, Pasay, Manila and Paranaque); and (3) thus completing the
Manila Flood and Control and Drainage Project.
So the petitioner acquired the needed properties through negotiated purchase
starting with the lands from Taft Avenue up to Roxas Boulevard including the
lands in Fernando Rein-Del Pan streets. It acquired through negotiated
purchases about 80 to 85 percent of the lands involved in the project whose
owners did not raise any objection as to arbitrariness on the choice of the
project and of the route. It is only with respect to the remaining 10 to 15 percent
along the route that the petitioner cannot negotiate through a sales agreement
with a few land owners, including de Knecht whose holding is hardly 5% of the
whole route area. Thus, as above related on February 20, 1979 the petitioner
filed the expropriation proceedings in the Court of First Instance.
There is no question that in the decision of this Court dated October 30, 1980
in De Knecht vs. Bautista, G.R. No. L-51078, this Court held that the "choice
should be extended to Roxas Boulevard is arbitrary and should not receive
judicial approval." 5 It is based on the recommendation of the Human
Settlements Commission that the choice of Cuneta street as the line of the
extension will minimize the social impact factor as the buildings and
improvement therein are mostly motels. 6
In view of the said finding, this Court set aside the order of the trial court dated
June 14, 1979 authorizing the Republic of the Philippines to take possession
of the properties sought to be condemned and enjoined the respondent judge
from taking any further action in the case except to dismiss the same.
Said decision having become final no action was taken by the lower court on
the said directive of this Court to dismiss the case. Subsequently B.P. Blg. 340
was enacted by the Batasang Pambansa on February 17, 1983. On the basis
of said law petitioner filed a motion to dismiss the case before the trial court
and this was granted.
On appeal by de Knecht to the Court of Appeals the appellate court held that
the decision of the Supreme Court having become final, the petitioner's right
as determined therein should no longer be disturbed and that the same has
become the law of the case between the parties involved. Thus, the appellate
court set aside the questioned order of the trial court and issued another order
dismissing the expropriation proceedings before the lower court pursuant to
the ruling in De Knecht case.
While it is true that said final judgment of this Court on the subject becomes
the law of the case between the parties, it is equally true that the right of the
petitioner to take private properties for public use upon the payment of the just
compensation is so provided in the Constitution and our laws. 7 Such
expropriation proceedings may be undertaken by the petitioner not only by
voluntary negotiation with the land owners but also by taking appropriate court
action or by legislation. 8
When on February 17, 1983 the Batasang Pambansa passed B.P. Blg. 340
expropriating the very properties subject of the present proceedings, and for
the same purpose, it appears that it was based on supervening events that
occurred after the decision of this Court was rendered in De Knecht in 1980
justifying the expropriation through the Fernando Rein-Del Pan Streets.
The social impact factor which persuaded the Court to consider this extension
to be arbitrary had disappeared. All residents in the area have been relocated
and duly compensated. Eighty percent of the EDSA outfall and 30% of the
EDSA extension had been completed. Only private respondent remains as the
solitary obstacle to this project that will solve not only the drainage and flood
control problem but also minimize the traffic bottleneck in the area.
The Solicitor General summarizing the situation said —
The construction and completion of the Metro Manila Flood Control and
Drainage Project and the EDSA extension are essential to alleviate the
worsening traffic problem in the Baclaran and Pasay City areas and the
perennial flood problems. Judicial notice may be taken that these problems
bedevil life and property not only in the areas directly affected but also in areas
much beyond. Batas Pambansa Blg. 340 was enacted to hasten 'The Project'
and thus solve these problems, and its implementation has resulted so far in
an 80% completion of the EDSA outfall and a 30% completion of the EDSA
extension, all part of 'The Project'.
This instant case stands in the way of the final solution of the above-mentioned
problems, solely because the single piece of property I occupied' by De
Knecht, although already expropriated under B.P. Blg. 340, is the only parcel
of land where Government engineers could not enter due to the 'armed'
resistance offered by De Knecht, guarded and surrounded as the lot is
perennially by De Knecht's fierce private security guards. It may thus be said
that De Knecht, without any more legal interest in the land, single-handedly
stands in the way of the completion of 'The Project' essential to the progress
of Metro Manila and surrounding areas. Without the property she persists in
occupying and without any bloodletting, the EDSA outfall construction
on both sides of the said property cannot be joined together, and the flood
waters of Pasay, Parañaque and Marikina — which flow through the Estero
Tripa de Gallina will continue to have no way or outlet that could drain into
Manila Bay. Without said property, the EDSA extension, already 30%
completed, can in no way be finished, and traffic will continue to clog and jam
the intersections of EDSA and Taft Avenue in Baclaran and pile up along the
airport roads.
In sum, even in the face of BP340, De Knecht holds the Legislative sovereign
will and choice inutile. 9
The Court finds justification in proceeding with the said expropriation
proceedings through the Fernando Rein-Del Pan streets from ESDA to Roxas
Boulevard due to the aforestated supervening events after the rendition of the
decision of this Court in De Knecht.
B.P. Blg. 340 therefore effectively superseded the aforesaid final and
executory decision of this Court. And the trial court committed no grave abuse
of discretion in dismissing the case pending before it on the ground of the
enactment of B.P. Blg. 340.
Moreover, the said decision, is no obstacle to the legislative arm of the
Government in thereafter (over two years later in this case) making its own
independent assessment of the circumstances then prevailing as to the
propriety of undertaking the expropriation of the properties in question and
thereafter by enacting the corresponding legislation as it did in this case. The
Court agrees in the wisdom and necessity of enacting B.P. Blg. 340. Thus the
anterior decision of this Court must yield to this subsequent legislative flat.
WHEREFORE, the petition is hereby GRANTED and the questioned decision
of the Court of Appeals dated December 28, 1988 and its resolution dated
March 9, 1989 are hereby REVERSED and SET ASIDE and the order of
Branch III of the then Court of First Instance of Rizal in Pasay City in Civil Case
No. 7001-P dated September 2, 1983 is hereby reinstated without
pronouncement as to costs.
SO ORDERED.
MUNICIPALITY OF MEYCAUAYAN VS IAC
This is a petition for review on certiorari of the resolution dated April 24,1985
by the former Intermediate Appellate Court, now Court of Appeals, setting
aside its earlier decision dated January 10, 1985 and dismissing the special
civil action for expropriation filed by the petitioner.
In 1975, respondent Philippine Pipes and Merchandising Corporation filed with
the Office of the Municipal Mayor of Meycauayan, Bulacan, an application for
a permit to fence a parcel of land with a width of 26.8 meters and a length of
184.37 meters covered by Transfer Certificates of Title Nos. 215165 and
37879. The fencing of said property was allegedly to enable the storage of the
respondent's heavy equipment and various finished products such as large
diameter steel pipes, pontoon pipes for ports, wharves, and harbors, bridge
components, pre-stressed girders and piles, large diameter concrete pipes,
and parts for low cost housing.
In the same year, the Municipal Council of Meycauayan, headed by then
Mayor Celso R. Legaspi, passed Resolution No. 258, Series of 1975,
manifesting the intention to expropriate the respondent's parcel of land
covered by Transfer Certificate of Title No. 37879.
An opposition to the resolution was filed by the respondent with the Office of
the Provincial Governor, which, in turn, created a special committee of four
members to investigate the matter.
On March 10, 1976, the Special Committee recommended that the Provincial
Board of Bulacan disapprove or annul the resolution in question because there
was no genuine necessity for the Municipality of Meycauayan to expropriate
the respondent's property for use as a public road.
On the basis of this report, the Provincial Board of Bulacan passed Resolution
No. 238, Series of 1976, disapproving and annulling Resolution No. 258,
Series of 1975, of the Municipal Council of Meycauayan. The respondent,
then, reiterated to the Office of the Mayor its petition for the approval of the
permit to fence the aforesaid parcels of land.
On October 21, 1983, however, the Municipal Council of Meycauayan, now
headed by Mayor Adriano D. Daez, passed Resolution No. 21, Series of 1983,
for the purpose of expropriating anew the respondent's land. The Provincial
Board of Bulacan approved the aforesaid resolution on January 25, 1984.
Thereafter, the petitioner, on February 14, 1984, filed with the Regional Trial
Court of Malolos, Bulacan, Branch VI, a special civil action for expropriation.
Upon deposit of the amount of P24,025.00, which is the market value of the
land, with the Philippine National Bank, the trial court on March 1, 1984 issued
a writ of possession in favor of the petitioner.
On August 27, 1984, the trial court issued an order declaring the taking of the
property as lawful and appointing the Provincial Assessor of Bulacan as court
commissioner who shall hold the hearing to ascertain the just compensation
for the property.
The respondent went to the Intermediate Appellate Court on petition for review.
On January 10, 1985, the appellate court affirmed the trial court's decision.
However, upon motion for reconsideration by the respondent, the decision was
re-examined and reversed. The appellate court held that there is no genuine
necessity to expropriate the land for use as a public road as there were several
other roads for the same purpose and another more appropriate lot for the
proposed public road. The court, taking into consideration the location and size
of the land, also opined that the land is more Ideal for use as storage area for
respondent's heavy equipment and finished products.
After its motion for reconsideration was denied, the petitioner went to this Court
on petition for review on certiorari on October 25, 1985, with the following
arguments:
Petitioners most respectfully submit that respondent Court has decided a
question of substance not in accord with law or with applicable decisions of
this Honorable Supreme Court; that the judgment is based on a
misapprehension of facts and the conclusion is a finding grounded entirely on
speculation, surmises, and conjectures, because:
a. It concluded, that by dismissing the complaint for expropriation the existence
of legal and factual circumstance of grave abuse of discretion amounting to
lack of jurisdiction committed by the respondent Judge without any shred of
evidence at all contrary to the law on evidence;
b. It concluded, in its decision that respondent Philippine Pipes and
Merchandising Corporation has no need of the property sought to be
condemned on the use to which it is devoted as a private road but allegedly
for storage contrary to the allegations of respondent Philippine Pipes and
Merchandising Corporation itself;
c. It anchored its decision on factual situations obtaining a long, long time ago
without regard to the relatively present situation now obtaining. (Rollo, pp. 8-
9)
In refuting the petitioner's arguments, the private respondent contends that this
Court may only resolve questions of law and not questions of fact such as
those which the petitioner puts in issue in this case. The respondent further
argues that this Court may not also interfere with an action of the Court of
Appeals which involves the exercise of discretion.
We agree with the respondent.
The jurisdiction of this Court in cases brought to us from the Court of Appeals
is limited to the review of errors of law (Rizal Cement Co., Inc. v. Villareal, 135
SCRA 15, 24), factual issues not being proper in certiorari proceedings (See
Ygay et al. v. Hon. Escareal et al., 135 SCRA 78, 82).
This Court reviews and rectifies the findings of fact of the Court of Appeals only
under certain established exceptions such as: (1) when the conclusion is a
finding grounded entirely on speculations, surmises and conjectures; (2) when
the inference made is manifestly mistaken, absurd and impossible; (3) when
there is grave abuse of discretion; (4) when the judgment is based on a
misapprehension of facts; and (5) when the court, in making its finding, went
beyond the issues of the case and the same is contrary to the admissions of
both the appellant and the appellee (Moran, Jr. v. Court of Appeals, 133 SCRA
88).
None of the exceptions warranting non-application of the rule is present in this
case. On the contrary, we find that the appellate court's decision is supported
by substantial evidence.
The petitioner's purpose in expropriating the respondent's property is to
convert the same into a public road which would provide a connecting link
between Malhacan Road and Bulac Road in Valenzuela, Bulacan and thereby
ease the traffic in the area of vehicles coming from MacArthur Highway.
The records, however, reveals that there are other connecting links between
the aforementioned roads. The petitioner itself admits that there are four such
cross roads in existence. The respondent court stated that with the proposed
road, there would be seven.
Appreciating the evidence presented before it, with particular emphasis on the
Special Committee's report dated March 10, 1976, the Court of Appeals
declared:
xxx xxx xxx
FACTS ESTABLISHED ON OCULAR INSPECTION
In the ocular inspection, the following facts came into the limelight:
(1) The property in question of the Philippine Pipes and Merchandazing
Corporation intended to be expropriated by the Municipality of Meycauayan is
embraced under Transfer Certificate of Title No. 37879 and is a private road
of the company used in the conduct and operation of its business, with
the inhabitation in nearby premises tolerated to pass the same. It extends from
Bulac Road to the south, to Malhacan Road on the north, with a width of about
6 to 7 meters, more or less.
(2) Adjoining this private road on the eastern side, is a vacant property also
belonging to the Philippine Pipes and Merchandising Corporation and
extending also from Bulac Road to Malhacan Road, with a high wall along the
property line on the east side thereof serving as a fence.
(3) Opposite the private road, after crossing Bulac Road, is the gate of the
factory of the Philippine Pipes and Merchandising Corporation.
(4) From the private road of the firm on the eastern direction about 30 to 40
meters distance are subdivision roads of an existing subdivision with a width
of 6 to 7 meters, more or less, running parallel to the said private road of the
firm and likewise extending from Bulac Road to Malhacan Road. Whether said
subdivision roads had already been donated to the municipality is not known.
(5) On the western side of the private road is a vacant lot with an area of l6,071
square meters offered for sale by its owner extending also from Bulac Road to
Malhacan Road.
(6) Bulac road, a municipal road with a width of about 6 to 7 meters and all the
nearby subdivision roads are obviously very poorly developed and maintained,
and are in dire need of repair. Like the Malhacan Road, Bulac road extends
from the McArthur Highway with exit to North Diversion Road.
xxx xxx xxx
The Sketch Plan (Rollo, p. 26 or p. 97) clearly and conclusively shows that
petitioner does not need this strip of land as a private road. The Sketch Plan
clearly shows that petitioner's factory site is adjacent to Bulac Road which has
a width of about seven meters, more or less. Petitioner can use Bulac Road in
reaching McArthur Highway on the west or in reaching the Manila North
Expressway on the east for the purpose of transporting its products. Petitioner
does not need to go to Malhacan Road via this so-called private road before
going to McArthur Highway or to the Manila North Expressway. Why should
petitioner go first to Malhacan Road via this so called "private road" before
going to McArthur Highway or to the Manila North Expressway when taking
the Bulac Road in going to McArthur Highway or to the Manila North
Expressway is more direct, nearer and more advantageous. Hence, it is
beyond doubt that petitioner acquired this strip of land for the storage of its
heavy equipments and various finished products and for growth and expansion
and never to use it as a private road. This is the very reason why petitioner
filed an application with the Office of the Municipal Mayor of Meycauayan,
Bulacan to fence with hollow blocks this strip of land.
Third, We will determine whether there is a genuine necessity to expropriate
this strip of land for use as a public road.
We hereby quote a relevant part of the Special Committee's Report dated
March 10, 1976, which is as follows:
OBSERVATION OF COMMITTEE
From the foregoing facts, it appears obvious to this Special Committee that
there is no genuine necessity for the Municipality of' Meycauayan to
expropriate the aforesaid property of the Philippine Pipes and Merchandising
Corporation for use as a public road. Considering that in the vicinity there are
other available road and vacant lot offered for sale situated similarly as the lot
in question and lying Idle, unlike the lot sought to be expropriated which was
found by the Committee to be badly needed by the company as a site for its
heavy equipment after it is fenced together with the adjoining vacant lot, the
justification to condemn the same does not appear to be very imperative and
necessary and would only cause unjustified damage to the firm. The desire of
the Municipality of Meycauayan to build a public road to decongest the volume
of traffic can be fully and better attained by acquiring the other available roads
in the vicinity maybe at lesser costs without causing harm to an establishment
doing legitimate business therein. Or, the municipality may seek to expropriate
a portion of the vacant lot also in the vicinity offered for sale for a wider public
road to attain decongest (sic) of traffic because as observed by the Committee,
the lot of the Corporation sought to be taken will only accommodate a one-way
traffic lane and therefore, will not suffice to improve and decongest the flow of
traffic and pedestrians in the Malhacan area. ...
xxx xxx xxx
It must be noted that this strip of land covered by Transfer Certificates of Titles
Nos. 215165 and 37879 were acquired by petitioner from Dr. Villacorta. The
lot for sale and lying Idle with an area of 16,071 square meter which is adjacent
and on the western side of the aforesaid strip of land and extends likewise from
Bulac Road to Malhacan Road belongs also to Dr. Villacorta. This lot for sale
and lying Idle is most Ideal for use as a public road because it is more than
three (3) times wider that the said strip of land.
xxx xxx xxx
xxx xxx xxx
Since there is another lot ready for sale and lying Idle, adjacent and on the
western side of the strip of land, and extending also from Malhacan Road to
Bulac Road and most Ideal for a public road because it is very much wider
than the lot sought to be expropriated, it seems that it is more just, fair, and
reasonable if this lot is the one to be expropriated. (Rollo, pp. 22-26)
The petitioner objects to the appellate court's findings contending that they
were based on facts obtaining long before the present action to expropriate
took place. We note, however, that there is no evidence on record which shows
a change in the factual circumstances of the case. There is no showing that
some of the six other available cross roads have been closed or that the private
roads in the subdivision may not be used for municipal purposes. What is more
likely is that these roads have already been turned over to the government.
The petitioner alleges that surely the environmental progress during the span
of seven years between the first and second attempts to expropriate has
brought about a change in the facts of the case. This allegation does not merit
consideration absent a showing of concrete evidence attesting to it.
There is no question here as to the right of the State to take private property
for public use upon payment of just compensation. What is questioned is the
existence of a genuine necessity therefor.
As early as City of Manila v. Chinese Community of Manila (40 Phil. 349) this
Court held that the foundation of the right to exercise the power of eminent
domain is genuine necessity and that necessity must be of a public character.
Condemnation of private property is justified only if it is for the public good and
there is a genuine necessity of a public character. Consequently, the courts
have the power to inquire into the legality of the exercise of the right of eminent
domain and to determine whether there is a genuine necessity therefor
(Republic v. La Orden de PP. Benedictos de Filipinas, 1 SCRA 646; J.M.
Tuason & Co., Inc. v. Land Tenure Administration, 31 SCRA 413).
In the recent case of De Knecht v. Bautista, (100 SCRA 660) this court further
ruled that the government may not capriciously choose what private property
should be taken. Citing the case of J.M. Tuason & Co., Inc. v. Land Tenure
Administration (supra), the Court held:
... With due recognition then of the power of Congress to designate the
particular property to be taken and how much thereof may be condemned in
the exercise of the power of expropriation, it is still a judicial question whether
in the exercise of such competence, the party adversely affected is the victim
of partiality and prejudice. That the equal protection clause will not allow. (At
p. 436)
There is absolutely no showing in the petition why the more appropriate lot for
the proposed road which was offered for sale has not been the subject of the
petitioner's attempt to expropriate assuming there is a real need for another
connecting road.
WHEREFORE, the petition is hereby DISMISSED for lack of merit. The
questioned resolution of the respondent court is AFFIRMED.
SO ORDERED.
NHA VS HEIRS OF ISIDRO GUIVELONDO
On February 23, 1999, petitioner National Housing Authority filed with the
Regional Trial Court of Cebu City, Branch 11, an Amended Complaint for
eminent domain against Associacion Benevola de Cebu, Engracia Urot and
the Heirs of Isidro Guivelondo, docketed as Civil Case No. CEB-23386.
Petitioner alleged that defendant Associacion Benevola de Cebu was the
claimant/owner of Lot 108-C located in the Banilad Estate, Cebu City; that
defendant Engracia Urot was the claimant/owner of Lots Nos. 108-F, 108-I,
108-G, 6019-A and 6013-A, all of the Banilad Estate; that defendant Heirs of
Isidro Guivelondo were the claimants/owners of Cadastral Lot No. 1613-D
located at Carreta, Mabolo, Cebu City; and that the lands are within a blighted
urban center which petitioner intends to develop as a socialized housing
project.1
On November 12, 1999, the Heirs of Isidro Guivelondo, respondents herein,
filed a Manifestation stating that they were waiving their objections to
petitioner’s power to expropriate their properties. Hence, the trial court issued
an Order as follows:
WHEREFORE, the Court hereby declares that the plaintiff has a lawful right to
expropriate the properties of the defendants who are heirs of Isidro
Guivelondo.
The appointment of commissioners who would ascertain and report to the
Court the just compensation for said properties will be done as soon as the
parties shall have submitted to the Court the names of persons desired by
them to be appointed as such commissioners.
SO ORDERED.2
Thereafter, the trial court appointed three Commissioners to ascertain the
correct and just compensation of the properties of respondents. On April 17,
2000, the Commissioners submitted their report wherein they recommended
that the just compensation of the subject properties be fixed at P11,200.00 per
square meter.3 On August 7, 2000, the trial court rendered Partial Judgment
adopting the recommendation of the Commissioners and fixing the just
compensation of the lands of respondent Heirs of Isidro Guivelondo at
P11,200.00 per square meter, to wit:
WHEREFORE, in view of the foregoing premises, judgment is hereby
rendered by the Court in this case fixing the just compensation for the lands of
the defendants who are the heirs of Isidro Guivelondo, more particularly Lots
Nos. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 15, 16, 19, 20, 6016-F, 6016-H,
6016-E and 6016-D of Csd-10219, which were sought to be expropriated by
the plaintiff at P11,200.00 per square meter and ordering the plaintiff to pay to
the said defendants the just compensation for the said lands computed at
P11,200.00 per square meter.
IT IS SO ORDERED.4
Petitioner NHA filed two motions for reconsideration dated August 30, 2000
and August 31, 2000, assailing the inclusion of Lots 12, 13 and 19 as well as
the amount of just compensation, respectively. Respondent Heirs also filed a
motion for reconsideration of the Partial Judgment. On October 11, 2000, the
trial court issued an Omnibus Order denying the motion for reconsideration of
respondent Heirs and the August 31, 2000 motion of petitioner, on the ground
that the fixing of the just compensation had adequate basis and support. On
the other hand, the trial court granted petitioner’s August 30, 2000 motion for
reconsideration on the ground that the Commissioner’s Report did not include
Lots 12, 13 and 19 within its coverage. Thus:
WHEREFORE, in view of the foregoing premises, the Court hereby denies the
motion of the heirs of Isidro Guivelondo (with the exception of Carlota Mercado
and Juanita Suemith) for reconsideration of the partial judgment rendered in
this case on August 7, 2000 and plaintiff’s motion for reconsideration of said
judgment, dated August 31, 2000.
However, the Court hereby grants the plaintiff’s motion for reconsideration of
said judgment, dated August 30, 2000. Accordingly, the judgment rendered in
this case on August 7, 2000 is hereby set aside insofar as it has fixed just
compensations for Lots Nos. 12, 13 and 19 of Csd-10219 because the fixing
of said just compensations appears to lack adequate basis.
SO ORDERED.5
Petitioner filed with the Court of Appeals a petition for certiorari, which was
docketed as CA-G.R. SP No. 61746.6 Meanwhile, on October 31, 2000, the
trial court issued an Entry of Judgment over the Partial Judgment dated August
7, 2000 as modified by the Omnibus Order dated October 11,
2000.7 Subsequently, respondent Heirs filed a Motion for Execution, which was
granted on November 22, 2000.
On January 31, 2001, the Court of Appeals dismissed the petition for certiorari
on the ground that the Partial Judgment and Omnibus Order became final and
executory when petitioner failed to appeal the same.8
Petitioner’s Motion for Reconsideration and Urgent Ex-Parte Motion for a
Clarificatory Ruling were denied in a Resolution dated March 18, 2001. 9 A
petition for review was filed by petitioner with this Court, which was docketed
as G.R. No. 147527. However, the same was denied in a Minute Resolution
dated May 9, 2001 for failure to show that the Court of Appeals committed a
reversible error.10
Petitioner filed a Motion for Reconsideration which was however denied with
finality on August 20, 2001.11
Prior to the aforesaid denial of the Motion for Reconsideration, petitioner, on
July 16, 2001, filed with the trial court a Motion to Dismiss Civil Case No. CEB-
23386, complaint for eminent domain, alleging that the implementation of its
socialized housing project was rendered impossible by the unconscionable
value of the land sought to be expropriated, which the intended beneficiaries
can not afford.12 The Motion was denied on September 17, 2001, on the
ground that the Partial Judgment had already become final and executory and
there was no just and equitable reason to warrant the dismissal of the
case.13 Petitioner filed a Motion for Reconsideration, which was denied in an
Order dated November 20, 2001.14
Petitioner thus filed a petition for certiorari with the Court of Appeals, which
was docketed as CA-G.R. SP No. 68670, praying for the annulment of the
Order of the trial court denying its Motion to Dismiss and its Motion for
Reconsideration.15
On February 5, 2002, the Court of Appeals summarily dismissed the petition.
Immediately thereafter, respondent Sheriff Pascual Y. Abordo of the Regional
Trial Court of Cebu City, Branch 11, served on petitioner a Notice of Levy
pursuant to the Writ of Execution issued by the trial court to enforce the Partial
Judgment of August 7, 2000 and the Omnibus Order of October 11, 2000. 16
On February 18, 2002, the Court of Appeals set aside the dismissal of the
petition and reinstated the same.17 Thereafter, a temporary restraining order
was issued enjoining respondent sheriff to preserve the status quo. 18
On May 27, 2002, respondent sheriff served on the Landbank of the
Philippines a Notice of Third Garnishment against the deposits, moneys and
interests of petitioner therein.19 Subsequently, respondent sheriff levied on
funds and personal properties of petitioner.20
On July 16, 2002, the Court of Appeals rendered the assailed decision
dismissing the petition for certiorari.21
Hence, petitioner filed this petition for review, raising the following issues:
1) WHETHER OR NOT THE STATE CAN BE COMPELLED AND COERCED
BY THE COURTS TO EXERCISE OR CONTINUE WITH THE EXERCISE OF
ITS INHERENT POWER OF EMINENT DOMAIN;
2) WHETHER OR NOT JUDGMENT HAS BECOME FINAL AND
EXECUTORY AND IF ESTOPPEL OR LACHES APPLIES TO
GOVERNMENT;
3) WHETHER OR NOT WRITS OF EXECUTION AND GARNISHMENT MAY
BE ISSUED AGAINST THE STATE IN AN EXPROPRIATION WHEREIN THE
EXERCISE OF THE POWER OF EMINENT DOMAIN WILL NOT SERVE
PUBLIC USE OR PURPOSE {APPLICATION OF SUPREME COURT
ADMINISTRATIVE CIRCULAR NO. 10-2000}.22
Respondent Heirs of Isidro Guivelondo filed their Comment, arguing as
follows:
I
AS EARLIER UPHELD BY THE HONORABLE COURT, THE JUDGMENT OF
THE TRIAL COURT IS ALREADY FINAL AND EXECUTORY, HENCE,
COULD NO LONGER BE DISTURBED NOR SET ASIDE
II
THE FUNDS AND ASSETS OF THE PETITIONER ARE NOT EXEMPT FROM
LEVY AND GARNISHMENT
III
THE ISSUES RAISED IN THIS SECOND PETITION FOR REVIEW WERE
ALREADY RESOLVED BY THE HONORABLE COURT23
In the early case of City of Manila v. Ruymann,24 the Court was confronted with
the question: May the petitioner, in an action for expropriation, after he has
been placed in possession of the property and before the termination of the
action, dismiss the petition? It resolved the issue in the affirmative and held:
The right of the plaintiff to dismiss an action with the consent of the court is
universally recognized with certain well-defined exceptions. If the plaintiff
discovers that the action which he commenced was brought for the purpose of
enforcing a right or a benefit, the advisability or necessity of which he later
discovers no longer exists, or that the result of the action would be different
from what he had intended, then he should be permitted to withdraw his action,
subject to the approval of the court. The plaintiff should not be required to
continue the action, subject to some well-defined exceptions, when it is not to
his advantage to do so. Litigation should be discouraged and not encouraged.
Courts should not require parties to litigate when they no longer desire to do
so. Courts, in granting permission to dismiss an action, of course, should
always take into consideration the effect which said dismissal would have upon
the rights of the defendant.25
Subsequently, in Metropolitan Water District v. De Los Angeles,26 the Court
had occasion to apply the above-quoted ruling when the petitioner, during the
pendency of the expropriation case, resolved that the land sought to be
condemned was no longer necessary in the maintenance and operation of its
system of waterworks. It was held:
It is not denied that the purpose of the plaintiff was to acquire the land in
question for a public use. The fundamental basis then of all actions brought for
the expropriation of lands, under the power of eminent domain, is public use.
That being true, the very moment that it appears at any stage of the
proceedings that the expropriation is not for a public use, the action must
necessarily fail and should be dismissed, for the reason that the action cannot
be maintained at all except when the expropriation is for some public use. That
must be true even during the pendency of the appeal of at any other stage of
the proceedings. If, for example, during the trial in the lower court, it should be
made to appear to the satisfaction of the court that the expropriation is not for
some public use, it would be the duty and the obligation of the trial court to
dismiss the action. And even during the pendency of the appeal, if it should be
made to appear to the satisfaction of the appellate court that the expropriation
is not for public use, then it would become the duty and the obligation of the
appellate court to dismiss it.27
Notably, the foregoing cases refer to the dismissal of an action for eminent
domain at the instance of the plaintiff during the pendency of the case. The
rule is different where the case had been decided and the judgment had
already become final and executory.
Expropriation proceedings consists of two stages: first, condemnation of the
property after it is determined that its acquisition will be for a public purpose or
public use and, second, the determination of just compensation to be paid for
the taking of private property to be made by the court with the assistance of
not more than three commissioners.28 Thus:
There are two (2) stages in every action for expropriation. 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." An order of dismissal, if this be ordained,
would be a final one, of course, since it finally disposes of the action and leaves
nothing more to be done by the Court on the merits. So, too, would an order
of condemnation be a final one, for thereafter, as the Rules expressly state, in
the proceedings before the Trial Court, "no objection to the exercise of the right
of condemnation (or the propriety thereof) shall be filed or heard."
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. The order fixing the just compensation on the basis
of the evidence before, and findings of, the commissioners would be final, too.
It would finally dispose of the second stage of the suit, and leave nothing more
to be done by the Court regarding the issue. Obviously, one or another of the
parties may believe the order to be erroneous in its appreciation of the
evidence or findings of fact or otherwise. Obviously, too, such a dissatisfied
party may seek a reversal of the order by taking an appeal therefrom. 29
The outcome of the first phase of expropriation proceedings, which is either an
order of expropriation or an order of dismissal, is final since it finally disposes
of the case. On the other hand, the second phase ends with an order fixing the
amount of just compensation. Both orders, being final, are appealable.30 An
order of condemnation or dismissal is final, resolving the question of whether
or not the plaintiff has properly and legally exercised its power of eminent
domain.31 Once the first order becomes final and no appeal thereto is taken,
the authority to expropriate and its public use can no longer be questioned.32
The above rule is based on Rule 67, Section 4 of the 1997 Rules of Civil
Procedure, which provides:
Order of expropriation. — If the objections to and the defenses against the
right of the plaintiff to expropriate the property are overruled, or when no party
appears to defend as required by this Rule, the court may issue an order of
expropriation declaring that the plaintiff has a lawful right to take the property
sought to be expropriated, for the public use or purpose described in the
complaint, upon the payment of just compensation to be determined as of the
date of the taking of the property or the filing of the complaint, whichever came
first.
A final order sustaining the right to expropriate the property may be appealed
by any party aggrieved thereby. Such appeal, however, shall not prevent the
court from determining the just compensation to be paid.
After the rendition of such an order, the plaintiff shall not be permitted to
dismiss or discontinue the proceeding except on such terms as the court
deems just and equitable. (underscoring ours)
In the case at bar, petitioner did not appeal the Order of the trial court dated
December 10, 1999, which declared that it has a lawful right to expropriate the
properties of respondent Heirs of Isidro Guivelondo. Hence, the Order became
final and may no longer be subject to review or reversal in any court. 33 A final
and executory decision or order can no longer be disturbed or reopened no
matter how erroneous it may be. Although judicial determinations are not
infallible, judicial error should be corrected through appeals, not through
repeated suits on the same claim.34
Petitioner anchors its arguments on the last paragraph of the above-quoted
Rule 67, Section 4. In essence, it contends that there are just and equitable
grounds to allow dismissal or discontinuance of the expropriation proceedings.
More specifically, petitioner alleges that the intended public use was rendered
nugatory by the unreasonable just compensation fixed by the court, which is
beyond the means of the intended beneficiaries of the socialized housing
project. The argument is tenuous.
Socialized housing has been recognized as public use for purposes of
exercising the power of eminent domain.
Housing is a basic human need. Shortage in housing is a matter of state
concern since it directly and significantly affects public health, safety, the
environment and in sum, the general welfare. The public character of housing
measures does not change because units in housing projects cannot be
occupied by all but only by those who satisfy prescribed qualifications. A
beginning has to be made, for it is not possible to provide housing for all who
need it, all at once.
xxx xxx xxx
In the light of the foregoing, this Court is satisfied that "socialized housing" falls
with the confines of "public use". xxx xxx xxx. Provisions on economic
opportunities inextricably linked with low-cost housing, or slum clearance,
relocation and resettlement, or slum improvement emphasize the public
purpose of the project.35
The public purpose of the socialized housing project is not in any way
diminished by the amount of just compensation that the court has fixed. The
need to provide decent housing to the urban poor dwellers in the locality was
not lost by the mere fact that the land cost more than petitioner had expected.
It is worthy to note that petitioner pursued its petition for certiorari with the
Court of Appeals assailing the amount of just compensation and its petition for
review with this Court which eloquently indicates that there still exists a public
use for the housing project. It was only after its appeal and petitions for review
were dismissed that petitioner made a complete turn-around and decided it did
not want the property anymore.
Respondent landowners had already been prejudiced by the expropriation
case. Petitioner cannot be permitted to institute condemnation proceedings
against respondents only to abandon it later when it finds the amount of just
compensation unacceptable. Indeed, our reprobation in the case of
Cosculluela v. Court of Appeals36 is apropos:
It is arbitrary and capricious for a government agency to initiate expropriation
proceedings, seize a person’s property, allow the judgment of the court to
become final and executory and then refuse to pay on the ground that there
are no appropriations for the property earlier taken and profitably used. We
condemn in the strongest possible terms the cavalier attitude of government
officials who adopt such a despotic and irresponsible stance.
In order to resolve the issue of the propriety of the garnishment against
petitioner’s funds and personal properties, there is a need to first determine its
true character as a government entity. Generally, funds and properties of the
government cannot be the object of garnishment proceedings even if the
consent to be sued had been previously granted and the state liability
adjudged.37
The universal rule that where the State gives its consent to be sued by private
parties either by general or special law, it may limit claimant’s action "only up
to the completion of proceedings anterior to the stage of execution" and that
the power of the Courts ends when the judgment is rendered, since
government funds and properties may not be seized under writs of execution
or garnishment to satisfy such judgments, is based on obvious considerations
of public policy. Disbursements of public funds must be covered by the
corresponding appropriation as required by law. The functions and public
services rendered by the State cannot be allowed to be paralyzed or disrupted
by the diversion of public funds from their legitimate and specific objects, as
appropriated by law.38
However, if the funds belong to a public corporation or a government-owned
or controlled corporation which is clothed with a personality of its own,
separate and distinct from that of the government, then its funds are not
exempt from garnishment.39 This is so because when the government enters
into commercial business, it abandons its sovereign capacity and is to be
treated like any other corporation.40
In the case of petitioner NHA, the matter of whether its funds and properties
are exempt from garnishment has already been resolved squarely against its
predecessor, the People’s Homesite and Housing Corporation (PHHC), to wit:
The plea for setting aside the notice of garnishment was premised on the funds
of the People’s Homesite and Housing Corporation deposited with petitioner
being "public in character." There was not even a categorical assertion to that
effect. It is only the possibility of its being "public in character." The tone was
thus irresolute, the approach diffident. The premise that the funds cold be
spoken of as public in character may be accepted in the sense that the
People’s Homesite and Housing Corporation was a government-owned
entity. It does not follow though that they were exempt from garnishment.41
This was reiterated in the subsequent case of Philippine Rock Industries, Inc.
v. Board of Liquidators:42
Having a juridical personality separate and distinct from the government, the
funds of such government-owned and controlled corporations and non-
corporate agency, although considered public in character, are not exempt
from garnishment. This doctrine was applied to suits filed against the
Philippine Virginia Tobacco Administration (PNB vs. Pabalan, et al., 83 SCRA
695); the National Shipyard & Steel Corporation (NASSCO vs. CIR, 118 Phil.
782); the Manila Hotel Company (Manila Hotel Employees Asso. vs. Manila
Hotel Co., 73 Phil. 374); and the People's Homesite and Housing
Corporation (PNB vs. CIR, 81 SCRA 314). [emphasis ours]
Hence, it is clear that the funds of petitioner NHA are not exempt from
garnishment or execution. Petitioner’s prayer for injunctive relief to restrain
respondent Sheriff Pascual Abordo from enforcing the Notice of Levy and
Garnishment against its funds and properties must, therefore, be denied.
WHEREFORE, in view of the foregoing, the instant petition for review is
DENIED. The decision of the Court of Appeals in CA-G.R. SP No. 68670,
affirming the trial court’s Order denying petitioner’s Motion to Dismiss the
expropriation proceedings in Civil Case No. CEB-23386, is AFFIRMED.
Petitioner’s prayer for injunctive relief against the levy and garnishment of its
funds and personal properties is DENIED. The Temporary Restraining Order
dated January 22, 2003 is LIFTED.
SO ORDERED.
NPC & POBRE VS CA
The Case
Before us is a petition for review1 of the 30 March 1992 Decision2 and 14
August 1992 Resolution of the Court of Appeals in CA-G.R. CV No. 16930.
The Court of Appeals affirmed the Decision3 of the Regional Trial Court,
Branch 17, Tabaco, Albay in Civil Case No. T-552.
The Antecedents
Petitioner National Power Corporation ("NPC") is a public corporation created
to generate geothermal, hydroelectric, nuclear and other power and to transmit
electric power nationwide.4 NPC is authorized by law to acquire property and
exercise the right of eminent domain.
Private respondent Antonino Pobre ("Pobre") is the owner of a 68,969 square-
meter land ("Property") located in Barangay Bano, Municipality of Tiwi, Albay.
The Property is covered by TCT No. 4067 and Subdivision Plan 11-9709.
In 1963, Pobre began developing the Property as a resort-subdivision, which
he named as "Tiwi Hot Springs Resort Subdivision." On 12 January 1966, the
then Court of First Instance of Albay approved the subdivision plan of the
Property. The Register of Deeds thus cancelled TCT No. 4067 and issued
independent titles for the approved lots. In 1969, Pobre started advertising and
selling the lots.
On 4 August 1965, the Commission on Volcanology certified that thermal
mineral water and steam were present beneath the Property. The Commission
on Volcanology found the thermal mineral water and steam suitable for
domestic use and potentially for commercial or industrial use.
NPC then became involved with Pobre's Property in three instances.
First was on 18 February 1972 when Pobre leased to NPC for one year eleven
lots from the approved subdivision plan.
Second was sometime in 1977, the first time that NPC filed its expropriation
case against Pobre to acquire an 8,311.60 square-meter portion of the
Property.5 On 23 October 1979, the trial court ordered the expropriation of the
lots upon NPC's payment of P25 per square meter or a total amount
of P207,790. NPC began drilling operations and construction of steam wells.
While this first expropriation case was pending, NPC dumped waste materials
beyond the site agreed upon by NPC with Pobre. The dumping of waste
materials altered the topography of some portions of the Property. NPC did not
act on Pobre's complaints and NPC continued with its dumping.
Third was on 1 September 1979, when NPC filed its second expropriation case
against Pobre to acquire an additional 5,554 square meters of the Property.
This is the subject of this petition. NPC needed the lot for the construction and
maintenance of Naglagbong Well Site F-20, pursuant to Proclamation No.
7396 and Republic Act No. 5092.7 NPC immediately deposited P5,546.36 with
the Philippine National Bank. The deposit represented 10% of the total market
value of the lots covered by the second expropriation. On 6 September 1979,
NPC entered the 5,554 square-meter lot upon the trial court's issuance of a
writ of possession to NPC.
On 10 December 1984, Pobre filed a motion to dismiss the second complaint
for expropriation. Pobre claimed that NPC damaged his Property. Pobre
prayed for just compensation of all the lots affected by NPC's actions and for
the payment of damages.
On 2 January 1985, NPC filed a motion to dismiss the second expropriation
case on the ground that NPC had found an alternative site and that NPC had
already abandoned in 1981 the project within the Property due to Pobre's
opposition.
On 8 January 1985, the trial court granted NPC's motion to dismiss but the trial
court allowed Pobre to adduce evidence on his claim for damages. The trial
court admitted Pobre's exhibits on the damages because NPC failed to object.
On 30 August 1985, the trial court ordered the case submitted for decision
since NPC failed to appear to present its evidence. The trial court denied
NPC's motion to reconsider the submission of the case for decision.
NPC filed a petition for certiorari8 with
the then Intermediate Appellate Court,
questioning the 30 August 1985 Order of the trial court. On 12 February 1987,
the Intermediate Appellate Court dismissed NPC's petition but directed the
lower court to rule on NPC's objections to Pobre's documentary exhibits.
On 27 March 1987, the trial court admitted all of Pobre's exhibits and upheld
its Order dated 30 August 1985. The trial court considered the case submitted
for decision.
On 29 April 1987, the trial court issued its Decision in favor of Pobre. The
dispositive portion of the decision reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of
the defendant and against the plaintiff, ordering the plaintiff to pay unto the
defendant:
(1) The sum of THREE MILLION FOUR HUNDRED FORTY EIGHT
THOUSAND FOUR HUNDRED FIFTY (P3,448,450.00) PESOS which is the
fair market value of the subdivision of defendant with an area of sixty eight
thousand nine hundred sixty nine (68,969) square meters, plus legal rate of
interest per annum from September 6, 1979 until the whole amount is paid,
and upon payment thereof by the plaintiff the defendant is hereby ordered to
execute the necessary Deed of Conveyance or Absolute Sale of the property
in favor of the plaintiff;
(2) The sum of ONE HUNDRED FIFTY THOUSAND (P150,000.00) PESOS
for and as attorney's fees.
Costs against the plaintiff.
SO ORDERED.9
On 13 July 1987, NPC filed its motion for reconsideration of the decision. On
30 October 1987, the trial court issued its Order denying NPC's motion for
reconsideration.
NPC appealed to the Court of Appeals. On 30 March 1992, the Court of
Appeals upheld the decision of the trial court but deleted the award of
attorney's fees. The dispositive portion of the decision reads:
WHEREFORE, by reason of the foregoing, the Decision appealed from is
AFFIRMED with the modification that the award of attorney's fees is deleted.
No pronouncement as to costs.
SO ORDERED.10
The Court of Appeals denied NPC's motion for reconsideration in a Resolution
dated 14 August 1992.
The Ruling of the Trial Court
In its 69-page decision, the trial court recounted in great detail the scale and
scope of the damage NPC inflicted on the Property that Pobre had developed
into a resort-subdivision. Pobre's Property suffered "permanent injury"
because of the noise, water, air and land pollution generated by NPC's
geothermal plants. The construction and operation of the geothermal plants
drastically changed the topography of the Property making it no longer viable
as a resort-subdivision. The chemicals emitted by the geothermal plants
damaged the natural resources in the Property and endangered the lives of
the residents.
NPC did not only take the 8,311.60 square-meter portion of the Property, but
also the remaining area of the 68,969 square-meter Property. NPC had
rendered Pobre's entire Property useless as a resort-subdivision. The Property
has become useful only to NPC. NPC must therefore take Pobre's entire
Property and pay for it.
The trial court found the following badges of NPC's bad faith: (1) NPC allowed
five years to pass before it moved for the dismissal of the second expropriation
case; (2) NPC did not act on Pobre's plea for NPC to eliminate or at least
reduce the damage to the Property; and (3) NPC singled out Pobre's Property
for piecemeal expropriation when NPC could have expropriated other
properties which were not affected in their entirety by NPC's operation.
The trial court found the just compensation to be P50 per square meter or a
total of P3,448,450 for Pobre's 68,969 square-meter Property. NPC failed to
contest this valuation. Since NPC was in bad faith and it employed dilatory
tactics to prolong this case, the trial court imposed legal interest on
the P3,448,450 from 6 September 1979 until full payment. The trial court
awarded Pobre attorney's fees of P150,000.
The Ruling of the Court of Appeals
The Court of Appeals affirmed the decision of the trial court. However, the
appellate court deleted the award of attorney's fees because Pobre did not
properly plead for it.
The Issues
NPC claims that the Court of Appeals committed the following errors that
warrant reversal of the appellate court's decision:
1. In not annulling the appealed Decision for having been rendered by the trial
court with grave abuse of discretion and without jurisdiction;
2. In holding that NPC had "taken" the entire Property of Pobre;
3. Assuming arguendo that there was "taking" of the entire Property, in not
excluding from the Property the 8,311.60 square-meter portion NPC had
previously expropriated and paid for;
4. In holding that the amount of just compensation fixed by the trial court
at P3,448,450.00 with interest from September 6, 1979 until fully paid, is just
and fair;
5. In not holding that the just compensation should be fixed at P25.00 per
square meter only as what NPC and Pobre had previously mutually agreed
upon; and
6. In not totally setting aside the appealed Decision of the trial court. 11
Procedural Issues
NPC, represented by the Office of the Solicitor General, insists that at the time
that it moved for the dismissal of its complaint, Pobre had yet to serve an
answer or a motion for summary judgment on NPC. Thus, NPC as plaintiff had
the right to move for the automatic dismissal of its complaint. NPC relies on
Section 1, Rule 17 of the 1964 Rules of Court, the Rules then in effect. NPC
argues that the dismissal of the complaint should have carried with it the
dismissal of the entire case including Pobre's counterclaim.
NPC's belated attack on Pobre's claim for damages must fail. The trial court's
reservation of Pobre's right to recover damages in the same case is already
beyond review. The 8 January 1985 Order of the trial court attained finality
when NPC failed to move for its reconsideration within the 15-day
reglementary period. NPC opposed the order only on 27 May 1985 or more
than four months from the issuance of the order.
We cannot fault the Court of Appeals for not considering NPC's objections
against the subsistence of Pobre's claim for damages. NPC neither included
this issue in its assignment of errors nor discussed it in its appellant's brief.
NPC also failed to question the trial court's 8 January 1985 Order in the petition
for certiorari12 it had earlier filed with the Court of Appeals. It is only before this
Court that NPC now vigorously assails the preservation of Pobre's claim for
damages. Clearly, NPC's opposition to the existence of Pobre's claim for
damages is a mere afterthought. Rules of fair play, justice and due process
dictate that parties cannot raise an issue for the first time on appeal.13
We must correct NPC's claim that it filed the notice of dismissal just "shortly"
after it had filed the complaint for expropriation. While NPC had intimated
several times to the trial court its desire to dismiss the expropriation case it
filed on 5 September 1979,14 it was only on 2 January 1985 that NPC filed its
notice of dismissal.15 It took NPC more than five years to actually file the notice
of dismissal. Five years is definitely not a short period of time. NPC obviously
dilly-dallied in filing its notice of dismissal while NPC meanwhile burdened
Pobre's property rights.
Even a timely opposition against Pobre's claim for damages would not yield a
favorable ruling for NPC. It is not Section 1, Rule 17 of the 1964 Rules of Court
that is applicable to this case but Rule 67 of the same Rules, as well as
jurisprudence on expropriation cases. Rule 17 referred to dismissal of civil
actions in general while Rule 67 specifically governed eminent domain cases.
Eminent domain is the authority and right of the state, as sovereign, to take
private property for public use upon observance of due process of law and
payment of just compensation.16 The power of eminent domain may be validly
delegated to the local governments, other public entities and public
utilities17 such as NPC. Expropriation is the procedure for enforcing the right of
eminent domain.18 "Eminent Domain" was the former title of Rule 67 of the
1964 Rules of Court. In the 1997 Rules of Civil Procedure, which took effect
on 1 July 1997, the prescribed method of expropriation is still found in Rule 67,
but its title is now "Expropriation."
Section 1, Rule 17 of the 1964 Rules of Court provided the exception to the
general rule that the dismissal of the complaint is addressed to the sound
discretion of the court.19 For as long as all of the elements of Section 1, Rule
17 were present the dismissal of the complaint rested exclusively on the
plaintiff's will.20 The defending party and even the courts were powerless to
prevent the dismissal.21 The courts could only accept and record the
dismissal.22
A plain reading of Section 1, Rule 17 of the 1964 Rules of Court makes it
obvious that this rule was not intended to supplement Rule 67 of the same
Rules. Section 1, Rule 17 of the 1964 Rules of Court, provided that:
SECTION 1. Dismissal by the plaintiff. — An action may be dismissed by the
plaintiff without order of court by filing a notice of dismissal at any time before
service of the answer or of a motion for summary judgment. Unless otherwise
stated in the notice, the dismissal is without prejudice, except that a notice
operates as an adjudication upon the merits when filed by a plaintiff who has
once dismissed in a competent court an action based on or including the same
claim. A class suit shall not be dismissed or compromised without approval of
the court.
While Section 1, Rule 17 spoke of the "service of answer or summary
judgment," the Rules then did not require the filing of an answer or summary
judgment in eminent domain cases.23 In lieu of an answer, Section 3 of Rule
67 required the defendant to file a single motion to dismiss where he should
present all of his objections and defenses to the taking of his property for the
purpose specified in the complaint.24 In short, in expropriation cases under
Section 3 of Rule 67, the motion to dismiss took the place of the answer.
The records show that Pobre had already filed and served on NPC his "motion
to dismiss/answer"25 even before NPC filed its own motion to dismiss. NPC
filed its notice of dismissal of the complaint on 2 January 1985. However, as
early as 10 December 1984, Pobre had already filed with the trial court
and served on NPC his "motion to dismiss/answer." A certain Divina Cerela
received Pobre's pleading on behalf of NPC.26 Unfortunately for NPC, even
Section 1, Rule 17 of the 1964 Rules of Court could not save its cause.
NPC is in no position to invoke Section 1, Rule 17 of the 1964 Rules of Court.
A plaintiff loses his right under this rule to move for the immediate dismissal of
the complaint once the defendant had served on the plaintiff the answer or a
motion for summary judgment before the plaintiff could file his notice of
dismissal of the complaint.27 Pobre's "motion to dismiss/answer," filed and
served way ahead of NPC's motion to dismiss, takes the case out of Section
1, Rule 17 assuming the same applies.
In expropriation cases, there is no such thing as the plaintiff's matter of right to
dismiss the complaint precisely because the landowner may have already
suffered damages at the start of the taking. The plaintiff's right in expropriation
cases to dismiss the complaint has always been subject to court approval and
to certain conditions.28 The exceptional right that Section 1, Rule 17 of the 1964
Rules of Court conferred on the plaintiff must be understood to have applied
only to other civil actions. The 1997 Rules of Civil Procedure abrogated this
exceptional right.29
The power of eminent domain is subject to limitations. A landowner cannot be
deprived of his right over his land until expropriation proceedings are instituted
in court.30 The court must then see to it that the taking is for public use, there
is payment of just compensation and there is due process of law.31
If the propriety of the taking of private property through eminent domain is
subject to judicial scrutiny, the dismissal of the complaint must also pass
judicial inquiry because private rights may have suffered in the meantime. The
dismissal, withdrawal or abandonment of the expropriation case cannot be
made arbitrarily. If it appears to the court that the expropriation is not for some
public use,32 then it becomes the duty of the court to dismiss the
action.33 However, when the defendant claims that his land suffered damage
because of the expropriation, the dismissal of the action should not foreclose
the defendant's right to have his damages ascertained either in the same case
or in a separate action.34
Thus, NPC's theory that the dismissal of its complaint carried with it the
dismissal of Pobre's claim for damages is baseless. There is nothing in Rule
67 of the 1964 Rules of Court that provided for the dismissal of the defendant's
claim for damages, upon the dismissal of the expropriation case. Case law
holds that in the event of dismissal of the expropriation case, the claim for
damages may be made either in a separate or in the same action, for all
damages occasioned by the institution of the expropriation case. 35 The
dismissal of the complaint can be made under certain conditions, such as the
reservation of the defendant's right to recover damages either in the same or
in another action.36 The trial court in this case reserved Pobre's right to prove
his claim in the same case, a reservation that has become final due to NPC's
own fault.
Factual Findings of the Trial and Appellate Courts Bind the Court
The trial and appellate courts held that even before the first expropriation case,
Pobre had already established his Property as a resort-subdivision. NPC had
wrought so much damage to the Property that NPC had made the Property
uninhabitable as a resort-subdivision. NPC's facilities such as steam wells, nag
wells, power plants, power lines, and canals had hemmed in Pobre's Property.
NPC's operations of its geothermal project also posed a risk to lives and
properties.
We uphold the factual findings of the trial and appellate courts. Questions of
facts are beyond the pale of Rule 45 of the Rules of Court as a petition for
review may only raise questions of law.37 Moreover, factual findings of the trial
court, particularly when affirmed by the Court of Appeals, are generally binding
on this Court.38 We thus find no reason to set aside the two courts' factual
findings.
NPC points out that it did not take Pobre's 68,969 square-meter Property. NPC
argues that assuming that it is liable for damages, the 8,311.60 square-meter
portion that it had successfully expropriated and fully paid for should have been
excluded from the 68,969 square-meter Property that Pobre claims NPC had
damaged.
We are not persuaded.
In its 30 October 1987 Order denying NPC's motion for reconsideration, the
trial court pointed out that the Property originally had a total area of 141,300
square meters.39 Pobre converted the Property into a resort-subdivision and
sold lots to the public. What remained of the lots are the 68,969 square meters
of land.40 Pobre no longer claimed damages for the other lots that he had
before the expropriation.
Pobre identified in court the lots forming the 68,969 square-meter Property.
NPC had the opportunity to object to the identification of the lots. 41 NPC,
however, failed to do so. Thus, we do not disturb the trial and appellate courts'
finding on the total land area NPC had damaged.
NPC must Pay Just Compensation for the Entire Property
Ordinarily, the dismissal of the expropriation case restores possession of the
expropriated land to the landowner.42 However, when possession of the land
cannot be turned over to the landowner because it is neither convenient nor
feasible anymore to do so, the only remedy available to the aggrieved
landowner is to demand payment of just compensation.43
In this case, we agree with the trial and appellate courts that it is no longer
possible and practical to restore possession of the Property to Pobre. The
Property is no longer habitable as a resort-subdivision. The Property is
worthless to Pobre and is now useful only to NPC. Pobre has completely lost
the Property as if NPC had physically taken over the entire 68,969 square-
meter Property.
In United States v. Causby,44 the U.S. Supreme Court ruled that when private
property is rendered uninhabitable by an entity with the power to exercise
eminent domain, the taking is deemed complete. Such taking is thus
compensable.
In this jurisdiction, the Court has ruled that if the government takes property
without expropriation and devotes the property to public use, after many years
the property owner may demand payment of just compensation.45 This
principle is in accord with the constitutional mandate that private property shall
not be taken for public use without just compensation.46
In the recent case of National Housing Authority v. Heirs of Isidro
Guivelondo,47 the Court compelled the National Housing Authority ("NHA") to
pay just compensation to the landowners even after the NHA had already
abandoned the expropriation case. The Court pointed out that a government
agency could not initiate expropriation proceedings, seize a person's property,
and then just decide not to proceed with the expropriation. Such a complete
turn-around is arbitrary and capricious and was condemned by the Court in the
strongest possible terms. NHA was held liable to the landowners for the
prejudice that they had suffered.
In this case, NPC appropriated Pobre's Property without resort to expropriation
proceedings. NPC dismissed its own complaint for the second expropriation.
At no point did NPC institute expropriation proceedings for the lots outside the
5,554 square-meter portion subject of the second expropriation. The only
issues that the trial court had to settle were the amount of just compensation
and damages that NPC had to pay Pobre.
This case ceased to be an action for expropriation when NPC dismissed its
complaint for expropriation. Since this case has been reduced to a simple case
of recovery of damages, the provisions of the Rules of Court on the
ascertainment of the just compensation to be paid were no longer applicable.
A trial before commissioners, for instance, was dispensable.
We have held that the usual procedure in the determination of just
compensation is waived when the government itself initially violates procedural
requirements.48 NPC's taking of Pobre's property without filing the appropriate
expropriation proceedings and paying him just compensation is a
transgression of procedural due process.
From the beginning, NPC should have initiated expropriation proceedings for
Pobre's entire 68,969 square-meter Property. NPC did not. Instead, NPC
embarked on a piecemeal expropriation of the Property. Even as the second
expropriation case was still pending, NPC was well aware of the damage that
it had unleashed on the entire Property. NPC, however, remained impervious
to Pobre's repeated demands for NPC to abate the damage that it had wrought
on his Property.
NPC moved for the dismissal of the complaint for the second expropriation on
the ground that it had found an alternative site and there was stiff opposition
from Pobre.49 NPC abandoned the second expropriation case five years after
it had already deprived the Property virtually of all its value. NPC has
demonstrated its utter disregard for Pobre's property rights.
Thus, it would now be futile to compel NPC to institute expropriation
proceedings to determine the just compensation for Pobre's 68,969 square-
meter Property. Pobre must be spared any further delay in his pursuit to
receive just compensation from NPC.
Just compensation is the fair and full equivalent of the loss. 50 The trial and
appellate courts endeavored to meet this standard. The P50 per square meter
valuation of the 68,969 square-meter Property is reasonable considering that
the Property was already an established resort-subdivision. NPC has itself to
blame for not contesting the valuation before the trial court. Based on the P50
per square meter valuation, the total amount of just compensation that NPC
must pay Pobre is P3,448,450.
The landowner is entitled to legal interest on the price of the land from the time
of the taking up to the time of full payment by the government.51 In accord with
jurisprudence, we fix the legal interest at six per cent (6%) per annum. 52 The
legal interest should accrue from 6 September 1979, the date when the trial
court issued the writ of possession to NPC, up to the time that NPC fully pays
Pobre.53
NPC's abuse of its eminent domain authority is appalling. However, we cannot
award moral damages because Pobre did not assert his right to it. 54 We also
cannot award attorney's fees in Pobre's favor since he did not appeal from the
decision of the Court of Appeals denying recovery of attorney's fees. 55
Nonetheless, we find it proper to award P50,000 in temperate damages to
Pobre. The court may award temperate or moderate damages, which are more
than nominal but less than compensatory damages, if the court finds that a
party has suffered some pecuniary loss but its amount cannot be proved with
certainty from the nature of the case.56 As the trial and appellate courts noted,
Pobre's resort-subdivision was no longer just a dream because Pobre had
already established the resort-subdivision and the prospect for it was initially
encouraging. That is, until NPC permanently damaged Pobre's Property. NPC
did not just destroy the property. NPC dashed Pobre's hope of seeing his
Property achieve its full potential as a resort-subdivision.
The lesson in this case must not be lost on entities with eminent domain
authority. Such entities cannot trifle with a citizen's property rights. The power
of eminent domain is an extraordinary power they must wield with
circumspection and utmost regard for procedural requirements. Thus, we hold
NPC liable for exemplary damages of P100,000. Exemplary damages or
corrective damages are imposed, by way of example or correction for the
public good, in addition to the moral, temperate, liquidated or compensatory
damages.57
WHEREFORE, we DENY the petition for lack of merit. The appealed Decision
of the Court of Appeals dated 30 March 1992 in CA-G.R. CV No. 16930 is
AFFIRMED with MODIFICATION. National Power Corporation is ordered to
pay Antonino Pobre P3,448,450 as just compensation for the 68,969 square-
meter Property at P50 per square meter. National Power Corporation is
directed to pay legal interest at 6% per annum on the amount adjudged from
6 September 1979 until fully paid. Upon National Power Corporation's payment
of the full amount, Antonino Pobre is ordered to execute a Deed of
Conveyance of the Property in National Power Corporation's favor. National
Power Corporation is further ordered to pay temperate and exemplary
damages of P50,000 and P100,000, respectively. No costs.
SO ORDERED.
ATO VS GOPUCO
When private land is expropriated for a particular public use, and that particular
public use is abandoned, does its former owner acquire a cause of action for
recovery of the property?
The trial court’s ruling in the negative was reversed by the Court of Appeals in
its Decision1 of 28 February 2001. Hence this petition for review under Rule 45
of the 1997 Rules of Civil Procedure of the said Decision of the court a
quo, and its Resolution2 of 22 May 2003 dismissing petitioners’ motion for
reconsideration.
The facts, as adduced from the records, are as follows:
Respondent Apolonio Gopuco, Jr. was the owner of Cadastral Lot No. 72
consisting of 995 square meters located in the vicinity of the Lahug Airport in
Cebu City covered by Transfer Certificate of Title (TCT) No. 13061-T.
The Lahug Airport had been turned over by the Unites States Army to the
Republic of the Philippines sometime in 1947 through the Surplus Property
Commission, which accepted it in behalf of the Philippine Government. In
1947, the Surplus Property Commission was succeeded by the Bureau of
Aeronautics, which office was supplanted by the National Airport Corporation
(NAC). The NAC was in turn dissolved and replaced with the Civil Aeronautics
Administration (CAA).3
Sometime in 1949, the NAC informed the owners of the various lots
surrounding the Lahug Airport, including the herein respondent, that the
government was acquiring their lands for purposes of expansion. Some
landowners were convinced to sell their properties on the assurance that they
would be able to repurchase the same when these would no longer be used
by the airport. Others, including Gopuco, refused to do so.
Thus, on 16 April 1952, the CAA filed a complaint with the Court of First
Instance (CFI) of Cebu for the expropriation of Lot No. 72 and its neighboring
realties, docketed as Civil Case No. R-1881.
On 29 December 1961, the CFI promulgated a Decision,
1. Declaring the expropriation of [the subject lots, including Lot No. 72] justified
and in lawful exercise of the right of eminent domain;
2. Declaring …. a balance of ₱1,990 in favor of Apolonio Go Puco, Jr. 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
Certificates of Title to their respective 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.4
No appeal was taken from the above Decision on Lot No. 72, and the judgment
of condemnation became final and executory. Thereafter, on 23 May 1962,
absolute title to Lot No. 72 was transferred to the Republic of the Philippines
under TCT No. 25030.5
Subsequently, when the Mactan International Airport commenced operations,
the Lahug Airport was ordered closed by then President Corazon C. Aquino in
a Memorandum of 29 November 1989.6 Lot No. 72 was thus virtually
abandoned.7
On 16 March 1990, Gopuco wrote8 the Bureau of Air Transportation, through
the manager of the Lahug Airport, seeking the return of his lot and offering to
return the money previously received by him as payment for the expropriation.
This letter was ignored.9
In the same year, Congress passed Republic Act No. 6958 creating the
Mactan-Cebu International Airport Authority (MCIAA) and in part providing for
the transfer of the assets of the Lahug Airport thereto. Consequently, on 08
May 1992, ownership of Lot No. 72 was transferred to MCIAA under TCT No.
120356.10
On 06 August 1992, Apolonio Gopuco, Jr. filed an amended complaint 11 for
recovery of ownership of Lot No. 72 against the Air Transportation Office12 and
the Province of Cebu with the Regional Trial Court (RTC) of Cebu, Branch X,
docketed as Civil Case No. CEB-11914. He maintained that by virtue of the
closure of the Lahug Airport, the original purpose for which the property was
expropriated had ceased or otherwise been abandoned, and title to the
property had therefore reverted to him.
Gopuco further alleged that when the original judgment of expropriation had
been handed down, and before they could file an appeal thereto, the CAA
offered them a compromise settlement whereby they were assured that the
expropriated lots would be resold to them for the same price as when it was
expropriated in the event that the Lahug Airport would be abandoned. Gopuco
claims to have accepted this offer.13 However, he failed to present any proof
on this matter, and later admitted that insofar as the said lot was concerned,
no compromise agreement was entered into by the government and the
previous owners.14
Lastly, Gopuco asserted that he had come across several announcements in
the papers that the Lahug Airport was soon to be developed into a commercial
complex, which he took to be a scheme of the Province of Cebu to make
permanent the deprivation of his property.
On 20 May 1994, the trial court rendered a Decision15 dismissing the complaint
and directing the herein respondent to pay the MCIAA exemplary damages,
litigation expenses and costs.
Aggrieved by the holding of the trial court, Gopuco appealed to the Court of
Appeals, which overturned the RTC decision, ordered the herein petitioners to
reconvey Lot No. 72 to Gopuco upon payment of the reasonable price as
determined by it, and deleted the award to the petitioners of exemplary
damages, litigation expenses and costs.
The Motion for Reconsideration was denied16 on 22 May 2003, hence this
petition, which raises the following issues:
WHETHER THE COURT OF APPEALS ERRED IN HOLDING THAT
RESPONDENT HAS THE RIGHT TO RECLAIM OWNERSHIP OVER THE
SUBJECT EXPROPRIATED LOT BASED ON THE IMPORT OF THE
DECEMBER 29, 1961 DECISION IN CIVIL CASE NO. 1881.
WHETHER THE COURT OF APPEALS ERRED IN DELETING THE AWARD
OF LITIGATION EXPENSES AND COSTS IN FAVOR OF PETITIONERS.
In deciding the original expropriation case that gave rise to the present
controversy, Civil Case No. R-1881, the CFI reasoned that the planned
expansion of the airport justified the exercise of eminent domain, thus:
As for the public purpose of the expropriation proceeding, it cannot be doubted.
Although the 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 return 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 for 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 a showing, the Court will
presume that the Lahug Airport will continue to be in
operation.17 (emphasis supplied)1avvphi1
By the time Gopuco had filed his action for recovery of ownership of Lot No.
72, Lahug Airport had indeed ceased to operate. Nevertheless, the trial court
held:
The fact of abandonment or closure of the Lahug Airport admitted by the
defendant did not by itself, result in the reversion of the subject property back
to the plaintiff. Nor did it vest in the plaintiff the right to demand reconveyance
of said property.
When real property has been acquired for public use unconditionally, either by
eminent domain or by purchase, the abandonment or non-use of the real
property, does not ipso facto give to the previous owner of said property any
right to recover the same (Fery vs. Municipality of Cabanatuan, 42 Phil. 28).18
In reversing the trial court, the Court of Appeals called attention to the fact that
both parties cited Fery v. Municipality of Cabanatuan,19 which the trial court
also relied on in its Decision. The court a quo agreed in Gopuco’s
interpretation of Fery that when the CFI in Civil Case No. R-1881 held that,
. . . [T]hen, 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….In the absence of such a showing, the Court will
presume that the Lahug Airport will continue to be in operation, . . . .20
the expropriation of the property was conditioned on its continued devotion to
its public purpose. Thus, although the MCIAA stressed that nothing in the
judgment of expropriation expressly stated that the lands would revert to their
previous owners should the public use be terminated or abandoned, the Court
of Appeals nevertheless ruled that,
. . . [W]hile, there is no explicit statement that the land is expropriated with the
condition that when the purpose is ended the property shall return to its owner,
the full import of the decision (in Civil Case No. R-1881) suggests that the
expropriation was granted because there is no clear showing that Lahug
Airport will be closed, the moment Mactan International Airport is put to
operation. It stands to reason that should that public use be abandoned, then
the expropriated property should revert back to its former owner.
Moreover, the foundation of the right to exercise the power of eminent domain
is genuine necessity. Condemnation is justified only if it is for the public good
and there is genuine necessity of a public character. Thus, when such genuine
necessity no longer exists as when the State abandons the property
expropriated, government interest must yield to the private right of the former
land owner, whose property right was disturbed as a consequence of the
exercise of eminent domain.
Justice, equity and fair play demand that the property should revert back to
plaintiff-appellant upon paying the reasonable value of the land to be based on
the prevailing market value at the time of judicial demand to recover the
property. If the State expects landowners to cooperate in its bid to take private
property for its public use, so must it apply also the same standard, to allow
the landowner to reclaim the property, now that the public use has been
abandoned.21
In this petition, the MCIAA reiterates that the Republic of the Philippines validly
expropriated Lot No. 72 through the proceedings in Civil Case No. R-1881, the
judgment of which had long become final and executory. It further asserts that
said judgment vested absolute and unconditional title in the government,
specifically on the petitioners, there having been no condition whatsoever that
the property should revert to its owners in case the Lahug Airport should be
abandoned.
On the other hand, the respondent would have us sustain the appellate court’s
interpretation of Fery as applied to the original judgment of expropriation, to
the effect that this was subject to the condition "that the Lahug Airport will
continue to be in operation."
We resolve to grant the petition.
In Fery, the Court asked and answered the same question confronting us now:
When private land is expropriated for a particular public use, and that particular
public use is abandoned, does the land so expropriated return to its former
owner?22
The answer to that question depends upon the character of the title acquired
by the 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. . . 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. (10 R.C.L., 240, sec. 202; 20 C.J.
1234, secs. 593-599 and numerous cases cited; Reichling vs. Covington
Lumber Co., 57 Wash., 225; 135 Am. St. Rep., 976; McConihay vs. Wright,
121 U.S., 201.)
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. (Fort Wayne vs. Lake Shore, etc. Ry. Co., 132 Ind., 558;
18 L.R.A., 367.) (Emphases Supplied)23
Did the judgment of expropriation in Civil Case No. R-1881 vest absolute and
unconditional title in the government? We have already had occasion to rule
on this matter in Mactan-Cebu International Airport Authority v. Court of
Appeals,24 which is a related action for reconveyance of a parcel of land also
subject of the expropriation proceedings in Civil Case No. R-1881. One of the
landowners affected by the said proceeding was Virginia Chiongbian, to whom
the CFI ordered the Republic of the Philippines to pay ₱34,415.00, with legal
interest computed from the time the government began using her land. Like
the herein respondent, she did not appeal from the CFI’s judgment. Also like
Gopuco, she eventually filed for the reconveyance of her property when the
airport closed. Although she was upheld by both the RTC of Cebu and the
Court of Appeals, on appeal we held that "the terms of the judgment (in Civil
Case No. R-1881) are clear and unequivocal and granted 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."25 Moreover, we held that
although other lot owners were able to successfully reacquire their lands by
virtue of a compromise agreement, since CHIONGBIAN was not a party to any
such agreement, she could not validly invoke the same.
The respondent would have us revisit this ruling for three reasons. First,
because he claims there is no showing that the government benefited from
entering into compromise agreements with the other lot owners; second,
because such a doctrine supposedly discriminates against those who have
"neither the werewithal nor the savvy to contest the expropriation," or agree to
modify the judgment; and third, because there exists between the government
and the owners of expropriated realty an "implied contract" that the properties
involved will be used only for the public purpose for which they were acquired
in the first place.
As to respondent’s first and second arguments, we have time and again ruled
that a compromise agreement, when not contrary to law, public order, public
policy, morals, or good customs, is a valid contract which is the law between
the parties.26 It is a contract perfected by mere consent,27 whereby the parties,
making reciprocal concessions, avoid litigation or put an end to one already
commenced. It has the force of law and is conclusive between the
parties,28 and courts will not relieve parties from obligations voluntarily
assumed, simply because their contracts turned out to be unwise.29 Note that
respondent has not shown that any of the compromise agreements were in
any way tainted with illegality, irregularity or imprudence. Indeed, anyone who
is not a party to a contract or agreement cannot be bound by its terms, and
cannot be affected by it.30 Since Gopuco was not a party to the compromise
agreements, he cannot legally invoke the same.31
Lastly, Gopuco argues that there is present, in cases of expropriation, an
"implied contract" that the properties will be used only for the public purpose
for which they were acquired. No such contract exists.
Eminent domain is generally described as "the highest and most exact idea of
property remaining in the government" that may be acquired for some public
purpose through a method in the nature of a forced purchase by the
State.32 Also often referred to as expropriation and, with less frequency, as
condemnation, it is, like police power and taxation, an inherent power of
