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Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

Prosperidad, Agusan del Sur. 4 The complaint was later amended to include the registered owners, Percival Moday's parents, Zotico and Leonora Moday, as party defendants. On March 6, 1991, public respondent municipality filed a Motion to Take or Enter Upon the Possession of Subject Matter of This Case stating that it had already deposited with the municipal treasurer the necessary amount in accordance with Section 2, Rule 67 of the Revised Rules of Court and that it would be in the government's best interest for public respondent to be allowed to take possession of the property. Despite petitioners' opposition and after a hearing on the merits, the Regional Trial Court granted respondent municipality's motion to take possession of the land. The lower court held that the Sangguniang Panlalawigan's failure to declare the resolution invalid leaves it effective. It added that the duty of the Sangguniang Panlalawigan is merely to review the ordinances and resolutions passed by the Sangguniang Bayan under Section 208 (1) of B.P. Blg. 337, old Local Government Code and that the exercise of eminent domain is not one of the two acts enumerated in Section 19 thereof requiring the approval of the Sangguniang Panlalawigan. 5 The dispositive portion of the lower court's Order dated July 2, 1991 reads: WHEREFORE, it appearing that the amount of P632.39 had been deposited as per Official Receipt No. 5379647 on December 12, 1989 which this Court now determines as the provisional value of the land, the Motion to Take or Enter Upon the Possession of the Property filed by petitioner through counsel is hereby GRANTED. The Sheriff of this Court is ordered to forthwith place the plaintiff in possession of the property involved. Let the hearing be set on August 9, 1991 at 8:30 o'clock in the morning for the purpose of ascertaining the just compensation or fair market value of the property sought to be taken, with notice to all the parties concerned. SO ORDERED. 6 Petitioners' motion for reconsideration was denied by the trial court on October 31, 1991.

G.R. No. 107916 February 20, 1997 PERCIVAL MODAY, ZOTICO MODAY (deceased) and LEONORA MODAY, petitioners, vs. COURT OF APPEALS, JUDGE EVANGELINE S. YUIPCO OF BRANCH 6, REGIONAL TRIAL COURT, AGUSAN DEL SUR AND MUNICIPALITY OF BUNAWAN, respondents.

ROMERO, J.: The main issue presented in this case is whether a municipality may expropriate private property by virtue of a municipal resolution which was disapproved by the Sangguniang Panlalawigan. Petitioner seeks the reversal of the Court of Appeals decision and resolution, promulgated on July 15, 1992 and October 22, 1992 respectively, 1 and a declaration that Municipal Resolution No. 43-89 of the Bunawan Sangguniang Bayan is null and void. On July 23, 1989, the Sangguniang Bayan of the Municipality of Bunawan in Agusan del Sur passed Resolution No. 43-89, "Authorizing the Municipal Mayor to Initiate the Petition for Expropriation of a One (1) Hectare Portion of Lot No. 6138-Pls-4 Along the National Highway Owned by Percival Moday for the Site of Bunawan Farmers Center and Other Government Sports Facilities." 2 In due time, Resolution No. 43-89 was approved by then Municipal Mayor Anuncio C. Bustillo and transmitted to the Sangguniang Panlalawigan for its approval. On September 11, 1989, the Sangguniang Panlalawigan disapproved said Resolution and returned it with the comment that "expropriation is unnecessary considering that there are still available lots in Bunawan for the establishment of the government center." 3 The Municipality of Bunawan, herein public respondent, subsequently filed a petition for Eminent Domain against petitioner Percival Moday before the Regional Trial Court at

Petitioners elevated the case in a petition for certiorari alleging grave abuse of discretion on the part of the trial court, but the same was dismissed by respondent appellate court on July 15, 1992. 7 The Court of Appeals held that the public purpose for the expropriation is clear from Resolution No. 43-89 and that since the Sangguniang Panlalawigan of Agusan del Sur did not declare Resolution No. 43-89 invalid, expropriation of petitioners' property could proceed.

Respondent appellate court also denied petitioners' motion for reconsideration on October 22, 1992. 8 Meanwhile, the Municipality of Bunawan had erected three buildings on the subject property: the Association of Barangay Councils (ABC) Hall, the Municipal Motorpool, both wooden structures, and the Bunawan Municipal Gymnasium, which is made of concrete. In the instant petition for review filed on November 23, 1992, petitioner seeks the reversal of the decision and resolution of the Court of Appeals and a declaration that Resolution No. 4389 of the Municipality of Bunawan is null and void. On December 8, 1993, the Court issued a temporary restraining order enjoining and restraining public respondent Judge Evangeline Yuipco from enforcing her July 2, 1991 Order and respondent municipality from using and occupying all the buildings constructed and from further constructing any building on the land subject of this petition. 9 Acting on petitioners' Omnibus Motion for Enforcement of Restraining Order and for Contempt, the Court issued a Resolution on March 15, 1995, citing incumbent municipal mayor Anuncio C. Bustillo for contempt, ordering him to pay the fine and to demolish the "blocktiendas" which were built in violation of the restraining order. 10 Former Mayor Anuncio C. Bustillo paid the fine and manifested that he lost in the May 8, 1995 election. 11 The incumbent Mayor Leonardo Barrios, filed a Manifestation, Motion to Resolve "Urgent Motion for Immediate Dissolution of the Temporary Restraining Order" and Memorandum on June 11, 1996 for the Municipality of Bunawan. 12 Petitioners contend that the Court of Appeals erred in upholding the legality of the condemnation proceedings initiated by the municipality. According to petitioners, the expropriation was politically motivated and Resolution No. 43-89 was correctly disapproved by the Sangguniang Panlalawigan, there being other municipal properties available for the purpose. Petitioners also pray that the former Mayor Anuncio C. Bustillo be ordered to pay damages for insisting on the enforcement of a void municipal resolution. The Court of Appeals declared that the Sangguniang Panlalawigan's reason for disapproving the resolution "could be baseless, because it failed to point out which and where are those available lots.'" Respondent court also concluded that since the Sangguniang Panlalawigan did not declare the municipal board's resolution as invalid, expropriation of petitioners' property could proceed. 13

The Court finds no merit in the petition and affirms the decision of the Court of Appeals. Eminent domain, the power which the Municipality of Bunawan exercised in the instant case, is a fundamental State power that is inseparable from sovereignty. 14 It is government's right to appropriate, in the nature of a compulsory sale to the State, private property for public use or purpose. 15 Inherently possessed by the national legislature, the power of eminent domain may be validly delegated to local governments, other public entities and public utilities. 16 For the taking of private property by the government to be valid, the taking must be for public use and there must be just compensation. 17 The Municipality of Bunawan's power to exercise the right of eminent domain is not disputed as it is expressly provided for in Batas Pambansa Blg. 337, the local Government Code 18 in force at the time expropriation proceedings were initiated. Section 9 of said law states: Sec. 9. Eminent Domain. A local government unit may, through its head and acting pursuant to a resolution of its sanggunian, exercise the right of eminent domain and institute condemnation proceedings for public use or purpose. What petitioners question is the lack of authority of the municipality to exercise this right since the Sangguniang Panlalawigan disapproved Resolution No. 43-89. Section 153 of B.P. Blg. 337 provides: Sec. 153. Sangguniang Panlalawigan Review. (1) Within thirty days after receiving copies of approved ordinances, resolutions and executive orders promulgated by the municipal mayor, the sangguniang panlalawigan shall examine the documents or transmit them to the provincial attorney, or if there be none, to the provincial fiscal, who shall examine them promptly and inform the sangguniang panlalawigan in writing of any defect or impropriety which he may discover therein and make such comments or recommendations as shall appear to him proper. (2) If the sangguniang panlalawigan shall find that any municipal ordinance, resolution or executive order is beyond the power conferred upon the sangguniang bayan or the mayor, it shall declare such ordinance, resolution or executive order invalid in whole or in part, entering its actions upon the minutes and advising the proper municipal authorities thereof. The effect of such an action shall be to annul the ordinance, resolution or executive order in question in whole or in part. The action of the sangguniang panlalawigan shall be final. xxx xxx xxx (Emphasis supplied.)

The Sangguniang Panlalawigan's disapproval of Municipal Resolution No. 43-89 is an infirm action which does not render said resolution null and void. The law, as expressed in Section 153 of B.P. Blg. 337, grants the Sangguniang Panlalawigan the power to declare a municipal resolution invalid on the sole ground that it is beyond the power of the Sangguniang Bayan or the Mayor to issue. Although pertaining to a similar provision of law but different factual milieu then obtaining, the Court's pronouncements in Velazco v. Blas, 19 where we cited significant early jurisprudence, are applicable to the case at bar. The only ground upon which a provincial board may declare any municipal resolution, ordinance, or order invalid is when such resolution, ordinance, or order is "beyond the powers conferred upon the council or president making the same." Absolutely no other ground is recognized by the law. A strictly legal question is before the provincial board in its consideration of a municipal resolution, ordinance, or order. The provincial (board's) disapproval of any resolution, ordinance, or order must be premised specifically upon the fact that such resolution, ordinance, or order is outside the scope of the legal powers conferred by law. If a provincial board passes these limits, it usurps the legislative function of the municipal council or president. Such has been the consistent course of executive authority. 20 Thus, the Sangguniang Panlalawigan was without the authority to disapprove Municipal Resolution No. 43-89 for the Municipality of Bunawan clearly has the power to exercise the right of eminent domain and its Sangguniang Bayan the capacity to promulgate said resolution, pursuant to the earlier-quoted Section 9 of B.P. Blg. 337. Perforce, it follows that Resolution No. 43-89 is valid and binding and could be used as lawful authority to petition for the condemnation of petitioners' property. As regards the accusation of political oppression, it is alleged that Percival Moday incurred the ire of then Mayor Anuncio C. Bustillo when he refused to support the latter's candidacy for mayor in previous elections. Petitioners claim that then incumbent Mayor C. Bustillo used the expropriation to retaliate by expropriating their land even if there were other properties belonging to the municipality and available for the purpose. Specifically, they allege that the municipality owns a vacant seven-hectare property adjacent to petitioners' land, evidenced by a sketch plan. 21 The limitations on the power of eminent domain are that the use must be public, compensation must be made and due process of law must be observed. 22 The Supreme Court, taking cognizance of such issues as the adequacy of compensation, necessity of the taking and the public use character or the purpose of the taking, 23 has ruled that the necessity of exercising eminent domain must be genuine and of a public character. 24 Government may not capriciously choose what private property should be taken.

After a careful study of the records of the case, however, we find no evidentiary support for petitioners' allegations. The uncertified photocopy of the sketch plan does not conclusively prove that the municipality does own vacant land adjacent to petitioners' property suited to the purpose of the expropriation. In the questioned decision, respondent appellate court similarly held that the pleadings and documents on record have not pointed out any of respondent municipality's "other available properties available for the same purpose." 25 The accusations of political reprisal are likewise unsupported by competent evidence. Consequently, the Court holds that petitioners' demand that the former municipal mayor be personally liable for damages is without basis. WHEREFORE, the instant petition is hereby DENIED. The questioned Decision and Resolution of the Court of Appeals in the case of "Percival Moday." et al. v. Municipality of Bunawan, et al." (CA G.R. SP No. 26712) are AFFIRMED. The Temporary Restraining Order issued by the Court on December 8, 1993 is LIFTED. SO ORDERED. Regalado, Puno, Mendoza and Torres, Jr., JJ., concur. Footnotes 1 "Percival Moday V. Municipality of Bunawan, et.al." CA G.R. SP No. 26712, penned by Justice Artemon D. Luna, with Justices Jose A.R. Melo (now a member of this Court) and Segundino G. Chua, concurring. Rollo, p. 21, 36. 2 The lot is part of 5.6610 hectares covered by Transfer Certificate of Title No. T-3132 in the name of Zotico Moday, married to Leonora Moday. The assessed value of the entire lot in 1989 was P3,580.00 while the assessed value of one hectare is about P632.39. 3 Excerpts From the Minutes of the Regular Session of the Sangguniang Panlalawigan of Agusan del Sur Held at the Session Hall, Training Center, Prosperidad, on September 11, 1989. Rollo, p. 85. 4 "Municipality of Bunawan, Agusan del Sur v. Percival Moday, et al.," Special Civil Case No. 719, Judge Evangeline S. Yuipco, presiding. 5 "Sec. 19. Certain Acts of the Sangguniang Bayan Requiring Approval of the Sangguniang Panlalawigan. The following acts of the sangguniang bayan shall be subject to the approval of the sangguniang panlalawigan:

(1) Permanent closure of a public road, street, alley, park or square; and (2) Donation of municipal funds or property." 6 Rollo, p. 75. 7 "Percival Moday, et al. v. Municipality of Bunawan, et al.," CA G.R. SP No. 26712, Rollo, pp. 21-25. 8 Rollo, p. 36. 9 Rollo, p. 104. 10 Rollo, pp. 242-245. 11 Rollo, pp. 248-249. 12 Rollo, p. 286. 13 Rollo, p. 24. 14 V. SINCO, PHILIPPINE POLITICAL LAW: PRINCIPLES AND CONCEPTS 592 (10th ed., 1954) citing Kohl v. US, 91 U.S. 371. A. PIMENTEL, THE LOCAL GOVERNMENT CODE OF 1991: THE KEY TO NATIONAL DEVELOPMENT 106 (1993). Visayan Refining Co. v. Camus, 40 Phil. 550. 15 BLACK's LAW DICTIONARY 616 (4th ed.) cited in I. CRUZ, CONSTITUTIONAL LAW 59 (1991 ed.); J. BERNAS, THE 1987 PHILIPPINE CONSTITUTION, A REVIEWER PRIMER 92 (2nd ed., 1992) citing Charles River Bridge V. Warren Bridge, 11 Pet. 420, 641 (US 1837). 16 BERNAS, op. cit. at 93; CRUZ, op. cit. at 59-60; Province of Camarines Sur v. CA, G.R. No.103125, May 11, 1993, 222 SCRA 173. 17 Article III, Section 9 of the 1987 constitution states that "(p)rivate property shall not be taken for public use without just compensation." 18 Approved on February 10, 1983, the Code was published in 79 O.G. No. 7. The Local Government Code of 1991 (Republic Act No. 7160) took effect on January 1, 1992. Evardone v. Comelec, G.R. No. 94010, December 2, 1991, 204 SCRA 464.

19 G.R. No. L-30456, July 30, 1982, 115 SCRA 540, 544-545. The law then in force, Section 2233 of the Revised Administrative Code, also provided that "(i)f the board should in any case find that any resolution, ordinance, or order, as aforesaid, is beyond the powers conferred upon the council or mayor making the same, it shall declare such resolution, ordinance, or order invalid, entering its action upon the minutes and advising the proper municipal authorities thereof. The effect of such action shall be to annul the resolution, ordinance, or order in question, subject to action by the Secretary of the Interior as hereinafter provided." 20 At pages 544-545, citing Gabriel v. Provincial Board of Pampanga, 50 Phil. 686, 692-693; Cario v. Jamoralne, 56 Phil. 188, Manantan v. Municipality of Luna, 82 Phil. 844, which cite the Opinions Attorney-General Wilfley (1905), II Op. Atty.-Gen., 557, 642, Opinion AttorneyGeneral Villa-Real, November 22, 1922; Opinion Attorney-General Jaranilla, August 9, 1926; Provincial Circular Executive Bureau, September 16, 1918. 21 Rollo, p. 88. 22 V. SINCO, op. cit. citing Visayan Refining Company v. Camus, supra. and In re Fowler, 53 N.Y. 60. 23 Municipality of Meycauayan v. IAC, G.R. No. L-72126, January 29, 1988, 157 SCRA 640; J.M. Tuason v. Land Tenure Administration, 31 SCRA 413; National Power Corporation v. Jocson, 206 SCRA 520; Republic v. IAC, 185 SCRA 572. 24 City of Manila v. Chinese Community of Manila, 40 Phil. 349 citing Morrison v. Indianapolis, 166 Ind. 511; Stearns v. Barre, 73 Vt. 281, Wheeling v. Toledo, 72 Ohio St. 368. 25 Rollo, p. 23.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-18841 January 27, 1969

facilities in cities, towns, and provinces as may be found feasible and under such terms and conditions or arrangements with the present owners or operators thereof as may be agreed upon to the satisfaction of all concerned; (c) To prescribe, subject to approval by the Department Head, equitable rates of charges for messages handled by the system and/or for time calls and other services that may be rendered by said system; (d) To establish and maintain coastal stations to serve ships at sea or aircrafts and, when public interest so requires, to engage in the international telecommunication service in agreement with other countries desiring to establish such service with the Republic of the Philippines; and (e) To abide by all existing rules and regulations prescribed by the International Telecommunication Convention relative to the accounting, disposition and exchange of messages handled in the international service, and those that may hereafter be promulgated by said convention and adhered to by the Government of the Republic of the Philippines. 1 The defendant, Philippine Long Distance Telephone Company (PLDT for short), is a public service corporation holding a legislative franchise, Act 3426, as amended by Commonwealth Act 407, to install, operate and maintain a telephone system throughout the Philippines and to carry on the business of electrical transmission of messages within the Philippines and between the Philippines and the telephone systems of other countries. 2 The RCA Communications, Inc., (which is not a party to the present case but has contractual relations with the parties) is an American corporation authorized to transact business in the Philippines and is the grantee, by assignment, of a legislative franchise to operate a domestic station for the reception and transmission of long distance wireless messages (Act 2178) and to operate broadcasting and radio-telephone and radio-telegraphic communications services (Act 3180). 3 Sometime in 1933, the defendant, PLDT, and the RCA Communications, Inc., entered into an agreement whereby telephone messages, coming from the United States and received by RCA's domestic station, could automatically be transferred to the lines of PLDT; and viceversa, for calls collected by the PLDT for transmission from the Philippines to the United States. The contracting parties agreed to divide the tolls, as follows: 25% to PLDT and 75% to RCA. The sharing was amended in 1941 to 30% for PLDT and 70% for RCA, and again amended in 1947 to a 50-50 basis. The arrangement was later extended to radio-telephone messages to and from European and Asiatic countries. Their contract contained a stipulation that either party could terminate it on a 24-month notice to the other. 4 On 2 February 1956, PLDT gave notice to RCA to terminate their contract on 2 February 1958. 5

REPUBLIC OF THE PHILIPPINES, plaintiff-appellant, vs. PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, defendant-appellant. Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor General Antonio A. Torres and Solicitor Camilo D. Quiason for plaintiff-appellant. Ponce Enrile, Siguion Reyna, Montecillo and Belo for defendant-appellant. REYES, J.B.L., J.: Direct appeals, upon a joint record on appeal, by both the plaintiff and the defendant from the dismissal, after hearing, by the Court of First Instance of Manila, in its Civil Case No. 35805, of their respective complaint and counterclaims, but making permanent a preliminary mandatory injunction theretofore issued against the defendant on the interconnection of telephone facilities owned and operated by said parties. The plaintiff, Republic of the Philippines, is a political entity exercising governmental powers through its branches and instrumentalities, one of which is the Bureau of Telecommunications. That office was created on 1 July 1947, under Executive Order No. 94, with the following powers and duties, in addition to certain powers and duties formerly vested in the Director of Posts: 1awphil.t SEC. 79. The Bureau of Telecommunications shall exercise the following powers and duties: (a) To operate and maintain existing wire-telegraph and radio-telegraph offices, stations, and facilities, and those to be established to restore the pre-war telecommunication service under the Bureau of Posts, as well as such additional offices or stations as may hereafter be established to provide telecommunication service in places requiring such service; (b) To investigate, consolidate, negotiate for, operate and maintain wire-telephone or radio telephone communication service throughout the Philippines by utilizing such existing

Soon after its creation in 1947, the Bureau of Telecommunications set up its own Government Telephone System by utilizing its own appropriation and equipment and by renting trunk lines of the PLDT to enable government offices to call private parties. 6 Its application for the use of these trunk lines was in the usual form of applications for telephone service, containing a statement, above the signature of the applicant, that the latter will abide by the rules and regulations of the PLDT which are on file with the Public Service Commission. 7 One of the many rules prohibits the public use of the service furnished the telephone subscriber for his private use. 8 The Bureau has extended its services to the general public since 1948, 9 using the same trunk lines owned by, and rented from, the PLDT, and prescribing its (the Bureau's) own schedule of rates. 10 Through these trunk lines, a Government Telephone System (GTS) subscriber could make a call to a PLDT subscriber in the same way that the latter could make a call to the former. On 5 March 1958, the plaintiff, through the Director of Telecommunications, entered into an agreement with RCA Communications, Inc., for a joint overseas telephone service whereby the Bureau would convey radio-telephone overseas calls received by RCA's station to and from local residents. 11 Actually, they inaugurated this joint operation on 2 February 1958, under a "provisional" agreement. 12 On 7 April 1958, the defendant Philippine Long Distance Telephone Company, complained to the Bureau of Telecommunications that said bureau was violating the conditions under which their Private Branch Exchange (PBX) is inter-connected with the PLDT's facilities, referring to the rented trunk lines, for the Bureau had used the trunk lines not only for the use of government offices but even to serve private persons or the general public, in competition with the business of the PLDT; and gave notice that if said violations were not stopped by midnight of 12 April 1958, the PLDT would sever the telephone connections. 13 When the PLDT received no reply, it disconnected the trunk lines being rented by the Bureau at midnight on 12 April 1958. 14 The result was the isolation of the Philippines, on telephone services, from the rest of the world, except the United States. 15 At that time, the Bureau was maintaining 5,000 telephones and had 5,000 pending applications for telephone connection. 16 The PLDT was also maintaining 60,000 telephones and had also 20,000 pending applications. 17 Through the years, neither of them has been able to fill up the demand for telephone service. The Bureau of Telecommunications had proposed to the PLDT on 8 January 1958 that both enter into an interconnecting agreement, with the government paying (on a call basis) for all calls passing through the interconnecting facilities from the Government Telephone System to the PLDT. 18 The PLDT replied that it was willing to enter into an agreement on

overseas telephone service to Europe and Asian countries provided that the Bureau would submit to the jurisdiction and regulations of the Public Service Commission and in consideration of 37 1/2% of the gross revenues. 19 In its memorandum in lieu of oral argument in this Court dated 9 February 1964, on page 8, the defendant reduced its offer to 33 1/3 % (1/3) as its share in the overseas telephone service. The proposals were not accepted by either party. On 12 April 1958, plaintiff Republic commenced suit against the defendant, Philippine Long Distance Telephone Company, in the Court of First Instance of Manila (Civil Case No. 35805), praying in its complaint for judgment commanding the PLDT to execute a contract with plaintiff, through the Bureau, for the use of the facilities of defendant's telephone system throughout the Philippines under such terms and conditions as the court might consider reasonable, and for a writ of preliminary injunction against the defendant company to restrain the severance of the existing telephone connections and/or restore those severed. Acting on the application of the plaintiff, and on the ground that the severance of telephone connections by the defendant company would isolate the Philippines from other countries, the court a quo, on 14 April 1958, issued an order for the defendant: (1) to forthwith reconnect and restore the seventy-eight (78) trunk lines that it has disconnected between the facilities of the Government Telephone System, including its overseas telephone services, and the facilities of defendant; (2) to refrain from carrying into effect its threat to sever the existing telephone communication between the Bureau of Telecommunications and defendant, and not to make connection over its telephone system of telephone calls coming to the Philippines from foreign countries through the said Bureau's telephone facilities and the radio facilities of RCA Communications, Inc.; and (3) to accept and connect through its telephone system all such telephone calls coming to the Philippines from foreign countries until further order of this Court. On 28 April 1958, the defendant company filed its answer, with counterclaims. It denied any obligation on its part to execute a contrary of services with the Bureau of Telecommunications; contested the jurisdiction of the Court of First Instance to compel it to enter into interconnecting agreements, and averred that it was justified to disconnect the trunk lines heretofore leased to the Bureau of Telecommunications under the existing agreement because its facilities were being used in fraud of its rights. PLDT further claimed that the Bureau was engaging in commercial telephone operations in excess of authority, in competition with, and to the prejudice of, the PLDT, using defendants own telephone poles, without proper accounting of revenues.

