consticases 3

DIDIPIO EARTH-SAVERS MULTI-PURPOSE ASSOCIATION VS. GOZUNGR NO. 157882, March 30, 2006

This petition for prohibition and mandamus under Rule 65 of the Rules of Court assails the constitutionality of Republic Act No. 7942 otherwise known as the Philippine Mining Act of 1995, together with the Implementing Rules and Regulations issued pursuant thereto, Department of Environment and Natural Resources (DENR) Administrative Order No. 96-40, s. 1996 (DAO 96-40) and of the Financial and Technical Assistance Agreement (FTAA) entered into on 20 June 1994 by the Republic of the Philippines and Arimco Mining Corporation (AMC), a corporation established under the laws of Australia and owned by its nationals.

On 25 July 1987, then President Corazon C. Aquino promulgated Executive Order No. 279 which authorized the DENR Secretary to accept, consider and evaluate proposals from foreign-owned corporations or foreign investors for contracts of agreements involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, which, upon appropriate recommendation of the Secretary, the President may execute with the foreign proponent.

On 3 March 1995, then President Fidel V. Ramos signed into law Rep. Act No. 7942 entitled, "An Act Instituting A New System of Mineral Resources Exploration, Development, Utilization and Conservation," otherwise known as the Philippine Mining Act of 1995.

On 15 August 1995, then DENR Secretary Victor O. Ramos issued DENR Administrative Order (DAO) No. 23, Series of 1995, containing the implementing guidelines of Rep. Act No. 7942. This was soon superseded by DAO No. 96-40, s. 1996, which took effect on 23 January 1997 after due publication.

Previously, however, or specifically on 20 June 1994, President Ramos executed an FTAA with AMC over a total land area of 37,000 hectares covering the provinces of Nueva Vizcaya and Quirino. Included in this area is Barangay Dipidio, Kasibu, Nueva Vizcaya.

Subsequently, AMC consolidated with Climax Mining Limited to form a single company that now goes under the new name of Climax-Arimco Mining Corporation (CAMC), the controlling 99% of stockholders of which are Australian nationals.

On 7 September 2001, counsels for petitioners filed a demand letter addressed to then DENR Secretary Heherson Alvarez, for the cancellation of the CAMC FTAA for the primary reason that Rep. Act No. 7942 and its Implementing Rules and Regulations DAO 96-40 are unconstitutional. The Office of the Executive Secretary was also furnished a copy of the said letter. There being no response to both letters, another letter of the same content dated 17 June 2002 was sent to President Gloria Macapagal Arroyo. This letter was indorsed to the DENR Secretary and eventually referred to the Panel of Arbitrators of the Mines and Geosciences Bureau (MGB), Regional Office No. 02, Tuguegarao, Cagayan, for further action.

On 12 November 2002, counsels for petitioners received a letter from the Panel of Arbitrators of the MGB requiring the petitioners to comply with the Rules of the Panel of Arbitrators before the letter may be acted upon.

Yet again, counsels for petitioners sent President Arroyo another demand letter dated 8 November 2002. Said letter was again forwarded to the DENR Secretary who referred the same to the MGB, Quezon City.

In a letter dated 19 February 2003, the MGB rejected the demand of counsels for petitioners for the cancellation of the CAMC FTAA.1avvphil.net

Petitioners thus filed the present petition for prohibition and mandamus, with a prayer for a temporary restraining order. They pray that the Court issue an order:

1. enjoining public respondents from acting on any application for FTAA;

2. declaring unconstitutional the Philippine Mining Act of 1995 and its Implementing Rules and Regulations;

3. canceling the FTAA issued to CAMC.

In their memorandum petitioners pose the following issues:

I

Whether or not Republic Act No. 7942 and the CAMC FTAA are void because they allow the unjust and unlawful taking of property without payment of just compensation , in violation of Section 9, Article III of the Constitution.

II

Whether or not the Mining Act and its Implementing Rules and Regulations are void and unconstitutional for sanctioning an unconstitutional administrative process of determining just compensation.

III

Whether or not the State, through Republic Act No. 7942 and the CAMC FTAA, abdicated its primary responsibility to the full control and supervision over natural resources.

IV

Whether or not the respondents’ interpretation of the role of wholly foreign and foreign-owned corporations in their involvement in mining enterprises, violates paragraph 4, section 2, Article XII of the Constitution.

V

WHETHER OR NOT THE 1987 CONSTITUTION PROHIBITS SERVICE CONTRACTS.1

Before going to the substantive issues, the procedural question raised by public respondents shall first be dealt with. Public respondents are of the view that petitioners’ eminent domain claim is not ripe for adjudication as they fail to allege that CAMC has actually taken their properties nor do they allege that their property rights have been endangered or are in danger on account of CAMC’s FTAA. In effect, public respondents insist that the issue of eminent domain is not a justiciable controversy which this Court can take cognizance of.

A justiciable controversy is defined as a definite and concrete dispute touching on the legal relations of parties having adverse legal interests which may be resolved by a court of law through the application of a law.2 Thus, courts have no judicial power to review cases involving political questions and as a rule, will desist from taking cognizance of speculative or hypothetical cases, advisory opinions and cases that have become moot.3 The Constitution is quite explicit on this matter.4 It provides that judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable. Pursuant to this constitutional mandate, courts, through the power of judicial review, are to entertain only real disputes between conflicting parties through the application of law. For the courts to exercise the power of judicial review, the following must be extant (1) there must be an actual case calling for the exercise of judicial power; (2) the question must be ripe for adjudication; and (3) the person challenging must have the "standing."5

An actual case or controversy involves a conflict of legal rights, an assertion of opposite legal claims, susceptible of judicial resolution as distinguished from a hypothetical or abstract difference or dispute.6 There must be a contrariety of legal rights that can be interpreted and enforced on the basis of existing law and jurisprudence.

Closely related to the second requisite is that the question must be ripe for adjudication. A question is considered ripe for adjudication when the act being challenged has had a direct adverse effect on the individual challenging it.7

The third requisite is legal standing or locus standi. It is defined as a personal or substantial interest in the case such that the party has sustained or will sustain direct injury as a result of the governmental act that is being challenged, alleging more than a generalized grievance.8 The gist of the question of standing is whether a party alleges "such personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court depends for illumination of difficult constitutional questions."9 Unless a person is injuriously affected in any of his constitutional rights by the operation of statute or ordinance, he has no standing.10

In the instant case, there exists a live controversy involving a clash of legal rights as Rep. Act No. 7942 has been enacted, DAO 96-40 has been approved and an FTAAs have been entered into. The FTAA holders have already been operating in various provinces of the country. Among them is CAMC which operates in the provinces of Nueva Vizcaya and Quirino where numerous

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individuals including the petitioners are imperiled of being ousted from their landholdings in view of the CAMC FTAA. In light of this, the court cannot await the adverse consequences of the law in order to consider the controversy actual and ripe for judicial intervention.11 Actual eviction of the land owners and occupants need not happen for this Court to intervene. As held in Pimentel, Jr. v. Hon. Aguirre12:

By the mere enactment of the questioned law or the approval of the challenged act, the dispute is said to have ripened into a judicial controversy even without any other overt act. Indeed, even a singular violation of the Constitution and/or the law is enough to awaken judicial duty.13

Petitioners embrace various segments of the society. These include Didipio Earth-Savers’ Multi-Purpose Association, Inc., an organization of farmers and indigenous peoples organized under Philippine laws, representing a community actually affected by the mining activities of CAMC, as well as other residents of areas affected by the mining activities of CAMC. These petitioners have the standing to raise the constitutionality of the questioned FTAA as they allege a personal and substantial injury.14 They assert that they are affected by the mining activities of CAMC. Likewise, they are under imminent threat of being displaced from their landholdings as a result of the implementation of the questioned FTAA. They thus meet the appropriate case requirement as they assert an interest adverse to that of respondents who, on the other hand, claim the validity of the assailed statute and the FTAA of CAMC.

Besides, the transcendental importance of the issues raised and the magnitude of the public interest involved will have a bearing on the country’s economy which is to a greater extent dependent upon the mining industry. Also affected by the resolution of this case are the proprietary rights of numerous residents in the mining contract areas as well as the social existence of indigenous peoples which are threatened. Based on these considerations, this Court deems it proper to take cognizance of the instant petition.

Having resolved the procedural question, the constitutionality of the law under attack must be addressed squarely.

First Substantive Issue: Validity of Section 76 of Rep. Act No. 7942 and DAO 96-40

In seeking to nullify Rep. Act No. 7942 and its implementing rules DAO 96-40 as unconstitutional, petitioners set their sight on Section 76 of Rep. Act No. 7942 and Section 107 of DAO 96-40 which they claim allow the unlawful and unjust "taking" of private property for private purpose in contradiction with Section 9, Article III of the 1987 Constitution mandating that private property shall not be taken except for public use and the corresponding payment of just compensation. They assert that public respondent DENR, through the Mining Act and its Implementing Rules and Regulations, cannot, on its own, permit entry into a private property and allow taking of land without payment of just compensation.

Interpreting Section 76 of Rep. Act No. 7942 and Section 107 of DAO 96-40, juxtaposed with the concept of taking of property for purposes of eminent domain in the case of Republic v. Vda. de Castellvi,15 petitioners assert that there is indeed a "taking" upon entry into private lands and concession areas.

Republic v. Vda. de Castellvi defines "taking" under the concept of eminent domain 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 to substantially oust the owner and deprive him of all beneficial enjoyment thereof.

From the criteria set forth in the cited case, petitioners claim that the entry into a private property by CAMC, pursuant to its FTAA, is for more than a momentary period, i.e., for 25 years, and renewable for another 25 years; that the entry into the property is under the warrant or color of legal authority pursuant to the FTAA executed between the government and CAMC; and that the entry substantially ousts the owner or possessor and deprives him of all beneficial enjoyment of the property. These facts, according to the petitioners, amount to taking. As such, petitioners question the exercise of the power of eminent domain as unwarranted because respondents failed to prove that the entry into private property is devoted for public use.

Petitioners also stress that even without the doctrine in the Castellvi case, the nature of the mining activity, the extent of the land area covered by the CAMC FTAA and the various rights granted to the proponent or the FTAA holder, such as (a) the right of possession of the Exploration Contract Area, with full right of ingress and egress and the right to occupy the same; (b) the right not to be prevented from entry into private lands by surface owners and/or occupants thereof when prospecting, exploring and exploiting for minerals therein; (c) the right to enjoy easement rights, the use of timber, water and other natural resources in the Exploration Contract Area; (d) the right of possession of the Mining Area, with full right of ingress and egress and the right to occupy the same; and (e) the right to enjoy easement rights, water and other natural resources in the Mining Area, result in a taking of private property.






Petitioners quickly add that even assuming arguendo that there is no absolute, physical taking, at the very least, Section 76 establishes a legal easement upon the surface owners, occupants and concessionaires of a mining contract area sufficient to deprive them of enjoyment and use of the property and that such burden imposed by the legal easement falls within the purview of eminent domain.

To further bolster their claim that the legal easement established is equivalent to taking, petitioners cite the case of National Power Corporation v. Gutierrez16 holding that the easement of right-of-way imposed against the use of the land for an indefinite period is a taking under the power of eminent domain.

Traversing petitioners’ assertion, public respondents argue that Section 76 is not a taking provision but a valid exercise of the police power and by virtue of which, the state may prescribe regulations to promote the health, morals, peace, education, good order, safety and general welfare of the people. This government regulation involves the adjustment of rights for the public good and that this adjustment curtails some potential for the use or economic exploitation of private property. Public respondents concluded that "to require compensation in all such circumstances would compel the government to regulate by purchase."

Public respondents are inclined to believe that by entering private lands and concession areas, FTAA holders do not oust the owners thereof nor deprive them of all beneficial enjoyment of their properties as the said entry merely establishes a legal easement upon surface owners, occupants and concessionaires of a mining contract area.

Taking in Eminent Domain Distinguished from Regulation in Police Power

The power of eminent domain is the inherent right of the state (and of those entities to which the power has been lawfully delegated) to condemn private property to public use upon payment of just compensation.17 On the other hand, police power is the power of the state to promote public welfare by restraining and regulating the use of liberty and property.18 Although both police power and the power of eminent domain have the general welfare for their object, and recent trends show a mingling19 of the two with the latter being used as an implement of the former, there are still traditional distinctions between the two.

Property condemned under police power is usually noxious or intended for a noxious purpose; hence, no compensation shall be paid.20 Likewise, in the exercise of police power, property rights of private individuals are subjected to restraints and burdens in order to secure the general comfort, health, and prosperity of the state. Thus, an ordinance prohibiting theaters from selling tickets in excess of their seating capacity (which would result in the diminution of profits of the theater-owners) was upheld valid as this would promote the comfort, convenience and safety of the customers.21 In U.S. v. Toribio,22 the court upheld the provisions of Act No. 1147, a statute regulating the slaughter of carabao for the purpose of conserving an adequate supply of draft animals, as a valid exercise of police power, notwithstanding the property rights impairment that the ordinance imposed on cattle owners. A zoning ordinance prohibiting the operation of a lumber yard within certain areas was assailed as unconstitutional in that it was an invasion of the property rights of the lumber yard owners in People v. de Guzman.23 The Court nonetheless ruled that the regulation was a valid exercise of police power. A similar ruling was arrived at in Seng Kee S Co. v. Earnshaw and Piatt24 where an ordinance divided the City of Manila into industrial and residential areas.