sovereignty and need not be clothed with any constitutional gear to exist;
instead, provisions in our Constitution on the subject are meant more to
regulate, rather than to grant, the exercise of the power. It is a right to take
or reassert dominion over property within the state for public use or to meet a
public exigency and is said to be an essential part of governance even in its
most primitive form and thus inseparable from sovereignty. 33 In fact, "all
separate interests of individuals in property are held of the government under
this tacit agreement or implied reservation. Notwithstanding the grant to
individuals, the eminent domain, the highest and most exact idea of property,
remains in the government, or in the aggregate body of people in their
sovereign capacity; and they have the right to resume the possession of the
property whenever the public interest so requires it."34
The ubiquitous character of eminent domain is manifest in the nature of the
expropriation proceedings. Expropriation proceedings are not adversarial in
the conventional sense, for the condemning authority is not required to assert
any conflicting interest in the property. Thus, by filing the action, the
condemnor in effect merely serves notice that it is taking title and possession
of the property, and the defendant asserts title or interest in the property, not
to prove a right to possession, but to prove a right to compensation for the
taking.35
The only direct constitutional qualification is thus that "private property shall
not be taken for public use without just compensation."36 This prescription is
intended to provide a safeguard against possible abuse and so to protect as
well the individual against whose property the power is sought to be
enforced.37lawphil.net
In this case, the judgment on the propriety of the taking and the adequacy of
the compensation received have long become final. We have also already held
that the terms of that judgment granted title in fee simple to the Republic of the
Philippines. Therefore, pursuant to our ruling in Fery, as recently cited
in Reyes v. National Housing Authority,38 no rights to Lot No. 72, either
express or implied, have been retained by the herein respondent.
We are not unaware of the ruling in Heirs of Timoteo Moreno v. Mactan-Cebu
International Airport Authority,39 concerning still another set of owners of lots
declared expropriated in the judgment in Civil Case No. R-1881. As with
Chiongbian and the herein respondent, the owners of the lots therein did not
appeal the judgment of expropriation, but subsequently filed a complaint for
reconveyance. In ordering MCIAA to reconvey the said lots in their favor, we
held that the predicament of petitioners therein involved a constructive trust
"akin to the implied trust referred to in Art. 145440 of the Civil
Code."41 However, we qualified our Decision in that case, to the effect that,
We adhere to the principles enunciated in Fery and in Mactan-Cebu
International Airport Authority, and do not overrule them. Nonetheless the
weight of their import, particularly our ruling as regards the properties of
respondent Chiongbian in Mactan-Cebu International Airport Authority, must
be commensurate to the facts that were established therein as distinguished
from those extant in the case at bar. Chiongbian put forth inadmissible and
inconclusive evidence, while in the instant case we have preponderant
proof as found by the trial court of the existence of the right of
repurchase in favor of petitioners.
Neither has Gopuco, in the present case, adduced any evidence at all
concerning a right of repurchase in his favor. Heirs of Moreno is thus not in
point.
The trial court was thus correct in denying Gopuco’s claim for the
reconveyance of Lot No. 72 in his favor. However, for failure of the petitioners
to present any proof that this case was clearly unfounded or filed for purposes
of harassment, or that the herein respondent acted in gross and evident bad
faith, the reimposition of litigation expenses and costs has no basis. It is not
sound public policy to set a premium upon the right to litigate where such right
is exercised in good faith, as in the present case.42
WHEREFORE, the petition is GRANTED. The Decision of the Court of
Appeals in CA-G.R. SP No. 49898 dated 28 February 2001, and its Resolution
of 22 May 2003 are hereby REVERSED and SET ASIDE. The Decision of
RTC-Branch X of Cebu dated 20 May 1994 in Civil Case No. CEB-11914 is
REINSTATED with the modification that the award of exemplary damages,
litigation expenses and costs are DELETED.
SO ORDERED.
REPUBLIC VS LIM
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 ₱9,500.00 with the Philippine National Bank, pursuant to the
Order of the CFI dated October 19, 1938, 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 ₱4,062.10 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.
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
₱4,062.10, 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 ₱16,248.40, 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 ₱9,500,00, 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, ₱9,500.00 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 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).
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 Decision5 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. x x x. 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).
xxxxxx
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.
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 a second 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."
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.lawphil.net
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 ₱16,248.40 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 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.
x x x Although the right to appropriate and use land taken for a canal is
complete at the time of entry, title to the property taken remains in the
owner until payment is actually made. (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. Garcia15 this Court ruled that the
expropriation of lands consists of two stages, to wit:
"x x x 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" x x x.
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. x x x.
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 domain19 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.
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 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] x x
x 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 compensation. In Cosculluela v. Court of Appeals,29 we defined just
have been completed. Moreover, it is only upon payment of just compensation compensation as not only the correct determination of the amount to be paid
that title over the property passes to the government. Therefore, until the action to the property owner but also the payment of the property within a reasonable
for expropriation has been completed and terminated, ownership over the time. Without prompt payment, compensation cannot be considered "just."
property being expropriated remains with the registered
owner. Consequently, the latter can exercise all rights pertaining to an WHEREFORE, the assailed Decision of the Court of Appeals in CA-G.R. CV
owner, including the right to dispose of his property subject to the power No. 72915 is AFFIRMED in toto.
of the State ultimately to acquire it through expropriation. The Republic’s motion for reconsideration of our Resolution dated March 1,
It bears emphasis that when Valdehueza and Panerio mortgaged Lot 932 to 2004 is DENIED with FINALITY. No further pleadings will be allowed.
respondent in 1964, they were still the owners thereof and their title had not Let an entry of judgment be made in this case.
yet passed to the petitioner Republic. In fact, it never did. Such title or
ownership was rendered conclusive when we categorically ruled SO ORDERED.
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." ESLABAN VS DE ONORIO
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 This is a petition for review of the decision1 of the Court of Appeals which
to secure the performance of the principal obligation. One of its characteristics affirmed the decision of the Regional Trial Court, Branch 26, Surallah, South
is that it is inseparable from the property. It adheres to the property regardless Cotabato, ordering the National Irrigation Administration (NIA for brevity) to
of who its owner may subsequently be.25 Respondent must have known that pay respondent the amount of P107,517.60 as just compensation for the
even if Lot 932 is ultimately expropriated by the Republic, still, his right as a taking of the latter’s property.
mortgagee is protected. In this regard, Article 2127 of the Civil Code provides:
The facts are as follows:
"Art. 2127. The mortgage extends to the natural accessions, to the
Respondent Clarita Vda. de Enorio is the owner of a lot in Barangay M. Roxas,
improvements, growing fruits, and the rents or income not yet received when
Sto. Niño, South Cotabato with an area of 39,512 square meters. The lot,
the obligation becomes due, and to the amount of the indemnity granted or
known as Lot 1210-A-Pad-11-000586, is covered by TCT No. T-22121 of the
owing to the proprietor from the insurers of the property mortgaged, or in
Registry of Deeds, South Cotabato. On October 6, 1981, Santiago Eslaban,
virtue of expropriation for public use, with the declarations, amplifications,
Jr., Project Manager of the NIA, approved the construction of the main
and limitations established by law, whether the estate remains in the
irrigation canal of the NIA on the said lot, affecting a 24,660 square meter
possession of the mortgagor or it passes in the hands of a third person.
portion thereof. Respondent’s husband agreed to the construction of the NIA
In summation, while the prevailing doctrine is that "the non-payment of just canal provided that they be paid by the government for the area taken after the
compensation does not entitle the private landowner to recover possession of processing of documents by the Commission on Audit.
the expropriated lots,26 however, in cases where the government failed to pay
Sometime in 1983, a Right-of-Way agreement was executed between
just compensation within five (5)27 years from the finality of the judgment
respondent and the NIA (Exh. 1). The NIA then paid respondent the amount
in the expropriation proceedings, the owners concerned shall have the right
of P4,180.00 as Right-of-Way damages. Respondent subsequently executed
to recover possession of their property. This is in consonance with the principle
an Affidavit of Waiver of Rights and Fees whereby she waived any
that "the government cannot keep the property and dishonor the
compensation for damages to crops and improvements which she suffered as
judgment."28 To be sure, the five-year period limitation will encourage the
a result of the construction of a right-of-way on her property (Exh. 2). The same
government to pay just compensation punctually. This is in keeping with justice
year, petitioner offered respondent the sum of P35,000.00 by way of amicable
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
settlement pursuant to Executive Order No. 1035, §18, which provides in part
that ―
Financial assistance may also be given to owners of lands acquired under C.A.
141, as amended, for the area or portion subject to the reservation under
Section 12 thereof in such amounts as may be determined by the
implementing agency/instrumentality concerned in consultation with the
Commission on Audit and the assessor’s office concerned.
Respondent demanded payment for the taking of her property, but petitioner
refused to pay. Accordingly, respondent filed on December 10, 1990 a
complaint against petitioner before the Regional Trial Court, praying that
petitioner be ordered to pay the sum of P111,299.55 as compensation for the
portion of her property used in the construction of the canal constructed by the
NIA, litigation expenses, and the costs.
Petitioner, through the Office of the Solicitor-General, filed an Answer, in which
he admitted that NIA constructed an irrigation canal over the property of the
plaintiff and that NIA paid a certain landowner whose property had been taken
for irrigation purposes, but petitioner interposed the defense that: (1) the
government had not consented to be sued; (2) the total area used by the NIA
for its irrigation canal was only 2.27 hectares, not 24,600 square meters; and
(3) respondent was not entitled to compensation for the taking of her property
considering that she secured title over the property by virtue of a homestead
patent under C.A. No. 141.
At the pre-trial conference, the following facts were stipulated upon: (1) that
the area taken was 24,660 square meters; (2) that it was a portion of the land
covered by TCT No. T-22121 in the name of respondent and her late husband
(Exh. A); and (3) that this area had been taken by the NIA for the construction
of an irrigation canal.2
On October 18, 1993, the trial court rendered a decision, the dispositive portion
of which reads:
In view of the foregoing, decision is hereby rendered in favor of plaintiff and
against the defendant ordering the defendant, National Irrigation
Administration, to pay to plaintiff the sum of One Hundred Seven Thousand
Five Hundred Seventeen Pesos and Sixty Centavos (P107,517.60) as just
compensation for the questioned area of 24,660 square meters of land owned
by plaintiff and taken by said defendant NIA which used it for its main canal
plus costs.3
On November 15, 1993, petitioner appealed to the Court of Appeals which, on
October 31, 2000, affirmed the decision of the Regional Trial Court. Hence this
petition.
The issues in this case are:
1. WHETHER OR NOT THE PETITION IS DISMISSIBLE FOR FAILURE TO
COMPLY WITH THE PROVISIONS OF SECTION 5, RULE 7 OF THE
REVISED RULES OF CIVIL PROCEDURE.
2. WHETHER OR NOT LAND GRANTED BY VIRTUE OF A HOMESTEAD
PATENT AND SUBSEQUENTLY REGISTERED UNDER PRESIDENTIAL
DECREE 1529 CEASES TO BE PART OF THE PUBLIC DOMAIN.
3. WHETHER OR NOT THE VALUE OF JUST COMPENSATION SHALL BE
DETERMINED FROM THE TIME OF THE TAKING OR FROM THE TIME OF
THE FINALITY OF THE DECISION.
4. WHETHER THE AFFIDAVIT OF WAIVER OF RIGHTS AND FEES
EXECUTED BY RESPONDENT EXEMPTS PETITIONER FROM MAKING
PAYMENT TO THE FORMER.
We shall deal with these issues in the order they are stated.
First. Rule 7, §5 of the 1997 Revised Rules on Civil Procedure provides ―
Certification against forum shopping. ― The plaintiff or principal party shall
certify under oath in the complaint or other initiatory pleading asserting a claim
for relief, or in a sworn certification annexed thereto and simultaneously filed
therewith: (a) that he has not theretofore commenced any action or filed any
claim involving the same issues in any court, tribunal or quasi-judicial agency
and, to the best of his knowledge, no such other action or claim is pending
therein; (b) if there is such other pending action or claim, a complete statement
of the present status thereof; and (c) if he should thereafter learn that the same
or similar action or claim has been filed or is pending, he shall report the fact
within five (5) days therefrom to the court wherein his aforesaid complaint or
initiatory pleading has been filed.
Failure to comply with the foregoing requirements shall not be curable by mere
amendment of the complaint or other initiatory pleading but shall be cause for
the dismissal of the case without prejudice, unless otherwise provided, upon
motion and after hearing . . . .
By reason of Rule 45, §4 of the 1997 Revised Rules on Civil Procedure, in
relation to Rule 42, §2 thereof, the requirement of a certificate of non-forum
shopping applies to the filing of petitions for review on certiorari of the decisions
of the Court of Appeals, such as the one filed by petitioner.
As provided in Rule 45, §5, "The failure of the petitioner to comply with any of
the foregoing requirements regarding . . . the contents of the document which
should accompany the petition shall be sufficient ground for the dismissal
thereof."
The requirement in Rule 7, §5 that the certification should be executed by the
plaintiff or the principal means that counsel cannot sign the certificate against
forum-shopping. The reason for this is that the plaintiff or principal knows better
than anyone else whether a petition has previously been filed involving the
same case or substantially the same issues. Hence, a certification signed by
counsel alone is defective and constitutes a valid cause for dismissal of the
petition.4
In this case, the petition for review was filed by Santiago Eslaban, Jr., in his
capacity as Project Manager of the NIA. However, the verification and
certification against forum-shopping were signed by Cesar E. Gonzales, the
administrator of the agency. The real party-in-interest is the NIA, which is a
body corporate. Without being duly authorized by resolution of the board of the
corporation, neither Santiago Eslaban, Jr. nor Cesar E. Gonzales could sign
the certificate against forum-shopping accompanying the petition for review.
Hence, on this ground alone, the petition should be dismissed.
Second. Coming to the merits of the case, the land under litigation, as already
stated, is covered by a transfer certificate of title registered in the Registry
Office of Koronadal, South Cotabato on May 13, 1976. This land was originally
covered by Original Certificate of Title No. (P-25592) P-9800 which was issued
pursuant to a homestead patent granted on February 18, 1960. We have held:
Whenever public lands are alienated, granted or conveyed to applicants
thereof, and the deed grant or instrument of conveyance [sales patent]
registered with the Register of Deeds and the corresponding certificate and
owner’s duplicate of title issued, such lands are deemed registered lands
under the Torrens System and the certificate of title thus issued is as
conclusive and indefeasible as any other certificate of title issued to private
lands in ordinary or cadastral registration proceedings. 5
The Solicitor-General contends, however, that an encumbrance is imposed on
the land in question in view of §39 of the Land Registration Act (now P.D. No.
1529, §44) which provides:
Every person receiving a certificate of title in pursuance of a decree of
registration, and every subsequent purchaser of registered land who takes a
certificate of title for value in good faith shall hold the same free from all
encumbrances except those noted on said certificate, and any of the following
encumbrances which may be subsisting, namely:
....
Third. Any public highway, way, private way established by law, or any
government irrigation canal or lateral thereof, where the certificate of title does
not state that the boundaries of such highway, way, irrigation canal or lateral
thereof, have been determined.
As this provision says, however, the only servitude which a private property
owner is required to recognize in favor of the government is the easement of
a "public highway, way, private way established by law, or any government
canal or lateral thereof where the certificate of title does not state that the
boundaries thereof have been pre-determined." This implies that the same
should have been pre-existing at the time of the registration of the land in order
that the registered owner may be compelled to respect it. Conversely, where
the easement is not pre-existing and is sought to be imposed only after the
land has been registered under the Land Registration Act, proper expropriation
proceedings should be had, and just compensation paid to the registered
owner thereof.6
In this case, the irrigation canal constructed by the NIA on the contested
property was built only on October 6, 1981, several years after the property
had been registered on May 13, 1976. Accordingly, prior expropriation
proceedings should have been filed and just compensation paid to the owner
thereof before it could be taken for public use.
Indeed, the rule is that where private property is needed for conversion to some
public use, the first thing obviously that the government should do is to offer to
buy it.7 If the owner is willing to sell and the parties can agree on the price and
the other conditions of the sale, a voluntary transaction can then be concluded
and the transfer effected without the necessity of a judicial action. Otherwise,
the government will use its power of eminent domain, subject to the payment
of just compensation, to acquire private property in order to devote it to public
use.
Third. With respect to the compensation which the owner of the condemned
property is entitled to receive, it is likewise settled that it is the market value
which should be paid or "that sum of money which a person, desirous but not
compelled to buy, and an owner, willing but not compelled to sell, would agree
on as a price to be given and received therefor." 8 Further, just compensation
means not only the correct amount to be paid to the owner of the land but also
the payment of the land within a reasonable time from its taking. Without
prompt payment, compensation cannot be considered "just" for then the
property owner is made to suffer the consequence of being immediately
deprived of his land while being made to wait for a decade or more before
actually receiving the amount necessary to cope with his loss. 9 Nevertheless,
as noted in Ansaldo v. Tantuico, Jr.,10 there are instances where the
expropriating agency takes over the property prior to the expropriation suit, in
which case just compensation shall be determined as of the time of taking, not
as of the time of filing of the action of eminent domain.
Before its amendment in 1997, Rule 67, §4 provided:
Order of condemnation. When such a motion is overruled or when any party
fails to defend as required by this rule, the court may enter an order of
condemnation declaring that the plaintiff has a lawful right to take the property
sought to be condemned, for the public use or purpose described in the
complaint upon the payment of just compensation to be determined as of the
date of the filing of the complaint. . . .
It is now provided that ―
SEC. 4. Order of expropriation. ― If the objections to and the defense against
the right of the plaintiff to expropriate the property are overruled, or when no
party appears to defend as required by this Rule, the court may issue an order
of expropriation declaring that the plaintiff has a lawful right to take the property
sought to be expropriated, for the public use or purpose described in the
complaint, upon the payment of just compensation to be determined as of the
date of the taking of the property or the filing of the complaint, whichever came
first.
A final order sustaining the right to expropriate the property may be appealed
by any party aggrieved thereby. Such appeal, however, shall not prevent the
court from determining the just compensation to be paid.
After the rendition of such an order, the plaintiff shall not be permitted to
dismiss or discontinue the proceeding except on such terms as the court
deems just and equitable. (Emphasis added)
Thus, the value of the property must be determined either as of the date of the
taking of the property or the filing of the complaint, "whichever came first." Even
before the new rule, however, it was already held in Commissioner of Public
Highways v. Burgos11 that the price of the land at the time of taking, not its
value after the passage of time, represents the true value to be paid as just
compensation. It was, therefore, error for the Court of Appeals to rule that the
just compensation to be paid to respondent should be determined as of the
filing of the complaint in 1990, and not the time of its taking by the NIA in 1981,
because petitioner was allegedly remiss in its obligation to pay respondent,
and it was respondent who filed the complaint. In the case of Burgos,12 it was
also the property owner who brought the action for compensation against the
government after 25 years since the taking of his property for the construction
of a road.
Indeed, the value of the land may be affected by many factors. It may be
enhanced on account of its taking for public use, just as it may depreciate. As
observed in Republic v. Lara:13
[W]here property is taken ahead of the filing of the condemnation proceedings,
the value thereof may be enhanced by the public purpose for which it is taken;
the entry by the plaintiff upon the property may have depreciated its value
thereby; or there may have been a natural increase in the value of the property
from the time it is taken to the time the complaint is filed, due to general
economic conditions. The owner of private property should be compensated
only for what he actually loses; it is not intended that his compensation shall
extend beyond his loss or injury. And what he loses is only the actual value of
his property at the time it is taken. This is the only way that compensation to
be paid can be truly just, i.e., "just" not only to the individual whose property is
taken, "but to the public, which is to pay for it" . . . .
In this case, the proper valuation for the property in question is P16,047.61 per
hectare, the price level for 1982, based on the appraisal report submitted by
the commission (composed of the provincial treasurer, assessor, and auditor
of South Cotabato) constituted by the trial court to make an assessment of the
expropriated land and fix the price thereof on a per hectare basis.14
Fourth. Petitioner finally contends that it is exempt from paying any amount to
respondent because the latter executed an Affidavit of Waiver of Rights and
Fees of any compensation due in favor of the Municipal Treasurer of Barangay
Sto. Niño, South Cotabato. However, as the Court of Appeals correctly held:
[I]f NIA intended to bind the appellee to said affidavit, it would not even have
bothered to give her any amount for damages caused on the
improvements/crops within the appellee’s property. This, apparently was not
the case, as can be gleaned from the disbursement voucher in the amount
of P4,180.00 (page 10 of the Folder of Exhibits in Civil Case 396) issued on
September 17, 1983 in favor of the appellee, and the letter from the Office of
the Solicitor General recommending the giving of "financial assistance in the
amount of P35,000.00" to the appellee.
Thus, We are inclined to give more credence to the appellee’s explanation that
the waiver of rights and fees "pertains only to improvements and crops and not
to the value of the land utilized by NIA for its main canal."15
WHEREFORE, premises considered, the assailed decision of the Court of
Appeals is hereby AFFIRMED with MODIFICATION to the extent that the just
compensation for the contested property be paid to respondent in the amount
of P16,047.61 per hectare, with interest at the legal rate of six percent (6%)
per annum from the time of taking until full payment is made. Costs against
petitioner.1âwphi1.nêt
SO ORDERED.
RP VS IAC
This is an appeal from the 1) decision * of the FIRST CIVIL CASES DIVISION
of the then Intermediate Appellate Court dated May 13, 1986, in AC G.R. No.
01410 entitled the ROMAN CATHOLIC BISHOP OF Lucena, represented
by Msgr. Jose T. Sanchez, applicant-appellee vs. Republic of the Philippines,
et al., Oppositors-appellants, affirming the decision ** of the then Court of
FIRST INSTANCE of Quezon, 9th Judicial District, Branch 1, dated November
4, 1980 in Land Registration Case No. N-1106 entitled the ROMAN
CATHOLIC BISHOP of Lucena, represented by Msgr. Jose T. Sanchez,
applicant vs. the Director of Lands and the Director, Bureau of Forest
Development, oppositors, ordering the registration of title to the parcel of land
designated, as lots 1, 2 and 3 of plan PSD-65686 and its technical
descriptions, and the parcel of land described in plan PSU-112592 and its
technical description, together with whatever improvements existing thereon,
in the name of the ROMAN CATHOLIC BISHOP of Lucena and 2) its resolution
Dated June 19,1986, denying appellant's "Motion for Reconsideration for lack
of merit."
The factual background of the case as found by the Intermediate Appellate
Court are as follows:
On February 2, 1979, the ROMAN CATHOLIC BISHOP of Lucena,
represented by Msgr. Jose T. Sanchez, filed an application for confirmation of
title to four (4) parcels of land. Three of said parcels, denominated as Lots 1,
2 and 3, respectively, of plan PSU-65686 are situated in Barrio Masin,
Municipality of Candelaria, Quezon Province. The fourth parcels under plan
PSU-112592 is located in Barrio Bucal (Taguan), same municipality and
province. As basis for the application, the applicant claimed title to the various
properties through either purchase or donation dating as far back as 1928.
The legal requirements of publication and posting were duly complied with, as
was the service of copies of notice of initial hearing on the proper government
officials.
In behalf of the Director of Lands and the Director of the Bureau of Forest
Development, the Solicitor General filed an Opposition on April 20, 1979,
alleging therein among others, that the applicant did not have an imperfect title
or title in fee simple to the parcel of land being applied for.
At the initial hearing held on November 13, 1979, only the Provincial Fiscal in
representation of the Solicitor General appeared to interpose personal
objection to the application. Hence, an Order of General Default against the
whole world was issued by the Court a quo except for the Director of Lands
and the Director of the Bureau of Forest Development.
The preliminaries dispensed with, the applicant then introduced its proofs in
support of the petition, summed up by the lower court as follows:
With respect to Lots 1, 2, and 3, plan PSU-65686.
Lots 1, 2 and 3 of plan PSU-65686 respectively containing an area of 18,977,
6,910 and 16,221 square meters, are adjoining lots & are situated in the Barrio
of Masin, Municipality of Candelaria, Province of Quezon (formerly Tayabas)
(Exhibits F, F-1, F-2 and F-3). Said lots were surveyed for the Roman Catholic
Church on November 3, 1928 (Exhibit P-5) and the survey plan approved on
October 20, 1929 (Exhibit F-6).
Lot 1 was acquired by the Roman Catholic Church thru Rev. Father Raymundo
Esquenet by purchase from the spouses Atanacio Yranso and Maria Coronado
on October 20, 1928 (Exhibits G, G-1), portion of Lot 2 also by purchase thru
Rev. Father Raymundo Esquenet from the spouses Benito Maramot and
Venancia Descaller on May 22, 1969 (Exhibits M, N-1), while the remaining
portion of Lot 2 and Lot 3 were already owned and possessed by the Roman
Catholic Church even prior to the survey of the said three lots in 1928.
Records of burial of the Roman Catholic Church of Candelaria, Quezon
showed that even as early as November 1918, Lot 3 has already been utilized
by the Roman Catholic Church as its cemetery in Candelaria, Quezon (Exhibit
N, N-1 to N-5).<äre||anº•1àw>
These three lots presently constituted the Roman Catholic Church cemetery
in Candelaria, Quezon.
Lots 1, 2 and 3 are declared for taxation purposes in the name of the Roman
Catholic Church under Tax Declaration Nos. 22-19-02-079, 22-19-02-077 and
22-19-02-082 as 'cemetery site' (Exhibit S, V and T).
With respect to the parcel of land described in plan PSU-112592:
This parcel of land situated in the barrio of Bucal (Taguan), Municipality of
Candelaria, Province of Quezon (formerly Tayabas) and more particularly
described in plan PSU-1 12592 and its technical description with an area of
3,221 square meters (Exhibit 1) was formerly owned and possessed by the
spouses Paulo G. Macasaet, and Gabriela V. de Macasaet. Said spouses, on
February 26, 1941, donated this lot to the Roman Catholic Church represented
by Reverend Father Raymundo Esquenet (Exhibit J, J-1 to J-4). It was
surveyed for the Roman Catholic Church on Aug. 16, 1940 as church site and
the corresponding survey plan approved on Jan. 15, 1941 (Exhibits I-1, I-2, 1-
3).
Previously erected on this Lot was an old chapel which was demolished and
new chapel now stands in its place on the same site.
For his part, the Fiscal in a Manifestation dated July 22, 1980, said 'the State
will not adduce evidence in support of its opposition and will submit the instant
case for decision.'
Evaluating the applicant's submitted proofs, the court a quo concluded, on the
basis of acquisitive prescription at the very least, that the former had
adequately shown title to the parcels of land being claimed.
Since the acquisition of these four (4) lots by the applicant, it has been in
continuous possession and enjoyment thereof, and such possession, together
with its predecessors-in interest, covering a period of more than 52 years (at
least from the date of the survey in 1928) with respect to lots 1 and 2, about
62 years with respect to lot 3, all of plan PSU- 65686; and more than 39 years
with respect to the fourth parcel described in plan PSU-112592 (at least from
the date of the survey in 1940) have been open, public, continuous, peaceful,
adverse against the whole world, and in the concept of owner.
Accordingly, the court ordered the registration of the four parcels together with
the improvements thereon "in the name of the ROMAN CATHOLIC BISHOP
OF LUCENA, INC., a religious corporation sole duly registered and existing
under the laws of the Republic of the Philippines."
Against this decision, the Solicitor General filed a Motion for reconsideration
on the following grounds:
1. Article XIV, Section 11 of the New Constitution(1973) disqualifies a private
corporation from acquiring alienable lands for the public domain.
2. In the case at bar the application was filed after the effectivity on the New
Constitution on January 17, 1973.
which was denied by the lower court for lack of merit.
Still insisting of the alleged unconstitutionality of the registration (a point which,
incidentally, the appellant never raised in the lower court prior to its Motion for
Reconsideration), the Republic elevated this appeal. (Rollo, pp. 25-28)
On May 13, 1986, the first Civil Cases Division of the Intermediate Appellate
Court rendered its Decision the dispositive part of which reads:
WHEREFORE, finding the judgment a quo to be supported by law and the
evidence on record, the same is hereby AFFIRMED. No pronouncement as to
costs.
SO ORDERED. (Rollo p. 30)
A reconsideration of the aforequoted Decision was sought by Appellant
Republic of the Philippines, but for lack of merit, its motion for reconsideration
was denied on June 19, 1986, by Resolution of the First Civil Case Division,
Intermediate Appellate Court which resolution reads in full:
Considering appellant Republic of the Philippines "Motion for reconsideration"
filed on June 4, 1986; the Court RESOLVED to DENY the Motion for
Reconsideration for lack of merit, grounds raised therein having all been
considered in the decision. (Rollo, p. 31)
Hence, this petition.
The following are the assigned errors raised by the petitioner in its petition:
1. The decision and the resolution in question are contrary to law and decisions
of this honorable Court in Meralco vs. Castro-Bartolome and Republic, 114
SCRA 799 (prom. June 29,1982); Republic vs. Judge Villanueva and Iglesia
ni Cristo, 114 SCRA 875, June 29, 1982); and Republic vs. Judge Gonong and
Iglesia ni Cristo, 118 SCRA 729-733 (November 25,1982); Director of Lands
vs. Hermanos y Hermanas, Inc. 141 SCRA 21-25 (Jan. 7,1986).
2. The lands applied for registration were the subject of a previous registration
case where a decree of registration was already issued.
3. Respondent corporation failed to establish the indentity of the lands applied
for. (Rollo, pp. 14-15)
The issue raised in this case involves the question of whether the Roman
Catholic Bishop of Lucena, as a corporation sole is qualified to apply for
confirmation of its title to the four (4) parcels of land subject of this case.
Corollary thereto is the question of whether or not a corporation sole should
be treated as an ordinary private corporation, for purpose of the application of
Art. XIV, Sec. 11 of the 1973 Constitution.
Article XIV, Sec. 11 of the 1973 Constitution, in part provides:
Sec. 11. .... No private corporation or association may hold alienable lands of
the public domain except by lease not to exceed one thousand hectares in
area; nor may any citizen hold such lands by lease in excess of five hundred
hectares....
Sec. 48 of the Public Land Act, in part, provides:
Sec. 48. The following described citizens of the Philippines occupying lands of
the public domain or claiming to own any such lands or an interest therein, but
whose titles have not been perfected or completed, may apply to the Court of
First Instance of the province where the land is located for confirmation of their
claims and the issuance of a Certificate of title therefor, under the Land
Registration Act, to wit:
(a) ...
(b) Those who by themselves or through their predecessor-in-interest have
been in open, continuous, exclusive, and notorious possession and occupation
of agricultural lands of the public domain under a bona fide claim of acquisition
of ownership for at least thirty years immediately preceding the filing of the
application for confirmation of title except when prevented by war or force
majeure. These shall be conclusively presumed to have performed all the
conditions essential to a Government grant and shall be entitled to a certificate
of title under the provisions of this chapter.
(c) ...
In its Motion for Reconsideration, petitioner contends that the Roman Catholic
Bishop of Lucena (private respondent herein) which is admittedly a corporation
sole is disqualified to own and register its title over the parcels of land involved
herein. (Rollo, p. 41)
In its petition it likewise argued that being a juridical entity, private respondent
cannot avail of the benefits of Sec. 48(b) of the public land law which applies
to FILIPINO citizens or NATURAL persons. On the other hand, private
respondent in its MEMORANDUM espoused the contrary view.
There is no merit in this petition.
The parties herein do not dispute that since the acquisition of the four (4) lots
by the applicant, it has been in continuous possession and enjoyment thereof,
and such possession, together with its predecessors-in-interest, covering a
period of more than 52 years (at least from the date of survey in 1928) with
respect to lots 1 and 2, about 62 years with respect to lot 3, all of plan PSU-
65686; and more than 39 years with respect to the fourth parcel described in
plan PSU-11 2592 (at least from the date of the survey in 1940) have been
open, public, continuous, peaceful, adverse against the whole world, and in
the concept of owner.
Being disputed before this Court is the matter of the applicability of Art. XIV
Sec. 11 of the 1973 Constitution to the case at bar.
Petitioner argues that considering such constitutional prohibition, private
respondent is disqualified to own and register its title to the lots in question.
Further, it argues that since the application for registration was filed only on
February 2, 1979, long after the 1973 Constitution took effect on January 17,
1973, the application for registration and confirmation of title is ineffectual
because at the time it was filed, private corporation had been declared
ineligible to acquire alienable lands of the public domain pursuant to Art. XIV,
Sec. 11 of the said constitution. (Rollo, p. 41)
The questioned posed before this Court has been settled in the case
of DIRECTOR OF LANDS vs. Intermediate Appellate Court (146 SCRA 509
[1986]) which reversed the ruling first enunciated in the 1982 case of Manila
Electric Co. vs. CASTRO BARTOLOME, (114 SCRA 789 [1982]) imposing the
constitutional ban on public land acquisition by private corporations which
ruling was declared emphatically as res judicata on January 7, 1986 in Director
of Lands vs. Hermanos y Hermanas de Sta. Cruz de Mayo, Inc., (141 SCRA
21 [1986]).<äre||anº•1àw> In said case, (Director of Lands v. IAC, supra), this
Court stated that a determination of the character of the lands at the time of
institution of the registration proceedings must be made. If they were then still
part of the public domain, it must be answered in the negative.
If, on the other hand, they were already private lands, the constitutional
prohibition against their acquisition by private corporation or association
obviously does not apply. In affirming the Decision of the Intermediate
Appellate Court in said case, this Court adopted the vigorous dissent of the
then Justice, later Chief Justice Claudio Teehankee, tracing the line of cases
beginning with CARINO, 1 in 1909, thru SUSI, 2 in 1925, down to HERICO, 3 in
1980, which developed, affirmed and reaffirmed the doctrine that open,
exclusive and undisputed possession of alienable public land for the period
prescribed by law creates the legal fiction whereby the land, upon completion
of the requisite period ipso jure and without the need of judicial or other
sanction, ceases to be public land and becomes' private property. (DIRECTOR
OF LANDS vs. IAC, supra, p. 518).
Nothing can more clearly demonstrate the logical inevitability of considering
possession of public land which is of the character and duration prescribed by
statute as the equivalent of an express grant from the state than the dictim of
the statute itself; 4 that the possessor "... shall be conclusively presumed to
have performed all the conditions essential to a government grant and shall be
entitled to a certificate of title ..." No proof being admissable to overcome a
conclusive presumption, confirmation proceedings would, in truth be little more
than a formality, at the most limited to ascertaining whether the possession
claimed is of the required character and length of time, and registration
thereunder would not confer title, but simply recognize a title already vested.
The proceedings would not ORIGINALLY convert the land from public to
private land, but only confirm such a conversion already effected by operation
of law from the moment the required period of possession became complete.
As was so well put in Carino, "... There are indications that registration was
expected from all, but none sufficient to show that, for want of it, ownership
actually gained would be lost. The effect of the proof, wherever made, was not
to confer title, but simply to establish it, as already conferred by the decree, if
not by earlier law. (DIRECTOR OF LANDS vs. IAC, supra, p. 520).
The open, continuous and exclusive possession of the four lots by private
respondent can clearly be gleaned from the following facts on record: Lot 1
and portion of Lot 2 was acquired by purchase in 1928 and 1929, respectively.
The remaining portion of lots 2 and 3 was already owned and possessed by
private respondent even prior to the survey of said lots in 1928. In fact, records
of burial of the Roman Catholic Church of Candelaria, Quezon showed that as
early as 1919, Lot 3 has already been utilized by the Roman Catholic Church
as its cemetery. That at present, said three lots are utilized as the Roman
Catholic Church of Candelaria, Quezon. That said lots are declared for taxation
purposes in the name of the Roman Catholic Church. The fourth parcel of land
was acquired by donation in 1941 and same lot is utilized as church site.
It must be emphasized that the Court is not here saying that a corporation sole
should be treated like an ordinary private corporation.
In Roman Catholic Apostolic Administration of Davao, Inc. vs. Land
Registration Commission, et al. (L-8451, December 20,1957,102 Phil. 596).
We articulated:
In solving the problem thus submitted to our consideration, We can say the
following: A corporation sole is a special form of corporation usually associated
with the clergy. Conceived and introduced into the common law by sheer
necessity, this legal creation which was referred to as "that unhappy freak of
English Law" was designed to facilitate the exercise of the functions of
ownership carried on by the clerics for and on behalf of the church which was
regarded as the property owner (See 1 Bouvier's Law Dictionary, p. 682-683).
A corporation sole consists of one person only, and his successors (who will
always be one at a time), in some particular station, who are incorporated by
law in order to give them some legal capacities and advantages, particulary
that of perpetuity, which in their natural persons they could not have had. In
this sense, the King is a sole corporation; so is a bishop, or deans distinct from
their several chapters (Reid vs. Barry, 93 fla. 849, 112 So. 846).
Pertinent to this case is the provision of Sec. 113 Batas Pambansa Blg. 68
which reads as follows:
Sec. 113. Acquisition and alienation of property. — Any corporation sole may
purchase and hold real estate and personal property for its church, charitable,
benevolent or educational purposes, and may receive bequests or gifts for
such purposes. Such corporation may mortgage or sell real property held by it
upon obtaining an order for that purpose from the Court of First Instance of the
province where the property is situated; but before the order is issued, proof
must be made to the satisfaction of the Court that notice of the application for
leave to mortgage or sell has been given by publication or otherwise in such
manner and for such time as said court may have directed, and that it is to the
interest of the corporation that leave to mortgage or sell should be granted.
The application for leave to mortgage or sell must be made by petition, duly
verified by the chief archbishop, bishop, priest, minister, rabbi or presiding
elder acting as corporation sole, and may be opposed by any member of the
religious denomination, sect or church represented by the corporation sole:
Provided, That in cases where the rules, regulations and discipline of the
religious denomination, sect or church religious society or order concerned
represented by such corporation sole regulate the method of acquiring,
holding, selling and mortgaging real estate and personal property, such rules,
regulations and discipline shall control and the intervention of the courts shall
not be necessary.
There is no doubt that a corporation sole by the nature of its Incorporation is
vested with the right to purchase and hold real estate and personal property.
It need not therefore be treated as an ordinary private corporation because
whether or not it be so treated as such, the Constitutional provision involved
will, nevertheless, be not applicable.
In the light of the facts obtaining in this case and the ruling of this Court
in Director of Lands vs. IAC, (supra, 513), the lands subject of this petition were
already private property at the time the application for confirmation of title was
filed in 1979. There is therefore no cogent reason to disturb the findings of the
appellate court.
WHEREFORE, the petition is dismissed for lack of merit and the appealed
decision and Resolution of the Intermediate Appellate Court is hereby
AFFIRMED.
SO ORDERED.
EPZA VS DULAY
The question raised in this petition is whether or not Presidential Decrees
Numbered 76, 464, 794 and 1533 have repealed and superseded Sections 5
to 8 of Rule 67 of the Revised Rules of Court, such that in determining the just
compensation of property in an expropriation case, the only basis should be
its market value as declared by the owner or as determined by the assessor,
whichever is lower.
On January 15, 1979, the President of the Philippines, issued Proclamation
No. 1811, reserving a certain parcel of land of the public domain situated in
the City of Lapu-Lapu, Island of Mactan, Cebu and covering a total area of
1,193,669 square meters, more or less, for the establishment of an export
processing zone by petitioner Export Processing Zone Authority (EPZA).
Not all the reserved area, however, was public land. The proclamation
included, among others, four (4) parcels of land with an aggregate area of
22,328 square meters owned and registered in the name of the private
respondent. The petitioner, therefore, offered to purchase the parcels of land
from the respondent in acccordance with the valuation set forth in Section 92,
Presidential Decree (P.D.) No. 464, as amended. The parties failed to reach
an agreement regarding the sale of the property.
The petitioner filed with the then Court of First Instance of Cebu, Branch XVI,
Lapu-Lapu City, a complaint for expropriation with a prayer for the issuance of
a writ of possession against the private respondent, to expropriate the
aforesaid parcels of land pursuant to P.D. No. 66, as amended, which
empowers the petitioner to acquire by condemnation proceedings any property
for the establishment of export processing zones, in relation to Proclamation
No. 1811, for the purpose of establishing the Mactan Export Processing Zone.
On October 21, 1980, the respondent judge issued a writ of possession
authorizing the petitioner to take immediate possession of the premises. On
December 23, 1980, the private respondent flied its answer.
At the pre-trial conference on February 13, 1981, the respondent judge issued
an order stating that the parties have agreed that the only issue to be resolved
is the just compensation for the properties and that the pre-trial is thereby
terminated and the hearing on the merits is set on April 2, 1981.
On February 17, 1981, the respondent judge issued the order of condemnation
declaring the petitioner as having the lawful right to take the properties sought
to be condemned, upon the payment of just compensation to be determined
as of the filing of the complaint. The respondent judge also issued a second
order, subject of this petition, appointing certain persons as commissioners to
ascertain and report to the court the just compensation for the properties
sought to be expropriated.
On June 19, 1981, the three commissioners submitted their consolidated
report recommending the amount of P15.00 per square meter as the fair and
reasonable value of just compensation for the properties.
On July 29, 1981, the petitioner Med a Motion for Reconsideration of the order
of February 19, 1981 and Objection to Commissioner's Report on the grounds
that P.D. No. 1533 has superseded Sections 5 to 8 of Rule 67 of the Rules of
Court on the ascertainment of just compensation through commissioners; and
that the compensation must not exceed the maximum amount set by P.D. No.
1533.
On November 14, 1981, the trial court denied the petitioner's motion for
reconsideration and gave the latter ten (10) days within which to file its
objection to the Commissioner's Report.
On February 9, 1982, the petitioner flied this present petition for certiorari and
mandamus with preliminary restraining order, enjoining the trial court from
enforcing the order dated February 17, 1981 and from further proceeding with
the hearing of the expropriation case.
The only issue raised in this petition is whether or not Sections 5 to 8, Rule 67
of the Revised Rules of Court had been repealed or deemed amended by P.D.
No. 1533 insofar as the appointment of commissioners to determine the just
compensation is concerned. Stated in another way, is the exclusive and
mandatory mode of determining just compensation in P.D. No. 1533 valid and
constitutional?
The petitioner maintains that the respondent judge acted in excess of his
jurisdiction and with grave abuse of discretion in denying the petitioner's
motion for reconsideration and in setting the commissioner's report for hearing
because under P.D. No. 1533, which is the applicable law herein, the basis of
just compensation shall be the fair and current market value declared by the
owner of the property sought to be expropriated or such market value as
determined by the assessor, whichever is lower. Therefore, there is no more
need to appoint commissioners as prescribed by Rule 67 of the Revised Rules
of Court and for said commissioners to consider other highly variable factors
in order to determine just compensation. The petitioner further maintains that
P.D. No. 1533 has vested on the assessors and the property owners
themselves the power or duty to fix the market value of the properties and that
said property owners are given the full opportunity to be heard before the Local
Board of Assessment Appeals and the Central Board of Assessment Appeals.
Thus, the vesting on the assessor or the property owner of the right to
determine the just compensation in expropriation proceedings, with
appropriate procedure for appeal to higher administrative boards, is valid and
constitutional.
Prior to the promulgation of P.D. Nos. 76, 464, 794 and 1533, this Court has
interpreted the eminent domain provisions of the Constitution and established
the meaning, under the fundametal law, of just compensation and who has the
power to determine it. Thus, in the following cases, wherein the filing of the
expropriation proceedings were all commenced prior to the promulgation of
the aforementioned decrees, we laid down the doctrine onjust compensation:
Municipality of Daet v. Court of Appeals (93 SCRA 503, 516),
xxx xxx xxx
"And in the case of J.M. Tuason & Co., Inc. v. Land Tenure Administration, 31
SCRA 413, the Court, speaking thru now Chief Justice Fernando, reiterated
the 'well-settled (rule) that just compensation means the equivalent for the
value of the property at the time of its taking. Anything beyond that is more and
anything short of that is less, than just compensation. It means a fair and full
equivalent for the loss sustained, which is the measure of the indemnity, not
whatever gain would accrue to the expropriating entity."
Garcia v. Court ofappeals (102 SCRA 597, 608),
xxx xxx xxx
"Hence, in estimating the market value, all the capabilities of the property and
all the uses to which it may be applied or for which it is adapted are to be
considered and not merely the condition it is in the time and the use to which
it is then applied by the owner. All the facts as to the condition of the property
and its surroundings, its improvements and capabilities may be shown and
considered in estimating its value."
Republic v. Santos (141 SCRA 30, 35-36),
"According to section 8 of Rule 67, the court is not bound by the
commissioners' report. It may make such order or render such judgment as
shall secure to the plaintiff the property essential to the exercise of his right of
condemnation, and to the defendant just compensation for the property
expropriated. This Court may substitute its own estimate of the value as
gathered from the record (Manila Railroad Company v. Velasquez, 32 Phil.
286)."
However, the promulgation of the aforementioned decrees practically set aside
the above and many other precedents hammered out in the course of
evidence-laden, well argued, fully heard, studiously deliberated, and
judiciously considered court proceedings. The decrees categorically and
peremptorily limited the definition of just compensation thus:
P.D. No. 76:
xxx xxx xxx
"For purposes of just compensation in cases of private property acquired by
the government for public use, the basis shall be the current and fair market
value declared by the owner or administrator, or such market value as
determined by the Assessor, whichever is lower."
P.D. No. 464:
"Section 92. Basis for payment of just compensation in expropriation
proceedings. — In determining just compensation which private property is
acquired by the government for public use, the basis shall be the market value
declared by the owner or administrator or anyone having legal interest in the
property, or such market value as determined by the assessor, whichever is
lower."
P.D. No. 794:
"Section 92. Basis for payment of just compensation in expropriation
proceedings. — In determining just compensation when private property is
acquired by the government for public use, the same shall not exceed the
market value declared by the owner or administrator or anyone having legal
interest in the property, or such market value as determined by the assessor,
whichever is lower."
P.D. No. 1533:
"Section 1. In determining just compensation for private property acquired
through eminent domain proceedings, the compensation to be paid shall not
exceed the value declared by the owner or administrator or anyone having
legal interest in the property or determined by the assessor, pursuant to the
Real Property Tax Code, whichever value is lower, prior to the
recommendation or decision of the appropriate Government office to acquire
the property."
We are constrained to declare the provisions of the Decrees on just
compensation unconstitutional and void and accordingly dismiss the instant
petition for lack of merit.
The method of ascertaining just compensation under the aforecited decrees
constitutes impermissible encroachment on judicial prerogatives. It tends to
render this Court inutile in a matter which under the Constitution is reserved to
it for final determination.
Thus, although in an expropriation proceeding the court technically would still
have the power to determine the just compensation for the property, following
the applicable decrees, its task would be relegated to simply stating the lower
value of the property as declared either by the owner or the assessor. As a
necessary consequence, it would be useless for the court to appoint
commissioners under Rule 67 of the Rules of Court. Moreover, the need to
satisfy the due process clause in the taking of private property is seemingly
fulfilled since it cannot be said that a judicial proceeding was not had before
the actual taking. However, the strict application of the decrees during the
proceedings would be nothing short of a mere formality or charade as the court
has only to choose between the valuation of the owner and that of the
assessor, and its choice is always limited to the lower of the two. The court
cannot exercise its discretion or independence in determining what is just or
fair. Even a grade school pupil could substitute for the judge insofar as the
determination of constitutional just compensation is concerned.
In the case of National Housing Authority v. Reyes (123 SCRA 245), this Court
upheld P.D. No. 464, as further amended by P.D. Nos. 794, 1224 and 1259.
In this case, the petitioner National Housing Authority contended that the
owner's declaration at P1,400.00 which happened to be lower than the
assessor's assessment, is the just compensation for the respondent's property
under section 92 of P.D. No. 464. On the other hand, the private respondent
stressed that while there may be basis for the allegation that the respondent
judge did not follow the decree, the matter is still subject to his final disposition,
he having been vested with the original and competent authority to exercise
his judicial discretion in the light of the constitutional clauses on due process
and equal protection.
To these opposing arguments, this Court ruled ihat under the conceded facts,
there should be a recognition that the law as it stands must be applied; that
the decree having spoken so clearly and unequivocably calls for obedience;
and that on a matter where the applicable law speaks in no uncertain
language, the Court has no choice except to yield to its command. We further
stated that "the courts should recognize that the rule introduced by P.D. No.
76 and reiterated in subsequent decrees does not upset the established
concepts of justice or the constitutional provision on just compensation for,
precisely, the owner is allowed to make his own valuation of his property."
While the Court yielded to executive prerogative exercised in the form of
absolute law-making power, its members, nonetheless, remained
uncomfortable with the implications of the decision and the abuse and
unfairness which might follow in its wake. For one thing, the President himself
did not seem assured or confident with his own enactment. It was not enough
to lay down the law on determination of just compensation in P.D. 76. It had to
be repeated and reiterated in P.D. 464, P.D. 794, and P.D. 1533. The provision
is also found in P.D. 1224, P.D. 1259 and P.D. 1313. Inspite of its effectivity
as general law and the wide publicity given to it, the questioned provision or
an even stricter version had to be embodied in cases of specific expropriations
by decree as in P.D. 1669 expropriating the Tambunting Estate and P.D. 1670
expropriating the Sunog Apog area in Tondo, Manila.
In the present petition, we are once again confronted with the same question
of whether the courts under P.D. 1533, which contains the same provision on
just compensation as its predecessor decrees, still have the power and
authority to determine just compensation, independent of what is stated by the
decree and to this effect, to appoint commissioners for such purpose.
This time, we answer in the affirmative.
In overruling the petitioner's motion for reconsideration and objection to the
commissioner's report, the trial court said:
"Another consideration why the Court is empowered to appoint commissioners
to assess the just compensation of these properties under eminent domain
proceedings, is the well-entrenched ruling that 'the owner of property
expropriated is entitled to recover from expropriating authority the fair and full
value of the lot, as of the time when possession thereof was actually taken by
the province, plus consequential damages — including attorney's fees — from
which the consequential benefits, if any should be deducted, with interest at
the legal rate, on the aggregate sum due to the owner from and after the date
of actual taking.' (Capitol Subdivision, Inc. v. Province of Negros Occidental, 7
SCRA 60). In fine, the decree only establishes a uniform basis for determining
just compensation which the Court may consider as one of the factors in
arriving at 'just compensation,' as envisage in the Constitution. In the words of
Justice Barredo, "Respondent court's invocation of General Order No. 3 of
September 21, 1972 is nothing short of an unwarranted abdication of judicial
authority, which no judge duly imbued with the implications of the paramount
principle of independence of the judiciary should ever think of doing." (Lina v.
Purisima, 82 SCRA 344, 351; Cf. Prov. of Pangasinan v. CFI Judge of
Pangasinan, Br. VIII, 80 SCRA 117) Indeed, where this Court simply follows
PD 1533, thereby limiting the determination of just compensation on the value
declared by the owner or administrator or as determined by the Assessor,
whichever is lower, it may result in the deprivation of the landowner's right of
due process to enable it to prove its claim to just compensation, as mandated
by the Constitution. (Uy v. Genato, 57 SCRA 123). The tax declaration under
the Real Property Tax Code is, undoubtedly, for purposes of taxation."
We are convinced and so rule that the trial court correctly stated that the
valuation in the decree may only serve as a guiding principle or one of the
factors in determining just compensation but it may not substitute the court's
own judgment as to what amount should be awarded and how to arrive at such
amount. A return to the earlier well-established doctrine, to our mind, is more
in keeping with the principle that the judiciary should live up to its mission "by
vitalizing and not denigrating constitutional rights." (See Salonga v. Cruz Paño,
134 SCRA 438, 462; citing Mercado v. Court of First Instance of Rizal, 116
SCRA 93.) The doctrine we enunciated in National Housing Authority v.
Reyes, supra, therefore, must necessarily be abandoned if we are to uphold
this Court's role as the guardian of the fundamental rights guaranteed by the
due process and equal protection clauses and as the final arbiter over
transgressions committed against constitutional rights.
The basic unfairness of the decrees is readily apparent.
Just compensation means the value of the property at the time of the taking. It
means a fair and full equivalent for the loss sustained. All the facts as to the
condition of the property and its surroundings, its improvements and
capabilities, should be considered.
In this particular case, the tax declarations presented by the petitioner as basis
for just compensation were made by the Lapu-Lapu municipal, later city
assessor long before martial law, when land was not only much cheaper but
when assessed values of properties were stated in figures constituting only a
fraction of their true market value. The private respondent was not even the
owner of the properties at the time. It purchased the lots for development
purposes. To peg the value of the lots on the basis of documents which are
out of date and at prices below the acquisition cost of present owners would
be arbitrary and confiscatory.
Various factors can come into play in the valuation of specific properties
singled out for expropriation. The values given by provincial assessors are
usually uniform for very wide areas covering several barrios or even an entire
town with the exception of the poblacion. Individual differences are never taken
into account. The value of land is based on such generalities as its possible
cultivation for rice, corn, coconuts, or other crops. Very often land described
as "cogonal" has been cultivated for generations. Buildings are described in
terms of only two or three classes of building materials and estimates of areas
are more often inaccurate than correct. Tax values can serve as guides but
cannot be absolute substitutes for just compensation.
To say that the owners are estopped to question the valuations made by
assessors since they had the opportunity to protest is illusory. The
overwhelming mass of land owners accept unquestioningly what is found in
the tax declarations prepared by local assessors or municipal clerks for them.
They do not even look at, much less analyze, the statements. The Idea of
expropriation simply never occurs until a demand is made or a case filed by
an agency authorized to do so.
It is violative of due process to deny to the owner the opportunity to prove that
the valuation in the tax documents is unfair or wrong. And it is repulsive to
basic concepts of justice and fairness to allow the haphazard work of a minor
bureaucrat or clerk to absolutely prevail over the judgment of a court
promulgated only after expert commissioners have actually viewed the
property, after evidence and arguments pro and con have been presented, and
after all factors and considerations essential to a fair and just determination
have been judiciously evaluated.
As was held in the case of Gideon v. Wainwright (93 ALR 2d,733,742):
"In the light of these and many other prior decisions of this Court, it is not
surprising that the Betts Court, when faced with the contention that 'one
charged with crime, who is unable to obtain counsel must be furnished counsel
by the State,' conceded that '[E]xpressions in the opinions of this court lend
color to the argument. . .' 316 U.S., at 462, 463, 86 L ed. 1602, 62 S Ct. 1252.
The fact is that in deciding as it did-that "appointment of counsel is not a
fundamental right, essential to a fair trial" — the Court in Betts v. Brady made
an ubrupt brake with its own well-considered precedents. In returning to these
old precedents, sounder we believe than the new, we but restore constitutional
principles established to achieve a fair system of justice. . ."
We return to older and more sound precedents. This Court has the duty to
formulate guiding and controlling constitutional principles, precepts, doctrines,
or rules. (See Salonga v. Cruz Pano, supra).
The determination of "just compensation" in eminent domain cases is a judicial
function. The executive department or the legislature may make the initial
determinations but when a party claims a violation of the guarantee in the Bill
of Rights that private property may not be taken for public use without just
compensation, no statute, decree, or executive order can mandate that its own
determination shall prevail over the court's findings. Much less can the courts
be precluded from looking into the "just-ness" of the decreed compensation.
We, therefore, hold that P.D. No. 1533, which eliminates the court's discretion
to appoint commissioners pursuant to Rule 67 of the Rules of Court, is
unconstitutional and void. To hold otherwise would be to undermine the very
purpose why this Court exists in the first place.
WHEREFORE, IN VIEW OF THE FOREGOING, the petition is hereby
DISMISSED. The temporary restraining order issued on February 16, 1982 is
LIFTED and SET ASIDE.
SO ORDERED.
NAPOCOR VS TIANGCO
In this petition for review on certiorari under Rule 45 of the Rules of Court,
petitioner National Power Corporation (NPC) seeks the annulment and setting
aside of the Decision1 dated March 14, 2005 of the Court of Appeals (CA) in
CA-G.R. CV No. 53576, as reiterated in its Resolution 2 of December 2, 2005
which denied the petitioner’s motion for reconsideration. The assailed decision
modified that of the Regional Trial Court (RTC) of Tanay, Rizal, Branch 80, by
increasing the amount of just compensation due the respondents in an
expropriation case filed against them by the petitioner.
The facts:
Herein respondents Aurellano, Lourdes and Nestor, all surnamed Tiangco, are
the owners of a parcel of land with an area of 152,187 square meters at
Barangay Sampaloc, Tanay, Rizal and registered in their names under TCT
No. M-17865 of the Registry of Deeds of Rizal.
On the other hand, petitioner NPC is a government-owned and controlled
corporation created for the purpose of undertaking the development and
generation of power from whatever source. NPC’s charter (Republic Act No.
6395) authorizes the corporation to acquire private property and exercise the
right of eminent domain.1awphi1.net
NPC requires 19,423 square meters of the respondents’ aforementioned
property, across which its 500Kv Kalayaan-San Jose Transmission Line
Project will traverse. NPC’s Segregation Plan3 for the purpose shows that the
desired right-of-way will cut through the respondents’ land, in such a manner
that 33,392 square meters thereof will be left separated from 99,372 square
meters of the property. Within the portion sought to be expropriated stand fruit-
bearing tress, such as mango, avocado,
jackfruit, casuy, santol, calamansi, sintones and coconut trees.
On November 20, 1990, after repeated unsuccessful negotiations with the
respondents, NPC filed with the RTC of Tanay, Rizal a complaint for
expropriation4 against them. In time, the respondents filed their answer.
On March 14, 1991, the trial court issued a Condemnation Order, granting
NPC the right to take possession of the area sought to be expropriated. In the
same Order, the court directed the parties to nominate their respective
commissioners, with a third member to be nominated and appointed by the
court itself, to determine the proper amount of just compensation to be paid to
the respondents. As constituted in the manner thus indicated, the board of
commissioners was composed of the following: for NPC, Atty. Restituto Mallo
of its Legal Department; for the respondents, Mr. Basilio Afuang, a geodetic
engineer and a real estate broker by profession; and for the court, Clerk of
Court V Ms. Amelia de Guzman Carbonell.
On April 5, 1991, the trial court issued an order directing NPC to pay and
deposit with the Rizal Provincial Treasurer the amount of ₱81,204.00,
representing the temporary provisional value of the area subject of the
expropriation prior to the taking of possession thereof. On April 22, 1991, with
NPC having complied with the deposit requirement, a writ of possession was
issued in its favor.
Thereafter, an ocular inspection of the premises was conducted and hearings
before the board of commissioners were held, during which the Municipal
Assessor of Tanay, Rizal was presented. He submitted a record of the
Schedule of Values for taxation purposes and a certification to the effect that
the unit value of the respondents’ property is ₱21,000.00 per hectare.
On August 7, 1993, commissioner Basilio Afuang for the respondents filed his
report. He pegged the price of the area sought to be expropriated at ₱30.00
per square meter or ₱582,690.005 in the aggregate; and for the improvements
thereon, Afuang placed a valuation of ₱2,093,950.00. The figures are in
contrast with the respondents’ own valuation of ₱600,600.00, for the area, and
₱4,935,500.00, for the improvements.
On September 14, 1993, NPC filed an amended complaint to acquire only
19,423 square meters of the respondents’ property. The original area of 20,220
square meters initially sought to be expropriated under the original complaint
turned out to be in excess of the area required.
For its part, NPC made it clear that it is interested only in acquiring an
easement of right-of-way over the respondents’ property and that ownership
of the area over which the right-of-way will be established shall remain with the
respondents. For this reason, NPC claims that it should pay, in addition to the
agreed or adjudged value of the improvements on the area, only an easement
fee in an amount equivalent to ten per cent (10%) of the market value of the
property as declared by the respondents or by the Municipal Assessor,
whichever is lower, as provided for under Section 3-A of Republic Act No.
6395, as amended by Presidential Decree 938.6
The court-appointed commissioner, Ms. Amelia de Guzman Carbonell, found
that the risk and dangerous nature of the transmission line project essentially
deprive the respondents of the use of the area. Nonetheless, she
recommended that the determination of just compensation should be relegated
to "expert appraisers."7
From the evidence before it, the trial court made a determination that the
market value of the property is ₱2.09 per square meter, or ₱40,594.07 for the
entire 19,423 square meters needed by NPC, and not the ₱30.00 per square
meter claimed by the respondents. Neither did the trial court consider NPC’s
reliance on Section 3-A of Republic Act No. 6395, as amended by Presidential
Decree 938, the court placing more weight on the respondents’ argument that
expropriation would result in the substantial impairment of the use of the area
needed, even though what is sought is a mere aerial right-of-way. The court
found as reasonable the amount of ₱324,750.00 offered by NPC for the
improvements, as the same is based on the official current schedule of values
as determined by the Municipal Assessor of Tanay, Rizal.
Hence, in its decision8 of February 19, 1996, the trial court rendered judgment
as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered:
1. Expropriating in favor of [NPC] a parcel of land covering a total area of
19,423 sq.m. covered by TCT No. M-17860 owned by the [respondents];
2. Ordering the amount of P40,594.07 as just compensation for the 19,423
square meters of land affected by the expropriations; and the amount of
P324,750.00 as reasonable compensation for the improvements on the land
expropriated with legal interest from the time of possession by the plaintiff. No
pronouncement as to costs.
SO ORDERED. (Words in brackets supplied.)
The respondents moved for reconsideration, presenting for the first time a
document entitled "Bureau of Internal Revenue Circular of Appraisal," which
shows that for the year 1985, lands in Barangay Sampaloc were valued at
₱30.00 per square meter; for the year 1992, at ₱80.00 per square meter; and
for year 1994, at ₱100.00 per square meter. Respondents maintain that the
price of ₱30.00 per square meter for the needed area of 19,423 square meters
is the reasonable amount and should be the basis for fixing the amount of just
compensation due them. The trial court denied the motion, stating that the BIR
circular in question was belatedly filed and therefore NPC could not have
opposed its presentation.
From the aforesaid decision of the trial court, both NPC and the respondents
went on appeal to the CA whereat the separate appeals were consolidated
and docketed as CA-G.R. CV No. 53576. The appellate court found merit in
the respondents’ appeal, and disregarded the ₱2.09 per square meter
valuation of the trial court, which was based on a 1984 tax declaration. Instead,
the CA placed reliance upon a 1993 tax declaration, "being only two years
removed from the time of taking."9 The appellate court determined the time of
taking to be in 1991. Thus, the greater value of ₱913,122.00 as declared in
Tax Declaration No. 011-2667 dated July 23, 1993 should be the basis for
determining just compensation. With regard to the value of improvements, the
appellate court found NPC’s valuation more favorable, being based on the
current (1991) schedule of values for trees in the provinces of Rizal and
Laguna. Hence, in its decision10 of March 14, 2005, the CA rendered judgment,
to wit:
WHEREFORE, the instant Appeal is GRANTED. The decision of the Regional
Trial Court of Tanay, Rizal, Branch 80 dated February 19, 1996 is hereby
MODIFIED and the compensation awarded for the 19,423 square meters of
land affected is increased to ₱116,538.00, and the reasonable compensation
for the improvements thereon is likewise increased to P325,025.00, with legal
interest from the time of possession by the plaintiff-appellee NAPOCOR. No
pronouncement as to costs.
SO ORDERED.
NPC moved for reconsideration, but its motion was denied by the appellate
court in its resolution11 of December 2, 2005.
Hence, NPC’s instant petition for review, submitting for our resolution only the
following issues with respect to the amount of just compensation that must be
paid the respondents for the expropriated portion (19,423 square meters) of
their property:
1. Is it to be based on the 1984 or the 1993 valuation?
2. Should NPC pay for the value of the land being taken, or should it be
limited to what is provided for under P.D. 938, that is, ten per cent (10%)
of its market value as declared by the owner or the assessor (whichever
is lower), considering that the purpose for which the property is being
taken is merely for the establishment of a safe and free passage for its
overhead transmission lines?
There is no issue as to the improvements. Since the ₱325,025.00 valuation
therefor is the very price set by the NPC commissioner, to which the
corporation did not object but otherwise adopts, the Court fixes the amount of
₱325,025.00 as just compensation for the improvements.
We now come to the more weighty question of what amount is just by way of
compensation for the 19,423 square-meter portion of the respondents’
property.
In eminent domain cases, the time of taking is the filing of the complaint, if
there was no actual taking prior thereto. Hence, in this case, the value of the
property at the time of the filing of the complaint on November 20, 1990 should
be considered in determining the just compensation due the respondents. So
it is that in National Power Corporation v. Court of Appeals, et al.,12 we ruled:
Normally, the time of the taking coincides with the filing of the complaint for
expropriation. Hence, many rulings of this Court have equated just
compensation with the value of the property as of the time of filing of the
complaint consistent with the above provision of the Rules. So too, where the
institution of the action precedes entry into the property, the just compensation
is to be ascertained as of the time of the filing of the complaint.
The trial court fixed the value of the property at its 1984 value, while the CA,
at its 1993 worth. Neither of the two determinations is correct. For purposes of
just compensation, the respondents should be paid the value of the property
as of the time of the filing of the complaint which is deemed to be the time of
taking the property.
It was certainly unfair for the trial court to have considered a property value
several years behind its worth at the time the complaint in this case was filed
on November 20, 1990. The landowners are necessarily shortchanged,
considering that, as a rule, land values enjoy steady upward movement. It was
likewise erroneous for the appellate court to have fixed the value of the
property on the basis of a 1993 assessment. NPC would be paying too much.
Petitioner corporation is correct in arguing that the respondents should not
profit from an assessment made years after the taking.
The expropriation proceedings in this case having been initiated by NPC on
November 20, 1990, property values on such month and year should lay the
basis for the proper determination of just compensation. In Association of
Small Landowners in the Philippines, Inc. v. Secretary of Agrarian
Reform,13 the Court ruled that the equivalent to be rendered for the property to
be taken shall be substantial, full, ample and, as must apply to this case, real.
This must be taken to mean, among others, that the value as of the time of
taking should be the price to be paid the property owner.
Just compensation is defined as the full and fair equivalent of the property
taken from its owner by the expropriator. In this case, this simply means the
property’s fair market value at the time of the filing of the complaint, or "that
sum of money which a person desirous but not compelled to buy, and an owner
willing but not compelled to sell, would agree on as a price to be given and
received therefor."14 The measure is not the taker’s gain, but the owner’s loss.
In the determination of such value, the court is not limited to the assessed
value of the property or to the schedule of market values determined by the
provincial or city appraisal committee; these values consist but one factor in
the judicial valuation of the property.15 The nature and character of the land at
the time of its taking is the principal criterion for determining how much just
compensation should be given to the landowner 16 All the facts as to the
condition of the property and its surroundings, as well as its improvements and
capabilities, should be considered.17
Neither of the two determinations made by the courts below is therefore
correct. A new one must be arrived at, taking into consideration the foregoing
pronouncements.
Now, to the second issue raised by petitioner NPC.
In several cases, the Court struck down NPC’s consistent reliance on Section
3-A of Republic Act No. 6395, as amended by Presidential Decree 938.18 True,
an easement of a right-of-way transmits no rights except the easement itself,
and the respondents would retain full ownership of the property taken.
Nonetheless, the acquisition of such easement is not gratis. The limitations on
the use of the property taken for an indefinite period would deprive its owner
of the normal use thereof. For this reason, the latter is entitled to payment of a
just compensation, which must be neither more nor less than the monetary
equivalent of the land taken.19
While the power of eminent domain results in the taking or appropriation of title
to, and possession of, the expropriated property, no cogent reason appears
why said power may not be availed of to impose only a burden upon the owner
of the condemned property, without loss of title and possession. 20 However, if
the easement is intended to perpetually or indefinitely deprive the owner of his
proprietary rights through the imposition of conditions that affect the ordinary
use, free enjoyment and disposal of the property or through restrictions and
limitations that are inconsistent with the exercise of the attributes of ownership,
or when the introduction of structures or objects which, by their nature, create
or increase the probability of injury, death upon or destruction of life and
property found on the land is necessary, then the owner should be
compensated for the monetary equivalent of the land, in accordance with our
ruling in NPC v. Manubay Agro-Industrial:
As correctly observed by the CA, considering the nature and the effect of the
installation power lines, the limitations on the use of the land for an indefinite
period would deprive respondent of normal use of the property. For this
reason, the latter is entitled to payment of a just compensation, which must be On 17 September 1993, petitioner City of Cebu filed in Civil Case No. CEB-
neither more nor less than the monetary equivalent of the land.21 14632 a complaint for eminent domain against respondents spouses Apolonio
and Blasa Dedamo. The petitioner alleged therein that it needed the following
The evidence suggests that NPC’s transmission line project that traverses the parcels of land of respondents, to wit:
respondents’ property is perpetual, or at least indefinite, in nature. Moreover,
not to be discounted is the fact that the high-tension current to be conveyed
Lot No. 1527
through said transmission lines evidently poses a danger to life and limb;
injury, death or destruction to life and property within the vicinity. As the Court
held in NPC v. Chiong,22 it is not improper to assume that NPC will erect Area------------------------------------------------ 1,146 square
structures for its transmission lines within the property. What is sought to be meters
expropriated in this case is, at its longest extent, 326.34 meters, and through
it may be built several structures, not simply one. Finally, if NPC were to have
Tax Declaration---------------------------------- 03472
its way, respondents will continue to pay the realty taxes due on the affected
portion of their property, an imposition that, among others, merits the rejection
of NPC’s thesis of payment of a mere percentage of the property’s actual Title No. ------------------------------------------ 31833
value.