After trial, the lower court rendered judgment that it could not compel the PLDT to enter into an agreement with the Bureau because the parties were not in agreement; that under Executive Order 94, establishing the Bureau of Telecommunications, said Bureau was not limited to servicing government offices alone, nor was there any in the contract of lease of the trunk lines, since the PLDT knew, or ought to have known, at the time that their use by the Bureau was to be public throughout the Islands, hence the Bureau was neither guilty of fraud, abuse, or misuse of the poles of the PLDT; and, in view of serious public prejudice that would result from the disconnection of the trunk lines, declared the preliminary injunction permanent, although it dismissed both the complaint and the counterclaims. Both parties appealed. Taking up first the appeal of the Republic, the latter complains of the action of the trial court in dismissing the part of its complaint seeking to compel the defendant to enter into an interconnecting contract with it, because the parties could not agree on the terms and conditions of the interconnection, and of its refusal to fix the terms and conditions therefor. We agree with the court below that parties cannot be coerced to enter into a contract where no agreement is had between them as to the principal terms and conditions of the contract. Freedom to stipulate such terms and conditions is of the essence of our contractual system, and by express provision of the statute, a contract may be annulled if tainted by violence, intimidation, or undue influence (Articles 1306, 1336, 1337, Civil Code of the Philippines). But the court a quo has apparently overlooked that while the Republic may not compel the PLDT to celebrate a contract with it, the Republic may, in the exercise of the sovereign power of eminent domain, require the telephone company to permit interconnection of the government telephone system and that of the PLDT, as the needs of the government service may require, subject to the payment of just compensation to be determined by the court. Nominally, of course, the power of eminent domain results in the taking or appropriation of title to and possession of, the expropriated property; but no cogent reason appears why the said power may not be availed of to impose only a burden upon the owner of condemned property, without loss of title and possession. It is unquestionable that real property may, through expropriation, be subjected to an easement of right of way. The use of the PLDT's lines and services to allow inter-service connection between both telephone systems is not much different. In either case private property is subjected to a burden for public use and benefit. If, under section 6, Article XIII, of the Constitution, the State may, in the interest of national welfare, transfer utilities to public ownership upon payment of just compensation, there is no reason why the State may not require a public utility to render services in the general interest, provided just compensation is paid therefor. Ultimately, the beneficiary of the interconnecting service would be the users of both telephone systems, so that the condemnation would be for public use.

The Bureau of Telecommunications, under section 78 (b) of Executive Order No. 94, may operate and maintain wire telephone or radio telephone communications throughout the Philippines by utilizing existing facilities in cities, towns, and provinces under such terms and conditions or arrangement with present owners or operators as may be agreed upon to the satisfaction of all concerned; but there is nothing in this section that would exclude resort to condemnation proceedings where unreasonable or unjust terms and conditions are exacted, to the extent of crippling or seriously hampering the operations of said Bureau. A perusal of the complaint shows that the Republic's cause of action is predicated upon the radio telephonic isolation of the Bureau's facilities from the outside world if the severance of interconnection were to be carried out by the PLDT, thereby preventing the Bureau of Telecommunications from properly discharging its functions, to the prejudice of the general public. Save for the prayer to compel the PLDT to enter into a contract (and the prayer is no essential part of the pleading), the averments make out a case for compulsory rendering of inter-connecting services by the telephone company upon such terms and conditions as the court may determine to be just. And since the lower court found that both parties "are practically at one that defendant (PLDT) is entitled to reasonable compensation from plaintiff for the reasonable use of the former's telephone facilities" (Decision, Record on Appeal, page 224), the lower court should have proceeded to treat the case as one of condemnation of such services independently of contract and proceeded to determine the just and reasonable compensation for the same, instead of dismissing the petition. This view we have taken of the true nature of the Republic's petition necessarily results in overruling the plea of defendant-appellant PLDT that the court of first instance had no jurisdiction to entertain the petition and that the proper forum for the action was the Public Service Commission. That body, under the law, has no authority to pass upon actions for the taking of private property under the sovereign right of eminent domain. Furthermore, while the defendant telephone company is a public utility corporation whose franchise, equipment and other properties are under the jurisdiction, supervision and control of the Public Service Commission (Sec. 13, Public Service Act), yet the plaintiff's telecommunications network is a public service owned by the Republic and operated by an instrumentality of the National Government, hence exempt, under Section 14 of the Public Service Act, from such jurisdiction, supervision and control. The Bureau of Telecommunications was created in pursuance of a state policy reorganizing the government offices to meet the exigencies attendant upon the establishment of the free and independent Government of the Republic of the Philippines, and for the purpose of promoting simplicity, economy and efficiency in its operation (Section 1, Republic Act No. 51)

and the determination of state policy is not vested in the Commission (Utilities Com. vs. Bartonville Bus Line, 290 Ill. 574; 124 N.E. 373). Defendant PLDT, as appellant, contends that the court below was in error in not holding that the Bureau of Telecommunications was not empowered to engage in commercial telephone business, and in ruling that said defendant was not justified in disconnecting the telephone trunk lines it had previously leased to the Bureau. We find that the court a quo ruled correctly in rejecting both assertions. Executive Order No. 94, Series of 1947, reorganizing the Bureau of Telecommunications, expressly empowered the latter in its Section 79, subsection (b), to "negotiate for, operate and maintain wire telephone or radio telephone communication service throughout the Philippines", and, in subsection (c), "to prescribe, subject to approval by the Department Head, equitable rates of charges for messages handled by the system and/or for time calls and other services that may be rendered by the system". Nothing in these provisions limits the Bureau to non-commercial activities or prevents it from serving the general public. It may be that in its original prospectuses the Bureau officials had stated that the service would be limited to government offices: but such limitations could not block future expansion of the system, as authorized by the terms of the Executive Order, nor could the officials of the Bureau bind the Government not to engage in services that are authorized by law. It is a well-known rule that erroneous application and enforcement of the law by public officers do not block subsequent correct application of the statute (PLDT vs. Collector of Internal Revenue, 90 Phil. 676), and that the Government is never estopped by mistake or error on the part of its agents (Pineda vs. Court of First Instance of Tayabas, 52 Phil. 803, 807; Benguet Consolidated Mining Co. vs. Pineda, 98 Phil. 711, 724). The theses that the Bureau's commercial services constituted unfair competition, and that the Bureau was guilty of fraud and abuse under its contract, are, likewise, untenable. First, the competition is merely hypothetical, the demand for telephone service being very much more than the supposed competitors can supply. As previously noted, the PLDT had 20,000 pending applications at the time, and the Bureau had another 5,000. The telephone company's inability to meet the demands for service are notorious even now. Second, the charter of the defendant expressly provides: SEC. 14. The rights herein granted shall not be exclusive, and the rights and power to grant to any corporation, association or person other than the grantee franchise for the telephone or electrical transmission of message or signals shall not be impaired or affected by the granting of this franchise: (Act 3436)

And third, as the trial court correctly stated, "when the Bureau of Telecommunications subscribed to the trunk lines, defendant knew or should have known that their use by the subscriber was more or less public and all embracing in nature, that is, throughout the Philippines, if not abroad" (Decision, Record on Appeal, page 216). The acceptance by the defendant of the payment of rentals, despite its knowledge that the plaintiff had extended the use of the trunk lines to commercial purposes, continuously since 1948, implies assent by the defendant to such extended use. Since this relationship has been maintained for a long time and the public has patronized both telephone systems, and their interconnection is to the public convenience, it is too late for the defendant to claim misuse of its facilities, and it is not now at liberty to unilaterally sever the physical connection of the trunk lines. ..., but there is high authority for the position that, when such physical connection has been voluntarily made, under a fair and workable arrangement and guaranteed by contract and the continuous line has come to be patronized and established as a great public convenience, such connection shall not in breach of the agreement be severed by one of the parties. In that case, the public is held to have such an interest in the arrangement that its rights must receive due consideration. This position finds approval in State ex rel. vs. Cadwaller, 172 Ind. 619, 636, 87 N.E. 650, and is stated in the elaborate and learned opinion of Chief Justice Myers as follows: "Such physical connection cannot be required as of right, but if such connection is voluntarily made by contract, as is here alleged to be the case, so that the public acquires an interest in its continuance, the act of the parties in making such connection is equivalent to a declaration of a purpose to waive the primary right of independence, and it imposes upon the property such a public status that it may not be disregarded" citing Mahan v. Mich. Tel. Co., 132 Mich. 242, 93 N.W. 629, and the reasons upon which it is in part made to rest are referred to in the same opinion, as follows: "Where private property is by the consent of the owner invested with a public interest or privilege for the benefit of the public, the owner can no longer deal with it as private property only, but must hold it subject to the right of the public in the exercise of that public interest or privilege conferred for their benefit." Allnut v. Inglis (1810) 12 East, 527. The doctrine of this early case is the acknowledged law. (Clinton-Dunn Tel. Co. v. Carolina Tel. & Tel. Co., 74 S.E. 636, 638). It is clear that the main reason for the objection of the PLDT lies in the fact that said appellant did not expect that the Bureau's telephone system would expand with such rapidity as it has done; but this expansion is no ground for the discontinuance of the service agreed upon.

The last issue urged by the PLDT as appellant is its right to compensation for the use of its poles for bearing telephone wires of the Bureau of Telecommunications. Admitting that section 19 of the PLDT charter reserves to the Government the privilege without compensation of using the poles of the grantee to attach one ten-pin cross-arm, and to install, maintain and operate wires of its telegraph system thereon; Provided, however, That the Bureau of Posts shall have the right to place additional crossarms and wires on the poles of the grantee by paying a compensation, the rate of which is to be agreed upon by the Director of Posts and the grantee; the defendant counterclaimed for P8,772.00 for the use of its poles by the plaintiff, contending that what was allowed free use, under the aforequoted provision, was one ten-pin cross-arm attachment and only for plaintiff's telegraph system, not for its telephone system; that said section could not refer to the plaintiff's telephone system, because it did not have such telephone system when defendant acquired its franchise. The implication of the argument is that plaintiff has to pay for the use of defendant's poles if such use is for plaintiff's telephone system and has to pay also if it attaches more than one (1) ten-pin crossarm for telegraphic purposes. As there is no proof that the telephone wires strain the poles of the PLDT more than the telegraph wires, nor that they cause more damage than the wires of the telegraph system, or that the Government has attached to the poles more than one ten-pin cross-arm as permitted by the PLDT charter, we see no point in this assignment of error. So long as the burden to be borne by the PLDT poles is not increased, we see no reason why the reservation in favor of the telegraph wires of the government should not be extended to its telephone lines, any time that the government decided to engage also in this kind of communication. In the ultimate analysis, the true objection of the PLDT to continue the link between its network and that of the Government is that the latter competes "parasitically" (sic) with its own telephone services. Considering, however, that the PLDT franchise is non-exclusive; that it is well-known that defendant PLDT is unable to adequately cope with the current demands for telephone service, as shown by the number of pending applications therefor; and that the PLDT's right to just compensation for the services rendered to the Government telephone system and its users is herein recognized and preserved, the objections of defendantappellant are without merit. To uphold the PLDT's contention is to subordinate the needs of the general public to the right of the PLDT to derive profit from the future expansion of its services under its non-exclusive franchise. WHEREFORE, the decision of the Court of First Instance, now under appeal, is affirmed, except in so far as it dismisses the petition of the Republic of the Philippines to compel the

Philippine Long Distance Telephone Company to continue servicing the Government telephone system upon such terms, and for a compensation, that the trial court may determine to be just, including the period elapsed from the filing of the original complaint or petition. And for this purpose, the records are ordered returned to the court of origin for further hearings and other proceedings not inconsistent with this opinion. No costs. Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Fernando, Capistrano, Teehankee and Barredo, JJ., concur.

Footnotes 1Stipulated by parties (Record on Appeal, pages 70-72). 2Ibid. 3Ibid. 4Exhibit "Q", folder of exhibits, pages 1-2, 11, 66-67, 69, 72-73, 82-83, 88. 5T.s.n., 26 January 1959, page 11. 6Exhibit "12-A". 7Partial Stipulation of Facts and its Annex "D", record on appeal, pages 72, 134-135. 8Exhibit "16", page 49. 9T.s.n., 9 March 1960, page 9. 10T.s.n., 9 March 1960, page 57. 11Annex "M" to Partial Stipulation of Facts, record on appeal, page 164-177. 12T.s.n., 9 March 1960, pages 30-31. 13Annex "P", record on appeal, pages 184-186. 14Partial Stipulation of Facts, record on appeal page 78.

15Decision, record on appeal, pages 221-222. 16Decision, record on appeal, page 211; Exhibit "3", record of exhibits, page 103; T.s.n., 9 March 1960, pages 56 and 59. 17Ibid. 18Partial Stipulation of Facts, record on appeal, page 72. 19Partial Stipulation of Facts, record on appeal, page 77.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 138896 June 20, 2000

of action is the exercise of such power or right. The fact that the action also involves real property is merely incidental. An action for eminent domain is therefore within the exclusive original jurisdiction of the Regional Trial Court and not with this Court."4 Assailed RTC Ruling The RTC also dismissed the Complaint when filed before it, holding that an action for eminent domain affected title to real property; hence, the value of the property to be expropriated would determine whether the case should be filed before the MTC or the RTC. Concluding that the action should have been filed before the MTC since the value of the subject property was less than P20,000, the RTC ratiocinated in this wise: The instant action is for eminent domain. It appears from the current Tax Declaration of the land involved that its assessed value is only One Thousand Seven Hundred Forty Pesos (P1,740.00). Pursuant to Section 3, paragraph (3), of Republic Act No. 7691, all civil actions involving title to, or possession of, real property with an assessed value of less than P20,000.00 are within the exclusive original jurisdiction of the Municipal Trial Courts. In the case at bar, it is within the exclusive original jurisdiction of the Municipal Trial Court of Talisay, Cebu, where the property involved is located. The instant action for eminent domain or condemnation of real property is a real action affecting title to or possession of real property, hence, it is the assessed value of the property involved which determines the jurisdiction of the court. That the right of eminent domain or condemnation of real, property is included in a real action affecting title to or possession of real property, is pronounced by retired Justice Jose Y. Feria, thus, "Real actions are those affecting title to or possession of real property. These include partition or condemnation of, or foreclosures of mortgage on, real property. . . ."5 Aggrieved, petitioner appealed directly to this Court, raising a pure question of law.6 In a Resolution dated July 28, 1999, the Court denied the Petition for Review "for being posted out of time on July 2, 1999, the due date being June 2, 1999, as the motion for extension of time to file petition was denied in the resolution of July 14, 1999."7 In a subsequent Resolution dated October 6, 1999, the Court reinstated the Petition.8 Issue

BARANGAY SAN ROQUE, TALISAY, CEBU, petitioner, vs. Heirs of FRANCISCO PASTOR namely: EUGENIO SYLIANCO, TEODORO SYLIANCO, TEODORO SYLIANCO, ISABEL SYLIANCO, EUGENIA S. ONG, LAWRENCE SYLIANCO, LAWSON SYLIANCO, LAWINA S. NOTARIO, LEONARDO SYLIANCO JR. and LAWFORD SYLIANCO, respondents. PANGANIBAN, J.: An expropriation suit is incapable of pecuniary estimation. Accordingly, it falls within the jurisdiction of the regional trial courts, regardless of the value of the subject property. The Case Before us is a Petition for Review on Certiorari assailing the March 29, 1999 Order1 of the Regional Trial Court (RTC) of Cebu City (Branch 58) in Civil Case No. CEB-21978, in which it dismissed a Complaint for eminent domain. It ruled as follows: Premises considered, the motion to dismiss is hereby granted on the ground that this Court has no jurisdiction over the case. Accordingly, the Orders dated February 19, 1999 and February 26, 1999, as well as the Writ of Possession issued by virtue of the latter Order are hereby recalled for being without force and effect.2 Petitioner also challenges the May 14, 1999 Order of the RTC denying reconsideration. The Facts Petitioner filed before the Municipal Trial Court (MTC) of Talisay, Cebu (Branch 1)3 a Complaint to expropriate a property of the respondents. In an Order dated April 8, 1997, the MTC dismissed the Complaint on the ground of lack of jurisdiction. It reasoned that "[e]minent domain is an exercise of the power to take private property for public use after payment of just compensation. In an action for eminent domain, therefore, the principal cause

In its Memorandum, petitioner submits this sole issue for the consideration of this Court:

Which court, MTC or RTC, has jurisdiction over cases for eminent domain or expropriation where the assessed value of the subject property is below Twenty Thousand (P20,000.00) Pesos?9 This Court's Ruling The Petition is meritorious. Main Issue: Jurisdiction over an Expropriation Suit In support of its appeal, petitioner cites Section 19 (1) of BP 129, which provides that RTCs shall exercise exclusive original jurisdiction over "all civil actions in which the subject of the litigation is incapable of pecuniary estimation; . . . . ." It argues that the present action involves the exercise of the right to eminent domain, and that such right is incapable of pecuniary estimation. Respondents, on the other hand, contend that the Complaint for Eminent Domain affects the title to or possession of real property. Thus, they argue that the case should have been brought before the MTC, pursuant to BP 129 as amended by Section 3 (3) of RA 7691. This law provides that MTCs shall have exclusive original jurisdiction over all civil actions that involve title to or possession of real property, the assessed value of which does not exceed twenty thousand pesos or, in civil actions in Metro Manila, fifty thousand pesos exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses and costs. We agree with the petitioner that an expropriation suit is incapable of pecuniary estimation. The test to determine whether it is so was laid down by the Court in this wise: A review of the jurisprudence of this Court indicates that in determining whether an action is one the subject matter of which is not capable of pecuniary estimation, this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance would depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, or where the money claim is purely incidental to, or a consequence of, the principal relief sought, like in suits to have the defendant perform his part of the contract (specific performance) and in actions for support, or for annulment of a judgment or to foreclose a mortgage, this Court has considered such actions as cases where the subject of the litigation may not be estimated in terms of money,

and are cognizable exclusively by courts of first instance. The rationale of the rule is plainly that the second class cases, besides the determination of damages, demand an inquiry into other factors which the law has deemed to be more within the competence of courts of first instance, which were the lowest courts of record at the time that the first organic laws of the Judiciary were enacted allocating jurisdiction (Act 136 of the Philippine Commission of June 11, 1901). 10 In the present case, an expropriation suit does not involve the recovery of a sum of money. Rather, it deals with the exercise by the government of its authority and right to take private property for public use. 11 In National Power Corporation v. Jocson, 12 the Court ruled that expropriation proceedings have two phases: The first is concerned with the determination of the authority of the plaintiff to exercise the power of eminent domain and the propriety of its exercise in the context of the facts involved in the suit. It ends with an order, if not of dismissal of the action, "of condemnation declaring that the plaintiff has a lawful right to take the property sought to be condemned, for the public use or purpose described in the complaint, upon the payment of just compensation to be determined as of the date of the filing of the complaint." An order of dismissal, if this be ordained, would be a final one, of course, since it finally disposes of the action and leaves nothing more to be done by the Court on the merits. So, too, would an order of condemnation be a final one, for thereafter as the Rules expressly state, in the proceedings before the Trial Court, "no objection to the exercise of the right of condemnation (or the propriety thereof) shall be filed or heard." The second phase of the eminent domain action is concerned with the determination by the court of "the just compensation for the property sought to be taken." This is done by the Court with the assistance of not more than three (3) commissioners. The order fixing the just compensation on the basis of the evidence before, and findings of, the commissioners would be final, too. It would finally dispose of the second stage of the suit, and leave nothing more to be done by the Court regarding the issue. . . . It should be stressed that the primary consideration in an expropriation suit is whether the government or any of its instrumentalities has complied with the requisites for the taking of private property. Hence, the courts determine the authority of the government entity, the necessity of the expropriation, and the observance of due process. 1 In the main, the subject of an expropriation suit is the government's exercise of eminent domain, a matter that is incapable of pecuniary estimation. True, the value of the property to be expropriated is estimated in monetary terms, for the court is duty-bound to determine the just compensation for it.1avvphi1 This, however, is

merely incidental to the expropriation suit. Indeed, that amount is determined only after the court is satisfied with the propriety of the expropriation. Verily, the Court held in Republic of the Philippines v. Zurbano that "condemnation proceedings are within the jurisdiction of Courts of First Instance," 14 the forerunners of the regional trial courts. The said case was decided during the effectivity of the Judiciary Act of 1948 which, like BP 129 in respect to RTCs, provided that courts of first instance had original jurisdiction over "all civil actions in which the subject of the litigation is not capable of pecuniary estimation." 15 The 1997 amendments to the Rules of Court were not intended to change these jurisprudential precedents. We are not persuaded by respondents' argument that the present action involves the title to or possession of a parcel of land. They cite the observation of retired Justice Jose Y. Feria, an eminent authority in remedial law, that condemnation or expropriation proceedings are examples of real actions that affect the title to or possession of a parcel of land. 16 Their reliance is misplaced. Justice Feria sought merely to distinguish between real and personal actions. His discussion on this point pertained to the nature of actions, not to the jurisdiction of courts. In fact, in his pre-bar lectures, he emphasizes that jurisdiction over eminent domain cases is still within the RTCs under the 1997 Rules. To emphasize, the question in the present suit is whether the government may expropriate private property under the given set of circumstances. The government does not dispute respondents' title to or possession of the same. Indeed, it is not a question of who has a better title or right, for the government does not even claim that it has a title to the property. It merely asserts its inherent sovereign power to "appropriate and control individual property for the public benefit, as the public necessity, convenience or welfare may demand." 17 WHEREFORE, the Petition is hereby GRANTED and the assailed Orders SET ASIDE. The Regional Trial Court is directed to HEAR the case. No costs. SO ORDERED. Melo, Purisima and Gonzaga-Reyes, JJ., concur. Vitug, J., abroad on official business.

2 Rollo, p. 22. 3 Presided by Judge Mario V. Manayon. 4 Rollo, pp. 20-21. 5 Rollo, p. 22. 6 The case was deemed submitted for decision on March 16, 2000, upon receipt by this Court of petitioner's Memorandum, signed by Atty. Marino E. Martinquilla of the Cebu Provincial Legal Office. Respondents' Memorandum, signed by Atty. Eustacio Ch. Veloso, was filed on March 8, 2000. 7 Rollo, p. 25. 8 Ibid., p. 31. 9 Petitioner's Memorandum, p. 5. 10 Lapitan v. Scandia, Inc., 24 SCRA 479, 481, July 31, 1968, per Reyes, J.B.L., J.; cited in De Leon v. Court of Appeals, 287 SCRA 94, 99, March 6, 1998. 11 Republic v. La Orden de PP. Benedictinos de Filipinas, 1 SCRA 646, February 28, 1961. 12 206 SCRA 520, 536, February 25, 1992, per Davide Jr., J. 13 Moday v. Court of Appeals, 268 SCRA 586, February 20, 1997. 14 105 Phil. 409, March 31, 1959, per Padilla, J. 15 Sec. 44, Judiciary Act of 1948. 16 Jose Feria, 1997 Rules of Civil Procedure, p. 18. 17 Herrera, Remedial Law, Vol. III, 1999 ed., p. 312, citing Cooley's Constitutional Limit, 8th ed., 1110.

Footnotes 1 Penned by Judge Jose P. Soberano Jr.

Republic of the Philippines SUPREME COURT Manila EN BANC

A parcel of land (Portion Lot Blk-1, Bureau of Lands Plan Psd, 26254. Bounded on the NE by Lot 3, on the SE by Lot 3; on the SW by Lot 1-B, Blk. 2 (equivalent to Lot 199-B Swo 23666; on the NW by AFP military reservation. Containing an area of 450,273 square meters, more or less and registered in the name of Maria Nieves Toledo-Gozun under TCT No. 8708 of the Register of Deeds of Pampanga. ..., and A parcel of land (Portion of lot 3, Blk-1, Bureau of Lands Plan Psd 26254. Bounded on the NE by Lot No. 3, on the SE by school lot and national road, on the SW by Lot 1-B Blk 2 (equivalent to Lot 199-B Swo 23666), on the NW by Lot 1-B, Blk-1. Containing an area of 88,772 square meters, more or less, and registered in the name of Maria Nieves Toledo Gozun under TCT No. 8708 of the Register of Deeds of Pampanga, .... In its complaint, the Republic alleged, among other things, that the fair market value of the above-mentioned lands, according to the Committee on Appraisal for the Province of Pampanga, was not more than P2,000 per hectare, or a total market value of P259,669.10; and prayed, that the provisional value of the lands be fixed at P259.669.10, that the court authorizes plaintiff to take immediate possession of the lands upon deposit of that amount with the Provincial Treasurer of Pampanga; that the court appoints three commissioners to ascertain and report to the court the just compensation for the property sought to be expropriated, and that the court issues thereafter a final order of condemnation. On June 29, 1959 the trial court issued an order fixing the provisional value of the lands at P259,669.10. In her "motion to dismiss" filed on July 14, 1959, Castellvi alleged, among other things, that the land under her administration, being a residential land, had a fair market value of P15.00 per square meter, so it had a total market value of P11,389,485.00; that the Republic, through the Armed Forces of the Philippines, particularly the Philippine Air Force, had been, despite repeated demands, illegally occupying her property since July 1, 1956, thereby preventing her from using and disposing of it, thus causing her damages by way of unrealized profits. This defendant prayed that the complaint be dismissed, or that the Republic be ordered to pay her P15.00 per square meter, or a total of P11,389,485.00, plus interest thereon at 6% per annum from July 1, 1956; that the Republic be ordered to pay her P5,000,000.00 as unrealized profits, and the costs of the suit. By order of the trial court, dated August, 1959, Amparo C. Diaz, Dolores G. viuda de Gil, Paloma Castellvi, Carmen Castellvi, Rafael Castellvi, Luis Castellvi, Natividad Castellvi de Raquiza, Jose Castellvi and Consuelo Castellvi were allowed to intervene as parties defendants. Subsequently, Joaquin V. Gozun, Jr., husband of defendant Nieves Toledo Gozun, was also allowed by the court to intervene as a party defendant.

G.R. No. L-20620 August 15, 1974 REPUBLIC OF THE PHILIPPINES, plaintiff-appellant, vs. CARMEN M. VDA. DE CASTELLVI, ET AL., defendants-appellees. Office of the Solicitor General for plaintiff-appellant. C.A. Mendoza & A. V. Raquiza and Alberto Cacnio & Associates for defendant-appellees.

ZALDIVAR, J.:p Appeal from the decision of the Court of First Instance of Pampanga in its Civil Case No. 1623, an expropriation proceeding. Plaintiff-appellant, the Republic of the Philippines, (hereinafter referred to as the Republic) filed, on June 26, 1959, a complaint for eminent domain against defendant-appellee, Carmen M. Vda. de Castellvi, judicial administratrix of the estate of the late Alfonso de Castellvi (hereinafter referred to as Castellvi), over a parcel of land situated in the barrio of San Jose, Floridablanca, Pampanga, described as follows: A parcel of land, Lot No. 199-B Bureau of Lands Plan Swo 23666. Bounded on the NE by Maria Nieves Toledo-Gozun; on the SE by national road; on the SW by AFP reservation, and on the NW by AFP reservation. Containing an area of 759,299 square meters, more or less, and registered in the name of Alfonso Castellvi under TCT No. 13631 of the Register of Pampanga ...; and against defendant-appellee Maria Nieves Toledo Gozun (hereinafter referred to as Toledo-Gozun over two parcels of land described as follows:

After the Republic had deposited with the Provincial Treasurer of Pampanga the amount of P259,669.10, the trial court ordered that the Republic be placed in possession of the lands. The Republic was actually placed in possession of the lands on August 10, 1959. 1 In her "motion to dismiss", dated October 22, 1959, Toledo-Gozun alleged, among other things, that her two parcels of land were residential lands, in fact a portion with an area of 343,303 square meters had already been subdivided into different lots for sale to the general public, and the remaining portion had already been set aside for expansion sites of the already completed subdivisions; that the fair market value of said lands was P15.00 per square meter, so they had a total market value of P8,085,675.00; and she prayed that the complaint be dismissed, or that she be paid the amount of P8,085,675.00, plus interest thereon at the rate of 6% per annum from October 13, 1959, and attorney's fees in the amount of P50,000.00. Intervenors Jose Castellvi and Consuelo Castellvi in their answer, filed on February 11, 1960, and also intervenor Joaquin Gozun, Jr., husband of defendant Maria Nieves Toledo-Gozun, in his motion to dismiss, dated May 27, 1960, all alleged that the value of the lands sought to be expropriated was at the rate of P15.00 per square meter. On November 4, 1959, the trial court authorized the Provincial Treasurer of Pampanga to pay defendant Toledo-Gozun the sum of P107,609.00 as provisional value of her lands. 2 On May 16, 1960 the trial Court authorized the Provincial Treasurer of Pampanga to pay defendant Castellvi the amount of P151,859.80 as provisional value of the land under her administration, and ordered said defendant to deposit the amount with the Philippine National Bank under the supervision of the Deputy Clerk of Court. In another order of May 16, 1960 the trial Court entered an order of condemnation. 3 The trial Court appointed three commissioners: Atty. Amadeo Yuzon, Clerk of Court, as commissioner for the court; Atty. Felicisimo G. Pamandanan, counsel of the Philippine National Bank Branch at Floridablanca, for the plaintiff; and Atty. Leonardo F. Lansangan, Filipino legal counsel at Clark Air Base, for the defendants. The Commissioners, after having qualified themselves, proceeded to the performance of their duties. On March 15,1961 the Commissioners submitted their report and recommendation, wherein, after having determined that the lands sought to be expropriated were residential lands, they recommended unanimously that the lowest price that should be paid was P10.00 per square meter, for both the lands of Castellvi and Toledo-Gozun; that an additional P5,000.00 be paid to Toledo-Gozun for improvements found on her land; that legal interest on the

compensation, computed from August 10, 1959, be paid after deducting the amounts already paid to the owners, and that no consequential damages be awarded. 4 The Commissioners' report was objected to by all the parties in the case by defendants Castellvi and ToledoGozun, who insisted that the fair market value of their lands should be fixed at P15.00 per square meter; and by the Republic, which insisted that the price to be paid for the lands should be fixed at P0.20 per square meter. 5 After the parties-defendants and intervenors had filed their respective memoranda, and the Republic, after several extensions of time, had adopted as its memorandum its objections to the report of the Commissioners, the trial court, on May 26, 1961, rendered its decision 6 the dispositive portion of which reads as follows: WHEREFORE, taking into account all the foregoing circumstances, and that the lands are titled, ... the rising trend of land values ..., and the lowered purchasing power of the Philippine peso, the court finds that the unanimous recommendation of the commissioners of ten (P10.00) pesos per square meter for the three lots of the defendants subject of this action is fair and just. xxx xxx xxx The plaintiff will pay 6% interest per annum on the total value of the lands of defendant Toledo-Gozun since (sic) the amount deposited as provisional value from August 10, 1959 until full payment is made to said defendant or deposit therefor is made in court. In respect to the defendant Castellvi, interest at 6% per annum will also be paid by the plaintiff to defendant Castellvi from July 1, 1956 when plaintiff commenced its illegal possession of the Castellvi land when the instant action had not yet been commenced to July 10, 1959 when the provisional value thereof was actually deposited in court, on the total value of the said (Castellvi) land as herein adjudged. The same rate of interest shall be paid from July 11, 1959 on the total value of the land herein adjudged minus the amount deposited as provisional value, or P151,859.80, such interest to run until full payment is made to said defendant or deposit therefor is made in court. All the intervenors having failed to produce evidence in support of their respective interventions, said interventions are ordered dismissed. The costs shall be charged to the plaintiff. On June 21, 1961 the Republic filed a motion for a new trial and/or reconsideration, upon the grounds of newly-discovered evidence, that the decision was not supported by the evidence, and that the decision was against the law, against which motion defendants Castellvi and

Toledo-Gozun filed their respective oppositions. On July 8, 1961 when the motion of the Republic for new trial and/or reconsideration was called for hearing, the Republic filed a supplemental motion for new trial upon the ground of additional newly-discovered evidence. This motion for new trial and/or reconsideration was denied by the court on July 12, 1961. On July 17, 1961 the Republic gave notice of its intention to appeal from the decision of May 26, 1961 and the order of July 12, 1961. Defendant Castellvi also filed, on July 17, 1961, her notice of appeal from the decision of the trial court. The Republic filed various ex-parte motions for extension of time within which to file its record on appeal. The Republic's record on appeal was finally submitted on December 6, 1961. Defendants Castellvi and Toledo-Gozun filed not only a joint opposition to the approval of the Republic's record on appeal, but also a joint memorandum in support of their opposition. The Republic also filed a memorandum in support of its prayer for the approval of its record on appeal. On December 27, 1961 the trial court issued an order declaring both the record on appeal filed by the Republic, and the record on appeal filed by defendant Castellvi as having been filed out of time, thereby dismissing both appeals. On January 11, 1962 the Republic filed a "motion to strike out the order of December 27, 1961 and for reconsideration", and subsequently an amended record on appeal, against which motion the defendants Castellvi and Toledo-Gozun filed their opposition. On July 26, 1962 the trial court issued an order, stating that "in the interest of expediency, the questions raised may be properly and finally determined by the Supreme Court," and at the same time it ordered the Solicitor General to submit a record on appeal containing copies of orders and pleadings specified therein. In an order dated November 19, 1962, the trial court approved the Republic's record on appeal as amended. Defendant Castellvi did not insist on her appeal. Defendant Toledo-Gozun did not appeal. The motion to dismiss the Republic's appeal was reiterated by appellees Castellvi and ToledoGozun before this Court, but this Court denied the motion. In her motion of August 11, 1964, appellee Castellvi sought to increase the provisional value of her land. The Republic, in its comment on Castellvi's motion, opposed the same. This Court denied Castellvi's motion in a resolution dated October 2,1964.

The motion of appellees, Castellvi and Toledo-Gozun, dated October 6, 1969, praying that they be authorized to mortgage the lands subject of expropriation, was denied by this Court or October 14, 1969. On February 14, 1972, Attys. Alberto Cacnio, and Associates, counsel for the estate of the late Don Alfonso de Castellvi in the expropriation proceedings, filed a notice of attorney's lien, stating that as per agreement with the administrator of the estate of Don Alfonso de Castellvi they shall receive by way of attorney's fees, "the sum equivalent to ten per centum of whatever the court may finally decide as the expropriated price of the property subject matter of the case." --------Before this Court, the Republic contends that the lower court erred: 1. In finding the price of P10 per square meter of the lands subject of the instant proceedings as just compensation; 2. In holding that the "taking" of the properties under expropriation commenced with the filing of this action; 3. In ordering plaintiff-appellant to pay 6% interest on the adjudged value of the Castellvi property to start from July of 1956; 4. In denying plaintiff-appellant's motion for new trial based on newly discovered evidence. In its brief, the Republic discusses the second error assigned as the first issue to be considered. We shall follow the sequence of the Republic's discussion. 1. In support of the assigned error that the lower court erred in holding that the "taking" of the properties under expropriation commenced with the filing of the complaint in this case, the Republic argues that the "taking" should be reckoned from the year 1947 when by virtue of a special lease agreement between the Republic and appellee Castellvi, the former was granted the "right and privilege" to buy the property should the lessor wish to terminate the lease, and that in the event of such sale, it was stipulated that the fair market value should be as of the time of occupancy; and that the permanent improvements amounting to more that half a million pesos constructed during a period of twelve years on the land, subject of expropriation, were indicative of an agreed pattern of permanency and stability of occupancy by the Philippine Air Force in the interest of national Security. 7

Appellee Castellvi, on the other hand, maintains that the "taking" of property under the power of eminent domain requires two essential elements, to wit: (1) entrance and occupation by condemn or upon the private property for more than a momentary or limited period, and (2) devoting it to a public use in such a way as to oust the owner and deprive him of all beneficial enjoyment of the property. This appellee argues that in the instant case the first element is wanting, for the contract of lease relied upon provides for a lease from year to year; that the second element is also wanting, because the Republic was paying the lessor Castellvi a monthly rental of P445.58; and that the contract of lease does not grant the Republic the "right and privilege" to buy the premises "at the value at the time of occupancy." 8 Appellee Toledo-Gozun did not comment on the Republic's argument in support of the second error assigned, because as far as she was concerned the Republic had not taken possession of her lands prior to August 10, 1959. 9 In order to better comprehend the issues raised in the appeal, in so far as the Castellvi property is concerned, it should be noted that the Castellvi property had been occupied by the Philippine Air Force since 1947 under a contract of lease, typified by the contract marked Exh. 4-Castellvi, the pertinent portions of which read: CONTRACT OF LEASE This AGREEMENT OF LEASE MADE AND ENTERED into by and between INTESTATE ESTATE OF ALFONSO DE CASTELLVI, represented by CARMEN M. DE CASTELLVI, Judicial Administratrix ... hereinafter called the LESSOR and THE REPUBLIC OF THE PHILIPPINES represented by MAJ. GEN. CALIXTO DUQUE, Chief of Staff of the ARMED FORCES OF THE PHILIPPINES, hereinafter called the LESSEE, WITNESSETH: 1. For and in consideration of the rentals hereinafter reserved and the mutual terms, covenants and conditions of the parties, the LESSOR has, and by these presents does, lease and let unto the LESSEE the following described land together with the improvements thereon and appurtenances thereof, viz: Un Terreno, Lote No. 27 del Plano de subdivision Psu 34752, parte de la hacienda de Campauit, situado en el Barrio de San Jose, Municipio de Floridablanca Pampanga. ... midiendo una extension superficial de cuatro milliones once mil cuatro cientos trienta y cinco (4,001,435) [sic] metros cuadrados, mas o menos.