A thorough scrutiny of the extant jurisprudence leads to a cogent deduction that where a property interest is merely restricted because the continued use thereof would be injurious to public welfare, or where property is destroyed because its continued existence would be injurious to public interest, there is no compensable taking.25However, when a property interest is appropriated and applied to some public purpose, there is compensable taking.26

According to noted constitutionalist, Fr. Joaquin Bernas, SJ, in the exercise of its police power regulation, the state restricts the use of private property, but none of the property interests in the bundle of rights which constitute ownership is appropriated for use by or for the benefit of the public.27 Use of the property by the owner was limited, but no aspect of the property is used by or for the public.28 The deprivation of use can in fact be total and it will not constitute compensable taking if nobody else acquires use of the property or any interest therein.29

If, however, in the regulation of the use of the property, somebody else acquires the use or interest thereof, such restriction constitutes compensable taking. Thus, in City Government of Quezon City v. Ericta,30 it was argued by the local government that an ordinance requiring private cemeteries to reserve 6% of their total areas for the burial of paupers was a valid exercise of the police power under the general welfare clause. This court did not agree in the contention, ruling that property taken under the police power is sought to be destroyed and not, as in this case, to be devoted to a public use. It further declared that the ordinance in question was actually a taking of private property without just compensation of a certain area from a private cemetery to benefit paupers who are charges of the local government. Being an exercise of eminent domain without provision for the payment of just compensation, the same was rendered invalid as it violated the principles governing eminent domain.
















In People v. Fajardo,31 the municipal mayor refused Fajardo permission to build a house on his own land on the ground that the proposed structure would destroy the view or beauty of the public plaza. The ordinance relied upon by the mayor prohibited the construction of any building that would destroy the view of the plaza from the highway. The court ruled that the municipal ordinance under the guise of police power permanently divest owners of the beneficial use of their property for the benefit of the public; hence, considered as a taking under the power of eminent domain that could not be countenanced without payment of just compensation to the affected owners. In this case, what the municipality wanted was to impose an easement on the property in order to preserve the view or beauty of the public plaza, which was a form of utilization of Fajardo’s property for public benefit.32

While the power of eminent domain often results in the appropriation of title to or possession of property, it need not always be the case. Taking may include trespass without actual eviction of the owner, material impairment of the value of the property or prevention of the ordinary uses for which the property was intended such as the establishment of an easement.33 In Ayala de Roxas v. City of Manila,34 it was held that the imposition of burden over a private property through easement was considered taking; hence, payment of just compensation is required. The Court declared:

And, considering that the easement intended to be established, whatever may be the object thereof, is not merely a real right that will encumber the property, but is one tending to prevent the exclusive use of one portion of the same, by expropriating it for public use which, be it what it may, can not be accomplished unless the owner of the property condemned or seized be previously and duly indemnified, it is proper to protect the appellant by means of the remedy employed in such cases, as it is only adequate remedy when no other legal action can be resorted to, against an intent which is nothing short of an arbitrary restriction imposed by the city by virtue of the coercive power with which the same is invested.

And in the case of National Power Corporation v. Gutierrez,35 despite the NPC’s protestation that the owners were not totally deprived of the use of the land and could still plant the same crops as long as they did not come into contact with the wires, the Court nevertheless held that the easement of right-of-way was a taking under the power of eminent domain. The Court said:

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 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.

A case exemplifying an instance of compensable taking which does not entail transfer of title is Republic v. Philippine Long Distance Telephone Co.36 Here, the Bureau of Telecommunications, a government instrumentality, had contracted with the PLDT for the interconnection between the Government Telephone System and that of the PLDT, so that the former could make use of the lines and facilities of the PLDT. In its desire to expand services to government offices, the Bureau of Telecommunications demanded to expand its use of the PLDT lines. Disagreement ensued on the terms of the contract for the use of the PLDT facilities. The Court ruminated:

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 the condemned property, without loss of title and possession. It is unquestionable that real property may, through expropriation, be subjected to an easement right of way.37

In Republic v. Castellvi,38 this Court had the occasion to spell out the requisites of taking in eminent domain, to wit:

(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;

(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.

As shown by the foregoing jurisprudence, a regulation which substantially deprives the owner of his proprietary rights and restricts the beneficial use and enjoyment for public use amounts to compensable taking. In the case under consideration, the entry referred to in Section 76 and the easement rights under Section 75 of Rep. Act No. 7942 as well as the various rights to CAMC under its









FTAA are no different from the deprivation of proprietary rights in the cases discussed which this Court considered as taking. Section 75 of the law in question reads:

Easement Rights. - When mining areas are so situated that for purposes of more convenient mining operations it is necessary to build, construct or install on the mining areas or lands owned, occupied or leased by other persons, such infrastructure as roads, railroads, mills, waste dump sites, tailing ponds, warehouses, staging or storage areas and port facilities, tramways, runways, airports, electric transmission, telephone or telegraph lines, dams and their normal flood and catchment areas, sites for water wells, ditches, canals, new river beds, pipelines, flumes, cuts, shafts, tunnels, or mills, the contractor, upon payment of just compensation, shall be entitled to enter and occupy said mining areas or lands.

Section 76 provides:

Entry into private lands and concession areas – Subject to prior notification, holders of mining rights shall not be prevented from entry into private lands and concession areas by surface owners, occupants, or concessionaires when conducting mining operations therein.

The CAMC FTAA grants in favor of CAMC the right of possession of the Exploration Contract Area, the full right of ingress and egress and the right to occupy the same. It also bestows CAMC the right not to be prevented from entry into private lands by surface owners or occupants thereof when prospecting, exploring and exploiting minerals therein.

The entry referred to in Section 76 is not just a simple right-of-way which is ordinarily allowed under the provisions of the Civil Code. Here, the holders of mining rights enter private lands for purposes of conducting mining activities such as exploration, extraction and processing of minerals. Mining right holders build mine infrastructure, dig mine shafts and connecting tunnels, prepare tailing ponds, storage areas and vehicle depots, install their machinery, equipment and sewer systems. On top of this, under Section 75, easement rights are accorded to them where they may build warehouses, port facilities, electric transmission, railroads and other infrastructures necessary for mining operations. All these will definitely oust the owners or occupants of the affected areas the beneficial ownership of their lands. Without a doubt, taking occurs once mining operations commence.

Section 76 of Rep. Act No. 7942 is a Taking Provision

Moreover, it would not be amiss to revisit the history of mining laws of this country which would help us understand Section 76 of Rep. Act No. 7942.

This provision is first found in Section 27 of Commonwealth Act No. 137 which took effect on 7 November 1936, viz:

Before entering private lands the prospector shall first apply in writing for written permission of the private owner, claimant, or holder thereof, and in case of refusal by such private owner, claimant, or holder to grant such permission, or in case of disagreement as to the amount of compensation to be paid for such privilege of prospecting therein, the amount of such compensation shall be fixed by agreement among the prospector, the Director of the Bureau of Mines and the surface owner, and in case of their failure to unanimously agree as to the amount of compensation, all questions at issue shall be determined by the Court of First Instance.

Similarly, the pertinent provision of Presidential Decree No. 463, otherwise known as "The Mineral Resources Development Decree of 1974," provides:

SECTION 12. Entry to Public and Private Lands. — A person who desires to conduct prospecting or other mining operations within public lands covered by concessions or rights other than mining shall first obtain the written permission of the government official concerned before entering such lands. In the case of private lands, the written permission of the owner or possessor of the land must be obtained before entering such lands. In either case, if said permission is denied, the Director, at the request of the interested person may intercede with the owner or possessor of the land. If the intercession fails, the interested person may bring suit in the Court of First Instance of the province where the land is situated. If the court finds the request justified, it shall issue an order granting the permission after fixing the amount of compensation and/or rental due the owner or possessor: Provided, That pending final adjudication of such amount, the court shall upon recommendation of the Director permit the interested person to enter, prospect and/or undertake other mining operations on the disputed land upon posting by such interested person of a bond with the court which the latter shall consider adequate to answer for any damage to the owner or possessor of the land resulting from such entry, prospecting or any other mining operations.

Hampered by the difficulties and delays in securing surface rights for the entry into private lands for purposes of mining operations, Presidential Decree No. 512 dated 19 July 1974 was passed into law in order to achieve full and accelerated mineral resources development. Thus, Presidential Decree No. 512 provides for a new system of surface rights acquisition by mining prospectors and claimants. Whereas in Commonwealth Act No. 137 and Presidential Decree No. 463 eminent domain may only be exercised in order that the mining claimants can build, construct or install roads, railroads, mills, warehouses and other facilities, this time, the power of eminent domain may now be invoked by mining operators for the entry, acquisition and use of private lands, viz:

SECTION 1. Mineral prospecting, location, exploration, development and exploitation is hereby declared of public use and benefit, and for which the power of eminent domain may be invoked and exercised for the entry, acquisition and use of private lands. x x x.

The evolution of mining laws gives positive indication that mining operators who are qualified to own lands were granted the authority to exercise eminent domain for the entry, acquisition, and use of private lands in areas open for mining operations. This grant of authority extant in Section 1 of Presidential Decree No. 512 is not expressly repealed by Section 76 of Rep. Act No. 7942; and neither are the former statutes impliedly repealed by the former. These two provisions can stand together even if Section 76 of Rep. Act No. 7942 does not spell out the grant of the privilege to exercise eminent domain which was present in the old law.

It is an established rule in statutory construction that in order that one law may operate to repeal another law, the two laws must be inconsistent.39 The former must be so repugnant as to be irreconciliable with the latter act. Simply because a latter enactment may relate to the same subject matter as that of an earlier statute is not of itself sufficient to cause an implied repeal of the latter, since the new law may be cumulative or a continuation of the old one. As has been the ruled, repeals by implication are not favored, and will not be decreed unless it is manifest that the legislature so intended.40 As laws are presumed to be passed with deliberation and with full knowledge of all existing ones on the subject, it is but reasonable to conclude that in passing a statute it was not intended to interfere with or abrogate any former law relating to the same matter, unless the repugnancy between the two is not only irreconcilable, but also clear and convincing, and flowing necessarily from the language used, unless the later act fully embraces the subject matter of the earlier, or unless the reason for the earlier act is beyond peradventure removed.41 Hence, every effort must be used to make all acts stand and if, by any reasonable construction, they can be reconciled, the latter act will not operate as a repeal of the earlier.

Considering that Section 1 of Presidential Decree No. 512 granted the qualified mining operators the authority to exercise eminent domain and since this grant of authority is deemed incorporated in Section 76 of Rep. Act No. 7942, the inescapable conclusion is that the latter provision is a taking provision.

While this Court declares that the assailed provision is a taking provision, this does not mean that it is unconstitutional on the ground that it allows taking of private property without the determination of public use and the payment of just compensation.

The taking to be valid must be for public use.42 Public use as a requirement for the valid exercise of the power of eminent domain is now synonymous with public interest, public benefit, public welfare and public convenience.43It includes the broader notion of indirect public benefit or advantage. Public use as traditionally understood as "actual use by the public" has already been abandoned.44

Mining industry plays a pivotal role in the economic development of the country and is a vital tool in the government’s thrust of accelerated recovery.45 The importance of the mining industry for national development is expressed in Presidential Decree No. 463:

WHEREAS, mineral production is a major support of the national economy, and therefore the intensified discovery, exploration, development and wise utilization of the country’s mineral resources are urgently needed for national development.

Irrefragably, mining is an industry which is of public benefit.

That public use is negated by the fact that the state would be taking private properties for the benefit of private mining firms or mining contractors is not at all true. In Heirs of Juancho Ardona v. Reyes,46 petitioners therein contended that the promotion of tourism is not for public use because private concessionaires would be allowed to maintain various facilities such as restaurants, hotels, stores, etc., inside the tourist area. The Court thus contemplated:

The rule in Berman v. Parker [348 U.S. 25; 99 L. ed. 27] 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 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. x x x"47

Petitioners further maintain that the state’s discretion to decide when to take private property is reduced contractually by Section 13.5 of the CAMC FTAA, which reads:

If the CONTRACTOR so requests at its option, the GOVERNMENT shall use its offices and legal powers to assist in the acquisition at reasonable cost of any surface areas or rights required by the CONTRACTOR at the CONTRACTOR’s cost to carry out the Mineral Exploration and the Mining Operations herein.

All obligations, payments and expenses arising from, or incident to, such agreements or acquisition of right shall be for the account of the CONTRACTOR and shall be recoverable as Operating Expense.

According to petitioners, the government is reduced to a sub-contractor upon the request of the private respondent, and on account of the foregoing provision, the contractor can compel the government to exercise its power of eminent domain thereby derogating the latter’s power to expropriate property.

The provision of the FTAA in question lays down the ways and means by which the foreign-owned contractor, disqualified to own land, identifies to the government the specific surface areas within the FTAA contract area to be acquired for the mine infrastructure.48 The government then acquires ownership of the surface land areas on behalf of the contractor, through a voluntary transaction in order to enable the latter to proceed to fully implement the FTAA. Eminent domain is not yet called for at this stage since there are still various avenues by which surface rights can be acquired other than expropriation. The FTAA provision under attack merely facilitates the implementation of the FTAA given to CAMC and shields it from violating the Anti-Dummy Law. Hence, when confronted with the same question in La Bugal-B’Laan Tribal Association, Inc. v. Ramos,49 the Court answered:

Clearly, petitioners have needlessly jumped to unwarranted conclusions, without being aware of the rationale for the said provision. That provision does not call for the exercise of the power of eminent domain -- and determination of just compensation is not an issue -- as much as it calls for a qualified party to acquire the surface rights on behalf of a foreign-owned contractor.