WHEREFORE, the instant petition is GRANTED in part in that the decision of Market value------------------------------------- P240,660.00
the Court of Appeals dated March 14, 2005 vis a vis the award of ₱116,538.00,
as and by way of just compensation for the 19,423 square meters of the Assessed Value---------------------------------- P72,200.00
respondents’ property, is SET ASIDE, and the case is ordered REMANDED to
the court of origin for the proper determination of the amount of just
compensation for the portion thus taken, based on our pronouncements
hereon. The same decision, however, is AFFIRMED, insofar as it pertains to
the award of ₱325,025.00 for the improvements, with legal interest from the Lot No. 1528
time of actual possession by the petitioner.

No pronouncement as to costs. Area------------------------------------------------ 793 square meters

SO ORDERED.
Area sought to be expropriated --------------- 478 square meters
-
CITY OF CEBU VS SPOUSES DEDAMO
Tax Declaration ----------------------------------- 03450

In its petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Title No. -------------------------------------------- 31832
Procedure, petitioner City of Cebu assails the decision of 11 October 1999 of
the Court of Appeals in CA-G.R. CV No. 592041 affirming the judgment of 7
May 1996 of the Regional Trial Court, Branch 13, Cebu City, in Civil Case No. Market value for the whole lot ----------------- P1,666,530.00
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 operation facts are not disputed.