Out of the above described property, 75.93 hectares thereof are actually occupied and covered by this contract. . Above lot is more particularly described in TCT No. 1016, province of Pampanga ... of which premises, the LESSOR warrants that he/she/they/is/are the registered owner(s) and with full authority to execute a contract of this nature. 2. The term of this lease shall be for the period beginning July 1, 1952 the date the premises were occupied by the PHILIPPINE AIR FORCE, AFP until June 30, 1953, subject to renewal for another year at the option of the LESSEE or unless sooner terminated by the LESSEE as hereinafter provided. 3. The LESSOR hereby warrants that the LESSEE shall have quiet, peaceful and undisturbed possession of the demised premises throughout the full term or period of this lease and the LESSOR undertakes without cost to the LESSEE to eject all trespassers, but should the LESSOR fail to do so, the LESSEE at its option may proceed to do so at the expense of the LESSOR. The LESSOR further agrees that should he/she/they sell or encumber all or any part of the herein described premises during the period of this lease, any conveyance will be conditioned on the right of the LESSEE hereunder. 4. The LESSEE shall pay to the LESSOR as monthly rentals under this lease the sum of FOUR HUNDRED FIFTY-FIVE PESOS & 58/100 (P455.58) ... 5. The LESSEE may, at any time prior to the termination of this lease, use the property for any purpose or purposes and, at its own costs and expense make alteration, install facilities and fixtures and errect additions ... which facilities or fixtures ... so placed in, upon or attached to the said premises shall be and remain property of the LESSEE and may be removed therefrom by the LESSEE prior to the termination of this lease. The LESSEE shall surrender possession of the premises upon the expiration or termination of this lease and if so required by the LESSOR, shall return the premises in substantially the same condition as that existing at the time same were first occupied by the AFP, reasonable and ordinary wear and tear and damages by the elements or by circumstances over which the LESSEE has no control excepted: PROVIDED, that if the LESSOR so requires the return of the premises in such condition, the LESSOR shall give written notice thereof to the LESSEE at least twenty (20) days before the termination of the lease and provided, further, that should the LESSOR give notice within the time specified above, the LESSEE shall have the right and privilege to compensate the LESSOR at the fair value or the equivalent, in lieu of performance of its obligation, if any,

to restore the premises. Fair value is to be determined as the value at the time of occupancy less fair wear and tear and depreciation during the period of this lease. 6. The LESSEE may terminate this lease at any time during the term hereof by giving written notice to the LESSOR at least thirty (30) days in advance ... 7. The LESSEE should not be responsible, except under special legislation for any damages to the premises by reason of combat operations, acts of GOD, the elements or other acts and deeds not due to the negligence on the part of the LESSEE. 8. This LEASE AGREEMENT supersedes and voids any and all agreements and undertakings, oral or written, previously entered into between the parties covering the property herein leased, the same having been merged herein. This AGREEMENT may not be modified or altered except by instrument in writing only duly signed by the parties. 10 It was stipulated by the parties, that "the foregoing contract of lease (Exh. 4, Castellvi) is 'similar in terms and conditions, including the date', with the annual contracts entered into from year to year between defendant Castellvi and the Republic of the Philippines (p. 17, t.s.n., Vol. III)". 11 It is undisputed, therefore, that the Republic occupied Castellvi's land from July 1, 1947, by virtue of the above-mentioned contract, on a year to year basis (from July 1 of each year to June 30 of the succeeding year) under the terms and conditions therein stated. Before the expiration of the contract of lease on June 30, 1956 the Republic sought to renew the same but Castellvi refused. When the AFP refused to vacate the leased premises after the termination of the contract, on July 11, 1956, Castellvi wrote to the Chief of Staff, AFP, informing the latter that the heirs of the property had decided not to continue leasing the property in question because they had decided to subdivide the land for sale to the general public, demanding that the property be vacated within 30 days from receipt of the letter, and that the premises be returned in substantially the same condition as before occupancy (Exh. 5 Castellvi). A follow-up letter was sent on January 12, 1957, demanding the delivery and return of the property within one month from said date (Exh. 6 Castellvi). On January 30, 1957, Lieutenant General Alfonso Arellano, Chief of Staff, answered the letter of Castellvi, saying that it was difficult for the army to vacate the premises in view of the permanent installations and other facilities worth almost P500,000.00 that were erected and already established on the property, and that, there being no other recourse, the acquisition of the property by means of expropriation proceedings would be recommended to the President (Exhibit "7" Castellvi). Defendant Castellvi then brought suit in the Court of First Instance of Pampanga, in Civil Case No. 1458, to eject the Philippine Air Force from the land. While this ejectment case was

pending, the Republic instituted these expropriation proceedings, and, as stated earlier in this opinion, the Republic was placed in possession of the lands on August 10, 1959, On November 21, 1959, the Court of First Instance of Pampanga, dismissed Civil Case No. 1458, upon petition of the parties, in an order which, in part, reads as follows: 1. Plaintiff has agreed, as a matter of fact has already signed an agreement with defendants, whereby she has agreed to receive the rent of the lands, subject matter of the instant case from June 30, 1966 up to 1959 when the Philippine Air Force was placed in possession by virtue of an order of the Court upon depositing the provisional amount as fixed by the Provincial Appraisal Committee with the Provincial Treasurer of Pampanga; 2. That because of the above-cited agreement wherein the administratrix decided to get the rent corresponding to the rent from 1956 up to 1959 and considering that this action is one of illegal detainer and/or to recover the possession of said land by virtue of non-payment of rents, the instant case now has become moot and academic and/or by virtue of the agreement signed by plaintiff, she has waived her cause of action in the above-entitled case. 12 The Republic urges that the "taking " of Castellvi's property should be deemed as of the year 1947 by virtue of afore-quoted lease agreement. In American Jurisprudence, Vol. 26, 2nd edition, Section 157, on the subject of "Eminent Domain, we read the definition of "taking" (in eminent domain) as follows: Taking' under the power of eminent domain may be defined generally as entering upon private property for more than a momentary period, and, under the warrant or color of legal authority, devoting it to a public use, or otherwise informally appropriating or injuriously affecting it in such a way as substantially to oust the owner and deprive him of all beneficial enjoyment thereof. 13 Pursuant to the aforecited authority, a number of circumstances must be present in the "taking" of property for purposes of eminent domain. First, the expropriator must enter a private property. This circumstance is present in the instant case, when by virtue of the lease agreement the Republic, through the AFP, took possession of the property of Castellvi. Second, the entrance into private property must be for more than a momentary period. "Momentary" means, "lasting but a moment; of but a moment's duration" (The Oxford English Dictionary, Volume VI, page 596); "lasting a very short time; transitory; having a very brief life; operative or recurring at every moment" (Webster's Third International Dictionary, 1963

edition.) The word "momentary" when applied to possession or occupancy of (real) property should be construed to mean "a limited period" not indefinite or permanent. The aforecited lease contract was for a period of one year, renewable from year to year. The entry on the property, under the lease, is temporary, and considered transitory. The fact that the Republic, through the AFP, constructed some installations of a permanent nature does not alter the fact that the entry into the land was transitory, or intended to last a year, although renewable from year to year by consent of 'The owner of the land. By express provision of the lease agreement the Republic, as lessee, undertook to return the premises in substantially the same condition as at the time the property was first occupied by the AFP. It is claimed that the intention of the lessee was to occupy the land permanently, as may be inferred from the construction of permanent improvements. But this "intention" cannot prevail over the clear and express terms of the lease contract. Intent is to be deduced from the language employed by the parties, and the terms 'of the contract, when unambiguous, as in the instant case, are conclusive in the absence of averment and proof of mistake or fraud the question being not what the intention was, but what is expressed in the language used. (City of Manila v. Rizal Park Co., Inc., 53 Phil. 515, 525); Magdalena Estate, Inc. v. Myrick, 71 Phil. 344, 348). Moreover, in order to judge the intention of the contracting parties, their contemporaneous and subsequent acts shall be principally considered (Art. 1371, Civil Code). If the intention of the lessee (Republic) in 1947 was really to occupy permanently Castellvi's property, why was the contract of lease entered into on year to year basis? Why was the lease agreement renewed from year to year? Why did not the Republic expropriate this land of Castellvi in 1949 when, according to the Republic itself, it expropriated the other parcels of land that it occupied at the same time as the Castellvi land, for the purpose of converting them into a jet air base? 14 It might really have been the intention of the Republic to expropriate the lands in question at some future time, but certainly mere notice - much less an implied notice of such intention on the part of the Republic to expropriate the lands in the future did not, and could not, bind the landowner, nor bind the land itself. The expropriation must be actually commenced in court (Republic vs. Baylosis, et al., 96 Phil. 461, 484). Third, the entry into the property should be under warrant or color of legal authority. This circumstance in the "taking" may be considered as present in the instant case, because the Republic entered the Castellvi property as lessee. Fourth, the property must be devoted to a public use or otherwise informally appropriated or injuriously affected. It may be conceded that the circumstance of the property being devoted to public use is present because the property was used by the air force of the AFP. Fifth, the utilization of the property for public use must be in such a way as to oust the owner and deprive him of all beneficial enjoyment of the property. In the instant case, the entry of the Republic into the property and its utilization of the same for public use did not oust

Castellvi and deprive her of all beneficial enjoyment of the property. Castellvi remained as owner, and was continuously recognized as owner by the Republic, as shown by the renewal of the lease contract from year to year, and by the provision in the lease contract whereby the Republic undertook to return the property to Castellvi when the lease was terminated. Neither was Castellvi deprived of all the beneficial enjoyment of the property, because the Republic was bound to pay, and had been paying, Castellvi the agreed monthly rentals until the time when it filed the complaint for eminent domain on June 26, 1959. It is clear, therefore, that the "taking" of Catellvi's property for purposes of eminent domain cannot be considered to have taken place in 1947 when the Republic commenced to occupy the property as lessee thereof. We find merit in the contention of Castellvi that two essential elements in the "taking" of property under the power of eminent domain, namely: (1) that the entrance and occupation by the condemnor must be for a permanent, or indefinite period, and (2) that in devoting the property to public use the owner was ousted from the property and deprived of its beneficial use, were not present when the Republic entered and occupied the Castellvi property in 1947. Untenable also is the Republic's contention that although the contract between the parties was one of lease on a year to year basis, it was "in reality a more or less permanent right to occupy the premises under the guise of lease with the 'right and privilege' to buy the property should the lessor wish to terminate the lease," and "the right to buy the property is merged as an integral part of the lease relationship ... so much so that the fair market value has been agreed upon, not, as of the time of purchase, but as of the time of occupancy" 15 We cannot accept the Republic's contention that a lease on a year to year basis can give rise to a permanent right to occupy, since by express legal provision a lease made for a determinate time, as was the lease of Castellvi's land in the instant case, ceases upon the day fixed, without need of a demand (Article 1669, Civil Code). Neither can it be said that the right of eminent domain may be exercised by simply leasing the premises to be expropriated (Rule 67, Section 1, Rules of Court). Nor can it be accepted that the Republic would enter into a contract of lease where its real intention was to buy, or why the Republic should enter into a simulated contract of lease ("under the guise of lease", as expressed by counsel for the Republic) when all the time the Republic had the right of eminent domain, and could expropriate Castellvi's land if it wanted to without resorting to any guise whatsoever. Neither can we see how a right to buy could be merged in a contract of lease in the absence of any agreement between the parties to that effect. To sustain the contention of the Republic is to sanction a practice whereby in order to secure a low price for a land which the government intends to expropriate (or would eventually expropriate) it would first negotiate with the owner of the land to lease the land (for say ten or twenty years) then expropriate the same when the lease is about to terminate, then claim that the "taking" of the property for the purposes of the expropriation be reckoned as of the date when the Government started to

occupy the property under the lease, and then assert that the value of the property being expropriated be reckoned as of the start of the lease, in spite of the fact that the value of the property, for many good reasons, had in the meantime increased during the period of the lease. This would be sanctioning what obviously is a deceptive scheme, which would have the effect of depriving the owner of the property of its true and fair market value at the time when the expropriation proceedings were actually instituted in court. The Republic's claim that it had the "right and privilege" to buy the property at the value that it had at the time when it first occupied the property as lessee nowhere appears in the lease contract. What was agreed expressly in paragraph No. 5 of the lease agreement was that, should the lessor require the lessee to return the premises in the same condition as at the time the same was first occupied by the AFP, the lessee would have the "right and privilege" (or option) of paying the lessor what it would fairly cost to put the premises in the same condition as it was at the commencement of the lease, in lieu of the lessee's performance of the undertaking to put the land in said condition. The "fair value" at the time of occupancy, mentioned in the lease agreement, does not refer to the value of the property if bought by the lessee, but refers to the cost of restoring the property in the same condition as of the time when the lessee took possession of the property. Such fair value cannot refer to the purchase price, for purchase was never intended by the parties to the lease contract. It is a rule in the interpretation of contracts that "However general the terms of a contract may be, they shall not be understood to comprehend things that are distinct and cases that are different from those upon which the parties intended to agree" (Art. 1372, Civil Code). We hold, therefore, that the "taking" of the Castellvi property should not be reckoned as of the year 1947 when the Republic first occupied the same pursuant to the contract of lease, and that the just compensation to be paid for the Castellvi property should not be determined on the basis of the value of the property as of that year. The lower court did not commit an error when it held that the "taking" of the property under expropriation commenced with the filing of the complaint in this case. Under Section 4 of Rule 67 of the Rules of Court, 16 the "just compensation" is to be determined as of the date of the filing of the complaint. This Court has ruled that when the taking of the property sought to be expropriated coincides with the commencement of the expropriation proceedings, or takes place subsequent to the filing of the complaint for eminent domain, the just compensation should be determined as of the date of the filing of the complaint. (Republic vs. Philippine National Bank, L-14158, April 12, 1961, 1 SCRA 957, 961-962). In the instant case, it is undisputed that the Republic was placed in possession of the Castellvi property, by authority of the court, on August 10, 1959. The "taking" of the Castellvi property for the purposes of determining the just compensation to be paid must, therefore, be reckoned as of June 26, 1959 when the complaint for eminent domain was filed.

Regarding the two parcels of land of Toledo-Gozun, also sought to be expropriated, which had never been under lease to the Republic, the Republic was placed in possession of said lands, also by authority of the court, on August 10, 1959, The taking of those lands, therefore, must also be reckoned as of June 26, 1959, the date of the filing of the complaint for eminent domain. 2. Regarding the first assigned error discussed as the second issue the Republic maintains that, even assuming that the value of the expropriated lands is to be determined as of June 26, 1959, the price of P10.00 per square meter fixed by the lower court "is not only exhorbitant but also unconscionable, and almost fantastic". On the other hand, both Castellvi and Toledo-Gozun maintain that their lands are residential lands with a fair market value of not less than P15.00 per square meter. The lower court found, and declared, that the lands of Castellvi and Toledo-Gozun are residential lands. The finding of the lower court is in consonance with the unanimous opinion of the three commissioners who, in their report to the court, declared that the lands are residential lands. The Republic assails the finding that the lands are residential, contending that the plans of the appellees to convert the lands into subdivision for residential purposes were only on paper, there being no overt acts on the part of the appellees which indicated that the subdivision project had been commenced, so that any compensation to be awarded on the basis of the plans would be speculative. The Republic's contention is not well taken. We find evidence showing that the lands in question had ceased to be devoted to the production of agricultural crops, that they had become adaptable for residential purposes, and that the appellees had actually taken steps to convert their lands into residential subdivisions even before the Republic filed the complaint for eminent domain. In the case of City of Manila vs. Corrales (32 Phil. 82, 98) this Court laid down basic guidelines in determining the value of the property expropriated for public purposes. This Court said: In determining the value of land appropriated for public purposes, the same consideration are to be regarded as in a sale of property between private parties. The inquiry, in such cases, must be what is the property worth in the market, viewed not merely with reference to the uses to which it is at the time applied, but with reference to the uses to which it is plainly adapted, that is to say, What is it worth from its availability for valuable uses? So many and varied are the circumstances to be taken into account in determining the value of property condemned for public purposes, that it is practically impossible to formulate a rule to govern its appraisement in all cases. Exceptional circumstances will modify the most carefully guarded rule, but, as a general thing, we should say that the compensation of the

owner is to be estimated by reference to the use for which the property is suitable, having regard to the existing business or wants of the community, or such as may be reasonably expected in the immediate future. (Miss. and Rum River Boom Co. vs. Patterson, 98 U.S., 403). In expropriation proceedings, therefore, the owner of the land has the right to its value for the use for which it would bring the most in the market. 17 The owner may thus show every advantage that his property possesses, present and prospective, in order that the price it could be sold for in the market may be satisfactorily determined. 18 The owner may also show that the property is suitable for division into village or town lots. 19 The trial court, therefore, correctly considered, among other circumstances, the proposed subdivision plans of the lands sought to be expropriated in finding that those lands are residential lots. This finding of the lower court is supported not only by the unanimous opinion of the commissioners, as embodied in their report, but also by the Provincial Appraisal Committee of the province of Pampanga composed of the Provincial Treasurer, the Provincial Auditor and the District Engineer. In the minutes of the meeting of the Provincial Appraisal Committee, held on May 14, 1959 (Exh. 13-Castellvi) We read in its Resolution No. 10 the following: 3. Since 1957 the land has been classified as residential in view of its proximity to the air base and due to the fact that it was not being devoted to agriculture. In fact, there is a plan to convert it into a subdivision for residential purposes. The taxes due on the property have been paid based on its classification as residential land; The evidence shows that Castellvi broached the idea of subdividing her land into residential lots as early as July 11, 1956 in her letter to the Chief of Staff of the Armed Forces of the Philippines. (Exh. 5-Castellvi) As a matter of fact, the layout of the subdivision plan was tentatively approved by the National Planning Commission on September 7, 1956. (Exh. 8Castellvi). The land of Castellvi had not been devoted to agriculture since 1947 when it was leased to the Philippine Army. In 1957 said land was classified as residential, and taxes based on its classification as residential had been paid since then (Exh. 13-Castellvi). The location of the Castellvi land justifies its suitability for a residential subdivision. As found by the trial court, "It is at the left side of the entrance of the Basa Air Base and bounded on two sides by roads (Exh. 13-Castellvi), paragraphs 1 and 2, Exh. 12-Castellvi), the poblacion, (of Floridablanca) the municipal building, and the Pampanga Sugar Mills are closed by. The barrio schoolhouse and chapel are also near (T.S.N. November 23,1960, p. 68)." 20 The lands of Toledo-Gozun (Lot 1-B and Lot 3) are practically of the same condition as the land of Castellvi. The lands of Toledo-Gozun adjoin the land of Castellvi. They are also contiguous to the Basa Air Base, and are along the road. These lands are near the barrio

schoolhouse, the barrio chapel, the Pampanga Sugar Mills, and the poblacion of Floridablanca (Exhs. 1, 3 and 4-Toledo-Gozun). As a matter of fact, regarding lot 1-B it had already been surveyed and subdivided, and its conversion into a residential subdivision was tentatively approved by the National Planning Commission on July 8, 1959 (Exhs. 5 and 6 Toledo-Gozun). As early as June, 1958, no less than 32 man connected with the Philippine Air Force among them commissioned officers, non-commission officers, and enlisted men had requested Mr. and Mrs. Joaquin D. Gozun to open a subdivision on their lands in question (Exhs. 8, 8-A to 8ZZ-Toledo-Gozun). 21 We agree with the findings, and the conclusions, of the lower court that the lands that are the subject of expropriation in the present case, as of August 10, 1959 when the same were taken possession of by the Republic, were residential lands and were adaptable for use as residential subdivisions. Indeed, the owners of these lands have the right to their value for the use for which they would bring the most in the market at the time the same were taken from them. The most important issue to be resolved in the present case relates to the question of what is the just compensation that should be paid to the appellees. The Republic asserts that the fair market value of the lands of the appellees is P.20 per square meter. The Republic cites the case of Republic vs. Narciso, et al., L-6594, which this Court decided on May 18, 1956. The Narciso case involved lands that belonged to Castellvi and Toledo-Gozun, and to one Donata Montemayor, which were expropriated by the Republic in 1949 and which are now the site of the Basa Air Base. In the Narciso case this Court fixed the fair market value at P.20 per square meter. The lands that are sought to be expropriated in the present case being contiguous to the lands involved in the Narciso case, it is the stand of the Republic that the price that should be fixed for the lands now in question should also be at P.20 per square meter. We can not sustain the stand of the Republic. We find that the price of P.20 per square meter, as fixed by this Court in the Narciso case, was based on the allegation of the defendants (owners) in their answer to the complaint for eminent domain in that case that the price of their lands was P2,000.00 per hectare and that was the price that they asked the court to pay them. This Court said, then, that the owners of the land could not be given more than what they had asked, notwithstanding the recommendation of the majority of the Commission on Appraisal which was adopted by the trial court that the fair market value of the lands was P3,000.00 per hectare. We also find that the price of P.20 per square meter in the Narciso case was considered the fair market value of the lands as of the year 1949 when the expropriation proceedings were instituted, and at that time the lands were classified as sugar lands, and assessed for taxation purposes at around P400.00 per hectare, or P.04 per square meter. 22 While the lands involved in the present case, like the lands involved in the Narciso case, might have a fair market value of P.20 per square meter in 1949, it can not be denied