Rather than having the foreign contractor act through a dummy corporation, having the State do the purchasing is a better alternative. This will at least cause the government to be aware of such transaction/s and foster transparency in the contractor’s dealings with the local property owners. The government, then, will not act as a subcontractor of the contractor; rather, it will facilitate the transaction and enable the parties to avoid a technical violation of the Anti-Dummy Law.

There is also no basis for the claim that the Mining Law and its implementing rules and regulations do not provide for just compensation in expropriating private properties. Section 76 of Rep. Act No. 7942 and Section 107 of DAO 96-40 provide for the payment of just compensation:

Section 76. xxx Provided, that any damage to the property of the surface owner, occupant, or concessionaire as a consequence of such operations shall be properly compensated as may be provided for in the implementing rules and regulations.

Section 107. Compensation of the Surface Owner and Occupant- Any damage done to the property of the surface owners, occupant, or concessionaire thereof as a consequence of the mining operations or as a result of the construction or installation of the infrastructure mentioned in 104 above shall be properly and justly compensated.

Such compensation shall be based on the agreement entered into between the holder of mining rights and the surface owner, occupant or concessionaire thereof, where appropriate, in accordance with P.D. No. 512. (Emphasis supplied.)

Second Substantive Issue: Power of Courts to Determine Just Compensation

Closely-knit to the issue of taking is the determination of just compensation. It is contended that Rep. Act No. 7942 and Section 107 of DAO 96-40 encroach on the power of the trial courts to determine just compensation in eminent domain cases inasmuch as the same determination of proper compensation are cognizable only by the Panel of Arbitrators.

The question on the judicial determination of just compensation has been settled in the case of Export Processing Zone Authority v. Dulay50 wherein the court declared that the determination of just compensation in eminent domain cases is a judicial function.





Even as the executive department or the legislature may make the initial determinations, the same cannot prevail over the court’s findings.

Implementing Section 76 of Rep. Act No. 7942, Section 105 of DAO 96-40 states that holder(s) of mining right(s) shall not be prevented from entry into its/their contract/mining areas for the purpose of exploration, development, and/or utilization. That in cases where surface owners of the lands, occupants or concessionaires refuse to allow the permit holder or contractor entry, the latter shall bring the matter before the Panel of Arbitrators for proper disposition. Section 106 states that voluntary agreements between the two parties permitting the mining right holders to enter and use the surface owners’ lands shall be registered with the Regional Office of the MGB. In connection with Section 106, Section 107 provides that the compensation for the damage done to the surface owner, occupant or concessionaire as a consequence of mining operations or as a result of the construction or installation of the infrastructure shall be properly and justly compensated and that such compensation shall be based on the agreement between the holder of mining rights and surface owner, occupant or concessionaire, or where appropriate, in accordance with Presidential Decree No. 512. In cases where there is disagreement to the compensation or where there is no agreement, the matter shall be brought before the Panel of Arbitrators. Section 206 of the implementing rules and regulations provides an aggrieved party the remedy to appeal the decision of the Panel of Arbitrators to the Mines Adjudication Board, and the latter’s decision may be reviewed by the Supreme Court by filing a petition for review on certiorari.51

An examination of the foregoing provisions gives no indication that the courts are excluded from taking cognizance of expropriation cases under the mining law. The disagreement referred to in Section 107 does not involve the exercise of eminent domain, rather it contemplates of a situation wherein the permit holders are allowed by the surface owners entry into the latters’ lands and disagreement ensues as regarding the proper compensation for the allowed entry and use of the private lands. Noticeably, the provision points to a voluntary sale or transaction, but not to an involuntary sale.

The legislature, in enacting the mining act, is presumed to have deliberated with full knowledge of all existing laws and jurisprudence on the subject. Thus, it is but reasonable to conclude that in passing such statute it was in accord with the existing laws and jurisprudence on the jurisdiction of courts in the determination of just compensation and that it was not intended to interfere with or abrogate any former law relating to the same matter. Indeed, there is nothing in the provisions of the assailed law and its implementing rules and regulations that exclude the courts from their jurisdiction to determine just compensation in expropriation proceedings involving mining operations. Although Section 105 confers upon the Panel of Arbitrators the authority to decide cases where surface owners, occupants, concessionaires refuse permit holders entry, thus, necessitating involuntary taking, this does not mean that the determination of the just compensation by the Panel of Arbitrators or the Mines Adjudication Board is final and conclusive. The determination is only preliminary unless accepted by all parties concerned. There is nothing wrong with the grant of primary jurisdiction by the Panel of Arbitrators or the Mines Adjudication Board to determine in a preliminary matter the reasonable compensation due the affected landowners or occupants.52 The original and exclusive jurisdiction of the courts to decide determination of just compensation remains intact despite the preliminary determination made by the administrative agency. As held in Philippine Veterans Bank v. Court of Appeals53:

The jurisdiction of the Regional Trial Courts is not any less "original and exclusive" because the question is first passed upon by the DAR, as the judicial proceedings are not a continuation of the administrative determination.

Third Substantive Issue: Sufficient Control by the State Over Mining Operations

Anent the third issue, petitioners charge that Rep. Act No. 7942, as well as its Implementing Rules and Regulations, makes it possible for FTAA contracts to cede over to a fully foreign-owned corporation full control and management of mining enterprises, with the result that the State is allegedly reduced to a passive regulator dependent on submitted plans and reports, with weak review and audit powers. The State is not acting as the supposed owner of the natural resources for and on behalf of the Filipino people; it practically has little effective say in the decisions made by the enterprise. In effect, petitioners asserted that the law, the implementing regulations, and the CAMC FTAA cede beneficial ownership of the mineral resources to the foreign contractor.

It must be noted that this argument was already raised in La Bugal-B’Laan Tribal Association, Inc. v. Ramos,54where the Court answered in the following manner:

RA 7942 provides for the state’s control and supervision over mining operations. The following provisions thereof establish the mechanism of inspection and visitorial rights over mining operations and institute reportorial requirements in this manner:

1. Sec. 8 which provides for the DENR’s power of over-all supervision and periodic review for "the conservation, management, development and proper use of the State’s mineral resources";





2. Sec. 9 which authorizes the Mines and Geosciences Bureau (MGB) under the DENR to exercise "direct charge in the administration and disposition of mineral resources", and empowers the MGB to "monitor the compliance by the contractor of the terms and conditions of the mineral agreements", "confiscate surety and performance bonds", and deputize whenever necessary any member or unit of the Phil. National Police, barangay, duly registered non-governmental organization (NGO) or any qualified person to police mining activities;

3. Sec. 66 which vests in the Regional Director "exclusive jurisdiction over safety inspections of all installations, whether surface or underground", utilized in mining operations.

4. Sec. 35, which incorporates into all FTAAs the following terms, conditions and warranties:

"(g) Mining operations shall be conducted in accordance with the provisions of the Act and its IRR.

"(h) Work programs and minimum expenditures commitments.

x x x x

"(k) Requiring proponent to effectively use appropriate anti-pollution technology and facilities to protect the environment and restore or rehabilitate mined-out areas.

"(l) The contractors shall furnish the Government records of geologic, accounting and other relevant data for its mining operation, and that books of accounts and records shall be open for inspection by the government. x x x.

"(m) Requiring the proponent to dispose of the minerals at the highest price and more advantageous terms and conditions.

x x x x

"(o) Such other terms and conditions consistent with the Constitution and with this Act as the Secretary may deem to be for the best interest of the State and the welfare of the Filipino people."

The foregoing provisions of Section 35 of RA 7942 are also reflected and implemented in Section 56 (g), (h), (l), (m) and (n) of the Implementing Rules, DAO 96-40.

Moreover, RA 7942 and DAO 96-40 also provide various stipulations confirming the government’s control over mining enterprises:

o The contractor is to relinquish to the government those portions of the contract area not needed for mining operations and not covered by any declaration of mining feasibility (Section 35-e, RA 7942; Section 60, DAO 96-40).

o The contractor must comply with the provisions pertaining to mine safety, health and environmental protection (Chapter XI, RA 7942; Chapters XV and XVI, DAO 96-40).

o For violation of any of its terms and conditions, government may cancel an FTAA. (Chapter XVII, RA 7942; Chapter XXIV, DAO 96-40).

o An FTAA contractor is obliged to open its books of accounts and records for 0inspection by the government (Section 56-m, DAO 96-40).

o An FTAA contractor has to dispose of the minerals and by-products at the highest market price and register with the MGB a copy of the sales agreement (Section 56-n, DAO 96-40).

o MGB is mandated to monitor the contractor’s compliance with the terms and conditions of the FTAA; and to deputize, when necessary, any member or unit of the Philippine National Police, the barangay or a DENR-accredited nongovernmental organization to police mining activities (Section 7-d and -f, DAO 96-40).

o An FTAA cannot be transferred or assigned without prior approval by the President (Section 40, RA 7942; Section 66, DAO 96-40).

o A mining project under an FTAA cannot proceed to the construction/development/utilization stage, unless its Declaration of Mining Project Feasibility has been approved by government (Section 24, RA 7942).

o The Declaration of Mining Project Feasibility filed by the contractor cannot be approved without submission of the following documents:

1. Approved mining project feasibility study (Section 53-d, DAO 96-40)

2. Approved three-year work program (Section 53-a-4, DAO 96-40)

3. Environmental compliance certificate (Section 70, RA 7942)

4. Approved environmental protection and enhancement program (Section 69, RA 7942)

5. Approval by the Sangguniang Panlalawigan/Bayan/Barangay (Section 70, RA 7942; Section 27, RA 7160)

6. Free and prior informed consent by the indigenous peoples concerned, including payment of royalties through a Memorandum of Agreement (Section 16, RA 7942; Section 59, RA 8371)

o The FTAA contractor is obliged to assist in the development of its mining community, promotion of the general welfare of its inhabitants, and development of science and mining technology (Section 57, RA 7942).

o The FTAA contractor is obliged to submit reports (on quarterly, semi-annual or annual basis as the case may be; per Section 270, DAO 96-40), pertaining to the following:

1. Exploration

2. Drilling

3. Mineral resources and reserves

4. Energy consumption

5. Production

6. Sales and marketing

7. Employment

8. Payment of taxes, royalties, fees and other Government Shares

9. Mine safety, health and environment

10. Land use

11. Social development

12. Explosives consumption

o An FTAA pertaining to areas within government reservations cannot be granted without a written clearance from the government agencies concerned (Section 19, RA 7942; Section 54, DAO 96-40).

o An FTAA contractor is required to post a financial guarantee bond in favor of the government in an amount equivalent to its expenditures obligations for any particular year. This requirement is apart from the representations and warranties of the contractor that it has access to all the financing, managerial and technical expertise and technology necessary to carry out the objectives of the FTAA (Section 35-b, -e, and -f, RA 7942).

o Other reports to be submitted by the contractor, as required under DAO 96-40, are as follows: an environmental report on the rehabilitation of the mined-out area and/or mine waste/tailing covered area, and anti-pollution measures undertaken (Section 35-a-2); annual reports of the mining operations and records of geologic accounting (Section 56-m); annual progress reports and final report of exploration activities (Section 56-2).

o Other programs required to be submitted by the contractor, pursuant to DAO 96-40, are the following: a safety and health program (Section 144); an environmental work program (Section 168); an annual environmental protection and enhancement program (Section 171).

The foregoing gamut of requirements, regulations, restrictions and limitations imposed upon the FTAA contractor by the statute and regulations easily overturns petitioners’ contention. The setup under RA 7942 and DAO 96-40 hardly relegates the State to the role of a "passive regulator" dependent on submitted plans and reports. On the contrary, the government agencies concerned are empowered to approve or disapprove -- hence, to influence, direct and change -- the various work programs and the corresponding minimum expenditure commitments for each of the exploration, development and utilization phases of the mining enterprise.

Once these plans and reports are approved, the contractor is bound to comply with its commitments therein. Figures for mineral production and sales are regularly monitored and subjected to government review, in order to ensure that the products and by-products are disposed of at the best prices possible; even copies of sales agreements have to be submitted to and registered with MGB. And the contractor is mandated to open its books of accounts and records for scrutiny, so as to enable the State to determine if the government share has been fully paid.

The State may likewise compel the contractor’s compliance with mandatory requirements on mine safety, health and environmental protection, and the use of anti-pollution technology and facilities. Moreover, the contractor is also obligated to assist in the development of the mining community and to pay royalties to the indigenous peoples concerned.

Cancellation of the FTAA may be the penalty for violation of any of its terms and conditions and/or noncompliance with statutes or regulations. This general, all-around, multipurpose sanction is no trifling matter, especially to a contractor who may have yet to recover the tens or hundreds of millions of dollars sunk into a mining project.

Overall, considering the provisions of the statute and the regulations just discussed, we believe that the State definitely possesses the means by which it can have the ultimate word in the operation of the enterprise, set directions and objectives, and detect deviations and noncompliance by the contractor; likewise, it has the capability to enforce compliance and to impose sanctions, should the occasion therefor arise.

In other words, the FTAA contractor is not free to do whatever it pleases and get away with it; on the contrary, it will have to follow the government line if it wants to stay in the enterprise. Ineluctably then, RA 7942 and DAO 96-40 vest in the government more than a sufficient degree of control and supervision over the conduct of mining operations.