Market value of the Area to be expropriated P100,380.00
--
Assessed Value ----------------------------------- P49,960.00
-
for a public purpose, i.e., for the construction of a public road which shall serve
as an access/relief road of Gorordo Avenue to extend to the General Maxilum
Avenue and the back of Magellan International Hotel Roads in Cebu City. The
lots are the most suitable site for the purpose. The total area sought to be
expropriated is 1,624 square meters with an assessed value of P1,786.400.
Petitioner deposited with the Philippine National Bank the amount of P51,156
representing 15% of the fair market value of the property to enable the
petitioner to take immediate possession of the property pursuant to Section 19
of R.A. No. 7160.2
Respondents, filed a motion to dismiss the complaint because the purpose for
which their property was to be expropriated was not for a public purpose but
for benefit of a single private entity, the Cebu Holdings, Inc. Petitioner could
simply buy directly from them the property at its fair market value if it wanted
to, just like what it did with the neighboring lots. Besides, the price offered was
very low in light of the consideration of P20,000 per square meter, more or
less, which petitioner paid to the neighboring lots. Finally, respondents alleged
that they have no other land in Cebu City.
A pre-trial was thereafter had.
On 23 August 1994, petitioner filed a motion for the issuance of a writ of
possession pursuant to Section 19 of R.A. No. 7160. The motion was granted
by the trial court on 21 September 1994.3
On 14 December 1994, the parties executed and submitted to the trial court
an Agreement4 wherein they declared that they have partially settled the case
and in consideration thereof they agreed:
1. That the SECOND PARTY hereby conforms to the intention to [sic] the
FIRST PARTY in expropriating their parcels of land in the above-cited case as
for public purpose and for the benefit of the general public;
2. That the SECOND PARTY agrees to part with the ownership of the subject
parcels of land in favor of the FIRST PARTY provided the latter will pay just
compensation for the same in the amount determined by the court after due
notice and hearing;
3. That in the meantime the SECOND PARTY agrees to receive the amount
of ONE MILLION SEVEN HUNDRED EIGHTY SIX THOUSAND FOUR
HUNDRED PESOS (1,786,400.00) as provisional payment for the subject
parcels of land, without prejudice to the final valuation as maybe determined
by the court;
4. That the FIRST PARTY in the light of the issuance of the Writ of Possession
Order dated September 21, 1994 issued by the Honorable Court, agreed to
take possession over that portion of the lot sought to be expropriated where
the house of the SECOND PARTY was located only after fifteen (15) days
upon the receipt of the SECOND PARTY of the amount of P1,786,400.00;
5. That the SECOND PARTY upon receipt of the aforesaid provisional amount,
shall turn over to the FIRST PARTY the title of the lot and within the lapse of
the fifteen (15) days grace period will voluntarily demolish their house and the
other structure that may be located thereon at their own expense;
6. That the FIRST PARTY and the SECOND PARTY jointly petition the
Honorable Court to render 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.1âwphi1.nêt
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 o
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 (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 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 commissioners' assessment.1âwphi1.nêt
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 on the
Court of Appeals in CA-G.R. CV No. 59204, the petition in this case is
hereby DENIED.
No pronouncement as to costs.
SO ORDERED.
ANASALDO VS TANTUICO
This expropriation case is quite unique. Two lots of private ownership were
taken by the Government and used for the widening of a road more than forty-
three years ago, without benefit of an action of eminent domain or agreement
with its owners, albeit without protest by the latter.
The lots belong to the petitioners, Jose Ma. Ansaldo and Maria Angela
Ansaldo, are covered by title in their names 1 and have an aggregate area of
1,041 square meters. These lots were taken from the Ansaldos sometime in
1947 by the Department of Public Work Transportation and Communication
and made part of what used to be Sta. Mesa Street and is now Ramon
Magsaysay Avenue at San Juan, Metro Manila. This, to repeat, without demur
on the part of the owners.
Said owners made no move whatever until twenty-six years later. They wrote
to ask for compensation for their land on January 22, 1973. 2 Their claim was
referred to the Secretary of Justice who in due course rendered an opinion
dated February 22, 1973, 3 that just compensation should be paid in
accordance with Presidential Decree No. 76. 4 The Decree provided that the
basis for the payment of just compensation of property taken for public use
should be the current and fair market value thereof as declared by the owner
or administrator, or such market value as determined by the assessor,
whichever was lower. 5 The Secretary of Justice thus advised that the
corresponding expropriation suit be forthwith instituted to fix the just
compensation to be paid to the Ansaldos.
Pursuant to this opinion, the Commissioner of Public Highways requested the
Provincial Assessor of Rizal to make a redetermination of the market value of
the Ansaldos' property in accordance with PD 76. 6 The new valuation was
made, after which the Auditor of the Bureau of Public Highways forwarded the
Ansaldos' claim to the Auditor General with the recommendation that payment
be made on the basis of the "current and fair market value, . . . and not on the
fair market value at the time of taking. 7
The Commission on Audit, however, declined to adopt the recommendation.
In a decision handed down on September 26, 1973, the Acting Chairman ruled
that "the amount of compensation to be paid to the claimants is to be
determined as of the time of the taking of the subject lots, 8 i.e. 1947. The
ruling was reiterated by the Commission on September 8, 1978, and again on
January 25, 1979 when it denied the Ansaldos' motion for reconsideration. 9 It
is these rulings of the Commission on Audit that the Ansaldos have appealed
to this Court.
While not decisive of this case, it may be stressed that the provisions of
Presidential Decree No. 76 and its related or successor decrees (Numbered
464, 794 and 1533) no longer determine the just compensation payable to
owners of expropriated property. Said provisions were, it may be recalled,
struck down as unconstitutional and void in 1988, in Export Processing Zone
Authority v. Dulay, 10 which declared that the mode therein prescribed for
determining just compensation, i. e., on the basis of the value declared by the
owner or administrator or on that determined by the assessor, whichever is
lower, constituted an impermissible encroachment on the judicial prerogative
to resolve the issue in an appropriate proceeding of eminent domain.
Now, nothing in the record even remotely suggests that the land was taken
from the Ansaldos against their will. Indeed, all indications, not the least of
which is their silence for more than two decades, are that they consented to
such a taking although they knew that no expropriation case had been
commenced at all. There is therefore no reason, as regards the Ansaldos'
property, to impugn the existence of the power to expropriate, or the public
purpose for which that power was exercised.
The sole question thus confronting the Court involves the precise time at which
just compensation should be fixed, whether as of the time of actual taking of
possession by the expropriating entity or, as the Ansaldos maintain, only after
conveyance of title to the expropriator pursuant to expropriation proceedings
duly instituted since it is only at such a time that the constitutional requirements
of due process aside from those of just compensation may be fully met.
Normally, of course, where the institution of an expropriation action precedes
the taking of the property subject thereof, the just compensation is fixed as of
the time of the filing of the complaint. This is so provided by the Rules of
Court, 11 the assumption of possession by the expropriator ordinarily being
conditioned on its deposits with the National or Provincial Treasurer of the
value of the property as provisionally ascertained by the court having
jurisdiction of the proceedings.
There are instances, however, where the expropriating agency takes over the
property prior to the expropriation suit, as in this case although, to repeat, the
case at bar is quite extraordinary in that possession was taken by the
expropriator more than 40 years prior to suit. In these instances, this Court has
ruled that the just compensation shall be determined as of the time of taking,
not as of the time of filing of the action of eminent domain.
In the context of the State's inherent power of eminent domain, there is a
"taking" when the owner is actually deprived or dispossessed of his property;
when there is a practical destruction or a material impairment of the value of
his property or when he is deprived of the ordinary use thereof. 12 There is a
"taking" in this sense when the expropriator enters private property not only for
a momentary period but for a more permanent duration, for the purpose of
devoting the property to a public use in such a manner as to oust the owner
and deprive him of all beneficial enjoyment thereof. 13 For ownership, after all,
"is nothing without the inherent rights of possession, control and enjoyment.
Where the owner is deprived of the ordinary and beneficial use of his property
or of its value by its being diverted to public use, there is taking within the
Constitutional sense. 14 Under these norms, there was undoubtedly a taking of
the Ansaldos' property when the Government obtained possession thereof and
converted it into a part of a thoroughfare for public use.
It is as of the time of such a taking, to repeat, that the just compensation for
the property is to be established. As stated in Republic v. Philippine National
Bank, 15
. . . (W)hen plaintiff takes possession before the institution of the condemnation
proceedings, the value should be fixed as of the time of the taking of said
possession, not of filing of the complaint and the latter should be the basis for
the determination of the value, when the taking of the property involved
coincides with or is subsequent to, the commencement of the proceedings.
Indeed, otherwise, the provision of Rule 69, Section 3, directing that
compensation be determined as of the date of the filing of the complaint' would
never be operative. As intimated in Republic v. Lara (supra), said provision
contemplates normal circumstances, under which the complaint coincides or
even precedes the taking of the property by the plaintiff.
The reason for the rule, as pointed out in Rpublic v. Larae, 16 is that —
. . . (W)here property is taken ahead of the filing of the condemnation
proceedings, the value thereof may be enchanced by the public purpose for
which it is taken; the entry by the plaintiff upon the property may have
depreciated its value thereby; or, there may have been a natural increase in
the value of the property from the time the complaint is filed, due to general
economic conditions. The owner of private property should be compensated
only for what he actually loses; it is not intended that his compensation shall
extend beyond his loss or injury. And what he loses is only the actual value of
his property at the time it is taken. This is the only way that compensation to
be paid can be truly just i.e.,"just; not only to the individual whose property is
taken but, to the public, which is to pay for it.
Clearly, then, the value of the Ansaldos' property must be ascertained as of
the year 1947, when it was actually taken, and not at the time of the filing of
the expropriation suit, which, by the way, still has to be done. It is as of that
time that the real measure of their loss may fairly be adjudged. The value, once
fixed, shall earn interest at the legal rate until full payment is effected,
conformably with other principles laid down by case law. 17
WHEREFORE, the petition is DENIED, the challenged decision of the
Commission on Audit is AFFIRMED, and the Department of Public Works and
Highways is DIRECTED to forthwith institute the appropriate expropriation
action over the land in question so that the just compensation due its owners
may be determined in accordance with the Rules of Court, with interest at the
legal rate of six percent (6%) per annum from the time of taking until full
payment is made. No costs.
SO ORDERED.
ASSOCIATION OF SMALL LANDOWNERS VS DAR
In ancient mythology, Antaeus was a terrible giant who blocked and challenged
Hercules for his life on his way to Mycenae after performing his eleventh labor.
The two wrestled mightily and Hercules flung his adversary to the ground
thinking him dead, but Antaeus rose even stronger to resume their struggle.
This happened several times to Hercules' increasing amazement. Finally, as
they continued grappling, it dawned on Hercules that Antaeus was the son of
Gaea and could never die as long as any part of his body was touching his
Mother Earth. Thus forewarned, Hercules then held Antaeus up in the air,
beyond the reach of the sustaining soil, and crushed him to death.
Mother Earth. The sustaining soil. The giver of life, without whose invigorating
touch even the powerful Antaeus weakened and died.
The cases before us are not as fanciful as the foregoing tale. But they also tell
of the elemental forces of life and death, of men and women who, like Antaeus
need the sustaining strength of the precious earth to stay alive.
"Land for the Landless" is a slogan that underscores the acute imbalance in
the distribution of this precious resource among our people. But it is more than
a slogan. Through the brooding centuries, it has become a battle-cry
dramatizing the increasingly urgent demand of the dispossessed among us for
a plot of earth as their place in the sun.
Recognizing this need, the Constitution in 1935 mandated the policy of social
justice to "insure the well-being and economic security of all the
people," 1 especially the less privileged. In 1973, the new Constitution affirmed
this goal adding specifically that "the State shall regulate the acquisition,
ownership, use, enjoyment and disposition of private property and equitably
diffuse property ownership and profits." 2 Significantly, there was also the
specific injunction to "formulate and implement an agrarian reform program
aimed at emancipating the tenant from the bondage of the soil." 3
The Constitution of 1987 was not to be outdone. Besides echoing these
sentiments, it also adopted one whole and separate Article XIII on Social
Justice and Human Rights, containing grandiose but undoubtedly sincere
provisions for the uplift of the common people. These include a call in the
following words for the adoption by the State of an agrarian reform program:
SEC. 4. The State shall, by law, undertake an agrarian reform program
founded on the right of farmers and regular farmworkers, who are landless, to
own directly or collectively the lands they till or, in the case of other
farmworkers, to receive a just share of the fruits thereof. To this end, the State
shall encourage and undertake the just distribution of all agricultural lands,
subject to such priorities and reasonable retention limits as the Congress may
prescribe, taking into account ecological, developmental, or equity
considerations and subject to the payment of just compensation. In
determining retention limits, the State shall respect the right of small
landowners. The State shall further provide incentives for voluntary land-
sharing.
Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural Land
Reform Code, had already been enacted by the Congress of the Philippines
on August 8, 1963, in line with the above-stated principles. This was
substantially superseded almost a decade later by P.D. No. 27, which was
promulgated on October 21, 1972, along with martial law, to provide for the
compulsory acquisition of private lands for distribution among tenant-farmers
and to specify maximum retention limits for landowners.
The people power revolution of 1986 did not change and indeed even
energized the thrust for agrarian reform. Thus, on July 17, 1987, President
Corazon C. Aquino issued E.O. No. 228, declaring full land ownership in favor
of the beneficiaries of P.D. No. 27 and providing for the valuation of still
unvalued lands covered by the decree as well as the manner of their payment.
This was followed on July 22, 1987 by Presidential Proclamation No. 131,
instituting a comprehensive agrarian reform program (CARP), and E.O. No.
229, providing the mechanics for its implementation.
Subsequently, with its formal organization, the revived Congress of the
Philippines took over legislative power from the President and started its own
deliberations, including extensive public hearings, on the improvement of the
interests of farmers. The result, after almost a year of spirited debate, was the
enactment of R.A. No. 6657, otherwise known as the Comprehensive Agrarian
Reform Law of 1988, which President Aquino signed on June 10, 1988. This
law, while considerably changing the earlier mentioned enactments,
nevertheless gives them suppletory effect insofar as they are not inconsistent
with its provisions. 4
The above-captioned cases have been consolidated because they involve
common legal questions, including serious challenges to the constitutionality
of the several measures mentioned above. They will be the subject of one
common discussion and resolution, The different antecedents of each case
will require separate treatment, however, and will first be explained hereunder.
G.R. No. 79777
Squarely raised in this petition is the constitutionality of P.D. No. 27, E.O. Nos.
228 and 229, and R.A. No. 6657.
The subjects of this petition are a 9-hectare riceland worked by four tenants
and owned by petitioner Nicolas Manaay and his wife and a 5-hectare riceland
worked by four tenants and owned by petitioner Augustin Hermano, Jr. The
tenants were declared full owners of these lands by E.O. No. 228 as qualified
farmers under P.D. No. 27.
The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on
grounds inter alia of separation of powers, due process, equal protection and
the constitutional limitation that no private property shall be taken for public
use without just compensation.
They contend that President Aquino usurped legislative power when she
promulgated E.O. No. 228. The said measure is invalid also for violation of
Article XIII, Section 4, of the Constitution, for failure to provide for retention
limits for small landowners. Moreover, it does not conform to Article VI, Section
25(4) and the other requisites of a valid appropriation.
In connection with the determination of just compensation, the petitioners
argue that the same may be made only by a court of justice and not by the
President of the Philippines. They invoke the recent cases of EPZA v.
Dulay 5 and Manotok v. National Food Authority. 6 Moreover, the just
compensation contemplated by the Bill of Rights is payable in money or in
cash and not in the form of bonds or other things of value.
In considering the rentals as advance payment on the land, the executive order
also deprives the petitioners of their property rights as protected by due
process. The equal protection clause is also violated because the order places
the burden of solving the agrarian problems on the owners only of agricultural
lands. No similar obligation is imposed on the owners of other properties.
The petitioners also maintain that in declaring the beneficiaries under P.D. No.
27 to be the owners of the lands occupied by them, E.O. No. 228 ignored
judicial prerogatives and so violated due process. Worse, the measure would
not solve the agrarian problem because even the small farmers are deprived
of their lands and the retention rights guaranteed by the Constitution.
In his Comment, the Solicitor General stresses that P.D. No. 27 has already
been upheld in the earlier cases of Chavez v. Zobel, 7 Gonzales v.
Estrella, 8 and Association of Rice and Corn Producers of the Philippines, Inc.
v. The National Land Reform Council. 9 The determination of just
compensation by the executive authorities conformably to the formula
prescribed under the questioned order is at best initial or preliminary only. It
does not foreclose judicial intervention whenever sought or warranted. At any
rate, the challenge to the order is premature because no valuation of their
property has as yet been made by the Department of Agrarian Reform. The
petitioners are also not proper parties because the lands owned by them do
not exceed the maximum retention limit of 7 hectares.
Replying, the petitioners insist they are proper parties because P.D. No. 27
does not provide for retention limits on tenanted lands and that in any event
their petition is a class suit brought in behalf of landowners with landholdings
below 24 hectares. They maintain that the determination of just compensation
by the administrative authorities is a final ascertainment. As for the cases
invoked by the public respondent, the constitutionality of P.D. No. 27 was
merely assumed in Chavez, while what was decided in Gonzales was the
validity of the imposition of martial law.
In the amended petition dated November 22, 1588, it is contended that P.D.
No. 27, E.O. Nos. 228 and 229 (except Sections 20 and 21) have been
impliedly repealed by R.A. No. 6657. Nevertheless, this statute should itself
also be declared unconstitutional because it suffers from substantially the
same infirmities as the earlier measures.
A petition for intervention was filed with leave of court on June 1, 1988 by
Vicente Cruz, owner of a 1. 83- hectare land, who complained that the DAR
was insisting on the implementation of P.D. No. 27 and E.O. No. 228 despite
a compromise agreement he had reached with his tenant on the payment of
rentals. In a subsequent motion dated April 10, 1989, he adopted the
allegations in the basic amended petition that the above- mentioned
enactments have been impliedly repealed by R.A. No. 6657.
G.R. No. 79310
The petitioners herein are landowners and sugar planters in the Victorias Mill
District, Victorias, Negros Occidental. Co-petitioner Planters' Committee, Inc.
is an organization composed of 1,400 planter-members. This petition seeks to
prohibit the implementation of Proc. No. 131 and E.O. No. 229.
The petitioners claim that the power to provide for a Comprehensive Agrarian
Reform Program as decreed by the Constitution belongs to Congress and not
the President. Although they agree that the President could exercise legislative
power until the Congress was convened, she could do so only to enact
emergency measures during the transition period. At that, even assuming that
the interim legislative power of the President was properly exercised, Proc. No.
131 and E.O. No. 229 would still have to be annulled for violating the
constitutional provisions on just compensation, due process, and equal
protection.
They also argue that under Section 2 of Proc. No. 131 which provides:
Agrarian Reform Fund.-There is hereby created a special fund, to be known
as the Agrarian Reform Fund, an initial amount of FIFTY BILLION PESOS
(P50,000,000,000.00) to cover the estimated cost of the Comprehensive
Agrarian Reform Program from 1987 to 1992 which shall be sourced from the
receipts of the sale of the assets of the Asset Privatization Trust and Receipts
of sale of ill-gotten wealth received through the Presidential Commission on
Good Government and such other sources as government may deem
appropriate. The amounts collected and accruing to this special fund shall be
considered automatically appropriated for the purpose authorized in this
Proclamation the amount appropriated is in futuro, not in esse. The money
needed to cover the cost of the contemplated expropriation has yet to be raised
and cannot be appropriated at this time.
Furthermore, they contend that taking must be simultaneous with payment of
just compensation as it is traditionally understood, i.e., with money and in full,
but no such payment is contemplated in Section 5 of the E.O. No. 229. On the
contrary, Section 6, thereof provides that the Land Bank of the Philippines
"shall compensate the landowner in an amount to be established by the
government, which shall be based on the owner's declaration of current fair
market value as provided in Section 4 hereof, but subject to certain controls to
be defined and promulgated by the Presidential Agrarian Reform Council."
This compensation may not be paid fully in money but in any of several modes
that may consist of part cash and part bond, with interest, maturing
periodically, or direct payment in cash or bond as may be mutually agreed
upon by the beneficiary and the landowner or as may be prescribed or
approved by the PARC.
The petitioners also argue that in the issuance of the two measures, no effort
was made to make a careful study of the sugar planters' situation. There is no
tenancy problem in the sugar areas that can justify the application of the CARP
to them. To the extent that the sugar planters have been lumped in the same
legislation with other farmers, although they are a separate group with
problems exclusively their own, their right to equal protection has been
violated.
A motion for intervention was filed on August 27,1987 by the National
Federation of Sugarcane Planters (NASP) which claims a membership of at
least 20,000 individual sugar planters all over the country. On September 10,
1987, another motion for intervention was filed, this time by Manuel Barcelona,
et al., representing coconut and riceland owners. Both motions were granted
by the Court.
NASP alleges that President Aquino had no authority to fund the Agrarian
Reform Program and that, in any event, the appropriation is invalid because of
uncertainty in the amount appropriated. Section 2 of Proc. No. 131 and
Sections 20 and 21 of E.O. No. 229 provide for an initial appropriation of fifty
billion pesos and thus specifies the minimum rather than the maximum
authorized amount. This is not allowed. Furthermore, the stated initial amount
has not been certified to by the National Treasurer as actually available.
Two additional arguments are made by Barcelona, to wit, the failure to
establish by clear and convincing evidence the necessity for the exercise of
the powers of eminent domain, and the violation of the fundamental right to
own property.
The petitioners also decry the penalty for non-registration of the lands, which
is the expropriation of the said land for an amount equal to the government
assessor's valuation of the land for tax purposes. On the other hand, if the
landowner declares his own valuation he is unjustly required to immediately
pay the corresponding taxes on the land, in violation of the uniformity rule.
In his consolidated Comment, the Solicitor General first invokes the
presumption of constitutionality in favor of Proc. No. 131 and E.O. No. 229. He
also justifies the necessity for the expropriation as explained in the "whereas"
clauses of the Proclamation and submits that, contrary to the petitioner's
contention, a pilot project to determine the feasibility of CARP and a general
survey on the people's opinion thereon are not indispensable prerequisites to
its promulgation.
On the alleged violation of the equal protection clause, the sugar planters have
failed to show that they belong to a different class and should be differently
treated. The Comment also suggests the possibility of Congress first
distributing public agricultural lands and scheduling the expropriation of private
agricultural lands later. From this viewpoint, the petition for prohibition would
be premature.
The public respondent also points out that the constitutional prohibition is
against the payment of public money without the corresponding appropriation.
There is no rule that only money already in existence can be the subject of an
appropriation law. Finally, the earmarking of fifty billion pesos as Agrarian
Reform Fund, although denominated as an initial amount, is actually the
maximum sum appropriated. The word "initial" simply means that additional
amounts may be appropriated later when necessary.
On April 11, 1988, Prudencio Serrano, a coconut planter, filed a petition on his
own behalf, assailing the constitutionality of E.O. No. 229. In addition to the
arguments already raised, Serrano contends that the measure is
unconstitutional because:
(1) Only public lands should be included in the CARP;
(2) E.O. No. 229 embraces more than one subject which is not expressed in
the title;
(3) The power of the President to legislate was terminated on July 2, 1987; and
(4) The appropriation of a P50 billion special fund from the National Treasury
did not originate from the House of Representatives.
G.R. No. 79744
The petitioner alleges that the then Secretary of Department of Agrarian
Reform, in violation of due process and the requirement for just compensation,
placed his landholding under the coverage of Operation Land Transfer.
Certificates of Land Transfer were subsequently issued to the private
respondents, who then refused payment of lease rentals to him.
On September 3, 1986, the petitioner protested the erroneous inclusion of his
small landholding under Operation Land transfer and asked for the recall and
cancellation of the Certificates of Land Transfer in the name of the private
respondents. He claims that on December 24, 1986, his petition was denied
without hearing. On February 17, 1987, he filed a motion for reconsideration,
which had not been acted upon when E.O. Nos. 228 and 229 were issued.
These orders rendered his motion moot and academic because they directly
effected the transfer of his land to the private respondents.
The petitioner now argues that:
(1) E.O. Nos. 228 and 229 were invalidly issued by the President of the
Philippines.
(2) The said executive orders are violative of the constitutional provision that
no private property shall be taken without due process or just compensation.
(3) The petitioner is denied the right of maximum retention provided for under
the 1987 Constitution.
The petitioner contends that the issuance of E.0. Nos. 228 and 229 shortly
before Congress convened is anomalous and arbitrary, besides violating the
doctrine of separation of powers. The legislative power granted to the
President under the Transitory Provisions refers only to emergency measures
that may be promulgated in the proper exercise of the police power.
The petitioner also invokes his rights not to be deprived of his property without
due process of law and to the retention of his small parcels of riceholding as
guaranteed under Article XIII, Section 4 of the Constitution. He likewise argues
that, besides denying him just compensation for his land, the provisions of E.O.
No. 228 declaring that:
Lease rentals paid to the landowner by the farmer-beneficiary after October
21, 1972 shall be considered as advance payment for the land.
is an unconstitutional taking of a vested property right. It is also his contention
that the inclusion of even small landowners in the program along with other
landowners with lands consisting of seven hectares or more is undemocratic.
In his Comment, the Solicitor General submits that the petition is premature
because the motion for reconsideration filed with the Minister of Agrarian
Reform is still unresolved. As for the validity of the issuance of E.O. Nos. 228
and 229, he argues that they were enacted pursuant to Section 6, Article XVIII
of the Transitory Provisions of the 1987 Constitution which reads:
The incumbent president shall continue to exercise legislative powers until the
first Congress is convened.
On the issue of just compensation, his position is that when P.D. No. 27 was
promulgated on October 21. 1972, the tenant-farmer of agricultural land was
deemed the owner of the land he was tilling. The leasehold rentals paid after
that date should therefore be considered amortization payments.
In his Reply to the public respondents, the petitioner maintains that the motion
he filed was resolved on December 14, 1987. An appeal to the Office of the
President would be useless with the promulgation of E.O. Nos. 228 and 229,
which in effect sanctioned the validity of the public respondent's acts.
G.R. No. 78742
The petitioners in this case invoke the right of retention granted by P.D. No. 27
to owners of rice and corn lands not exceeding seven hectares as long as they
are cultivating or intend to cultivate the same. Their respective lands do not
exceed the statutory limit but are occupied by tenants who are actually
cultivating such lands.
According to P.D. No. 316, which was promulgated in implementation of P.D.
No. 27:
No tenant-farmer in agricultural lands primarily devoted to rice and corn shall
be ejected or removed from his farmholding until such time as the respective
rights of the tenant- farmers and the landowner shall have been determined in
accordance with the rules and regulations implementing P.D. No. 27.
The petitioners claim they cannot eject their tenants and so are unable to enjoy
their right of retention because the Department of Agrarian Reform has so far
not issued the implementing rules required under the above-quoted decree.
They therefore ask the Court for a writ of mandamus to compel the respondent
to issue the said rules.
In his Comment, the public respondent argues that P.D. No. 27 has been
amended by LOI 474 removing any right of retention from persons who own
other agricultural lands of more than 7 hectares in aggregate area or lands
used for residential, commercial, industrial or other purposes from which they
derive adequate income for their family. And even assuming that the
petitioners do not fall under its terms, the regulations implementing P.D. No.
27 have already been issued, to wit, the Memorandum dated July 10, 1975
(Interim Guidelines on Retention by Small Landowners, with an accompanying
Retention Guide Table), Memorandum Circular No. 11 dated April 21, 1978,
(Implementation Guidelines of LOI No. 474), Memorandum Circular No. 18-81
dated December 29,1981 (Clarificatory Guidelines on Coverage of P.D. No.
27 and Retention by Small Landowners), and DAR Administrative Order No.
1, series of 1985 (Providing for a Cut-off Date for Landowners to Apply for
Retention and/or to Protest the Coverage of their Landholdings under
Operation Land Transfer pursuant to P.D. No. 27). For failure to file the
corresponding applications for retention under these measures, the petitioners
are now barred from invoking this right.
The public respondent also stresses that the petitioners have prematurely
initiated this case notwithstanding the pendency of their appeal to the
President of the Philippines. Moreover, the issuance of the implementing rules,
assuming this has not yet been done, involves the exercise of discretion which
cannot be controlled through the writ of mandamus. This is especially true if
this function is entrusted, as in this case, to a separate department of the
government.
In their Reply, the petitioners insist that the above-cited measures are not
applicable to them because they do not own more than seven hectares of
agricultural land. Moreover, assuming arguendo that the rules were intended
to cover them also, the said measures are nevertheless not in force because
they have not been published as required by law and the ruling of this Court
in Tanada v. Tuvera.10 As for LOI 474, the same is ineffective for the additional
reason that a mere letter of instruction could not have repealed the presidential
decree.
I
Although holding neither purse nor sword and so regarded as the weakest of
the three departments of the government, the judiciary is nonetheless vested
with the power to annul the acts of either the legislative or the executive or of
both when not conformable to the fundamental law. This is the reason for what
some quarters call the doctrine of judicial supremacy. Even so, this power is
not lightly assumed or readily exercised. The doctrine of separation of powers
imposes upon the courts a proper restraint, born of the nature of their functions
and of their respect for the other departments, in striking down the acts of the
legislative and the executive as unconstitutional. The policy, indeed, is a blend
of courtesy and caution. To doubt is to sustain. The theory is that before the
act was done or the law was enacted, earnest studies were made by Congress
or the President, or both, to insure that the Constitution would not be breached.
In addition, the Constitution itself lays down stringent conditions for a
declaration of unconstitutionality, requiring therefor the concurrence of a
majority of the members of the Supreme Court who took part in the
deliberations and voted on the issue during their session en banc. 11 And as
established by judge made doctrine, the Court will assume jurisdiction over a
constitutional question only if it is shown that the essential requisites of a
judicial inquiry into such a question are first satisfied. Thus, there must be an
actual case or controversy involving a conflict of legal rights susceptible of
judicial determination, the constitutional question must have been opportunely
raised by the proper party, and the resolution of the question is unavoidably
necessary to the decision of the case itself. 12
With particular regard to the requirement of proper party as applied in the
cases before us, we hold that the same is satisfied by the petitioners and
intervenors because each of them has sustained or is in danger of sustaining
an immediate injury as a result of the acts or measures complained of. 13 And
even if, strictly speaking, they are not covered by the definition, it is still within
the wide discretion of the Court to waive the requirement and so remove the
impediment to its addressing and resolving the serious constitutional questions
raised.
In the first Emergency Powers Cases, 14 ordinary citizens and taxpayers were
allowed to question the constitutionality of several executive orders issued by
President Quirino although they were invoking only an indirect and general
interest shared in common with the public. The Court dismissed the objection
that they were not proper parties and ruled that "the transcendental importance
to the public of these cases demands that they be settled promptly and
definitely, brushing aside, if we must, technicalities of procedure." We have
since then applied this exception in many other cases. 15
The other above-mentioned requisites have also been met in the present
petitions.
In must be stressed that despite the inhibitions pressing upon the Court when
confronted with constitutional issues like the ones now before it, it will not
hesitate to declare a law or act invalid when it is convinced that this must be
done. In arriving at this conclusion, its only criterion will be the Constitution as
God and its conscience give it the light to probe its meaning and discover its
purpose. Personal motives and political considerations are irrelevancies that
cannot influence its decision. Blandishment is as ineffectual as intimidation.
For all the awesome power of the Congress and the Executive, the Court will
not hesitate to "make the hammer fall, and heavily," to use Justice Laurel's
pithy language, where the acts of these departments, or of any public official,
betray the people's will as expressed in the Constitution.
It need only be added, to borrow again the words of Justice Laurel, that —
... when the judiciary mediates to allocate constitutional boundaries, it does not
assert any superiority over the other departments; it does not in reality nullify
or invalidate an act of the Legislature, but only asserts the solemn and sacred
obligation assigned to it by the Constitution to determine conflicting claims of
authority under the Constitution and to establish for the parties in an actual
controversy the rights which that instrument secures and guarantees to them.
This is in truth all that is involved in what is termed "judicial supremacy" which
properly is the power of judicial review under the Constitution. 16
The cases before us categorically raise constitutional questions that this Court
must categorically resolve. And so we shall.
II
We proceed first to the examination of the preliminary issues before resolving
the more serious challenges to the constitutionality of the several measures
involved in these petitions.
The promulgation of P.D. No. 27 by President Marcos in the exercise of his
powers under martial law has already been sustained in Gonzales v.
Estrella and we find no reason to modify or reverse it on that issue. As for the
power of President Aquino to promulgate Proc. No. 131 and E.O. Nos. 228
and 229, the same was authorized under Section 6 of the Transitory Provisions
of the 1987 Constitution, quoted above.
The said measures were issued by President Aquino before July 27, 1987,
when the Congress of the Philippines was formally convened and took over
legislative power from her. They are not "midnight" enactments intended to
pre-empt the legislature because E.O. No. 228 was issued on July 17, 1987,
and the other measures, i.e., Proc. No. 131 and E.O. No. 229, were both
issued on July 22, 1987. Neither is it correct to say that these measures ceased
to be valid when she lost her legislative power for, like any statute, they
continue to be in force unless modified or repealed by subsequent law or
declared invalid by the courts. A statute does not ipso facto become
inoperative simply because of the dissolution of the legislature that enacted it.
By the same token, President Aquino's loss of legislative power did not have
the effect of invalidating all the measures enacted by her when and as long as
she possessed it.
Significantly, the Congress she is alleged to have undercut has not rejected
but in fact substantially affirmed the challenged measures and has specifically
provided that they shall be suppletory to R.A. No. 6657 whenever not
inconsistent with its provisions. 17 Indeed, some portions of the said measures,
like the creation of the P50 billion fund in Section 2 of Proc. No. 131, and
Sections 20 and 21 of E.O. No. 229, have been incorporated by reference in
the CARP Law. 18
That fund, as earlier noted, is itself being questioned on the ground that it does
not conform to the requirements of a valid appropriation as specified in the
Constitution. Clearly, however, Proc. No. 131 is not an appropriation measure
even if it does provide for the creation of said fund, for that is not its principal
purpose. An appropriation law is one the primary and specific purpose of which
is to authorize the release of public funds from the treasury. 19 The creation of
the fund is only incidental to the main objective of the proclamation, which is
agrarian reform.
It should follow that the specific constitutional provisions invoked, to wit,
Section 24 and Section 25(4) of Article VI, are not applicable. With particular
reference to Section 24, this obviously could not have been complied with for
the simple reason that the House of Representatives, which now has the
exclusive power to initiate appropriation measures, had not yet been convened
when the proclamation was issued. The legislative power was then solely
vested in the President of the Philippines, who embodied, as it were, both
houses of Congress.
The argument of some of the petitioners that Proc. No. 131 and E.O. No. 229
should be invalidated because they do not provide for retention limits as
required by Article XIII, Section 4 of the Constitution is no longer tenable. R.A.
No. 6657 does provide for such limits now in Section 6 of the law, which in fact
is one of its most controversial provisions. This section declares:
Retention Limits. — Except as otherwise provided in this Act, no person may
own or retain, directly or indirectly, any public or private agricultural land, the
size of which shall vary according to factors governing a viable family-sized
farm, such as commodity produced, terrain, infrastructure, and soil fertility as
determined by the Presidential Agrarian Reform Council (PARC) created
hereunder, but in no case shall retention by the landowner exceed five (5)
hectares. Three (3) hectares may be awarded to each child of the landowner,
subject to the following qualifications: (1) that he is at least fifteen (15) years
of age; and (2) that he is actually tilling the land or directly managing the farm;
Provided, That landowners whose lands have been covered by Presidential
Decree No. 27 shall be allowed to keep the area originally retained by them
thereunder, further, That original homestead grantees or direct compulsory
heirs who still own the original homestead at the time of the approval of this
Act shall retain the same areas as long as they continue to cultivate said
homestead.
The argument that E.O. No. 229 violates the constitutional requirement that a
bill shall have only one subject, to be expressed in its title, deserves only short
attention. It is settled that the title of the bill does not have to be a catalogue of
its contents and will suffice if the matters embodied in the text are relevant to
each other and may be inferred from the title. 20
The Court wryly observes that during the past dictatorship, every presidential
issuance, by whatever name it was called, had the force and effect of law
because it came from President Marcos. Such are the ways of despots. Hence,
it is futile to argue, as the petitioners do in G.R. No. 79744, that LOI 474 could
not have repealed P.D. No. 27 because the former was only a letter of
instruction. The important thing is that it was issued by President Marcos,
whose word was law during that time.
But for all their peremptoriness, these issuances from the President Marcos
still had to comply with the requirement for publication as this Court held
in Tanada v. Tuvera. 21 Hence, unless published in the Official Gazette in
accordance with Article 2 of the Civil Code, they could not have any force and
effect if they were among those enactments successfully challenged in that
case. LOI 474 was published, though, in the Official Gazette dated November
29,1976.)
Finally, there is the contention of the public respondent in G.R. No. 78742 that
the writ of mandamus cannot issue to compel the performance of a
discretionary act, especially by a specific department of the government. That
is true as a general proposition but is subject to one important qualification.
Correctly and categorically stated, the rule is that mandamus will lie to compel
the discharge of the discretionary duty itself but not to control the discretion to
be exercised. In other words, mandamus can issue to require action only but
not specific action.
Whenever a duty is imposed upon a public official and an unnecessary and
unreasonable delay in the exercise of such duty occurs, if it is a clear duty
imposed by law, the courts will intervene by the extraordinary legal remedy of
mandamus to compel action. If the duty is purely ministerial, the courts will
require specific action. If the duty is purely discretionary, the courts
by mandamus will require action only. For example, if an inferior court, public
official, or board should, for an unreasonable length of time, fail to decide a
particular question to the great detriment of all parties concerned, or a court
should refuse to take jurisdiction of a cause when the law clearly gave it
jurisdiction mandamus will issue, in the first case to require a decision, and in
the second to require that jurisdiction be taken of the cause. 22
And while it is true that as a rule the writ will not be proper as long as there is
still a plain, speedy and adequate remedy available from the administrative
authorities, resort to the courts may still be permitted if the issue raised is a
question of law. 23
III
There are traditional distinctions between the police power and the power of
eminent domain that logically preclude the application of both powers at the
same time on the same subject. In the case of City of Baguio v.
NAWASA, 24 for example, where a law required the transfer of all municipal
waterworks systems to the NAWASA in exchange for its assets of equivalent
value, the Court held that the power being exercised was eminent domain
because the property involved was wholesome and intended for a public use.
Property condemned under the police power is noxious or intended for a
noxious purpose, such as a building on the verge of collapse, which should be
demolished for the public safety, or obscene materials, which should be
destroyed in the interest of public morals. The confiscation of such property is
not compensable, unlike the taking of property under the power of
expropriation, which requires the payment of just compensation to the owner.
In the case of Pennsylvania Coal Co. v. Mahon, 25 Justice Holmes laid down
the limits of the police power in a famous aphorism: "The general rule at least
is that while property may be regulated to a certain extent, if regulation goes
too far it will be recognized as a taking." The regulation that went "too far" was
a law prohibiting mining which might cause the subsidence of structures for
human habitation constructed on the land surface. This was resisted by a coal
company which had earlier granted a deed to the land over its mine but
reserved all mining rights thereunder, with the grantee assuming all risks and
waiving any damage claim. The Court held the law could not be sustained
without compensating the grantor. Justice Brandeis filed a lone dissent in
which he argued that there was a valid exercise of the police power. He said:
Every restriction upon the use of property imposed in the exercise of the police
power deprives the owner of some right theretofore enjoyed, and is, in that
sense, an abridgment by the State of rights in property without making
compensation. But restriction imposed to protect the public health, safety or
morals from dangers threatened is not a taking. The restriction here in question
is merely the prohibition of a noxious use. The property so restricted remains
in the possession of its owner. The state does not appropriate it or make any
use of it. The state merely prevents the owner from making a use which
interferes with paramount rights of the public. Whenever the use prohibited
ceases to be noxious — as it may because of further changes in local or social
conditions — the restriction will have to be removed and the owner will again
be free to enjoy his property as heretofore.
Recent trends, however, would indicate not a polarization but a mingling of the
police power and the power of eminent domain, with the latter being used as
an implement of the former like the power of taxation. The employment of the
taxing power to achieve a police purpose has long been accepted. 26 As for
the power of expropriation, Prof. John J. Costonis of the University of Illinois
College of Law (referring to the earlier case of Euclid v. Ambler Realty Co.,
272 US 365, which sustained a zoning law under the police power) makes the
following significant remarks:
Euclid, moreover, was decided in an era when judges located the Police and
eminent domain powers on different planets. Generally speaking, they viewed
eminent domain as encompassing public acquisition of private property for
improvements that would be available for public use," literally construed. To
the police power, on the other hand, they assigned the less intrusive task of
preventing harmful externalities a point reflected in the Euclid opinion's
reliance on an analogy to nuisance law to bolster its support of zoning. So long
as suppression of a privately authored harm bore a plausible relation to some
legitimate "public purpose," the pertinent measure need have afforded no
compensation whatever. With the progressive growth of government's
involvement in land use, the distance between the two powers has contracted
considerably. Today government often employs eminent domain
interchangeably with or as a useful complement to the police power-- a trend
expressly approved in the Supreme Court's 1954 decision in Berman v. Parker,
which broadened the reach of eminent domain's "public use" test to match that
of the police power's standard of "public purpose." 27
The Berman case sustained a redevelopment project and the improvement of
blighted areas in the District of Columbia as a proper exercise of the police
power. On the role of eminent domain in the attainment of this purpose, Justice
Douglas declared:
If those who govern the District of Columbia decide that the Nation's Capital
should be beautiful as well as sanitary, there is nothing in the Fifth Amendment
that stands in the way.
Once the object is within the authority of Congress, the right to realize it
through the exercise of eminent domain is clear.
For the power of eminent domain is merely the means to the end. 28
In Penn Central Transportation Co. v. New York City, 29 decided by a 6-3 vote
in 1978, the U.S Supreme Court sustained the respondent's Landmarks
Preservation Law under which the owners of the Grand Central Terminal had
not been allowed to construct a multi-story office building over the Terminal,
which had been designated a historic landmark. Preservation of the landmark
was held to be a valid objective of the police power. The problem, however,
was that the owners of the Terminal would be deprived of the right to use the
airspace above it although other landowners in the area could do so over their
respective properties. While insisting that there was here no taking, the Court
nonetheless recognized certain compensatory rights accruing to Grand
Central Terminal which it said would "undoubtedly mitigate" the loss caused
by the regulation. This "fair compensation," as he called it, was explained by
Prof. Costonis in this wise:
In return for retaining the Terminal site in its pristine landmark status, Penn
Central was authorized to transfer to neighboring properties the authorized but
unused rights accruing to the site prior to the Terminal's designation as a
landmark — the rights which would have been exhausted by the 59-story
building that the city refused to countenance atop the Terminal. Prevailing bulk
restrictions on neighboring sites were proportionately relaxed, theoretically
enabling Penn Central to recoup its losses at the Terminal site by constructing
or selling to others the right to construct larger, hence more profitable buildings
on the transferee sites. 30
The cases before us present no knotty complication insofar as the question of
compensable taking is concerned. To the extent that the measures under
challenge merely prescribe retention limits for landowners, there is an exercise
of the police power for the regulation of private property in accordance with the
Constitution. But where, to carry out such regulation, it becomes necessary to
deprive such owners of whatever lands they may own in excess of the
maximum area allowed, there is definitely a taking under the power of eminent
domain for which payment of just compensation is imperative. The taking
contemplated is not a mere limitation of the use of the land. What is required
is the surrender of the title to and the physical possession of the said excess
and all beneficial rights accruing to the owner in favor of the farmer-beneficiary.
This is definitely an exercise not of the police power but of the power of eminent
domain.
Whether as an exercise of the police power or of the power of eminent domain,
the several measures before us are challenged as violative of the due process
and equal protection clauses.
The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the ground that
no retention limits are prescribed has already been discussed and dismissed.
It is noted that although they excited many bitter exchanges during the
deliberation of the CARP Law in Congress, the retention limits finally agreed
upon are, curiously enough, not being questioned in these petitions. We
therefore do not discuss them here. The Court will come to the other claimed
violations of due process in connection with our examination of the adequacy
of just compensation as required under the power of expropriation.
The argument of the small farmers that they have been denied equal protection
because of the absence of retention limits has also become academic under
Section 6 of R.A. No. 6657. Significantly, they too have not questioned the
area of such limits. There is also the complaint that they should not be made
to share the burden of agrarian reform, an objection also made by the sugar
planters on the ground that they belong to a particular class with particular
interests of their own. However, no evidence has been submitted to the Court
that the requisites of a valid classification have been violated.
Classification has been defined as the grouping of persons or things similar to
each other in certain particulars and different from each other in these same
particulars. 31 To be valid, it must conform to the following requirements: (1) it
must be based on substantial distinctions; (2) it must be germane to the
purposes of the law; (3) it must not be limited to existing conditions only; and
(4) it must apply equally to all the members of the class. 32 The Court finds that
all these requisites have been met by the measures here challenged as
arbitrary and discriminatory.
Equal protection simply means that all persons or things similarly situated must
be treated alike both as to the rights conferred and the liabilities
imposed. 33 The petitioners have not shown that they belong to a different
class and entitled to a different treatment. The argument that not only
landowners but also owners of other properties must be made to share the
burden of implementing land reform must be rejected. There is a substantial
distinction between these two classes of owners that is clearly visible except
to those who will not see. There is no need to elaborate on this matter. In any
event, the Congress is allowed a wide leeway in providing for a valid
classification. Its decision is accorded recognition and respect by the courts of
justice except only where its discretion is abused to the detriment of the Bill of
Rights.
It is worth remarking at this juncture that a statute may be sustained under the
police power only if there is a concurrence of the lawful subject and the lawful
method. Put otherwise, the interests of the public generally as distinguished
from those of a particular class require the interference of the State and, no
less important, the means employed are reasonably necessary for the
attainment of the purpose sought to be achieved and not unduly oppressive
upon individuals. 34 As the subject and purpose of agrarian reform have been
laid down by the Constitution itself, we may say that the first requirement has
been satisfied. What remains to be examined is the validity of the method
employed to achieve the constitutional goal.
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.
That 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.
This brings us now to the power of eminent domain.
IV
Eminent domain is an inherent power of the State that enables it to forcibly
acquire private lands intended for public use upon payment of just
compensation to the owner. Obviously, there is no need to expropriate where
the owner is willing to sell under terms also acceptable to the purchaser, in
which case an ordinary deed of sale may be agreed upon by the parties. 35 It
is only where the owner is unwilling to sell, or cannot accept the price or other
conditions offered by the vendee, that the power of eminent domain will come
into play to assert the paramount authority of the State over the interests of the
property owner. Private rights must then yield to the irresistible demands of the
public interest on the time-honored justification, as in the case of the police
power, that the welfare of the people is the supreme law.
But for all its primacy and urgency, the power of expropriation is by no means
absolute (as indeed no power is absolute). The limitation is found in the
constitutional injunction that "private property shall not be taken for public use
without just compensation" and in the abundant jurisprudence that has evolved
from the interpretation of this principle. Basically, the requirements for a proper
exercise of the power are: (1) public use and (2) just compensation.
Let us dispose first of the argument raised by the petitioners in G.R. No. 79310
that the State should first distribute public agricultural lands in the pursuit of
agrarian reform instead of immediately disturbing property rights by forcibly
acquiring private agricultural lands. Parenthetically, it is not correct to say that
only public agricultural lands may be covered by the CARP as the Constitution
calls for "the just distribution of all agricultural lands." In any event, the decision
to redistribute private agricultural lands in the manner prescribed by the CARP
was made by the legislative and executive departments in the exercise of their
discretion. We are not justified in reviewing that discretion in the absence of a
clear showing that it has been abused.
A becoming courtesy admonishes us to respect the decisions of the political
departments when they decide what is known as the political question. As
explained by Chief Justice Concepcion in the case of Tañada v. Cuenco: 36
The term "political question" connotes what it means in ordinary parlance,
namely, a question of policy. It refers to "those questions which, under the
Constitution, are to be decided by the people in their sovereign capacity; or in
regard to which full discretionary authority has been delegated to the legislative
or executive branch of the government." It is concerned with issues dependent
upon the wisdom, not legality, of a particular measure.
It is true that the concept of the political question has been constricted with the
enlargement of judicial power, which now includes the authority of the courts
"to determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government." 37 Even so, this should not be construed
as a license for us to reverse the other departments simply because their views
may not coincide with ours.
The legislature and the executive have been seen fit, in their wisdom, to
include in the CARP the redistribution of private landholdings (even as the
distribution of public agricultural lands is first provided for, while also continuing
apace under the Public Land Act and other cognate laws). The Court sees no
justification to interpose its authority, which we may assert only if we believe
that the political decision is not unwise, but illegal. We do not find it to be so.
In U.S. v. Chandler-Dunbar Water Power Company,38 it was held:
Congress having determined, as it did by the Act of March 3,1909 that the
entire St. Mary's river between the American bank and the international line,
as well as all of the upland north of the present ship canal, throughout its entire
length, was "necessary for the purpose of navigation of said waters, and the
waters connected therewith," that determination is conclusive in condemnation
proceedings instituted by the United States under that Act, and there is no
room for judicial review of the judgment of Congress ... .
As earlier observed, the requirement for public use has already been settled
for us by the Constitution itself No less than the 1987 Charter calls for agrarian
reform, which is the reason why private agricultural lands are to be taken from
their owners, subject to the prescribed maximum retention limits. The purposes
specified in P.D. No. 27, Proc. No. 131 and R.A. No. 6657 are only an
elaboration of the constitutional injunction that the State adopt the necessary
measures "to encourage and undertake the just distribution of all agricultural
lands to enable farmers who are landless to own directly or collectively the
lands they till." That public use, as pronounced by the fundamental law itself,
must be binding on us.
The second requirement, i.e., the payment of just compensation, needs a
longer and more thoughtful examination.
Just compensation is defined as the full and fair equivalent of the property
taken from its owner by the expropriator. 39 It has been repeatedly stressed by
this Court that the measure is not the taker's gain but the owner's loss. 40 The
word "just" is used to intensify the meaning of the word "compensation" to
convey the idea that the equivalent to be rendered for the property to be taken
shall be real, substantial, full, ample. 41
It bears repeating that the measures challenged in these petitions contemplate
more than a mere regulation of the use of private lands under the police power.
We deal here with an actual taking of private agricultural lands that has
dispossessed the owners of their property and deprived them of all its
beneficial use and enjoyment, to entitle them to the just compensation
mandated by the Constitution.
As held in Republic of the Philippines v. Castellvi, 42 there is compensable
taking when the following conditions concur: (1) the expropriator must enter a
private property; (2) the entry must be for more than a momentary period; (3)
the entry must be under warrant or color of legal authority; (4) the property
must be devoted to public use or otherwise informally appropriated or
injuriously affected; and (5) the utilization of the property for public use must
be in such a way as to oust the owner and deprive him of beneficial enjoyment
of the property. All these requisites are envisioned in the measures before us.
Where the State itself is the expropriator, it is not necessary for it to make a
deposit upon its taking possession of the condemned property, as "the
compensation is a public charge, the good faith of the public is pledged for its
payment, and all the resources of taxation may be employed in raising the
amount." 43 Nevertheless, Section 16(e) of the CARP Law provides that:
Upon receipt by the landowner of the corresponding payment or, in case of
rejection or no response from the landowner, upon the deposit with an
accessible bank designated by the DAR of the compensation in cash or in LBP
bonds in accordance with this Act, the DAR shall take immediate possession
of the land and shall request the proper Register of Deeds to issue a Transfer
Certificate of Title (TCT) in the name of the Republic of the Philippines. The
DAR shall thereafter proceed with the redistribution of the land to the qualified
beneficiaries.
Objection is raised, however, to the manner of fixing the just compensation,
which it is claimed is entrusted to the administrative authorities in violation of
judicial prerogatives. Specific reference is made to Section 16(d), which
provides that in case of the rejection or disregard by the owner of the offer of
the government to buy his land-
... the DAR shall conduct summary administrative proceedings to determine
the compensation for the land by requiring the landowner, the LBP and other
interested parties to submit evidence as to the just compensation for the land,
within fifteen (15) days from the receipt of the notice. After the expiration of the
above period, the matter is deemed submitted for decision. The DAR shall
decide the case within thirty (30) days after it is submitted for decision.
To be sure, the determination of just compensation is a function addressed to
the courts of justice and may not be usurped by any other branch or official of
the government. EPZA v. Dulay 44 resolved a challenge to several decrees
promulgated by President Marcos providing that the just compensation for
property under expropriation should be either the assessment of the property
by the government or the sworn valuation thereof by the owner, whichever was
lower. In declaring these decrees unconstitutional, the Court held through Mr.
Justice Hugo E. Gutierrez, Jr.:
The method of ascertaining just compensation under the aforecited decrees
constitutes impermissible encroachment on judicial prerogatives. It tends to
render this Court inutile in a matter which under this Constitution is reserved
to it for final determination.
Thus, although in an expropriation proceeding the court technically would still
have the power to determine the just compensation for the property, following
the applicable decrees, its task would be relegated to simply stating the lower
value of the property as declared either by the owner or the assessor. As a
necessary consequence, it would be useless for the court to appoint
commissioners under Rule 67 of the Rules of Court. Moreover, the need to
satisfy the due process clause in the taking of private property is seemingly
fulfilled since it cannot be said that a judicial proceeding was not had before
the actual taking. However, the strict application of the decrees during the
proceedings would be nothing short of a mere formality or charade as the court
has only to choose between the valuation of the owner and that of the
assessor, and its choice is always limited to the lower of the two. The court
cannot exercise its discretion or independence in determining what is just or
fair. Even a grade school pupil could substitute for the judge insofar as the
determination of constitutional just compensation is concerned.
xxx
In the present petition, we are once again confronted with the same question
of whether the courts under P.D. No. 1533, which contains the same provision
on just compensation as its predecessor decrees, still have the power and
authority to determine just compensation, independent of what is stated by the
decree and to this effect, to appoint commissioners for such purpose.
This time, we answer in the affirmative.
xxx
It is violative of due process to deny the owner the opportunity to prove that
the valuation in the tax documents is unfair or wrong. And it is repulsive to the
basic concepts of justice and fairness to allow the haphazard work of a minor
bureaucrat or clerk to absolutely prevail over the judgment of a court
promulgated only after expert commissioners have actually viewed the
property, after evidence and arguments pro and con have been presented, and
after all factors and considerations essential to a fair and just determination
have been judiciously evaluated.
A reading of the aforecited Section 16(d) will readily show that it does not suffer
from the arbitrariness that rendered the challenged decrees constitutionally
objectionable. Although the proceedings are described as summary, the
landowner and other interested parties are nevertheless allowed an
opportunity to submit evidence on the real value of the property. But more
importantly, the determination of the just compensation by the DAR is not by
any means final and conclusive upon the landowner or any other interested
party, for Section 16(f) clearly provides:
Any party who disagrees with the decision may bring the matter to the court of
proper jurisdiction for final determination of just compensation.
The determination made by the DAR is only preliminary unless accepted by all
parties concerned. Otherwise, the courts of justice will still have the right to
review with finality the said determination in the exercise of what is admittedly
a judicial function.
The second and more serious objection to the provisions on just compensation
is not as easily resolved.
This refers to Section 18 of the CARP Law providing in full as follows:
SEC. 18. Valuation and Mode of Compensation. — The LBP shall compensate
the landowner in such amount as may be agreed upon by the landowner and
the DAR and the LBP, in accordance with the criteria provided for in Sections
16 and 17, and other pertinent provisions hereof, or as may be finally
determined by the court, as the just compensation for the land.
The compensation shall be paid in one of the following modes, at the option of
the landowner:
(1) Cash payment, under the following terms and conditions:
(a) For lands above fifty (50) hectares, insofar as the excess hectarage is
concerned — Twenty-five percent (25%) cash, the balance to be paid in
government financial instruments negotiable at any time.
(b) For lands above twenty-four (24) hectares and up to fifty (50) hectares —
Thirty percent (30%) cash, the balance to be paid in government financial
instruments negotiable at any time.
(c) For lands twenty-four (24) hectares and below — Thirty-five percent (35%)
cash, the balance to be paid in government financial instruments negotiable at
any time.
(2) Shares of stock in government-owned or controlled corporations, LBP
preferred shares, physical assets or other qualified investments in accordance
with guidelines set by the PARC;
(3) Tax credits which can be used against any tax liability;
(4) LBP bonds, which shall have the following features:
(a) Market interest rates aligned with 91-day treasury bill rates. Ten percent
(10%) of the face value of the bonds shall mature every year from the date of
issuance until the tenth (10th) year: Provided, That should the landowner
choose to forego the cash portion, whether in full or in part, he shall be paid
correspondingly in LBP bonds;
(b) Transferability and negotiability. Such LBP bonds may be used by the
landowner, his successors-in- interest or his assigns, up to the amount of their
face value, for any of the following:
(i) Acquisition of land or other real properties of the government, including
assets under the Asset Privatization Program and other assets foreclosed by
government financial institutions in the same province or region where the
lands for which the bonds were paid are situated;
(ii) Acquisition of shares of stock of government-owned or controlled
corporations or shares of stock owned by the government in private
corporations;
(iii) Substitution for surety or bail bonds for the provisional release of accused
persons, or for performance bonds;
(iv) Security for loans with any government financial institution, provided the
proceeds of the loans shall be invested in an economic enterprise, preferably
in a small and medium- scale industry, in the same province or region as the
land for which the bonds are paid;
(v) Payment for various taxes and fees to government: Provided, That the use
of these bonds for these purposes will be limited to a certain percentage of the
outstanding balance of the financial instruments; Provided, further, That the
PARC shall determine the percentages mentioned above;
(vi) Payment for tuition fees of the immediate family of the original bondholder
in government universities, colleges, trade schools, and other institutions;
(vii) Payment for fees of the immediate family of the original bondholder in
government hospitals; and
(viii) Such other uses as the PARC may from time to time allow.
The contention of the petitioners in G.R. No. 79777 is that the above provision
is unconstitutional insofar as it requires the owners of the expropriated
properties to accept just compensation therefor in less than money, which is
the only medium of payment allowed. In support of this contention, they cite
jurisprudence holding that:
The fundamental rule in expropriation matters is that the owner of the property
expropriated is entitled to a just compensation, which should be neither more
nor less, whenever it is possible to make the assessment, than the money
equivalent of said property. Just compensation has always been understood
to be the just and complete equivalent of the loss which the owner of the thing
expropriated has to suffer by reason of the expropriation . 45 (Emphasis
supplied.)
In J.M. Tuazon Co. v. Land Tenure Administration, 46 this Court held:
It is well-settled that just compensation means the equivalent for the value of
the property at the time of its taking. Anything beyond that is more, and
anything short of that is less, than just compensation. It means a fair and full
equivalent for the loss sustained, which is the measure of the indemnity, not
whatever gain would accrue to the expropriating entity. The market value of
the land taken is the just compensation to which the owner of condemned
property is entitled, the market value being that sum of money which a person
desirous, but not compelled to buy, and an owner, willing, but not compelled
to sell, would agree on as a price to be given and received for such property.
(Emphasis supplied.)
In the United States, where much of our jurisprudence on the subject has been
derived, the weight of authority is also to the effect that just compensation for
property expropriated is payable only in money and not otherwise. Thus —
The medium of payment of compensation is ready money or cash. The
condemnor cannot compel the owner to accept anything but money, nor can
the owner compel or require the condemnor to pay him on any other basis than
the value of the property in money at the time and in the manner prescribed by
the Constitution and the statutes. When the power of eminent domain is
resorted to, there must be a standard medium of payment, binding upon both
parties, and the law has fixed that standard as money in cash. 47 (Emphasis
supplied.)
Part cash and deferred payments are not and cannot, in the nature of things,
be regarded as a reliable and constant standard of compensation. 48
"Just compensation" for property taken by condemnation means a fair
equivalent in money, which must be paid at least within a reasonable time after
the taking, and it is not within the power of the Legislature to substitute for such
payment future obligations, bonds, or other valuable advantage. 49 (Emphasis
supplied.)
It cannot be denied from these cases that the traditional medium for the
payment of just compensation is money and no other. And so, conformably,
has just compensation been paid in the past solely in that medium. However,
we do not deal here with the traditional excercise of the power of eminent
domain. This is not an ordinary expropriation where only a specific property of