that ten years later, in 1959, when the present proceedings were instituted, the value of those lands had increased considerably. The evidence shows that since 1949 those lands were no longer cultivated as sugar lands, and in 1959 those lands were already classified, and assessed for taxation purposes, as residential lands. In 1959 the land of Castellvi was assessed at P1.00 per square meter. 23 The Republic also points out that the Provincial Appraisal Committee of Pampanga, in its resolution No. 5 of February 15, 1957 (Exhibit D), recommended the sum of P.20 per square meter as the fair valuation of the Castellvi property. We find that this resolution was made by the Republic the basis in asking the court to fix the provisional value of the lands sought to be expropriated at P259,669.10, which was approved by the court. 24 It must be considered, however, that the amount fixed as the provisional value of the lands that are being expropriated does not necessarily represent the true and correct value of the land. The value is only "provisional" or "tentative", to serve as the basis for the immediate occupancy of the property being expropriated by the condemnor. The records show that this resolution No. 5 was repealed by the same Provincial Committee on Appraisal in its resolution No. 10 of May 14, 1959 (Exhibit 13-Castellvi). In that resolution No. 10, the appraisal committee stated that "The Committee has observed that the value of the land in this locality has increased since 1957 ...", and recommended the price of P1.50 per square meter. It follows, therefore, that, contrary to the stand of the Republic, that resolution No. 5 of the Provincial Appraisal Committee can not be made the basis for fixing the fair market value of the lands of Castellvi and Toledo-Gozun. The Republic further relied on the certification of the Acting Assistant Provincial Assessor of Pampanga, dated February 8, 1961 (Exhibit K), to the effect that in 1950 the lands of ToledoGozun were classified partly as sugar land and partly as urban land, and that the sugar land was assessed at P.40 per square meter, while part of the urban land was assessed at P.40 per square meter and part at P.20 per square meter; and that in 1956 the Castellvi land was classified as sugar land and was assessed at P450.00 per hectare, or P.045 per square meter. We can not also consider this certification of the Acting Assistant Provincial Assessor as a basis for fixing the fair market value of the lands of Castellvi and Toledo-Gozun because, as the evidence shows, the lands in question, in 1957, were already classified and assessed for taxation purposes as residential lands. The certification of the assessor refers to the year 1950 as far as the lands of Toledo-Gozun are concerned, and to the year 1956 as far as the land of Castellvi is concerned. Moreover, this Court has held that the valuation fixed for the purposes of the assessment of the land for taxation purposes can not bind the landowner where the latter did not intervene in fixing it. 25 On the other hand, the Commissioners, appointed by the court to appraise the lands that were being expropriated, recommended to the court that the price of P10.00 per square

meter would be the fair market value of the lands. The commissioners made their recommendation on the basis of their observation after several ocular inspections of the lands, of their own personal knowledge of land values in the province of Pampanga, of the testimonies of the owners of the land, and other witnesses, and of documentary evidence presented by the appellees. Both Castellvi and Toledo-Gozun testified that the fair market value of their respective land was at P15.00 per square meter. The documentary evidence considered by the commissioners consisted of deeds of sale of residential lands in the town of San Fernando and in Angeles City, in the province of Pampanga, which were sold at prices ranging from P8.00 to P20.00 per square meter (Exhibits 15, 16, 17, 18, 19, 20, 21, 22, 23Castellvi). The commissioners also considered the decision in Civil Case No. 1531 of the Court of First Instance of Pampanga, entitled Republic vs. Sabina Tablante, which was expropriation case filed on January 13, 1959, involving a parcel of land adjacent to the Clark Air Base in Angeles City, where the court fixed the price at P18.00 per square meter (Exhibit 14-Castellvi). In their report, the commissioners, among other things, said: ... This expropriation case is specially pointed out, because the circumstances and factors involved therein are similar in many respects to the defendants' lands in this case. The land in Civil Case No. 1531 of this Court and the lands in the present case (Civil Case No. 1623) are both near the air bases, the Clark Air Base and the Basa Air Base respectively. There is a national road fronting them and are situated in a first-class municipality. As added advantage it may be said that the Basa Air Base land is very near the sugar mill at Del Carmen, Floridablanca, Pampanga, owned by the Pampanga Sugar Mills. Also just stone's throw away from the same lands is a beautiful vacation spot at Palacol, a sitio of the town of Floridablanca, which counts with a natural swimming pool for vacationists on weekends. These advantages are not found in the case of the Clark Air Base. The defendants' lands are nearer to the poblacion of Floridablanca then Clark Air Base is nearer (sic) to the poblacion of Angeles, Pampanga. The deeds of absolute sale, according to the undersigned commissioners, as well as the land in Civil Case No. 1531 are competent evidence, because they were executed during the year 1959 and before August 10 of the same year. More specifically so the land at Clark Air Base which coincidentally is the subject matter in the complaint in said Civil Case No. 1531, it having been filed on January 13, 1959 and the taking of the land involved therein was ordered by the Court of First Instance of Pampanga on January 15, 1959, several months before the lands in this case were taken by the plaintiffs .... From the above and considering further that the lowest as well as the highest price per square meter obtainable in the market of Pampanga relative to subdivision lots within its jurisdiction in the year 1959 is very well known by the Commissioners, the Commission finds

that the lowest price that can be awarded to the lands in question is P10.00 per square meter. 26 The lower court did not altogether accept the findings of the Commissioners based on the documentary evidence, but it considered the documentary evidence as basis for comparison in determining land values. The lower court arrived at the conclusion that "the unanimous recommendation of the commissioners of ten (P10.00) pesos per square meter for the three lots of the defendants subject of this action is fair and just". 27 In arriving at its conclusion, the lower court took into consideration, among other circumstances, that the lands are titled, that there is a rising trend of land values, and the lowered purchasing power of the Philippine peso. In the case of Manila Railroad Co. vs. Caligsihan, 40 Phil. 326, 328, this Court said: A court of first instance or, on appeal, the Supreme Court, may change or modify the report of the commissioners by increasing or reducing the amount of the award if the facts of the case so justify. While great weight is attached to the report of the commissioners, yet a court may substitute therefor its estimate of the value of the property as gathered from the record in certain cases, as, where the commissioners have applied illegal principles to the evidence submitted to them, or where they have disregarded a clear preponderance of evidence, or where the amount allowed is either palpably inadequate or excessive. 28 The report of the commissioners of appraisal in condemnation proceedings are not binding, but merely advisory in character, as far as the court is concerned. 29 In our analysis of the report of the commissioners, We find points that merit serious consideration in the determination of the just compensation that should be paid to Castellvi and Toledo-Gozun for their lands. It should be noted that the commissioners had made ocular inspections of the lands and had considered the nature and similarities of said lands in relation to the lands in other places in the province of Pampanga, like San Fernando and Angeles City. We cannot disregard the observations of the commissioners regarding the circumstances that make the lands in question suited for residential purposes their location near the Basa Air Base, just like the lands in Angeles City that are near the Clark Air Base, and the facilities that obtain because of their nearness to the big sugar central of the Pampanga Sugar mills, and to the flourishing first class town of Floridablanca. It is true that the lands in question are not in the territory of San Fernando and Angeles City, but, considering the facilities of modern communications, the town of Floridablanca may be considered practically adjacent to San Fernando and Angeles City. It is not out of place, therefore, to compare the land values in Floridablanca to the land values in San Fernando and Angeles City, and form an idea of the value of the lands in Floridablanca with reference to the land values in those two other communities.

The important factor in expropriation proceeding is that the owner is awarded the just compensation for his property. We have carefully studied the record, and the evidence, in this case, and after considering the circumstances attending the lands in question We have arrived at the conclusion that the price of P10.00 per square meter, as recommended by the commissioners and adopted by the lower court, is quite high. It is Our considered view that the price of P5.00 per square meter would be a fair valuation of the lands in question and would constitute a just compensation to the owners thereof. In arriving at this conclusion We have particularly taken into consideration the resolution of the Provincial Committee on Appraisal of the province of Pampanga informing, among others, that in the year 1959 the land of Castellvi could be sold for from P3.00 to P4.00 per square meter, while the land of Toledo-Gozun could be sold for from P2.50 to P3.00 per square meter. The Court has weighed all the circumstances relating to this expropriations proceedings, and in fixing the price of the lands that are being expropriated the Court arrived at a happy medium between the price as recommended by the commissioners and approved by the court, and the price advocated by the Republic. This Court has also taken judicial notice of the fact that the value of the Philippine peso has considerably gone down since the year 1959. 30 Considering that the lands of Castellvi and Toledo-Gozun are adjoining each other, and are of the same nature, the Court has deemed it proper to fix the same price for all these lands. 3. The third issue raised by the Republic relates to the payment of interest. The Republic maintains that the lower court erred when it ordered the Republic to pay Castellvi interest at the rate of 6% per annum on the total amount adjudged as the value of the land of Castellvi, from July 1, 1956 to July 10, 1959. We find merit in this assignment of error. In ordering the Republic to pay 6% interest on the total value of the land of Castellvi from July 1, 1956 to July 10, 1959, the lower court held that the Republic had illegally possessed the land of Castellvi from July 1, 1956, after its lease of the land had expired on June 30, 1956, until August 10, 1959 when the Republic was placed in possession of the land pursuant to the writ of possession issued by the court. What really happened was that the Republic continued to occupy the land of Castellvi after the expiration of its lease on June 30, 1956, so much so that Castellvi filed an ejectment case against the Republic in the Court of First Instance of Pampanga. 31 However, while that ejectment case was pending, the Republic filed the complaint for eminent domain in the present case and was placed in possession of the land on August 10, 1959, and because of the institution of the expropriation proceedings the ejectment case was later dismissed. In the order dismissing the ejectment case, the Court of First Instance of Pampanga said: Plaintiff has agreed, as a matter of fact has already signed an agreement with defendants, whereby she had agreed to receive the rent of the lands, subject matter of the instant case

from June 30, 1956 up to 1959 when the Philippine Air Force was placed in possession by virtue of an order of the Court upon depositing the provisional amount as fixed by the Provincial Appraisal Committee with the Provincial Treasurer of Pampanga; ... If Castellvi had agreed to receive the rentals from June 30, 1956 to August 10, 1959, she should be considered as having allowed her land to be leased to the Republic until August 10, 1959, and she could not at the same time be entitled to the payment of interest during the same period on the amount awarded her as the just compensation of her land. The Republic, therefore, should pay Castellvi interest at the rate of 6% per annum on the value of her land, minus the provisional value that was deposited, only from July 10, 1959 when it deposited in court the provisional value of the land. 4. The fourth error assigned by the Republic relates to the denial by the lower court of its motion for a new trial based on nearly discovered evidence. We do not find merit in this assignment of error. After the lower court had decided this case on May 26, 1961, the Republic filed a motion for a new trial, supplemented by another motion, both based upon the ground of newly discovered evidence. The alleged newly discovered evidence in the motion filed on June 21, 1961 was a deed of absolute sale-executed on January 25, 1961, showing that a certain Serafin Francisco had sold to Pablo L. Narciso a parcel of sugar land having an area of 100,000 square meters with a sugar quota of 100 piculs, covered by P.A. No. 1701, situated in Barrio Fortuna, Floridablanca, for P14,000, or P.14 per square meter. In the supplemental motion, the alleged newly discovered evidence were: (1) a deed of sale of some 35,000 square meters of land situated at Floridablanca for P7,500.00 (or about P.21 per square meter) executed in July, 1959, by the spouses Evelyn D. Laird and Cornelio G. Laird in favor of spouses Bienvenido S. Aguas and Josefina Q. Aguas; and (2) a deed of absolute sale of a parcel of land having an area of 4,120,101 square meters, including the sugar quota covered by Plantation Audit No. 161 1345, situated at Floridablanca, Pampanga, for P860.00 per hectare (a little less than P.09 per square meter) executed on October 22, 1957 by Jesus Toledo y Mendoza in favor of the Land Tenure Administration. We find that the lower court acted correctly when it denied the motions for a new trial. To warrant the granting of a new trial based on the ground of newly discovered evidence, it must appear that the evidence was discovered after the trial; that even with the exercise of due diligence, the evidence could not have been discovered and produced at the trial; and

that the evidence is of such a nature as to alter the result of the case if admitted. 32 The lower court correctly ruled that these requisites were not complied with. The lower court, in a well-reasoned order, found that the sales made by Serafin Francisco to Pablo Narciso and that made by Jesus Toledo to the Land Tenure Administration were immaterial and irrelevant, because those sales covered sugarlands with sugar quotas, while the lands sought to be expropriated in the instant case are residential lands. The lower court also concluded that the land sold by the spouses Laird to the spouses Aguas was a sugar land. We agree with the trial court. In eminent domain proceedings, in order that evidence as to the sale price of other lands may be admitted in evidence to prove the fair market value of the land sought to be expropriated, the lands must, among other things, be shown to be similar. But even assuming, gratia argumenti, that the lands mentioned in those deeds of sale were residential, the evidence would still not warrant the grant of a new trial, for said evidence could have been discovered and produced at the trial, and they cannot be considered newly discovered evidence as contemplated in Section 1(b) of Rule 37 of the Rules of Court. Regarding this point, the trial court said: The Court will now show that there was no reasonable diligence employed. The land described in the deed of sale executed by Serafin Francisco, copy of which is attached to the original motion, is covered by a Certificate of Title issued by the Office of the Register of Deeds of Pampanga. There is no question in the mind of the court but this document passed through the Office of the Register of Deeds for the purpose of transferring the title or annotating the sale on the certificate of title. It is true that Fiscal Lagman went to the Office of the Register of Deeds to check conveyances which may be presented in the evidence in this case as it is now sought to be done by virtue of the motions at bar, Fiscal Lagman, one of the lawyers of the plaintiff, did not exercise reasonable diligence as required by the rules. The assertion that he only went to the office of the Register of Deeds 'now and then' to check the records in that office only shows the half-hazard [sic] manner by which the plaintiff looked for evidence to be presented during the hearing before the Commissioners, if it is at all true that Fiscal Lagman did what he is supposed to have done according to Solicitor Padua. It would have been the easiest matter for plaintiff to move for the issuance of a subpoena duces tecum directing the Register of Deeds of Pampanga to come to testify and to bring with him all documents found in his office pertaining to sales of land in Floridablanca adjacent to or near the lands in question executed or recorded from 1958 to the present. Even this elementary precaution was not done by plaintiff's numerous attorneys.

The same can be said of the deeds of sale attached to the supplementary motion. They refer to lands covered by certificate of title issued by the Register of Deeds of Pampanga. For the same reason they could have been easily discovered if reasonable diligence has been exerted by the numerous lawyers of the plaintiff in this case. It is noteworthy that all these deeds of sale could be found in several government offices, namely, in the Office of the Register of Deeds of Pampanga, the Office of the Provincial Assessor of Pampanga, the Office of the Clerk of Court as a part of notarial reports of notaries public that acknowledged these documents, or in the archives of the National Library. In respect to Annex 'B' of the supplementary motion copy of the document could also be found in the Office of the Land Tenure Administration, another government entity. Any lawyer with a modicum of ability handling this expropriation case would have right away though [sic] of digging up documents diligently showing conveyances of lands near or around the parcels of land sought to be expropriated in this case in the offices that would have naturally come to his mind such as the offices mentioned above, and had counsel for the movant really exercised the reasonable diligence required by the Rule' undoubtedly they would have been able to find these documents and/or caused the issuance of subpoena duces tecum. ... It is also recalled that during the hearing before the Court of the Report and Recommendation of the Commissioners and objection thereto, Solicitor Padua made the observation: I understand, Your Honor, that there was a sale that took place in this place of land recently where the land was sold for P0.20 which is contiguous to this land. The Court gave him permission to submit said document subject to the approval of the Court. ... This was before the decision was rendered, and later promulgated on May 26, 1961 or more than one month after Solicitor Padua made the above observation. He could have, therefore, checked up the alleged sale and moved for a reopening to adduce further evidence. He did not do so. He forgot to present the evidence at a more propitious time. Now, he seeks to introduce said evidence under the guise of newly-discovered evidence. Unfortunately the Court cannot classify it as newly-discovered evidence, because tinder the circumstances, the correct qualification that can be given is 'forgotten evidence'. Forgotten however, is not newly-discovered evidence. 33 The granting or denial of a motion for new trial is, as a general rule, discretionary with the trial court, whose judgment should not be disturbed unless there is a clear showing of abuse of discretion. 34 We do not see any abuse of discretion on the part of the lower court when it denied the motions for a new trial.

WHEREFORE, the decision appealed from is modified, as follows: (a) the lands of appellees Carmen Vda. de Castellvi and Maria Nieves Toledo-Gozun, as described in the complaint, are declared expropriated for public use; (b) the fair market value of the lands of the appellees is fixed at P5.00 per square meter; (c) the Republic must pay appellee Castellvi the sum of P3,796,495.00 as just compensation for her one parcel of land that has an area of 759,299 square meters, minus the sum of P151,859.80 that she withdrew out of the amount that was deposited in court as the provisional value of the land, with interest at the rate of 6% per annum from July 10, 1959 until the day full payment is made or deposited in court; (d) the Republic must pay appellee Toledo-Gozun the sum of P2,695,225.00 as the just compensation for her two parcels of land that have a total area of 539,045 square meters, minus the sum of P107,809.00 that she withdrew out of the amount that was deposited in court as the provisional value of her lands, with interest at the rate of 6%, per annum from July 10, 1959 until the day full payment is made or deposited in court; (e) the attorney's lien of Atty. Alberto Cacnio is enforced; and (f) the costs should be paid by appellant Republic of the Philippines, as provided in Section 12, Rule 67, and in Section 13, Rule 141, of the Rules of Court. IT IS SO ORDERED. Makalintal, C.J., Barredo, Antonio, Esguerra, Fernandez, Muoz Palma and Aquino, JJ., concur. Castro, Fernando, Teehankee and Makasiar, JJ., took no part.

Footnotes 1 Record on Appeal, Vol. I, pp. 53-56. 2 Record on Appeal, Vol. I, pp. 53-56. 3 Record on Appeal, Vol. I, pp. 121-124.

4 Record on Appeal, Vol. I, pp. 235-261. 5 Record on Appeal, Vol. I, pp. 264-270, 284-297 and 297-299. 6 Record on Appeal, Vol. I, pp. 387-456. 7 Appellant's brief, pp. 18-30; citing the case of Penn. vs. Carolina Virginia Estate Corp., 57 SE 2d 817. 8 Appellee Castellvi's brief, pp. 21-26.

20 Decision of the lower court pp. 444-445, Record on Appeal, Vol. I. 21 Decision of the lower court, pp. 446-449, Record on Appeal, Vol. I. 22 Decision in the Narciso case, Exhibit H for the Republic. 23 See page 471, Record on Appeal, Vol. II, and page 41, Appellant's Brief. 24 Page 10-16, Record on Appeal, Vol. I. 25 Republic of the Philippines vs. Urtula, 110 Phil. 262-264.

9 Appellee Toledo-Gozun's brief, pp. 7-9. The issue raised in the second error assigned should really refer only to the land of Castellvi. We find that the lands of Toledo-Gozun, unlike the land of Castellvi, were never leased to the Republic. 10 Appellant's brief, pp. 6-12. 11 Appellant's brief, p. 12. 12 Record on Appeal, Vol. II, pp. 462-463. 13 Among the cases cited under this Section is that of Penn. vs. Carolina Virginia Coastal Corporation, 57 SE 2d 817, which is cited by the Republic on p. 18 of its brief. 14 See Appellant's brief, p. 6.

26 Record on Appeal, Vol. I, pages 257-260. 27 Lower court's decision, p. 454, Record on Appeal, Vol. I. 28 See also Manila Railroad Company vs. Velasquez, 32 Phil. 286: and City of Manila vs. Estrada, 25 Phil. 208. 29 City of Cebu vs. Ledesma, 14 SCRA 666, 669. 30 In 1959 the money value of two pesos (P2.00), Philippine currency, was equal to one U.S. dollar ($1.00). As published in the "Daily Express" of August 6, 1974, the Philippine National Bank announced that the inter-bank guiding rate was P6.735 to one U.S. dollar ($1,00). 31 Civil Case No. 1548.

15 See Appellant's brief, p. 22. 32 Sec. 1 (b) of Rule 37 of the Rules of Court. 16 Similar to Section 5, Rule 69 of the old Rules of Court, the rule in force when the complaint in this case was filed. 17 King vs. Mineapolis Union Railway Co., 32 Minn. 224. 18 Little Rock Junction Ry. vs. Woodruff, 49 Ark. 381; 5 SW 792. 19 27 Am. Jur. 2d pp. 344-345; Rothnam vs. Commonwealth, 406 Pa. 376; Wichita Falls and N.W. Ry. Co. vs. Holloman, 28 Okla. 419, 114 P 700, 701. See also Republic vs. Venturanza, et al., L-20417, May 30,1966, 17 SCRA 322, 331. 33 Record on Appeal, Vol. 11, pp. 607-613. 34 Miranda vs. Legaspi, et al., 92 Phil. 290, 293-294.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-34915 June 24, 1983 CITY GOVERNMENT OF QUEZON CITY and CITY COUNCIL OF QUEZON CITY, petitioners, vs. HON. JUDGE VICENTE G. ERICTA as Judge of the Court of First Instance of Rizal, Quezon City, Branch XVIII; HIMLAYANG PILIPINO, INC., respondents. City Fiscal for petitioners. Manuel Villaruel, Jr. and Feliciano Tumale for respondents.