Fourth Substantive Issue: The Proper Interpretation of the Constitutional Phrase "Agreements Involving Either Technical or Financial Assistance

In interpreting the first and fourth paragraphs of Section 2, Article XII of the Constitution, petitioners set forth the argument that foreign corporations are barred from making decisions on the conduct of operations and the management of the mining project. The first paragraph of Section 2, Article XII reads:

x x x The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production sharing agreements with Filipino citizens, or corporations or associations at least sixty percentum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty five years, renewable for not more than twenty five years, and under such terms and conditions as may be provided by law x x x.

The fourth paragraph of Section 2, Article XII provides:

The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country x x x.

Petitioners maintain that the first paragraph bars aliens and foreign-owned corporations from entering into any direct arrangement with the government including those which involve co-production, joint venture or production sharing agreements. They likewise insist that the fourth paragraph allows foreign-owned corporations to participate in the large-scale exploration, development and utilization of natural resources, but such participation, however, is merely limited to an agreement for either financial or technical assistance only.

Again, this issue has already been succinctly passed upon by this Court in La Bugal-B’Laan Tribal Association, Inc. v. Ramos.55 In discrediting such argument, the Court ratiocinated:

Petitioners claim that the phrase "agreements x x x involving either technical or financial assistance" simply means technical assistance or financial assistance agreements, nothing more and nothing else. They insist that there is no ambiguity in the phrase, and that a plain reading of paragraph 4 quoted above leads to the inescapable conclusion that what a foreign-owned corporation may enter into with the government is merely an agreement for either financial or technical assistance only, for the large-scale exploration, development and utilization of minerals, petroleum and other mineral oils; such a limitation, they argue, excludes foreign management and operation of a mining enterprise.

This restrictive interpretation, petitioners believe, is in line with the general policy enunciated by the Constitution reserving to Filipino citizens and corporations the use and enjoyment of the country’s natural resources. They maintain that this Court’s Decision of January 27, 2004 correctly declared the WMCP FTAA, along with pertinent provisions of RA 7942, void for allowing a foreign contractor to have direct and exclusive management of a mining enterprise. Allowing such a privilege not only runs counter to the "full control and supervision" that the State is constitutionally mandated to exercise over the exploration, development and utilization of the country’s natural resources; doing so also vests in the foreign company "beneficial ownership" of our mineral resources. It will be recalled that the Decision of January 27, 2004 zeroed in on "management or other forms of assistance" or other activities associated with the "service contracts" of the martial law regime, since "the management or operation of mining activities by foreign contractors, which is the primary feature of service contracts, was precisely the evil that the drafters of the 1987 Constitution sought to eradicate."

x x x x

We do not see how applying a strictly literal or verba legis interpretation of paragraph 4 could inexorably lead to the conclusions arrived at in the ponencia. First, the drafters’ choice of words -- their use of the phraseagreements x x x involving either technical or financial assistance -- does not indicate the intent to exclude other modes of assistance. The drafters opted to use involving when they could have simply said agreements forfinancial or technical assistance, if that was their intention to begin with. In this case, the limitation would be very clear and no further debate would ensue.

In contrast, the use of the word "involving" signifies the possibility of the inclusion of other forms of assistance or activities having to do with, otherwise related to or compatible with financial or technical assistance. The word "involving" as used in this context has three connotations that can be differentiated thus:one, the sense of "concerning," "having to do with," or "affecting"; two, "entailing," "requiring," "implying" or "necessitating"; and three, "including," "containing" or "comprising."

Plainly, none of the three connotations convey a sense of exclusivity. Moreover, the word "involving," when understood in the sense of "including," as in including technical or financial assistance, necessarily implies that there are activities other than those that are being included. In other words, if an agreement includes technical or financial assistance, there is apart from such assistance -- something else already in, and covered or may be covered by, the said agreement.

In short, it allows for the possibility that matters, other than those explicitly mentioned, could be made part of the agreement. Thus, we are now led to the conclusion that the use of the word "involving" implies that these agreements with foreign corporations are not limited to mere financial or technical assistance. The difference in sense becomes very apparent when we juxtapose "agreements for technical or financial assistance" against "agreements including technical or financial assistance." This much is unalterably clear in a verba legisapproach.

Second, if the real intention of the drafters was to confine foreign corporations to financial or technical assistance and nothing more, their language would have certainly been so unmistakably restrictive and stringent as to leave no doubt in anyone’s mind about their true intent. For example, they would have used the sentence foreign corporations are absolutely prohibited from


involvement in the management or operation of mining or similar ventures or words of similar import. A search for such stringent wording yields negative results. Thus, we come to the inevitable conclusion that there was a conscious and deliberate decision to avoid the use of restrictive wording that bespeaks an intent not to use the expression "agreements x x x involving either technical or financial assistance" in an exclusionary and limiting manner.

Fifth Substantive Issue: Service Contracts Not Deconstitutionalized

Lastly, petitioners stress that the service contract regime under the 1973 Constitution is expressly prohibited under the 1987 Constitution as the term service contracts found in the former was deleted in the latter to avoid the circumvention of constitutional prohibitions that were prevalent in the 1987 Constitution. According to them, the framers of the 1987 Constitution only intended for foreign-owned corporations to provide either technical assistance or financial assistance. Upon perusal of the CAMC FTAA, petitioners are of the opinion that the same is a replica of the service contract agreements that the present constitution allegedly prohibit.

Again, this contention is not well-taken. The mere fact that the term service contracts found in the 1973 Constitution was not carried over to the present constitution, sans any categorical statement banning service contracts in mining activities, does not mean that service contracts as understood in the 1973 Constitution was eradicated in the 1987 Constitution.56 The 1987 Constitution allows the continued use of service contracts with foreign corporations as contractors who would invest in and operate and manage extractive enterprises, subject to the full control and supervision of the State; this time, however, safety measures were put in place to prevent abuses of the past regime.57 We ruled, thus:

To our mind, however, such intent cannot be definitively and conclusively established from the mere failure to carry the same expression or term over to the new Constitution, absent a more specific, explicit and unequivocal statement to that effect. What petitioners seek (a complete ban on foreign participation in the management of mining operations, as previously allowed by the earlier Constitutions) is nothing short of bringing about a momentous sea change in the economic and developmental policies; and the fundamentally capitalist, free-enterprise philosophy of our government. We cannot imagine such a radical shift being undertaken by our government, to the great prejudice of the mining sector in particular and our economy in general, merely on the basis of the omission of the terms service contract from or the failure to carry them over to the new Constitution. There has to be a much more definite and even unarguable basis for such a drastic reversal of policies.

x x x x

The foregoing are mere fragments of the framers’ lengthy discussions of the provision dealing with agreements x x x involving either technical or financial assistance, which ultimately became paragraph 4 of Section 2 of Article XII of the Constitution. Beyond any doubt, the members of the ConCom were actually debating about the martial-law-era service contracts for which they were crafting appropriate safeguards.

In the voting that led to the approval of Article XII by the ConCom, the explanations given by Commissioners Gascon, Garcia and Tadeo indicated that they had voted to reject this provision on account of their objections to the "constitutionalization" of the "service contract" concept.

Mr. Gascon said, "I felt that if we would constitutionalize any provision on service contracts, this should always be with the concurrence of Congress and not guided only by a general law to be promulgated by Congress." Mr. Garcia explained, "Service contracts are given constitutional legitimization in Sec. 3, even when they have been proven to be inimical to the interests of the nation, providing, as they do, the legal loophole for the exploitation of our natural resources for the benefit of foreign interests." Likewise, Mr. Tadeo cited inter alia the fact that service contracts continued to subsist, enabling foreign interests to benefit from our natural resources. It was hardly likely that these gentlemen would have objected so strenuously, had the provision called for mere technical or financial assistance and nothing more.

The deliberations of the ConCom and some commissioners’ explanation of their votes leave no room for doubt that the service contract concept precisely underpinned the commissioners’ understanding of the "agreements involving either technical or financial assistance."

x x x x

From the foregoing, we are impelled to conclude that the phrase agreements involving either technical or financial assistance, referred to in paragraph 4, are in fact service contracts. But unlike those of the 1973 variety, the new ones are between foreign corporations acting as contractors on the one hand; and on the other, the government as principal or "owner" of the works.



In the new service contracts, the foreign contractors provide capital, technology and technical know-how, and managerial expertise in the creation and operation of large-scale mining/extractive enterprises; and the government, through its agencies (DENR, MGB), actively exercises control and supervision over the entire operation.

x x x x

It is therefore reasonable and unavoidable to make the following conclusion, based on the above arguments. As written by the framers and ratified and adopted by the people, the Constitution allows the continued use of service contracts with foreign corporations -- as contractors who would invest in and operate and manage extractive enterprises, subject to the full control and supervision of the State -- sans the abuses of the past regime. The purpose is clear: to develop and utilize our mineral, petroleum and other resources on a large scale for the immediate and tangible benefit of the Filipino people.58

WHEREFORE, the instant petition for prohibition and mandamus is hereby DISMISSED. Section 76 of Republic Act No. 7942 and Section 107 of DAO 96-40; Republic Act No. 7942 and its Implementing Rules and Regulations contained in DAO 96-40 – insofar as they relate to financial and technical assistance agreements referred to in paragraph 4 of Section 2 of Article XII of the Constitution are NOT UNCONSTITUTIONAL.

SO ORDERED.

NATIONAL POWER CORPORATION VS. MANUBAY AGRO-INDUSTRIAL DEVELOPMENT CORPORATION347 SCRA 60

How much just compensation should be paid for an easement of a right of way over a parcel of land that will be traversed by high-powered transmission lines? Should such compensation be a simple easement fee or the full value of the property? This is the question to be answered in this case.

The Case Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking to reverse and set aside the November

23, 2001 Decision[2] of the Court of Appeals (CA) in CA-GR CV No. 60515. The CA affirmed the June 24, 1998 Decision[3] of the Regional Trial Court[4] (RTC) of Naga City (Branch 26), directing the National Power Corporation (NPC) to pay the value of the land expropriated from respondent for the use thereof in NPC’s Leyte-Luzon HVDC Power Transmission Project.

The Facts

The CA summarized the antecedents of the case as follows: “In 1996, [Petitioner] NATIONAL POWER CORPORATION, a government-owned and controlled corporation created for the purpose of undertaking the development and generation of hydroelectric power, commenced its 350 KV Leyte-Luzon HVDC Power Transmission Project. The project aims to transmit the excess electrical generating capacity coming from Leyte Geothermal Plant to Luzon and various load centers in its vision to interconnect the entire country into a single power grid. Apparently, the project is for a public purpose.

“In order to carry out this project, it is imperative for the [petitioner’s] transmission lines to cross over certain lands owned by private individuals and entities. One of these lands, [where] only a portion will be traversed by the transmission lines, is owned by [respondent] MANUBAY AGRO-INDUSTRIAL DEVELOPMENT CORPORATION.

“Hence, on 03 December 1996, [petitioner] filed a complaint for expropriation before the Regional

Trial Court of Naga City against [respondent] in order to acquire an easement of right of way over the land which the latter owns. The said land is situated at Km. 8, Barangay Pacol, Naga City, Camarines Sur and described with more particularity, as follows:

TCT/OCT NO. TOTAL AREA AFFECTED AREA CLASS. IN SQ.M. IN SQ. M. OF LAND


17795 490,232 21,386.16 Agri. 17797 40,848 1,358.17 Agri. 17798 5,279 217.38 Agri. TOTAL 22,961.71

“On 02 January 1997, [respondent] filed its answer. Thereafter, the court a quo issued an order dated 20 January 1997 authorizing the immediate issuance of a writ of possession and directing Ex-Officio Provincial Sheriff to immediately place [petitioner] in possession of the subject land. “Subsequently, the court a quo directed the issuance of a writ of condemnation in favor of [petitioner] through an order dated 14 February 1997. Likewise, for the purpose of determining the fair and just compensation due to [respondent], the court appointed three commissioners composed of one representative of the petitioner, one for the respondent and the other from the court, namely: OIC-Branch Clerk of Court Minda B. Teoxon as Chairperson and Philippine National Bank-Naga City Loan Appraiser Mr. Isidro Virgilio Bulao, Jr. and City Assessor Ramon R. Albeus as members. “On 03 and 06 March 1997, respectively, Commissioners Ramon Albeus and Isidro Bulao, Jr. took their oath of office before OIC Branch Clerk of Court and Chairperson Minda B. Teoxon. “Accordingly, the commissioners submitted their individual appraisal/valuation reports. The commissioner for the [petitioner], Commissioner Albeus, finding the subject land irregular and sloppy, classified the same as low density residential zone and recommended the price of P115.00 per square meter. On the other hand, Commissioner Bulao, commissioner for the [respondent], recommended the price of P550.00 per square meter. The court’s Commissioner and Chairperson of the Board Minda Teoxon, on the other hand, found Commissioner Albeus’ appraisal low as compared to the BIR Zonal Valuation and opted to adopt the price recommended by Commissioner Bulao. On the assumption that the subject land will be developed into a first class subdivision, she recommended the amount of P550.00 per square meter as just compensation for the subject property, or the total amount of P12,628,940.50 for the entire area affected.”[5]

Taking into consideration the condition, the surroundings and the potentials of respondent’s expropriated property, the RTC approved Chairperson Minda B. Teoxon’s recommended amount of P550 per square meter as just compensation for the property. The trial court opined that the installation thereon of the 350 KV Leyte-Luzon HVDC Power Transmission Project would impose a limitation on the use of the land for an indefinite period of time, thereby justifying the payment of the full value of the property.