relatively limited area is sought to be taken by the State from its owner for a
specific and perhaps local purpose.
What we deal with here is a revolutionary kind of expropriation.
The expropriation before us affects all private agricultural lands whenever
found and of whatever kind as long as they are in excess of the maximum
retention limits allowed their owners. This kind of expropriation is intended for
the benefit not only of a particular community or of a small segment of the
population but of the entire Filipino nation, from all levels of our society, from
the impoverished farmer to the land-glutted owner. Its purpose does not cover
only the whole territory of this country but goes beyond in time to the
foreseeable future, which it hopes to secure and edify with the vision and the
sacrifice of the present generation of Filipinos. Generations yet to come are as
involved in this program as we are today, although hopefully only as
beneficiaries of a richer and more fulfilling life we will guarantee to them
tomorrow through our thoughtfulness today. And, finally, let it not be forgotten
that it is no less than the Constitution itself that has ordained this revolution in
the farms, calling for "a just distribution" among the farmers of lands that have
heretofore been the prison of their dreams but can now become the key at
least to their deliverance.
Such a program will involve not mere millions of pesos. The cost will be
tremendous. Considering the vast areas of land subject to expropriation under
the laws before us, we estimate that hundreds of billions of pesos will be
needed, far more indeed than the amount of P50 billion initially appropriated,
which is already staggering as it is by our present standards. Such amount is
in fact not even fully available at this time.
We assume that the framers of the Constitution were aware of this difficulty
when they called for agrarian reform as a top priority project of the government.
It is a part of this assumption that when they envisioned the expropriation that
would be needed, they also intended that the just compensation would have
to be paid not in the orthodox way but a less conventional if more practical
method. There can be no doubt that they were aware of the financial limitations
of the government and had no illusions that there would be enough money to
pay in cash and in full for the lands they wanted to be distributed among the
farmers. We may therefore assume that their intention was to allow such
manner of payment as is now provided for by the CARP Law, particularly the
payment of the balance (if the owner cannot be paid fully with money), or
indeed of the entire amount of the just compensation, with other things of
value. We may also suppose that what they had in mind was a similar scheme
of payment as that prescribed in P.D. No. 27, which was the law in force at the
time they deliberated on the new Charter and with which they presumably
agreed in principle.
The Court has not found in the records of the Constitutional Commission any
categorical agreement among the members regarding the meaning to be given
the concept of just compensation as applied to the comprehensive agrarian
reform program being contemplated. There was the suggestion to "fine tune"
the requirement to suit the demands of the project even as it was also felt that
they should "leave it to Congress" to determine how payment should be made
to the landowner and reimbursement required from the farmer-beneficiaries.
Such innovations as "progressive compensation" and "State-subsidized
compensation" were also proposed. In the end, however, no special definition
of the just compensation for the lands to be expropriated was reached by the
Commission. 50
On the other hand, there is nothing in the records either that militates against
the assumptions we are making of the general sentiments and intention of the
members on the content and manner of the payment to be made to the
landowner in the light of the magnitude of the expenditure and the limitations
of the expropriator.
With these assumptions, the Court hereby declares that the content and
manner of the just compensation provided for in the afore- quoted Section 18
of the CARP Law is not violative of the Constitution. We do not mind admitting
that a certain degree of pragmatism has influenced our decision on this issue,
but after all this Court is not a cloistered institution removed from the realities
and demands of society or oblivious to the need for its enhancement. The
Court is as acutely anxious as the rest of our people to see the goal of agrarian
reform achieved at last after the frustrations and deprivations of our peasant
masses during all these disappointing decades. We are aware that invalidation
of the said section will result in the nullification of the entire program, killing the
farmer's hopes even as they approach realization and resurrecting the spectre
of discontent and dissent in the restless countryside. That is not in our view
the intention of the Constitution, and that is not what we shall decree today.
Accepting the theory that payment of the just compensation is not always
required to be made fully in money, we find further that the proportion of cash
payment to the other things of value constituting the total payment, as
determined on the basis of the areas of the lands expropriated, is not unduly
oppressive upon the landowner. It is noted that the smaller the land, the bigger
the payment in money, primarily because the small landowner will be needing
it more than the big landowners, who can afford a bigger balance in bonds and
other things of value. No less importantly, the government financial
instruments making up the balance of the payment are "negotiable at any
time." The other modes, which are likewise available to the landowner at his
option, are also not unreasonable because payment is made in shares of
stock, LBP bonds, other properties or assets, tax credits, and other things of
value equivalent to the amount of just compensation.
Admittedly, the compensation contemplated in the law will cause the
landowners, big and small, not a little inconvenience. As already remarked,
this cannot be avoided. Nevertheless, it is devoutly hoped that these
countrymen of ours, conscious as we know they are of the need for their
forebearance and even sacrifice, will not begrudge us their indispensable
share in the attainment of the ideal of agrarian reform. Otherwise, our pursuit
of this elusive goal will be like the quest for the Holy Grail.
The complaint against the effects of non-registration of the land under E.O.
No. 229 does not seem to be viable any more as it appears that Section 4 of
the said Order has been superseded by Section 14 of the CARP Law. This
repeats the requisites of registration as embodied in the earlier measure but
does not provide, as the latter did, that in case of failure or refusal to register
the land, the valuation thereof shall be that given by the provincial or city
assessor for tax purposes. On the contrary, the CARP Law says that the just
compensation shall be ascertained on the basis of the factors mentioned in its
Section 17 and in the manner provided for in Section 16.
The last major challenge to CARP is that the landowner is divested of his
property even before actual payment to him in full of just compensation, in
contravention of a well- accepted principle of eminent domain.
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:
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. 51
... 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. 52 (Emphasis supplied.)
In Kennedy v. Indianapolis, 53 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, 54 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, 55 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, 56 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.)
It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer
as October 21, 1972 and declared that he shall "be deemed the owner" of a
portion of land consisting of a family-sized farm except that "no title to the land
owned by him was to be actually issued to him unless and until he had become
a full-fledged member of a duly recognized farmers' cooperative." It was
understood, however, that full payment of the just compensation also had to
be made first, conformably to the constitutional requirement.
When E.O. No. 228, categorically stated in its Section 1 that:
All qualified farmer-beneficiaries are now deemed full owners as of October
21, 1972 of the land they acquired by virtue of Presidential Decree No. 27.
(Emphasis supplied.)
it was obviously referring to lands already validly acquired under the said
decree, after proof of full-fledged membership in the farmers' cooperatives and
full payment of just compensation. Hence, it was also perfectly proper for the
Order to also provide in its Section 2 that the "lease rentals paid to the
landowner by the farmer- beneficiary after October 21, 1972 (pending transfer
of ownership after full payment of just compensation), shall be considered as
advance payment for the land."
The CARP Law, for its part, conditions the transfer of possession and
ownership of the land to the government on receipt by the landowner of the
corresponding payment or the deposit by the DAR of the compensation in cash
or LBP bonds with an accessible bank. Until then, title also remains with the
landowner. 57 No outright change of ownership is contemplated either.
Hence, the argument that the assailed measures violate due process by
arbitrarily transferring title before the land is fully paid for must also be rejected.
It is worth stressing at this point that all rights acquired by the tenant-farmer
under P.D. No. 27, as recognized under E.O. No. 228, are retained by him
even now under R.A. No. 6657. This should counter-balance the express
provision in Section 6 of the said law that "the landowners whose lands have
been covered by Presidential Decree No. 27 shall be allowed to keep the area
originally retained by them thereunder, further, That original homestead
grantees or direct compulsory heirs who still own the original homestead at the
time of the approval of this Act shall retain the same areas as long as they
continue to cultivate said homestead."
In connection with these retained rights, it does not appear in G.R. No. 78742
that the appeal filed by the petitioners with the Office of the President has
already been resolved. Although we have said that the doctrine of exhaustion
of administrative remedies need not preclude immediate resort to judicial
action, there are factual issues that have yet to be examined on the
administrative level, especially the claim that the petitioners are not covered
by LOI 474 because they do not own other agricultural lands than the subjects
of their petition.
Obviously, the Court cannot resolve these issues. In any event, assuming that
the petitioners have not yet exercised their retention rights, if any, under P.D.
No. 27, the Court holds that they are entitled to the new retention rights
provided for by R.A. No. 6657, which in fact are on the whole more liberal than
those granted by the decree.
V 5. Subject to the above-mentioned rulings all the petitions are DISMISSED,
without pronouncement as to costs.
The CARP Law and the other enactments also involved in these cases have
been the subject of bitter attack from those who point to the shortcomings of SO ORDERED.
these measures and ask that they be scrapped entirely. To be sure, these
enactments are less than perfect; indeed, they should be continuously re-
examined and rehoned, that they may be sharper instruments for the better DAR VS CA
protection of the farmer's rights. But we have to start somewhere. In the pursuit
of agrarian reform, we do not tread on familiar ground but grope on terrain
fraught with pitfalls and expected difficulties. This is inevitable. The CARP Law
It has been declared that the duty of the court to protect the weak and the
is not a tried and tested project. On the contrary, to use Justice Holmes's
underprivileged should not be carried out to such an extent as deny justice to
words, "it is an experiment, as all life is an experiment," and so we learn as we
the landowner whenever truth and justice happen to be on his side. 1 As
venture forward, and, if necessary, by our own mistakes. We cannot expect
eloquently stated by Justice Isagani Cruz:
perfection although we should strive for it by all means. Meantime, we struggle
as best we can in freeing the farmer from the iron shackles that have . . . social justice — or any justice for that matter — is for the deserving, whether
unconscionably, and for so long, fettered his soul to the soil. he be a millionaire in his mansion or a pauper in his hovel. It is true that, in
case of reasonable doubt, we are called upon to tilt the balance in favor of the
By the decision we reach today, all major legal obstacles to the comprehensive
poor, to whom the Constitution fittingly extends its sympathy and compassion.
agrarian reform program are removed, to clear the way for the true freedom of
But never is it justified to prefer the poor simply because they are poor, or to
the farmer. We may now glimpse the day he will be released not only from
reject the rich simply because they are rich, for justice must always be served,
want but also from the exploitation and disdain of the past and from his own
for poor and rich alike, according to the mandate of the law.2
feelings of inadequacy and helplessness. At last his servitude will be ended
forever. At last the farm on which he toils will be his farm. It will be his portion In this agrarian dispute, it is once more imperative that the aforestated
of the Mother Earth that will give him not only the staff of life but also the joy of principles be applied in its resolution.
living. And where once it bred for him only deep despair, now can he see in it
the fruition of his hopes for a more fulfilling future. Now at last can he banish Separate petitions for review were filed by petitioners Department of Agrarian
from his small plot of earth his insecurities and dark resentments and "rebuild Reform (DAR) (G.R. No. 118745) and Land Bank of the Philippines (G.R. No.
in it the music and the dream." 118712) following the adverse ruling by the Court of Appeals in CA-G.R. SP
No. 33465. However, upon motion filed by private respondents, the petitions
WHEREFORE, the Court holds as follows: were ordered consolidated.3
1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and 229 are Petitioners assail the decision of the Court of Appeals promulgated on October
SUSTAINED against all the constitutional objections raised in the herein 20, 1994, which granted private respondents' Petition
petitions. for Certiorari and Mandamus and ruled as follows:
2. Title to all expropriated properties shall be transferred to the State only upon WHEREFORE, premises considered, the Petition
full payment of compensation to their respective owners. for Certiorari and Mandamus is hereby GRANTED:
3. All rights previously acquired by the tenant- farmers under P.D. No. 27 are a) DAR Administrative Order No. 9, Series of 1990 is
retained and recognized. declared null and void insofar as it provides for the opening of trust accounts
in lieu of deposits in cash or bonds;
4. Landowners who were unable to exercise their rights of retention under P.D.
No. 27 shall enjoy the retention rights granted by R.A. No. 6657 under the b) Respondent Landbank is ordered to immediately deposit — not merely
conditions therein prescribed. "earmark", "reserve" or "deposit in trust" — with an accessible bank designated
by respondent DAR in the names of the following petitioners the following
amounts in cash and in government financial instruments — within the
parameters of Sec. 18 (1) of RA 6657:
P 1,455,207.31 Pedro L. Yap
P 135,482.12 Heirs of Emiliano Santiago
P 15,914,127.77 AMADCOR;
c) The DAR-designated bank is ordered to allow the petitioners to withdraw the
above-deposited amounts without prejudice to the final determination of just
compensation by the proper authorities; and
d) Respondent DAR is ordered to
1) immediately conduct summary administrative proceedings to determine the
just compensation for the lands of the petitioners giving the petitioners 15 days
from notice within which to submit evidence and to 2) decide the cases within
30 days after they are submitted for decision.4
Likewise, petitioners seek the reversal of the Resolution dated January 18,
1995,5 denying their motion for reconsideration.
Private respondents are landowners whose landholdings were acquired by the
DAR and subjected to transfer schemes to qualified beneficiaries under the
Comprehensive Agrarian Reform Law (CARL, Republic Act No. 6657).
Aggrieved by the alleged lapses of the DAR and the Landbank with respect to
the valuation and payment of compensation for their land pursuant to the
provisions of RA 6657, private respondents filed with this Court a Petition
for Certiorari and Mandamus with prayer for preliminary mandatory injunction.
Private respondents questioned the validity of DAR Administrative Order No.
6, Series of 19926 and DAR Administrative Order No. 9, Series of 1990, 7 and
sought to compel the DAR to expedite the pending summary administrative
proceedings to finally determine the just compensation of their properties, and
the Landbank to deposit in cash and bonds the amounts respectively
"earmarked", "reserved" and "deposited in trust accounts" for private
respondents, and to allow them to withdraw the same.
Through a Resolution of the Second Division dated February 9, 1994, this
Court referred the petition to respondent Court of Appeals for proper
determination and disposition.
As found by respondent court , the following are undisputed:
Petitioner Pedro Yap alleges that "(o)n 4 September 1992 the transfer
certificates of title (TCTs) of petitioner Yap were totally cancelled by the
Registrar of Deeds of Leyte and were transferred in the names of farmer
beneficiaries collectively, based on the request of the DAR together with a
certification of the Landbank that the sum of P735,337.77 and P719,869.54
have been earmarked for Landowner Pedro L. Yap for the parcels of lands
covered by TCT Nos. 6282 and 6283, respectively, and issued in lieu thereof
TC-563 and TC-562, respectively, in the names of listed beneficiaries
(ANNEXES "C" & "D") without notice to petitioner Yap and without complying
with the requirement of Section 16 (e) of RA 6657 to deposit the compensation
in cash and Landbank bonds in an accessible bank. (Rollo, p. 6).
The above allegations are not disputed by any of the respondents.
Petitioner Heirs of Emiliano Santiago allege that the heirs of Emiliano F.
Santiago are the owners of a parcel of land located at Laur, NUEVA ECIJA
with an area of 18.5615 hectares covered by TCT No. NT-60359 of the registry
of Deeds of Nueva Ecija, registered in the name of the late Emiliano F.
Santiago; that in November and December 1990, without notice to the
petitioners, the Landbank required and the beneficiaries executed Actual tillers
Deed of Undertaking (ANNEX "B") to pay rentals to the LandBank for the use
of their farmlots equivalent to at least 25% of the net harvest; that on 24
October 1991 the DAR Regional Director issued an order directing the
Landbank to pay the landowner directly or through the establishment of a trust
fund in the amount of P135,482.12, that on 24 February 1992, the Landbank
reserved in trust P135,482.12 in the name of Emiliano F. Santiago. (ANNEX
"E"; Rollo,
p. 7); that the beneficiaries stopped paying rentals to the landowners after they
signed the Actual Tiller's Deed of Undertaking committing themselves to pay
rentals to the LandBank (Rollo, p. 133).
The above allegations are not disputed by the respondents except that
respondent Landbank claims 1) that it was respondent DAR, not Landbank
which required the execution of Actual Tillers Deed of Undertaking (ATDU, for
brevity); and 2) that respondent Landbank, although armed with the ATDU, did
not collect any amount as rental from the substituting beneficiaries (Rollo, p.
99).
Petitioner Agricultural Management and Development Corporation
(AMADCOR, for brevity) alleges — with respect to its properties located in San
Francisco, Quezon — that the properties of AMADCOR in San Francisco,
Quezon consist of a parcel of land covered by TCT No. 34314 with an area of
209.9215 hectares and another parcel covered by TCT No. 10832 with an area
of 163.6189 hectares; that a summary administrative proceeding to determine
compensation of the property covered by TCT No. 34314 was conducted by
the DARAB in Quezon City without notice to the landowner; that a decision
was rendered on 24 November 1992 (ANNEX "F") fixing the compensation for
the parcel of land covered by TCT No. 34314 with an area of 209.9215
hectares at P2,768,326.34 and ordering the Landbank to pay or establish a
trust account for said amount in the name of AMADCOR; and that the trust
account in the amount of P2,768,326.34 fixed in the decision was established
by adding P1,986,489.73 to the first trust account established on 19 December
1991 (ANNEX "G"). With respect to petitioner AMADCOR's property in
Tabaco, Albay, it is alleged that the property of AMADCOR in Tabaco, Albay
is covered by TCT No. T-2466 of the Register of Deeds of Albay with an area
of 1,629.4578 hectares'; that emancipation patents were issued covering an
area of 701.8999 hectares which were registered on 15 February 1988 but no
action was taken thereafter by the DAR to fix the compensation for said land;
that on 21 April 1993, a trust account in the name of AMADCOR was
established in the amount of P12,247,217.83', three notices of acquisition
having been previously rejected by AMADCOR. (Rollo, pp. 8-9)
The above allegations are not disputed by the respondents except that
respondent Landbank claims that petitioner failed to participate in the DARAB
proceedings (land valuation case) despite due notice to it (Rollo, p. 100).8
Private respondents argued that Administrative Order No. 9, Series of 1990
was issued without jurisdiction and with grave abuse of discretion because it
permits the opening of trust accounts by the Landbank, in lieu of depositing in
cash or bonds in an accessible bank designated by the DAR, the
compensation for the land before it is taken and the titles are cancelled as
provided under Section 16(e) of RA 6657.9 Private respondents also assail the
fact that the DAR and the Landbank merely "earmarked", "deposited in trust"
or "reserved" the compensation in their names as landowners despite the clear
mandate that before taking possession of the property, the compensation must
be deposited in cash or in bonds. 10
Petitioner DAR, however, maintained that Administrative Order No. 9 is a valid
exercise of its rule-making power pursuant to Section 49 of RA
6657.11 Moreover, the DAR maintained that the issuance of the "Certificate of
Deposit" by the Landbank was a substantial compliance with Section 16(e) of
RA 6657 and the ruling in the case of Association of Small Landowners in the
Philippines, Inc., et al. vs. Hon. Secretary of Agrarian Reform, G.R. No.
78742, July 14, 1989 (175 SCRA 343).12
For its part, petitioner Landbank declared that the issuance of the Certificates
of Deposits was in consonance with Circular Nos. 29, 29-A and 54 of the Land
Registration Authority where the words "reserved/deposited" were also used. 13
On October 20, 1994, the respondent court rendered the assailed decision in
favor of private respondents.14 Petitioners filed a motion for reconsideration
but respondent court denied the same.15
Hence, the instant petitions.
On March 20, 1995, private respondents filed a motion to dismiss the petition
in G.R. No. 118745 alleging that the appeal has no merit and is merely
intended to delay the finality of the appealed decision. 16 The Court, however,
denied the motion and instead required the respondents to file their
comments.17
Petitioners submit that respondent court erred in (1) declaring as null and void
DAR Administrative Order No. 9, Series of 1990, insofar as it provides for the
opening of trust accounts in lieu of deposit in cash or in bonds, and (2) in
holding that private respondents are entitled as a matter of right to the
immediate and provisional release of the amounts deposited in trust pending
the final resolution of the cases it has filed for just compensation.
Anent the first assignment of error, petitioners maintain that the word "deposit"
as used in Section 16(e) of RA 6657 referred merely to the act of depositing
and in no way excluded the opening of a trust account as a form of deposit.
Thus, in opting for the opening of a trust account as the acceptable form of
deposit through Administrative Circular No. 9, petitioner DAR did not commit
any grave abuse of discretion since it merely exercised its power to promulgate
rules and regulations in implementing the declared policies of RA 6657.
The contention is untenable. Section 16(e) of RA 6657 provides as follows:
Sec. 16. Procedure for Acquisition of Private Lands —
xxx xxx xxx
(e) Upon receipt by the landowner of the corresponding payment or, in case of
rejection or no response from the landowner, upon the deposit with an
accessible bank designated by the DAR of the compensation in cash or in LBP
bonds in accordance with this Act, the DAR shall take immediate possession
of the land and shall request the proper Register of Deeds to issue a Transfer
Certificate of Title (TCT) in the name of the Republic of the Philippines. . . .
(emphasis supplied)
It is very explicit therefrom that the deposit must be made only in "cash" or in
"LBP bonds". Nowhere does it appear nor can it be inferred that the deposit
can be made in any other form. If it were the intention to include a "trust
account" among the valid modes of deposit, that should have been made
express, or at least, qualifying words ought to have appeared from which it can
be fairly deduced that a "trust account" is allowed. In sum, there is no ambiguity
in Section 16(e) of RA 6657 to warrant an expanded construction of the term
"deposit".
The conclusive effect of administrative construction is not absolute. Action of
an administrative agency may be disturbed or set aside by the judicial
department if there is an error of law, a grave abuse of power or lack of
jurisdiction or grave abuse of discretion clearly conflicting with either the letter
or the spirit of a legislative enactment.18 In this regard, it must be stressed that
the function of promulgating rules and regulations may be legitimately
exercised only for the purpose of carrying the provisions of the law into effect.
The power of administrative agencies is thus confined to implementing the law
or putting it into effect. Corollary to this is that administrative regulations cannot
extend
the law and amend a legislative enactment,19 for settled is the rule that
administrative regulations must be in harmony with the provisions of the law.
And in case there is a discrepancy between the basic law and an implementing
rule or regulation, it is the former that prevails.20
In the present suit, the DAR clearly overstepped the limits of its power to enact
rules and regulations when it issued Administrative Circular No. 9. There is no
basis in allowing the opening of a trust account in behalf of the landowner as
compensation for his property because, as heretofore discussed, Section
16(e) of RA 6657 is very specific that the deposit must be made only in "cash"
or in "LBP bonds". In the same vein, petitioners cannot invoke LRA Circular
Nos. 29, 29-A and 54 because these implementing regulations cannot
outweigh the clear provision of the law. Respondent court therefore did not
commit any error in striking down Administrative Circular No. 9 for being null
and void.
Proceeding to the crucial issue of whether or not private respondents are
entitled to withdraw the amounts deposited in trust in their behalf pending the
final resolution of the cases involving the final valuation of their properties,
petitioners assert the negative.
The contention is premised on the alleged distinction between the deposit of
compensation under Section 16(e) of RA 6657 and payment of final
compensation as provided under Section 1821 of the same law. According to
petitioners, the right of the landowner to withdraw the amount deposited in his
behalf pertains only to the final valuation as agreed upon by the landowner,
the DAR and the LBP or that adjudged by the court. It has no reference to
amount deposited in the trust account pursuant to Section 16(e) in case of
rejection by the landowner because the latter amount is only provisional and
intended merely to secure possession of the property pending final valuation.
To further bolster the contention petitioners cite the following pronouncements
in the case of "Association of Small Landowners in the Phil. Inc. vs. Secretary
of Agrarian Reform".22
The last major challenge to CARP is that the landowner is divested of his
property even before actual payment to him in full of just compensation, in
contravention of a well-accepted principle of eminent domain.
xxx xxx xxx
The CARP Law, for its part conditions the transfer of possession and
ownership of the land to the government on receipt by the landowner of the
corresponding payment or the deposit by the DAR of the compensation in cash
or LBP bonds with an accessible bank. Until then, title also remains with the
landowner. No outright change of ownership is contemplated either.
xxx xxx xxx
Hence the argument that the assailed measures violate due process by
arbitrarily transferring title before the land is fully paid for must also be rejected.
Notably, however, the aforecited case was used by respondent court in
discarding petitioners' assertion as it found that:
. . . despite the "revolutionary" character of the expropriation envisioned under
RA 6657 which led the Supreme Court, in the case of Association of Small
Landowners in the Phil. Inc. vs. Secretary of Agrarian Reform (175 SCRA 343),
to conclude that "payments of the just compensation is not always required to
be made fully in money" — even as the Supreme Court admits in the same
case "that the traditional medium for the payment of just compensation is
money and no other" — the Supreme Court in said case did not abandon the
"recognized rule . . . that title to the property expropriated shall pass from the
owner to the expropriator only upon full payment of the just
compensation." 23 (Emphasis supplied)
We agree with the observations of respondent court. The ruling in the
"Association" case merely recognized the extraordinary nature of the
expropriation to be undertaken under RA 6657 thereby allowing a deviation
from the traditional mode of payment of compensation and recognized
payment other than in cash. It did not, however, dispense with the settled rule
that there must be full payment of just compensation before the title to the
expropriated property is transferred.
The attempt to make a distinction between the deposit of compensation under
Section 16(e) of RA 6657 and determination of just compensation under
Section 18 is unacceptable. To withhold the right of the landowners to
appropriate the amounts already deposited in their behalf as compensation for
their properties simply because they rejected the DAR's valuation, and
notwithstanding that they have already been deprived of the possession and
use of such properties, is an oppressive exercise of eminent domain. The
irresistible expropriation of private respondents' properties was painful enough
for them. But petitioner DAR rubbed it in all the more by withholding that which
rightfully belongs to private respondents in exchange for the taking, under an
authority (the "Association" case) that is, however, misplaced. This is misery
twice bestowed on private respondents, which the Court must rectify.
Hence, we find it unnecessary to distinguish between provisional
compensation under Section 16(e) and final compensation under Section 18
for purposes of exercising the landowners' right to appropriate the same. The
immediate effect in both situations is the same, the landowner is deprived of
the use and possession of his property for which he should be fairly and
immediately compensated. Fittingly, we reiterate the cardinal rule that:
. . . within the context of the State's inherent power of eminent domain, just
compensation means not only the correct determination of the amount to be
paid to the owner of the land but also the payment of the land within a
reasonable time from its taking. Without prompt payment, compensation
cannot be considered "just" for the property owner is made to suffer the
consequence of being immediately deprived of his land while being made to
wait for a decade or more before actually receiving the amount necessary to
cope with his loss. 24 (Emphasis supplied)
The promulgation of the "Association" decision endeavored to remove all legal
obstacles in the implementation of the Comprehensive Agrarian Reform
Program and clear the way for the true freedom of the farmer. 25 But despite
this, cases involving its implementation continue to multiply and clog the courts'
dockets. Nevertheless, we are still optimistic that the goal of totally
emancipating the farmers from their bondage will be attained in due time. It
must be stressed, however, that in the pursuit of this objective, vigilance over
the rights of the landowners is equally important because social justice cannot
be invoked to trample on the rights of property owners, who under our
Constitution and laws are also entitled to protection. 26
WHEREFORE, the foregoing premises considered, the petition is hereby
DENIED for lack of merit and the appealed decision is AFFIRMED in toto.
SO ORDERED.
NAPOCOR VS SPS DELA CRUZ
The Case
In this petition for review under Rule 45 of the Rules of Court, petitioner
National Power Corporation (NAPOCOR) seeks to annul and set aside the
November 18, 2002 Decision1 of the Court of Appeals (CA) in CA-G.R. CV No.
67446, which affirmed the December 28, 1999 Order 2 of the Imus, Cavite
Regional Trial Court (RTC), Branch XX in Civil Case No. 1816-98, which fixed
the fair market value of the expropriated lots at PhP 10,000.00 per square
meter.
The Facts
Petitioner NAPOCOR is a government-owned and controlled corporation
created under Republic Act No. 6395, as amended, with the mandate of
developing hydroelectric power, producing transmission lines, and developing
hydroelectric power throughout the Philippines. NAPOCOR decided to acquire
an easement of right-of-way over portions of land within the areas of
Dasmariñas and Imus, Cavite for the construction and maintenance of the
proposed Dasmariñas-Zapote 230 kV Transmission Line Project.3
On November 27, 1998, petitioner filed a Complaint 4 for eminent domain and
expropriation of an easement of right-of-way against respondents as
registered owners of the parcels of land sought to be expropriated, which were
covered by Transfer Certificates of Title (TCT) Nos. T-313327, T-671864, and
T-454278. The affected areas were 51.55, 18.25, and 14.625 square meters,
respectively, or a total of 84.425 square meters.
After respondents filed their respective answers to petitioner’s Complaint,
petitioner deposited PhP 5,788.50 to cover the provisional value of the land in
accordance with Section 2, Rule 67 of the Rules of Court.5 Then, on February
25, 1999, petitioner filed an Urgent Ex-Parte Motion for the Issuance of a Writ
of Possession, which the trial court granted in its March 9, 1999 Order. The
trial court issued a Writ of Possession over the lots owned by respondents
spouses de la Cruz and respondent Ferrer on March 10, 1999 and April 12,
1999, respectively.
However, the trial court dropped the Dela Cruz spouses and their mortgagee,
Metrobank, as parties-defendants in its May 11, 1999 Order,6 in view of the
Motion to Intervene filed by respondent/intervenor Virgilio M. Saulog, who
claimed ownership of the land sought to be expropriated from respondents
spouses Dela Cruz.
On June 24, 1999, the trial court terminated the pre-trial in so far as respondent
Ferrer was concerned, considering that the sole issue was the amount of just
compensation, and issued an Order directing the constitution of a Board of
Commissioners with respect to the property of respondent S.K. Dynamics. The
trial court designated Mr. Lamberto C. Parra, Cavite Provincial Assessor, as
chairman, while petitioner nominated the Municipal Assessor of Dasmariñas,
Mr. Regalado T. Andaya, as member. Respondent S.K. Dynamics did not
nominate any commissioner.
As to the just compensation for the property of Saulog, successor-in-interest
of the Dela Cruz spouses, the trial court ordered the latter and petitioner to
submit their compromise agreement.
The commissioners conducted an ocular inspection of S.K. Dynamics’
property, and on October 8, 1999, they submitted a report to the trial court,
with the following pertinent findings:
In arriving our [sic] estimate of values our studies and analysis include the
following:
I. PROPERTY LOCATION
As shown to us on-site during our ocular inspection, the appraised property is
land only, identified as the area affected by the construction of the National
Power Corporation (NPC) Dasmariñas-Zapote 230KV Transmission Lines
Project, located within Barangay Salitran, Dasmariñas, Cavite registered in the
name of S.K. Dynamic[s] Manufacture[r], Corp., under Transfer Certificate of
Title No. T-454278.
II. NEIGHBORHOOD DESCRIPTION
The neighborhood particularly in the immediate vicinity is within a mixed
residential and commercial area, situated in the northern section of the
Municipality of Dasmariñas which was transversed [sic] by Gen. Emilio
Aguinaldo Highway [where] several residential subdivisions and commercial
establishment[s] are located.
Considered as some of the important improvements [on] the vicinity are (within
1.5 radius)
Orchard Golf and Country Club
Golden City Subdivision
Southfield Subdivisions
Arcontica Sports Complex
Max’s Restaurant
Waltermart Shopping Mall
UMC Medical Center
Several savings and Commercial Banks as well as several Gasoline stations.
Community centers such as, [sic] churches, public markets, shopping malls,
banks and gasoline stations are easily accessible from the subject real
properties.
Convenience facilities such as electricity, telephone service as well as pipe
potable water supply system are all available along Gen. Emilio Aguinaldo
Highway.
Public transportation consisting of passenger jeepneys and buses as well
taxicabs are [sic] regularly available along Gen. E. Emilio Aguinaldo Highway
[sic].
xxxx
IV. HIGHEST AND MOST PROFITABLE USE
xxxx
The subject property is situated within the residential/commercial zone and
considering the area affected and taking into consideration, their location,
shape, lot topography, accessibility and the predominant uses of properties in
the neighborhood, as well as the trend of land developments in the vicinity, we
are on the opinion that the highest and most profitable use of the property is
good for residential and commercial purposes.
V. VALUATION OF LAND MARKET DATA
xxxx
Based on the analysis of data gathered and making the proper adjustments
with respect to the location, area, shape, accessibility, and the highest and
best use of the subject properties, it is the opinion of the herein commissioners
that the fair market value of the subject real properties is P10,000.00 per
square meter, as of this date, October 05, 1999.7
Thus, both commissioners recommended that the property of S.K. Dynamics
to be expropriated by petitioner be valued at PhP 10,000.00 per square meter.
The records show that the commissioners did not afford the parties the
opportunity to introduce evidence in their favor, nor did they conduct hearings
before them. In fact, the commissioners did not issue notices to the parties to
attend hearings nor provide the concerned parties the opportunity to argue
their respective causes.
Upon the submission of the commissioners’ report, petitioner was not notified
of the completion or filing of it nor given any opportunity to file its objections to
it.
On December 1, 1999, respondent Ferrer filed a motion adopting in toto the
commissioners’ report with respect to the valuation of his property. 8 On
December 28, 1999, the trial court consequently issued the Order approving
the commissioners’ report, and granted respondent Ferrer’s motion to adopt
the subject report. Subsequently, the just compensation for the disparate
properties to be expropriated by petitioner for its project was uniformly pegged
at PhP 10,000.00 per square meter.
Incidentally, on February 11, 2000, respondent S.K. Dynamics filed a motion
informing the trial court that in addition to the portion of its property covered by
TCT No. T-454278 sought to be expropriated by petitioner, the latter also took
possession of an 8.55-square meter portion of S.K. Dynamics’ property
covered by TCT No. 503484 for the same purpose––to acquire an easement
of right-of-way for the construction and maintenance of the proposed
Dasmariñas-Zapote 230 kV Transmission Line Project. Respondent S.K.
Dynamics prayed that said portion be included in the computation of the just
compensation to be paid by petitioner.
On the same date, the Imus, Cavite RTC granted S.K. Dynamics’ motion to
have the 8.55-square meter portion of its property included in the computation
of just compensation.1awphi1.net
The Ruling of the Regional Trial Court
As previously stated, in its December 28, 1999 Order, the trial court fixed the
just compensation to be paid by petitioner at PhP 10,000.00 per square meter.
The relevant portion of the said Order reads as follows:
On October 8, 1999, a Commissioner’s Valuation Report was submitted in
Court by the Provincial Assessor of Cavite and by the Municipal Assessor of
Dasmariñas, Cavite. Quoting from said Report, thus:
"Based on the analysis of data gathered and making the proper adjustments
with respect to location, area, shape, accessibility, and the highest and best
use of the subject properties, it is the opinion of herein commissioners that the
fair market value of the subject real properties is ₧10,000.00 per square
meter, as of this date, October 05, 1999."
Finding the opinion of the Commissioners to be in order, this Court approves
the same. Accordingly, the Motion filed by [respondent] Reynaldo Ferrer
adopting said valuation report is granted.
SO ORDERED. 9
On January 20, 2000, petitioner filed a Motion for Reconsideration of the
abovementioned Order, but said motion was denied in the trial court’s March
23, 2000 Order, which states that:
The basis of [petitioner] in seeking to set aside the Order dated December 28,
1999 is its claim that the Commissioners’ Report fixing the just compensation
at P10,000.00 per square meter is exorbitant, unjust and unreasonable. To
support its contention, [petitioner] invoked Provincial Appraisal Committee
Report No. 08-95 dated October 25, 1995 which set the just compensation of
lots along Gen. Aguinaldo Highway at P3,000.00 per sq.m. only.
By way of opposition, [respondent] Dynamics countered that the valuation of a
lot under expropriation is reckoned at the time of its taking by the government.
And since in the case at bar, the writ of possession was issued on March 10,
1999, the price or value for 1999 must be the one to be considered.
We find for the defendant.
The PAR Resolution alluded to by [petitioner] was passed in 1995 or four (4)
years [before] the lot in question was taken over by the government. This
explains why the price or cost of the land has considerably increased. Besides,
the valuation of P10,000.00 per sq.m. was the one recommended by the
commissioner designated by [petitioner] itself and concurred in by the
Provincial Assessor of Cavite.
Be that as it may, the Motion for Reconsideration is denied.
SO ORDERED.10
The Ruling of the Court of Appeals
Unsatisfied with the amount of just compensation, petitioner filed an appeal
before the CA. In resolving the appeal, the CA made the following findings:
We find nothing on record which would warrant the reversal of the Order dated
December 28, 1999 of the court a quo.
[Petitioner] submits that the order of the court a quo adopting the
Commissioners [sic] Valuation Report, fixing the just compensation for the
subject lots in the amount of P10,000.00 per square meter is exhorbitant [sic],
highly speculative and without any basis. In support thereto, [petitioner]
presented before the court a quo the Provincial Appraisal Committee of Cavite
Resolution No. 08-95 x x x which fixed the fair market value of lots located
along Gen. Aguinaldo Highway, Dasmariñas, Cavite, which incidentally
includes the lots subject of this proceedings [sic], in the amount of P3,000.00
per square meter.
We do not agree.
"The nature and character of the land at the time of its taking is the principal
criterion to determine just compensation to the land owner." (National Power
Corporation vs. Henson, 300 SCRA 751-756).
The CA then cited Section 4, Rule 67 of the 1997 Rules of Civil Procedure 11 to
explain why Resolution No. 08-95 could not "be used as [a] basis for
determining the just compensation of the subject lots, which by reason of the
changed commercial conditions in the vicinity, could have increased its value
greater than its value three (3) years ago." The said resolution, which fixed the
fair market value of the lots, including that of the disputed lots along Gen.
Aguinaldo Highway, was approved on October 25, 1995, while petitioner filed
the Complaint for the expropriation of the disputed lots on November 27, 1998,
or more than three (3) years had elapsed after said resolution was approved.
Reflecting on the commissioners’ report, the CA noted that since the property
underwent important changes and improvements, "the highest and most
profitable use of the property is good for residential and commercial purposes."
As regards the commissioners’ failure to conduct a hearing "to give the parties
the opportunity to present their respective evidence," as alleged by petitioner,
the CA opined that "[t]he filing by [petitioner] of a motion for reconsideration
accorded it ample opportunity to dispute the findings of the commissioners, so
that [petitioner] was as fully heard as there might have been hearing actually
taken place x x x."
The CA ultimately rendered its judgment, as follows:
WHEREFORE, premises considered, the present appeal is hereby
DISMISSED for lack of merit. The Order dated December 28, 1999 and March
23, 2000 of the court a quo are hereby AFFIRMED by this Court.
SO ORDERED.12
Significantly, petitioner did not file a Motion for Reconsideration of the CA
November 18, 2002 Decision, but it directly filed a petition for review before
us.
The Issues
In this petition for review, the issues are the following:
PETITIONER WAS DENIED DUE PROCESS WHEN IT WAS NOT ALLOWED
TO PRESENT EVIDENCE ON THE REASONABLE VALUE OF THE
EXPROPRIATED PROPERTY BEFORE THE BOARD OF
COMMISSIONERS.
THE VALUATION OF JUST COMPENSATION HEREIN WAS NOT BASED
FROM THE EVIDENCE ON RECORD AND OTHER AUTHENTIC
DOCUMENTS.13
The Court’s Ruling
We find this petition meritorious.
It is beyond question that petitions for review may only raise questions of law
which must be distinctly set forth;14 thus, this Court is mandated to only
consider purely legal questions in this petition, unless called for by
extraordinary circumstances.
In this case, petitioner raises the issue of denial of due process because it was
allegedly deprived of the opportunity to present its evidence on the just
compensation of properties it wanted to expropriate, and the sufficiency of the
legal basis or bases for the trial court’s Order on the matter of just
compensation. Unquestionably, a petition for review under Rule 45 of the
Rules of Court is the proper vehicle to raise the issues in question before this
Court.
In view of the significance of the issues raised in this petition, because this
case involves the expenditure of public funds for a clear public purpose, this
Court will overlook the fact that petitioner did not file a Motion for
Reconsideration of the CA November 18, 2002 Decision, and brush aside this
technicality in favor of resolving this case on the merits.
First Issue: Petitioner was deprived of due process when it was not given the
opportunity to present evidence before the commissioners
It is undisputed that the commissioners failed to afford the parties the
opportunity to introduce evidence in their favor, conduct hearings before them,
issue notices to the parties to attend hearings, and provide the opportunity for
the parties to argue their respective causes. It is also undisputed that petitioner
was not notified of the completion or filing of the commissioners’ report, and
that petitioner was also not given any opportunity to file its objections to the
said report.
A re-examination of the pertinent provisions on expropriation, under Rule 67
of the Rules of Court, reveals the following:
SEC. 6. Proceedings by commissioners.—Before entering upon the
performance of their duties, the commissioners shall take and subscribe an
oath that they will faithfully perform their duties as commissioners, which oath
shall be filed in court with the other proceedings in the case. Evidence may be
introduced by either party before the commissioners who are authorized to
administer oaths on hearings before them, and the commissioners shall,
unless the parties consent to the contrary, after due notice to the parties to
attend, view and examine the property sought to be expropriated and its
surroundings, and may measure the same, after which either party may, by
himself or counsel, argue the case. The commissioners shall assess the
consequential damages to the property not taken and deduct from such
consequential damages the consequential benefits to be derived by the owner
from the public use or purpose of the property taken, the operation of its
franchise by the corporation or the carrying on of the business of the
corporation or person taking the property. But in no case shall the
consequential benefits assessed exceed the consequential damages
assessed, or the owner be deprived of the actual value of his property so taken.
SEC. 7. Report by commissioners and judgment thereupon.—The court may
order the commissioners to report when any particular portion of the real estate
shall have been passed upon by them, and may render judgment upon such
partial report, and direct the commissioners to proceed with their work as to
subsequent portions of the property sought to be expropriated, and may from
time to time so deal with such property. The commissioners shall make a full
and accurate report to the court of all their proceedings, and such proceedings
shall not be effectual until the court shall have accepted their report and
rendered judgment in accordance with their recommendations. Except as
otherwise expressly ordered by the court, such report shall be filed within sixty
(60) days from the date the commissioners were notified of their appointment,
which time may be extended in the discretion of the court. Upon the filing of
such report, the clerk of the court shall serve copies thereof on all interested
parties, with notice that they are allowed ten (10) days within which to file
objections to the findings of the report, if they so desire.
SEC. 8. Action upon commissioners’ report.—Upon the expiration of the period
of ten (10) days referred to in the preceding section, or even before the
expiration of such period but after all the interested parties have filed their
objections to the report or their statement of agreement therewith, the court
may, after hearing, accept the report and render judgment in accordance
therewith; or, for cause shown, it may recommit the same to the
commissioners for further report of facts; or it may set aside the report and
appoint new commissioners; or it may accept the report in part and reject it in
part; and it may make such order or render such judgment as shall secure to
the plaintiff the property essential to the exercise of his right of expropriation,
and to the defendant just compensation for the property so taken.
Based on these provisions, it is clear that in addition to the ocular inspection
performed by the two (2) appointed commissioners in this case, they are also
required to conduct a hearing or hearings to determine just compensation; and
to provide the parties the following: (1) notice of the said hearings and the
opportunity to attend them; (2) the opportunity to introduce evidence in their
favor during the said hearings; and (3) the opportunity for the parties to argue
their respective causes during the said hearings.
The appointment of commissioners to ascertain just compensation for the
property sought to be taken is a mandatory requirement in expropriation cases.
In the instant expropriation case, where the principal issue is the determination
of just compensation, a hearing before the commissioners is indispensable to
allow the parties to present evidence on the issue of just compensation. While
it is true that the findings of commissioners may be disregarded and the trial
court may substitute its own estimate of the value, the latter may only do so
for valid reasons, that is, where the commissioners have applied illegal
principles to the evidence submitted to them, where they have disregarded a
clear preponderance of evidence, or where the amount allowed is either
grossly inadequate or excessive. Thus, "trial with the aid of the commissioners
is a substantial right that may not be done away with capriciously or for no
reason at all."15
In this case, the fact that no trial or hearing was conducted to afford the parties
the opportunity to present their own evidence should have impelled the trial
court to disregard the commissioners’ findings. The absence of such trial or
hearing constitutes reversible error on the part of the trial court because the
parties’ (in particular, petitioner’s) right to due process was violated.
The Court of Appeals erred in ruling that the petitioner was not deprived of due
process when it was able to file a motion for reconsideration
In ruling that petitioner was not deprived of due process because it was able
to file a Motion for Reconsideration, the CA had this to say:
[Petitioner], further, asserts that "the appointed commissioners failed to
conduct a hearing to give the parties the opportunity to present their respective
evidence. According to [petitioner], the Commissioners Valuation Report was
submitted on October 8, 1999 in violation of the appellant’s right to due process
as it was deprived of the opportunity to present evidence on the determination
of the just compensation."
We are not persuaded.
The filing by [petitioner] of a motion for reconsideration accorded it ample
opportunity to dispute the findings of the commissioners, so that [petitioner]
was as fully heard as there might have been hearing actually taken place.
"Denial of due process cannot be successfully invoked by a party who has had
the opportunity to be heard on his motion for reconsideration." (Vda. De Chua
vs. Court of Appeals, 287 SCRA 33, 50).16
In this respect, we are constrained to disagree with the CA ruling, and
therefore, set it aside.
While it is true that there is jurisprudence supporting the rule that the filing of a
Motion for Reconsideration negates allegations of denial of due process, it is
equally true that there are very specific rules for expropriation cases that
require the strict observance of procedural and substantive due
process,17 because expropriation cases involve the admittedly painful
deprivation of private property for public purposes and the disbursement of
public funds as just compensation for the private property taken. Therefore, it
is insufficient to hold that a Motion for Reconsideration in an expropriation case
cures the defect in due process.
As a corollary, the CA’s ruling that "denial of due process cannot be
successfully invoked by a party who has had the opportunity to be heard on
his motion for reconsideration," citing Vda. de Chua v. Court of Appeals, is not
applicable to the instant case considering that the cited case involved a lack
of notice of the orders of the trial court in granting letters of administration. It
was essentially a private dispute and therefore, no public funds were involved.
It is distinct from this expropriation case where grave consequences attached
to the orders of the trial court when it determined the just compensation.
The Court takes this opportunity to elucidate the ruling that the opportunity to
present evidence incidental to a Motion for Reconsideration will suffice if there
was no chance to do so during the trial. We find such situation to be the
exception and not the general rule. The opportunity to present evidence during
the trial remains a vital requirement in the observance of due process. The trial
is materially and substantially different from a hearing on a Motion for
Reconsideration. At the trial stage, the party is usually allowed several hearing
dates depending on the number of witnesses who will be presented. At the
hearing of said motion, the trial court may not be more accommodating with
the grant of hearing dates even if the movant has many available witnesses.
Before the decision is rendered, a trial court has an open mind on the merits
of the parties’ positions. After the decision has been issued, the trial court’s
view of these positions might be inclined to the side of the winning party and
might treat the Motion for Reconsideration and the evidence adduced during
the hearing of said motion perfunctorily and in a cavalier fashion. The incident
might not receive the evaluation and judgment of an impartial or neutral judge.
In sum, the constitutional guarantee of due process still requires that a party
should be given the fullest and widest opportunity to adduce evidence during
trial, and the availment of a motion for reconsideration will not satisfy a party’s
right to procedural due process, unless his/her inability to adduce evidence
during trial was due to his/her own fault or negligence.
Second Issue: The legal basis for the determination of just compensation was
insufficient
In this case, it is not disputed that the commissioners recommended that the
just compensation be pegged at PhP 10,000.00 per square meter. The
commissioners arrived at the figure in question after their ocular inspection of
the property, wherein they considered the surrounding structures, the
property’s location and, allegedly, the prices of the other, contiguous real
properties in the area. Furthermore, based on the commissioners’ report, the
recommended just compensation was determined as of the time of the
preparation of said report on October 5, 1999.
In B.H. Berkenkotter & Co. v. Court of Appeals, we held, thus:
Just compensation is defined as the full and fair equivalent of the property
sought to be expropriated. The measure is not the taker’s gain but the owner’s
loss. The compensation, to be just, must be fair not only to the owner but also
to the taker. Even as undervaluation would deprive the owner of his property
without due process, so too would its overvaluation unduly favor him to the
prejudice of the public.
To determine just compensation, the trial court should first ascertain the
market value of the property, to which should be added the consequential
damages after deducting therefrom the consequential benefits which may
arise from the expropriation. If the consequential benefits exceed the
consequential damages, these items should be disregarded altogether as the
basic value of the property should be paid in every case.
The market value of the property is the price that may be agreed upon by
parties willing but not compelled to enter into the contract of sale. Not unlikely,
a buyer desperate to acquire a piece of property would agree to pay more, and
a seller in urgent need of funds would agree to accept less, than what it is
actually worth. x x x
Among the factors to be considered in arriving at the fair market value of the
property are the cost of acquisition, the current value of like properties, its
actual or potential uses, and in the particular case of lands, their size, shape,
location, and the tax declarations thereon.
It is settled that just compensation is to be ascertained as of the time of the
taking, which usually coincides with the commencement of the expropriation
proceedings. Where the institution of the action precedes entry into the
property, the just compensation is to be ascertained as of the time of the filing
of the complaint.18
We note that in this case, the filing of the complaint for expropriation preceded
the petitioner’s entry into the property.
Therefore, it is clear that in this case, the sole basis for the determination of
just compensation was the commissioners’ ocular inspection of the properties
in question, as gleaned from the commissioners’ October 5, 1999 report. The
trial court’s reliance on the said report is a serious error considering that the
recommended compensation was highly speculative and had no strong factual
moorings. For one, the report did not indicate the fair market value of the lots
occupied by the Orchard Golf and Country Club, Golden City Subdivision,
Arcontica Sports Complex, and other business establishments cited. Also, the
report did not show how convenience facilities, public transportation, and the
residential and commercial zoning could have added value to the lots being
expropriated.
Moreover, the trial court did not amply explain the nature and application of the
"highest and best use" method to determine the just compensation in
expropriation cases. No attempt was made to justify the recommended "just
price" in the subject report through other sufficient and reliable means such as
the holding of a trial or hearing at which the parties could have had adequate
opportunity to adduce their own evidence, the testimony of realtors in the area
concerned, the fair market value and tax declaration, actual sales of lots in the
vicinity of the lot being expropriated on or about the date of the filing of the
complaint for expropriation, the pertinent zonal valuation derived from the
Bureau of Internal Revenue, among others.
More so, the commissioners did not take into account that the Asian financial
crisis in the second semester of 1997 affected the fair market value of the
subject lots. Judicial notice can be taken of the fact that after the crisis hit the
real estate market, there was a downward trend in the prices of real estate in
the country.
Furthermore, the commissioners’ report itself is flawed considering that its
recommended just compensation was pegged as of October 5, 1999, or the
date when the said report was issued, and not the just compensation as of the
date of the filing of the complaint for expropriation, or as of November 27, 1998.
The period between the time of the filing of the complaint (when just
compensation should have been determined), and the time when the
commissioners’ report recommending the just compensation was issued (or
almost one [1] year after the filing of the complaint), may have distorted the
correct amount of just compensation.
Clearly, the legal basis for the determination of just compensation in this case
is insufficient as earlier enunciated. This being so, the trial court’s ruling in this
respect should be set aside.
WHEREFORE, the petition is GRANTED. The December 28, 1999 and March
23, 2000 Orders of the Imus, Cavite RTC and the November 18, 2002 Decision
of the CA are hereby SET ASIDE. This case is remanded to the said trial court
for the proper determination of just compensation in conformity with this
Decision. No costs.
SO ORDERED.
LECA REALTY VS REPUBLIC
These are consolidated petitions for review on certiorari filed by Leca Realty
Corporation (LECA), petitioner, assailing the separate related Decisions of the
Court of Appeals in CA-G.R. SP No. 87185 and CA-G.R. SP No. 80861.
G.R. No. 168924
In a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, as amended, petitioner LECA assails the Decision of the Court of
Appeals (Special 8th Division) dated April 28, 2005 and its Resolution of July
15, 2005 in CA-G.R. SP No. 87185.
In its Decision, the Court of Appeals sustained the Rehabilitation Plan of
Manuela Corporation (Manuela), respondent. Petitioner now contends that the
Rehabilitation Plan has impaired its contract of lease with respondent over a
tract of land consisting of almost three (3) hectares. Petitioner is the owner of
the property situated on Shaw Boulevard, Mandaluyong City.
G.R. No. 166800
This is a petition for review on certiorari under the same Rule questioning the
Decision dated September 30, 2004 of the Court of Appeals (17th Division)
and its Resolution dated January 25, 2005 in CA-G.R. SP No. 80861.
In its Decision, the Court of Appeals affirmed the trial court’s Order denying
petitioner’s motion for extension of time to file its Record on Appeal in Civil
Case No. LP-02-0028, entitled "In the Matter of the Petition for Rehabilitation
of Manuela Corporation."
As found by the Court of Appeals in CA-G.R. SP No. 87185, the antecedent
facts, common to both petitions, are:
On January 31, 2002, respondent filed with the Regional Trial Court (RTC),
Branch 253, Las Piñas City, a Petition for Rehabilitation, docketed as Civil
Case No. LP-02-0028.
The petition alleges inter alia that respondent is a corporation duly organized
and existing under the laws of the Republic of the Philippines, primarily
engaged in the business of leasing to retailers commercial spaces in shopping
malls. Its principal office address is Alabang-Zapote Road, Pamplona, Las
Piñas City.
Respondent is the owner and operator of the following malls strategically
located in Metro Manila:
a) M Star One
b) M Star
c) Starmall
d) Metropolis Star
e) Pacific Mall
Respondent has assets valued at ₱12.43 billion and total liabilities of ₱4.87
billion as of December 31, 2001.
However, due to reasons that shall be discussed below, respondent is now
having severe cash flow problems which prevent it from paying its debts as
they fall due.
In order to finance the costs of building the Metropolis Star and the Pacific
Mall, respondent obtained several loans from two syndicates of lenders.
The first syndicate is composed of Bank of Philippine Islands, BPI Family
Bank, Metropolitan Bank and Trust Company, Allied Bank, and Bank of
Commerce; the second syndicate is composed of Allied Bank, Bank of
Commerce, Philippine National Bank, and Equitable PCI Bank. Respondent’s
loans are governed by the Loan Agreement dated July 5, 1995 and the
Syndicated Loan Agreement dated December 16, 1996.
Respondent’s total outstanding loan from the syndicates (e.g., principal plus
interest) is ₱2.174 billion as of December 31, 2001. These loans are secured
by a mortgage over M Star One and M Star, both located in Las Piñas City.
Respondent also has liabilities to the Hero Holdings, Inc. and its trade
suppliers and other parties in the sum of ₱1.476 billion as of December 31,
2001.
At the onset of the Asian financial crisis in 1997, the banks stopped their
lending activities to borrowers, including respondent. This event took its toll
upon respondent since its malls failed to operate sufficiently resulting in heavy
losses.
Matters finally came to a head in 1997 when respondent could no longer pay
its trade suppliers for maturing obligations. Neither could it pay its creditor
banks. The adjusted interest rates on its outstanding loans, as a result of the
Asian financial crisis, were between 18% to 30% which added to respondent’s
liquidity problems.
Nonetheless, respondent has been acting in good faith and has exerted
earnest efforts to avert its worsening financial problems. It closed down non-
income generating businesses, concentrated on its business of leasing
commercial spaces, intensified collection efforts, reduced personnel,
negotiated for restructuring of loans with creditors, and worked out a viable
payment scheme without giving undue preference to any creditor. Despite its
efforts, respondent could no longer pay its suppliers and the maturing interests
on its loans.
The petition further alleges that respondent can only be brought back to its
financial viability if its proposed Rehabilitation Plan is approved and that it is
given a respite from its creditors’ demands through the issuance of a Stay
Order. The successful implementation of the proposed Rehabilitation Plan will
enable it to settle its remaining obligations in an orderly manner, restore its
financial viability, and allow it to resume its normal operations.
On February 5, 2002, the trial court issued a Stay Order,1 thus:
xxx
a) a stay in the enforcement of all claims, whether for money or otherwise and
whether such enforcement is by court action or otherwise, against petitioner
MANUELA, its guarantors and sureties not solidarily liable with it;
b) prohibiting MANUELA from selling, encumbering, transferring or disposing
in any manner any of its properties except in the ordinary course of business;
c) prohibiting MANUELA from making any payment of its liabilities outstanding
as of the filing of the instant petition;
d) prohibiting MANUELA’s suppliers of goods and services from withholding
supply of goods and services in the ordinary course of business as long as
MANUELA makes payments for the goods and services supplied after the
issuance of this Stay Order; and
e) directing the payment in full of all administrative expenses incurred after the
issuance of this Stay Order.2
In the same Stay Order, the trial court appointed Marilou Adea, also a
respondent, as Rehabilitation Receiver. On February 12, 2002, respondent
Adea accepted her appointment.
In its Order dated May 21, 2002, the trial court referred the petition to
respondent Adea for evaluation and recommendation. On September 28,
2002, she submitted to the trial court her Report and Recommendation finding
respondent Manuela’s Rehabilitation Plan viable and feasible and
recommending its approval.
Respondent Adea then held several consultative meetings with respondent
Manuela’s creditors to discuss their respective concerns and suggestions
relative to its rehabilitation. For their part, the creditors filed their various
comments/oppositions to respondent Manuela’s Petition for Rehabilitation and
Rehabilitation Plan.
On July 31, 2002, petitioner filed with the trial court its Comment and/or Formal
Claim with Leave of Court against respondent Manuela amounting to
₱193,724,262.34 as of February 28, 2002, representing unpaid rentals,
security deposits, interests, and penalty charges.
On September 30, 2002, respondent Adea issued a Notice informing all
creditors, claimants, suppliers, lot and/or house buyers, counsels, oppositors,
and other parties that copies of her Report and Recommendation on
respondent Manuela’s Petition for Rehabilitation are available and on file with
the trial court for distribution to all parties concerned.
On October 22, 2002, petitioner filed its comment on respondent Adea’s
Report and Recommendation. Petitioner opposed her recommendation to
reduce respondent Manuela’s liability, considering its contractual nature which
cannot be impaired during the process of rehabilitation.
On July 28, 2003, the trial court issued an Order approving the Rehabilitation
Plan, the dispositive portion of which reads:
WHEREFORE, the Rehabilitation Plan submitted by the Rehabilitation
Receiver, pp. 120 to 165 of the Report and Recommendation on Manuela
Corporation (Manuela)’s Petition for Rehabilitation revised June 9, 2003, is
APPROVED. Petitioner is strictly enjoined to abide by its terms and conditions
and the Rehabilitation Receiver shall, unless directed otherwise, submit a
quarterly report on the progress of the implementation of the Rehabilitation
Plan.3
Aggrieved, petitioner filed with the trial court its Notice of Appeal with Motion
for Extension of Time to File Record on Appeal.4
However, the trial court issued an Order denying the Motion for Extension of
Time to File Record on Appeal, thus:
Before the Court is a Notice of Appeal with Motion forExtension of Time filed
by creditor Leca Realty Corporation praying for a period of thirty (30) days from
August 21, 2003 to September 20, 2003 to file its intended record on appeal.
However, under Rule 3, Section 1 of the Interim Rules of Procedure on
Corporate Rehabilitation, a motion for extension is a prohibited pleading.
WHEREFORE, the subject motion is DENIED.
SO ORDERED.
Petitioner then elevated the case to the Court of Appeals through a Petition
for Certiorari and Mandamus, docketed as CA-G.R. SP No. 80861 and
assigned to the 17th Division.
On September 30, 2004, the Court of Appeals rendered a Decision dismissing
the petition for lack of merit.5
Petitioner then filed a motion for reconsideration but it was denied by the
appellate court in its Resolution dated January 25, 2005.6
Hence, the instant petition for review on certiorari, docketed as G.R. No.
166800.
G.R. No. 168924
In the meantime, petitioner seasonably filed with the Court of Appeals a
petition for review under Rule 43 of the 1997 Rules of Civil Procedure, as
amended, alleging that the RTC erred in approving respondent Manuela’s
Rehabilitation Plan as it violates its (petitioner’s) constitutional right to non-
impairment of contract and the Interim Rules of Procedure on Corporate
Rehabilitation.
On April 28, 2005, the Court of Appeals (Special 8th Division) promulgated its
Decision denying the petition, holding that:
x x x The pendency of the rehabilitation proceedings cannot be interpreted to
impair the contractual obligations previously entered into by the contracting
parties because the automatic stay of all actions is sanctioned by P.D. 902-A
which provides that "all actions for claims against corporations, partnerships
or associations under management or receivership pending before any court,
tribunal, board or body shall be suspended accordingly [Rubberworld (Phils.),
Inc. v. NLRC, 391 Phil. 318 (2000)].
On May 20, 2005, petitioner filed with the Court of Appeals a motion for
reconsideration but it was denied in its Resolution dated July 15, 2005.
Hence, petitioner filed with this Court a Petition for Review on Certiorari,
docketed as G.R. No. 168924.
In view of the identity of parties and the inter-relationship of the issues involved
in G.R. No. 166800 and G.R. No. 168924, we resolved to consolidate the two
petitions.
The issue posed before us in G.R. No. 166800 for certiorari and mandamus is
whether the trial court erred in ruling that a motion for extension of time to file
record on appeal is a prohibited pleading under Section 1 of the Interim Rules
of Procedure on Corporate Rehabilitation which provides:
Section 1. Nature of Proceedings. – Any proceeding initiated under these
Rules shall be considered in rem. Jurisdiction over all those affected by the
proceedings shall be considered as acquired upon publication of the notice of
the commencement of the proceedings in any newspaper of general circulation
in the Philippines in the manner prescribed by these Rules.
The proceedings shall also be summary and non-adversarial in nature. The
following pleadings are prohibited:
a. Motion to Dismiss;
b. Motion for Bill of Particulars;
c. Motion for New Trial or For Reconsideration;
d. Petition for Relief;
e. Motion for Extension;
f. Memorandum;
g. Motion for Postponement;
h. Reply or Rejoinder;
i. Third Party Complaint;
j. Intervention;
xxx xxx xxx
The prohibited pleadings enumerated above are those filed in the rehabilitation
proceedings. Once the trial court decides the case and an aggrieved party
appeals, the procedure to be followed is that prescribed by the Rules of Court
as mandated by Section 5, Rule 3, of the same Interim Rules, thus:
The review of any order or decision of the court or on appeal therefrom shall
be in accordance with the Rules of Court.
In this connection, Section 11, Rule 11, of the Rules of Court (now the 1997
Rules of Civil Procedure, as amended), states:
Extension of time to plead. – Upon motion and on such terms as may be just,
the court may extend the time to plead provided in these Rules.
The court may also, upon like terms, allow an answer or other pleading to be
filed after the time fixed by these Rules.
Verily, the trial court erred in denying petitioner’s motion for extension of time
to file record on appeal. At any rate, this petition has become moot considering
that the Court of Appeals gave due course to LECA’s petition for review (CA-
G.R. SP No. 80861) which eventually reached this Court via a petition for
review on certiorari, docketed as G.R. No. 168924.
In G.R. No. 168924, petitioner ascribes to the Court of Appeals the following
assignment of errors:
1. THE COURT OF APPEALS GRIEVOUSLY ERRED IN RULING THAT THE
"PENDENCY OF THE REHABILITATION PROCEEDINGS CANNOT BE
INTERPRETED TO IMPAIR THE CONTRACTUAL OBLIGATIONS
PREVIOUSLY ENTERED INTO BY THE CONTRACTING PARTIES
BECAUSE THE AUTOMATIC STAY OF ALL ACTIONS IS SANCTIONED BY
P.D. 902-A WHICH PROVIDES THAT "ALL ACTIONS FOR CLAIMS
AGAINST CORPORATIONS, PARTNERSHIPS OR ASSOCIATIONS UNDER
MANAGEMENT OR RECEIVERSHIP PENDING BEFORE ANY COURT,
TRIBUNAL, BOARD OR BODY SHALL BE SUSPENDED ACCORDINGLY,"
CITING RUBBERWORLD (PHILS.), INC. V. NLRC, G.R. NO. 128003, JULY
26, 2000, 336 SCRA 433.
2. THE COURT OF APPEALS ERRED IN SUSTAINING THE LOWER
COURT’S APPROVAL OF RESPONDENT MANUELA’S REHABILITATION
PLAN EVEN IF SUCH PLAN IS NOT VIABLE OR FEASIBLE BECAUSE
RESPONDENT MANUELA CORPORATION COULD NOT EVEN COMPLY
WITH THE TERMS AND PROVISIONS OF THE COURT-APPROVED
REHABILITATION PLAN.
3. THE COURT OF APPEALS ALSO ERRED IN NOT ADDRESSING THE 13 136.54 3,657,906.60 4
ISSUE OF THE LOWER COURT’S FAILURE TO ACT, THAT IS, APPROVE
OR DISAPPROVE, THE REHABILITATION PLAN OF MANUELA
14 146.22 3,917,233.80 4
CORPORATION WITHIN EIGHTEEN MONTHS AFTER THE FILING OF THE
PETITION FOR REHABILITATION.
15 155.90 4,176,561.00 5
Petitioner contends that the approved Rehabilitation Plan drastically altered
the terms of its lease contract with respondent Manuela, hence, should be
16 174.60 4,677,534.00 5
declared void.