RESOLVED by the council of Quezon assembled, to request, as it does hereby request the City Engineer, Quezon City, to stop any further selling and/or transaction of memorial park lots in Quezon City where the owners thereof have failed to donate the required 6% space intended for paupers burial. Pursuant to this petition, the Quezon City Engineer notified respondent Himlayang Pilipino, Inc. in writing that Section 9 of Ordinance No. 6118, S-64 would be enforced Respondent Himlayang Pilipino reacted by filing with the Court of First Instance of Rizal Branch XVIII at Quezon City, a petition for declaratory relief, prohibition and mandamus with preliminary injunction (Sp. Proc. No. Q-16002) seeking to annul Section 9 of the Ordinance in question The respondent alleged that the same is contrary to the Constitution, the Quezon City Charter, the Local Autonomy Act, and the Revised Administrative Code. There being no issue of fact and the questions raised being purely legal both petitioners and respondent agreed to the rendition of a judgment on the pleadings. The respondent court, therefore, rendered the decision declaring Section 9 of Ordinance No. 6118, S-64 null and void. A motion for reconsideration having been denied, the City Government and City Council filed the instant petition. Petitioners argue that the taking of the respondent's property is a valid and reasonable exercise of police power and that the land is taken for a public use as it is intended for the burial ground of paupers. They further argue that the Quezon City Council is authorized under its charter, in the exercise of local police power, " to make such further ordinances and resolutions not repugnant to law as may be necessary to carry into effect and discharge the powers and duties conferred by this Act and such as it shall deem necessary and proper to provide for the health and safety, promote the prosperity, improve the morals, peace, good order, comfort and convenience of the city and the inhabitants thereof, and for the protection of property therein." On the other hand, respondent Himlayang Pilipino, Inc. contends that the taking or confiscation of property is obvious because the questioned ordinance permanently restricts the use of the property such that it cannot be used for any reasonable purpose and deprives the owner of all beneficial use of his property. The respondent also stresses that the general welfare clause is not available as a source of power for the taking of the property in this case because it refers to "the power of promoting the public welfare by restraining and regulating the use of liberty and property." The

GUTIERREZ, JR., J.: This is a petition for review which seeks the reversal of the decision of the Court of First Instance of Rizal, Branch XVIII declaring Section 9 of Ordinance No. 6118, S-64, of the Quezon City Council null and void. Section 9 of Ordinance No. 6118, S-64, entitled "ORDINANCE REGULATING THE ESTABLISHMENT, MAINTENANCE AND OPERATION OF PRIVATE MEMORIAL TYPE CEMETERY OR BURIAL GROUND WITHIN THE JURISDICTION OF QUEZON CITY AND PROVIDING PENALTIES FOR THE VIOLATION THEREOF" provides: Sec. 9. At least six (6) percent of the total area of the memorial park cemetery shall be set aside for charity burial of deceased persons who are paupers and have been residents of Quezon City for at least 5 years prior to their death, to be determined by competent City Authorities. The area so designated shall immediately be developed and should be open for operation not later than six months from the date of approval of the application. For several years, the aforequoted section of the Ordinance was not enforced by city authorities but seven years after the enactment of the ordinance, the Quezon City Council passed the following resolution:

respondent points out that if an owner is deprived of his property outright under the State's police power, the property is generally not taken for public use but is urgently and summarily destroyed in order to promote the general welfare. The respondent cites the case of a nuisance per se or the destruction of a house to prevent the spread of a conflagration. We find the stand of the private respondent as well as the decision of the respondent Judge to be well-founded. We quote with approval the lower court's ruling which declared null and void Section 9 of the questioned city ordinance: The issue is: Is Section 9 of the ordinance in question a valid exercise of the police power? An examination of the Charter of Quezon City (Rep. Act No. 537), does not reveal any provision that would justify the ordinance in question except the provision granting police power to the City. Section 9 cannot be justified under the power granted to Quezon City to tax, fix the license fee, and regulate such other business, trades, and occupation as may be established or practised in the City.' (Subsections 'C', Sec. 12, R.A. 537). The power to regulate does not include the power to prohibit (People vs. Esguerra, 81 PhiL 33, Vega vs. Municipal Board of Iloilo, L-6765, May 12, 1954; 39 N.J. Law, 70, Mich. 396). A fortiori, the power to regulate does not include the power to confiscate. The ordinance in question not only confiscates but also prohibits the operation of a memorial park cemetery, because under Section 13 of said ordinance, 'Violation of the provision thereof is punishable with a fine and/or imprisonment and that upon conviction thereof the permit to operate and maintain a private cemetery shall be revoked or cancelled.' The confiscatory clause and the penal provision in effect deter one from operating a memorial park cemetery. Neither can the ordinance in question be justified under sub- section "t", Section 12 of Republic Act 537 which authorizes the City Council to'prohibit the burial of the dead within the center of population of the city and provide for their burial in such proper place and in such manner as the council may determine, subject to the provisions of the general law regulating burial grounds and cemeteries and governing funerals and disposal of the dead.' (Sub-sec. (t), Sec. 12, Rep. Act No. 537). There is nothing in the above provision which authorizes confiscation or as euphemistically termed by the respondents, 'donation' We now come to the question whether or not Section 9 of the ordinance in question is a valid exercise of police power. The police power of Quezon City is defined in sub-section 00, Sec. 12, Rep. Act 537 which reads as follows:

(00) To make such further ordinance and regulations not repugnant to law as may be necessary to carry into effect and discharge the powers and duties conferred by this act and such as it shall deem necessary and proper to provide for the health and safety, promote, the prosperity, improve the morals, peace, good order, comfort and convenience of the city and the inhabitants thereof, and for the protection of property therein; and enforce obedience thereto with such lawful fines or penalties as the City Council may prescribe under the provisions of subsection (jj) of this section. We start the discussion with a restatement of certain basic principles. Occupying the forefront in the bill of rights is the provision which states that 'no person shall be deprived of life, liberty or property without due process of law' (Art. Ill, Section 1 subparagraph 1, Constitution). On the other hand, there are three inherent powers of government by which the state interferes with the property rights, namely-. (1) police power, (2) eminent domain, (3) taxation. These are said to exist independently of the Constitution as necessary attributes of sovereignty. Police power is defined by Freund as 'the power of promoting the public welfare by restraining and regulating the use of liberty and property' (Quoted in Political Law by Tanada and Carreon, V-11, p. 50). It is usually exerted in order to merely regulate the use and enjoyment of property of the owner. If he is deprived of his property outright, it is not taken for public use but rather to destroy in order to promote the general welfare. In police power, the owner does not recover from the government for injury sustained in consequence thereof (12 C.J. 623). It has been said that police power is the most essential of government powers, at times the most insistent, and always one of the least limitable of the powers of government (Ruby vs. Provincial Board, 39 PhiL 660; Ichong vs. Hernandez, 1,7995, May 31, 1957). This power embraces the whole system of public regulation (U.S. vs. Linsuya Fan, 10 PhiL 104). The Supreme Court has said that police power is so far-reaching in scope that it has almost become impossible to limit its sweep. As it derives its existence from the very existence of the state itself, it does not need to be expressed or defined in its scope. Being coextensive with self-preservation and survival itself, it is the most positive and active of all governmental processes, the most essential insistent and illimitable Especially it is so under the modern democratic framework where the demands of society and nations have multiplied to almost unimaginable proportions. The field and scope of police power have become almost boundless, just as the fields of public interest and public welfare have become almost all embracing and have transcended human foresight. Since the Courts cannot foresee the needs and demands of public interest and welfare, they cannot delimit beforehand the extent or scope of the police power by which and through which the state seeks to attain or achieve public interest and welfare. (Ichong vs. Hernandez, L-7995, May 31, 1957).

We have likewise considered the principles earlier stated in Case v. Board of Health supra : The police power being the most active power of the government and the due process clause being the broadest station on governmental power, the conflict between this power of government and the due process clause of the Constitution is oftentimes inevitable. It will be seen from the foregoing authorities that police power is usually exercised in the form of mere regulation or restriction in the use of liberty or property for the promotion of the general welfare. It does not involve the taking or confiscation of property with the exception of a few cases where there is a necessity to confiscate private property in order to destroy it for the purpose of protecting the peace and order and of promoting the general welfare as for instance, the confiscation of an illegally possessed article, such as opium and firearms. It seems to the court that Section 9 of Ordinance No. 6118, Series of 1964 of Quezon City is not a mere police regulation but an outright confiscation. It deprives a person of his private property without due process of law, nay, even without compensation. In sustaining the decision of the respondent court, we are not unmindful of the heavy burden shouldered by whoever challenges the validity of duly enacted legislation whether national or local As early as 1913, this Court ruled in Case v. Board of Health (24 PhiL 250) that the courts resolve every presumption in favor of validity and, more so, where the ma corporation asserts that the ordinance was enacted to promote the common good and general welfare. In the leading case of Ermita-Malate Hotel and Motel Operators Association Inc. v. City Mayor of Manila (20 SCRA 849) the Court speaking through the then Associate Justice and now Chief Justice Enrique M. Fernando stated Primarily what calls for a reversal of such a decision is the a of any evidence to offset the presumption of validity that attaches to a statute or ordinance. As was expressed categorically by Justice Malcolm 'The presumption is all in favor of validity. ... The action of the elected representatives of the people cannot be lightly set aside. The councilors must, in the very nature of things, be familiar with the necessities of their particular ... municipality and with all the facts and lances which surround the subject and necessitate action. The local legislative body, by enacting the ordinance, has in effect given notice that the regulations are essential to the well-being of the people. ... The Judiciary should not lightly set aside legislative action when there is not a clear invasion of personal or property rights under the guise of police regulation. (U.S. v. Salaveria (1918], 39 Phil. 102, at p. 111. There was an affirmation of the presumption of validity of municipal ordinance as announced in the leading Salaveria decision in Ebona v. Daet, [1950]85 Phil. 369.) ... Under the provisions of municipal charters which are known as the general welfare clauses, a city, by virtue of its police power, may adopt ordinances to the peace, safety, health, morals and the best and highest interests of the municipality. It is a well-settled principle, growing out of the nature of well-ordered and society, that every holder of property, however absolute and may be his title, holds it under the implied liability that his use of it shall not be injurious to the equal enjoyment of others having an equal right to the enjoyment of their property, nor injurious to the rights of the community. An property in the state is held subject to its general regulations, which are necessary to the common good and general welfare. Rights of property, like all other social and conventional rights, are subject to such reasonable limitations in their enjoyment as shall prevent them from being injurious, and to such reasonable restraints and regulations, established by law, as the legislature, under the governing and controlling power vested in them by the constitution, may think necessary and expedient. The state, under the police power, is possessed with plenary power to deal with all matters relating to the general health, morals, and safety of the people, so long as it does not contravene any positive inhibition of the organic law and providing that such power is not exercised in such a manner as to justify the interference of the courts to prevent positive wrong and oppression. but find them not applicable to the facts of this case. There is no reasonable relation between the setting aside of at least six (6) percent of the total area of an private cemeteries for charity burial grounds of deceased paupers and the promotion of health, morals, good order, safety, or the general welfare of the people. The ordinance is actually a taking without compensation of a certain area from a private cemetery to benefit paupers who are charges of the municipal corporation. Instead of building or maintaining a public cemetery for this purpose, the city passes the burden to private cemeteries. The expropriation without compensation of a portion of private cemeteries is not covered by Section 12(t) of Republic Act 537, the Revised Charter of Quezon City which empowers the city council to prohibit the burial of the dead within the center of population of the city and to provide for their burial in a proper place subject to the provisions of general law regulating burial grounds and cemeteries. When the Local Government Code, Batas Pambansa Blg. 337 provides in Section 177 (q) that a Sangguniang panlungsod may "provide for the burial of the dead in such place and in such manner as prescribed by law or ordinance" it simply authorizes the city to provide its own city owned land or to buy or expropriate private properties to construct public cemeteries. This has been the law and practise in the past. It continues to the present. Expropriation, however, requires payment of just compensation. The

questioned ordinance is different from laws and regulations requiring owners of subdivisions to set aside certain areas for streets, parks, playgrounds, and other public facilities from the land they sell to buyers of subdivision lots. The necessities of public safety, health, and convenience are very clear from said requirements which are intended to insure the development of communities with salubrious and wholesome environments. The beneficiaries of the regulation, in turn, are made to pay by the subdivision developer when individual lots are sold to home-owners. As a matter of fact, the petitioners rely solely on the general welfare clause or on implied powers of the municipal corporation, not on any express provision of law as statutory basis of their exercise of power. The clause has always received broad and liberal interpretation but we cannot stretch it to cover this particular taking. Moreover, the questioned ordinance was passed after Himlayang Pilipino, Inc. had incorporated. received necessary licenses and permits and commenced operating. The sequestration of six percent of the cemetery cannot even be considered as having been impliedly acknowledged by the private respondent when it accepted the permits to commence operations. WHEREFORE, the petition for review is hereby DISMISSED. The decision of the respondent court is affirmed. SO ORDERED. Teehankee (Chairman), Melencio-Herrera, Plana, Vasquez and Relova, JJ., concur.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-12172 August 29, 1958

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. JUAN F. FAJARDO, ET AL., defendants-appellants. Assistant Solicitor General Esmeraldo Umali and Higinio V. Catalan for appellee. Prila, Pardalis and Pejo for appellants. REYES, J. B. L., J.: Appeal from the decision of the Court of First Instance of Camarines Sur convicting defendants-appellants Juan F. Fajardo and Pedro Babilonia of a violation of Ordinance No. 7, Series of 1950, of the Municipality of Baao, Camarines Sur, for having constructed without a permit from the municipal mayor a building that destroys the view of the public plaza. It appears that on August 15, 1950, during the incumbency of defendant-appellant Juan F. Fajardo as mayor of the municipality of Baao, Camarines Sur, the municipal council passed the ordinance in question providing as follows: SECTION 1. Any person or persons who will construct or repair a building should, before constructing or repairing, obtain a written permit from the Municipal Mayor. SEC. 2. A fee of not less than P2.00 should be charged for each building permit and P1.00 for each repair permit issued. SEC. 3. PENALTY Any violation of the provisions of the above, this ordinance, shall make the violation liable to pay a fine of not less than P25 nor more than P50 or imprisonment of not less than 12 days nor more than 24 days or both, at the discretion of the court. If said building destroys the view of the Public Plaza or occupies any public property, it shall be removed at the expense of the owner of the building or house. SEC. 4. EFFECTIVITY This ordinance shall take effect on its approval. (Orig. Recs., P. 3)

Four years later, after the term of appellant Fajardo as mayor had expired, he and his son inlaw, appellant Babilonia, filed a written request with the incumbent municipal mayor for a permit to construct a building adjacent to their gasoline station on a parcel of land registered in Fajardo's name, located along the national highway and separated from the public plaza by a creek (Exh. D). On January 16, 1954, the request was denied, for the reason among others that the proposed building would destroy the view or beauty of the public plaza (Exh. E). On January 18, 1954, defendants reiterated their request for a building permit (Exh. 3), but again the request was turned down by the mayor. Whereupon, appellants proceeded with the construction of the building without a permit, because they needed a place of residence very badly, their former house having been destroyed by a typhoon and hitherto they had been living on leased property. On February 26, 1954, appellants were charged before and convicted by the justice of the peace court of Baao, Camarines Sur, for violation of the ordinance in question. Defendants appealed to the Court of First Instance, which affirmed the conviction, and sentenced appellants to pay a fine of P35 each and the costs, as well as to demolish the building in question because it destroys the view of the public plaza of Baao, in that "it hinders the view of travelers from the National Highway to the said public plaza." From this decision, the accused appealed to the Court of Appeals, but the latter forwarded the records to us because the appeal attacks the constitutionality of the ordinance in question. We find that the appealed conviction can not stand. A first objection to the validity of the ordinance in question is that under it the mayor has absolute discretion to issue or deny a permit. The ordinance fails to state any policy, or to set up any standard to guide or limit the mayor's action. No purpose to be attained by requiring the permit is expressed; no conditions for its grant or refusal are enumerated. It is not merely a case of deficient standards; standards are entirely lacking. The ordinance thus confers upon the mayor arbitrary and unrestricted power to grant or deny the issuance of building permits, and it is a settled rule that such an undefined and unlimited delegation of power to allow or prevent an activity, per se lawful, is invalid (People vs. Vera, 65 Phil., 56; Primicias vs. Fugoso, 80 Phil., 71; Schloss Poster Adv. Co. vs. Rock Hill, 2 SE (2d) 392) The ordinance in question in no way controls or guides the discretion vested thereby in the respondents. It prescribes no uniform rule upon which the special permission of the city is to be granted. Thus the city is clothed with the uncontrolled power to capriciously grant the privilege to some and deny it others; to refuse the application of one landowner or lessee and to grant that of another, when for all material purposes, the two applying for precisely the same privileges under the same circumstances. The danger of such an ordinance is that it makes possible arbitrary discriminations and abuses in its execution, depending upon no

conditions or qualifications whatever, other than the unregulated arbitrary will of the city authorities as the touchstone by which its validity is to be tested. Fundamental rights under our government do not depend for their existence upon such a slender and uncertain thread. Ordinances which thus invest a city council with a discretion which is purely arbitrary, and which may be exercised in the interest of a favored few, are unreasonable and invalid. The ordinance should have established a rule by which its impartial enforcement could be secured. All of the authorities cited above sustain this conclusion. As was said in City of Richmond vs. Dudley, 129 Ind. 112,28 N. E. 312, 314 13 L. R. A. 587, 28 Am. St. Rep. 180: "It seems from the foregoing authorities to be well established that municipal ordinances placing restrictions upon lawful conduct or the lawful use of property must, in order to be valid, specify the rules and conditions to be observed in such conduct or business; and must admit of the exercise of the privilege of all citizens alike who will comply with such rules and conditions; and must not admit of the exercise, or of an opportunity for the exercise, of any arbitrary discrimination by the municipal authorities between citizens who will so comply. (Schloss Poster Adv. Co., Inc. vs. City of Rock Hill, et al., 2 SE (2d), pp. 394-395). It is contended, on the other hand, that the mayor can refuse a permit solely in case that the proposed building "destroys the view of the public plaza or occupies any public property" (as stated in its section 3); and in fact, the refusal of the Mayor of Baao to issue a building permit to the appellant was predicated on the ground that the proposed building would "destroy the view of the public plaza" by preventing its being seen from the public highway. Even thus interpreted, the ordinance is unreasonable and oppressive, in that it operates to permanently deprive appellants of the right to use their own property; hence, it oversteps the bounds of police power, and amounts to a taking of appellants property without just compensation. We do not overlook that the modern tendency is to regard the beautification of neighborhoods as conducive to the comfort and happiness of residents. But while property may be regulated in the interest of the general welfare, and in its pursuit, the State may prohibit structures offensive to the sight (Churchill and Tait vs. Rafferty, 32 Phil. 580), the State may not, under the guise of police power, permanently divest owners of the beneficial use of their property and practically confiscate them solely to preserve or assure the aesthetic appearance of the community. As the case now stands, every structure that may be erected on appellants' land, regardless of its own beauty, stands condemned under the ordinance in question, because it would interfere with the view of the public plaza from the highway. The appellants would, in effect, be constrained to let their land remain idle and unused for the obvious purpose for which it is best suited, being urban in character. To legally achieve that result, the municipality must give appellants just compensation and an opportunity to be heard. An ordinance which permanently so restricts the use of property that it can not be used for any reasonable purpose goes, it is plain, beyond regulation and must be recognized as a

taking of the property. The only substantial difference, in such case, between restriction and actual taking, is that the restriction leaves the owner subject to the burden of payment of taxation, while outright confiscation would relieve him of that burden. (Arverne Bay Constr. Co. vs. Thatcher (N.Y.) 117 ALR. 1110, 1116). A regulation which substantially deprives an owner of all beneficial use of his property is confiscation and is a deprivation within the meaning of the 14th Amendment. (Sundlum vs. Zoning Bd., 145 Atl. 451; also Eaton vs. Sweeny, 177 NE 412; Taylor vs. Jacksonville, 133 So. 114). Zoning which admittedly limits property to a use which can not reasonably be made of it cannot be said to set aside such property to a use but constitutes the taking of such property without just compensation. Use of property is an element of ownership therein. Regardless of the opinion of zealots that property may properly, by zoning, be utterly destroyed without compensation, such principle finds no support in the genius of our government nor in the principles of justice as we known them. Such a doctrine shocks the sense of justice. If it be of public benefit that property remain open and unused, then certainly the public, and not the private individuals, should bear the cost of reasonable compensation for such property under the rules of law governing the condemnation of private property for public use. (Tews vs. Woolhiser (1933) 352 I11. 212, 185 N.E. 827) (Emphasis supplied.) The validity of the ordinance in question was justified by the court below under section 2243, par. (c), of the Revised Administrative Code, as amended. This section provides: SEC. 2243. Certain legislative powers of discretionary character. The municipal council shall have authority to exercise the following discretionary powers: xxx xxx xxx