Further, the RTC held that it was not bound by the provision cited by petitioner -- Section 3-A[6] of Republic Act 6395[7], as amended by

Presidential Decree 938. This law prescribes as just compensation for the acquired easement of a right of way over an expropriated property an easement fee in an amount not exceeding 10 percent of the market value of such

property. The trial court relied on the earlier pronouncements of this Court that the determination of just compensation in eminent domain cases is a judicial function. Thus, valuations made by the executive branch or the

legislature are at best initial or preliminary only.

Ruling of the Court of Appeals

Affirming the RTC, the CA held that RA 6395, as amended by PD No. 938, did not preclude expropriation. Section 3-A thereof allowed the power company to acquire not just an easement of a right of way, but even the land itself. Such easement was deemed by the appellate court to be a “taking” under the power of eminent domain.

The CA observed that, given their nature, high-powered electric lines traversing respondent’s property would necessarily

diminish -- if not damage entirely -- the value and the use of the affected property; as well as endanger lives and limbs because of the high-tension current conveyed through the lines. Respondent was therefore deemed entitled to a just compensation, which should be neither more nor less than the monetary equivalent of the property taken. Accordingly, the appellate found the award of P550 per square meter to be proper and reasonable.

Hence, this Petition.[8]

Issues In its Memorandum, petitioner submits this lone issue for our consideration:

“Whether or not the Honorable Court of Appeals gravely erred in affirming the Decision dated June 24, 1998 of the Regional Trial Court, Branch 26, Naga City considering that its Decision dated November 23, 2001 is not in accord with law and the applicable decisions of this Honorable Court.”[9]

The Court’s Ruling

The Petition is devoid of merit.

Sole Issue:Just Compensation

Petitioner contends that the valuation of the expropriated property -- fixed by the trial court and affirmed by the CA -- was too high a price for the acquisition of an easement of a mere aerial right of way, because respondent would continue to own and use the subject land anyway. Petitioner argues that in a strict sense, there is no “taking” of property, but merely an imposition of an encumbrance or a personal easement/servitude under Article 614[10] of the Civil Code. Such encumbrance will not result in ousting or depriving respondent of the beneficial enjoyment of the property. And even if there was a “taking,” petitioner points out that the loss is limited only to a portion of the aerial domain above the property of respondent. Hence, the latter should be compensated only for what it would actually lose.

We are not persuaded. Petitioner averred in its Complaint in Civil Case No. RTC 96-3675 that it had sought to acquire an easement of a right of

way over portions of respondent’s land -- a total area of 22,961.71 square meters.[11] In its prayer, however, it also sought authority to enter the property and demolish all improvements existing thereon, in order to commence and undertake the construction of its Power Transmission Project.

In other words, the expropriation was not to be limited to an easement of a right of way. In its Answer, respondent

alleged that it had already authorized petitioner to take possession of the affected portions of the property and to install electric towers thereon.[12] The latter did not controvert this material allegation.

Granting arguendo that what petitioner acquired over respondent’s property was purely an easement of a right of way,

still, we cannot sustain its view that it should pay only an easement fee, and not the full value of the property. The acquisition of such an easement falls within the purview of the power of eminent domain. This conclusion finds support in similar cases in which the Supreme Court sustained the award of just compensation for private property condemned for public use.[13] Republic v. PLDT[14] held thus:

“x x x. Normally, of course, the power of eminent domain results in the taking or appropriation of title

to, and possession of, the expropriated property; but no cogent reason appears why the said power may not be availed of to impose only a burden upon the owner of condemned property, without loss of title and possession. It is unquestionable that real property may, through expropriation, be subjected to an easement of right of way.”[15]

True, an easement of a right of way transmits no rights except the easement itself, and respondent retains full ownership

of the property. The acquisition of such easement is, nevertheless, not gratis. 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 neither more nor less than the monetary equivalent of the land.[16]

Just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator. The

measure is not the taker’s gain, but the owner’s loss. The word “just” is used to intensify the meaning of the word “compensation” and to convey thereby the idea that the equivalent to be rendered for the property to be taken shall be real, substantial, full and ample.[17]

In eminent domain or expropriation proceedings, the just compensation to which the owner of a condemned property is entitled is generally the market value. Market value is “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.”[18] Such amount 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. However, these values may serve as factors to be considered in the judicial valuation of the property.[19]

The parcels of land sought to be expropriated are undeniably undeveloped, raw agricultural land. But a dominant portion

thereof has been reclassified by the Sangguniang Panlungsod ng Naga -- per Zoning Ordinance No. 94-076 dated August 10, 1994 -- as residential, per the August 8, 1996 certification of Zoning Administrator Juan O. Villegas Jr.[20] The property is also covered by Naga City Mayor Jesse M. Robredo’s favorable endorsement of the issuance of a certification for land use conversion by the

Department of Agrarian Reform (DAR) on the ground that the locality where the property was located had become highly urbanized and would have greater economic value for residential or commercial use.[21]

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.[22] All the facts as to the condition of the property and its surroundings, as well as its improvements and capabilities, should be considered.[23]

In fixing the valuation at P550 per square meter, the trial court had considered the Report of the commissioners and the

proofs submitted by the parties. These documents included the following: (1) the established fact that the property of respondent was located along the Naga-Carolina provincial road; (2) the fact that it was about 500 meters from the Kayumanggi Resort and 8 kilometers from the Naga City Central Business District; and a half kilometer from the main entrance of the fully developed Naga City Sports Complex -- used as the site of the Palarong Pambansa -- and the San Francisco Village Subdivision, a first class subdivision where lots were priced at P2,500 per square meter; (3) the fair market value of P650 per square meter proffered by respondent, citing its recently concluded sale of a portion of the same property to Metro Naga Water District at a fixed price of P800 per square meter; (4) the BIR zonal valuation of residential lots in Barangay Pacol, Naga City, fixed at a price of P220 per square meter as of 1997; and (5) the fact that the price of P430 per square meter had been determined by the RTC of Naga City (Branch 21)[24] as just compensation for the Mercados’ adjoining property, which had been expropriated by NPC for the same power transmission project.

The chairperson of the Board of Commissioners, in adopting the recommendation of Commissioner Bulaos, made a

careful study of the property. Factors considered in arriving at a reasonable estimate of just compensation for respondent were the location; the most profitable likely use of the remaining area; and the size, shape, accessibility as well as listings of other properties within the vicinity. Averments pertaining to these factors were supported by documentary evidence.

On the other hand, the commissioner for petitioner -- City Assessor Albeus -- recommended a price of P115 per square

meter in his Report dated June 30, 1997. No documentary evidence, however, was attached to substantiate the opinions of the banks and the realtors, indicated in the commissioner’s Report and computation of the market value of the property.

The price of P550 per square meter appears to be the closest approximation of the market value of the lots in the

adjoining, fully developed San Francisco Village Subdivision. Considering that the parcels of land in question are still undeveloped raw land, it appears to the Court that the just compensation of P550 per square meter is justified.

Inasmuch as the determination of just compensation in eminent domain cases is a judicial function,[25] and the trial court

apparently did not act capriciously or arbitrarily in setting the price at P550 per square meter -- an award affirmed by the CA -- we see no reason to disturb the factual findings as to the valuation of the property. Both the Report of Commissioner Bulao and the commissioners’ majority Report were based on uncontroverted facts supported by documentary evidence and confirmed by their ocular inspection of the property. As can be gleaned from the records, they did not abuse their authority in evaluating the evidence submitted to them; neither did they misappreciate the clear preponderance of evidence. The amount fixed and agreed to by the trial court and respondent appellate court has not been grossly exorbitant or otherwise unjustified.[26]

Majority Report of Commissioners Sufficient

Deserving scant consideration is petitioner’s contention that the Report adopted by the RTC and affirmed by the CA was not the same one submitted by the board of commissioners, but was only that of its chairperson. As correctly pointed out by the trial court, the commissioner’s Report was actually a decision of the majority of the board. Note that after reviewing the Reports of the other commissioners, Chairperson Teoxon opted to adopt the recommendation of Commissioner Bulao. There has been no claim that fraud or prejudice tainted the majority Report. In fact, on December 19, 1997, the trial court admitted the commissioner’s Report without objection from any of the parties.[27]

Under Section 8 of Rule 67 of the Rules of Court, the court may “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; x x x.” In other words, the reports of commissioners are merely advisory and recommendatory in character, as far as the courts are concerned.[28]

Thus, it hardly matters whether the commissioners have unanimously agreed on their recommended valuation of the

property. It has been held that the report of only two commissioners may suffice, even if the third commissioner dissents.[29] As a court is not bound by commissioners’ reports it may make such order or render such judgment as shall secure for the plaintiff the property essential to the exercise of the latter’s right of condemnation; and for the defendant, just compensation for the property expropriated. For that matter, the court may even substitute its own estimate of the value as gathered from the evidence on record.[30]

WHEREFORE, the Petition is DENIED, and the assailed Decision AFFIRMED. No pronouncement as to costs. SO ORDERED.

BARDILLON VS. BARANGAY MASILI OF CALAMBA, LAGUNAGR NO. 146886, April 30, 2003

An expropriation suit is incapable of pecuniary estimation. Accordingly, it falls within the jurisdiction of regional trial courts, regardless of the value of the subject property.

The Case

Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking to set aside the January 10, 2001 Decision and the February 5, 2001 Resolution of the Court of Appeals[2] (CA) in CA-GR SP No. 61088. The dispositive part of the Decision reads:

“WHEREFORE, premises considered, the present [P]etition for [C]ertiorari is hereby DENIED DUE COURSE and accordingly DISMISSED, for lack of merit.”[3]

The assailed Resolution[4] denied petitioner’s Motion for Reconsideration.

The Facts

The factual antecedents are summarized by the CA as follows:

“At the root of this present [P]etition is the controversy surrounding the two (2) [C]omplaints for eminent domain which were filed by herein respondent for the purpose of expropriating a ONE HUNDRED FORTY FOUR (144) square meter-parcel of land, otherwise known as Lot 4381-D situated in Barangay Masili, Calamba, Laguna and owned by herein petitioner under Transfer Certificate of Title No. 383605 of the Registry of Deeds of Calamba, Laguna. Petitioner acquired from Makiling Consolidated Credit Corporation the said lot pursuant to a Deed of Absolute Sale which was executed by and between the former and the latter on October 7, 1996.

“The first [C]omplaint for eminent domain, docketed as Civil Case No. 3648 and entitled ‘Brgy. Masili, Calamba, Laguna v. Emelita A. Reblara, Eugenia Almazan & Devorah E. Bardillon,’ was filed before the Municipal Trial Court of Calamba, Laguna (‘MTC’) on February 23, 1998, following the failure of Barangay Masili to reach an agreement with herein petitioner on the purchase offer of TWO HUNDRED THOUSAND PESOS (P200,000.00). The expropriation of Lot 4381-D was being pursued in view of providing Barangay Masili a multi-purpose hall for the use and benefit of its constituents.

“On March 5, 1999, the MTC issued an order dismissing Civil Case No. 3648 ‘for lack of interest’ for failure of the [respondent] and its counsel to appear at the pre-trial. The MTC, in its Order dated May 3, 1999, denied [respondent’s] [M]otion for [R]econsideration thereof.

“The second [C]omplaint for eminent domain, docketed as Civil Case No. 2845-99-C and entitled ‘ Brgy. Masili, Calamba, Laguna v. Devorah E. Bardillon, ’ was filed before Branch 37 of the Regional Trial Court of Calamba, Laguna (‘RTC’) on October 18, 1999. This [C]omplaint also sought the expropriation of the said Lot 4381-D for the erection of a multi-purpose hall of Barangay Masili, but petitioner, by way of a Motion to Dismiss, opposed this [C]omplaint by alleging in the main that it violated Section 19(f) of Rule 16 in that [respondent’s] cause of action is barred by prior judgment, pursuant to the doctrine of res judicata .

“On January 21, 2000, [the] Judge issued an order denying petitioner’s Motion to Dismiss, holding that the MTC which ordered the dismissal of Civil Case No. 3648 has no jurisdiction over the said expropriation proceeding.

“With the subsequent approval of Municipal Ordinance No. 2000-261 on July 10, 2000, and the submission thereof in compliance with [the] Judge’s Order dated June 9, 2000 requiring herein respondent to produce the authority for the expropriation through the Municipal Council of Calamba, Laguna, the assailed Order dated August 4, 2000 was issued in favor of Barangay Masili x x x and, on August 16, 2000, the corresponding order for the issuance of the [W]rit of [P]ossession over Lot 4381-D.”[5]

Ruling of the Court of Appeals

In dismissing the Petition, the CA held that the Regional Trial Court (RTC) of Calamba, Laguna (Branch 37)[6] did not commit grave abuse of discretion in issuing the assailed Orders. It ruled that the second Complaint for eminent domain (Civil

http://sc.judiciary.gov.ph/jurisprudence/2003/apr2003/146886.htm#_ftn6






Case No. 2845-99-C) was not barred by res judicata. The reason is that the Municipal Trial Court (MTC), which dismissed the first Complaint for eminent domain (Civil Case No. 3648), had no jurisdiction over the action.