The contract of lease between petitioner and respondent Manuela 7 for twenty- 17 193.30 5,178,507.00 6
five years, from August 1, 1995 to July 31, 2020, stipulates that the rates of
rental on the leased parcel of land are as follows: 18 212.00 5,679,480.00 6

Year Rent/Sq. M. Monthly Rent Yearly Rent

19 230.70 6,180,453.00 7

1 60.00 1,607,400.00 19,288,800.00

20 260.69 6,983,885.10 8

2 64.20 1,719,918.00 20,639,016.00

21 290.68 7,787,317.20 9

3 68.40 1,832,436.00 21,989,232.00

22 320.67 8,590,749.30 1

4 72.60 1.944,954.00 23,339,448.00

23 365.56 9,793,352.40 1

5 76.80 2,057,472.00 24,689,664.00

24 410.45 10,995,955.50 1

6 82.94 2,221,962.00 26,663,551.20

25 455.34 12,198,558.60 1

7 89.08 2,386,453.20 28,637,438.40

On the other hand, the Rehabilitation Plan prescribes the following rental rates:

8 95.23 2,552,211.70 30,614,540.40 Year Yearly Rent

9 101.37 2,715,702.30 1st year

32,588,427.60 2003-2004 RENT FREE

10 107.52 2,880,460.80 2nd year

34,565,529.60 2004-2005 ₱ 5,000,000.00

11 117.19 3,139,520.10 3rd year

37,674,241.20 2005-2006 5,000,000.00

12 126.87 3,398,847.30 4th year

40,786,167.60 2006-2007 5,000,000.00
 5th year 2007-2008 19,288,800.00
6th year 2008-2009 20,639,016.00
7th year 2009-2010 21,639,016.00
8th year 2010-2011 23,339,445.00
9th year 2011-2012 24,689,664.00
10th year 2012-2013 26,663,544.00
Clearly, there is a gross discrepancy between the amounts of rent agreed upon
by the parties and those provided in the Rehabilitation Plan.
In its Decision, the Court of Appeals rejected petitioner’s contention that the
approved Rehabilitation Plan impairs the obligation of contract, ratiocinating
that the automatic stay of all actions is sanctioned by Section 5 (c) of
Presidential Decree (P.D.) No. 902-A which provides that "all actions for claims
against corporations, partnerships or associations under management or
receivership pending before any court, tribunal, board or body shall be
suspended accordingly."
Petitioner, in support of its contention, cites in its Memorandum the treatises
of Ateneo Law Dean Cesar L. Villanueva and former SEC Commissioner
Danilo L. Concepcion, both known authorities on Corporation Law. In his
Article which appeared in the Ateneo Law Journal, Dean Villanueva said:
The nature and extent of the power of the SEC to approve and enforce a
rehabilitation plan is certainly an important issue. Often, a rehabilitation plan
would require a diminution, if not destruction, of contractual and property rights
of some, if not most of the various stakeholders in the petitioning corporation.
In the absence of clear coercive legal provisions, the courts of justice and much
less the SEC would have no power to amend or destroy the property and
contractual rights of private parties, much less relieve a petitioning corporation
from its contractual commitments.8
On the other hand, Professor Concepcion stated that what is allowed in
rehabilitation proceedings is only the suspension of payments, or the stay
of all actions for claims of distressed corporations, and upon its
successful rehabilitation, the claims must be settled in full.9
We agree with petitioner.
In The Insular Life Assurance Company, Ltd., v. Court of Appeals, et al., we
held:
When the language of the contract is explicit leaving no doubt as to the
intention of the drafters thereof, the courts may not read into it any other
intention that would contradict its plain import. The Court would be rewriting
the contract of lease between Insular and Sun Brothers under the guise of
construction were we to interpret the ‘option to renew’ clause as Sun Brothers
propounds it, despite the express provision in the original contract of lease and
the contracting parties’ subsequent acts. As the Court has held in Riviera
Filipina, Inc. vs. Court of Appeals, ‘a court, even the Supreme Court, has no
right to make new contracts for the parties or ignore those already made by
them, simply to avoid seeming hardships. Neither abstract justice nor the rule
of liberal construction justifies the creation of a contract for the parties which
they did not make themselves or the imposition upon one party to a contract
of an obligation not assumed.’10
The amount of rental is an essential condition of any lease contract. Needless
to state, the change of its rate in the Rehabilitation Plan is not justified as it
impairs the stipulation between the parties. We thus rule that the Rehabilitation
Plan is void insofar as it amends the rental rates agreed upon by the parties.
It must be emphasized that there is nothing in Section 5 (c) of P.D. No. 902-A
authorizing the change or modification of contracts entered into by the
distressed corporation and its creditors.
Moreover, the Stay Order issued by the trial court directed respondent
Manuela to pay in full, after the issuance of such Order, all administrative
expenses incurred. Administrative expenses are costs associated with the
general administration of an organization and include such items as
utilities, rents, salaries, postages, furniture, and housekeeping charges.11
Inasmuch as rents are considered administrative expenses and considering
that the Stay Order directed respondent Manuela to pay the rents in full, then
it must comply at the rates agreed upon.1âwphi1
Respondent Manuela, therefore, must update its payment of rental arrears and
continue to pay current rentals at the rate stipulated in the lease contract. The
rentals shall incur interest at the legal rate of 6% per annum. Upon finality of
this Decision, the legal rate shall be 12% per annum, pursuant to the following
rulings of this Court:
1. When the obligation is breached, and it consists in the payment of a sum of
money, i.e., a loan or forbearance of money, the interest due should be that
which may have been stipulated in writing. Furthermore, the interest due shall
itself earn legal interest from the time it is judicially demanded. In the absence
of stipulation, the rate of interest shall be 12% per annum to be computed from
default, i.e., from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is
breached, an interest on the amount of damages awarded may be imposed at
the discretion of the court at the rate of 6% per annum. No interest, however,
shall be adjudged on unliquidated claims or damages except when or until the
demand can be established with reasonable certainty. Accordingly, where the
demand is established with reasonable certainty, the interest shall begin to run
from the time the claim is made judicially or extrajudicially (Art. 1169, Civil
Code) but when such certainty cannot be so reasonably established at the time
the demand is made, the interest shall begin to run only from the date the
judgment of the court is made (at which time the quantification of damages
may be deemed to have been reasonably ascertained). The actual base for
the computation of legal interest shall, in any case, be on the amount finally
adjudged.
3. When the judgment of the court awarding a sum of money becomes final
and executory, the rate of legal interest, whether the case falls under
paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality
until its satisfaction, this interim period being deemed to be by then an
equivalent to a forbearance of credit.12
WHEREFORE, we GRANT the Petition for Review in G.R. No. 168924. The
assailed Decision of the Court of Appeals in CA-G.R. SP No. 87185
is AFFIRMED with MODIFICATION. The Rehabilitation Plan, insofar as it
modifies the rental rates agreed upon by petitioner LECA and respondent
Manuela, is declared VOID.
Respondent Manuela is ordered to pay the rentals and all arrearages at the
rates stipulated in the lease contract with interest at 6% per annum. Upon the
finality of this Decision, the interest shall be 12% per annum until fully paid.
The Petition for Review on Certiorari in G.R. No. 166800 is DENIED for being
moot. It has been overtaken by events. No costs.
SO ORDERED.
NPC VS HENSON
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.
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 complaint1 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:
Parcels 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 = 43,532 sq. m. - Henson Family
2. Lot 2-A = 6,823 sq. m. - Alfredo Tanchiatco,
encumbered with
Land Bank of
the Phil. (LBP)
3. Lot 3-A = 3,057 sq. m. - Bienvenido David,
encumbered with
LBP
4. Lot 4-A = 1,438 sq. m. - Maria Bondoc
Capili, encumbered
with LBP
5. Lot 5-A = 3,461 sq. m. - Miguel Manoloto
and Henson Family
Total A = 58,311 sq. m.
and covered 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. Manaloto, 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 are agricultrual/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, respondents filed a motion to dismiss. 4 They did not
challenge petitioner's right to condemn their property, but 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 63,2207 square meters
of respondents' property, to be deposited with the Provincial 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 Provincial Treasurer of Pampanga. 10
On April 5, 1991, the trial court issued an order appointing three (3)
commissioners to aid the court in the reception of evidence to determine just
compensation for the taking of the subject property. After receiving the
evidence and conducting an ocular inspection, the commissioners submitted
to the court their individual reports.
Commisioner Mariano C. Tiglao, in his report dated September 10, 1992,
recommended that the 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
Orocio, 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 petitioner for the taking of the entire area of 63,220
square 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 of 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.
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 re-classified 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
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 re-classified 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 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
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.
Consequently, we agree with Commissioner Atienza's report that the fair
market value of subject parcels of land be fixed at P375.00 per square-meter.
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.
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:
1. The Court fixes the amount of P375.00, per 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:
a. Lot 1-A, with an area of 43,532 square meters belonging to Lourdes Henson,
Josefina Henson, Jesusa Henson and Corazon Henson;
b. Lot 2-A, with an area of 6,823 square meters belonging to Alfredo
Tanchiatco;
c. Lot 3-A, with an area of 3,057 square meters belonging to Bienvenido David
(TCT No. 7111)
d. Lot 4-A, with an area of 1,438 square meters belonging to Maria Bondoc
Capili (TCT No. 7108)
e. Lot 5-A, with an area of 3,461 square meters 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.
SO ORDERED.
MERALCO VS PINEDA
This is a petition for review on certiorari on pure question of law seeking the
nullification of the orders issued by the respondent Judge Gregorio G. Pineda,
in his capacity as the presiding Judge of the Court of First Instance (now
Regional Trial Court) of Rizal, Branch 21, Pasig, Metro Manila in Civil Case
No. 20269, entitled "Manila Electric Company v. Teofilo Arayon, et al." The
aforesaid orders are as follows: (1) the order dated December 4, 1981 granting
the motion for payment of private respondents; (2) the order dated December
21, 1981 granting the private respondents' omnibus motion; and (3) the order
dated February 9, 1982 adjudging in favor of private respondents the fair
market value of their property at forty pesos (P40.00) per square meter for a
total of P369,720.00 and denying the motions for contempt for being moot and
academic and the motion for reconsideration of the orders dated December 4,
1981 and December 21, 1981 for lack of merit.
The antecedent facts giving rise to the controversy at bar are as follows:
Petitioner Manila Electric Company (MERALCO) is a domestic corporation
duly organized and existing under the laws of Philippines. Respondent
Honorable Judge Gregorio G. Pineda is impleaded in his official capacity as
the presiding judge of the Court of First Instance (now Regional Trial Court) of
Rizal, Branch XXI, Pasig, Metro Manila. While private respondents Teofilo
Arayon, Sr., Gil de Guzman, Lucito Santiago and Teresa Bautista are owners
in fee simple of the expropriated property situated at Malaya, Pililla, Rizal.
On October 29, 1974, a complaint for eminent domain was filed by petitioner
MERALCO against forty-two (42) defendants with the Court of First Instance
(now Regional Trial Court) of Rizal, Branch XXII, Pasig, Metro Manila.
The complaint alleges that for the purpose of constructing a 230 KV
Transmission line from Barrio Malaya to Tower No. 220 at Pililla, Rizal,
petitioner needs portions of the land of the private respondents consisting of
an aggregate area of 237,321 square meters. Despite petitioner's offers to pay
compensation and attempts to negotiate with the respondents', the parties
failed to reach an agreement.
Private respondents question in their motion to dismiss dated December 27,
1974 the petitioner's legal existence and the area sought to be expropriated
as too excessive.
On January 7, 1975, respondents Gil de Guzman and Teresa Bautista filed a
motion for contempt of court alleging, among other things that petitioner's
corporate existence had expired in 1969 and therefore it no longer exists under
Philippine Laws.
But despite the opposition of the private respondents, the court issued an
Order dated January 13, 1975 authorizing the petitioner to take or enter upon
the possession of the property sought to be expropriated.
On July 13, 1976, private respondents filed a motion for withdrawal of deposit
claiming that they are entitled to be paid at forty pesos (P40.00) per square
meter or an approximate sum of P272,000.00 and prayed that they be allowed
to withdraw the sum of P71,771.50 from petitioner's deposit-account with the
Philippine National Bank, Pasig Branch. However, respondents motion was
denied in an order dated September 3, 1976.
In the intervening period, Branch XXII became vacant when the presiding
Judge Nelly Valdellon-Solis retired, so respondent Judge Pineda acted on the
motions filed with Branch XXII.
Pursuant to a government policy, the petitioners on October 30, 1979 sold to
the National Power Corporation (Napocor) the power plants and transmission
lines, including the transmission lines traversing private respondents' property.
On February 11, 1980, respondent court issued an Order appointing the
members of the Board of Commissioners to make an appraisal of the
properties.
On June 5, 1980, petitioner filed a motion to dismiss the complaint on the
ground that it has lost all its interests over the transmission lines and properties
under expropriation because of their sale to the Napocor. In view of this motion,
the work of the Commissioners was suspended.
On June 9, 1981, private respondents filed another motion for payment. But
despite the opposition of the petitioner, the respondent court issued the first of
the questioned Orders dated December 4, 1981 granting the motion for
payment of private respondents, to wit:
As prayed for by defendants Teofilo Arayon, Lucito Santiago, Teresa Bautista
and Gil de Guzman, thru counsel Gil de Guzman, in their Motion for Payment,
for reasons therein stated, this Court hereby orders the plaintiff to pay the
movants the amount of P20,400.00 for the expropriated area of 6,800 square
meters, at P3.00 per square meter without prejudice to the just compensation
that may be proved in the final adjudication of this case.
The aforesaid sum of P20,400.00 having been deposited by plaintiff in the
Philippine National Bank (Pasig Branch) under Savings Account No. 9204, let
the Deputy Sheriff of this Branch Mr. Sofronio Villarin withdraw said amount in
the names of Teofilo Arayon, Lucito Santiago, Teresa Bautista and Gil de
Guzman, the said amount to be delivered to the defendant's counsel Atty. Gil
de Guzman who shall sign for the receipt thereof.
SO ORDERED. (Rollo, p. 108)
On December 15, 1981, private respondents filed an Omnibus Motion praying
that they be allowed to withdraw an additional sum of P90,125.50 from
petitioner's deposit-account with the Philippine National Bank.
By order dated December 21, 1981, the respondent court granted the Omnibus
Motion hereunder quoted as follows:
Acting on the Omnibus Motion dated December 15, 1981 filed by Atty. Gil de
Guzman, counsel for Teofilo Arayon, Sr., Lucito Santiago, Teresita Bautista
and for himself, and it appearing that there is deposited in the bank in trust for
them the amount of P90,125.50 to guarantee just compensation of
P272,000.00, thereby leaving a balance of P161,475.00 still payable to them,
the same is hereby GRANTED.
Mr. Nazario Nuevo and Marianita Burog, respectively the Manager and
Cashier, Philippine National Bank, Pasig Branch, Pasig, Metro Manila are
hereby ordered to allow Sheriff Sofronio Villarin to withdraw and collect from
the bank the amount of P90,125.50 under Savings Account No. 9204 and to
deliver the same to Atty. Gil de Guzman upon proper receipt, pending final
determination of just compensation.
SO ORDERED. (Rollo, p. 120)
Private respondents filed another motion dated January 8, 1982 praying that
petitioner be ordered to pay the sum of P169, 200.00.
On January 12, 1982 petitioner filed a motion for reconsideration of the Orders
dated December 4, 1981 and December 21, 1981 and to declare private
respondents in contempt of court for forging or causing to be forged the
receiving stamp of petitioner's counsel and falsifying or causing to be falsified
the signature of its receiving clerk in their Omnibus Motion.
In response to private respondents' motion for payment dated January 8, 1982,
petitioner filed an opposition alleging that private respondents are not entitled
to payment of just compensation at this stage of the proceeding because there
is still no appraisal and valuation of the property.
On February 9, 1982 the respondent court denied the petitioner's motion for
reconsideration and motion for contempt, the dispositive portion of which is
hereunder quoted as follows:
Viewed in the light of the foregoing, this Court hereby adjudges in favor of
defendants Teofilo Arayon, Sr., Lucito Santiago, Teresita Bautista and Atty. Gil
de Guzman the fair market value of their property taken by MERALCO at
P40.00 per square meter for a total of P369,720.00, this amount to bear legal
interest from February 24, 1975 until fully paid plus consequential damages in
terms of attorney's fees in the sum of P10,000.00, all these sums to be paid
by MERALCO to said defendants with costs of suit, minus the amount of
P102,800.00 already withdrawn by defendants.
For being moot and academic, the motions for contempt are DENIED; for lack
of merit, the motion for reconsideration of the orders of December 4, 1981 and
December 21, 1981 is also DENIED.
SO ORDERED. (Rollo, p. 211-212)
Furthermore, the respondent court stressed in said order that "at this stage,
the Court starts to appoint commissioners to determine just compensation or
dispenses with them and adopts the testimony of a credible real estate broker,
or the judge himself would exercise his right to formulate an opinion of his own
as to the value of the land in question. Nevertheless, if he formulates such an
opinion, he must base it upon competent evidence." (Rollo, p. 211)
Hence, this petition.
Subsequently, the respondent court issued an Order dated March 22, 1982
granting the private respondents' motion for execution pending appeal, thus
requiring petitioner to deposit P52,600.00 representing the consideration paid
by Napocor for the property it bought from petitioner which includes the subject
matter of this case, computed at P200.55 per square meter and to render an
accounting.
On March 26, 1982, petitioner filed a petition for preliminary injunction with this
Court seeking to enjoin respondent judge and all persons acting under him
from enforcing the Order dated March 22, 1982.
This Court issued a temporary restraining order addressed to respondent
judge. A motion to lift the restraining order was filed by the respondents.
Despite a series of oppositions and motions to lift the said order, this Court
reiterated its stand and noted that the restraining order is still effective.
The petitioner strongly maintains that the respondent court's act of determining
and ordering the payment of just compensation to private respondents without
formal presentation of evidence by the parties on the reasonable value of the
property constitutes a flagrant violation of petitioner's constitutional right to due
process. It stressed that respondent court ignored the procedure laid down by
the law in determining just compensation because it formulated an opinion of
its own as to the value of the land in question without allowing the Board of
Commissioners to hold hearings for the reception of evidence.
On the other hand, private respondents controvert the position of the petitioner
and contend that the petitioner was not deprived of due process. They agreed
with respondent court's ruling dispensing the need for the appointment of a
Board of Commissioners to determine just compensation, thus concluding that
the respondent court did not err in determining just compensation.
Furthermore, petitioner argues that the respondent judge gravely abused his
discretion in granting the motion for execution pending appeal and
consequently denying the petitioner's motion to dismiss. Respondent judge
should have ordered that Napocor be impleaded in substitution of petitioner or
could have at least impleaded both the Napocor and the petitioner as party
plaintiffs.
The controversy boils down to the main issue of whether or not the respondent
court can dispense with the assistance of a Board of Commissioners in an
expropriation proceeding and determine for itself the just compensation.
The applicable laws in the case at bar are Sections 5 and 8 of Rule 67 of the
Revised Rules of Court. The said sections particularly deal with the
ascertainment of compensation and the court's action upon commissioners'
report, to wit:
Sec. 5. 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.
xxx xxx xxx
Sec. 8. Upon the expiration of the period of ten (10) days referred to in the
preceding section, or even before the expiration of such period but after all the
interested parties have filed their objections to the report or their statement of
agreement therewith, the court may, after hearing, accept the report and
render judgment in accordance therewith; or, for cause shown, it may
recommit the same to the commissioners for further report of facts; or it may
set aside the report and appoint new commissioners, or it may accept the
report in part and reject it in part; and it may make such order or render such
judgment as shall secure to the plaintiff the property essential to the exercise
of his right of condemnation, and to the defendant just compensation for the
property so taken.
We already emphasized in the case of Municipality of Biñan v. Hon. Jose Mar
Garcia (G.R. No. 69260, December 22, 1989, 180 SCRA 576, 583-584) the
procedure for eminent domain, to wit:
There are two (2) stages in every action of expropriation. 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". An order of dismissal, if this be ordained,
would be a final one, of course, since it finally disposes of the action and leaves
nothing more to be done by the Court on the merits. So, too, would an order
of condemnation be a final one, for thereafter, as the Rules expressly state, in
the proceedings before the Trial Court, "no objection to the exercise of the right
of condemnation (or the propriety thereof) shall be filed or heard."
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. The order fixing the just compensation on the basis
of the evidence before, and findings of, the commissioners would be final, too.
It would finally dispose of the second stage of the suit, and leave nothing more
to be done by the Court regarding the issue. Obviously, one or another of the
parties may believe the order to be erroneous in its appreciation of the
evidence or findings of fact or otherwise. Obviously, too, such a dissatisfied
party may seek reversal of the order by taking an appeal therefrom.
Respondent judge, in the case at bar, arrived at the valuation of P40.00 per
square meter on a property declared for real estate tax purposes at P2.50 per
hectare on the basis of a "Joint Venture Agreement on Subdivision and
Housing Projects" executed by A.B.A Homes and private respondents on June
1, 1972. This agreement was merely attached to the motion to withdraw from
petitioner's deposit. Respondent judge arrived at the amount of just
compensation on its own, without the proper reception of evidence before the
Board of Commissioners. Private respondents as landowners have not proved
by competent evidence the value of their respective properties at a proper
hearing. Likewise, petitioner has not been given the opportunity to rebut any
evidence that would have been presented by private respondents. In an
expropriation case such as this one where the principal issue is the
determination of just compensation, a trial before the Commissioners is
indispensable to allow the parties to present evidence on the issue of just
compensation. Contrary to the submission of private respondents, the
appointment of at least three (3) competent persons as commissioners to
ascertain just compensation for the property sought to be taken is a mandatory
requirement in expropriation cases. While it is true that the findings of
commissioners may be disregarded and the court may substitute its own
estimate of the value, the latter may only do so for valid reasons, i.e., where
the Commissioners have applied illegal principles to the evidence submitted
to them or where they have disregarded a clear preponderance of evidence,
or where the amount allowed is either grossly inadequate or excessive (Manila
Railroad Company v. Velasquez, 32 Phil. 286). Thus, trial with the aid of the
commissioners is a substantial right that may not be done away with
capriciously or for no reason at all. Moreover, in such instances, where the
report of the commissioners may be disregarded, the trial court may make its
own estimate of value from competent evidence that may be gathered from
the record. The aforesaid joint venture agreement relied upon by the
respondent judge, in the absence of any other proof of valuation of said
properties, is incompetent to determine just compensation.
Prior to the determination of just compensation, the property owners may
rightfully demand to withdraw from the deposit made by the condemnor in
eminent domain proceedings. Upon an award of a smaller amount by the court,
the property owners are subject to a judgment for the excess or upon the award
of a larger sum, they are entitled to a judgment for the amount awarded by the
court. Thus, when the respondent court granted in the Orders dated December
4, 1981 and December 21, 1981 the motions of private respondents for
withdrawal of certain sums from the deposit of petitioner, without prejudice to
the just compensation that may be proved in the final adjudication of the case,
it committed no error.
Records, specifically Meralco's deed of sale dated October 30, 1979, in favor
of Napocor show that the latter agreed to purchase the parcels of land already
acquired by Meralco, the rights, interests and easements over those parcels
of land which are the subject of the expropriation proceedings under Civil Case
No. 20269, (Court of First Instance of Rizal, Branch XXII), as well as those
parcels of land occupied by Meralco by virtue of grant of easements of right-
of-way (see Rollo, pp. 341-342). Thus, Meralco had already ceded and in fact
lost all its rights and interests over the aforesaid parcels of land in favor of
Napocor. In addition, the same contract reveals that the Napocor was
previously advised and actually has knowledge of the pending litigation and
proceedings against Meralco (see Rollo, pp. 342-343). Hence, We find the
contention of the petitioner tenable. It is therefore proper for the lower court to
either implead the Napocor in substitution of the petitioner or at the very least
implead the former as party plaintiff.
All premises considered, this Court is convinced that the respondent judge's
act of determining and ordering the payment of just compensation without the
assistance of a Board of Commissioners is a flagrant violation of petitioner's
constitutional right to due process and is a gross violation of the mandated rule
established by the Revised Rules of Court.
ACCORDINGLY, the petition is GRANTED and the order dated February 9,
1982 issued by the respondent judge insofar as it finally determined the
amount of just compensation is nullified. This case is hereby ordered
remanded to the lower court for trial with the assistance of a Board of
Commissioners. Further, the National Power Corporation is impleaded as
party plaintiff therein.
SO ORDERED.
WYCOCO VS JUDGE CASPILLO
Before the Court are consolidated petitions, the first seeking the review of the
February 9, 1999 Decision1 and the September 22, 1999 Resolution2 of the
Court of Appeals in CA-G.R. No. SP No. 39913, which modified the
Decision3 of Regional Trial Court of Cabanatuan City, Branch 23, acting as a
Special Agrarian Court in Agrarian Case No. 91 (AF); and the second for
mandamus to compel the said trial court to issue a writ of execution and to
direct Judge Rodrigo S. Caspillo to inhibit himself from Agrarian Case No. 91
(AF).
The undisputed antecedents show that Feliciano F. Wycoco is the registered
owner of a 94.1690 hectare unirrigated and untenanted rice land, covered by
Transfer Certificate of Title No. NT-206422 and situated in the Sitios of Ablang,
Saguingan and Pinamunghilan, Barrio of San Juan, Licab, Nueva Ecija.4
In line with the Comprehensive Agrarian Reform Program (CARP) of the
government, Wycoco voluntarily offered to sell the land to the Department of
Agrarian Reform (DAR) for P14.9 million.5 In November 1991, after the DAR’s
evaluation of the application and the determination of the just compensation
by the Land Bank of the Philippines (LBP), a notice of intention to acquire
84.5690 hectares of the property for P1,342,667.466 was sent to Wycoco. The
amount offered was later raised to P2,594,045.39 and, upon review, was
modified to P2,280,159.82.7 The area which the DAR offered to acquire
excluded idle lands, river and road located therein. Wycoco rejected the offer,
prompting the DAR to indorse the case to the Department of Agrarian Reform
Adjudication Board (DARAB) for the purpose of fixing the just compensation in
a summary administrative proceeding.8 The case was docketed as DARAB
VOS Case No. 232 NE 93. Thereafter, the DARAB requested LBP to open a
trust account in the name of Wycoco and deposited the compensation offered
by DAR.9 In the meantime, the property was distributed to farmer-
beneficiaries.
On March 29, 1993, DARAB required the parties to submit their respective
memoranda or position papers in support of their claim.10 Wycoco, however,
decided to forego with the filing of the required pleadings, and instead filed on
April 13, 1993, the instant case for determination of just compensation with the
Regional Trial Court of Cabanatuan City, Branch 23, docketed as Agrarian
Case No. 91 (AF).11 Impleaded as party-defendants therein were DAR and
LBP.
On April 30, 1993, Wycoco filed a manifestation in VOS Case No. 232 NE 93,
informing the DARAB of the pendency of Agrarian Case No. 91 (AF) with the
Cabanatuan court, acting as a special agrarian court.12 On March 9, 1994, the
DARAB issued an order dismissing the case to give way to the determination
of just compensation by the Cabanatuan court. Pertinent portion thereof states:
Admittedly, this Forum is vested with the jurisdiction to conduct administrative
proceeding to determine compensation. [H]owever, a thorough perusal of
petitioner’s complaint showed that he did not only raise the issue of valuation
but such other matters which are beyond the competence of the Board.
Besides, the petitioner has the option to avail the administrative remedies or
bring the matter on just compensation to the Special Agrarian Court for final
determination.
WHEREFORE, premises considered, this case is hereby dismissed.
SO ORDERED.13
Meanwhile, DAR and LBP filed their respective answers before the special
agrarian court in Agrarian Case No. 91 (AF), contending that the valuation of
Wycoco’s property was in accordance with law and that the latter failed to
exhaust administrative remedies by not participating in the summary
administrative proceedings before the DARAB which has primary jurisdiction
over determination of land valuation.14
After conducting a pre-trial on October 3, 1994, the trial court issued a pre-trial
order as follows:
The parties manifested that there is no possibility of amicable settlement,
neither are they willing to admit or stipulate on facts, except those contained
in the pleadings.
The only issue left is for the determination of just compensation or correct
valuation of the land owned by the plaintiff subject of this case.
The parties then prayed to terminate the pre-trial conference.
AS PRAYED FOR, the pre-trial conference is considered terminated, and
instead of trial, the parties are allowed to submit their respective memoranda.
WHEREFORE, the parties are given twenty (20) days from today within which
to file their simultaneous memoranda, and another ten (10) days from receipt
thereof to file their Reply/Rejoinder, if any, and thereafter, this case shall be
deemed submitted for decision.
SO ORDERED.15
The evidence presented by Wycoco in support of his claim were the following:
(1) Transfer Certificate of Title No. NT-206422; (2) Notice of Land Valuation
dated June 18, 1992; and (3) letter dated July 10, 1992 rejecting the counter-
offer of LBP and DAR.16 On the other hand, DAR and LBP presented the Land
Valuation Worksheets.17
On November 14, 1995, the trial court rendered a decision in favor of Wycoco.
It ruled that there is no need to present evidence in support of the land
valuation inasmuch as it is of public knowledge that the prevailing market value
of agricultural lands sold in Licab, Nueva Ecija is from P135,000.00 to
150,000.00 per hectare. The court thus took judicial notice thereof and fixed
the compensation for the entire 94.1690 hectare land at P142,500.00 per
hectare or a total of P13,428,082.00. It also awarded Wycoco actual damages
for unrealized profits plus legal interest. The dispositive portion thereof states:
WHEREFORE, premises considered, judgment is hereby rendered:
1. Ordering the defendants to pay the amount of P13,419,082.00 to plaintiff as
just compensation for the property acquired;
2. Ordering the defendants to pay plaintiff the amount of P29,663,235.00
representing the unrealized profits from the time of acquisition of the subject
property and the sum of P8,475,210.00 for every calendar year, until the
amount of compensation is fully paid including legal interest which had accrued
thereon.
No pronouncement as to costs.
SO ORDERED.18
The DAR and the LBP filed separate petitions before the Court of Appeals.
The petition brought by DAR on jurisdictional and procedural issues, docketed
as CA-G.R. No. SP No. 39234, was dismissed on May 29, 1997.19 The
dismissal became final and executory on June 26, 1997.20 This prompted
Wycoco to file a petition for mandamus before this Court, docketed as G.R.
No. 146733, praying that the decision of the Regional Trial Court of
Cabanatuan City, Branch 23, in Agrarian Case No. 91 (AF) be executed, and
that Judge Rodrigo S. Caspillo, the now presiding Judge of said court, be
compelled to inhibit himself from hearing the case.
The petition brought by LBP on both substantive and procedural grounds,
docketed as CA-G.R. No. SP No. 39913, was likewise dismissed by the Court
of Appeals on February 9, 1999.21 On September 22, 1999, however, the Court
of Appeals modified its decision by deducting from the compensation due
Wycoco the amount corresponding to the 3.3672 hectare portion of the
94.1690 hectare land which was found to have been previously sold by
Wycoco to the Republic, thus –
WHEREFORE, and conformably with the above, Our decision of February 9,
1999 is hereby MODIFIED in the sense that the value corresponding to the
aforesaid 3.3672 hectares and all the awards appertaining thereto in the
decision a quo are ordered deducted from the totality of the awards granted to
the private respondent. In all other respects, the decision sought to be
reconsidered is hereby RE-AFFIRMED and REITERATED.
SO ORDERED.22
In its petition, LBP contended that the Court of Appeals erred in ruling:
I The issues for resolution are as follows: (1) Did the Regional Trial Court, acting
THAT THE TRIAL COURT ACTING AS A SPECIAL AGRARIAN COURT MAY
ASSUME JURISDICTION OVER AGRARIAN CASE NO. 91 (AF) AND
RENDER JUDGMENT THEREON WITHOUT AN INITIAL ADMINISTRATIVE
DETERMINATION OF JUST COMPENSATION BY THE DARAB PURSUANT
TO SECTION 16 OF RA 6657, OVER THE TIMELY OBJECTION OF THE
PETITIONER, AND IN VIOLATION OF THE RULE ON EXHAUSTION OF
ADMINISTRATIVE REMEDIES AND ON FORUM SHOPPING;
II
THAT THE JUST COMPENSATION DETERMINED BY THE TRIAL COURT
WAS SUPPORTED BY SUBSTANTIAL EVIDENCE, WHEN IT WAS BASED
ONLY ON JUDICIAL NOTICE OF THE PREVAILING MARKET VALUE OF
LAND BASED ON THE ALLEGED PRICE OF TRANSFER OF TENURAL
RIGHTS, TAKEN WITHOUT NOTICE AND HEARING IN VIOLATION OF
RULE 129 OF THE RULES OF COURT;
III
THAT THE TRIAL COURT CAN REQUIRE THE PETITIONER TO
COMPENSATE THE PORTIONS OF RESPONDENT’S PROPERTY WHICH
WERE NOT DECLARED BY THE DAR FOR ACQUISITION, NOR SUITABLE
FOR AGRICULTURE NOR CAPABLE OF DISTRIBUTION TO FARMER
BENEFICIARIES UNDER THE CARP;
IV
THAT THE TRIAL COURT CAN AWARD AS PART OF JUST
COMPENSATION LEGAL INTEREST ON THE PRINCIPAL AND ALLEGED
UNREALIZED PROFITS OF P29,663,235.00 FROM THE TIME OF
ACQUISITION OF THE SUBJECT PROPERTY AND P8,475,210.00 FOR
EVERY CALENDAR YEAR THEREAFTER, CONSIDERING THAT THE
SAME HAS NO LEGAL BASIS AND THAT THE RESPONDENT RETAINED
THE TITLE TO HIS PROPERTY DESPITE THE DAR’S NOTICE OF
ACQUISITION;
V
THAT THE TRIAL COURT HAD VALIDLY GRANTED EXECUTION PENDING
APPEAL ON THE ALLEGEDLY GOOD REASON OF THE PETITIONER’S
ADVANCED AGE AND WEAK HEALTH, CONTRARY TO THE APPLICABLE
JURISPRUDENCE AND CONSIDERING THAT THE RESPONDENT IS NOT
DESTITUTE.23
as Special Agrarian Court, validly acquire jurisdiction over the instant case for
determination of just compensation? (2) Assuming that it acquired jurisdiction,
was the compensation arrived at supported by evidence? (3) Can Wycoco
compel the DAR to purchase the entire land subject of the voluntary offer to
sell? (4) Were the awards of interest and damages for unrealized profits valid?
Anent the issue of jurisdiction, the laws in point are Sections 50 and 57 of
Republic Act No. 6657 (Comprehensive Agrarian Reform Law of 1988) which,
in pertinent part, provide:
Section 50. Quasi-judicial Powers of the DAR. – The DAR is hereby vested
with primary jurisdiction to determine and adjudicate agrarian reform matters
and shall have exclusive original jurisdiction over all matters involving the
implementation of agrarian reform, except those falling under the exclusive
jurisdiction of the Department of Agriculture (DA) and the Department of
Environment and Natural Resources (DENR)….
Section 57. Special Jurisdiction. – The Special Agrarian Court shall have
original and exclusive jurisdiction over all petitions for the determination of just
compensation to landowners, and the prosecution of all criminal offenses
under this Act.
The Special Agrarian Courts shall decide all appropriate cases under their
special jurisdiction within thirty (30) days from submission of the case for
decision.
In Republic v. Court of Appeals,24 it was held that Special Agrarian Courts are
given original and exclusive jurisdiction over two categories of cases, to wit:
(1) all petitions for the determination of just compensation; and (2) the
prosecution of all criminal offenses under R.A. No. 6657. Section 50 must be
construed in harmony with Section 57 by considering cases involving the
determination of just compensation and criminal cases for violations of R.A.
No. 6657 as excepted from the plenitude of power conferred to the DAR.
Indeed, there is a reason for this distinction. The DAR, as an administrative
agency, cannot be granted jurisdiction over cases of eminent domain and over
criminal cases. The valuation of property in eminent domain is essentially a
judicial function which is vested with the Special Agrarian Courts and cannot
be lodged with administrative agencies.25 In fact, Rule XIII, Section 11 of the
New Rules of Procedure of the DARAB acknowledges this power of the court,
thus –
Section 11. Land Valuation and Preliminary Determination and Payment of
Just Compensation. The decision of the Adjudicator on land valuation and
preliminary determination and payment of just compensation shall not be
appealable to the Board but shall be brought directly to the Regional Trial
Courts designated as Special Agrarian Courts within fifteen (15) days from
receipt of the notice thereof. Any party shall be entitled to only one motion for
reconsideration. (Emphasis supplied)
Under Section 1 of Executive Order No. 405, Series of 1990, the Land Bank
of the Philippines is charged with the initial responsibility of determining the
value of lands placed under land reform and the just compensation to be paid
for their taking.26 Through a notice of voluntary offer to sell (VOS) submitted
by the landowner, accompanied by the required documents, the DAR
evaluates the application and determines the land’s suitability for agriculture.
The LBP likewise reviews the application and the supporting documents and
determines the valuation of the land. Thereafter, the DAR issues the Notice of
Land Valuation to the landowner. In both voluntary and compulsory acquisition,
where the landowner rejects the offer, the DAR opens an account in the name
of the landowner and conducts a summary administrative proceeding. If the
landowner disagrees with the valuation, the matter may be brought to the
Regional Trial Court acting as a special agrarian court. This in essence is the
procedure for the determination of just compensation.27
In Land Bank of the Philippines v. Court of Appeals,28 the landowner filed an
action for determination of just compensation without waiting for the
completion of DARAB’s re-evaluation of the land. This, notwithstanding, the
Court held that the trial court properly acquired jurisdiction because of its
exclusive and original jurisdiction over determination of just compensation,
thus –
…It is clear from Sec. 57 that the RTC, sitting as a Special Agrarian Court, has
"original and exclusive jurisdiction over all petitions for the determination of just
compensation to landowners." This "original and exclusive" jurisdiction of the
RTC would be undermined if the DAR would vest in administrative officials
original jurisdiction in compensation cases and make the RTC an appellate
court for the review of administrative decisions. Thus, although the new rules
speak of directly appealing the decision of adjudicators to the RTCs sitting as
Special Agrarian Courts, it is clear from Sec. 57 that the original and exclusive
jurisdiction to determine such cases is in the RTCs. Any effort to transfer such
jurisdiction to the adjudicators and to convert the original jurisdiction of the
RTCs into an appellate jurisdiction would be contrary to Sec. 57 and therefore
would be void. Thus, direct resort to the SAC [Special Agrarian Court] by
private respondent is valid. (Emphasis supplied)29
In the case at bar, therefore, the trial court properly acquired jurisdiction over
Wycoco’s complaint for determination of just compensation. It must be
stressed that although no summary administrative proceeding was held before
the DARAB, LBP was able to perform its legal mandate of initially determining
the value of Wycoco’s land pursuant to Executive Order No. 405, Series of
1990. What is more, DAR and LBP’s conformity to the pre-trial order which
limited the issue only to the determination of just compensation estopped them
from questioning the jurisdiction of the special agrarian court. The pre-trial
order limited the issues to those not disposed of by admission or agreements;
and the entry thereof controlled the subsequent course of action.30
Besides, the issue of whether Wycoco violated the rule on exhaustion of
administrative remedies was rendered moot and academic in view of the
DARAB’s dismissal31 of the administrative case to give way to and in
recognition of the court’s power to determine just compensation.32
In arriving at the valuation of Wycoco’s land, the trial court took judicial notice
of the alleged prevailing market value of agricultural lands in Licab, Nueva
Ecija without apprising the parties of its intention to take judicial notice thereof.
Section 3, Rule 129 of the Rules on Evidence provides:
Sec. 3. Judicial Notice, When Hearing Necessary. – During the trial, the court,
on its own initiative, or on request of a party, may announce its intention to
take judicial notice of any matter and allow the parties to be heard thereon.
After trial and before judgment or on appeal, the proper court, on its own
initiative, or on request of a party, may take judicial notice of any matter and
allow the parties to be heard thereon if such matter is decisive of a material
issue in the case.
Inasmuch as the valuation of the property of Wycoco is the very issue in the
case at bar, the trial court should have allowed the parties to present evidence
thereon instead of practically assuming a valuation without basis. While market
value may be one of the bases of determining just compensation, the same
cannot be arbitrarily arrived at without considering the factors to be
appreciated in arriving at the fair market value of the property e.g., the cost of
acquisition, the current value of like properties, its size, shape, location, as well
as the tax declarations thereon.33 Since these factors were not considered, a
remand of the case for determination of just compensation is necessary. The
power to take judicial notice is to be exercised by courts with caution especially
where the case involves a vast tract of land. Care must be taken that the
requisite notoriety exists; and every reasonable doubt on the subject should
be promptly resolved in the negative. To say that a court will take judicial notice
of a fact is merely another way of saying that the usual form of evidence will
be dispensed with if knowledge of the fact can be otherwise acquired. This is
because the court assumes that the matter is so notorious that it will not be
disputed. But judicial notice is not judicial knowledge. The mere personal
knowledge of the judge is not the judicial knowledge of the court, and he is not
authorized to make his individual knowledge of a fact, not generally or
professionally known, the basis of his action.34
Anent the third issue, the DAR cannot be compelled to purchase the entire
property voluntarily offered by Wycoco. The power to determine whether a
parcel of land may come within the coverage of the Comprehensive Agrarian
Reform Program is essentially lodged with the DAR. That Wycoco will suffer
damages by the DAR’s non-acquisition of the approximately 10 hectare portion
of the entire land which was found to be not suitable for agriculture is no
justification to compel DAR to acquire the whole area.
We find Wycoco’s claim for payment of interest partly meritorious. In Land
Bank of the Philippines v. Court of Appeals,35 this Court struck down as void
DAR Administrative Circular No. 9, Series of 1990, which provides for the
opening of trust accounts in lieu of the deposit in cash or in bonds
contemplated in Section 16 (e) of RA 6657.
"It is very explicit …from [Section 16 (e)] that the deposit must be made only
in ‘cash’ or in ‘LBP bonds.’ Nowhere does it appear nor can it be inferred that
the deposit can be made in any other form. If it were the intention to include a
‘trust account’ among the valid modes of deposit, that should have been made
express, or at least, qualifying words ought to have appeared from which it can
be fairly deduced that a ‘trust account’ is allowed. In sum, there is no ambiguity
in Section 16(e) of RA 6657 to warrant an expanded construction of the term
‘deposit.’
xxx xxx xxx
"In the present suit, the DAR clearly overstepped the limits of its powers to
enact rules and regulations when it issued Administrative Circular No. 9. There
is no basis in allowing the opening of a trust account in behalf of the landowner
as compensation for his property because, as heretofore discussed, Section
16(e) of RA 6657 is very specific that the deposit must be made only in ‘cash’
or in ‘LBP bonds.’ In the same vein, petitioners cannot invoke LRA Circular
Nos. 29, 29-A and 54 because these implementing regulations can not
outweigh the clear provision of the law. Respondent court therefore did not
commit any error in striking down Administrative Circular No. 9 for being null
and void."36
Pursuant to the forgoing decision, DAR issued Administrative Order No. 2,
Series of 1996, converting trust accounts in the name of landowners into
deposit accounts. The transitory provision thereof states –
VI. TRANSITORY PROVISIONS
All trust accounts issued pursuant to Administrative Order No. 1, S. 1993
covering landholdings not yet transferred in the name of the Republic of the
Philippines as of July 5, 1996 shall immediately be converted to deposit
accounts in the name of the landowners concerned.
All Provincial Agrarian Reform Officers and Regional Directors are directed to
immediately inventory the claim folders referred to in the preceding paragraph,
wherever they may be found and request the LBP to establish the requisite
deposit under this Administrative Order and to issue a new certification to that
effect. The Original Certificate of Trust Deposit previously issued should be
attached to the request of the DAR in order that the same may be replaced
with a new one.
All previously established Trust Deposits which served as the basis for the
transfer of the landowner’s title to the Republic of the Philippines shall likewise
be converted to deposits in cash and in bonds. The Bureau of Land Acquisition
and Distribution shall coordinate with the LBP for this purpose.
In light of the foregoing, the trust account opened by LBP in the name of
Wycoco as the mode of payment of just compensation should be converted to
a deposit account. Such conversion should be retroactive in application in
order to rectify the error committed by the DAR in opening a trust account and
to grant the landowners the benefits concomitant to payment in cash or LBP
bonds prior to the ruling of the Court in Land Bank of the Philippines v. Court
of Appeals. Otherwise, petitioner’s right to payment of just and valid
compensation for the expropriation of his property would be violated.37 The
interest earnings accruing on the deposit account of landowners would suffice
to compensate them pending payment of just compensation.
In some expropriation cases, the Court imposed an interest of 12% per annum
on the just compensation due the landowner. It must be stressed, however,
that in these cases, the imposition of interest was in the nature of damages for
delay in payment which in effect makes the obligation on the part of the
government one of forbearance.38 It follows that the interest in the form of
damages cannot be applied where there was prompt and valid payment of just
compensation. Conversely, where there was delay in tendering a valid
payment of just compensation, imposition of interest is in order. This is
because the replacement of the trust account with cash or LBP bonds did
not ipso facto cure the lack of compensation; for essentially, the determination
of this compensation was marred by lack of due process.39
Accordingly, the just compensation due Wycoco should bear 12% interest per
annum from the time LBP opened a trust account in his name up to the time
said account was actually converted into cash and LBP bonds deposit
accounts. The basis of the 12% interest would be the just compensation that
would be determined by the Special Agrarian Court upon remand of the instant
case. In the same vein, the amount determined by the Special Agrarian Court
would also be the basis of the interest income on the cash and bond deposits
due Wycoco from the time of the taking of the property up to the time of actual
payment of just compensation.
The award of actual damages for unrealized profits should be deleted. The
amount of loss must not only be capable of proof, but must be proven with a
reasonable degree of certainty. The claim must be premised upon competent
proof or upon the best evidence obtainable, such as receipts or other
documentary proof.40 None having been presented in the instant case, the
claim for unrealized profits cannot be granted.
From the foregoing discussion, it is clear that Wycoco’s petition for mandamus
in G.R. No. 146733 should be dismissed. The decision of the Regional Trial
Court of Cabanatuan City, Branch 23, acting as Special Agrarian Court in
Agrarian Case No. 91 (AF), cannot be enforced because there is a need to
remand the case to the trial court for determination of just compensation.
Likewise, the prayer for the inhibition of Judge Rodrigo S. Caspillo in Agrarian
Case No. 91 (AF) is denied for lack of basis.
WHEREFORE, in view of all the foregoing, the petition in G.R. No. 140160 is
PARTIALLY GRANTED. Agrarian Case No. 91 (AF) is REMANDED to the
Regional Trial Court of Cabanatuan City, Branch 23, for the determination of
just compensation. The petition for mandamus in G.R. No. 146733 is
dismissed.
SO ORDERED.
NPC VS ANGAS
The basic issue in this original action for certiorari and mandamus filed by the
National Power Corporation is whether or not, in the computation of the legal
rate of interest on just compensation for expropriated lands, the law applicable
is Article 2209 of the Civil Code which prescribes a 6% legal interest rate or
Central Bank Circular No. 416 which fixed the legal interest rate at 12% per
annum. Pending consideration of this code on the merits, petitioner seeks the
issuance of a writ of preliminary injunction and/or restraining order to restrain
or enjoin the respondent judge of the lower court from enforcing the herein
assailed orders and from further acting or proceeding with Civil Case Nos.
2248 and 2277.
The following are the antecedents of the case:
On April 13, 1974 and December 3, 1974, petitioner National Power
Corporation, a government-owned and controlled corporation and the agency
through which the government undertakes the on-going infrastructure and
development projects throughout the country, filed two complaints for eminent
domain against private respondents with the Court of First Instance (now
Regional Trial Court) of Lanao del Sur, docketed as Civil Case No. 2248 and
Civil Case No. 2277, respectively. The complaint which sought to expropriate
certain specified lots situated at Limogao, Saguiaran, Lanao del Sur was for
the purpose of the development of hydro-electric power and production of
electricity as well as the erection of such subsidiary works and constructions
as may be necessarily connected therewith.
Both cases were jointly tried upon agreement of the parties. After responsive
pleadings were filed and issues joined, a series of hearings before court-
designated commissioners were held.
On June 15, 1979, a consolidated decision in Civil Cases Nos. 2248 and 2277
was rendered by the lower court, declaring and confirming that the lots
mentioned and described in the complaints have entirely been lawfully
condemned and expropriated by the petitioner, and ordering the latter to pay
the private respondents certain sums of money as just compensation for their
lands expropriated "with legal interest thereon . . . until fully paid."
Two consecutive motions for reconsideration of the said consolidated decision
were filed by the petitioner. The same were denied by the respondent court.
Petitioner did not appeal the aforesaid consolidated decision, which became
final and executory.
Thus, on May 16, 1980, one of the private respondents (Sittie Sohra Batara)
filed an ex-parte motion for the execution of the June 15, 1979 decision,
praying that petitioner be directed to pay her the unpaid balance of P14,300.00
for the lands expropriated from her, including legal interest which she
computed at 6% per annum. The said motion was granted by the lower court.
Thereafter, the lower court directed the petitioner to deposit with its Clerk of
Court the sums of money as adjudged in the joint decision dated June 15,
1979. Petitioner complied with said order and deposited the sums of money
with interest computed at 6% per annum.
On February 10, 1981, one of the private respondents (Pangonatan Cosna
Tagol), through counsel, filed with the trial court an ex-parte motion in Civil
Case No. 2248 praying, for the first time, that the legal interest on the just
compensation awarded to her by the court be computed at 12% per annum as
allegedly "authorized under and by virtue of Circular No. 416 of the Central
Bank issued pursuant to Presidential Decree No. 116 and in a decision of the
Supreme Court that legal interest allowed in the judgment of the courts, in the
absence of express contract, shall be computed at 12% per annum." (Brief for
Respondents, p. 3)
On February 11, 1981, the lower court granted the said motion allowing 12%
interest per annum. (Annex L, Petition). Subsequently, the other private
respondents filed motions also praying that the legal interest on the just
compensation awarded to them be computed at 12% per annum, on the basis
of which the lower court issued on March 10, 1981 and August 28, 1981 orders
bearing similar import.
Petitioner moved for a reconsideration of the lower court's last order dated
August 28, 1981, alleging that the main decision had already become final and
executory with its compliance of depositing the sums of money as just
compensation for the lands condemned, with legal interest at 6% per annum;
that the said main decision can no longer be modified or changed by the lower
court; and that Presidential Decree No. 116 is not applicable to this case
because it is Art. 2209 of the Civil Code which applies.
On January 25, 1982, the lower court denied petitioner's, motion for
reconsideration, stating that the rate of interest at the time of the promulgation
of the June 15, 1981 decision is that prescribed by Central Bank Circular No.
416 issued pursuant to Presidential Decree No. 116, which is 12% per annum,
and that it did not modify or change but merely amplified its order of August
28, 1981 in the determination of the legal interest.
Petitioner brings the case to Us for a determination of which legal interest is
applicable to the transaction in question.
Central Bank Circular No. 416 reads:
By virtue of the authority granted to it under Section 1 of Act No. 2655, as
amended, otherwise known as the "Usury Law," the Monetary Board, in its
Resolution No. 1622 dated July 29, 1974, has prescribed that the rate of
interest for the loan or forbearance of any money, goods or credits and the rate
allowed in judgments, in the absence of express contract as to such rate of
interest, shall be twelve per cent (12%) per annum.
It is clear from the foregoing provision that the Central Bank circular applies
only to loan or forbearance of money, goods or credits. This has already been
settled in several cases decided by this Court. Private respondents, however,
take exception to the inclusion of the term "judgments" in the said circular,
claiming that such term refers to any judgment directing the payment of legal
interest, which term includes the questioned judgment of the lower court in the
case at bar.
Private respondents' contention is bereft of merit. The term "judgments" as
used in Section 1 of the Usury Law, as well as in Central Bank Circular No.
416, should be interpreted to mean only judgments involving loan or
forbearance of money, goods or credits, following the principle of ejusdem
generis. Under this doctrine, where general terms follow the designation of
particular things or classes of persons or subjects, the general term will be
construed to comprehend those things or persons of the same class or of the
same nature as those specifically enumerated (Crawford, Statutory
Construction, p. 191; Go Tiaco vs. Union Ins. Society of Canton, 40 Phil. 40;
Mutuc vs. COMELEC, 36 SCRA 228)
The purpose of the rule on ejusdem generis is to give effect to both the
particular and general words, by treating the particular words as indicating the
class and the general words as including all that is embraced in said class,
although not specifically named by the particular words. This is justified on the
ground that if the lawmaking body intended the general terms to be used in
their unrestricted sense, it would have not made an enumeration of particular
subjects but would have used only general terms (2 Sutherland, Statutory
Construction, 3rd ed., pp. 395-400).
Applying the said rule on statutory construction to Central Bank Circular No.
416, the general term "judgments" can refer only to judgments in cases
involving loans or forbearance of any money, goods or credits. As significantly
laid down by this Court in the case of Reformina vs. Tomol, 139 SCRA 260:
The judgments spoken of and referred to are judgments in litigations involving
loans or forbearance of any money, goods or credits. Any other kind of
monetary judgment which has nothing to do with, nor involving loans or
forbearance of any money, goods or credits does not fall within the coverage
of the said law for it is not within the ambit of the authority granted to the Central
Bank. The Monetary Board may not tread on forbidden grounds. It cannot
rewrite other laws. That function is vested solely with the legislative authority.
It is axiomatic in legal hermeneutics that statutes should be construed as a
whole and not as a series of disconnected articles and phrases. In the absence
of a clear contrary intention, words and phrases in statutes should not be
interpreted in isolation from one another. A word or phrase in a statute is
always used in association with other words or phrases and its meaning may
thus be modified or restricted by the latter.
Obviously, therefore, Art. 2209 of the Civil Code, and not Central Bank Circular
No. 416, is the law applicable to the case at bar. Said law reads:
Art. 2209. If the obligation consists in the payment of a sum of money, and the
debtor incurs a delay, the indemnity for damages, there being no stipulation to
the contrary, shall be the payment of the interest agreed upon, and in the
absence of stipulation, the legal interest, which is six percent per annum.
The Central Bank circular applies only to loan or forbearance of money, goods
or credits and to judgments involving such loan or forbearance of money,
goods or credits. This is evident not only from said circular but also from
Presidential Decree No. 116, which amended Act No. 2655, otherwise known
as the Usury Law. On the other hand, Art. 2209 of the Civil Code applies to
transactions requiring the payment of indemnities as damages, in connection
with any delay in the performance of the obligation arising therefrom other than
those covering loan or forbearance of money, goods or credits.
In the case at bar, the transaction involved is clearly not a loan or forbearance
of money, goods or credits but expropriation of certain parcels of land for a
public purpose, the payment of which is without stipulation regarding interest,
and the interest adjudged by the trial court is in the nature of indemnity for
damages. The legal interest required to be paid on the amount of just
compensation for the properties expropriated is manifestly in the form of
indemnity for damages for the delay in the payment thereof. Therefore, since
the kind of interest involved in the joint judgment of the lower court sought to
be enforced in this case is interest by way of damages, and not by way of
earnings from loans, etc. Art. 2209 of the Civil Code shall apply.
As for private respondents' argument that Central Bank Circular No. 416
impliedly repealed or modified Art. 2209 of the Civil Code, suffice it to state
that repeals or even amendments by implication are not favored if two laws
can be fairly reconciled. The Courts are slow to hold that one statute has
repealed another by implication, and they will not make such an adjudication
if they can refrain from doing so, or if they can arrive at another result by any
construction which is just and reasonable. Besides, the courts will not enlarge
the meaning of one act in order to decide that it repeals another by implication,
nor will they adopt an interpretation leading to an adjudication of repeal by
implication unless it is inevitable and a clear and explicit reason therefor can
be adduced. (82 C.J.S. 479-486). In this case, Central Bank Circular No. 416
and Art. 2209 of the Civil Code contemplate different situations and apply to
different transactions. In transactions involving loan or forbearance of money,
goods or credits, as well as judgments relating to such loan or forbearance of
money, goods or credits, the Central Bank circular applies. It is only in such
transactions or judgments where the Presidential Decree allowed the
Monetary Board to dip its fingers into. On the other hand, in cases requiring
the payment of indemnities as damages, in connection with any delay in the
performance of an obligation other than those involving loan or forbearance of
money, goods or credits, Art. 2209 of the Civil Code applies. For the Court,
this is the most fair, reasonable, and logical interpretation of the two laws. We
do not see any conflict between Central Bank Circular No. 416 and Art. 2209
of the Civil Code or any reason to hold that the former has repealed the latter
by implication.
WHEREFORE, the petition is GRANTED. The Orders promulgated on
February 11, 1981, March 10, 1981, August 28, 1981 and January 25, 1982
(as to the recomputation of interest at 12% per annum) are ANNULLED and
SET ASIDE. It is hereby declared that the computation of legal interest at
6% per annum is the correct and valid legal interest allowed in payments of
just compensation for lands expropriated for public use to herein private
respondents by the Government through the National Power Corporation. The
injunction heretofore granted is hereby made permanent. No costs.
SO ORDERED.
REPUBLIC VS GINGOYON
This Resolution treats of the following motions:
(a) MOTION FOR PARTIAL RECONSIDERATION, dated 2 January 2006 of
the decision of 19 December 2005 filed by the Office of the Solicitor General
for petitioners;
(b) MOTION FOR LEAVE (To File Motion for Partial Reconsideration-in-
Intervention), dated 5 January 2006 filed by counsel for petitioner-intervenor
Asahikosan Corporation praying that the attached Motion for Partial
Reconsideration and Intervention dated January 5, 2006 be admitted;
(b-1) Aforesaid MOTION FOR PARTIAL RECONSIDERATION-IN-
INTERVENTION, dated January 5, 2006;
(c) MOTION FOR LEAVE (To File Motion for Partial Reconsideration-in-
Intervention), dated 5 January 2006 filed by counsel for petitioner-intervenor
Takenaka Corp.;
(c-1) Aforesaid MOTION FOR PARTIAL RECONSIDERATION-IN-
INTERVENTION, dated 5 January 2006;
(d) MOTION FOR INTERVENTION – and – MOTION TO ADMIT THE
ATTACHED MOTION FOR RECONSIDERATION-IN-INTERVENTION (of the
Decision dated 19 December 2005), dated 6 January 2006 filed by counsel for
movant-in-intervention Rep. Salacnib F. Baterina; and
(d-1) Aforesaid MOTION FOR RECONSIDERATION-IN-INTERVENTION (of
the Decision dated 19 December 2005) dated 6 January 2006.
We first dispose of the Motion for Partial Reconsideration filed by petitioner
Republic of the Philippines (Government). It propounds several reasons for the
reconsideration of the Court’s Decision dated 19 December 2005. Some of the
arguments merely rehash points raised in the petition and already dispensed
with exhaustively in the Decision. This applies in particular to the argument
that Republic Act No. 8974 does not apply to the expropriation of the Ninoy
Aquino International Airport Passenger Terminal 3 (NAIA 3), which is not a
right-of-way, site or location. This Resolution will instead focus as it should on
the new arguments, as well as the perspectives that were glossed over in the
Decision.
On the newly raised arguments, there are considerable factual elements
brought up by the Government. In the main, the Government devotes
significant effort in diminishing PIATCO’s right to just compensation as builder
or owner of the NAIA 3. Particularly brought to fore are the claims relating to
two entities, Takenaka Corporation (Takenaka) and Asahikosan (Asahikosan)
Corporation, who allegedly claim "significant liens" on the terminal, arising from
their alleged unpaid bills by virtue of an Engineering, Procurement and
Construction Contract they had with PIATCO. On account of these adverse
claims, the Government now claims as controvertible the question of who is
the builder of the NAIA 3.
The Government likewise claims as "indispensable" the need of Takenaka and
Asahikosan to provide the necessary technical services and supplies so that
all the various systems and equipment will be ready and operational in a
manner that allows the Government to possess a fully-capable international
airport terminal.
The Government’s concerns that impelled the filing of its Motion for
Reconsideration are summed up in the following passage therein: "The
situation the Republic now faces is that if any part of its Php3,002,125,000
deposit is released directly to PIATCO, and PIATCO, as in the past, does not
wish to settle its obligations directly to Takenaka, Asahikosan and Fraport, the
Republic may end up having expropriated a terminal with liens and claims far
in excess of its actual value, the liens remain unextinguished, and PIATCO on
the other hand, ends up with the Php3,0002,125,000 in its pockets
gratuitously."
The Court is not wont to reverse its previous rulings based on factual premises
that are not yet conclusive or judicially established. Certainly, whatever claims
or purported liens Takenaka and Asahikosan against PIATCO or over the
NAIA 3 have not been judicially established. Neither Takenaka nor Asahikosan
are parties to the present action, and thus have not presented any claim which
could be acted upon by this Court. The earlier adjudications in Agan v.
PIATCO made no mention of either Takenaka or Asahikosan, and certainly
made no declaration as to their rights to any form of compensation. If there is
indeed any right to remuneration due to these two entities arising from NAIA
3, they have not yet been established by the courts of the land.
It must be emphasized that the conclusive ruling in the Resolution dated 21
January 2004 in Agan v. PIATCO (Agan 2004) is that PIATCO, as builder of
the facilities, must first be justly compensated in accordance with law and
equity for the Government to take over the facilities. It is on that premise that
the Court adjudicated this case in its 19 December 2005 Decision.
While the Government refers to a judgment rendered by a London court in
favor of Takenaka and Asahikosan against PIATCO in the amount of US$82
Million, it should be noted that this foreign judgment is not yet binding on
Philippine courts. It is entrenched in Section 48, Rule 39 of the Rules of Civil
Procedure that a foreign judgment on the mere strength of its promulgation is
not yet conclusive, as it can be annulled on the grounds of want of jurisdiction,
want of notice to the party, collusion, fraud, or clear mistake of law or fact.1 It
is likewise recognized in Philippine jurisprudence and international law that a
foreign judgment may be barred from recognition if it runs counter to public
policy.2
Assuming that PIATCO indeed has corresponding obligations to other parties
relating to NAIA 3, the Court does not see how such obligations, yet unproven,
could serve to overturn the Decision mandating that the Government first pay
PIATCO the amount of 3.02 Million Pesos before it may acquire physical
possession over the facilities. This directive enjoining payment is in
accordance with Republic Act No. 8974, and under the mechanism established
by the law the amount to be initially paid is that which is provisionally
determined as just compensation. The provisional character of this payment
means that it is not yet final, yet sufficient under the law to entitle the
Government to the writ of possession over the expropriated property.
There are other judicial avenues outside of this Motion for Reconsideration
wherein all other claims relating to the airport facilities may be ventilated,
proved and determined. Since such claims involve factual issues, they must
first be established by the appropriate trier of facts before they can be accorded
any respect by or binding force on this Court.
The other grounds raised in the Motion for Reconsideration are similarly
flawed.
The Government argues that the 2004 Resolution in Agan did not strictly
require the payment of just compensation before the Government can take
over the airport facilities. Reliance is placed on the use by the Court of the
word "for", instead of "before." Yet the clear intent of that ruling is to mandate
payment of just compensation as a condition precedent before the
Government could acquire physical possession over the airport facilities. The
qualification was made out of due consideration of the fact that PIATCO had
already constructed the facilities at its own expense when its contracts with the
Government were nullified.
Even assuming that "for" may be construed as not necessarily meaning "prior
to", it cannot be denied that Rep. Act No. 8974 does require prior payment to
the owner before the Government may acquire possession over the property
to be expropriated. Even Rule 67 requires the disbursement of money by way
of deposit as a condition precedent prior to entitlement to a writ of possession.
As the instant case is one for expropriation, our pronouncement is worthily
consistent with the principles and laws that govern expropriation cases.
The Government likewise adopts the position raised by the Dissenting Opinion
of Mr. Justice Corona that Rep. Act No. 8974 could not repeal Rule 67 of the
Rules of Court, since the deposit of the assessed value is a procedural matter.
It adds that otherwise, Rep. Act No. 8974 is unconstitutional.
Of course it is too late in the day to question the constitutionality of Rep. Act
No. 8974, an issue that was not raised in the petition. Still, this point was
already addressed in the Decision, which noted that the determination of the
appropriate standards for just compensation is a substantive matter well within
the province of the legislature to fix.3 As held in Fabian v. Desierto, if the rule
takes away a vested right, it is not procedural,4 and so the converse certainly
holds that if the rule or provision creates a right, it should be properly
appreciated as substantive in nature. Indubitably, a matter is substantive when
it involves the creation of rights to be enjoyed by the owner of property to be
expropriated. The right of the owner to receive just compensation prior to
acquisition of possession by the State of the property is a proprietary right,
appropriately classified as a substantive matter and, thus, within the sole
province of the legislature to legislate on.
It is possible for a substantive matter to be nonetheless embodied in a rule of
procedure5 , and to a certain extent, Rule 67 does contain matters of
substance. Yet the absorption of the substantive point into a procedural rule
does not prevent the substantive right from being superseded or amended by
statute, for the creation of property rights is a matter for the legislature to enact
on, and not for the courts to decide upon. Indeed, if the position of the
Government is sustained, it could very well lead to the absurd situation wherein
the judicial branch of government may shield laws with the veneer of
irrepealability simply by absorbing the provisions of law into the rules of
procedure. When the 1987 Constitution restored to the judicial branch of
government the sole prerogative to promulgate rules concerning pleading,
practice and procedure, it should be understood that such rules necessarily
pertain to points of procedure, and not points of substantive law.
The Government also exhaustively cites the Dissenting Opinion in arguing that
the application of Rule 67 would violate the 2004 Resolution of the Court
in Agan. It claims that it is not possible to determine with reasonable certainty
the proper amount of just compensation to be paid unless it first acquires
possession of the NAIA 3. Yet what the Decision mandated to be paid to
PIATCO before the writ of possession could issue is merely the provisionally
determined amount of just compensation which, under the auspices of Rep.
Act No. 8974, constitutes the proffered value as submitted by the Government
itself. There is thus no need for the determination with reasonable certainty of
the final amount of just compensation before the writ of possession may be
issued. Specifically in this case, only the payment or release by the
Government of the proffered value need be made to trigger the operability of
the writ of possession.
Admittedly, the 2004 Resolution in Agan could be construed as mandating the
full payment of the final amount of just compensation before the Government
may be permitted to take over the NAIA 3. However, the Decision ultimately
rejected such a construction, acknowledging the public good that would result
from the immediate operation of the NAIA 3. Instead, the Decision adopted an
interpretation which is in consonance with Rep. Act No. 8974 and with
equitable standards as well, that allowed the Government to take possession
of the NAIA 3 after payment of the proffered value of the facilities to PIATCO.
Such a reading is substantially compliant with the pronouncement in the
2004 Agan Resolution, and is in accord with law and equity. In contrast, the
Government’s position, hewing to the strict application of Rule 67, would permit
the Government to acquire possession over the NAIA 3 and implement its
operation without having to pay PIATCO a single centavo, a situation that is
obviously unfair. Whatever animosity the Government may have towards
PIATCO does not acquit it from settling its obligations to the latter, particularly
those which had already been previously affirmed by this Court.
We now turn to the three (3) motions for intervention all of which were filed
after the promulgation of the Court’s Decision. All three (3) motions must be
denied. Under Section 2, Rule 19 of the 1997 Rules of Civil Procedure the
motion to intervene may be filed at any time before rendition of judgment by
the court.6 Since this case originated from an original action filed before this
Court, the appropriate time to file the motions-in-intervention in this case if ever
was before and not after resolution of this case. To allow intervention at this
juncture would be highly irregular. It is extremely improbable that the movants
were unaware of the pendency of the present case before the Court, and
indeed none of them allege such lack of knowledge.
Takenaka and Asahikosan rely on Mago v. Court of Appeals7 wherein the
Court took the extraordinary step of allowing the motion for intervention even
after the challenged order of the trial court had already become final. 8 Yet it
was apparent in Mago that the movants therein were not impleaded despite
being indispensable parties, and had not even known of the existence of the
case before the trial court9 , and the effect of the final order was to deprive the
movants of their land.10 In this case, neither Takenaka nor Asahikosan stand
to be dispossessed by reason of the Court’s Decision. There is no palpable
due process violation that would militate the suspension of the procedural rule.
Moreover, the requisite legal interest required of a party-in-intervention has not
been established so as to warrant the extra-ordinary step of allowing
intervention at this late stage. As earlier noted, the claims of Takenaka and
Asahikosan have not been judicially proved or conclusively established as fact
by any trier of facts in this jurisdiction. Certainly, they could not be considered
as indispensable parties to the petition for certiorari. In the case of
Representative Baterina, he invokes his prerogative as legislator to curtail the
disbursement without appropriation of public funds to compensate PIATCO,
as well as that as a taxpayer, as the basis of his legal standing to intervene.
However, it should be noted that the amount which the Court directed to be
paid by the Government to PIATCO was derived from the money deposited by
the Manila International Airport Authority, an agency which enjoys corporate
autonomy and possesses a legal personality separate and distinct from those
of the National Government and agencies thereof whose budgets have to be
approved by Congress.
It is also observed that the interests of the movants-in-intervention may be duly
litigated in proceedings which are extant before lower courts. There is no
compelling reason to disregard the established rules and permit the
interventions belatedly filed after the promulgation of the Court’s Decision.
WHEREFORE, the Motion for Partial Reconsideration of the petitioners is
DENIED WITH FINALITY.
The motions respectively filed by Takenaka Corporation, Asahikosan
Corporation and Representative Salacnib Baterina are DENIED.
SO ORDERED.
CITY OF MANILA VS OSCAR SERRANO
This is a petition for review on certiorari of the decision, dated November 16,
1999, and resolution, dated February 23, 2000, of the Court of Appeals
reversing the order, dated December 15, 1998, of the Regional Trial Court,
Branch 16, Manila and perpetually enjoining it from proceeding with the
petitioner's complaint for eminent domain in Civil Case No. 94-72282.
The facts are as follows:
On December 21, 1993, the City Council of Manila enacted the Ordinance No.
7833, authorizing the expropriation of certain properties in Manila 's First
District in Tondo, covered by TCT Nos. 70869, 105201, 105202, and 138273
of the Register of Deeds of Manila, which are to be sold and distributed to
qualified occupants pursuant to the Land Use Development Program of the
City of Manila.
One of the properties sought to be expropriated, denominated as Lot 1-C,
consists of 343.10 square meters. It is covered by TCT No. 138272 which was
derived from TCT No. 70869 issued in the name of Feliza De Guia. 1 After her
death, the estate of Feliza De Guia was settled among her heirs by virtue of a
compromise agreement, which was duly approved by the Regional Trial Court,
Branch 53, Manila in its decision, dated May 8, 1986.2 In 1989, Alberto De
Guia, one of the heirs of Feliza De Guia, died, as a result of which his estate,
consisting of his share in the properties left by his mother, was partitioned
among his heirs. Lot 1-C was assigned to Edgardo De Guia, one of the heirs
of Alberto De Guia.3 On April 15, 1994, Edgardo De Guia was issued TCT No.
215593, covering Lot 1-C.4 On July 29, 1994, the said property was transferred
to Lee Kuan Hui, in whose name TCT No. 217018 was issued.5
The property was subsequently sold on January 24,1996 to Demetria De Guia
to whom TCT No. 226048 was issued.6
On September 26, 1997, petitioner City of Manila filed an amended complaint
for expropriation, docketed as Civil Case No. 94-72282, with the Regional Trial
Court, Branch 16, Manila, against the supposed owners of the lots covered by
TCT Nos. 70869 (including Lot 1-C), 105201, 105202 and 138273, which
included herein respondents Oscar, Felicitas, Jose, Benjamin, Estelita,
Leonora, Adelaida, all surnamed are Serrano.7 On November 12, 1997,
respondents filed a consolidated answer, in which they alleged that their
mother, the late Demetria De Guia, had acquired Lot l-C from Lee Kian Hui;
that they had been the bona fide occupants of the said parcel of land for more
than 40 years; that the expropriation of Lot l-C would result in their disclosure,
it being the only residential land left to them by their deceased mother; and
that the said lot was exempt from expropriation because dividing the said
parcel of land among them would entitle each of them to only about 50 square
meters of land. Respondents, therefore, prayed that judgment be rendered
declaring Lot l-C exempt from expropriation and ordering the cancellation of
the notice annotated on the back of TCT No. 226048,8 regarding the pendency
of Civil Case No. 94-72282. for eminent domain filed by petitioner.9
Upon motion by petitioner, the trial court issued an order, dated October 9,
1998, directing petitioner to deposit the amount of Pl,825,241.00 equivalent to
the assessed value of the properties.10 After petitioner had made the deposit,
the trial court issued another order, dated December 15, 1998, directing the
issuance of a writ of possession in favor of petitioner.ll
Respondents filed a petition for certiorari with the Court of Appeals, alleging
that the expropriation of Lot l-C would render respondents, who are actual
occupants thereof, landless; that Lot l-C is exempt from expropriation because
R.A. No. 7279 provides that properties consisting of residential lands not
exceeding 300 square meters in highly urbanized cities are exempt from
expropriations; that respondents would only receive around 49 square meters
each after the partition of Lot l-C which consists of only 343.10 square meters;
and that R.A. No. 7279 was not meant to deprive an owner of the entire
residential land but only that in excess of 300 square meters.12
On November 16, 1999, the Court of Appeals rendered a decision holding that
Lot l-C is not exempt from expropriation because it undeniably exceeds 300
square meters which is no longer considered a small property within the
framework of R.A. No. 7279. However, it held that in accordance with the ruling
in Filstream International Inc. v. Court of Appeals,13 the other modes of
acquisition of lands enumerated in §§9-10 of the law must first be tried by the
city government before it can resort to expropriation. As petitioner failed to
show that it had done so, the Court of Appeals gave judgment for respondents
and enjoined petitioner from expropriating Lot 1-C. The dispositive portion of
its decision reads:
WHEREFORE, in view of all the foregoing, the instant petition is hereby GIVEN
DUE COURSE and accordingly GRANTED. The Order, dated December 15,
1998, denying petitioner's motion for reconsideration issued by the respondent
Regional Trial Court of Manila, Branch 16, in Civil Case No. 94-72282 is hereby
REVERSED and SET ASIDE. Let a writ of injunction issue perpetually
enjoining the same respondent court from proceeding with the complaint for
eminent domain in Civil Case No. 94-72282,14
In its resolution, dated February 23, 2000, the Court of Appeals likewise denied
two motions for reconsideration filed by petitioner. l5 Hence this petition.
Petitioner contends that the Court of Appeals erred in --
1) Giving due course to the petition of the Serranos under Rule 65
notwithstanding its own declaration of the impropriety of the resort to the writ
and filing thereof with the wrong appellate court;
2) Concluding that the Order of October 9, 1998 which authorizes the
immediate entry of the City as the expropriating agency into the property sough
to be expropriated upon the deposit of the provisionally fixed fair market value
thereof as tantamount to condemnation of the property without prior showing
of compliance with the acquisition of other lands enumerated in Sec. 9 of R.A.
7279 ergo a violation of due process of the Serranos by the doctrinaire
application of FILSTREAM ruling and corrollarily,
3) In prohibiting permanently, by writ of injunction, the trial court from
proceeding with a complaint for expropriation of the City in Civil Case No. 94-
72282.16
We will deal with these contentions in the order they are presented.
First. Petitioner contends that the respondents' remedy against the order of the
trial court granting a writ of possession was not to file a petition for certiorari
under Rule 65 but a petition for review under Rule 45 which should have been
filed in the Supreme Court.17
This contention has no merit. A petition for review under Rule 45 is a mode of
appeal. Accordingly, it could not have been resorted to by the respondents
inasmuch as the order of the trial court granting a writ of possession was
merely interlocutory from which no appeal could be taken. Rule 45, §1 of the
1997 Rules for Civil Procedure applies only to final judgments or orders of the
Court of Appeals, the Sandiganbayan, and the Regional Trial Court. On the
other hand, a petition for certiorari is the suitable remedy in view of Rule 65,
§1 which provides:
When any tribunal, board or officer exercising judicial or quasi-judicial
functions has acted without or in excess of its or his jurisdiction, or with grave
abuse of discretion amounting to lack or excess of jurisdiction, and there is no
appeal, nor any plain, speedy, and adequate remedy in the ordinary course of
law, a person aggrieved thereby may file a verified petition in the proper court,
alleging the facts with certainly and praying that judgment be rendered
annulling or modifying the proceedings of such tribunal, board or officer, and
granting such incidental reliefs as laws and justice may require.
Respondents' petition before the Court of Appeals alleged that the trial court
had acted without or in excess of its jurisdiction or with grave abuse of
discretion amounting to lack of jurisdiction in issuing the order, dated
December 15, 1998, resolving that Lot 1-C is not exempt from expropriation
and ordering the issuance of the writ of possession in favor of petitioner. 18
Second. Petitioner faults the Court of Appeals for deciding issues not raised in
the trial court, specifically the question of whether or not there was compliance
with §§9 and 10 of RA. No. 7279. It argues that the sole defense set up by
respondents in their petition before the Court of Appeals was that their property
was exempted from expropriation because it comes within the purview of a
"small property" as defined by R.A. No. 7279 . Accordingly, the Court of
Appeals should not have applied the doctrine laid down by this Court in
the Filstream19 case as such issue was not raised by respondents in their
petition before the Court of Appeals.
This contention likewise has no merit. In their petition before the Court of
Appeals, respondents raised the following issues:
1. Whether or not the subject Lot 1-C with an area of 343.10 square meters
covered by T.C.T. No. 226048 in the name of petitioners' mother, the late
Demetria [De Guia] Serrano, may be lawfully expropriated "for the public
purpose of providing landless occupants thereof homelots of their own under
the "land-for-the landless program of respondent City of Manila."
2. Whether or not the expropriation of the said Lot l-C by respondent City of
Manila violates the equal protection clause of the Constitution, since
petitioners, with the exemption of petitioner Oscar G. Serranno, who are
likewise landless are actual occupants hereof.
3. Whether or not Lot 1-C is or may be exempted from expropriation pursuant
to R.A. 7279, otherwise known as the Urban Development and Housing Act of
1992.20
It is clear that respondents raised in issue the propriety of the expropriation of
their property in connection with RA. No. 7279. Although what was discussed
at length in their petition before the Court of Appeals was whether or not the
said property could be considered a small property within the purview of the
exemption under the said law, the other provisions of the said law concerning
expropriation proceedings need also be looked into to address the first issue
raised by the respondents and to determine whether or not expropriation of Lot
1-C was proper under the circumstances. The Court of Appeals properly
considered relevant provisions of R A. No.7279 to determine the issues raised
by respondents. Whether or not it correctly applied the doctrine laid down
in Filstream in resolving the issues raised by respondents, however, is a
different matter altogether, and this brings us to the next point.
Third. Petitioner contends that the Court of Appeals erroneously presumed
that Lot 1-C has been ordered condemned in its favor when the fact is that the
order of the trial court, dated December 15, 1998, merely authorized the
issuance of a writ of possession and petitioner's entry into the property
pursuant to Rule 67, §2. At that stage, it was premature to determine whether
the requirements of RA. No. 7279, §§9 - 10 have been complied with since no
evidentiary hearing had yet been conducted by the trial court.21
This contention is well taken. Rule 67, §2 provides:
Upon the filing of the complaint or at any time thereafter and after due notice
to the defendant, the plaintiff shall have the right to take or enter upon
possession of the real property involved if he deposits with the authorized
government depository an amount equivalent to the assessed value of the
property for purposes of taxation to be held by such bank subject to the orders
of the court. Such deposit shall be in money, unless in lieu thereof the court
authorizes the deposit of a certificate of deposit of a government bank of the
Republic of the Philippines payable on demand to the authorized government
depositary.
If personal property is involved, its value shall be provisionally ascertained and
the amount to be deposited shall be fixed by the court.
After such deposit is made the court shall order the sheriff or other proper
officer to forthwith place the plaintiff in possession of the property involved and
promptly submit a report thereof to the court with service of copies to the
parties.
Thus, a writ of execution may be issued by a court upon the filing by the
government of a complaint for expropriation sufficient in form and substance
and upon deposit made by the government of the amount equivalent to the
assessed value of the property subject to expropriation. Upon compliance with
these requirements, the issuance of the writ of possession becomes
ministerial.22 In this case, these requirements were satisfied and, therefore, it
became the ministerial duty of the court to issue the writ of possession.
The Court of Appeals, however, ruled that petitioner failed to comply with the
requirements laid down in §§9 - 10 of RA. No. 7279 and reiterated
in Filstream ruling. This is error. The ruling in the Filstream was necessitated
because an order of condemnation had already been issued by the trial court
in that case. Thus, the judgment in that case had already become final. In this
case, the trial court has not gone beyond the issuance of a writ of possession.
Hearing is still to be held to determine whether or not petitioner indeed
complied with the requirements provided in RA. No. 7279. It is, therefore,
premature at this stage of the proceedings to find that petitioner resorted
expropriation without first trying the other modes of acquisition enumerated in
§ 10 of the law.
RA. No 7279 in pertinent parts provide:
SEC. 9. Priorities in the Acquisition of Land… Lands for socialized housing
shall be acquired in the following order:
(a) Those owned by the Government or any of its subdivisions,
instrumentalities, or agencies, including government owned and controlled
corporations and their subsidiaries;
(b) Alienable lands of the public domain;
(c) Unregistered or abandoned and idle lands;
(d) Those within the declares Areas or Priority Development, Zone
Improvement Program sites, and Slum Improvement and Resettlement
Programs sites which have not yet been acquired;
(e) Bagong Lipunan Improvement and Sites and Services or BLISS sites which
have not yet been acquired, and;
(f) Privately-owned lands.
Where on-site development is found more practicable and advantageously to
the beneficiaries, the priorities mentioned in this section shall not apply. The
local government units shall give budgetary priority on-site development of
government lands.
SEC. 10. Modes of Lands Acquisition. -- The modes of acquiring lands for
purposes of this Act shall include, amount others, community mortgage, land
swapping, land assembly or consolidation, land banking, donation to the
Government, joint-venture agreement, negotiated purchase, and
expropriation: Provided, however; That expropriation shall be resorted to only
when other modes of acquisition have been exhausted: Provided, further; That
were expropriation is resorted to, parcels of land owned by small property
owners shall be exempted for purposes of this Act: Provided finally, That
abandoned property, as herein defined, shall be reverted and escheated to the
State in a proceeding analogous to the procedure laid down in Rule 91 of the
Rules of Court.
For the purpose of socialized housing, government-owned and foreclosed
properties shall be acquired by the local government units, or by the National
Housing Authority primarily through negotiated purchase: Provided, That
qualified beneficiaries who are actual occupants of the lands shall be given the
right of first refusal.
Whether petitioner has complied with these provisions requires the
presentation of evidence, although in its amended complaint petitioner did
allege that it had complied with the requirements.23 The determination of this
question must await that hearing on the complaint for expropriation, particularly
the hearing for the condemnation of the properties sought to be expropriated.
Expropriation proceedings consist of two stages: first, condemnation of the
property after it is determined that its acquisition will be for a public purpose or
public use and, second, the determination of just compensation to be paid for
the taking of the private property to be made by the court with the assistance
of not more than three commissioners.24
WHEREFORE, the decision, dated November 16,1999, and resolution, dated
February 23, 2000, of the Court of Appeals are REVERSED and the order of
the trial court, dated December 15,1998, is REINSTATED. This case is
REMANDED to the trial court to further proceedings.1âwphi1.nêt
SO ORDERED.
ZAMBOANGA DEL NORTE VS CITY OF ZAMBOANGA
Prior to its incorporation as a chartered city, the Municipality of Zamboanga
used to be the provincial capital of the then Zamboanga Province. On October
12, 1936, Commonwealth Act 39 was approved converting the Municipality of
Zamboanga into Zamboanga City. Sec. 50 of the Act also provided that —
Buildings and properties which the province shall abandon upon the
transfer of the capital to another place will be acquired and paid for by the City
of Zamboanga at a price to be fixed by the Auditor General.
The properties and buildings referred to consisted of 50 lots and some
buildings constructed thereon, located in the City of Zamboanga and covered
individually by Torrens certificates of title in the name of Zamboanga Province.
As far as can be gleaned from the records, 1 said properties were being utilized
as follows —
No. of
Use
Lots
1 ................................................ Capitol Site
3 ................................................ School Site
3 ................................................ Hospital Site
3 ................................................ Leprosarium
1 ................................................ Curuan School
1 ................................................ Trade School
2 ................................................ Burleigh School
2 ................................................ High School Playground
9 ................................................ Burleighs
................................................ Hydro-Electric
1 Revenue to deduct an amount equal to 25% of the regular internal revenue
(Magay)
1 ................................................ San Roque
23 ................................................ vacant
It appears that in 1945, the capital of Zamboanga Province was
transferred to Dipolog. 2 Subsequently, or on June 16, 1948, Republic Act 286
was approved creating the municipality of Molave and making it the capital of
Zamboanga Province.
On May 26, 1949, the Appraisal Committee formed by the Auditor
General, pursuant to Commonwealth Act 39, fixed the value of the properties
and buildings in question left by Zamboanga Province in Zamboanga City at
P1,294,244.00. 3
On June 6, 1952, Republic Act 711 was approved dividing the province
of Zamboanga into two (2): Zamboanga del Norte and Zamboanga del Sur. As
to how the assets and obligations of the old province were to be divided
between the two new ones, Sec. 6 of that law provided:
Upon the approval of this Act, the funds, assets and other properties
and the obligations of the province of Zamboanga shall be divided equitably
between the Province of Zamboanga del Norte and the Province of
Zamboanga del Sur by the President of the Philippines, upon the
recommendation of the Auditor General.
Pursuant thereto, the Auditor General, on January 11, 1955, apportioned
the assets and obligations of the defunct Province of Zamboanga as follows:
54.39% for Zamboanga del Norte and 45.61% for Zamboanga del Sur.
Zamboanga del Norte therefore became entitled to 54.39% of P1,294,244.00,
the total value of the lots and buildings in question, or P704,220.05 payable by
Zamboanga City.
On March 17, 1959, the Executive Secretary, by order of the President,
issued a ruling 4 holding that Zamboanga del Norte had a vested right as owner
(should be co-owner pro-indiviso) of the properties mentioned in Sec. 50 of
Commonwealth Act 39, and is entitled to the price thereof, payable by
Zamboanga City. This ruling revoked the previous Cabinet Resolution of July
13, 1951 conveying all the said 50 lots and buildings thereon to Zamboanga
City for P1.00, effective as of 1945, when the provincial capital of the then
Zamboanga Province was transferred to Dipolog.
The Secretary of Finance then authorized the Commissioner of Internal
Site
allotment for the City of Zamboanga for the quarter ending March 31, 1960,
then for the quarter ending June 30, 1960, and again for the first quarter of the
fiscal year 1960-1961. The deductions, all aggregating P57,373.46, was
credited to the province of Zamboanga del Norte, in partial payment of the
P764,220.05 due it.
However, on June 17, 1961, Republic Act 3039 was approved amending
Sec. 50 of Commonwealth Act 39 by providing that —
All buildings, properties and assets belonging to the former province of
Zamboanga and located within the City of Zamboanga are hereby transferred,
free of charge, in favor of the said City of Zamboanga. (Stressed for emphasis).
Consequently, the Secretary of Finance, on July 12, 1961, ordered the
Commissioner of Internal Revenue to stop from effecting further payments to
Zamboanga del Norte and to return to Zamboanga City the sum of P57,373.46
taken from it out of the internal revenue allotment of Zamboanga del Norte.
Zamboanga City admits that since the enactment of Republic Act 3039,
P43,030.11 of the P57,373.46 has already been returned to it.
This constrained plaintiff-appellee Zamboanga del Norte to file on March
5, 1962, a complaint entitled "Declaratory Relief with Preliminary Mandatory
Injunction" in the Court of First Instance of Zamboanga del Norte against
defendants-appellants Zamboanga City, the Secretary of Finance and the
Commissioner of Internal Revenue. It was prayed that: (a) Republic Act 3039
be declared unconstitutional for depriving plaintiff province of property without
due process and just compensation; (b) Plaintiff's rights and obligations under
said law be declared; (c) The Secretary of Finance and the Internal Revenue
Commissioner be enjoined from reimbursing the sum of P57,373.46 to
defendant City; and (d) The latter be ordered to continue paying the balance
of P704,220.05 in quarterly installments of 25% of its internal revenue
allotments.
On June 4, 1962, the lower court ordered the issuance of preliminary
injunction as prayed for. After defendants filed their respective answers, trial
was held. On August 12, 1963, judgment was rendered, the dispositive portion
of which reads:
WHEREFORE, judgment is hereby rendered declaring Republic Act No.
3039 unconstitutional insofar as it deprives plaintiff Zamboanga del Norte of
its private properties, consisting of 50 parcels of land and the improvements
thereon under certificates of title (Exhibits "A" to "A-49") in the name of the
defunct province of Zamboanga; ordering defendant City of Zamboanga to pay
to the plaintiff the sum of P704,220.05 payment thereof to be deducted from
its regular quarterly internal revenue allotment equivalent to 25% thereof every
quarter until said amount shall have been fully paid; ordering defendant
Secretary of Finance to direct defendant Commissioner of Internal Revenue to
deduct 25% from the regular quarterly internal revenue allotment for defendant
City of Zamboanga and to remit the same to plaintiff Zamboanga del Norte
until said sum of P704,220.05 shall have been fully paid; ordering plaintiff
Zamboanga del Norte to execute through its proper officials the corresponding
public instrument deeding to defendant City of Zamboanga the 50 parcels of
land and the improvements thereon under the certificates of title (Exhibits "A"
to "A-49") upon payment by the latter of the aforesaid sum of P704,220.05 in
full; dismissing the counterclaim of defendant City of Zamboanga; and
declaring permanent the preliminary mandatory injunction issued on June 8,
1962, pursuant to the order of the Court dated June 4, 1962. No costs are
assessed against the defendants.
It is SO ORDERED.
Subsequently, but prior to the perfection of defendants' appeal, plaintiff
province filed a motion to reconsider praying that Zamboanga City be ordered
instead to pay the P704,220.05 in lump sum with 6% interest per annum. Over
defendants' opposition, the lower court granted plaintiff province's motion.
The defendants then brought the case before Us on appeal.
Brushing aside the procedural point concerning the property of
declaratory relief filed in the lower court on the assertion that the law had
already been violated and that plaintiff sought to give it coercive effect, since
assuming the same to be true, the Rules anyway authorize the conversion of
the proceedings to an ordinary action, 5 We proceed to the more important and
principal question of the validity of Republic Act 3039.
The validity of the law ultimately depends on the nature of the 50 lots
and buildings thereon in question. For, the matter involved here is the extent
of legislative control over the properties of a municipal corporation, of which a
province is one. The principle itself is simple: If the property is owned by the
municipality (meaning municipal corporation) in its public and governmental
capacity, the property is public and Congress has absolute control over it. But
if the property is owned in its private or proprietary capacity, then it is
patrimonial and Congress has no absolute control. The municipality cannot be
deprived of it without due process and payment of just compensation. 6
The capacity in which the property is held is, however, dependent on the
use to which it is intended and devoted. Now, which of two norms, i.e., that of
the Civil Code or that obtaining under the law of Municipal Corporations, must
be used in classifying the properties in question?
The Civil Code classification is embodied in its Arts. 423 and 424 which
provide:1äwphï1.ñët
 ART. 423. The property of provinces, cities, and municipalities is divided by the wording, that rule may be invoked only as to property which is used
into property for public use and patrimonial property. distinctly for public purposes...." (2) VIUDA DE TANTOCO V. MUNICIPAL
COUNCIL OF ILOILO 12 held that municipal properties necessary for
ART. 424. Property for public use, in the provinces, cities, and governmental purposes are public in nature. Thus, the auto trucks used by the
municipalities, consists of the provincial roads, city streets, municipal streets, municipality for street sprinkling, the police patrol automobile, police stations
the squares, fountains, public waters, promenades, and public works for public and concrete structures with the corresponding lots used as markets were
service paid for by said provinces, cities, or municipalities. declared exempt from execution and attachment since they were not
All other property possessed by any of them is patrimonial and shall be patrimonial properties. (3) MUNICIPALITY OF BATANGAS VS.
governed by this Code, without prejudice to the provisions of special laws. CANTOS 13 held squarely that a municipal lot which had always been devoted
(Stressed for emphasis). to school purposes is one dedicated to public use and is not patrimonial
property of a municipality.
Applying the above cited norm, all the properties in question, except the
two (2) lots used as High School playgrounds, could be considered as Following this classification, Republic Act 3039 is valid insofar as it
patrimonial properties of the former Zamboanga province. Even the capital affects the lots used as capitol site, school sites and its grounds, hospital and
site, the hospital and leprosarium sites, and the school sites will be considered leprosarium sites and the high school playground sites — a total of 24 lots —
patrimonial for they are not for public use. They would fall under the phrase since these were held by the former Zamboanga province in its governmental
"public works for public service" for it has been held that under the ejusdem capacity and therefore are subject to the absolute control of Congress. Said
generis rule, such public works must be for free and indiscriminate use by lots considered as public property are the following:
anyone, just like the preceding enumerated properties in the first paragraph of
TCT
Art 424. 7 The playgrounds, however, would fit into this category.
Numb Lot Number Use
This was the norm applied by the lower court. And it cannot be said that er
its actuation was without jurisprudential precedent for in Municipality of
Catbalogan v. Director of Lands, 8 and in Municipality of Tacloban v. Director ................................ ................................ Capitol
2200 4-B
of Lands, 9 it was held that the capitol site and the school sites in municipalities ...... ...... Site
constitute their patrimonial properties. This result is understandable because,
unlike in the classification regarding State properties, properties for public ................................ ................................ School
2816 149
service in the municipalities are not classified as public. Assuming then the ...... ...... Site
Civil Code classification to be the chosen norm, the lower court must be
................................ ................................ Hospital
affirmed except with regard to the two (2) lots used as playgrounds. 3281 1224
...... ...... Site
On the other hand, applying the norm obtaining under the principles
constituting the law of Municipal Corporations, all those of the 50 properties in ................................ ................................ Hospital
3282 1226
question which are devoted to public service are deemed public; the rest ...... ...... Site
remain patrimonial. Under this norm, to be considered public, it is enough that
the property be held and, devoted for governmental purposes like local ................................ ................................ Hospital
3283 1225
administration, public education, public health, etc. 10 ...... ...... Site

Supporting jurisprudence are found in the following cases: (1) ................................ 434-A- ................................ School
3748
HINUNANGAN V. DIRECTOR OF LANDS, 11 where it was stated that "... ...... 1 ...... Site
where the municipality has occupied lands distinctly for public purposes, such
as for the municipal court house, the public school, the public market, or other ................................ ................................ School
5406 171
necessary municipal building, we will, in the absence of proof to the contrary, ...... ...... Site
presume a grant from the States in favor of the municipality; but, as indicated
 High ................................ ................................
5573 178 Burleigh
................................ ................................ School ...... ......
5564 168
...... ...... Play-
ground ................................ ................................
5585 171-B Burleigh
...... ......
................................ 157 & ................................ Trade
5567 ................................ ................................
...... 158 ...... School 5586 173 Burleigh
...... ......
High
................................ ................................ School ................................ ................................
5583 167 5587 172-A Burleigh
...... ...... Play- ...... ......
ground
We noticed that the eight Burleigh lots above described are adjoining
................................ (O.C.T ................................ Curuan each other and in turn are between the two lots wherein the Burleigh schools
6181 are built, as per records appearing herein and in the Bureau of Lands. Hence,
...... .) ...... School
there is sufficient basis for holding that said eight lots constitute the
................................ ................................ Leprosariu appurtenant grounds of the Burleigh schools, and partake of the nature of the
11942 926
...... ...... m same.

................................ ................................ Leprosariu Regarding the several buildings existing on the lots above-mentioned,
11943 927 the records do not disclose whether they were constructed at the expense of
...... ...... m
the former Province of Zamboanga. Considering however the fact that said
................................ ................................ Leprosariu buildings must have been erected even before 1936 when Commonwealth Act
11944 925 39 was enacted and the further fact that provinces then had no power to
...... ...... m
authorize construction of buildings such as those in the case at bar at their own
................................ ................................ Burleigh expense, 14 it can be assumed that said buildings were erected by the National
5557 170
...... ...... School Government, using national funds. Hence, Congress could very well dispose
of said buildings in the same manner that it did with the lots in question.
................................ ................................ Burleigh
5562 180 But even assuming that provincial funds were used, still the buildings
...... ...... School
constitute mere accessories to the lands, which are public in nature, and so,
................................ ................................ they follow the nature of said lands, i.e., public. Moreover, said buildings,
5565 172-B Burleigh though located in the city, will not be for the exclusive use and benefit of city
...... ......
residents for they could be availed of also by the provincial residents. The
................................ ................................ province then — and its successors-in-interest — are not really deprived of the
5570 171-A Burleigh
...... ...... benefits thereof.

................................ ................................ But Republic Act 3039 cannot be applied to deprive Zamboanga del
5571 172-C Burleigh Norte of its share in the value of the rest of the 26 remaining lots which are
...... ......
patrimonial properties since they are not being utilized for distinctly,
................................ ................................ governmental purposes. Said lots are:
5572 174 Burleigh
...... ......
TCT Number Lot Number Use
 ................................... ................................... Mydro, ................................... ...................................
5577 177 5580 195 "
... ... Magay ... ...

1319 ................................... 127- ................................... San ................................... 159- ...................................

5581 "
8 ... 0 ... Roque ... B ...

................................... ................................... Burleigh 1 ................................... ...................................

5569 169 5 5582 194 "
... ... ... ...

................................... ................................... ................................... ...................................

5558 175 Vacant 5584 190 "
... ... ... ...

................................... ................................... ................................... ...................................

5559 188 " 5588 184 "
... ... ... ...

................................... ................................... ................................... ...................................

5560 183 " 5589 187 "
... ... ... ...

................................... ................................... ................................... ...................................

5561 186 " 5590 189 "
... ... ... ...

................................... ................................... ................................... ...................................

5563 191 " 5591 192 "
... ... ... ...

................................... ................................... ................................... ...................................

5566 176 " 5592 193 "
... ... ... ...

................................... ................................... ................................... ...................................

5568 179 " 5593 185 "
... ... ... ...

................................... ................................... ................................... 414 ...................................

5574 196 " 7379 "
... ... ... 7 ...

................................... 181- ................................... Moreover, the fact that these 26 lots are registered strengthens the
5575 "
... A ... proposition that they are truly private in nature. On the other hand, that the 24
lots used for governmental purposes are also registered is of no significance
................................... 181- ................................... since registration cannot convert public property to private. 16
5576 "
... B ...
We are more inclined to uphold this latter view. The controversy here is
................................... ................................... more along the domains of the Law of Municipal Corporations — State vs.
5578 182 " Province — than along that of Civil Law. Moreover, this Court is not inclined to
... ...
hold that municipal property held and devoted to public service is in the same
................................... ................................... category as ordinary private property. The consequences are dire. As ordinary
5579 197 "
... ... private properties, they can be levied upon and attached. They can even be
acquired thru adverse possession — all these to the detriment of the local
community. Lastly, the classification of properties other than those for public
use in the municipalities as patrimonial under Art. 424 of the Civil Code — is
"... without prejudice to the provisions of special laws." For purpose of this
article, the principles, obtaining under the Law of Municipal Corporations can
be considered as "special laws". Hence, the classification of municipal property
devoted for distinctly governmental purposes as public should prevail over the
Civil Code classification in this particular case.
Defendants' claim that plaintiff and its predecessor-in-interest are "guilty
of laches is without merit. Under Commonwealth Act 39, Sec. 50, the cause of
action in favor of the defunct Zamboanga Province arose only in 1949 after the
Auditor General fixed the value of the properties in question. While in 1951,
the Cabinet resolved transfer said properties practically for free to Zamboanga
City, a reconsideration thereof was seasonably sought. In 1952, the old
province was dissolved. As successor-in-interest to more than half of the
properties involved, Zamboanga del Norte was able to get a reconsideration
of the Cabinet Resolution in 1959. In fact, partial payments were effected
subsequently and it was only after the passage of Republic Act 3039 in 1961
that the present controversy arose. Plaintiff brought suit in 1962. All the
foregoing, negative laches.
It results then that Zamboanga del Norte is still entitled to collect from
the City of Zamboanga the former's 54.39% share in the 26 properties which
are patrimonial in nature, said share to computed on the basis of the valuation
of said 26 properties as contained in Resolution No. 7, dated March 26, 1949,
of the Appraisal Committee formed by the Auditor General.
Plaintiff's share, however, cannot be paid in lump sum, except as to the
P43,030.11 already returned to defendant City. The return of said amount to
defendant was without legal basis. Republic Act 3039 took effect only on June
17, 1961 after a partial payment of P57,373.46 had already been made. Since
the law did not provide for retroactivity, it could not have validly affected a
completed act. Hence, the amount of P43,030.11 should be immediately
returned by defendant City to plaintiff province. The remaining balance, if any,
in the amount of plaintiff's 54.39% share in the 26 lots should then be paid by
defendant City in the same manner originally adopted by the Secretary of
Finance and the Commissioner of Internal Revenue, and not in lump sum.
Plaintiff's prayer, particularly pars. 5 and 6, read together with pars. 10 and 11
of the first cause of action recited in the complaint 17 clearly shows that the
relief sought was merely the continuance of the quarterly payments from the
internal revenue allotments of defendant City. Art. 1169 of the Civil Code on
reciprocal obligations invoked by plaintiff to justify lump sum payment is
inapplicable since there has been so far in legal contemplation no complete
delivery of the lots in question. The titles to the registered lots are not yet in
the name of defendant Zamboanga City.
WHEREFORE, the decision appealed from is hereby set aside and
another judgment is hereby entered as follows:.
(1) Defendant Zamboanga City is hereby ordered to return to plaintiff
Zamboanga del Norte in lump sum the amount of P43,030.11 which the former
took back from the latter out of the sum of P57,373.46 previously paid to the
latter; and
(2) Defendants are hereby ordered to effect payments in favor of plaintiff
of whatever balance remains of plaintiff's 54.39% share in the 26 patrimonial
properties, after deducting therefrom the sum of P57,373.46, on the basis of
Resolution No. 7 dated March 26, 1949 of the Appraisal Committee formed by
the Auditor General, by way of quarterly payments from the allotments of
defendant City, in the manner originally adopted by the Secretary of Finance
and the Commissioner of Internal Revenue. No costs. So ordered.
CITY OF BAGUIO VS NAWASA
Plaintiff, a municipal corporation, filed on April 25, 1956, in the Court of First
Instance of Baguio, a complaint for declaratory relief against defendant, a
public corporation created by Republic Act No. 1383, contending that said Act
does not include within its preview the Baguio Workshop System; that
assuming that it does, said Act is unconstitutional because it has the effect of
depriving plaintiff of the ownership, control and operation of said waterworks
system without compensation and without due process of law, and that it is
oppressive, unreasonable and unjust to plaintiff and other cities, municipalities
and municipal districts similarly situated.
On My 22, 1956, defendant filed a motion to dismiss on the ground that
Republic Act No. 1383 is a proper exercise of the police power of the State;
that assuming that said Act contemplates an act of expropriation, it is still a
constitutional exercise of the power of eliminate domain; that at any rate the
Baguio Waterworks System is not a private property but "public works of public
service" over which the Legislature has control; and that the provision of the
said Act being clear and unambiguous, there is no necessity for construction.
On June 21, 1956, the Court, acting on the motion to dismiss as well as on the
answer and rejoinder filed by both parties, denied the motion and ordered
defendant to file its answer to the complaint. On July 6, 1956, defendant filed
its answer reiterating and amplifying the ground already advanced in this
motion to dismiss, adding thereto that the action for the declaratory relief is
improper for the reason that the Baguio waterworks System has already been
transferred to defendant pursuant to Republic Act No. 1383 or, if such has not
been done, there has already been a breach of said Act.
On August 14, 1956, the parties submitted a written stipulation of the facts and
filed written memoranda. And after allowing plaintiff to file a suplementary
complaint, the Court on November 5, 1956, rendered decision the dispositive
part of which reads: "This Court, . . . holds that the workshop system of the
City of Baguio falls filed within the category of 'private property', as
contemplated by our constitution and may not expropriated without just
compensation — and that section 8 of republic act No. 1383 provides for the
exchange of the NAWASA assets for the value of workshop system of Baguio
is unconstitutional as this is not 'just compensation,'" Defendant filed a motion
for reconsideration, and upon its denial. It took the present appeal.
The issues posed in this appeal are: (1) plaintiff's action for declatory relief is
improper because there has already been a breach by plaintiff of Republic Act
No. 1383 (2) Republic Act No. 1383 does not contemplates the exercise of the
power of eliminate domain but the exertion of the police power of the State;
and (3) assuming arguendo that Republic Act No. 1383 involves the exercise
of the power of eminent domain the same does not violate our Constitution.
Before we proceed with the discussion of this issues, there is need to state
some facts necessarily for their determination since the proper application of
the principles of law that may be pertinent would greatly depend upon them.
Plaintiff is a municipal corporation organized under its Charter with principal
place of business in the City of Baguio, while defendant is in the public
corporation created by Republic Act No. 1383 with provincial place of business
in the City of manila. Under section 2553 of its Charter, plaintiffs is maintaining
the Baguio Waterworks System under a certificates of public convenience, the
same being financed by its own funds, the Baguio general fund, and funds
advanced by the national Government. The assets of said system as of
December 31, 1955 were reported to be P1,408.795.98. The system supplies
only the City of Baguio, its inhabitants, and transient visitors, and, as provided
for in accordance, it grants to the employees of the City one fifth (1/5) of cubic
meter free from every one peso of their total salary per annum as part of their
compensation. The employees of the national Government are not given this
privilege but there is a provision plaintiff Charter which says: "in consideration
of the exemption from the taxation to the extensive real state holdings of the
national Government within the limit of the City, of the expenses of the
improvements which the Government of the said City is required to make a
reason for the location therein of the offenses of the national Government, and
of free services in connection of the said offices, there is created a permanent
and continuing appropriation from the funds in the national Treasury not
otherwise appropriated, equal to fifty per centum of the expenses of the
Government of the City exclusive of this accounts which appear as expenses
by reason of inter-department charges and charges against the national
Government for services and supplies."
The purposes for which defendants was created is expressed in section 1 of
republic Act No. 1383, which we quote:
Creation of the national Waterworks and Sewerage Authority;' its general
purposes; Zone and extends of the jurisdiction comprised by it; domicile and
place of business of the corporation. — For purposes of consolidating and
centralizing all waterworks, sewerage and drainage systems in the Philippines
under one control, direction and general supervision, there is hereby created
a public corporation to be known as the National workshop and Sewerage
authority, which shall be organized within one month after the approval of this
Act.
The National Waterworks and Sewerage authority shall own and/or have
jurisdiction, supervision and control over all territory now embraced by the
Metropolitan Water Districts as well as all areas now served by existing
government-owned waterworks in the boundaries of cities, municipalities and
municipality districts in the Philippines including those served by the
waterworks and wells and drills sections of the national Waterworks and
Sewerage authority, any from time to time extends its territory by the admission
of or the inclusion of any municipal or municipal districts in the Philippines.
The jurisdiction of the national waterworks and Sewerage Authority shall
extend to the construction, maintenance, operation and control of non-
supporting and/or non-revenue producing water systems and sanitary works,
whether undertaken at the expense of the Authority or through subsidy of the
national Government as provided in Section 10 of this act.
And to accomplish the above purpose, the following was provided in section 8
of the same act:
Dissolution of the Metropolitan Water District; transfer to the Authority of its
records, assets and liabilities; transfer to the Authority of entities, waterworks
and sewerage systems in the cities, municipalities, municipal district and other
government waterworks and sewerage systems. The present Metropolitan
Water District created Under Act Number Two Thousand eight hundred thirty-
two, as amended, is hereby dissolved, and its records, assets and liabilities
are transferred to the authority. All existing government owned waterworks and
sewerage systems are transferred to the National waterworks and Sewerage
Authority, and in turn to pledge such assets as security for the payment of the
waterworks and sewerage bonded debt.
The net book value of the properties and assets of the Metropolitan Water
District and of government-owned waterworks and sewerage systems in cities,
municipalities, or municipal districts, and other government-owned waterworks
and sewerage systems shall be received by the Authority in payment for an
equal value of the assets of the National Waterworks and sewerage Authority.
The references made to the Metropolitan Water District or to any existing
government-owned waterworks and sewerage system in any city, municipality
or municipal district and other waterworks and sewerage system under the
Bureau of Public Works, in any Act or Executive Order or Proclamation of the
President of the Philippines or in any city or municipal ordinance which is still
in force, shall be deemed to be a reference to the National Waterworks and
Sewerage Authority created by this Act.
On September 19, 1955, the President of the Philippines issued Executive
Order No. 127 outlining the procedure for the transfer of government-owned
waterworks and sewerage systems in the provinces, cities and municipalities
to defendant and provided for a time limit for such transfer, which is "at the
earliest time possible but not exceeding 90 days from the date of said order."
And on March 15, 1956, defendant, implementing said Executive Order, issued
Office Memorandum No. 7 providing, among other things, the following:
(1) Pending the establishment of the Waterworks district offices of the
Authority, District and City Engineers, shall continue to be in charge of the
operation and maintenance of all existing waterworks systems, including the
repair and improvement thereof and the construction of new waterworks
projects in their respective districts in accordance with the Memorandum of the
Secretary of Public Works and Communications dated October 25, 1955,
quoted in the Memorandum of the Director of Public Works dated October 27,
1955. Likewise, they shall continue approving vouchers and payrolls for
salaries and essential services chargeable against waterworks funds
heretofore, provided that said expenses do not exceed the appropriations in
the approved budget for the preceeding fiscal year.
(2) Pending the establishment of the Waterworks district offices of the Authority
which shall ultimately include an auditing force, Provincial and City auditors
shall, as heretofore, audit the accounts of the different waterworks systems in
their respective jurisdictions in accordance with Provincial Auditor's
Memorandum No. 151 to Provincial and City Auditors dated December 7,
1955.
(3) Pending the establishment of the waterworks district offices of the
Authority, provincial, city and municipal treasurers shall continue to perform
the work of handling the collections and disbursements of funds of the
waterworks systems and artesian wells projects in their respective jurisdictions
in accordance with provincial circular of the Secretary of Finance to all
provincial and City Treasurers dated November 23, 1955.
(4) Provincial Waterworks Boards, provincial Boards, Municipal Boards, or City
councils of cities and municipal councils of Municipalities and municipal
districts ipso facto ceased to have control and supervision over waterworks
systems within their respective territorial jurisdictions upon the formal
organization of the National Waterworks and sewerage Authority in
accordance with the provisions of Republic Act No. 1383. All budgets and
plantillas of personnel of said waterworks personnel, including collectors who
were formerly directly under the Provincial, City or Municipal Treasurers,
whether permanent, temporary or emergency, shall be effective only after their
approval by the Board of directors of the Authority.
Let us now discussed the issues raised..
As regards the first issue, appellant contends that appellee's action for
declaratory relief is improper because there has already been a breach of the
Republic Act No. 1383, invoking section 2 of rule 66 which provides; "A
contract or statue may be construed before there has been a breach thereof."
This contention is untenable. To begin with, the answer filed by defendant
through its counsel the Solicitor General contains a express admission of the
avernment in appellee's complaint that "although Republic Act No. 1383 took
effect upon its approval on June 18, 1955, and notwithstanding Executive
Order No. 127 of the President, there has been no breach of said law because
no actual physical turn-over of the Baguio Waterworks System has so far been
made." Because of such admission, it has always been assumed in the trial
court that the present action is proper because there has not been such breach
so much so that appellant desisted from raising the point in the rest of the
proceedings in the trial court and in the long memorandum it has submitted,
for which reason the trial court made in its decision the following comment: In
its memorandum, however, the NAWASA has failed to argue this point. the
omission is significant and this Court takes that in any objection to the
declaratory relief proceedings are waived." That appellant would now take an
inconsistent stand is strange in any event, we find that such is the situation
obtaining here. Republic Act No. 1383 provides that government-owned
waterworks system should be transferred to appellant at the earliest time
possible, and unless by administrative action this provision is actually carried
out, it cannot be said that the transfer has been effected. The most that
appellant did to carry out such provision is to issue its Office memorandum No.
7 which prescribes the preparatory steps for such transfer pending the
establishment of the branch office of the NAWASA that would take over the
waterworks concerned, but before any definite step could be taken to comply
with said directive the present action was instituted. We agree with the trial
court that so far there has not been a breach of the law and that the other
requisites necessary for an action for declaratory relief are present.
The contention that the Republic Act No. 1383 constitutes a valid exercise of
police power rather than a directive to expropriate the waterworks of the
appellee by the exercise of the power of eminent domain cannot also be
entertained. This is far from the intent and purpose of the law. The act does
not confiscate, nor destroy, nor appropriate property belonging to the appellee.
It merely directs that all waterworks belonging to cities, municipalities, and
municipal districts in the Philippines be transferred to the NAWASA for the
purpose of placing them under the control and supervision of one agency with
a view to promoting their efficient management, but in so doing it does not
confiscate them because it directs that they be paid with an equal value of the
assets of the NAWASA. This is clearly inferred from the context of the law
(section 8, Rep. Act No. 1383).
But appellant invites our attention to some authorities purporting to show the
Republic Act No. 1383 could at least be considered as a legitimate exercise of
police power such that Congress may in the exercise of such power enact a
law transferring Government property from one agency to another, and laying
stress one said authorities it contends that although Congress cannot deprive
the citizens of a municipal corporation of the use of property held in trust for
their benefit it may however change the trustee with or without its consent or
compensation provided the citizens are not deprived of its enjoyment. In other
words, appellant invokes the principle that the transfer of property and
authority by an act of Congress from one class of public officer to another
where the property continues devoted to its original purpose does not impair
any vested right of the city owning the property.
But the authorities cited are not in point. They in substance point out that the
transfer, if any, of the property of municipal corporation from one agency to
another is merely done for purposes of administration, its ownership and
benefits being retained by the corporation. Such is not the clear intent of
Republic Act No. 1383. Here, as we have already shown, its purpose is to
effect a real transfer of the ownership of the waterworks to the new agency
and does not merely encompass a transfer of administration. At any rate, the
authorities cited do not bear out the proposition of appellant as clearly pointed
out by counsel for appellee in his brief.
But it is insisted that the waterworks system of Baguio City does not have the
character of patrimonial property but comes under the phrase "public works for
public service" mentioned in Article 424 of the New Civil Code and as such is
subjected to the control of Congress. This contention is also untenable. The
Baguio Waterworks System is not like any public road, park, street or any other
public property held in trust by a municipal corporation held for the benefit of
the public but it is rather a property owned by appellee in its proprietary
character. While the cases may differ as to the public or private character of
waterworks, the weight of authority as far as the legislature is concerned
classes them as private affairs. (sec. 239, Vol. I, Revised, McQuillin Municipal
Corporation, p. 239; Shrik vs. City of Lancaster, 313 Pa. 158, 169 Atl. 557).
And in this jurisdiction, this court has already expressed the view that the
waterworks system is patrimonial property of the city that has established
it.(Mendoza vs. De Leon, 33 Phil. 509). And being owned by the municipal
corporation in a proprietary character, waterworks cannot be taken away
without observing the safeguards set by our Constitution for the protection of
private property.
While the judicial opinions on this subject are more or less uncertain in
expression, and court judgment apparently conflicting, perhaps it is correct to
affirm that a majority of decision recognize the private rights of the municipal
corporation, and hence support the view that all its property of a distinctly
private character is fully protected by the constitutional provisions protecting
private property of the individual or the private corporation. Accordingly the
right of state as to the private property of municipal corporation is a right of
regulation to be exercised in harmony with the general policy of the state, and
though broader than exists in the case of individuals, or private corporations,
is not a right of appropriation.
xxx xxx xxx
The decision maintain that the property held by a municipal corporation units
private capacity is not subject to the unrestricted control of the legislature, and
the municipality cannot be deprived of such property against its will, except by
the exercise of eminent domain with payment of full compensation. (McQuillin
Municipal Corporation, 2nd Ed., Vol. I, pp. 670-681).
In its private capacity a municipal corporation is wholly different. The people of
a compact community usually require certain conveniences which cannot be
furnished without a franchise from the State and which are either unnecessary
in the rural districts, such as a system of sewers, or parks and open spaces,
or which on account of the expenses it would be financially impossible to
supply except where the population is reasonably dense, such as water or gas.
But in so far as the municipality is thus authorized to exercise the functions of
a private corporation, it is clothed with the capacities of a private corporation
and may claim its rights and immunities, even as against the sovereign, and is
subject to the liabilities of such a corporation, even as against third parties. (19
R.C. L. p. 698)
The attempt of appellant in having waterworks considered as public property
subject to the control of Congress or one which can be regulated by the
exercise of police power having failed, that question that now arises is: Does
Republic Act No. 1383 provide for the automatic expropriation of the
waterworks in question in the light of our Constitution? In other words, does
said law comply with the requirements of section 6, Article XIII, in relation to
section 1(2), Article III, of our Constitution?
therefore persuaded to conclude that the law, insofar as it expropriates the
waterworks in question without providing for an effective payment of just
compensation, violates our Constitution. In this respect, the decision of the trial
court is correct.
Wherefore, the decision appealed from is affirmed, without pronouncement as
to costs.