(c) To establish fire limits in populous centers, prescribe the kinds of buildings that may be constructed or repaired within them, and issue permits for the creation or repair thereof, charging a fee which shall be determined by the municipal council and which shall not be less than two pesos for each building permit and one peso for each repair permit issued. The fees collected under the provisions of this subsection shall accrue to the municipal school fund. Under the provisions of the section above quoted, however, the power of the municipal council to require the issuance of building permits rests upon its first establishing fire limits in populous parts of the town and prescribing the kinds of buildings that may be constructed or repaired within them. As there is absolutely no showing in this case that the municipal council had either established fire limits within the municipality or set standards for the kind or kinds

of buildings to be constructed or repaired within them before it passed the ordinance in question, it is clear that said ordinance was not conceived and promulgated under the express authority of sec. 2243 (c) aforequoted. We rule that the regulation in question, Municipal Ordinance No. 7, Series of 1950, of the Municipality of Baao, Camarines Sur, was beyond the authority of said municipality to enact, and is therefore null and void. Hence, the conviction of herein appellants is reversed, and said accused are acquitted, with costs de oficio. So ordered. Paras, C. J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo, Concepcion, Endencia and Felix, JJ., concur.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

Plaintiff initiated negotiations for the acquisition of right of way easements over the aforementioned lots for the construction of its transmission lines but unsuccessful in this regard, said corporation was constrained to file eminent domain proceedings against the herein defendants on January 20, 1965. Upon filing of the corresponding complaint, plaintiff corporation deposited the amount of P973.00 with the Provincial Treasurer of Pampanga, tendered to cover the provisional value of the land of the defendant spouses Ricardo Malit and Misericordia Gutierrez. And by virtue of which, the plaintiff corporation was placed in possession of the property of the defendant spouses so it could immediately proceed with the construction of its Mexico-Limay 230 KV transmission line. In this connection, by the trial court's order of September 30, 1965, the defendant spouses were authorized to withdraw the fixed provisional value of their land in the sum of P973.00. The only controversy existing between the parties litigants is the reasonableness and adequacy of the disturbance or compensation fee of the expropriated properties. Meanwhile, for the purpose of determining the fair and just compensation due the defendants, the court appointed three commissioners, comprised of one representative of the plaintiff, one for the defendants and the other from the court, who then were empowered to receive evidence, conduct ocular inspection of the premises, and thereafter, prepare their appraisals as to the fair and just compensation to be paid to the owners of the lots. Hearings were consequently held before said commissioners and during their hearings, the case of defendant Heirs of Natalia Paule was amicably settled by virtue of a Right of Way Grant (Exh. C) executed by Guadalupe Sangalang for herself and in behalf of her co-heirs in favor of the plaintiff corporation. The case against Matias Cruz was earlier decided by the court, thereby leaving only the case against the defendant spouses Ricardo Malit and Misericordia Gutierrez still to be resolved. Accordingly, the commissioners submitted their individual reports. The commissioner for the plaintiff corporation recommended the following: . . . that plaintiff be granted right of way easement over the 760 square meters of the defendants Malit and Gutierrez land for plaintiff transmission line upon payment of an easement fee of P1.00 therefor. . . . (Annex M) The commissioner for the defendant spouses recommended the following: . . . that Mr. and Mrs. Ricardo Malit be paid as disturbance compensation the amount of P10.00 sq. meter or the total amount of P7,600.00' (Annex K) The Court's commissioner recommended the following:

G.R. No. L-60077 January 18, 1991 NATIONAL POWER CORPORATION, petitioner, vs. SPS. MISERICORDIA GUTIERREZ and RICARDO MALIT and THE HONORABLE COURT OF APPEALS, respondents. Pedro S. Dabu for private respondents.

BIDIN, J.:p This is a petition for review on certiorari filed by the National Power Corporation (NPC) seeking the reversal or modification of the March 9, 1986 Decision of the Court of Appeals in CA G.R. No. 54291-R entitled "National Power Corporation v. Sps. Misericordia Gutierrez and Ricardo Malit", affirming the December 4, 1972 Decision of the then Court of First Instance of Pampanga, Fifth Judicial District, Branch II, in Civil Case No. 2709, entitled National Power Corporation v. Matias Cruz, et al. The undisputed facts of the case, as found by the Court of Appeals, are as follows: Plaintiff National Power Corporation, a government owned and controlled entity, in accordance with Commonwealth Act No. 120, is invested with the power of eminent domain for the purpose of pursuing its objectives, which among others is the construction, operation, and maintenance of electric transmission lines for distribution throughout the Philippines. For the construction of its 230 KV Mexico-Limay transmission lines, plaintiff's lines have to pass the lands belonging to defendants Matias Cruz, Heirs of Natalia Paule and spouses Misericordia Gutierrez and Ricardo Malit covered by tax declarations Nos. 907, 4281 and 7582, respectively.

Hence, the instant petition. . . . the payment of Five (P 5.OO) Pesos per square meter of the area covered by the Right-ofway to be granted, . . .(Annex L) The plaintiff corporation urged the Court that the assessment as recommended by their commissioner be the one adopted. Defendant spouses, however, dissented and objected to the price recommended by both the representative of the court and of the plaintiff corporation. With these reports submitted by the three commissioners and on the evidence adduced by the defendants as well as the plaintiff for the purpose of proving the fair market value of the property sought to be expropriated, the lower court rendered a decision the dispositive portion of which reads as follows: WHEREFORE, responsive to the foregoing considerations, judgment is hereby rendered ordering plaintiff National Power Corporation to pay defendant spouses Ricardo Malit and Misericordia Gutierrez the sum of P10.00 per square meter as the fair and reasonable compensation for the right-of-way easement of the affected area, which is 760 squares, or a total sum of P7,600.00 and P800.00 as attorney's fees' (Record on Appeal, p. 83) Dissatisfied with the decision, the plaintiff corporation filed a motion for reconsideration which was favorably acted upon by the lower court, and in an order dated June 10, 1973, it amended its previous decision in the following tenor: On the basis of an ocular inspection made personally by the undersigned, this court finally classified the land of the spouses Ricardo Malit and Misericordia to be partly commercial and partly agricultural, for which reason the amount of P10.00 per sq. meter awarded in the decision of December 4,1972 is hereby reduced to P5.00 per square meter as the fair and reasonable market value of the 760 square meters belonging to the said spouses. There being no claim and evidence for attorney's fees, the amount of P800.00 awarded as attorney's fees, in the decision of December 4, 1972 is hereby reconsidered and set aside. (Annex S) Still not satisfied, an appeal was filed by petitioner (NPC) with the Court of Appeals but respondent Court of Appeals in its March 9, 1982, sustained the trial court, as follows: WHEREFORE, finding no reversible error committed by the court a quo, the appealed judgment is hereby affirmed with costs against the plaintiff-appellant. The First Division of this Court gave due course to the petition and required both parties to submit their respective memoranda (Resolution of January 12, 1983). It also noted in an internal resolution of August 17, 1983 that petitioner flied its memorandum while the respondents failed to file their memorandum within the period which expired on February 24,1983; hence, the case was considered submitted for decision. The sole issue raised by petitioner is WHETHER PETITIONER SHOULD BE MADE TO PAY SIMPLE EASEMENT FEE OR FULL COMPENSATION FOR THE LAND TRAVERSED BY ITS TRANSMISSION LINES. It is the contention of petitioner that the Court of Appeals committed gross error by adjudging the petitioner liable for the payment of the full market value of the land traversed by its transmission lines, and that it overlooks the undeniable fact that a simple right-of-way easement (for the passage of transmission lines) transmits no rights, except that of the easement. Full ownership is retained by the private respondents and they are not totally deprived of the use of the land. They can continue planting the same agricultural crops, except those that would result in contact with the wires. On this premise, petitioner submits that if full market value is required, then full transfer of ownership is only the logical equivalent. The petition is devoid of merit. The resolution of this case hinges on the determination of whether the acquisition of a mere right-of-way is an exercise of the power of eminent domain contemplated by law. The trial court's observation shared by the appellate court show that ". . . While it is true that plaintiff are (sic) only after a right-of-way easement, it nevertheless perpetually deprives defendants of their proprietary rights as manifested by the imposition by the plaintiff upon defendants that below said transmission lines no plant higher than three (3) meters is allowed. Furthermore, because of the high-tension current conveyed through said transmission lines, danger to life and limbs that may be caused beneath said wires cannot altogether be discounted, and to cap it all plaintiff only pays the fee to defendants once, while the latter shall continually pay the taxes due on said affected portion of their property." The foregoing facts considered, the acquisition of the right-of-way easement falls within the purview of the power of eminent domain. Such conclusion finds support in similar cases of easement of right-of-way where the Supreme Court sustained the award of just compensation for private property condemned for public use (See National Power

Corporation vs. Court of Appeals, 129 SCRA 665, 1984; Garcia vs. Court of Appeals, 102 SCRA 597,1981). The Supreme Court, in Republic of the Philippines vs. PLDT, * thus held that: Normally, of course, the power of eminent domain results in the taking or appropriation of title to, and possession of, the expropriated property; but no cogent reason appears why said power may not be availed of to impose only a burden upon the owner of condemned property, without loss of title and possession. It is unquestionable that real property may, through expropriation, be subjected to an easement of right-of-way. In the case at bar, the easement of right-of-way is definitely a taking under the power of eminent domain. Considering the nature and effect of the installation of the 230 KV MexicoLimay transmission lines, the limitation imposed by NPC against the use of the land for an indefinite period deprives private respondents of its ordinary use. For these reasons, the owner of the property expropriated is entitled to a just compensation, which should be neither more nor less, whenever it is possible to make the assessment, than the money equivalent of said property. Just compensation has always been understood to be the just and complete equivalent of the loss which the owner of the thing expropriated has to suffer by reason of the expropriation (Province of Tayabas vs. Perez, 66 Phil. 467 [1938]; Assoc. of Small Land Owners of the Phils., Inc. vs. Secretary of Agrarian Reform, G.R. No. 78742; Acuna vs. Arroyo, G.R. No. 79310; Pabrico vs. Juico, G.R. No. 79744; Manaay v. Juico, G.R. No. 79777,14 July 1989, 175 SCRA 343 [1989]). The price or value of the land and its character at the time it was taken by the Government are the criteria for determining just compensation (National Power Corp. v. Court of Appeals, 129 SCRA 665, [1984]). The above price refers to the market value of the land which may be the full market value thereof. According to private respondents, the market value of their lot is P50.00 per square meter because the said lot is adjacent to the National and super highways of Gapan, Nueva Ecija and Olongapo City. Private respondents recognize the inherent power of eminent domain being exercised by NPC when it finally consented to the expropriation of the said portion of their land, subject however to payment of just compensation. No matter how laudable NPC's purpose is, for which expropriation was sought, it is just and equitable that they be compensated the fair and full equivalent for the loss sustained, which is the measure of the indemnity, not whatever gain would accrue to the expropriating entity (EPZA v. Dulay, 149 SCRA 305 [1987]; Mun. of Daet v. Court of Appeals, 93 SCRA 503 (1979]). It appearing that the trial court did not act capriciously and arbitrarily in setting the price of P5.00 per square meter of the affected property, the said award is proper and not unreasonable.

On the issue of ownership being claimed by petitioner in the event that the price of P5.00 per square meter be sustained, it is well settled that an issue which has not been raised in the Court a quo cannot be raised for the first time on appeal as it would be offensive to the basic rules of fair play, justice and due process . . . (Filipino Merchants v. Court of Appeals, G.R. No. 85141, November 8, 1989, 179 SCRA 638; Commissioner of Internal Revenue v. Procter and Gamble Philippines Manufacturing Corporation, 160 SCRA 560 [1988]; Commissioner of Internal Revenue v. Wander Philippines, Inc., 160 SCRA 573 1988]). Petitioner only sought an easement of right-of-way, and as earlier discussed, the power of eminent domain may be exercised although title was not transferred to the expropriator. WHEREFORE, the assailed decision of the Court of Appeals is AFFIRMED. SO ORDERED. Fernan, C.J. and Feliciano, J., concur. Gutierrez, Jr., J., I concur but believe payment should be P10.00 a sq. meter at the very least.

Footnotes * 26 SCRA 620 (1969).

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 170945 September 26, 2006

The payment voucher for the residential portion of the lot valued at P6,000,000.00 (at P600.00 per square meter) was then processed.7 However, the NPC Board of Directors approved Board Resolution No. 97-2468 stating that it would pay only P230.00 per sq m for the residential portion and P89.00 per sq m for the agricultural portion, on the following premises: A) The proposed land valuations were evaluated and analyzed using the joint appraisal report on fair market value of lands by Cuervo Appraisal, Inc., Development Bank of the Philippines, and the Land Bank of the Philippines and the fair market values established by the respective Provincial Appraisal Committee (PAC) of Zambales, Pangasinan, Nueva Ecija, Pampanga and Bulacan as well as the City Appraisal Committee (CAC) of San Carlos and Cabanatuan. B) For lot acquisition, adopt PAC or CUERVO Appraisal, whichever is lower; if there is a problem of acceptance, refer same to the Board; C) For easement over agricultural lands, adopt median or average if there are several amounts involved; and D) Always oppose any proposals for conversion of agricultural lands.9 On January 15, 1998, the NPC filed a complaint10 for eminent domain in the Regional Trial Court (RTC) of Bulacan against Maria and other landowners. The case was docketed as Civil Case No. 28-M-98. According to NPC, in order to construct and maintain its Northwestern Luzon Transmission Line Project (San Manuel-San Jose 500 KV Transmission Line Project), it was necessary to acquire several lots in the Municipalities of San Jose del Monte and Norzagaray, Bulacan for an easement of right of way in the total area of more or less 35,288.5 sq m. The owners of the affected areas and their corresponding assessed values are:
OWNER/ CLAIMANT LOT/ BLK. NO. TAX DEC. TITLE NO. NO. TOTAL AREA AREA AFFECTED SQ. M. ASSESSED CLASSIFICATION IN VALUE OF OF LAND AREA AFFECTED P 18,555.75 P147,712.50 P 13,481.03 Agricultural Residential Agricultural

NATIONAL POWER CORPORATION, petitioner, vs. MARIA MENDOZA SAN PEDRO, represented by VICENTE, HERMINIA and FRANCISCO, all surnamed SAN PEDRO, respondents. DECISION CALLEJO, SR., J.: Before the Court is a Petition for Review on Certiorari under Rule 45 of the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 72860, and its Resolution2 denying the motion for reconsideration thereof. The Antecedents The National Power Corporation (NPC) is a government-owned-and-controlled corporation created to undertake the development of hydro-electric generation of power and the production of electricity from any and all sources; and particularly the construction, operation, and maintenance of power plants, auxiliary plants, dams, reservoirs, pipes, mains, transmission lines, power stations and substations, and other works for the purpose of developing hydraulic power from any river, lake, creek, spring and waterfalls in the Philippines and supplying such power to the inhabitants thereof.3 Under Republic Act No. 6395, as amended, the NPC is authorized to enter private property provided that the owners thereof shall be indemnified for any actual damage caused thereby.4 For the construction of its San Manuel-San Jose 500 KV Transmission Line and Tower No. SMJ-389, NPC negotiated with Maria Mendoza San Pedro, then represented by her son, Vicente, for an easement of right of way over her property, Lot No. 2076. The property, which was partly agricultural and partly residential land, was located in Barangay Partida, Norzagaray, Bulacan and covered by Tax Declaration No. 00386. On June 19, 1997, Maria executed a Right of Way Grant5 in favor of NPC over the lot for P1,277,886.90. The NPC paid her P524,635.50 for the damaged improvements thereon.6

Ma. Mendoza San Pedro 2076 rep. by Vicente San Pedro Lorenza Manuel / Sps. 1250 Raul & Edna Lagula Sps. Segundo & Maxima 1251 Manuel / Sps. Raul & Edna Lagula

00386 96-2101700084 96-2101700083 P-3965 (M) T-28392P-(M)

122,821.32 17,195 10,000 5,700 6,565 51,666.5

6,362

6,362

P 16,210.00

Agricultural

Maria San Pedro filed her Answer11 on February 2, 1998, alleging that there had already been an agreement as to the just compensation for her property. She prayed, among others, that she should be paid the consideration stated in the Right of Way Grant, P600.00 per sq m for the residential portion of the land as agreed upon by her and NPC, and to base the values from Resolution No. 97-00512 of the Provincial Appraisal Committee. Meanwhile, Maria San Pedro filed an Amended Answer13 in which she alleged that NPC had resorted to deceit, trickery and machination to induce her to grant a right of way by assuring her that it would also pay for the residential portion of the property at P600.00 per sq m. On August 10, 1998, the RTC issued a writ of possession against Maria San Pedro.14 When she passed away on August 22, 1998,15 she was substituted by her heirs, Vicente, Herminia and Francisco, all surnamed San Pedro, on September 11, 1998.16 During the pre-trial on January 25, 1999, the parties agreed that the only issue for resolution was the just compensation for the property. The court appointed a committee of commissioners to ascertain and recommend to the trial court the just compensation for the properties, composed of Atty. Josephine L. Sineneng-Baltazar, the Clerk of Court, as chairperson; and Engr. Oscar C. Cruz, Provincial Assessor of Bulacan, and Atty. Henry P. Alog of the Litigation Department of NPC to serve as members-commissioners thereof.17 On July 12, 1999, Atty. Baltazar and Engr. Cruz submitted their report,18 recommending as payment for just compensation P800.00 per sq m for the residential lot and P700.00 per sq m for the agricultural lot.19 The majority report reads: I. Description of the Property A parcel of land with a total area of 132,821.32 square meters located at Partida, Norzagaray, Bulacan and declared for taxation purposes in the name of Maria Mendoza San Pedro is sought to be expropriated by plaintiff National Power Corporation for the construction and maintenance of its Northwestern Luzon Transmission Line Project (San Miguel-San Jose 500 KV Transmission Line Project), to wit:
Lot No. Tax Dec. No. Total Area Area Affected in sq. m. 17,195 6,565 Classification

The residential lot is not affected by NPC's project in its entirety. Around 2,000 sq. m. remains on each side of the residential lot. Likewise, only a portion or 17,195 sq. m. of (sic) more than 12 hectares agricultural land, (sic) is affected by the project. A sketch plan of the affected area is attached hereto as Annex "B." II. Claims of the Parties Defendants allege that they had signed a Right of Way Grant Contract dated June 19, 1997 which plaintiff itself prepared and was notarized by Atty. Marcelo Aure; that, among others, defendants and plaintiff agreed that the price of the residential land is P600.00 per square meter, based on the Provincial Appraisals Committee (PAC) Resolution No. 97-005; that, on December 6, 1997, plaintiff informed them that the NPC Board passed Resolution No. 97-246 dated October 27, 1997, pursuant to which the board approved price for acquisition of subject property is P230.00 per sq. m. for residential and P89.00 per sq. m. for agricultural lot. Defendants did not accept the new offer. On the other hand, plaintiff alleges that the price for residential land is P230.00 per sq. m. as approved by NPC's Board and not P600.00 per sq. m. being asked by defendants. It further recommended the appointment of commissioners to report to the Court the just compensation to be paid to the defendants. III. Observations The Commissioners went to the site on May 11, 1999 and were able to observe that: (1) The residential lot of Vicente San Pedro is not affected by NPC's project in its entirety. Around 2,000 sq. m. remains on each side of the residential lot. There are no existing structures or improvements on said residential lot, which is situated along the all-weather (gravel) road. Defendants are afraid to utilize the said remaining portions for residential purposes because of the reported constant loud buzzing and exploding sounds emanating from the towers and transmission lines, especially on rainy days. The two children of Vicente San Pedro had wanted to construct their residential houses on said land, but decided against it now because of fear that the large transmission lines looming not far above their land and the huge tower in front of their lot will affect their safety and health. Moreover, there is a slim chance now that somebody will still buy the remaining portions on each side of the residential lot affected by the project, to the damage of the defendant, both as to future actual use of the land and financial gains to be derived therefrom.

2076

01337

122,821.32 10,000.00

Agricultural Residential

The pertinent tax declaration is hereto attached as Annex "A."