Hence, this Petition.[7]

The Issues

In her Memorandum, petitioner raises the following issues for our consideration:

“A. Whether or not, the Honorable Respondent Court committed grave abuse of discretion amounting to lack of jurisdiction when it denied and dismissed petitioner’s appeal;

“B. Whether or not, the Honorable Respondent Court committed grave abuse of discretion when it did not pass upon and consider the pending Motion for Reconsideration which was not resolved by the Regional Trial Court before issuing the questioned Orders of 4 and 16 August 2000;

“C. Whether or not, the Honorable Respondent Court committed grave abuse of discretion in taking the total amount of the assessed value of the land and building to confer jurisdiction to the court a quo;

“D. Whether or not, the Honorable Respondent Court committed grave abuse of discretion in ignoring the fact that there is an existing multi-purpose hall erected in the land owned by Eugenia Almazan which should be subject of expropriation; and

“E. Whether or not, the Honorable Respondent Court committed grave abuse of discretion in failing to consider the issue of forum shopping committed by Respondent Masili.”[8]

Simply put, the issues are as follows: (1) whether the MTC had jurisdiction over the expropriation case; (2) whether the dismissal of that case before the MTC constituted res judicata; (3) whether the CA erred when it ignored the issue of entry upon the premises; and (4) whether respondent is guilty of forum shopping.

The Court’s Ruling

The Petition has no merit.

First Issue: Jurisdiction Over Expropriation

Petitioner claims that, since the value of the land is only P11,448, the MTC had jurisdiction over the case.[9]

On the other hand, the appellate court held that the assessed value of the property was P28,960.[10] Thus, the MTC did not have jurisdiction over the expropriation proceedings, because the amount involved was beyond the P20,000 jurisdictional amount cognizable by MTCs.

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 property for public use.[11]As such, it is incapable of pecuniary estimation and should be filed with the regional trial courts.[12]

This was explained by the Court in Barangay San Roque v. Heirs of Francisco Pastor:[13]

“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. 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. 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,’ 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.’ The 1997 amendments to the Rules of Court were not intended to change these jurisprudential precedents.”[14]

To reiterate, an expropriation suit is within the jurisdiction of the RTC regardless of the value of the land, because the subject of the action is the government’s exercise of eminent domain -- a matter that is incapable of pecuniary estimation.

Second Issue: Res Judicata

Petitioner claims that the MTC’s dismissal of the first Complaint for eminent domain was with prejudice, since there was no indication to the contrary in the Order of dismissal. She contends that the filing of the second Complaint before the RTC should therefore be dismissed on account of res judicata.

Res judicata literally means a matter adjudged, judicially acted upon or decided, or settled by judgment.[15] It provides that a final judgment on the merits rendered by a court of competent jurisdiction is conclusive as to the rights of the parties and their privies; and constitutes an absolute bar to subsequent actions involving the same claim, demand or cause of action.[16]

The following are the requisites of res judicata: (1) the former judgment must be final; (2) the court that rendered it had jurisdiction over the subject matter and the parties; (3) it is a judgment on the merits; and (4) there is -- between the first and the second actions -- an identity of parties, subject matter and cause of action.[17]

Since the MTC had no jurisdiction over expropriation proceedings, the doctrine of res judicata finds no application even if the Order of dismissal may have been an adjudication on the merits.

Third Issue: Legality of Entry Into Premises

Petitioner argues that the CA erred when it ignored the RTC’s Writ of Possession over her property, issued despite the pending Motion for Reconsideration of the ruling dismissing the Complaint. We are not persuaded.

The requirements for the issuance of a writ of possession in an expropriation case are expressly and specifically governed by Section 2 of Rule 67 of the 1997 Rules of Civil Procedure.[18] On the part of local government units, expropriation is also governed by Section 19 of the Local Government Code.[19] Accordingly, in expropriation proceedings, the requisites for authorizing immediate entry are as follows: (1) the filing of a complaint for expropriation sufficient in form and substance; and (2) the deposit of the amount equivalent to 15 percent of the fair market value of the property to be expropriated based on its current tax declaration.[20]

In the instant case, the issuance of the Writ of Possession in favor of respondent after it had filed the Complaint for expropriation and deposited the amount required was proper, because it had complied with the foregoing requisites.

The issue of the necessity of the expropriation is a matter properly addressed to the RTC in the course of the expropriation proceedings. If petitioner objects to the necessity of the takeover of her property, she should say so in her Answer to the Complaint.[21] The RTC has 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 for it.[22]

Fourth Issue: Forum Shopping

Petitioner claims that respondent is guilty of forum shopping, because it scouted for another forum after obtaining an unfavorable Decision from the MTC.

The test for determining the presence of forum shopping is whether the elements of litis pendentia are present in two or more pending cases, such that a final judgment in one case will amount to res judicata in another.[23]

Be it noted that the earlier case lodged with the MTC had already been dismissed when the Complaint was filed before the RTC. Even granting arguendo that both cases were still pending, a final judgment in the MTC case will not constitute res judicata in the RTC, since the former had no jurisdiction over the expropriation case.

WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs against petitioner.

SO ORDERED.











MASIKIP VS. CITY OF PASIGGR NO. 136349, January 23, 2006

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 Decision[1] of the Court of Appeals dated October 31, 1997 in CA-G.R. SP

No. 41860 affirming the Order[2] of the Regional Trial Court, Branch 165, Pasig City, dated May 7, 1996 in S.C.A. No. 873.

Likewise assailed is the Resolution[3] 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.

http://sc.judiciary.gov.ph/jurisprudence/2006/jan2006/136349.htm#_ftn3



On April 25, 1995, petitioner filed a Motion to Dismiss the complaint on the following grounds:

I

PLAINTIFF HAS NO CAUSE OF ACTION FOR THE EXERCISE OF THE POWER OF EMINENT DOMAIN, CONSIDERING THAT:

(A) THERE IS NO GENUINE NECESSITY FOR THE TAKING OF THE PROPERTY SOUGHT TO BE EXPROPRIATED.

(B) PLAINTIFF HAS ARBITRARILY AND CAPRICIOUSLY CHOSEN THE PROPERTY SOUGHT TO BE EXPROPRIATED.

(C) EVEN ASSUMING ARGUENDO THAT 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 in its Order of July 31, 1996. Forthwith, it

appointed the City Assessor and City Treasurer of Pasig City as commissioners to ascertain the just compensation. This prompted

petitioner to file with the Court of Appeals a special civil action for certiorari, docketed as CA-G.R. SP No. 41860. On

October 31, 1997, the Appellate Court dismissed the petition for lack of merit. 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.



JESUS IS LORD CHRISTIAN SCHOOL FOUNDATION VS. MUNICIPALITY OF PASIGGR NO. 152230, August 9, 2005

Before us is a petition for review of the Decision [1] 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 Ordinance[5] 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 sale[9] 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

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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 forP1,719,000.00.[22] It paid a down payment of P1,000,000.00 for the property. After payment of the total purchase price, the Ching Cuancos executed a Deed of Absolute Sale [23] 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 photocopy[32] 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 CUANCO18 Alcalde Jose StreetCapasigan, 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 Mayoron Infrastructure[59]

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.

ATTY. TAN:






That is all for the witness, Your Honor.

COURT:

Do you have any cross-examination?

ATTY. JOLO:

Just a few cross, Your Honor, please. With the kind permission of the Honorable Court.

COURT:

Proceed.

CROSS-EXAMINATION

BY ATTY. JOLO:

Q Mr. Witness, do you know Mr. Lorenzo Ching [Cuanco]

A I do not know him.

Q As a matter of fact, you have not seen him even once, isn’t not (sic)?

A Yes, Sir.

Q This Luz Bernarte, do you know her?

A I do not know her.

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

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.

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 a substantial compliance with the requisite offer. A notice of lis pendens is a 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 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 portion of the title only on November 26, 1993, long after the complaint had been filed in the RTC against the Ching Cuancos.

Neither is the declaration in one of the whereas clauses of the ordinance that “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 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 erroneous premise that the letter of Engr. Reyes reached the co-owners of the 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 the letter of Engr. Reyes, the declaration in the ordinance is not a compliance with Section 19 of R.A. No. 7160.

The respondent contends, however, that the Ching Cuancos, impliedly admitted the allegation in its complaint that an offer to purchase the property 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 gleaned from their answer to the complaint, the Ching Cuancos specifically 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 denial, although not specific, is sufficient.

Public Necessity




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 taken[66] 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:








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… 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.



FILSTREAM INTERNATIONAL INC. VS. CA284 SCRA 716

In resolving the instant petitions, the Court is tasked to strike a balance between the contending interests when the state exercised 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. 7813[3] on November 5, 1993, authorizing Mayor Alfredo S. Lim to initiate the acquisition by negotiation, expropriation, purchase, or other legal means certain parcels of land registered under T.C.T. Nos. 169193, 169198, 169190, 169200, 169202, and 169192 of the Registry of Deeds of Manila which formed part of the properties of petitioner then occupied by private respondents. Subsequently, the City of Manila approved Ordinance No. 7855[4] declaring the expropriation of certain parcels of land situated along Antonio Rivera and Fernando Ma. Guerero streets in Tondo, Manila which were owned by Mr. Enrique Quijano Gutierez, 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 execution issued by the RTC of Manila, Branch 4 in the ejectment suit; violation of the constitutional guarantee against non-impairment of obligation and contract; 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 obligation 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 motion 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

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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 x x x accompanied by x x x 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 if 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 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 96-78098) for violation of Supreme Court Circular No. 04-94 (forum shopping) because the same parties, causes of action and subject matter involved therein have already been disposed of in the decision in the















ejectment case (Civil Case No. 140817) which has already become final and executory prior to the filing of these consolidated cases.

On December 9, 1996, an order was issued by the RTC of Manila, Branch 33, ordering the dismissal of Civil Cases 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 petitioner’s 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 decision 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 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 the 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 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 prejudiced 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 incient 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 became 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:

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 (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.” (Italics 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; Italics supplied).

x x x x x x x x x

“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 thebona 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 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 x x x”. (Italics 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. Nol 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 the 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 a 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:

“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: x x x.” (Italics supplied).

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

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

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

(b) Alienable lands of the public domain;

(c) Unregistered or abandoned and idle lands;

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

(e) Bagong Lipunan Improvement 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.” (Italics 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 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 the respondent City of Manila complied with Sec. 9 and Sec. 10 of R.A. 7279. Petitioners 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.

SAN ROQUE REALTY VS. REPUBLICGR NO. 163130, September 7, 2007

This is a petition for review on certiorari of a Decision[1] of the Court of Appeals (CA) in CA-G.R. CV. No. 61758 ordering the

cancellation of petitioner San Roque Realty Development Corporation's (SRRDC's) Transfer Certificates of Title (TCT) Nos.

128197 and 128198, thereby reversing the Decision[2] of the Regional Trial Court (RTC) of Cebu City, Branch 12, in Civil Case

No. CEB-1843.

The facts, as found by the CA, are as follows:

The subject parcels of land are located at Lahug, Cebu City and were part of Lot No. 933. Lot No. 933 was covered by Transfer Certificate of Title No. 11946. It was originally owned by Ismael D. Rosales, Pantaleon Cabrera and Francisco Racaza. On 5 September 1938, subject parcels of land, together with seventeen (17) others, were the subject of an expropriation proceeding initiated by the then Commonwealth of the Philippines docketed as Civil Case No. 781. On 19 October 1938, Judge Felix Martinez ordered the initial deposit of P9,500.00 as pre-condition for the entry on the lands sought to be expropriated. On 14 May 1940, a Decision was rendered (Exhibit “D,” Records, pp. 204-214) condemning the parcels of land. However, the title of the subject parcel of land was not transferred to the government. Eventually, the land was subdivided and T.C.T. No. 11946 was cancelled and new titles were issued by the Register of Deeds of Cebu. Two parcels covered by T.C.T. Nos. 128197 (Lot No. 933-B-3) and 128198 (Lot No. 933-B-4) were acquired by defendant-appellee. In 1995, defendant-appellee begun construction of townhouses on the subject parcels of land. On 22 February 1996, plaintiff-appellant filed the present case (Records, pp. 1-15) alleging that it is the owner of the subject parcels of land by virtue of the 1938 Decision in the expropriation case, thus, T.C.T. Nos. 128197 and 128198 are null and void. It argued that defendant-appellee, had no right to possess the subject properties because it was not its lawful owner. In its Answer (Records, pp. 28-38), defendant-appellee claimed that it was a buyer in good faith. It also claimed that there was no valid expropriation because it was initiated by the executive branch without legislative approval. It also alleged that the expropriation was never consummated because the government did not actually enter the land nor were the owners paid any compensation.[3]

The appellate court then quotes, verbatim, the evidence and positions of the parties, as found by the trial court, viz.:

Plaintiff alleged that the Republic of the Philippines is the absolute owner of Lot No. 933 of Cebu Cadastre (covered by Transfer Certificate of Title 11946), a part and parcel of the Camp Lapu-lapu military reservation; that said parcel of land was originally private property registered in the names of Francisco Racaza, Pantaleon Cabrera and Josefina Martinez; that on October 19, 1938, plaintiff (then Commonwealth now Republic of the Philippines) instituted condemnation proceeding against the owners of eighteen (18) parcels of land including Lot 933 in Banilad Estate Lahug (Exhibits “A” and “A-1”) before the Court of First Instance of the Province of Cebu, 8th Judicial District, that the purpose of expropriation was to carry out the development program of the Philippine Army as provided in the National Defense Act, i.e., military reservation; that sometime in October 1938, Judge Felix Martinez ordered plaintiff to make an initial deposit of P9,500.00 with any depository of the latter payable to the Provincial Treasurer as pre-condition for the entry on the lands sought to be expropriated (Exhibit “B”); that, accordingly, plaintiff deposited said amount with the Philippine National Bank to the credit of the Provincial Treasurer (Exhibit “C”); that said amount was subsequently disbursed in full but due to the destruction of the vouchers, journal and cash book in the Office of the Provincial Treasurer during the last World War, the names of the payees could not reasonably be ascertained (Exhibit “P”); that on May 14, 1940, Judge Martinez issued a Decision condemning the properties in favor of plaintiffs and, at the same time, fixing the just compensation thereof (Exhibits “D” and “E”); that defendant San Roque’s predecessors namely Ismael D. Rosales, Pantaleon Cabrera and Francisco Racaza interposed and (sic) Exception and Notice of Intention to Appeal and filed their corresponding appeal bond (Exhibits “N” & “O”); that naturally, the filing

held temporarily in abeyance the finality of the Decision and prevented plaintiff from recording the Decision with the Register of Deeds; that plaintiffs, nonetheless, started using the expropriated properties including Lot 933, devoting the properties to military use; that to show use of subject properties, plaintiff submitted (1) the historical account of the National Historical Commission embodied in a metal marker located in Lot 932 adjacent to Lot 933 (TSN, January 21, 1997, pp. 6-7; 9; Exhibits “I,” “I-1,” “I-2;” (2) the testimonial accounts of Sgt. Suralta, Barangay Captain Rosales, Lt. Colonel Infante and Col. Reynaldo Correa; and, (3) the remnant of the Lahug Airport, particularly its runway (originally devoted exclusively for military airport and landing field as can be gleaned from Executive Orders 73, 75 and 154 dated December 3, 1936, August 12, 1947 and June 24, 1938, respectively) situated on Lot 933 itself; that survey maps of defendant and plaintiff have shown the exact location of the runway; that Lot 933 was devoted to military use by plaintiff not only for building structures but also military training of the Riverine Battalion (Lot 932, as per testimony of M/Sgt. Renato Suralta); that these training continued up to the present (TSN, January 27, 1997, pp. 4-8); that the area where Park Vista is being built was used as training ground (TSN, April 3, 1997, p. 2). Plaintiff further alleged that defendant San Roque secured Certificates of Title in its favor to the prejudice of plaintiff specifically TCT Nos. 128197 and 128198 covering Lot No. 933-B-3 of the subdivision plan Psd-114779 and Lot 933-B-4 of the subdivision plan Psd-27-023209, respectively; that subject parcels of land belong to plaintiff and registration thereof in the name of defendant San Roque is null and void. Consequently, defendant San Roque’s possession and ownership over the subject property are without legal basis. On the other hand, defendant San Roque alleged that subject parcels of land have been covered by the Torrens System for decades and any transactions involving the same including the alleged expropriation should have been registered and annotated on the Transfer Certificates of Title; that there has been no registration much less annotation of said expropriation on TCTs issued to defendant San Roque nor any [of] its predecessors-in-interest. (Exhibits “20” to “24,” “25,” “25-A” to “25-C,” Exhibits “2,” “2-A” to “2-C,” “3,” “3-A” and “3-B”); that plaintiff never secured a title in its name, never actually took possession of subject parcels of land from the date of the Decision in Civil Case No. 781 up to the present; that despite the fact that defendant San Roque’s Park Vista Project is within viewing and walking distance from Camp Lapu-lapu, it was able to introduce substantial improvements (Exhibits “36,” “36-A” to “36-Q”) with no action being taken by plaintiff; that there are other developments on Lot 933 such as the Cebu Civic and Trade Center which include areas within the military camp as well (Exhibits “36-R” to “36-V,” “38,” “38-A” to “38-R”); that plaintiff’s only proof of its claim is the Camp Lapu-lapu Development Plan (Exhibit “F”) which is a private survey of plaintiff; that plaintiff knew and was fully aware of all transactions involving Lot No. 933 up to this date; that defendant San Roque is an innocent purchaser for value and, therefore, entitled to the protection of the law as it has every right to rely on the correctness of the certificates of title issued therefor; that defendant San Roque and its predecessors-in-interest have been in open, notorious and continuous possession and enjoyment of subject property(ies) since 1930; that there is a presumption of regularity in the issuance of subject TCT Nos. 128197 and 128198 by defendant Register of Deeds; that the alleged Camp Lapu-lapu Development Plan, in the absence of any Transfer Certificate of Title in plaintiff’s name, cannot prevail over defendant San Roque’s Transfer Certificate of Title; that defendant San Roque’s (sic) commenced development of subject parcels of land as early as 1993 and started construction in April 1994 upon issuance of titles in its name, two and a half years prior to institution of the instant case; that it has been paying real taxes since the acquisition of subject properties (Exhibits “4,” “4-A” and “4-B,” “5,” “5-A” and “5-B,” “26” to “35”); that all requirements for such development, such as securing permits and licenses from government agencies were complied with (Exhibits “9” to “18-C”); that it was only on 24 July 1995 that plaintiff initiated steps to recover possession starting with the letter dated 24 July 1995 (Exhibit “1,” “6,” “7” and “8”) and even addressed to a wrong entity; that it took plaintiff fifty-six (56) years (counted from the Decision dated 14 May 1940) to take action to secure its “claimed” ownership and possession; that private ownership of portions of Lot 933 have been affirmed by the appellate court by ordering the City Government of Cebu to pay the private landowner for the portion used for the expansion of Geongson Road in the case of Perpetua Magno, et al. versus City of Cebu, CA-G.R. No. 40604-CV (Exhibits “51” to “55,” “55-A” to “55-C”); that in fact, the plaintiff paid rental for another allegedly expropriated property in the case of another expropriated Lot 934 subject of the case of Segura v. CAA, et al., CA-G.R. No. 12728-CV (Exh. “56,” “56-A” to “56-B”); that the alleged expropriation of Lot 933 was never consummated as plaintiff never entered, much less take possession, of subject parcels of land and ever paid any compensation to the original owners despite its being a requisite for valid exercise of the power of eminent domain; that there is nother (sic) on record which will show that compensation for the expropriated lots was ever paid to, much less received by the landowners/predecessors-in-interest of defendant San Roque; that plaintiff abandoned the public use, much less did it do so within a reasonable time, the Lahug Airport had long transferred to Mactan and the areas said airport used to occupy are now being developed by or on long term lease to private entities; that alleged initial deposit of P9,500.00 payable to Provincial Treasurer does not specify for which property the same was intended for; that if indeed plaintiff actually entered subject property and introduced improvements thereon it would not have been possible for defendant San Roque or its predecessors-in-interest to have actually possessed and enjoyed the

property from 1938 up to the present to the exclusion of plaintiff; that the expropriation requires legislative action and thus the alleged expropriation of Lot 933 is null and void; that City Ordinances have classified Lot 933 and neighboring lots initially as residential and presently as commercial (Exhibits “39,” “40,” “41”); and, finally that the AFP-Viscom is not the proper party to initiate much less institute suit even assuming the alleged expropriation is valid as the expropriated lots were placed under the control and supervision of the Civil Aeronautics Board.[4]

On August 25, 1998, the RTC rendered a Decision[5] dismissing the Republic's complaint and upholding SRRDC's

ownership over the subject properties as supported by SRRDC's actual possession thereof and its unqualified title thereto. The

RTC ruled that SRRDC's ownership is borne out by the original owner's title to Lot No. 933 and the subsequent transferees’

respective titles all of which bore no annotation of the fact of expropriation and did not indicate the Republic's favorable lien. It

also found that there was no valid expropriation since the records are bereft of a showing that consideration was paid for the

subject properties.[6]

Aggrieved, the Republic appealed the decision to the CA insisting on its absolute ownership over the subject properties

grounded on the following: (1) the CFI Decision in the expropriation case, Civil Case No. 781; (2) the ruling of this Court

in Valdehueza v. Republic;[7] and (3) the expropriated properties, including Lot No. 933, are devoted to public use.

The CA reversed the RTC Decision on the finding that the appeal from the CFI Decision in the expropriation case was never

perfected by the original owners of the subject properties,[8] and thus, the expropriation of Lot No. 933 became final and binding on

the original owners, and SRRDC, which merely stepped into the latter's shoes, is similarly bound. [9] The CA further held that

laches and estoppel cannot work against the Republic despite its failure from 1940 to register Lot No. 933 in its name, or to record

the decree of expropriation on the title.[10] Accordingly, the CA found no necessity to rule on the applicability of Valdehueza v.

Republic in the case.[11]

Hence, the instant petition.

In this appeal, SRRDC assigned the following errors:

I.THE COURT OF APPEALS ERRED IN HOLDING THAT THE VALIDITY OF THE EXPROPRIATION PROCEEDINGS IN CIVIL CASE NO. 781 MAY NO LONGER BE QUESTIONED. RESPONDENT'S OWN (REBUTTAL) EVIDENCE SHOWS THAT THE DECISION IN CIVIL CASE NO. 781 IS NOT YET FINAL. FURTHERMORE, THE CONDUCT OF EXPROPRIATION PROCEEDINGS ALONE DOES NOT CONFER TITLE UPON RESPONDENT.

II.

THE COURT OF APPEALS ERRED IN HOLDING THAT RESPONDENT HAD A BETTER RIGHT TO THE SUBJECT PROPERTIES. THE SUBJECT PROPERTIES BEING UNDER THE TORRENS SYSTEM, PETITIONER'S RIGHT AS THE REGISTERED OWNER FAR OUTWEIGHS RESPONDENT'S. ASIDE FROM THE FACT THAT ITS CLAIM IS OF DOUBTFUL VALIDITY, RESPONDENT, FOR SEVERAL DECADES, FAILED TO REGISTER ITS INTEREST, IF ANY, OVER THE SUBJECT PROPERTIES.

III.

THE COURT OF APPEALS ERRED IN HOLDING THAT RESPONDENT IS NOT GUILTY OF LACHES DESPITE THE FACT THAT IT FAILED TO ASSERT ITS RIGHT, IF ANY, OVER THE SUBJECT PROPERTIES FOR 56 LONG YEARS.

IV.

THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER IS NOT A BUYER IN GOOD FAITH.[12]

At the outset, we note that issues of ownership and possession of several lots included in the 18 parcels of land covering the

Banilad Friar Lands Estate had been the subject of earlier controversies which we already had occasion to rule upon. Lot Nos. 932

and 939 were the subject of Valdehueza v. Republic[13] which is ubiquitously invoked by the Republic in this case. Republic v.

Lim[14] dealt with the special circumstances surrounding the incomplete and ineffectual expropriation of Lot No. 932. On the other

hand,Federated Realty Corporation v. Court of Appeals[15] preliminarily determined the state of ownership and possession of a

portion of Lot No. 933, particularly Lot 3, covered by TCT No. 119929.

In Valdehueza, we held that the registered lot owners were not entitled to recover possession of the expropriated lots

considering that the titles contained annotations of the right of the National Airports Corporation (now CAA) to pay for and

acquire said lots.[16]

In Republic v. Lim,[17] we rejected the Republic’s invocation of our Decision in Valdehueza to retain ownership over said lots,

and upheld the principle that title to the expropriated property shall pass from the owner to the expropriator only upon full

payment of just compensation.[18] We struck down the Republic’s claim of ownership over Lot No. 932 in light of its blatant

disregard of the explicit order in Valdehueza to effect payment of just compensation.

In Federated Realty Corporation v. Court of Appeals[19] we upheld Federated Realty Corporation’s (FRC’s) clear and

unmistakable right, as the title holder, to the lot in question, necessitating the issuance of a writ of injunction to prevent serious

damage to its interests.[20] Even as the Republic invoked Valdehueza and the CFI Decision in Civil Case No. 781 to defeat the

rights of the registered owner and actual possessor, we applied the settled principle in land registration that a certificate of title

serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person named therein.[21]

It is against this backdrop that we resolve the main issue at bench: the ownership of Lot Nos. 933-B-3 and 933-B-

4. To do so, however, we must answer a number of fundamental questions.

First, was there a valid and complete expropriation of the 18 parcels of land, inclusive of subject Lot No. 933? Corollary

thereto, did the CFI Decision in Civil Case No. 781 attain finality and, as such, now evade review?

To these questions, the CA responded in the affirmative. It found that no timely appeal had been filed by the original

owners of Lot No. 933, and thus, the CFI Decision became final. Accordingly, the CA ruled that the validity of the expropriation,

including the authority to expropriate, was no longer open to question. Therefore, the appellate court saw no necessity to delve

into the applicability of Valdehueza.

We cannot subscribe to the CA’s ruling.

In its effort to simplify the issues, the CA disregarded relevant facts and ignored the evidence, noteworthy among which

is that when the Republic filed its complaint with the RTC, it alleged that the CFI Decision in Civil Case No. 781 had long become

final and executory. However, this assertion would compound the Republic’s predicament, because the Republic could not

adequately explain its failure to register its ownership over the subject property or, at least, annotate its lien on the title. Trying to

extricate itself from this quandary, the Republic belatedly presented a copy of an Exception and Notice of Intention to Appeal

dated July 9, 1940, to show that an appeal filed by the original owners of Lot No. 933 effectively prevented the Republic from

registering its title, or even only annotating its lien, over the property.

The CA’s categorical pronouncement that the CFI Decision had become final as no appeal was perfected by SRRDC’s

predecessor-in-interest is, therefore, contradicted by the Republic’s own allegation that an appeal had been filed by the original

owners of Lot No. 933. Not only did the CA fail to resolve the issue of the Republic’s failure to register the property in its name,

it also did not give any explanation as to why title and continuous possession of the property remained with SRRDC and its

predecessors-in-interest for fifty-six years. The CA ruling that disregards these established facts and neglects to reconcile the

contradiction mentioned above does not deserve concurrence by this Court.