Section 6, Article XIII of our Constitution provides:

SEC. 6. The State may, in the interest of National Welfare and defense,
establish and operate industries and means of transportation and
communication, and, upon payment of just compensation, transfer to public
ownership utilities and other private enterprises to be operated by the
Government.

Section 1 (2), Article III, of our Constitution provides:

(2) Private property shall not be taken for public use without just compensation.

It is clear that the State may, in the interest of National welfare, transfer to
public ownership any private enterprise upon payment of just compensation.
At the same time, one has to bear in mind that no person can be deprived of
his property except for public use and upon payment of just compensation.
There is an attempt to observe this requirement in Republic Act No. 1383 when
in providing for the transfer of appellee's waterworks system to a national
agency it was directed that the transfer be made upon payment of an
equivalent value of the property. Has this been implemented? Has appellant
actually transferred to appellee any asset of the NAWASA that may be
considered just compensation for the property expropriated? There is nothing
in the record to show that such was done. Neither is there anything to this
effect in Office Memorandum No. 7 issued by the NAWASA in implementation
of the provision of the Republic Act No. 1383. The law speaks of assets of the
NAWASA by they are not specified. While the Act empowers the NAWASA to
contract indebtedness and issue bonds subject to the approval of the
Secretary of Finance when necessary for the transaction of its business (sec.
2, par. (L), sec. 5, Act No. 1383), no such action has been taken to comply
with appellant's commitment in so far as payment of compensation of appellee
is concerned. As to when such action should be taken no one knows. And
unless this aspect of the law is clarified and appellee is given its due
compensation, appellee cannot be deprived of its property even if appellant
desires to take over its administration in line with the spirit of the law. We are
TAXATION
COMMISIONER OF CUSTOMS VS MAKASIAR
Petitioner Commissioner of Customs seeks the reversal of respondent judge's
decision dated 20 July 1987 in Civil Case No. 82-12821 entitled "The Distillers
Co. Ltd., of England v. Victorio Francisco, et al.," the dispositive portion of
which reads as follows:
WHEREFORE, having been issued by the Collector of Customs in excess of
his jurisdiction the disputed Warrant of Seizure and Detention dated January
2, 1979, in Seizure Identification No. 2-79 of the Bureau of Customs, as well
as all the proceedings taken thereon are declared NULL and VOID, and the
writ of prohibition prayed for is GRANTED. The public respondent is ordered
to REFRAIN and DESIST from conducting any proceedings for the seizure and
forfeiture of the articles in question until after the Court having taken
cognizance and legal custody thereof has rendered its final judgment in the
criminal cases which involve the same articles. Without costs.
SO ORDERED. [RTC Decision, p. 7; Rollo, p. 26].
The undisputed acts are as follows:
On 7 December 1978, the then Court of First Instance of Manila (herein
referred to as CFI-MANILA) issued Search and Seizure Warrants in Criminal
Case Nos. 8602 and 8603 entitled "People of the Philippines vs. Howard J.
Sosis,, et al.," for violation of Section 11 (a) and/or 11(e) of Republic Act No.
3720, * and violation of Article 188 of the Revised Penal Code (captioned as
"Substituting and altering trademarks, tradenames, or service marks"),
respectively, and ordering the seizure of the following:
a) Materials:
All whisky, bottles, labels, caps, cartons, boxes, machinery equipment or other
materials used or intended to be used, or suitable for use, in connection with
counter-feiting or imitation of Johnnie Walker Scotch Whisky (Emphasis
supplied)
b) Documents:
xxx
under the control and possession of:
1. Howard J. Sosis
2. George Morrison Lonie
3. Hercules Bottling Co.
4. Lauro Villanueva
5. Vicente Velasco
6. Manuel Esteban
7. Eugenio Mauricio
[Rollo, pp. 106-107].
On 8 December 1978, a composite team from the Ministry of Finance Bureau
of Investigation and Intelligence (herein referred to as BII), the Bureau of
Customs and the Integrated National Police enforced the search and seizure
warrants, and seized and confiscated the following articles, among others,
found in the premises of the Hercules Bottling Co., Inc. (herein referred to as
HERCULES) at Isla de Provisor, Paco, Manila:
Six (6) Tanks of Scotch Whisky; 417 cartons each containing I doz. bottles of
"Johnnie Walker Black Label Whisky"; 109 empty bottles; Empty Cartons of
"Johnnie Walker Black Label Scotch Whisky" number 900-2044 empty
cartons. [Rollo, p. 21].
The articles seized remained in the premises of HERCULES guarded and
secured by BII personnel.
On 2 January 1979, the Collector of Customs for the Port of Manila, after being
informed of the seizure of the subject goods and upon verification that the
same were imported contrary to law, issued a warrant of seizure and detention,
in Seizure Identification No. 2-79, and ordered the immediate seizure and
turnover of the seized items to its Auction and Cargo Disposal Division at the
Port of Manila. Seizure and forfeiture proceedings were then initiated against
the above-enumerated articles for alleged violation of Section 2530 (f) of the
Tariff and Customs Code, in relation to Republic Act 3720, to wit:
Sec. 2530. Property subject to forfeiture under Tariff and Customs law:
xxx
(f) Any article the importation or exportation of which is effected or attempted
contrary to law, or any article of prohibited importation or exportation, and all
other articles which, in the opinion of the collector have been used, are or were
entered to be used as instruments in the importation or exportation of the
former.
xxx
On 29 January 1979, the CFI-MANILA issued an order authorizing the transfer
and delivery of the seized articles to the customs warehouse located at South
Harbor, Port of Manila, subject to the following conditions:
1. The Commissioner of Customs is willing to have custody of the same and
guarantees their safekeeping at all times in the same quantity, quality, manner
and condition when the articles shall be turned over to and received by the
Bureau of Customs in custodia legis, subject to the further orders from the
Court;
2. No article shall be transferred without the presence of a representative of
the applicant, the defendants, the Commissioner of Customs and the Court;
these representatives to secure the necessary escort as guarantee that
nothing will happen during the transfer of the articles.
3. The Commissioner of Customs to issue the proper and necessary receipt
for each and every article transferred to and received by the Bureau of
Customs pursuant to this order [Rollo, p. 22].
Meanwhile, the validity and constitutionality of the issuance and service of the
search and seizure warrants issued by the CFI- MANILA were contested in
and upheld by the Court of Appeals in CA-G.R. No. SP-09153-R entitled
"Hercules Bottling Co. Inc., et al., v. Victoriano Savellano, et al." HERCULES
filed a petition for certiorari in the Supreme Court but in a resolution dated 26
November 1986 in G.R. No. 55061 captioned as Hercules Bottling Co., Inc. v.
The Court of Appeals, the Court dismissed the petition.
Consequently, the City Fiscal of Manila proceeded with the preliminary
investigation of the criminal cases, where private respondent, The Distillers
Co. Ltd. of England, claiming to be the owner and exclusive manufacturer of
Johnnie Walker Scotch Whiskey was the private complainant [Rollo, p. 61],
With the dismissal of HERCULES' petition, the Bureau of Customs also
resumed hearing the seizure and forfeiture proceedings over the said articles.
The present controversy arose when private respondent, on 11 June 1982,
objected to the continuation by the Collector of Customs of the seizure
proceedings claiming, among others, that these proceedings would hamper or
even jeopardize the preliminary investigation being conducted by the fiscal.
The Collector of Customs ignored the objections.
In order to stop and enjoin the Hearing Officer of the Bureau of Customs from
taking further action in the seizure proceedings of the subject goods, private
respondent on 24 September 1982 filed a petition for prohibition with
preliminary injunction and/or temporary restraining order, docketed as Civil
Case No. 82-12721. It must be noted at this juncture that the petition was heard
not before the CFI-MANILA which originally issued the search warrants, but
before another sala, that of respondent judge of the Regional Trial Court,
Branch 35, Manila.
Respondent judge issued a temporary restraining order on 29 September
1982. Subsequently, a writ for preliminary injunction was issued as well.
Petitioner filed an answer on 12 November 1982. On 20 July 1987, respondent
judge rendered a decision holding that the Collector of Customs acted in
excess of its jurisdiction in issuing the warrant of seizure and detention
considering that the subject goods had already come under the legal custody
of the CFI-MANILA. Hence, petitioner represented by the Solicitor General,
filed the instant petition on 11 August 1987.
In the meantime, Howard Sosis and company were charged for violation of
Chapter VI, Sec. 11(a) & (e) of Republic Act 3720 in Criminal Case No. 88-
63157 and for violation of Article 188 of the Revised Penal Code in Criminal
Case No. 88-63156 before the Regional Trial Court and the Metropolitan Trial
Court of Manila, respectively [Rollo, p. 83].
In his petition, the Commissioner of Customs assigns as errors the following:
I. RESPONDENT JUDGE ERRED IN ISSUING A TEMPORARY
RESTRAINING ORDER AND SUBSEQUENTLY A WRIT OF INJUNCTION IN
CIVIL CASE NO. 82-12721 NOTWITHSTANDING THE FACT THAT PRIVATE
RESPONDENT, THE DISTILLERS CO., LTD., OF ENGLAND HAS NO VALID
CAUSE OF ACTION AGAINST HEREIN PETITIONER;
II. RESPONDENT RTC JUDGE GRAVELY ERRED IN TAKING
COGNIZANCE OF THE PETITION AND IN PROCEEDING TO HEAR AND
RENDER A DECISION IN CIVIL CASE NO. 82-12721 NOTWITHSTANDING
THE FACT THAT THE TRIAL COURT HAS NO JURISDICTION OVER THE
CASE [Rollo, pp. 10-11].
Petitioner contends that the authority of the Bureau of Customs over seizure
and forfeiture cases is beyond the judicial interference of the Regional Trial
Court, even in the form of certiorari, prohibition or mandamus which are really
attempts to review the Commissioner's actions [Rollo, p. 98]. Petitioner argues
that judicial recourse from the decision of the Bureau of Customs on seizure
and forfeiture cases can only be sought in the Court of Tax Appeals and
eventually in this Court.
Private respondent however contends that while the law may have vested
exclusive jurisdiction in the Bureau of Customs over forfeiture and seizure
cases, in this case respondent judge had jurisdiction to enjoin the Bureau of
Customs from continuing with its seizure and forfeiture proceedings since the
articles here were already in custodia legis, by virtue of the search warrants
issued by the CFI-MANILA. Private respondent contends that respondent
judge may properly take cognizance of the instant case since unlike the cases
cited by petitioner, the action for prohibition was brought not to claim ownership
or possession over the goods but only to preserve the same and to prevent
the Bureau of Customs from doing anything prejudicial to the successful
prosecution of the criminal cases [Rollo, p. 123].
The issue thus presented is whether or not respondent judge may enjoin the
Collector of Customs from continuing with its seizure and forfeiture
proceedings over goods earlier seized by virtue of search warrants issued by
the CFI-MANILA.
The instant petition is impressed with merit.
This Court finds that respondent-judge has failed to adhere to the prevailing
rule which denies him jurisdiction to enjoin the Bureau of Customs from taking
further action in the seizure and forfeiture proceedings over the subject goods.
Jurisprudence is replete with cases which have held that regional trial courts
are devoid of any competence to pass upon the validity or regularity of seizure
and forfeiture proceedings conducted in the Bureau of Customs, and to enjoin,
or otherwise interfere with, these proceedings. The Collector of Customs sitting
in seizure and forfeiture proceedings has exclusive jurisdiction to hear and
determine all questions touching on the seizure and forfeiture of dutiable
goods. The regional trial courts are precluded from assuming cognizance over
such matters even through petitions of certiorari, prohibition or mandamus
[See General Travel Service v. David, G.R. No. L-19259, September 23, 1966,
18 SCRA 59; Pacis v. Averia, G.R. No. L-22526, November 29, 1966, 18
SCRA 907; De Joya v. Lantin, G.R. No. L-24037, April 27, 1967, 19 SCRA
893; Ponce Enrile v. Vinuya G.R. No. L-29043, January 30, 1971, 37 SCRA
381; Collector of Customs v. Torres, G.R. No. L-22977, May 31, 1972, 45
SCRA 272; Pacis v. Geronimo, G.R. No. L-24068, April 23, 1974,56 SCRA
583; Commissioner of Customs v. Navarro, G.R. No. L-33146, May 31, 1977,
77 SCRA 264; Republic v. Bocar, G.R. No. L-35260, September 4, 1979,93
SCRA 78; De la Fuente v. De Veyra, G.R. No. L-35385, January 31, 1983, 120
SCRA 451].
It is likewise well-settled that the provisions of the Tariff and Customs Code
and that of Republic Act No. 1125, as amended ** specify the proper fora for
the ventilation of any legal objections or issues raised concerning these
proceedings. Actions of the Collector of Customs are appealable to the
Commissioner of Customs, whose decisions, in turn, are subject to the
exclusive appellate jurisdiction of the Court of Tax Appeals. Thereafter, an
appeal lies to this Court through the appropriate petition for review by writ of
certiorari. Undeniably, regional trial courts do not share these review powers.
The above rule is anchored upon the policy of placing no unnecessary
hindrance on the government's drive not only to prevent smuggling and other
frauds upon customs, but also, and more importantly, to render effective and
efficient the collection of import and export duties due the state. For tariff and
customs duties are taxes constituting a significant portion of the public revenue
which are the lifeblood that enables the government to carry out functions it
has been instituted to perform.
Notwithstanding these considerations, respondent judge entertained private
respondent's petition for prohibition holding that the seizure and forfeiture
proceedings instituted in the Bureau of Customs was null and void because
the subject goods were earlier seized by virtue of the warrants issued by the
CFI-MANILA in Criminal Cases Nos. 8602 and 8603.
This holding is erroneous.
Even if it be assumed that a taint of irregularity may be imputed to the exercise
by the Collector of Customs of his jurisdiction to institute seizure and forfeiture
proceedings over the subject goods because he had accepted custody of the
same under conditions specified in the CFI-Manila order dated January 29,
1979, it would not mean that respondent judge was correspondingly vested
with the jurisdiction to interfere with such proceedings (See Ponce Enrile v.
Vinuya supra]. It bears repeating that law and settled jurisprudence clearly
deprive the regional trial courts of jurisdiction to enjoin the Collector of
Customs from exercising his exclusive authority to order seizure and forfeiture
proceedings over imported goods.
Moreover, there is no legal basis for respondent judge's conclusion that the
Collector of Customs is deprived of his jurisdiction to issue the assailed warrant
of seizure and detention, and to institute seizure and forfeiture proceedings for
the subject goods simply because the same were first taken in custodia legis.
Undeniably, the subject goods have been brought under the legal control of
the CFI-MANILA by virtue of its search and seizure warrants and are,
therefore, in custodia legis. But this fact merely serves to deprive any other
court or tribunal, except one having supervisory control or superior jurisdiction
in the premises, of the right to divest the CFI-MANILA of its custody and control
of the said property [Collector of Internal Revenue v. Flores Vda. de Codinera
G.R. No. L-9675, September 28, 1957], or to interfere with and change its
possession without its consent [National Power Corporation v. De Veyra, G.R.
No. L-15763, December 22, 1961, 3 SCRA 646; De Leon v. Salvador, G.R.
Nos. L-30871 & L-31603, December 28, 1970, 36 SCRA 567; Vlasons
Enterprises Corporation v. Court of Appeals, G.R. No. 61688, October 28,
1987, 155 SCRA 186].
In the instant case, the CFI-Manila was not divested of its jurisdiction over the
subject goods, nor were its processes interfered with by the Collector of
Customs. It, in fact, authorized the transfer and delivery of the subject goods
from the premises of HERCULES to the Bureau of Customs
warehouse/bodega at the South Harbor, Port of Manila thereby entrusting the
Bureau of Customs with the actual possession and control of the same.
On the other hand, since the Collector of Customs herein had actual
possession and control over the subject goods, his jurisdiction over the goods
was secured for the purpose of instituting seizure and forfeiture proceedings
to determine whether or not the same were imported into the country contrary
to law [See Papa v. Mago, G.R. No. L-27360, February 28, 1968, 22 SCRA
857]. This is consistent with the principle that the basic operative fact for the
institution and perfection of proceedings in rem like the seizure and forfeiture
proceedings pursuant to the Tariff and Customs Code, is the actual or
constructive possession of the res by the tribunal empowered by law to
conduct the proceedings [See Dodge v. US, 71 L. ed. 392 (1926); US v. Mack,
79 L. ed. 1559 (1935) citing The Ann, 3 L. ed. 734 (1815); Fettig Canning Co.
v. Steckler, 188 F. 2d 715 (1951) citing Strong v. US, 46 F. 2d 257, 79 ALR
150 (1931)].
Therefore, contrary to the import of respondent judge's decision, the Collector
of Customs was not precluded by law or legal principle from assuming
jurisdiction over the subject goods. No legal infirmity attended the seizure and
forfeiture proceedings over the subject goods.
The Court must emphasize at this point that the instant case does not involve
a conflict of jurisdictions. Proceedings before the regular courts for criminal
prosecutions against Howard Sosis, et al., and seizure and forfeiture
proceedings for the subject goods conducted by the Bureau of Customs may
be maintained simultaneously and independently of each other. For the nature
of the two proceedings are entirely different such that a resolution in one is not
decisive of the issue in the other. The latter, which is administrative and civil in
nature, is directed against the res or articles imported and entails a
determination of the legality of its importation. The former is directed against
those persons who may be held liable for violating the penal laws in connection
with the importation [See Diosamito v. Balanque, G.R. No. L-30734, July
28,1969,28 SCRA 836; People v. CFI, G.R. No. L-41686, November 17, 1980,
101 SCRA 86].
Private respondent, however, argues that conflict may arise regarding the
disposition of the subject goods if the proceedings before the Collector of
Customs and the regular courts were allowed to proceed simultaneously.
Private respondent contends that in view of the nature of the seizure and
forfeiture proceedings, a judgment in favor of HERCULES will result in the
release of the subject goods to the claimants thereof, while an unfavorable
decision will entail their destruction or sale. It is asserted that either of the two
outcomes will hamper or even jeopardize the ongoing criminal prosecutions,
said goods comprising the substantial part of the evidence for the People of
the Philippines.
Proper adherence by both tribunals to the rules of comity as defined in the
leading case of The Government of the Philippines v. Gale [24 Phil. 95 (1931)]
will forestall the conflict feared. In that case the Court had established the rule
that where the preservation and safekeeping of the subject matter of an action
is demanded, as it is made to appear that these articles may prove to be of
vital importance as exhibits in the prosecution of other charges in another
proceeding, the rules for the orderly course of proceedings in courts and
tribunals forbid the disposition or destruction thereof in one action which would
prejudice the other, and vice versa [Id. at pp. 98-99].
The State in the instant case must be given reasonable opportunity to present
its cases for the proper enforcement of the applicable provisions of the Revised
Penal Code, Republic Act No. 3720, and the Tariff and Customs Code, and
the prosecution of the violators thereof. It follows then that the execution of any
final decision in the seizure and forfeiture case before the Bureau of Customs,
whether it requires the destruction, sale or the release of the subject goods,
should not frustrate the prosecution's task of duly presenting and offering its
evidence in Criminal Cases Nos. 88-63156 and 88-63157.
It is apropos to note that for evidentiary purposes, it would not be necessary
to present each and every item of the goods in question before the courts trying
the criminal cases. Thus, a representative quantity of the goods, as may be
agreed upon by the authorized customs officials and fiscals prosecuting the
criminal cases, shall be set aside as evidence to be presented in the above
criminal cases and retained in custodia legis until final judgment is secured in
these cases. The rest of the goods may be disposed of in accordance with the
final decision rendered in the seizure and forfeiture proceedings pursuant to
the Tariff and Customs Code.
WHEREFORE, in view of the foregoing, the respondent judge's decision dated
20 July 1987 is REVERSED. The seizure and forfeiture proceedings involving
the goods in question before the Bureau of Customs may proceed subject to
the above pronouncements relative to the setting aside of so much of the
goods as may be required for evidentiary purposes.
SO ORDERED.
CIR VS ALQUE INC
Taxes are the lifeblood of the government and so should be collected without
unnecessary hindrance On the other hand, such collection should be made in
accordance with law as any arbitrariness will negate the very reason for
government itself. It is therefore necessary to reconcile the apparently
conflicting interests of the authorities and the taxpayers so that the real
purpose of taxation, which is the promotion of the common good, may be
achieved.
The main issue in this case is whether or not the Collector of Internal Revenue
correctly disallowed the P75,000.00 deduction claimed by private respondent
Algue as legitimate business expenses in its income tax returns. The corollary
issue is whether or not the appeal of the private respondent from the decision
of the Collector of Internal Revenue was made on time and in accordance with
law.
We deal first with the procedural question.
The record shows that on January 14, 1965, the private respondent, a
domestic corporation engaged in engineering, construction and other allied
activities, received a letter from the petitioner assessing it in the total amount
of P83,183.85 as delinquency income taxes for the years 1958 and 1959. 1 On
January 18, 1965, Algue flied a letter of protest or request for reconsideration,
which letter was stamp received on the same day in the office of the
petitioner. 2 On March 12, 1965, a warrant of distraint and levy was presented
to the private respondent, through its counsel, Atty. Alberto Guevara, Jr., who
refused to receive it on the ground of the pending protest. 3 A search of the
protest in the dockets of the case proved fruitless. Atty. Guevara produced his
file copy and gave a photostat to BIR agent Ramon Reyes, who deferred
service of the warrant. 4 On April 7, 1965, Atty. Guevara was finally informed
that the BIR was not taking any action on the protest and it was only then that
he accepted the warrant of distraint and levy earlier sought to be
served.5 Sixteen days later, on April 23, 1965, Algue filed a petition for review
of the decision of the Commissioner of Internal Revenue with the Court of Tax
Appeals.6
The above chronology shows that the petition was filed seasonably. According
to Rep. Act No. 1125, the appeal may be made within thirty days after receipt
of the decision or ruling challenged.7 It is true that as a rule the warrant of
distraint and levy is "proof of the finality of the assessment" 8 and renders
hopeless a request for reconsideration," 9 being "tantamount to an outright
denial thereof and makes the said request deemed rejected." 10 But there is a
special circumstance in the case at bar that prevents application of this
accepted doctrine.
The proven fact is that four days after the private respondent received the
petitioner's notice of assessment, it filed its letter of protest. This was
apparently not taken into account before the warrant of distraint and levy was
issued; indeed, such protest could not be located in the office of the petitioner.
It was only after Atty. Guevara gave the BIR a copy of the protest that it was,
if at all, considered by the tax authorities. During the intervening period, the
warrant was premature and could therefore not be served.
As the Court of Tax Appeals correctly noted," 11 the protest filed by private
respondent was not pro forma and was based on strong legal considerations.
It thus had the effect of suspending on January 18, 1965, when it was filed, the
reglementary period which started on the date the assessment was received,
viz., January 14, 1965. The period started running again only on April 7, 1965,
when the private respondent was definitely informed of the implied rejection of
the said protest and the warrant was finally served on it. Hence, when the
appeal was filed on April 23, 1965, only 20 days of the reglementary period
had been consumed.
Now for the substantive question.
The petitioner contends that the claimed deduction of P75,000.00 was properly
disallowed because it was not an ordinary reasonable or necessary business
expense. The Court of Tax Appeals had seen it differently. Agreeing with
Algue, it held that the said amount had been legitimately paid by the private
respondent for actual services rendered. The payment was in the form of
promotional fees. These were collected by the Payees for their work in the
creation of the Vegetable Oil Investment Corporation of the Philippines and its
subsequent purchase of the properties of the Philippine Sugar Estate
Development Company.
Parenthetically, it may be observed that the petitioner had Originally claimed
these promotional fees to be personal holding company income 12 but later
conformed to the decision of the respondent court rejecting this assertion.13 In
fact, as the said court found, the amount was earned through the joint efforts
of the persons among whom it was distributed It has been established that the
Philippine Sugar Estate Development Company had earlier appointed Algue
as its agent, authorizing it to sell its land, factories and oil manufacturing
process. Pursuant to such authority, Alberto Guevara, Jr., Eduardo Guevara,
Isabel Guevara, Edith, O'Farell, and Pablo Sanchez, worked for the formation
of the Vegetable Oil Investment Corporation, inducing other persons to invest
in it.14 Ultimately, after its incorporation largely through the promotion of the
said persons, this new corporation purchased the PSEDC properties.15 For this
sale, Algue received as agent a commission of P126,000.00, and it was from
this commission that the P75,000.00 promotional fees were paid to the
aforenamed individuals.16
There is no dispute that the payees duly reported their respective shares of
the fees in their income tax returns and paid the corresponding taxes
thereon.17 The Court of Tax Appeals also found, after examining the evidence,
that no distribution of dividends was involved.18
The petitioner claims that these payments are fictitious because most of the
payees are members of the same family in control of Algue. It is argued that
no indication was made as to how such payments were made, whether by
check or in cash, and there is not enough substantiation of such payments. In
short, the petitioner suggests a tax dodge, an attempt to evade a legitimate
assessment by involving an imaginary deduction.
We find that these suspicions were adequately met by the private respondent
when its President, Alberto Guevara, and the accountant, Cecilia V. de Jesus,
testified that the payments were not made in one lump sum but periodically
and in different amounts as each payee's need arose. 19 It should be
remembered that this was a family corporation where strict business
procedures were not applied and immediate issuance of receipts was not
required. Even so, at the end of the year, when the books were to be closed,
each payee made an accounting of all of the fees received by him or her, to
make up the total of P75,000.00. 20 Admittedly, everything seemed to be
informal. This arrangement was understandable, however, in view of the close
relationship among the persons in the family corporation.
We agree with the respondent court that the amount of the promotional fees
was not excessive. The total commission paid by the Philippine Sugar Estate
Development Co. to the private respondent was P125,000.00. 21 After
deducting the said fees, Algue still had a balance of P50,000.00 as clear profit
from the transaction. The amount of P75,000.00 was 60% of the total
commission. This was a reasonable proportion, considering that it was the
payees who did practically everything, from the formation of the Vegetable Oil
Investment Corporation to the actual purchase by it of the Sugar Estate
properties. This finding of the respondent court is in accord with the following
provision of the Tax Code:
SEC. 30. Deductions from gross income.--In computing net income there shall
be allowed as deductions —
(a) Expenses:
(1) In general.--All the ordinary and necessary expenses paid or incurred
during the taxable year in carrying on any trade or business, including a
reasonable allowance for salaries or other compensation for personal services
actually rendered; ... 22
and Revenue Regulations No. 2, Section 70 (1), reading as follows:
SEC. 70. Compensation for personal services.--Among the ordinary and
necessary expenses paid or incurred in carrying on any trade or business may
be included a reasonable allowance for salaries or other compensation for
personal services actually rendered. The test of deductibility in the case of
compensation payments is whether they are reasonable and are, in fact,
payments purely for service. This test and deductibility in the case of
compensation payments is whether they are reasonable and are, in fact,
payments purely for service. This test and its practical application may be
further stated and illustrated as follows:
Any amount paid in the form of compensation, but not in fact as the purchase
price of services, is not deductible. (a) An ostensible salary paid by a
corporation may be a distribution of a dividend on stock. This is likely to occur
in the case of a corporation having few stockholders, Practically all of whom
draw salaries. If in such a case the salaries are in excess of those ordinarily
paid for similar services, and the excessive payment correspond or bear a
close relationship to the stockholdings of the officers of employees, it would
seem likely that the salaries are not paid wholly for services rendered, but the
excessive payments are a distribution of earnings upon the stock. . . .
(Promulgated Feb. 11, 1931, 30 O.G. No. 18, 325.)
It is worth noting at this point that most of the payees were not in the regular
employ of Algue nor were they its controlling stockholders. 23
The Solicitor General is correct when he says that the burden is on the
taxpayer to prove the validity of the claimed deduction. In the present case,
however, we find that the onus has been discharged satisfactorily. The private
respondent has proved that the payment of the fees was necessary and
reasonable in the light of the efforts exerted by the payees in inducing investors
and prominent businessmen to venture in an experimental enterprise and
involve themselves in a new business requiring millions of pesos. This was no
mean feat and should be, as it was, sufficiently recompensed.
It is said that taxes are what we pay for civilization society. Without taxes, the
government would be paralyzed for lack of the motive power to activate and
operate it. Hence, despite the natural reluctance to surrender part of one's hard
earned income to the taxing authorities, every person who is able to must
contribute his share in the running of the government. The government for its
part, is expected to respond in the form of tangible and intangible benefits
intended to improve the lives of the people and enhance their moral and
material values. This symbiotic relationship is the rationale of taxation and
should dispel the erroneous notion that it is an arbitrary method of exaction by
those in the seat of power.
But even as we concede the inevitability and indispensability of taxation, it is a
requirement in all democratic regimes that it be exercised reasonably and in
accordance with the prescribed procedure. If it is not, then the taxpayer has a
right to complain and the courts will then come to his succor. For all the
awesome power of the tax collector, he may still be stopped in his tracks if the
taxpayer can demonstrate, as it has here, that the law has not been observed.
We hold that the appeal of the private respondent from the decision of the
petitioner was filed on time with the respondent court in accordance with Rep.
Act No. 1125. And we also find that the claimed deduction by the private
respondent was permitted under the Internal Revenue Code and should
therefore not have been disallowed by the petitioner.
ACCORDINGLY, the appealed decision of the Court of Tax Appeals is
AFFIRMED in toto, without costs.
SO ORDERED.
ABRA VALLEY COLLEGE VS AQUINO
This is a petition for review on certiorari of the decision * of the defunct Court
of First Instance of Abra, Branch I, dated June 14, 1974, rendered in Civil Case
No. 656, entitled "Abra Valley Junior College, Inc., represented by Pedro V.
Borgonia, plaintiff vs. Armin M. Cariaga as Provincial Treasurer of Abra,
Gaspar V. Bosque as Municipal Treasurer of Bangued, Abra and Paterno
Millare, defendants," the decretal portion of which reads:
IN VIEW OF ALL THE FOREGOING, the Court hereby declares:
That the distraint seizure and sale by the Municipal Treasurer of Bangued,
Abra, the Provincial Treasurer of said province against the lot and building of
the Abra Valley Junior College, Inc., represented by Director Pedro Borgonia
located at Bangued, Abra, is valid;
That since the school is not exempt from paying taxes, it should therefore pay
all back taxes in the amount of P5,140.31 and back taxes and penalties from
the promulgation of this decision;
That the amount deposited by the plaintaff him the sum of P60,000.00 before
the trial, be confiscated to apply for the payment of the back taxes and for the
redemption of the property in question, if the amount is less than P6,000.00,
the remainder must be returned to the Director of Pedro Borgonia, who
represents the plaintiff herein;
That the deposit of the Municipal Treasurer in the amount of P6,000.00 also
before the trial must be returned to said Municipal Treasurer of Bangued, Abra;
And finally the case is hereby ordered dismissed with costs against the plaintiff.
SO ORDERED. (Rollo, pp. 22-23)
Petitioner, an educational corporation and institution of higher learning duly
incorporated with the Securities and Exchange Commission in 1948, filed a
complaint (Annex "1" of Answer by the respondents Heirs of Paterno Millare;
Rollo, pp. 95-97) on July 10, 1972 in the court a quo to annul and declare void
the "Notice of Seizure' and the "Notice of Sale" of its lot and building located
at Bangued, Abra, for non-payment of real estate taxes and penalties
amounting to P5,140.31. Said "Notice of Seizure" of the college lot and building
covered by Original Certificate of Title No. Q-83 duly registered in the name of
petitioner, plaintiff below, on July 6, 1972, by respondents Municipal Treasurer
and Provincial Treasurer, defendants below, was issued for the satisfaction of
the said taxes thereon. The "Notice of Sale" was caused to be served upon
the petitioner by the respondent treasurers on July 8, 1972 for the sale at public
auction of said college lot and building, which sale was held on the same date.
Dr. Paterno Millare, then Municipal Mayor of Bangued, Abra, offered the
highest bid of P6,000.00 which was duly accepted. The certificate of sale was
correspondingly issued to him.
On August 10, 1972, the respondent Paterno Millare (now deceased) filed
through counstel a motion to dismiss the complaint.
On August 23, 1972, the respondent Provincial Treasurer and Municipal
Treasurer, through then Provincial Fiscal Loreto C. Roldan, filed their answer
(Annex "2" of Answer by the respondents Heirs of Patemo Millare; Rollo, pp.
98-100) to the complaint. This was followed by an amended answer (Annex
"3," ibid, Rollo, pp. 101-103) on August 31, 1972.
On September 1, 1972 the respondent Paterno Millare filed his answer (Annex
"5," ibid; Rollo, pp. 106-108).
On October 12, 1972, with the aforesaid sale of the school premises at public Sgd. Agripino Brillantes
auction, the respondent Judge, Hon. Juan P. Aquino of the Court of First Typ AGRIPINO BRILLANTES
Instance of Abra, Branch I, ordered (Annex "6," ibid; Rollo, pp. 109-110) the Attorney for Plaintiff
respondents provincial and municipal treasurers to deliver to the Clerk of Court
the proceeds of the auction sale. Hence, on December 14, 1972, petitioner, Sgd. Loreto Roldan
through Director Borgonia, deposited with the trial court the sum of P6,000.00 Typ LORETO ROLDAN
evidenced by PNB Check No. 904369. Provincial Fiscal
Counsel for Defendants
On April 12, 1973, the parties entered into a stipulation of facts adopted and Provincial Treasurer of
embodied by the trial court in its questioned decision. Said Stipulations reads: Abra and the Municipal
Treasurer of Bangued, Abra
STIPULATION OF FACTS
Sgd. Demetrio V. Pre
COME NOW the parties, assisted by counsels, and to this Honorable Court Typ. DEMETRIO V. PRE
respectfully enter into the following agreed stipulation of facts: Attorney for Defendant
1. That the personal circumstances of the parties as stated in paragraph 1 of Paterno Millare (Rollo, pp. 17-18)
the complaint is admitted; but the particular person of Mr. Armin M. Cariaga is Aside from the Stipulation of Facts, the trial court among others, found the
to be substituted, however, by anyone who is actually holding the position of following: (a) that the school is recognized by the government and is offering
Provincial Treasurer of the Province of Abra; Primary, High School and College Courses, and has a school population of
2. That the plaintiff Abra Valley Junior College, Inc. is the owner of the lot and more than one thousand students all in all; (b) that it is located right in the heart
buildings thereon located in Bangued, Abra under Original Certificate of Title of the town of Bangued, a few meters from the plaza and about 120 meters
No. 0-83; from the Court of First Instance building; (c) that the elementary pupils are
housed in a two-storey building across the street; (d) that the high school and
3. That the defendant Gaspar V. Bosque, as Municipal treasurer of Bangued, college students are housed in the main building; (e) that the Director with his
Abra caused to be served upon the Abra Valley Junior College, Inc. a Notice family is in the second floor of the main building; and (f) that the annual gross
of Seizure on the property of said school under Original Certificate of Title No. income of the school reaches more than one hundred thousand pesos.
0-83 for the satisfaction of real property taxes thereon, amounting to
P5,140.31; the Notice of Seizure being the one attached to the complaint as From all the foregoing, the only issue left for the Court to determine and as
Exhibit A; agreed by the parties, is whether or not the lot and building in question
are used exclusively for educational purposes. (Rollo, p. 20)
4. That on June 8, 1972 the above properties of the Abra Valley Junior College,
Inc. was sold at public auction for the satisfaction of the unpaid real property The succeeding Provincial Fiscal, Hon. Jose A. Solomon and his Assistant,
taxes thereon and the same was sold to defendant Paterno Millare who offered Hon. Eustaquio Z. Montero, filed a Memorandum for the Government on March
the highest bid of P6,000.00 and a Certificate of Sale in his favor was issued 25, 1974, and a Supplemental Memorandum on May 7, 1974, wherein they
by the defendant Municipal Treasurer. opined "that based on the evidence, the laws applicable, court decisions and
jurisprudence, the school building and school lot used for educational
5. That all other matters not particularly and specially covered by this purposes of the Abra Valley College, Inc., are exempted from the payment of
stipulation of facts will be the subject of evidence by the parties. taxes." (Annexes "B," "B-1" of Petition; Rollo, pp. 24-49; 44 and 49).
WHEREFORE, it is respectfully prayed of the Honorable Court to consider and Nonetheless, the trial court disagreed because of the use of the second floor
admit this stipulation of facts on the point agreed upon by the parties. by the Director of petitioner school for residential purposes. He thus ruled for
the government and rendered the assailed decision.
Bangued, Abra, April 12, 1973.
After having been granted by the trial court ten (10) days from August 6, 1974
within which to perfect its appeal (Per Order dated August 6, 1974; Annex "G"
of Petition; Rollo, p. 57) petitioner instead availed of the instant petition for
review on certiorari with prayer for preliminary injunction before this Court,
which petition was filed on August 17, 1974 (Rollo, p.2).
In the resolution dated August 16, 1974, this Court resolved to give DUE
COURSE to the petition (Rollo, p. 58). Respondents were required to answer
said petition (Rollo, p. 74).
Petitioner raised the following assignments of error:
I Constitution, which expressly grants exemption from realty taxes for
THE COURT A QUO ERRED IN SUSTAINING AS VALID THE SEIZURE AND
SALE OF THE COLLEGE LOT AND BUILDING USED FOR EDUCATIONAL
PURPOSES OF THE PETITIONER.
II
THE COURT A QUO ERRED IN DECLARING THAT THE COLLEGE LOT
AND BUILDING OF THE PETITIONER ARE NOT USED EXCLUSIVELY FOR
EDUCATIONAL PURPOSES MERELY BECAUSE THE COLLEGE
PRESIDENT RESIDES IN ONE ROOM OF THE COLLEGE BUILDING.
III
THE COURT A QUO ERRED IN DECLARING THAT THE COLLEGE LOT
AND BUILDING OF THE PETITIONER ARE NOT EXEMPT FROM
PROPERTY TAXES AND IN ORDERING PETITIONER TO PAY P5,140.31
AS REALTY TAXES.
IV
THE COURT A QUO ERRED IN ORDERING THE CONFISCATION OF THE
P6,000.00 DEPOSIT MADE IN THE COURT BY PETITIONER AS PAYMENT
OF THE P5,140.31 REALTY TAXES. (See Brief for the Petitioner, pp. 1-2)
The main issue in this case is the proper interpretation of the phrase "used
exclusively for educational purposes."
Petitioner contends that the primary use of the lot and building for educational
purposes, and not the incidental use thereof, determines and exemption from
property taxes under Section 22 (3), Article VI of the 1935 Constitution. Hence,
the seizure and sale of subject college lot and building, which are contrary
thereto as well as to the provision of Commonwealth Act No. 470, otherwise
known as the Assessment Law, are without legal basis and therefore void.
On the other hand, private respondents maintain that the college lot and
building in question which were subjected to seizure and sale to answer for the
unpaid tax are used: (1) for the educational purposes of the college; (2) as the
permanent residence of the President and Director thereof, Mr. Pedro V.
Borgonia, and his family including the in-laws and grandchildren; and (3) for
commercial purposes because the ground floor of the college building is being
used and rented by a commercial establishment, the Northern Marketing
Corporation (See photograph attached as Annex "8" (Comment; Rollo, p. 90]).
Due to its time frame, the constitutional provision which finds application in the
case at bar is Section 22, paragraph 3, Article VI, of the then 1935 Philippine
"Cemeteries, churches and parsonages or convents appurtenant thereto, and
all lands, buildings, and improvements used exclusively for religious,
charitable or educational purposes ...
Relative thereto, Section 54, paragraph c, Commonwealth Act No. 470 as
amended by Republic Act No. 409, otherwise known as the Assessment Law,
provides:
The following are exempted from real property tax under the Assessment Law:
xxx xxx xxx
(c) churches and parsonages or convents appurtenant thereto, and all lands,
buildings, and improvements used exclusively for religious, charitable,
scientific or educational purposes.
xxx xxx xxx
In this regard petitioner argues that the primary use of the school lot and
building is the basic and controlling guide, norm and standard to determine tax
exemption, and not the mere incidental use thereof.
As early as 1916 in YMCA of Manila vs. Collector of lnternal Revenue, 33 Phil.
217 [1916], this Court ruled that while it may be true that the YMCA keeps a
lodging and a boarding house and maintains a restaurant for its members, still
these do not constitute business in the ordinary acceptance of the word, but
an institution used exclusively for religious, charitable and educational
purposes, and as such, it is entitled to be exempted from taxation.
In the case of Bishop of Nueva Segovia v. Provincial Board of Ilocos Norte, 51
Phil. 352 [1972], this Court included in the exemption a vegetable garden in an
adjacent lot and another lot formerly used as a cemetery. It was clarified that
the term "used exclusively" considers incidental use also. Thus, the exemption
from payment of land tax in favor of the convent includes, not only the land
actually occupied by the building but also the adjacent garden devoted to the
incidental use of the parish priest. The lot which is not used for commercial
purposes but serves solely as a sort of lodging place, also qualifies for
exemption because this constitutes incidental use in religious functions.
The phrase "exclusively used for educational purposes" was further clarified
by this Court in the cases of Herrera vs. Quezon City Board of assessment
Appeals, 3 SCRA 186 [1961] and Commissioner of Internal Revenue vs.
Bishop of the Missionary District, 14 SCRA 991 [1965], thus —
Moreover, the exemption in favor of property used exclusively for charitable or
educational purposes is 'not limited to property actually indispensable' therefor
(Cooley on Taxation, Vol. 2, p. 1430), but extends to facilities which are
incidental to and reasonably necessary for the accomplishment of said
purposes, such as in the case of hospitals, "a school for training nurses, a
nurses' home, property use to provide housing facilities for interns, resident
doctors, superintendents, and other members of the hospital staff, and
recreational facilities for student nurses, interns, and residents' (84 CJS 6621),
such as "Athletic fields" including "a firm used for the inmates of the institution.
(Cooley on Taxation, Vol. 2, p. 1430).
The test of exemption from taxation is the use of the property for purposes
mentioned in the Constitution (Apostolic Prefect v. City Treasurer of Baguio,
71 Phil, 547 [1941]).
It must be stressed however, that while this Court allows a more liberal and
non-restrictive interpretation of the phrase "exclusively used for educational
purposes" as provided for in Article VI, Section 22, paragraph 3 of the 1935
Philippine Constitution, reasonable emphasis has always been made that
exemption extends to facilities which are incidental to and reasonably
necessary for the accomplishment of the main purposes. Otherwise stated, the
use of the school building or lot for commercial purposes is neither
contemplated by law, nor by jurisprudence. Thus, while the use of the second
floor of the main building in the case at bar for residential purposes of the
Director and his family, may find justification under the concept of incidental
use, which is complimentary to the main or primary purpose—educational, the
lease of the first floor thereof to the Northern Marketing Corporation cannot by
any stretch of the imagination be considered incidental to the purpose of
education.
It will be noted however that the aforementioned lease appears to have been
raised for the first time in this Court. That the matter was not taken up in the to
court is really apparent in the decision of respondent Judge. No mention
thereof was made in the stipulation of facts, not even in the description of the
school building by the trial judge, both embodied in the decision nor as one of
the issues to resolve in order to determine whether or not said properly may
be exempted from payment of real estate taxes (Rollo, pp. 17-23). On the other
hand, it is noteworthy that such fact was not disputed even after it was raised
in this Court.
Indeed, it is axiomatic that facts not raised in the lower court cannot be taken
up for the first time on appeal. Nonetheless, as an exception to the rule, this
Court has held that although a factual issue is not squarely raised below, still
in the interest of substantial justice, this Court is not prevented from
considering a pivotal factual matter. "The Supreme Court is clothed with ample
authority to review palpable errors not assigned as such if it finds that their
consideration is necessary in arriving at a just decision." (Perez vs. Court of
Appeals, 127 SCRA 645 [1984]).
Under the 1935 Constitution, the trial court correctly arrived at the conclusion
that the school building as well as the lot where it is built, should be taxed, not
because the second floor of the same is being used by the Director and his
family for residential purposes, but because the first floor thereof is being used
for commercial purposes. However, since only a portion is used for purposes
of commerce, it is only fair that half of the assessed tax be returned to the
school involved.
PREMISES CONSIDERED, the decision of the Court of First Instance of Abra,
Branch I, is hereby AFFIRMED subject to the modification that half of the
assessed tax be returned to the petitioner.
SO ORDERED.
PROVINCE OF ABRA VS HERNANDO
On the face of this certiorari and mandamus petition filed by the Province of
Abra, 1 it clearly appears that the actuation of respondent Judge Harold M.
Hernando of the Court of First Instance of Abra left much to be desired. First,
there was a denial of a motion to dismiss 2 an action for declaratory relief by
private respondent Roman Catholic Bishop of Bangued desirous of being
exempted from a real estate tax followed by a summary judgment 3 granting
such exemption, without even hearing the side of petitioner. In the rather
vigorous language of the Acting Provincial Fiscal, as counsel for petitioner,
respondent Judge "virtually ignored the pertinent provisions of the Rules of
Court; ... wantonly violated the rights of petitioner to due process, by giving
due course to the petition of private respondent for declaratory relief, and
thereafter without allowing petitioner to answer and without any hearing,
adjudged the case; all in total disregard of basic laws of procedure and basic
provisions of due process in the constitution, thereby indicating a failure to
grasp and understand the law, which goes into the competence of the
Honorable Presiding Judge." 4
It was the submission of counsel that an action for declaratory relief would be
proper only before a breach or violation of any statute, executive order or
regulation. 5 Moreover, there being a tax assessment made by the Provincial
Assessor on the properties of respondent Roman Catholic Bishop, petitioner
failed to exhaust the administrative remedies available under Presidential
Decree No. 464 before filing such court action. Further, it was pointed out to
respondent Judge that he failed to abide by the pertinent provision of such
Presidential Decree which provides as follows: "No court shall entertain any
suit assailing the validity of a tax assessed under this Code until the taxpayer,
shall have paid, under protest, the tax assessed against him nor shall any court
declare any tax invalid by reason of irregularities or informalities in the
proceedings of the officers charged with the assessment or collection of taxes,
or of failure to perform their duties within this time herein specified for their
performance unless such irregularities, informalities or failure shall have
impaired the substantial rights of the taxpayer; nor shall any court declare any
portion of the tax assessed under the provisions of this Code invalid except
upon condition that the taxpayer shall pay the just amount of the tax, as
determined by the court in the pending proceeding." 6
When asked to comment, respondent Judge began with the allegation that
there "is no question that the real properties sought to be taxed by the Province
of Abra are properties of the respondent Roman Catholic Bishop of Bangued,
Inc." 7 The very next sentence assumed the very point it asked when he
categorically stated: "Likewise, there is no dispute that the properties including
their procedure are actually, directly and exclusively used by the Roman
Catholic Bishop of Bangued, Inc. for religious or charitable purposes." 8 For
him then: "The proper remedy of the petitioner is appeal and not this special
civil action." 9 A more exhaustive comment was submitted by private
respondent Roman Catholic Bishop of Bangued, Inc. It was, however, unable
to lessen the force of the objection raised by petitioner Province of Abra,
especially the due process aspect. it is to be admitted that his opposition to the
petition, pressed with vigor, ostensibly finds a semblance of support from the
authorities cited. It is thus impressed with a scholarly aspect. It suffers,
however, from the grave infirmity of stating that only a pure question of law is
presented when a claim for exemption is made.
The petition must be granted.
1. Respondent Judge would not have erred so grievously had he merely
compared the provisions of the present Constitution with that appearing in the
1935 Charter on the tax exemption of "lands, buildings, and improvements."
There is a marked difference. Under the 1935 Constitution: "Cemeteries,
churches, and parsonages or convents appurtenant thereto, and all lands,
buildings, and improvements used exclusively for religious, charitable, or
educational purposes shall be exempt from taxation." 10 The present
Constitution added "charitable institutions, mosques, and non-profit
cemeteries" and required that for the exemption of ":lands, buildings, and
improvements," they should not only be "exclusively" but also "actually and
"directly" used for religious or charitable purposes. 11 The Constitution is
worded differently. The change should not be ignored. It must be duly taken
into consideration. Reliance on past decisions would have sufficed were the
words "actually" as well as "directly" not added. There must be proof therefore
of the actual and direct use of the lands, buildings, and improvements for
religious or charitable purposes to be exempt from taxation. According
to Commissioner of Internal Revenue v. Guerrero: 12 "From 1906, in Catholic
Church v. Hastings to 1966, in Esso Standard Eastern, Inc. v. Acting
Commissioner of Customs, it has been the constant and uniform holding that
exemption from taxation is not favored and is never presumed, so that if
granted it must be strictly construed against the taxpayer. Affirmatively put, the
law frowns on exemption from taxation, hence, an exempting provision should
be construed strictissimi juris." 13 In Manila Electric Company v. Vera, 14 a
1975 decision, such principle was reiterated, reference being made
to Republic Flour Mills, Inc. v. Commissioner of Internal
Revenue; 15 Commissioner of Customs v. Philippine Acetylene Co. &
CTA; 16 and Davao Light and Power Co., Inc. v. Commissioner of Customs. 17
2. Petitioner Province of Abra is therefore fully justified in invoking the
protection of procedural due process. If there is any case where proof is
necessary to demonstrate that there is compliance with the constitutional
provision that allows an exemption, this is it. Instead, respondent Judge
accepted at its face the allegation of private respondent. All that was alleged
in the petition for declaratory relief filed by private respondents, after
mentioning certain parcels of land owned by it, are that they are used "actually,
directly and exclusively" as sources of support of the parish priest and his
helpers and also of private respondent Bishop. 18 In the motion to dismiss filed
on behalf of petitioner Province of Abra, the objection was based primarily on
the lack of jurisdiction, as the validity of a tax assessment may be questioned
before the Local Board of Assessment Appeals and not with a court. There
was also mention of a lack of a cause of action, but only because, in its view,
declaratory relief is not proper, as there had been breach or violation of the
right of government to assess and collect taxes on such property. It clearly
appears, therefore, that in failing to accord a hearing to petitioner Province of
Abra and deciding the case immediately in favor of private respondent,
respondent Judge failed to abide by the constitutional command of procedural
due process.
WHEREFORE, the petition is granted and the resolution of June 19, 1978 is
set aside. Respondent Judge, or who ever is acting on his behalf, is ordered
to hear the case on the merit. No costs.
BISHOP OF NUEVA SEGOVIA VS PROVINCIAL BOARD
The plaintiff, the Roman Catholic Apostolic Church, represented by the Bishop
of Nueva Segovia, possesses and is the owner of a parcel of land in the
municipality of San Nicolas, Ilocos Norte, all four sides of which face on public
streets. On the south side is a part of the churchyard, the convent and an
adjacent lot used for a vegetable garden, containing an area off 1,624 square
meters, in which there is a stable and a well for the use of the convent. In the
center is the remainder of the churchyard and the church. On the north is an
old cemetery with two of its walls still standing, and a portion where formerly
stood a tower, the base of which still be seen, containing a total area of 8,955
square meters.
As required by the defendants, on July 3, 1925 the plaintiff paid, under protest,
the land tax on the lot adjoining the convent and the lot which formerly was the
cemetery with the portion where the tower stood.
The plaintiff filed this action for the recovery of the sum paid by to the
defendants by way of land tax, alleging that the collection of this tax is illegal.
The lower court absolved the defendants from the complaint in regard to the
lot adjoining convent and declared that the tax collected on the lot, which
formerly was the cemetery and on the portion where the lower stood, was
illegal. Both parties appealed from this judgment.
The exemption in favor of the convent in the payment of the land tax (sec. 344
[c] Administrative Code) refers to the home of the parties who presides over
the church and who has to take care of himself in order to discharge his duties.
In therefore must, in the sense, include not only the land actually occupied by
the church, but also the adjacent ground destined to the ordinary incidental
uses of man. Except in large cities where the density of the population and the
development of commerce require the use of larger tracts of land for buildings,
a vegetable garden belongs to a house and, in the case of a convent, it use is
limited to the necessities of the priest, which comes under the
exemption.lawphi1.net
In regard to the lot which formerly was the cemetery, while it is no longer used
as such, neither is it used for commercial purposes and, according to the
evidence, is now being used as a lodging house by the people who participate
in religious festivities, which constitutes an incidental use in religious functions,
which also comes within the exemption.
The judgment appealed from is reversed in all it parts and it is held that both
lots are exempt from land tax and the defendants are ordered to refund to
plaintiff whatever was paid as such tax, without any special pronouncement as
to costs. So ordered.
LLADOC VS CIR
Sometime in 1957, the M.B. Estate, Inc., of Bacolod City, donated P10,000.00
in cash to Rev. Fr. Crispin Ruiz, then parish priest of Victorias, Negros
Occidental, and predecessor of herein petitioner, for the construction of a new
Catholic Church in the locality. The total amount was actually spent for the
purpose intended.
On March 3, 1958, the donor M.B. Estate, Inc., filed the donor's gift tax return.
Under date of April 29, 1960, the respondent Commissioner of Internal
Revenue issued an assessment for donee's gift tax against the Catholic Parish
of Victorias, Negros Occidental, of which petitioner was the priest. The tax
amounted to P1,370.00 including surcharges, interests of 1% monthly from
May 15, 1958 to June 15, 1960, and the compromise for the late filing of the
return.
Petitioner lodged a protest to the assessment and requested the withdrawal
thereof. The protest and the motion for reconsideration presented to the
Commissioner of Internal Revenue were denied. The petitioner appealed to
the Court of Tax Appeals on November 2, 1960. In the petition for review, the
Rev. Fr. Casimiro Lladoc claimed, among others, that at the time of the
donation, he was not the parish priest in Victorias; that there is no legal entity
or juridical person known as the "Catholic Parish Priest of Victorias," and,
therefore, he should not be liable for the donee's gift tax. It was also asserted
that the assessment of the gift tax, even against the Roman Catholic Church,
would not be valid, for such would be a clear violation of the provisions of the
Constitution.
After hearing, the CTA rendered judgment, the pertinent portions of which are
quoted below:
... . Parish priests of the Roman Catholic Church under canon laws are similarly
situated as its Archbishops and Bishops with respect to the properties of the
church within their parish. They are the guardians, superintendents or
administrators of these properties, with the right of succession and may sue
and be sued.
xxx xxx xxx
The petitioner impugns the, fairness of the assessment with the argument that
he should not be held liable for gift taxes on donation which he did not receive
personally since he was not yet the parish priest of Victorias in the year 1957
when said donation was given. It is intimated that if someone has to pay at all,
it should be petitioner's predecessor, the Rev. Fr. Crispin Ruiz, who received
the donation in behalf of the Catholic parish of Victorias or the Roman Catholic
Church. Following petitioner's line of thinking, we should be equally unfair to
hold that the assessment now in question should have been addressed to, and
collected from, the Rev. Fr. Crispin Ruiz to be paid from income derived from
his present parish where ever it may be. It does not seem right to indirectly
burden the present parishioners of Rev. Fr. Ruiz for donee's gift tax on a
donation to which they were not benefited.
xxx xxx xxx
We saw no legal basis then as we see none now, to include within the
Constitutional exemption, taxes which partake of the nature of an excise upon
the use made of the properties or upon the exercise of the privilege of receiving
the properties. (Phipps vs. Commissioner of Internal Revenue, 91 F [2d] 627;
1938, 302 U.S. 742.)
It is a cardinal rule in taxation that exemptions from payment thereof are highly
disfavored by law, and the party claiming exemption must justify his claim by
a clear, positive, or express grant of such privilege by law. (Collector vs. Manila
Jockey Club, G.R. No. L-8755, March 23, 1956; 53 O.G. 3762.)
The phrase "exempt from taxation" as employed in Section 22(3), Article VI of
the Constitution of the Philippines, should not be interpreted to mean
exemption from all kinds of taxes. Statutes exempting charitable and religious
property from taxation should be construed fairly though strictly and in such
manner as to give effect to the main intent of the lawmakers. (Roman Catholic
Church vs. Hastrings 5 Phil. 701.)
xxx xxx xxx
WHEREFORE, in view of the foregoing considerations, the decision of the
respondent Commissioner of Internal Revenue appealed from, is hereby
affirmed except with regard to the imposition of the compromise penalty in the
amount of P20.00 (Collector of Internal Revenue v. U.S.T., G.R. No. L-11274,
Nov. 28, 1958); ..., and the petitioner, the Rev. Fr. Casimiro Lladoc is hereby
ordered to pay to the respondent the amount of P900.00 as donee's gift tax,
plus the surcharge of five per centum (5%) as ad valorem penalty under
Section 119 (c) of the Tax Code, and one per centum (1%) monthly interest
from May 15, 1958 to the date of actual payment. The surcharge of 25%
provided in Section 120 for failure to file a return may not be imposed as the
failure to file a return was not due to willful neglect.( ... ) No costs.
The above judgment is now before us on appeal, petitioner assigning two (2)
errors allegedly committed by the Tax Court, all of which converge on the
singular issue of whether or not petitioner should be liable for the assessed
donee's gift tax on the P10,000.00 donated for the construction of the Victorias
Parish Church.
Section 22 (3), Art. VI of the Constitution of the Philippines, exempts from
taxation cemeteries, churches and parsonages or convents, appurtenant
thereto, and all lands, buildings, and improvements used exclusively for
religious purposes. The exemption is only from the payment of taxes assessed
on such properties enumerated, as property taxes, as contra distinguished
from excise taxes. In the present case, what the Collector assessed was a
donee's gift tax; the assessment was not on the properties themselves. It did
not rest upon general ownership; it was an excise upon the use made of the
properties, upon the exercise of the privilege of receiving the properties
(Phipps vs. Com. of Int. Rec. 91 F 2d 627). Manifestly, gift tax is not within the
exempting provisions of the section just mentioned. A gift tax is not a property
tax, but an excise tax imposed on the transfer of property by way of gift inter
vivos, the imposition of which on property used exclusively for religious
purposes, does not constitute an impairment of the Constitution. As well
observed by the learned respondent Court, the phrase "exempt from taxation,"
as employed in the Constitution (supra) should not be interpreted to mean
exemption from all kinds of taxes. And there being no clear, positive or express
grant of such privilege by law, in favor of petitioner, the exemption herein must
be denied.
The next issue which readily presents itself, in view of petitioner's thesis, and
Our finding that a tax liability exists, is, who should be called upon to pay the
gift tax? Petitioner postulates that he should not be liable, because at the time
of the donation he was not the priest of Victorias. We note the merit of the
above claim, and in order to put things in their proper light, this Court, in its
Resolution of March 15, 1965, ordered the parties to show cause why the Head
of the Diocese to which the parish of Victorias pertains, should not be
substituted in lieu of petitioner Rev. Fr. Casimiro Lladoc it appearing that the
Head of such Diocese is the real party in interest. The Solicitor General, in
representation of the Commissioner of Internal Revenue, interposed no
objection to such a substitution. Counsel for the petitioner did not also offer
objection thereto.
On April 30, 1965, in a resolution, We ordered the Head of the Diocese to
present whatever legal issues and/or defenses he might wish to raise, to which
resolution counsel for petitioner, who also appeared as counsel for the Head
of the Diocese, the Roman Catholic Bishop of Bacolod, manifested that it was
submitting itself to the jurisdiction and orders of this Court and that it was
presenting, by reference, the brief of petitioner Rev. Fr. Casimiro Lladoc as its
own and for all purposes.
In view here of and considering that as heretofore stated, the assessment at
bar had been properly made and the imposition of the tax is not a violation of
the constitutional provision exempting churches, parsonages or convents, etc.
(Art VI, sec. 22 [3], Constitution), the Head of the Diocese, to which the parish
Victorias Pertains, is liable for the payment thereof.
The decision appealed from should be, as it is hereby affirmed insofar as tax
liability is concerned; it is modified, in the sense that petitioner herein is not
personally liable for the said gift tax, and that the Head of the Diocese, herein
substitute petitioner, should pay, as he is presently ordered to pay, the said
gift tax, without special, pronouncement as to costs.
AMERICAN BIBLE SOCIETY VS CITY OF MANILA
Plaintiff-appellant is a foreign, non-stock, non-profit, religious, missionary
corporation duly registered and doing business in the Philippines through its
Philippine agency established in Manila in November, 1898, with its principal
office at 636 Isaac Peral in said City. The defendant appellee is a municipal
corporation with powers that are to be exercised in conformity with the
provisions of Republic Act No. 409, known as the Revised Charter of the City
of Manila.
In the course of its ministry, plaintiff's Philippine agency has been distributing
and selling bibles and/or gospel portions thereof (except during the Japanese
occupation) throughout the Philippines and translating the same into several
Philippine dialects. On May 29 1953, the acting City Treasurer of the City of
Manila informed plaintiff that it was conducting the business of general
merchandise since November, 1945, without providing itself with the
necessary Mayor's permit and municipal license, in violation of Ordinance No.
3000, as amended, and Ordinances Nos. 2529, 3028 and 3364, and required
plaintiff to secure, within three days, the corresponding permit and license
fees, together with compromise covering the period from the 4th quarter of
1945 to the 2nd quarter of 1953, in the total sum of P5,821.45 (Annex A).
Plaintiff protested against this requirement, but the City Treasurer demanded
that plaintiff deposit and pay under protest the sum of P5,891.45, if suit was to
be taken in court regarding the same (Annex B). To avoid the closing of its
business as well as further fines and penalties in the premises on October 24,
1953, plaintiff paid to the defendant under protest the said permit and license
fees in the aforementioned amount, giving at the same time notice to the City
Treasurer that suit would be taken in court to question the legality of the
ordinances under which, the said fees were being collected (Annex C), which
was done on the same date by filing the complaint that gave rise to this action.
In its complaint plaintiff prays that judgment be rendered declaring the said
Municipal Ordinance No. 3000, as amended, and Ordinances Nos. 2529, 3028
and 3364 illegal and unconstitutional, and that the defendant be ordered to
refund to the plaintiff the sum of P5,891.45 paid under protest, together with
legal interest thereon, and the costs, plaintiff further praying for such other
relief and remedy as the court may deem just equitable.
Defendant answered the complaint, maintaining in turn that said ordinances
were enacted by the Municipal Board of the City of Manila by virtue of the
power granted to it by section 2444, subsection (m-2) of the Revised
Administrative Code, superseded on June 18, 1949, by section 18, subsection
(1) of Republic Act No. 409, known as the Revised Charter of the City of
Manila, and praying that the complaint be dismissed, with costs against
plaintiff. This answer was replied by the plaintiff reiterating the
unconstitutionality of the often-repeated ordinances.
Before trial the parties submitted the following stipulation of facts:
COME NOW the parties in the above-entitled case, thru their undersigned
attorneys and respectfully submit the following stipulation of facts:
1. That the plaintiff sold for the use of the purchasers at its principal office at
636 Isaac Peral, Manila, Bibles, New Testaments, bible portions and bible
concordance in English and other foreign languages imported by it from the
United States as well as Bibles, New Testaments and bible portions in the local
dialects imported and/or purchased locally; that from the fourth quarter of 1945
to the first quarter of 1953 inclusive the sales made by the plaintiff were as
follows:
Quarter Amount of Sales
4th quarter 1945 P1,244.21
1st quarter 1946 2,206.85 2nd quarter 1950 21,816.32

2nd quarter 1946 1,950.38 3rd quarter 1950 25,004.55

3rd quarter 1946 2,235.99 4th quarter 1950 45,287.92

4th quarter 1946 3,256.04 1st quarter 1951 37,841.21

1st quarter 1947 13,241.07 2nd quarter 1951 29,103.98

2nd quarter 1947 15,774.55 3rd quarter 1951 20,181.10

3rd quarter 1947 14,654.13 4th quarter 1951 22,968.91

4th quarter 1947 12,590.94 1st quarter 1952 23,002.65

1st quarter 1948 11,143.90 2nd quarter 1952 17,626.96

2nd quarter 1948 14,715.26 3rd quarter 1952 17,921.01

3rd quarter 1948 38,333.83 4th quarter 1952 24,180.72

4th quarter 1948 16,179.90 1st quarter 1953 29,516.21

2. That the parties hereby reserve the right to present evidence of other facts
1st quarter 1949 23,975.10
not herein stipulated.