Furthermore, as correctly pointed out by SRRDC, even if the appellate court adverted to our finding

in Valdehueza on the finality of the expropriation over the lots subject of that case, still, SRRDC and its predecessors-in-interest

would not be bound. The reference to the finality of the CFI Decision in Civil Case No. 781 in Valdehuezaapplies to different

parties and separate parcels of land. We confirmed this in Federated Realty Corporation v. CA,[22] and noted that our decision

in Valdehueza and inRepublic v. Lim[23] did not involve the ownership of Lot No. 933 which was not subject of those cases.

Second, assuming that the CFI Decision in Civil Case No. 781 is final and executory, and that the expropriation

proceedings before that court had been completed, did the Republic pay just compensation for Lot No. 933?

Regrettably, the CA did not dispose of this issue.

The Republic submits that the P9,500.00 initial deposit it made was disbursed in full to the owners of the 18 lots subject

of expropriation, and assumes that the owners of Lot No. 933 were among the recipients of such disbursement. The Republic

admits that records of payment were destroyed by fire during World War II, and it cannot be ascertained who received the

money. It would rely simply on the presumption that official duty had been regularly performed in assuming that the owners of

the 18 lots expropriated were adequately paid.

We are not convinced.

The Republic’s bare contention and assumption cannot defeat SRRDC’s apparent ownership over the subject properties.

As we have previously found in Valdehueza, Republic v. Lim[24] and Federated Realty Corporation v. CA,[25] by the very admission

of the Republic, there was no record of payment of compensation to the land owners.

In Republic v. Lim,[26] we emphasized that no piece of land can be finally and irrevocably taken from an unwilling owner

until compensation is paid.[27] Without full payment of just compensation, there can be no transfer of title from the landowner to

the expropriator.[28] Thus, we ruled that the Republic’s failure to pay just compensation precluded the perfection of its title over

Lot No. 932.[29] In fact, we went even further and recognized the right of the unpaid owner to recover the property if within five

years from the decision of the expropriation court the expropriator fails to effect payment of just compensation.

Time and again, we have declared that eminent domain cases are to be strictly construed against the expropriator. [30] The

payment of just compensation for private property taken for public use is an indispensable requisite for the exercise of the State’s

sovereign power of eminent domain. Failure to observe this requirement renders the taking ineffectual, notwithstanding

the avowed public purpose. To disregard this limitation on the exercise of governmental power to expropriate is to ride roughshod

over private rights.

From the records of this case and our previous findings in the related cases, the Republic manifestly failed to present clear

and convincing evidence of full payment of just compensation and receipt thereof by the property owners. [31] Notably, the CFI

Decision in Civil Case No. 781 makes no mention of the initial deposit allegedly made by the Republic. [32] Furthermore, based on

the CFI Decision fixing the amount of just compensation for some of the lots, the initial deposit, if it was indeed disbursed, would

still not adequately recompense all the owners of the 18 expropriated lots. [33] More importantly, if the Republic had actually made

full payment of just compensation, in the ordinary course of things, it would have led to the cancellation of title, or at least, the

annotation of the lien in favor of the government on the certificate of title covering Lot No. 933.[34]

In Federated Realty Corporation v. CA,[35] we expounded on the registration requirement in expropriation proceedings as

provided in the law in force at the time of the CFI Decision, thus:

The registration with the Registry of Deeds of the Republic’s interest arising from the exercise of its power of eminent domain is in consonance with Section 88 of Act No. 496 or the Land Registration Act (now Section 85 of P.D. 1529 also known as the Property Registration Decree), to wit:

SEC. 88. Whenever any land of a registered owner, or any right or interest therein, is taken by eminent domain, the Government or municipality or corporation or other authority exercising such right shall file for registration in the proper province a description of the registered land so taken, giving the name of such owner thereof, referring by number and place of registration in the registration book to each certificate of title, and stating what amount or interest in the land is taken, and for what purpose. A memorandum of the right or interest taken, shall be made on each certificate of title by the register of deeds, and where the fee simple is taken a new certificate shall be entered to the owner for the land remaining to him after such taking, and a new certificate shall be entered to the Government, municipality, corporation, or other authority exercising such right for the land so taken. All fees on account of any memorandum of registration or entry of new certificate shall be paid by the authority taking the land.

Furthermore, Section 251 of the Code of Civil Procedure, the law in force at the time of the Commonwealth case likewise provides for the recording of the judgment of expropriation in the Registry of Deeds. Said provision reads, to wit:

SEC. 251. Final Judgment, Its Record and Effect. – The record of the final judgment in such action shall state definitely by metes and bounds and adequate description. The particular land or interest in land condemned to the public use, and the nature of the public use. A certified copy of the record of judgment shall be recorded in the office of the registrar of deeds for the province in which the estate is situated, and its effect shall be to vest in the plaintiff for the public use stated the land and estate so described. (Emphasis supplied)

There is no showing that the Republic complied with the aforestated registration requirement. Without such compliance, it cannot be said that FRC had notice of the Republic’s adverse claim sufficient to consider the former in bad faith, for the law gives the public the right to rely on the face of the Torrens title and to dispense with the need of further inquiry, except only when one has actual knowledge of facts and circumstances that should impel a reasonably cautious man to inquire further into its integrity. Such is the very essence of our Torrens system as ruled in Legarda v. Saleeby, 31 Phil. 590, thus:

The real purpose of the system is to quiet title of land; to put a stop forever to any question of the legality of the title, except claims which were noted at the time of registration, in the certificate, or which may arise subsequent thereto. That being the purpose of the law, it would seem that once a title is registered, the owner may rest secure, without the necessity of waiting in the portals of the courts, or sitting in the “mirador de su casa,” to avoid the possibility of losing his land. x x x The certificate, in the absence of fraud, is the evidence of title and shows exactly the real interest of its owner. The title once registered, with very few exceptions, should not thereafter be impugned, except in some direct proceeding permitted by law. Otherwise, all security in registered titles would be lost.[36]

From the foregoing, it is clear that it was incumbent upon the Republic to cause the registration of the subject properties

in its name or record the decree of expropriation on the title. Yet, not only did the Republic fail to register the subject properties in

its name, it failed to do so for fifty-six (56) years.

This brings us to the third question that begs resolution: Is the Republic, by its failure or neglect to assert its claim, barred

by laches?

Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which by exercising due

diligence could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time, warranting

a presumption that the party entitled to assert it either has abandoned it or declined to assert it.[37]

The general rule is that the State cannot be put in estoppel or laches by the mistakes or errors of its officials or agents.

[38] This rule, however, admits of exceptions. One exception is when the strict application of the rule will defeat the effectiveness

of a policy adopted to protect the public[39] such as the Torrens system.

In Republic v. Court of Appeals,[40] we ruled that the immunity of government from laches and estoppel is not absolute,

and the government’s silence or inaction for nearly twenty (20) years (starting from the issuance of St. Jude’s titles in 1966 up to

the filing of the Complaint in 1985) to correct and recover the alleged increase in the land area of St. Jude was tantamount to

laches.

In the case at bench, the Republic failed to register the subject properties in its name and incurred in laches spanning more

than five-and-a-half (5 ½) decades. Even if we were to accede to the Republic’s contention that the Exception and Notice of

Intention to Appeal filed by the original owners of Lot No. 933 initially prevented it from registering said property in its name, we

would still be hard pressed to find justification for the Republic’s silence and inaction for an excessively long time.

Very telling of the Republic’s silence and inaction, whether intentional or by sheer negligence, is the testimony of

Antonio L. Infante, the Republic’s witness in the proceedings before the RTC. [41] On cross-examination, he testified that several

surveys[42] were conducted on a number of expropriated lots, including Lot No. 933. [43] The results of these surveys showed that

Lot No. 933 was still registered in the name of the original owners.[44] As such, Infante recommended in his report that legal action

be taken.[45] Yet, despite the aforesaid recommendation, title to Lot No. 933 remained registered in the name of the original

owners, and subsequently its transferees. This silence and unexplained inaction by the Republic clearly constitute laches.

A fourth basic question is whether or not SRRDC is a buyer in good faith.

The CA found SRRDC wanting in good faith because it should be imputed with constructive knowledge, or at least,

sufficiently warned that the Republic had claims over the property in view of indications that the subject land belonged to a

military reservation.

Contrary to the CA’s findings, however, Infante testified that there were no facilities installed by the AFP on Lot No. 933,

although sometime in 1984 to 1985, there began some illegal construction thereon.[46] He was uncertain as to whether a criminal

case was filed against those responsible for the illegal construction, and simply referred to an arrangement between the AFP and an

Amores Realty which prevented the former from filing a case against the latter.[47]

Significantly, the records also reveal that the Republic’s possession of the 18 expropriated lots pertain only to the lots

adjacent to Lot No. 933. At most, the Lahug Airportrunway traverses only a portion of Lot No. 933 situated in Lot No. 933-A, and

not Lot No. 933-B which is the subject of this case. Even if these lots were originally part of Lot No. 933, the lack of annotation

on the title of the decree of expropriation, and its eventual segregation into several lots covered by separate titles enabled SRRDC

to purchase the subject properties, for value, free from any lien, and without knowledge of the Republic’s adverse claim of

ownership.

The trial court correctly held that title registered under the Torrens system is notice to the world.[48] Every person dealing

with registered land may safely rely on the correctness of its certificate of title and the law will not oblige him to go beyond what

appears on the face thereof to determine the condition of the property.[49]

The conveyance history of the subject properties is clearly shown on the titles of SRRDC’s predecessors-in-

interest. Absent a showing that SRRDC had any participation, voluntary or otherwise, in the transfers by the original owners of

Lot No. 933, prior to its eventual acquisition of the same, we affirm that SRRDC is a buyer in good faith and an innocent purchaser

for value.

An innocent purchaser for value is one who, relying on the certificate of title, bought the property from the registered

owner, without notice that some other person has a right to, or interest in, such property, and pays a full and fair price for the same,

at the time of such purchase, or before he has notice of the claim or interest of some other person in the property.[50]

Likewise, Section 32 of Presidential Decree No. 1529[51] provides: SECTION 32. Review of decree of registration; Innocent purchaser for value. – The decree of registration shall not be reopened or revised by reason of absence, minority, or other disability of any person adversely affected thereby, nor by any proceeding in any court for reversing judgments, subject, however, to the right of any person, including the government and the branches thereof, deprived of land or of any estate or interest therein by such adjudication or confirmation of title obtained by actual fraud, to file in the proper Court of First Instance a petition for reopening and review of the decree of registration not later than one year from and after the date of the entry of such decree of registration, but in no case shall such petition be entertained by the court where an innocent purchaser for value has acquired the land or an interest therein, whose rights may be prejudiced. Whenever the phrase “innocent purchaser for value” or an equivalent phrase occurs in this Decree, it shall be deemed to include an innocent lessee, mortgagee, or other encumbrancer for value. Upon the expiration of said period of one year, the decree of registration and the certificate of title issued shall become incontrovertible. Any person aggrieved by such decree of registration in any case may pursue his remedy by action for damages against the applicant or any other persons responsible for the fraud.

In the instant case, the Republic’s adverse claim of ownership over the subject properties may have given SRRDC’s

predecessors-in-interest, the sellers, voidable title to the subject properties. However, we stress that prior to SRRDC’s acquisition

of the subject properties, Lot No. 933 had already been subdivided and covered by separate titles of the subsequent

transferees. These titles, including the titles to the subject properties, had not been voided at the time of the sale to SRRDC in

1994. As such, SRRDC acquired good title to the subject properties, having purchased them in good faith, for value, and without

notice of the seller’s defect of title, if any.

Finally, there is a recent development that has sealed the fate of the Republic in its claim of ownership over the subject

properties. This is the passage of Republic Act No. 9443 (RA 9443), entitled “AN ACT CONFIRMING AND DECLARING,

SUBJECT TO CERTAIN EXCEPTIONS, THE VALIDITY OF EXISTING TRANSFER CERTIFICATES OF TITLE AND

RECONSTITUTED CERTIFICATES OF TITLE COVERING THE BANILAD FRIAR LANDS ESTATE, SITUATED IN THE

FIRST DISTRICT OF THE CITY OF CEBU.”[52] The law confirms and declares valid all existing TCTs and Reconstituted

Certificates of Title duly issued by the Register of Deeds of Cebu Province and/or Cebu City covering any portion of the Banilad

Friar Lands Estate.[53] Thus, by legislative fiat, SRRDC’s titles covering Lot Nos. 933B-3 and 933B-4 must be recognized as valid

and subsisting.

In fine, we hold that the operative facts in the case at bar, to wit: (1) the incomplete expropriation of Lot No. 933 in view of

Republic’s failure to prove payment in full of just compensation; (2) the registration under the Torrens system of the subject

properties in the name of SRRDC and its predecessors-in-interest; (3) the estoppel and laches of the Republic for 56 years; (4) the

status of SRRDC as an innocent purchaser for value; and (5) the passage of R.A. No. 9443, all warrant the reversal of the CA

Decision.

WHEREFORE, premises considered, the petition is GRANTED. The August 15, 2003 Decision of the Court of Appeals is

hereby REVERSED and the August 25, 1998 Decision of the Regional Trial Court is REINSTATED. TCT Nos. 128197 and

128198, in the name of petitioner San Roque Realty and Development Corporation, are upheld and declared valid.

SO ORDERED.

consticases 3

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philippine mining act

president ramos

denr secretary victor

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executive secretary

demand letter

denr administrative

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