2nd quarter 1949 17,802.08 WHEREFORE, it is respectfully prayed that this case be set for hearing so that
the parties may present further evidence on their behalf. (Record on Appeal,
pp. 15-16).
3rd quarter 1949 16,640.79
When the case was set for hearing, plaintiff proved, among other things, that
it has been in existence in the Philippines since 1899, and that its parent
4th quarter 1949 15,961.38 society is in New York, United States of America; that its, contiguous real
properties located at Isaac Peral are exempt from real estate taxes; and that it
1st quarter 1950 18,562.46 was never required to pay any municipal license fee or tax before the war, nor
does the American Bible Society in the United States pay any license fee or
sales tax for the sale of bible therein. Plaintiff further tried to establish that it
never made any profit from the sale of its bibles, which are disposed of for as
low as one third of the cost, and that in order to maintain its operating cost it
obtains substantial remittances from its New York office and voluntary
contributions and gifts from certain churches, both in the United States and in
the Philippines, which are interested in its missionary work. Regarding
plaintiff's contention of lack of profit in the sale of bibles, defendant retorts that
the admissions of plaintiff-appellant's lone witness who testified on cross-
examination that bibles bearing the price of 70 cents each from plaintiff-
appellant's New York office are sold here by plaintiff-appellant at P1.30 each;
those bearing the price of $4.50 each are sold here at P10 each; those bearing
the price of $7 each are sold here at P15 each; and those bearing the price of
$11 each are sold here at P22 each, clearly show that plaintiff's contention that
it never makes any profit from the sale of its bible, is evidently untenable.
After hearing the Court rendered judgment, the last part of which is as follows:
As may be seen from the repealed section (m-2) of the Revised Administrative
Code and the repealing portions (o) of section 18 of Republic Act No. 409,
although they seemingly differ in the way the legislative intent is expressed,
yet their meaning is practically the same for the purpose of taxing the
merchandise mentioned in said legal provisions, and that the taxes to be levied
by said ordinances is in the nature of percentage graduated taxes (Sec. 3 of
Ordinance No. 3000, as amended, and Sec. 1, Group 2, of Ordinance No.
2529, as amended by Ordinance No. 3364).
IN VIEW OF THE FOREGOING CONSIDERATIONS, this Court is of the
opinion and so holds that this case should be dismissed, as it is hereby
dismissed, for lack of merits, with costs against the plaintiff.
Not satisfied with this verdict plaintiff took up the matter to the Court of Appeals
which certified the case to Us for the reason that the errors assigned to the
lower Court involved only questions of law.
Appellant contends that the lower Court erred:
1. In holding that Ordinances Nos. 2529 and 3000, as respectively amended,
are not unconstitutional;
2. In holding that subsection m-2 of Section 2444 of the Revised Administrative
Code under which Ordinances Nos. 2592 and 3000 were promulgated, was
not repealed by Section 18 of Republic Act No. 409;
3. In not holding that an ordinance providing for taxes based on gross sales or
receipts, in order to be valid under the new Charter of the City of Manila, must
first be approved by the President of the Philippines; and
4. In holding that, as the sales made by the plaintiff-appellant have assumed
commercial proportions, it cannot escape from the operation of said municipal
ordinances under the cloak of religious privilege.
The issues. — As may be seen from the proceeding statement of the case, the
issues involved in the present controversy may be reduced to the following: (1)
whether or not the ordinances of the City of Manila, Nos. 3000, as amended,
and 2529, 3028 and 3364, are constitutional and valid; and (2) whether the
provisions of said ordinances are applicable or not to the case at bar.
Section 1, subsection (7) of Article III of the Constitution of the Republic of the
Philippines, provides that:
(7) No law shall be made respecting an establishment of religion, or prohibiting
the free exercise thereof, and the free exercise and enjoyment of religious
profession and worship, without discrimination or preference, shall forever be
allowed. No religion test shall be required for the exercise of civil or political
rights.
Predicated on this constitutional mandate, plaintiff-appellant contends that
Ordinances Nos. 2529 and 3000, as respectively amended, are
unconstitutional and illegal in so far as its society is concerned, because they
provide for religious censorship and restrain the free exercise and enjoyment
of its religious profession, to wit: the distribution and sale of bibles and other
religious literature to the people of the Philippines.
Before entering into a discussion of the constitutional aspect of the case, We
shall first consider the provisions of the questioned ordinances in relation to
their application to the sale of bibles, etc. by appellant. The records, show that
by letter of May 29, 1953 (Annex A), the City Treasurer required plaintiff to
secure a Mayor's permit in connection with the society's alleged business of
distributing and selling bibles, etc. and to pay permit dues in the sum of P35
for the period covered in this litigation, plus the sum of P35 for compromise on
account of plaintiff's failure to secure the permit required by Ordinance No.
3000 of the City of Manila, as amended. This Ordinance is of general
application and not particularly directed against institutions like the plaintiff,
and it does not contain any provisions whatever prescribing religious
censorship nor restraining the free exercise and enjoyment of any religious
profession. Section 1 of Ordinance No. 3000 reads as follows:
SEC. 1. PERMITS NECESSARY. — It shall be unlawful for any person or
entity to conduct or engage in any of the businesses, trades, or
occupations enumerated in Section 3 of this Ordinance or other businesses,
trades, or occupations for which a permit is required for the proper supervision
and enforcement of existing laws and ordinances governing the sanitation,
security, and welfare of the public and the health of the employees engaged in
the business specified in said section 3 hereof, WITHOUT FIRST HAVING
OBTAINED A PERMIT THEREFOR FROM THE MAYOR AND THE
NECESSARY LICENSE FROM THE CITY TREASURER.
The business, trade or occupation of the plaintiff involved in this case is not
particularly mentioned in Section 3 of the Ordinance, and the record does not
show that a permit is required therefor under existing laws and ordinances for
the proper supervision and enforcement of their provisions governing the
sanitation, security and welfare of the public and the health of the employees
engaged in the business of the plaintiff. However, sections 3 of Ordinance
3000 contains item No. 79, which reads as follows:
79. All other businesses, trades or occupations not
mentioned in this Ordinance, except those upon which the
City is not empowered to license or to tax P5.00
Therefore, the necessity of the permit is made to depend upon the power of
the City to license or tax said business, trade or occupation.
As to the license fees that the Treasurer of the City of Manila required the
society to pay from the 4th quarter of 1945 to the 1st quarter of 1953 in the
sum of P5,821.45, including the sum of P50 as compromise, Ordinance No.
2529, as amended by Ordinances Nos. 2779, 2821 and 3028 prescribes the
following:
SEC. 1. FEES. — Subject to the provisions of section 578 of the Revised
Ordinances of the City of Manila, as amended, there shall be paid to the City
Treasurer for engaging in any of the businesses or occupations below
enumerated, quarterly, license fees based on gross sales or receipts realized
during the preceding quarter in accordance with the rates herein prescribed:
PROVIDED, HOWEVER, That a person engaged in any businesses or
occupation for the first time shall pay the initial license fee based on the
probable gross sales or receipts for the first quarter beginning from the date of
the opening of the business as indicated herein for the corresponding business
or occupation.
xxx xxx xxx
GROUP 2. — Retail dealers in new (not yet used) merchandise, which dealers
are not yet subject to the payment of any municipal tax, such as (1) retail
dealers in general merchandise; (2) retail dealers exclusively engaged in the
sale of . . . books, including stationery.
xxx xxx xxx
As may be seen, the license fees required to be paid quarterly in Section 1 of
said Ordinance No. 2529, as amended, are not imposed directly upon any
religious institution but upon those engaged in any of the business or
occupations therein enumerated, such as retail "dealers in general
merchandise" which, it is alleged, cover the business or occupation of selling
bibles, books, etc.
Chapter 60 of the Revised Administrative Code which includes section 2444,
subsection (m-2) of said legal body, as amended by Act No. 3659, approved
on December 8, 1929, empowers the Municipal Board of the City of Manila:
(M-2) To tax and fix the license fee on (a) dealers in new automobiles or
accessories or both, and (b) retail dealers in new (not yet used) merchandise,
which dealers are not yet subject to the payment of any municipal tax.
For the purpose of taxation, these retail dealers shall be classified as (1) retail
dealers in general merchandise, and (2) retail dealers exclusively engaged in
the sale of (a) textiles . . . (e) books, including stationery, paper and office
supplies, . . .: PROVIDED, HOWEVER, That the combined total tax of any
debtor or manufacturer, or both, enumerated under these subsections (m-1)
and (m-2), whether dealing in one or all of the articles mentioned herein,
SHALL NOT BE IN EXCESS OF FIVE HUNDRED PESOS PER ANNUM.
and appellee's counsel maintains that City Ordinances Nos. 2529 and 3000,
as amended, were enacted in virtue of the power that said Act No. 3669
conferred upon the City of Manila. Appellant, however, contends that said
ordinances are longer in force and effect as the law under which they were
promulgated has been expressly repealed by Section 102 of Republic Act No.
409 passed on June 18, 1949, known as the Revised Manila Charter.
Passing upon this point the lower Court categorically stated that Republic Act
No. 409 expressly repealed the provisions of Chapter 60 of the Revised
Administrative Code but in the opinion of the trial Judge, although Section 2444
(m-2) of the former Manila Charter and section 18 (o) of the new seemingly
differ in the way the legislative intent was expressed, yet their meaning is
practically the same for the purpose of taxing the merchandise mentioned in
both legal provisions and, consequently, Ordinances Nos. 2529 and 3000, as
amended, are to be considered as still in full force and effect uninterruptedly
up to the present.
Often the legislature, instead of simply amending the pre-existing statute, will
repeal the old statute in its entirety and by the same enactment re-enact all or
certain portions of the preexisting law. Of course, the problem created by this
sort of legislative action involves mainly the effect of the repeal upon rights and
liabilities which accrued under the original statute. Are those rights and
liabilities destroyed or preserved? The authorities are divided as to the effect
of simultaneous repeals and re-enactments. Some adhere to the view that the
rights and liabilities accrued under the repealed act are destroyed, since the
statutes from which they sprang are actually terminated, even though for only
a very short period of time. Others, and they seem to be in the majority, refuse
to accept this view of the situation, and consequently maintain that all rights
an liabilities which have accrued under the original statute are preserved and
may be enforced, since the re-enactment neutralizes the repeal, therefore,
continuing the law in force without interruption. (Crawford-Statutory
Construction, Sec. 322).
Appellant's counsel states that section 18 (o) of Republic Act No, 409
introduces a new and wider concept of taxation and is different from the
provisions of Section 2444(m-2) that the former cannot be considered as a
substantial re-enactment of the provisions of the latter. We have quoted above
the provisions of section 2444(m-2) of the Revised Administrative Code and
We shall now copy hereunder the provisions of Section 18, subdivision (o) of
Republic Act No. 409, which reads as follows:
(o) To tax and fix the license fee on dealers in general merchandise, including
importers and indentors, except those dealers who may be expressly subject
to the payment of some other municipal tax under the provisions of this section.
Dealers in general merchandise shall be classified as (a) wholesale dealers
and (b) retail dealers. For purposes of the tax on retail dealers, general
merchandise shall be classified into four main classes: namely (1) luxury
articles, (2) semi-luxury articles, (3) essential commodities, and (4)
miscellaneous articles. A separate license shall be prescribed for each class
but where commodities of different classes are sold in the same establishment,
it shall not be compulsory for the owner to secure more than one license if he
pays the higher or highest rate of tax prescribed by ordinance. Wholesale
dealers shall pay the license tax as such, as may be provided by ordinance.
For purposes of this section, the term "General merchandise" shall include
poultry and livestock, agricultural products, fish and other allied products.
The only essential difference that We find between these two provisions that
may have any bearing on the case at bar, is that, while subsection (m-2)
prescribes that the combined total tax of any dealer or manufacturer, or both,
enumerated under subsections (m-1) and (m-2), whether dealing in one or all
of the articles mentioned therein, shall not be in excess of P500 per annum,
the corresponding section 18, subsection (o) of Republic Act No. 409, does
not contain any limitation as to the amount of tax or license fee that the retail
dealer has to pay per annum. Hence, and in accordance with the weight of the
authorities above referred to that maintain that "all rights and liabilities which
have accrued under the original statute are preserved and may be enforced,
since the reenactment neutralizes the repeal, therefore continuing the law in
force without interruption", We hold that the questioned ordinances of the City
of Manila are still in force and effect.
Plaintiff, however, argues that the questioned ordinances, to be valid, must
first be approved by the President of the Philippines as per section 18,
subsection (ii) of Republic Act No. 409, which reads as follows:
(ii) To tax, license and regulate any business, trade or occupation being
conducted within the City of Manila, not otherwise enumerated in the
preceding subsections, including percentage taxes based on gross sales or
receipts, subject to the approval of the PRESIDENT, except amusement taxes.
but this requirement of the President's approval was not contained in section
2444 of the former Charter of the City of Manila under which Ordinance No.
2529 was promulgated. Anyway, as stated by appellee's counsel, the business
of "retail dealers in general merchandise" is expressly enumerated in
subsection (o), section 18 of Republic Act No. 409; hence, an ordinance
prescribing a municipal tax on said business does not have to be approved by
the President to be effective, as it is not among those referred to in said
subsection (ii). Moreover, the questioned ordinances are still in force, having
been promulgated by the Municipal Board of the City of Manila under the
authority granted to it by law.
The question that now remains to be determined is whether said ordinances
are inapplicable, invalid or unconstitutional if applied to the alleged business
of distribution and sale of bibles to the people of the Philippines by a religious
corporation like the American Bible Society, plaintiff herein.
With regard to Ordinance No. 2529, as amended by Ordinances Nos. 2779,
2821 and 3028, appellant contends that it is unconstitutional and illegal
because it restrains the free exercise and enjoyment of the religious profession
and worship of appellant.
Article III, section 1, clause (7) of the Constitution of the Philippines
aforequoted, guarantees the freedom of religious profession and worship.
"Religion has been spoken of as a profession of faith to an active power that
binds and elevates man to its Creator" (Aglipay vs. Ruiz, 64 Phil., 201).It has
reference to one's views of his relations to His Creator and to the obligations
they impose of reverence to His being and character, and obedience to His
Will (Davis vs. Beason, 133 U.S., 342). The constitutional guaranty of the free
exercise and enjoyment of religious profession and worship carries with it the
right to disseminate religious information. Any restraints of such right can only
be justified like other restraints of freedom of expression on the grounds that
there is a clear and present danger of any substantive evil which the State has
the right to prevent". (Tañada and Fernando on the Constitution of the
Philippines, Vol. 1, 4th ed., p. 297). In the case at bar the license fee herein
involved is imposed upon appellant for its distribution and sale of bibles and
other religious literature:
In the case of Murdock vs. Pennsylvania, it was held that an ordinance
requiring that a license be obtained before a person could canvass or solicit
orders for goods, paintings, pictures, wares or merchandise cannot be made
to apply to members of Jehovah's Witnesses who went about from door to
door distributing literature and soliciting people to "purchase" certain religious
books and pamphlets, all published by the Watch Tower Bible & Tract Society.
The "price" of the books was twenty-five cents each, the "price" of the
pamphlets five cents each. It was shown that in making the solicitations there
was a request for additional "contribution" of twenty-five cents each for the
books and five cents each for the pamphlets. Lesser sum were accepted,
however, and books were even donated in case interested persons were
without funds.
On the above facts the Supreme Court held that it could not be said that
petitioners were engaged in commercial rather than a religious venture. Their
activities could not be described as embraced in the occupation of selling
books and pamphlets. Then the Court continued:
"We do not mean to say that religious groups and the press are free from all
financial burdens of government. See Grosjean vs. American Press Co., 297
U.S., 233, 250, 80 L. ed. 660, 668, 56 S. Ct. 444. We have here something
quite different, for example, from a tax on the income of one who engages in
religious activities or a tax on property used or employed in connection with
activities. It is one thing to impose a tax on the income or property of a
preacher. It is quite another to exact a tax from him for the privilege of
delivering a sermon. The tax imposed by the City of Jeannette is a flat license
tax, payment of which is a condition of the exercise of these constitutional
privileges. The power to tax the exercise of a privilege is the power to control
or suppress its enjoyment. . . . Those who can tax the exercise of this religious
practice can make its exercise so costly as to deprive it of the resources
necessary for its maintenance. Those who can tax the privilege of engaging in
this form of missionary evangelism can close all its doors to all those who do
not have a full purse. Spreading religious beliefs in this ancient and honorable
manner would thus be denied the needy. . . .
It is contended however that the fact that the license tax can suppress or
control this activity is unimportant if it does not do so. But that is to disregard
the nature of this tax. It is a license tax — a flat tax imposed on the exercise of
a privilege granted by the Bill of Rights . . . The power to impose a license tax
on the exercise of these freedom is indeed as potent as the power of
censorship which this Court has repeatedly struck down. . . . It is not a nominal
fee imposed as a regulatory measure to defray the expenses of policing the
activities in question. It is in no way apportioned. It is flat license tax levied and
collected as a condition to the pursuit of activities whose enjoyment is
guaranteed by the constitutional liberties of press and religion and inevitably
tends to suppress their exercise. That is almost uniformly recognized as the
inherent vice and evil of this flat license tax."
Nor could dissemination of religious information be conditioned upon the
approval of an official or manager even if the town were owned by a
corporation as held in the case of Marsh vs. State of Alabama (326 U.S. 501),
or by the United States itself as held in the case of Tucker vs. Texas (326 U.S.
517). In the former case the Supreme Court expressed the opinion that the
right to enjoy freedom of the press and religion occupies a preferred position
as against the constitutional right of property owners.
"When we balance the constitutional rights of owners of property against those
of the people to enjoy freedom of press and religion, as we must here, we
remain mindful of the fact that the latter occupy a preferred position. . . . In our
view the circumstance that the property rights to the premises where the
deprivation of property here involved, took place, were held by others than the
public, is not sufficient to justify the State's permitting a corporation to govern
a community of citizens so as to restrict their fundamental liberties and the
enforcement of such restraint by the application of a State statute." (Tañada
and Fernando on the Constitution of the Philippines, Vol. 1, 4th ed., p. 304-
306).
Section 27 of Commonwealth Act No. 466, otherwise known as the National
Internal Revenue Code, provides:
SEC. 27. EXEMPTIONS FROM TAX ON CORPORATIONS. — The following
organizations shall not be taxed under this Title in respect to income received
by them as such —
(e) Corporations or associations organized and operated exclusively
for religious, charitable, . . . or educational purposes, . . .: Provided, however,
That the income of whatever kind and character from any of its properties, real
or personal, or from any activity conducted for profit, regardless of the
disposition made of such income, shall be liable to the tax imposed under this
Code;
Appellant's counsel claims that the Collector of Internal Revenue has
exempted the plaintiff from this tax and says that such exemption clearly
indicates that the act of distributing and selling bibles, etc. is purely religious
and does not fall under the above legal provisions.
It may be true that in the case at bar the price asked for the bibles and other
religious pamphlets was in some instances a little bit higher than the actual
cost of the same but this cannot mean that appellant was engaged in the
business or occupation of selling said "merchandise" for profit. For this reason
We believe that the provisions of City of Manila Ordinance No. 2529, as
amended, cannot be applied to appellant, for in doing so it would impair its free
exercise and enjoyment of its religious profession and worship as well as its
rights of dissemination of religious beliefs.
With respect to Ordinance No. 3000, as amended, which requires the
obtention the Mayor's permit before any person can engage in any of the
businesses, trades or occupations enumerated therein, We do not find that it
imposes any charge upon the enjoyment of a right granted by the Constitution,
nor tax the exercise of religious practices. In the case of Coleman vs. City of
Griffin, 189 S.E. 427, this point was elucidated as follows:
An ordinance by the City of Griffin, declaring that the practice of distributing
either by hand or otherwise, circulars, handbooks, advertising, or literature of
any kind, whether said articles are being delivered free, or whether same are
being sold within the city limits of the City of Griffin, without first obtaining
written permission from the city manager of the City of Griffin, shall be deemed
a nuisance and punishable as an offense against the City of Griffin, does not
deprive defendant of his constitutional right of the free exercise and enjoyment
of religious profession and worship, even though it prohibits him from
introducing and carrying out a scheme or purpose which he sees fit to claim
as a part of his religious system.
It seems clear, therefore, that Ordinance No. 3000 cannot be considered
unconstitutional, even if applied to plaintiff Society. But as Ordinance No. 2529
of the City of Manila, as amended, is not applicable to plaintiff-appellant and
defendant-appellee is powerless to license or tax the business of plaintiff
Society involved herein for, as stated before, it would impair plaintiff's right to
the free exercise and enjoyment of its religious profession and worship, as well
as its rights of dissemination of religious beliefs, We find that Ordinance No.
3000, as amended is also inapplicable to said business, trade or occupation
of the plaintiff.
Wherefore, and on the strength of the foregoing considerations, We hereby
reverse the decision appealed from, sentencing defendant return to plaintiff
the sum of P5,891.45 unduly collected from it. Without pronouncement as to
costs. It is so ordered.
YMCA VS CIR
Is the income derived from rentals of real property owned by the Young Men's
Christian Association of the Philippines, Inc. (YMCA) — established as "a
welfare, educational and charitable non-profit corporation" — subject to
income tax under the National Internal Revenue Code (NIRC) and the
Constitution?
The Case
This is the main question raised before us in this petition for review
on certiorari challenging two Resolutions issued by the Court of Appeals 1 on
September 28, 19952 and February 29, 19963 in CA-GR SP No. 32007. Both
Resolutions affirmed the Decision of the Court of Tax Appeals (CTA) allowing
the YMCA to claim tax exemption on the latter's income from the lease of its
real property.
The Facts
The facts are undisputed.4 Private Respondent YMCA is a non-stock, non-
profit institution, which conducts various programs and activities that are
beneficial to the public, especially the young people, pursuant to its religious,
educational and charitable objectives.
In 1980, private respondent earned, among others, an income of P676,829.80
from leasing out a portion of its premises to small shop owners, like restaurants
and canteen operators, and P44,259.00 from parking fees collected from non-
members. On July 2, 1984, the commissioner of internal revenue (CIR) issued
an assessment to private respondent, in the total amount of P415,615.01
including surcharge and interest, for deficiency income tax, deficiency
expanded withholding taxes on rentals and professional fees and deficiency
withholding tax on wages. Private respondent formally protested the
assessment and, as a supplement to its basic protest, filed a letter dated
October 8, 1985. In reply, the CIR denied the claims of YMCA.
Contesting the denial of its protest, the YMCA filed a petition for review at the
Court of Tax Appeals (CTA) on March 14, 1989. In due course, the CTA issued
this ruling in favor of the YMCA:
. . . [T]he leasing of [private respondent's] facilities to small shop owners, to
restaurant and canteen operators and the operation of the parking lot are
reasonably incidental to and reasonably necessary for the accomplishment of
the objectives of the [private respondents]. It appears from the testimonies of
the witnesses for the [private respondent] particularly Mr. James C. Delote,
former accountant of YMCA, that these facilities were leased to members and
that they have to service the needs of its members and their guests. The
rentals were minimal as for example, the barbershop was only charged P300
per month. He also testified that there was actually no lot devoted for parking
space but the parking was done at the sides of the building. The parking was
primarily for members with stickers on the windshields of their cars and they
charged P.50 for non-members. The rentals and parking fees were just enough
to cover the costs of operation and maintenance only. The earning[s] from
these rentals and parking charges including those from lodging and other
charges for the use of the recreational facilities constitute [the] bulk of its
income which [is] channeled to support its many activities and attainment of its
objectives. As pointed out earlier, the membership dues are very insufficient
to support its program. We find it reasonably necessary therefore for [private
respondent] to make [the] most out [of] its existing facilities to earn some
income. It would have been different if under the circumstances, [private
respondent] will purchase a lot and convert it to a parking lot to cater to the
needs of the general public for a fee, or construct a building and lease it out to
the highest bidder or at the market rate for commercial purposes, or should it
invest its funds in the buy and sell of properties, real or personal. Under these
circumstances, we could conclude that the activities are already profit oriented,
not incidental and reasonably necessary to the pursuit of the objectives of the
association and therefore, will fall under the last paragraph of Section 27 of the
Tax Code and any income derived therefrom shall be taxable.
Considering our findings that [private respondent] was not engaged in the
business of operating or contracting [a] parking lot, we find no legal basis also
for the imposition of [a] deficiency fixed tax and [a] contractor's tax in the
amount[s] of P353.15 and P3,129.73, respectively.
xxx xxx xxx
WHEREFORE, in view of all the foregoing, the following assessments are
hereby dismissed for lack of merit:
1980 Deficiency Fixed Tax — P353,15;
1980 Deficiency Contractor's Tax — P3,129.23;
1980 Deficiency Income Tax — P372,578.20.
While the following assessments are hereby sustained:
1980 Deficiency Expanded Withholding Tax — P1,798.93;
1980 Deficiency Withholding Tax on Wages — P33,058.82
plus 10% surcharge and 20% interest per annum from July 2, 1984 until fully
paid but not to exceed three (3) years pursuant to Section 51(e)(2) & (3) of the
National Internal Revenue Code effective as of 1984. 5
Dissatisfied with the CTA ruling, the CIR elevated the case to the Court of
Appeals (CA). In its Decision of February 16, 1994, the CA6 initially decided in
favor of the CIR and disposed of the appeal in the following manner:
Following the ruling in the afore-cited cases of Province of Abra vs.
Hernando and Abra Valley College Inc. vs. Aquino, the ruling of the
respondent Court of Tax Appeals that "the leasing of petitioner's (herein
respondent's) facilities to small shop owners, to restaurant and canteen
operators and the operation of the parking lot are reasonably incidental to and
reasonably necessary for the accomplishment of the objectives of the
petitioners, and the income derived therefrom are tax exempt, must be
reversed.
WHEREFORE, the appealed decision is hereby REVERSED in so far as it
dismissed the assessment for:
1980 Deficiency Income Tax P 353.15
1980 Deficiency Contractor's Tax P 3,129.23, &
1980 Deficiency Income Tax P 372,578.20
but the same is AFFIRMED in all other respect. 7
Aggrieved, the YMCA asked for reconsideration based on the following
grounds:
I
The findings of facts of the Public Respondent Court of Tax Appeals being
supported by substantial evidence [are] final and conclusive.
II
The conclusions of law of [p]ublic [r]espondent exempting [p]rivate
[r]espondent from the income on rentals of small shops and parking fees [are]
in accord with the applicable law and jurisprudence. 8
Finding merit in the Motion for Reconsideration filed by the YMCA, the CA
reversed itself and promulgated on September 28, 1995 its first assailed
Resolution which, in part, reads:
The Court cannot depart from the CTA's findings of fact, as they are supported
by evidence beyond what is considered as substantial.
xxx xxx xxx
The second ground raised is that the respondent CTA did not err in saying that
the rental from small shops and parking fees do not result in the loss of the
exemption. Not even the petitioner would hazard the suggestion that YMCA is
designed for profit. Consequently, the little income from small shops and
parking fees help[s] to keep its head above the water, so to speak, and allow
it to continue with its laudable work.
The Court, therefore, finds the second ground of the motion to be meritorious
and in accord with law and jurisprudence.
WHEREFORE, the motion for reconsideration is GRANTED; the respondent
CTA's decision is AFFIRMED in toto.9
The internal revenue commissioner's own Motion for Reconsideration was
denied by Respondent Court in its second assailed Resolution of February 29,
1996. Hence, this petition for review under Rule 45 of the Rules of Court. 10
The Issues
Before us, petitioner imputes to the Court of Appeals the following errors:
I
In holding that it had departed from the findings of fact of Respondent Court of
Tax Appeals when it rendered its Decision dated February 16, 1994; and
II
In affirming the conclusion of Respondent Court of Tax Appeals that the
income of private respondent from rentals of small shops and parking fees [is]
exempt from taxation. 11
This Court's Ruling
The petition is meritorious.
First Issue:
Factual Findings of the CTA
Private respondent contends that the February 16, 1994 CA Decision reversed
the factual findings of the CTA. On the other hand, petitioner argues that the
CA merely reversed the "ruling of the CTA that the leasing of private
respondent's facilities to small shop owners, to restaurant and canteen
operators and the operation of parking lots are reasonably incidental to and
reasonably necessary for the accomplishment of the objectives of the private
respondent and that the income derived therefrom are tax
exempt." 12 Petitioner insists that what the appellate court reversed was the
legal conclusion, not the factual finding, of the CTA. 13 The commissioner has
a point.
Indeed, it is a basic rule in taxation that the factual findings of the CTA, when
supported by substantial evidence, will be disturbed on appeal unless it is
shown that the said court committed gross error in the appreciation of
facts. 14 In the present case, this Court finds that the February 16, 1994
Decision of the CA did not deviate from this rule. The latter merely applied the
law to the facts as found by the CTA and ruled on the issue raised by the CIR:
"Whether or not the collection or earnings of rental income from the lease of
certain premises and income earned from parking fees shall fall under the last
paragraph of Section 27 of the National Internal Revenue Code of 1977, as
amended." 15
Clearly, the CA did not alter any fact or evidence. It merely resolved the
aforementioned issue, as indeed it was expected to. That it did so in a manner
different from that of the CTA did not necessarily imply a reversal of factual
findings.
The distinction between a question of law and a question of fact is clear-cut. It
has been held that "[t]here is a question of law in a given case when the doubt
or difference arises as to what the law is on a certain state of facts; there is a
question of fact when the doubt or difference arises as to the truth or falsehood
of alleged facts." 16 In the present case, the CA did not doubt, much less
change, the facts narrated by the CTA. It merely applied the law to the facts.
That its interpretation or conclusion is different from that of the CTA is not
irregular or abnormal.
Second Issue:
Is the Rental Income of the YMCA Taxable?
We now come to the crucial issue: Is the rental income of the YMCA from its
real estate subject to tax? At the outset, we set forth the relevant provision of
the NIRC:
Sec. 27. Exemptions from tax on corporations. — The following organizations
shall not be taxed under this Title in respect to income received by them as
such —
xxx xxx xxx
(g) Civic league or organization not organized for profit but operated
exclusively for the promotion of social welfare;
(h) Club organized and operated exclusively for pleasure, recreation, and other
non-profitable purposes, no part of the net income of which inures to the benefit
of any private stockholder or member;
xxx xxx xxx
Notwithstanding the provisions in the preceding paragraphs, the income of
whatever kind and character of the foregoing organizations from any of their
properties, real or personal, or from any of their activities conducted for profit,
regardless of the disposition made of such income, shall be subject to the tax
imposed under this Code. (as amended by Pres. Decree No. 1457)
Petitioner argues that while the income received by the organizations
enumerated in Section 27 (now Section 26) of the NIRC is, as a rule, exempted
from the payment of tax "in respect to income received by them as such," the
exemption does not apply to income derived ". . . from any of their properties,
real or personal, or from any of their activities conducted for profit, regardless
of the disposition made of such income . . . ."
Petitioner adds that "rental income derived by a tax-exempt organization from
the lease of its properties, real or personal, [is] not, therefore, exempt from
income taxation, even if such income [is] exclusively used for the
accomplishment of its objectives." 17 We agree with the commissioner.
Because taxes are the lifeblood of the nation, the Court has always applied the
doctrine of strict in interpretation in construing tax exemptions. 18 Furthermore,
a claim of statutory exemption from taxation should be manifest. and
unmistakable from the language of the law on which it is based. Thus, the
claimed exemption "must expressly be granted in a statute stated in a
language too clear to be mistaken." 19
In the instant case, the exemption claimed by the YMCA is expressly
disallowed by the very wording of the last paragraph of then Section 27 of the
NIRC which mandates that the income of exempt organizations (such as the
YMCA) from any of their properties, real or personal, be subject to the tax
imposed by the same Code. Because the last paragraph of said section
unequivocally subjects to tax the rent income of the YMCA from its real
property, 20 the Court is duty-bound to abide strictly by its literal meaning and
to refrain from resorting to any convoluted attempt at construction.
It is axiomatic that where the language of the law is clear and unambiguous,
its express terms must be applied. 21 Parenthetically, a consideration of the
question of construction must not even begin, particularly when such question
is on whether to apply a strict construction or a liberal one on statutes that
grant tax exemptions to "religious, charitable and educational propert[ies] or
institutions." 22
The last paragraph of Section 27, the YMCA argues, should be "subject to the
qualification that the income from the properties must arise from activities
'conducted for profit' before it may be considered taxable." 23 This argument is
erroneous. As previously stated, a reading of said paragraph ineludibly shows
that the income from any property of exempt organizations, as well as that
arising from any activity it conducts for profit, is taxable. The phrase "any of
their activities conducted for profit" does not qualify the word "properties." This
makes from the property of the organization taxable, regardless of how that
income is used — whether for profit or for lofty non-profit purposes.
Verba legis non est recedendum. Hence, Respondent Court of Appeals
committed reversible error when it allowed, on reconsideration, the tax
exemption claimed by YMCA on income it derived from renting out its real
property, on the solitary but unconvincing ground that the said income is not
collected for profit but is merely incidental to its operation. The law does not
make a distinction. The rental income is taxable regardless of whence such
income is derived and how it is used or disposed of. Where the law does not
distinguish, neither should we.
Constitutional Provisions
On Taxation
Invoking not only the NIRC but also the fundamental law, private respondent
submits that Article VI, Section 28 of par. 3 of the 1987
Constitution, 24 exempts "charitable institutions" from the payment not only of
property taxes but also of income tax from any source. 25 In support of its novel
theory, it compares the use of the words "charitable institutions," "actually" and
"directly" in the 1973 and the 1987 Constitutions, on the one hand; and in
Article VI, Section 22, par. 3 of the 1935 Constitution, on the other hand. 26
Private respondent enunciates three points. First, the present provision is
divisible into two categories: (1) "[c]haritable institutions, churches and
parsonages or convents appurtenant thereto, mosques and non-profit
cemeteries," the incomes of which are, from whatever source, all tax-
exempt; 27 and (2) "[a]ll lands, buildings and improvements actually and
directly used for religious, charitable or educational purposes," which are
exempt only from property taxes. 28 Second, Lladoc v. Commissioner of
Internal Revenue, 29 which limited the exemption only to the payment of
property taxes, referred to the provision of the 1935 Constitution and not to its
counterparts in the 1973 and the 1987 Constitutions. 30 Third, the phrase
"actually, directly and exclusively used for religious, charitable or educational
purposes" refers not only to "all lands, buildings and improvements," but also
to the above-quoted first category which includes charitable institutions like the
private respondent. 31
The Court is not persuaded. The debates, interpellations and expressions of
opinion of the framers of the Constitution reveal their intent which, in turn, may
have guided the people in ratifying the Charter. 32 Such intent must be
effectuated.
Accordingly, Justice Hilario G. Davide, Jr., a former constitutional
commissioner, who is now a member of this Court, stressed during the
Concom debates that ". . . what is exempted is not the institution itself . . .;
those exempted from real estate taxes are lands, buildings and improvements
actually, directly and exclusively used for religious, charitable or educational
purposes." 33 Father Joaquin G. Bernas, an eminent authority on the
Constitution and also a member of the Concom, adhered to the same view that
the exemption created by said provision pertained only to property taxes. 34
In his treatise on taxation, Mr. Justice Jose C. Vitug concurs, stating that "[t]he
tax exemption covers property taxes only." 35 Indeed, the income tax
exemption claimed by private respondent finds no basis in Article VI, Section
26, par. 3 of the Constitution.
Private respondent also invokes Article XIV, Section 4, par. 3 of the
Character, 36 claiming that the YMCA "is a non-stock, non-profit educational
institution whose revenues and assets are used actually, directly and
exclusively for educational purposes so it is exempt from taxes on its
properties and income." 37 We reiterate that private respondent is exempt from
the payment of property tax, but not income tax on the rentals from its property.
The bare allegation alone that it is a non-stock, non-profit educational
institution is insufficient to justify its exemption from the payment of income
tax.
As previously discussed, laws allowing tax exemption are
construed strictissimi juris. Hence, for the YMCA to be granted the exemption
it claims under the aforecited provision, it must prove with substantial evidence
that (1) it falls under the classification non-stock, non-profit educational
institution; and (2) the income it seeks to be exempted from taxation is
used actually, directly, and exclusively for educational purposes. However, the
Court notes that not a scintilla of evidence was submitted by private
respondent to prove that it met the said requisites.
Is the YMCA an educational institution within the purview of Article XIV,
Section 4, par. 3 of the Constitution? We rule that it is not. The term
"educational institution" or "institution of learning" has acquired a well-known
technical meaning, of which the members of the Constitutional Commission
are deemed cognizant. 38 Under the Education Act of 1982, such term refers
to schools. 39 The school system is synonymous with formal
education, 40 which "refers to the hierarchically structured and chronologically
graded learnings organized and provided by the formal school system and for
which certification is required in order for the learner to progress through the
grades or move to the higher levels." 41 The Court has examined the
"Amended Articles of Incorporation" and "By-Laws"43 of the YMCA, but found
nothing in them that even hints that it is a school or an educational institution. 44
Furthermore, under the Education Act of 1982, even non-formal education is
understood to be school-based and "private auspices such as foundations and
civic-spirited organizations" are ruled out. 45 It is settled that the term
"educational institution," when used in laws granting tax exemptions, refers to
a ". . . school seminary, college or educational establishment . . .
." 46 Therefore, the private respondent cannot be deemed one of the
educational institutions covered by the constitutional provision under
consideration.
. . . Words used in the Constitution are to be taken in their ordinary acceptation.
While in its broadest and best sense education embraces all forms and phases
of instruction, improvement and development of mind and body, and as well of
religious and moral sentiments, yet in the common understanding and
application it means a place where systematic instruction in any or all of the
useful branches of learning is given by methods common to schools and
institutions of learning. That we conceive to be the true intent and scope of the
term [educational institutions,] as used in the
Constitution. 47
Moreover, without conceding that Private Respondent YMCA is an educational
institution, the Court also notes that the former did not submit proof of the
proportionate amount of the subject income that was actually, directly and
exclusively used for educational purposes. Article XIII, Section 5 of the YMCA
by-laws, which formed part of the evidence submitted, is patently insufficient,
since the same merely signified that "[t]he net income derived from the rentals
of the commercial buildings shall be apportioned to the Federation and
Member Associations as the National Board may decide." 48 In sum, we find
no basis for granting the YMCA exemption from income tax under the
constitutional provision invoked.
Cases Cited by Private
Respondent Inapplicable
The cases 49 relied on by private respondent do not support its cause. YMCA
of Manila v. Collector of Internal Revenue 50 and Abra Valley College, Inc. v.
Aquino 51 are not applicable, because the controversy in both cases involved
exemption from the payment of property tax, not income tax. Hospital de San
Juan de Dios, Inc. v. Pasay City 52 is not in point either, because it involves a
claim for exemption from the payment of regulatory fees, specifically electrical
inspection fees, imposed by an ordinance of Pasay City — an issue not at all
related to that involved in a claimed exemption from the payment of income
taxes imposed on property leases. In Jesus Sacred Heart College v. Com. of
Internal Revenue, 53 the party therein, which claimed an exemption from the
payment of income tax, was an educational institution which submitted
substantial evidence that the income subject of the controversy had been
devoted or used solely for educational purposes. On the other hand, the
private respondent in the present case has not given any proof that it is an
educational institution, or that part of its rent income is actually, directly and
exclusively used for educational purposes.
Epilogue
In deliberating on this petition, the Court expresses its sympathy with private
respondent. It appreciates the nobility of its cause. However, the Court's power
and function are limited merely to applying the law fairly and objectively. It
cannot change the law or bend it to suit its sympathies and appreciations.
Otherwise, it would be overspilling its role and invading the realm of legislation.
We concede that private respondent deserves the help and the
encouragement of the government. It needs laws that can facilitate, and not
frustrate, its humanitarian tasks. But the Court regrets that, given its limited
constitutional authority, it cannot rule on the wisdom or propriety of legislation.
That prerogative belongs to the political departments of government. Indeed,
some of the members of the Court may even believe in the wisdom and
prudence of granting more tax exemptions to private respondent. But such
belief, however well-meaning and sincere, cannot bestow upon the Court the
power to change or amend the law.
WHEREFORE, the petition is GRANTED. The Resolutions of the Court of
Appeals dated September 28, 1995 and February 29, 1996 are hereby
REVERSED and SET ASIDE. The Decision of the Court of Appeals dated
February 16, 1995 is REINSTATED, insofar as it ruled that the income derived
by petitioner from rentals of its real property is subject to income tax. No
pronouncement as to costs.
SO ORDERED.
PUNZALAN VS MUNICIPAL BOARD OF MANILA
This suit was commenced in the Court of First Instance of Manila by two
lawyers, a medical practitioner, a public accountant, a dental surgeon and a
pharmacist, purportedly "in their own behalf and in behalf of other
professionals practising in the City of Manila who may desire to join it." Object
of the suit is the annulment of Ordinance No. 3398 of the City of Manila
together with the provision of the Manila charter authorizing it and the refund
of taxes collected under the ordinance but paid under protest.
The ordinance in question, which was approved by the municipal board of the
City of Manila on July 25, 1950, imposes a municipal occupation tax on
persons exercising various professions in the city and penalizes non-payment
of the tax "by a fine of not more than two hundred pesos or by imprisonment
of not more than six months, or by both such fine and imprisonment in the
discretion of the court." Among the professions taxed were those to which
plaintiffs belong. The ordinance was enacted pursuant to paragraph (1) of
section 18 of the Revised Charter of the City of Manila (as amended by
Republic Act No. 409), which empowers the Municipal Board of said city to
impose a municipal occupation tax, not to exceed P50 per annum, on persons
engaged in the various professions above referred to.
Having already paid their occupation tax under section 201 of the National
Internal Revenue Code, plaintiffs, upon being required to pay the additional tax
prescribed in the ordinance, paid the same under protest and then brought the
present suit for the purpose already stated. The lower court upheld the validity
of the provision of law authorizing the enactment of the ordinance but declared
the ordinance itself illegal and void on the ground that the penalty there in
provided for non-payment of the tax was not legally authorized. From this
decision both parties appealed to this Court, and the only question they have
presented for our determination is whether this ruling is correct or not, for
though the decision is silent on the refund of taxes paid plaintiffs make no
assignment of error on this point.
To begin with defendants' appeal, we find that the lower court was in error in
saying that the imposition of the penalty provided for in the ordinance was
without the authority of law. The last paragraph (kk) of the very section that
authorizes the enactment of this tax ordinance (section 18 of the Manila
Charter) in express terms also empowers the Municipal Board "to fix penalties
for the violation of ordinances which shall not exceed to(sic) two hundred
pesos fine or six months" imprisonment, or both such fine and imprisonment,
for a single offense." Hence, the pronouncement below that the ordinance in
question is illegal and void because it imposes a penalty not authorized by law
is clearly without basis.
As to plaintiffs' appeal, the contention in substance is that this ordinance and
the law authorizing it constitute class legislation, are unjust and oppressive,
and authorize what amounts to double taxation.
In raising the hue and cry of "class legislation", the burden of plaintiffs'
complaint is not that the professions to which they respectively belong have
been singled out for the imposition of this municipal occupation tax; and in any
event, the Legislature may, in its discretion, select what occupations shall be
taxed, and in the exercise of that discretion it may tax all, or it may select for
taxation certain classes and leave the others untaxed. (Cooley on Taxation,
Vol. 4, 4th ed., pp. 3393-3395.) Plaintiffs' complaint is that while the law has
authorized the City of Manila to impose the said tax, it has withheld that
authority from other chartered cities, not to mention municipalities. We do not
think it is for the courts to judge what particular cities or municipalities should
be empowered to impose occupation taxes in addition to those imposed by the
National Government. That matter is peculiarly within the domain of the
political departments and the courts would do well not to encroach upon it.
Moreover, as the seat of the National Government and with a population and
volume of trade many times that of any other Philippine city or municipality,
Manila, no doubt, offers a more lucrative field for the practice of the
professions, so that it is but fair that the professionals in Manila be made to
pay a higher occupation tax than their brethren in the provinces.
Plaintiffs brand the ordinance unjust and oppressive because they say that it
creates discrimination within a class in that while professionals with offices in
Manila have to pay the tax, outsiders who have no offices in the city but
practice their profession therein are not subject to the tax. Plaintiffs make a
distinction that is not found in the ordinance. The ordinance imposes the tax
upon every person "exercising" or "pursuing" — in the City of Manila naturally
— any one of the occupations named, but does not say that such person must
have his office in Manila. What constitutes exercise or pursuit of a profession
in the city is a matter of judicial determination. The argument against double
taxation may not be invoked where one tax is imposed by the state and the
other is imposed by the city (1 Cooley on Taxation, 4th ed., p. 492), it being
widely recognized that there is nothing inherently obnoxious in the requirement
that license fees or taxes be exacted with respect to the same occupation,
calling or activity by both the state and the political subdivisions thereof. (51
Am. Jur., 341.)
In view of the foregoing, the judgment appealed from is reversed in so far as it
declares Ordinance No. 3398 of the City of Manila illegal and void and affirmed
in so far as it holds the validity of the provision of the Manila charter authorizing
it. With costs against plaintiffs-appellants.
PHYSICAL THERAPY ORG VS MUNICIPAL BOARD
The petitioner-appellant, an association of registered massagists and licensed
operators of massage clinics in the City of Manila and other parts of the
country, filed an action in the Court of First Instance of Manila for declaratory
judgment regarding the validity of Municipal Ordinance No. 3659, promulgated
by the Municipal Board and approved by the City Mayor. To stop the City from
enforcing said ordinance, the petitioner secured an injunction upon filing of a
bond in the sum of P1,000.00. A hearing was held, but the parties without
introducing any evidence submitted the case for decision on the pleadings,
although they submitted written memoranda. Thereafter, the trial court
dismissed the petition and later dissolved the writ of injunction previously
issued.
The petitioner appealed said order of dismissal directly to this Court. In support
of its appeal, petitioner-appellant contends among other things that the trial
court erred in holding that the Ordinance in question has not restricted the
practice of massotherapy in massage clinics to hygienic and aesthetic
massage, that the Ordinance is valid as it does not regulate the practice of
massage, that the Municipal Board of Manila has the power to enact the
Ordinance in question by virtue of Section 18, Subsection (kk), Republic Act
409, and that permit fee of P100.00 is moderate and not unreasonable.
Inasmuch as the appellant assails and discuss certain provisions regarding the
ordinance in question, and it is necessary to pass upon the same, for purposes
of ready reference, we are reproducing said ordinance in toto.
ORDINANCE No. 3659
AN ORDINANCE REGULATING THE OPERATION OF MASSAGE CLINICS
IN THE CITY OF MANILA AND PROVIDING PENALTIES FOR VIOLATIONS
THEREOF.
Be it ordained by the Municipal Board of the City of Manila, that:
Section 1. Definition. — For the purpose of this Ordinance the following words
and phrases shall be taken in the sense hereinbelow indicated:
(a) Massage clinic shall include any place or establishment used in the practice
of hygienic and aesthetic massage;
(b) Hygienic and aesthetic massage shall include any system of manipulation
of treatment of the superficial parts of the human body of hygienic and
aesthetic purposes by rubbing, stroking, kneading, or tapping with the hand or
an instrument;
(c) Massagist shall include any person who shall have passed the required
examination and shall have been issued a massagist certificate by the
Committee of Examiners of Massagist, or by the Director of Health or his
authorized representative;
(d) Attendant or helper shall include any person employed by a duly qualified
massagist in any message clinic to assist the latter in the practice of hygienic
and aesthethic massage;
(e) Operator shall include the owner, manager, administrator, or any person
who operates or is responsible for the operation of a message clinic.
SEC. 2. Permit Fees. — No person shall engage in the operation of a massage
clinic or in the occupation of attendant or helper therein without first having
obtained a permit therefor from the Mayor. For every permit granted under the
provisions of this Ordinance, there shall be paid to the City Treasurer the
following annual fees:
(a) Operator of a massage P100.00
(b) Attendant or helper 5.00
Said permit, which shall be renewed every year, may be revoked by the Mayor
at any time for the violation of this Ordinance.
SEC. 3. Building requirement. — (a) In each massage clinic, there shall be
separate rooms for the male and female customers. Rooms where massage
operations are performed shall be provided with sliding curtains only instead
of swinging doors. The clinic shall be properly ventilated, well lighted and
maintained under sanitary conditions at all times while the establishment is
open for business and shall be provided with the necessary toilet and washing
facilities.
(b) In every clinic there shall be no private rooms or separated compartment
except those assigned for toilet, lavatories, dressing room, office or kitchen.
(c) Every massage clinic shall "provided with only one entrance and it shall
have no direct or indirect communication whatsoever with any dwelling place,
house or building.
SEC. 4. Regulations for the operation of massage clinics. — (a) It shall be
unlawful for any operator massagist, attendant or helper to use, or allow the
use of, a massage clinic as a place of assignation or permit the commission
therein of any incident or immoral act. Massage clinics shall be used only for
hygienic and aesthetic massage.
(b) Massage clinics shall open at eight o'clock a.m. and shall close at eleven
o'clock p.m.
(c) While engaged in the actual performance of their duties, massagists,
attendants and helpers in a massage clinic shall be as properly and sufficiently
clad as to avoid suspicion of intent to commit an indecent or immoral act;
(d) Attendants or helpers may render service to any individual customer only
for hygienic and aesthetic purposes under the order, direction, supervision,
control and responsibility of a qualified massagist.
SEC. 5. Qualifications — No person who has previously been convicted by
final judgment of competent court of any violation of the provisions of
paragraphs 3 and 5 of Art. 202 and Arts. 335, 336, 340 and 342 of the Revised
Penal Code, or Secs. 819 of the City of Manila, or who is suffering from any
venereal or communicable disease shall engage in the occupation of
massagist, attendant or helper in any massage clinic. Applicants for Mayor's
permit shall attach to their application a police clearance and health certificate
duly issued by the City Health Officers as well as a massagist certificate duly
issued by the Committee or Examiners for Massagists or by the Director of
Health or his authorized representatives, in case of massagists.
SEC. 6. Duty of operator of massage clinic. — No operator of massage clinic
shall allow such clinic to operate without a duly qualified massagist nor allow,
any man or woman to act as massagist, attendant or helper therein without the
Mayor's permit provided for in the preceding sections. He shall submit
whenever required by the Mayor or his authorized representative the persons
acting as massagists, attendants or helpers in his clinic. He shall place the
massage clinic open to inspection at all times by the police, health officers, and
other law enforcement agencies of the government, shall be held liable for
anything which may happen with the premises of the massage clinic.
SEC. 7. Penalty. — Any person violating any of the provisions of this
Ordinance shall upon conviction, be punished by a fine of not less than fifty
pesos nor more than two hundred pesos or by imprisonment for not less than
six days nor more than six months, or both such fine and imprisonment, at the
discretion of the court.
SEC. 8. Repealing Clause. — All ordinances or parts of ordinances, which are
inconsistent herewith, are hereby repealed.
SEC. 9. Effectivity. — This Ordinance shall take effect upon its approval.
Enacted, August 27, 1954.
Approved, September 7, 1954.
The main contention of the appellant in its appeal and the principal ground of
its petition for declaratory judgment is that the City of Manila is without authority
to regulate the operation of massagists and the operation of massage clinics
within its jurisdiction; that whereas under the Old City Charter, particularly,
Section 2444 (e) of the Revised Administrative Code, the Municipal Board was
expressly granted the power to regulate and fix the license fee for the
occupation of massagists, under the New Charter of Manila, Republic Act 409,
said power has been withdrawn or omitted and that now the Director of Health,
pursuant to authority conferred by Section 938 of the Revised Administrative
Code and Executive Order No. 317, series of 1941, as amended by Executive
Order No. 392, series, 1951, is the one who exercises supervision over the
practice of massage and over massage clinics in the Philippines; that the
Director of Health has issued Administrative Order No. 10, dated May 5, 1953,
prescribing "rules and regulations governing the examination for admission to
the practice of massage, and the operation of massage clinics, offices, or
establishments in the Philippines", which order was approved by the Secretary
of Health and duly published in the Official Gazette; that Section 1 (a) of
Ordinance No. 3659 has restricted the practice of massage to only hygienic
and aesthetic massage prohibits or does not allow qualified massagists to
practice therapeutic massage in their massage clinics. Appellant also contends
that the license fee of P100.00 for operator in Section 2 of the Ordinance is
unreasonable, nay, unconscionable.
If we can ascertain the intention of the Manila Municipal Board in promulgating
the Ordinance in question, much of the objection of appellant to its legality may
be solved. It would appear to us that the purpose of the Ordinance is not to
regulate the practice of massage, much less to restrict the practice of licensed
and qualified massagists of therapeutic massage in the Philippines. The end
sought to be attained in the Ordinance is to prevent the commission of
immorality and the practice of prostitution in an establishment masquerading
as a massage clinic where the operators thereof offer to massage or
manipulate superficial parts of the bodies of customers for hygienic and
aesthetic purposes. This intention can readily be understood by the building
requirements in Section 3 of the Ordinance, requiring that there be separate
rooms for male and female customers; that instead of said rooms being
separated by permanent partitions and swinging doors, there should only be
sliding curtains between them; that there should be "no private rooms or
separated compartments, except those assigned for toilet, lavatories, dressing
room, office or kitchen"; that every massage clinic should be provided with only
one entrance and shall have no direct or indirect communication whatsoever
with any dwelling place, house or building; and that no operator, massagists,
attendant or helper will be allowed "to use or allow the use of a massage clinic
as a place of assignation or permit the commission therein of any immoral or
incident act", and in fixing the operating hours of such clinic between 8:00 a.m.
and 11:00 p.m. This intention of the Ordinance was correctly ascertained by
Judge Hermogenes Concepcion, presiding in the trial court, in his order of
dismissal where he said: "What the Ordinance tries to avoid is that the
massage clinic run by an operator who may not be a masseur
or massagista may be used as cover for the running or maintaining a house of
prostitution."
Ordinance No. 3659, particularly, Sections 1 to 4, should be considered as
limited to massage clinics used in the practice of hygienic and aesthetic
massage. We do not believe that Municipal Board of the City of Manila and the
Mayor wanted or intended to regulate the practice of massage in general or
restrict the same to hygienic and aesthetic only.
As to the authority of the City Board to enact the Ordinance in question, the
City Fiscal, in representation of the appellees, calls our attention to Section 18
of the New Charter of the City of Manila, Act No. 409, which gives legislative
powers to the Municipal Board to enact all ordinances it may deem necessary
and proper for the promotion of the morality, peace, good order, comfort,
convenience and general welfare of the City and its inhabitants. This is
generally referred to as the General Welfare Clause, a delegation in statutory
form of the police power, under which municipal corporations, are authorized
to enact ordinances to provide for the health and safety, and promote the
morality, peace and general welfare of its inhabitants. We agree with the City
Fiscal.
As regards the permit fee of P100.00, it will be seen that said fee is made
payable not by the masseur or massagist, but by the operator of a massage
clinic who may not be a massagist himself. Compared to permit fees required
in other operations, P100.00 may appear to be too large and rather
unreasonable. However, much discretion is given to municipal corporations in
determining the amount of said fee without considering it as a tax for revenue
purposes:
The amount of the fee or charge is properly considered in determining whether
it is a tax or an exercise of the police power. The amount may be so large as
to itself show that the purpose was to raise revenue and not to regulate, but in
regard to this matter there is a marked distinction between license fees
imposed upon useful and beneficial occupations which the sovereign wishes
to regulate but not restrict, and those which are inimical and dangerous to
public health, morals or safety. In the latter case the fee may be very large
without necessarily being a tax. (Cooley on Taxation, Vol. IV, pp. 3516-17;
underlining supplied.)

Evidently, the Manila Municipal Board considered the practice of hygienic and
aesthetic massage not as a useful and beneficial occupation which will
promote and is conducive to public morals, and consequently, imposed the
said permit fee for its regulation.

In conclusion, we find and hold that the Ordinance in question as we interpret

it and as intended by the appellees is valid. We deem it unnecessary to discuss
and pass upon the other points raised in the appeal. The order appealed from
is hereby affirmed. No costs.