(2) Likewise only a portion, or 17,195 sq. m. of the 122,821.32 square meter agricultural land, is affected by the transmission line project. It was not planted with palay at the time of the inspection. According to the defendants, their farm helpers are already afraid to work on the land because of the buzzing and cracking sounds coming from the tower and transmission lines. (3) The site is located in a highly developed area about 1.5 kms. away from Norzagaray Municipal Building. The vast land owned by Jesus Is Lord congregation is on the same side of the road as subject property. Opposite the road is an ongoing resort project, the Falcon Crest Resort about kilometers away, and the proposed Catholic Retreat House about 200 meters away. Attached as Annex "C" is the Location Plan of said lot. IV. Available Data (1) Based on the Zoning Certificate issued by the Municipal Mayor, subject parcel of land has been classified as residential pursuant to the proposed Comprehensive Land Use Plan of local government unit. Copy of said Zoning Certificate is hereto attached as Annex "D." (2) Based on the BIR Zonal Valuation attached as Annex "E," subject land has a zonal value of P60.00/sq. m. for residential and P30.00/sq. m. for agricultural lot. However, it is common knowledge that zonal valuation provided by BIR cannot be made as basis for the purpose of determining just compensation in eminent domain cases because it is only for the purpose of computing internal revenue taxes. (3) Opinion values gathered by the Provincial Assessor on the price of the property are as follows: Residential - P1,075.00 / sq. m. Agricultural - P 643.00 / sq. m. The summary of Opinion Values is hereto attached as Annex "F." (4) There are no available sales data on properties within the vicinity of subject land for the years 1996 and 1997, approximate time of the taking. IV. Recommendation The Commissioners, after considering the location of the subject property in a highly developed area and accessibility thru the all-weather road (gravel); its potential for full

development as shown by the existence of building projects in the vicinity; and the long-term effect the expropriation will have on the lives, comfort and financial condition of herein defendants, respectfully recommend the following amounts as payment for the affected portions of subject property. P800. / sq. m. - for the residential lot P700. / sq. m. - for the agricultural lot20 However, Atty. Alog, who represented NPC, dissented from the report, claiming that it was merely based on "opinion values," and the self-serving declarations and opinions of defendants. He maintained that, in determining just compensation, the trial court should instead consider the appraisal report of Cuervo Appraisers, Inc., upon which Resolution No. 97-246 of NPC was based. He likewise argued that the property involved was actually and principally used as agricultural, though declared as agricultural/residential lots; hence, only the easement fee of right of way should be paid, as the principal purpose for which the lot was devoted would not be impaired by the construction of transmission lines. His report reads: I. FINDINGS The ocular inspection and research conducted by the undersigned Commissioner on May 12, 1999 disclosed the following pertinent information and data: 1) The subject lots can be reached through a 1.4 km two lane concrete road, from the Sta. Maria-Norzagaray National Highway intersection at Poblacion, Norzagaray, Bulacan (refer to Annex "B"); 2) The low lying northern portion of the property is presently used as riceland and the rest planted with assorted trees (refer to Annex "C," pictures); 3) The property is a portion of hill in the area with sides sloping downward on the northern eastern boundaries (refer to Annex "C"); 4) There is no visible structural development in the area except for: a) a two lane concrete road adjacent to the property at the northwest boundaries going to San Jose Del Monte, Bulacan; b) newly constructed steel towers of NPC;

c) barbed wire fence with wooden post covering the northwestern portion of the lot adjacent to the concrete road to San Jose Del Monte, Bulacan and a bamboo fence that covers the southern portion (refer to Annex "C"); and d) residential house approximately 200 meters from affected area. 5) During the ocular inspection, it is noted that they still use the affected area for agricultural purposes; 6) The Falcon Crest Resort is approximately 1 km. from the affected property; 7) Price data gathered are as follows (in square meter unless specified):

Atty. Alog also recommended that only P2,640,274.70 be paid to defendants by way of just compensation, broken down as follows:

Eight Hundred Two Thousand Three - Payment for damaged Hundred Sixty Eight Pesos and 50/100 crops/plants/trees (P802,368.50) One Hundred Sixty Two Thousand Eight - Payment for structures Hundred Sixty Five Pesos and 65/100 (P162,865.65) One Million Five Hundred Nine Thousand - Payment for Nine Hundred Fifty Pesos (P1,509,950.00) portion of lot residential

Agri-Orchard (Interior)

Riceland unirrigated (Interior)

Subd. along Res'l Sta. Maria (Garay)

Agr'l

One Hundred Fifty One Thousand Six - Easement fee for Hundred Ninety One Pesos and 60/100 agricultural portion of lot (P151,691.60) Thirteen Thousand Three Hundred Ninety- - Tower Occupancy Fee Eight and 95/100 (P13,398.95)22
On October 28, 1999, the RTC rendered judgment,23 declaring as well-grounded, fair and reasonable the compensation for the property as recommended by Atty. Baltazar and Engr. Cruz. The fallo of the RTC decision reads: WHEREFORE, premises considered, this Court hereby orders the above-described 5,700square meter lot from Lot No. 1250 of defendants Spouse (sic) Raul (sic) and the aforedescribed 6,362-square meter lot from Lot No. 1251 of same defendants, subject to the covering Compromise Agreements; and the above-described 17,195-square meter lot from Lot No. 2076 of defendant Maria Mendoza San Pedro, CONDEMNED and/or EXPROPRIATED for the construction and maintenance of plaintiff's Northwestern Luzon Transmission Line Project (San Manuel - San Jose 500 KV Transmission Line Project), a project for public purpose. Accordingly, this Court hereby fixes the just compensation for the expropriated lots, as follows:

Provincial Appraisal Committee Bulacan (Res. No. 97005) (Annex "D") NP Board Resolution No. P89.00 97-246 (Annex "E") Cuervo Appraisers, Inc. P890,000/ha. (Annex "F") P80.00 P230.00

P600.00 P400.00

P800,000/ha.

P230.00

21

OWNERS Sps. Raul Lagula Sps. Raul Lagula & &

LOT NO. Edna 1250 Edna 1251 San 2076

AREA EXPROPRIATED 5,700 sq. m. 6,362 sq. m. 17,195 sq. m.

PRICE/ S.Q. JUST METER COMPENSATION P499.00 499.00 800.00 P2,844,300.00 2,174,638 13,756,000

only an easement fee, the trial court ruled that Lot No. 2076 should be treated the same way as NPC treated the properties of the spouses Lagula. It was pointed out that in the compromise agreements executed by plaintiff and spouses Lagula, plaintiff paid P499.00 per sq m on the basis of a straight sale of their agricultural land, and not merely an easement fee for a right of way thereon. The fallo of the amended decision reads: WHEREFORE, in the light of the foregoing, the Court hereby: 1. Grants the motion of defendant Maria Mendoza San Pedro and thus orders that the 1st paragraph of page 8 of the Decision be amended to read as follows: "Plaintiff is expropriating portions of defendants' above-described properties to give way to the construction and maintenance of its Northern Luzon Transmission Line Project (San Manuel - San Jose 500 KV Transmission Line Project), a project for public purpose. The area of the lots sought to be expropriated from the lot of defendant Maria Mendoza San Pedro, represented by her heirs, are 17,195 square meters more or less of agricultural land and 6,565 square meters of residential land, while the area of the land sought to be expropriated from the two lots of defendants Sps. Raul and Edna Lagula are only 5,166.50 square meters, more or less, from Lot No. 1250 and 6,363 (sic) square meters, more or less, from Lot No. 1251. Furthermore, the second paragraph of the dispositive portion of the Decision should be amended as follows: "Accordingly, this Court hereby fixes the just compensation for the expropriated lots, as follows:

Ma. Mendoza Pedro her heirs

Hence, plaintiff is ordered to pay, as soon as possible, herein defendants the just compensation enumerated above for their respective lots aforementioned. For this purpose, plaintiff may withdraw the sum of money deposited with the Land Bank of the Philippines or any other banks pursuant to Section 2 of Rule 67 of the Rules of Court, as amended by P.D. No. 42. FURTHER, defendants are ordered to clear and vacate the lots in question within 30 days from receipt hereof and to surrender possession thereof to the plaintiff. The fees for the 3 Commissioners of the Appraisal Committee in the sum of P6,000.00 for the Chairman and P5,000.00 each for the 2 members, shall be paid by the plaintiff. SO ORDERED.24 On November 19, 1999, the heirs of Maria San Pedro filed a Manifestation and Motion25 for the partial reconsideration of the decision on the ground that the court failed to include in its decision the just compensation for the 6,565-square-meter residential portion of their land, with prayer for attorney's fees equivalent to 10% of the total amount to be awarded to them. On December 3, 1999, NPC filed its motion for reconsideration,26 insisting that the just compensation awarded to defendants was without legal and factual basis, and that it should only be made to pay an easement fee. On June 6, 2001, the trial court issued an Order granting the motion of the heirs and denied that of NPC.27 The RTC declared that the just compensation for the residential portion of the property should be the same as that of the spouses Lagula's property, which was P499.00 per sq m. On the claim of NPC in its motion for reconsideration that it should be made to pay

OWNERS

LOT NO.

AREA EXPROPRIATED

PRICE/ S.Q. METER P499.00 499.00 499.00 800.00

JUST COMPENSATION

Sps. Raul & Edna Lagula 1250 Sps. Raul & Edna Lagula 1251 Ma. Mendoza San Pedro her heirs 2076 Ma. Mendoza San Pedro her heirs

5,700 sq. m. 6,362 sq. m. 17,195 sq. m. 6,565 sq. m.

P2,844,300.00 3,174,638.00 8,580,305.00 5,252,000.00

The petition is denied for lack of merit. 2. Denies the plaintiff's Motion for Reconsideration for lack of merit. SO ORDERED.28 NPC appealed the amended decision to the CA, asserting that: THE LOWER COURT GRAVELY ERRED IN FIXING P800.00 AND P499.00 PER SQUARE METER AS JUST COMPENSATION FOR APPELLEE'S 6,565 SQUARE METERS OF RESIDENTIAL LAND AND 17,195 SQUARE METERS OF AGRICULTURAL LAND, RESPECTIVELY.29 On September 28, 2005, the CA rendered judgment dismissing the appeal. The CA ruled that the July 12, 1999 majority report was based on uncontroverted facts, supported by documentary evidence and confirmed by the commissioners' ocular inspection of the subject properties. To arrive at a reasonable estimate of just compensation, the commissioners considered factors such as the location, the most profitable likely use of the remaining area, size, shape, accessibility, as well as listings of other properties within the vicinity. Citing National Power Corporation v. Manubay AgroIndustrial Development Corporation,30 the CA found as unpersuasive NPC's argument that it should only pay an easement fee. It ruled that considering the nature and effect of the installation of power lines, the limitations on the use of land for an indefinite period deprives the owner of its normal use. The fallo of the CA decision reads: WHEREFORE, the Appeal is hereby DENIED. The assailed Decision and Order dated 28 October 1999 and 6 June 2001, respectively, are AFFIRMED. SO ORDERED.31 NPC filed a Motion for Reconsideration,32 which the CA denied in its Resolution33 dated December 22, 2005; hence, the instant petition based on the following ground: THE COURT OF APPEALS COMMITTED A GRAVE ERROR WHEN IT UPHELD THE DECISION OF THE TRIAL COURT FIXING THE JUST COMPENSATION FOR RESPONDENT'S 6,565 SQ. METERS OF RESIDENTIAL LAND AND 17,195 SQUARE METERS OF AGRICULTURAL LAND, AT PHP800.00 AND PHP499.00 PER SQUARE METER RESPECTIVELY, INSTEAD OF THE EASEMENT FEE AS PRAYED FOR IN THE COMPLAINT AND PROVIDED UNDER REPUBLIC ACT NO. 6395, AS AMENDED, OTHERWISE KNOWN AS THE REVISED NPC CHARTER.34 The Ruling of the Court The CA found no reversible error in the trial court's finding of just compensation. Inasmuch as the determination of just compensation in eminent domain cases is a judicial function and factual findings of the CA are conclusive on the parties and reviewable only when the case falls within the recognized exceptions, which does not obtain in this case, we see no reason to disturb the factual findings as to the valuation of the subject property.35 Petitioner avers that the rulings of the trial court affirmed by the appellate court, based on the majority report on the subject property's just compensation, is not supported by documentary evidence. It avers that in the majority report, Commissioners Atty. Baltazar and Engr. Cruz, even admit that there were no available sales data on properties within the vicinity of the subject property for the years 1996 and 1997. Moreover, the Bureau of Internal Revenue (BIR) valued the property at P60.00 per sq m for residential, and P30.00 per sq m for agricultural lot.36 Petitioner further argues that respondents have not shown that the condition of the adjoining properties or improvements thereon had increased their land's economic value.37 The valuation, thus, of the trial court, as affirmed by the CA, was exorbitant and devoid of factual and legal basis.38 We are not persuaded. The constitutional limitation of "just compensation" is considered to be the sum equivalent to the market value of the property, broadly described to be the price fixed by the seller in open market in the usual and ordinary course of legal action and competition or the fair value of the property as between one who receives, and one who desires to sell it, fixed at the time of the actual taking by the government.39 To determine the just compensation to be paid to the landowner, the nature and character of the land at the time of its taking is the principal criterion.40 In the July 12, 1999 Majority Report, the commissioners found that the property was located in a highly-developed area and was accessible through an all-weather road. The fact that the property had potential for full development as shown by the existence of building projects in the vicinity, and the long-term effect of the expropriation on the lives, comfort and financial condition of petitioners was likewise considered. The report also took into account the ocular inspection conducted by the commissioners on May 11, 1999. The tax declaration of the subject property,41 the NPC sketch plan,42 the location plan,43 the zoning certificates,44 the zonal valuation of the BIR,45 and the opinion values46 were also considered.

The lone fact that there was no available sales data on properties within the vicinity of respondent's land for 1996 and 1997 and that the BIR zonal value was P60.00 per sq m for residential and P30.00 per sq m for agricultural did not proscribe the commissioners and the trial court from making their own reasonable estimates of just compensation, after considering all the facts as to the condition of the property and its surroundings, its improvements and capabilities. As had been amply explained by this Court in Export Processing Zone Authority v. Dulay:47 Various factors can come into play in the valuation of specific properties singled out for expropriation. The values given by provincial assessors are usually uniform for very wide areas covering several barrios or even an entire town with the exception of the poblacion. Individual differences are never taken into account. The value of land is based on such generalities as its possible cultivation for rice, corn, coconuts, or other crops. Very often land described as "cogonal" has been cultivated for generations. Buildings are described in terms of only two or three classes of building materials and estimates of areas are more often inaccurate than correct. Tax values can serve as guides but cannot be absolute substitutes for just compensation. To say that the owners are estopped to question the valuations made by assessors since they had the opportunity to protest is illusory. The overwhelming mass of land owners accept unquestioningly what is found in the tax declarations prepared by local assessors or municipal clerks for them. They do not even look at, much less analyze, the statements. The idea of expropriation simply never occurs until a demand is made or a case filed by an agency authorized to do so. It is violative of due process to deny to the owner the opportunity to prove that the valuation in the tax documents is unfair or wrong. And it is repulsive to basic concepts of justice and fairness to allow the haphazard work of a minor bureaucrat or clerk to absolutely prevail over the judgment of a court promulgated only after expert commissioners have actually viewed the property, after evidence and arguments pro and con have been presented, and after all factors and considerations essential to a fair and just determination have been judiciously evaluated.48 Conformably with the rulings of this Court, the majority report took into account the most profitable likely use of the remaining area; and the size, shape, accessibility, as well as listings of other properties within the vicinity.49 As gleaned from the location plan50 of the property in the case at bar, Lot No. 2076 is connected via a cemented road to the National Road, 1.5 kilometers away. The same is likewise strategically located at a junction of the barrio road leading to the Provincial Road,

the National Road and to Sapang Palay. The lot is also on the same side of the road as the land owned by the Jesus Is Lord Congregation and the Partida Elementary School. The ocular inspection of the commissioners also reveals that opposite the road, about half a km away, is an ongoing resort project, the Falcon Crest Resort, and, about 200 meters away, the proposed Catholic Retreat House. While there are no existing structures or improvements on the residential portion of the lot, the same is situated along the all-weather (gravel) road and is fronting the property. On the agricultural portion thereof, the same appears to have been cultivated prior to the taking, as petitioner offered to compensate respondent's heirs' damages to the crops, plants and trees. The trial court fixed the just compensation for the property as follows: (1) P499.00 per sq m on the 17,195 sq m agricultural portion of the subject land; and (2) P800.00 per sq m on the 6,565 sq m residential portion of the lot. Noticeably, the trial court did not blindly accept the recommendation of majority of the commissioners of P800.00 per sq m for the residential lot and P700.00 per sq m for the agricultural lot. Indeed, the trial court took into account the evidence of the parties, in tandem with the findings and recommendation of the majority of the commissioners. Considering that such valuation of the trial court as affirmed by the CA is reasonable as it is and supported by the evidence on record, we find no compelling reason to disturb the same.51 The Court is not persuaded by petitioner's argument that respondents had not shown that the condition of the adjoining properties, i.e., improvements, had increased their land's economic value. It bears stressing that there is absence of any available sales data on properties within the vicinity of respondent's land for the years 1996 and 1997, the time of the taking. The property of respondent was the first to be sold. It is thus an exercise in futility for respondents to require evidence of sales of properties in the vicinity when no such transactions took place. Petitioner's contention that the trial court should have based the fixing of just compensation on the appraisal report of Cuervo Appraisers, Inc. (where petitioner based its Resolution No. 97-246) is likewise untenable. Petitioner failed to present the so-called report of the Cuervo Appraisers, Inc. as evidence. We note that annexed to NPC Resolution No. 97-246 is a data of the NPC Board Appraisal on the Fair Market Value of residential lands along the concrete road in Sapang Palay, San Jose Del Monte, valued at P499.00 per sq m, which, however, is not signed nor authenticated. If, at all, the values indicated therein are self-serving to petitioner. Parenthetically, petitioner has not explained why it agreed on paying just compensation of P499.00 per sq m on the agricultural lands of the spouses Lagula, when the purported Cuervo Appraisal Report indicates that the fair market value of unirrigated riceland along the road is only P110.00 per sq m, and for an unirrigated interior only P85.00 per sq m.52 Had petitioner

really believed Cuervo's appraisal, then, it should have likewise insisted on the values therein when it dealt with the spouses Lagulas. Notably, the lower court's valuations of respondent's property P499.00 per sq m on the agricultural portion and P800.00 per sq m on the residential portion of the lot are near the estimates made by the following: (1) the Provincial Appraisal Committee, in its Resolution No. 97-005, which are P400.00 for agricultural and P600.00 for residential;53 (2) the recommendation in the majority report of the commissioners (P700.00 for agricultural and P800.00 for residential); and (3) the opinion values, which are P643.00 for agricultural and P1,075.00 for residential. On the other hand, the valuations made by Atty. Alog, P89.00 for agricultural and P230.00 for residential, are unconscionably low, understandably so because he works for petitioner. On the question as to whether petitioner shall pay only an easement fee to respondent's heirs, the following pronouncement in National Power Corporation v. Aguirre-Paderanga54 is enlightening: Indeed, expropriation is not limited to the acquisition of real property with a corresponding transfer of title or possession. The right-of-way easement resulting in a restriction or limitation on property rights over the land traversed by transmission lines, as in the present case, also falls within the ambit of the term "expropriation." As explained in National Power Corporation v. Gutierrez, viz: The trial court's observation shared by the appellate court show that "x x x While it is true that plaintiff [is] only after a right-of-way easement, it nevertheless perpetually deprives defendants of their proprietary rights as manifested by the imposition by the plaintiff upon defendants that below said transmission lines no plant higher than three (3) meters is allowed. Furthermore, because of the high-tension current conveyed through said transmission lines, danger to life and limbs that may be caused beneath said wires cannot altogether be discounted, and to cap it all, plaintiff only pays the fee to defendants once, while the latter shall continually pay the taxes due on said affected portion of their property." The foregoing facts considered, the acquisition of the right-of-way easement falls within the purview of the power of eminent domain. Such conclusion finds support in similar cases of easement of right-of-way where the Supreme Court sustained the award of just compensation for private property condemned for public use (See National Power Corporation v. Court of Appeals, 129 SCRA 665, 1984; Garcia v. Court of Appeals, 102 SCRA 597, 1981). The Supreme Court, in Republic of the Philippines v. PLDT, thus held that:

"Normally, of course, the power of eminent domain results in the taking or appropriation of title to, and possession of, the expropriated property; but no cogent reason appears why said power may not be availed of to impose only a burden upon the owner of condemned property, without loss of title and possession. It is unquestionable that real property may, through expropriation, be subjected to an easement of right-of-way." In the case at bar, the easement of right-of-way is definitely a taking under the power of eminent domain. Considering the nature and effect of the installation of the 230 KV MexicoLimay transmission lines, the limitation imposed by NPC against the use of the land for an indefinite period deprives private respondents of its ordinary use.55 Similarly, in this case, the commissioners' observation on the reported constant loud buzzing and exploding sounds emanating from the towers and transmission lines, especially on rainy days; the constant fear on the part of the landowners that the large transmission lines looming not far above their land and the huge tower in front of their lot will affect their safety and health; and the slim chance that no one would be interested to buy the remaining portions on each side of the residential lot affected by the project, to the damage of the landowners, both as to future actual use of the land and financial gains to be derived therefrom, makes the instant case fall within the ambit of expropriation. WHEREFORE, premises considered, the appeal is hereby DENIED for lack of merit. The ruling of the Court of Appeals in CA-G.R. CV No. 72860 is AFFIRMED. SO ORDERED. Panganiban, C.J., Chairperson, Ynares-Santiago, Austria-Martinez, Chico-Nazario, J.J., concur.

Footnotes 1 Penned by Associate Justice Japar B. Dimaampao, with Associate Justices Martin S. Villarama, Jr. and Edgardo F. Sundiam, concurring; CA rollo, pp. 162-177. 2 Id. at 195-196. 3 Records, p. 2. 4 Id. 5 Id. at 16.

6 Id. at 17-18. 7 Id. at 21. 8 Id. at 29-30. 9 Id. at 133. 10 Id. at 1-8. 11 Id. at 12-15. 12 Id. at 19-20 and 258. 13 Id. at 65-70. 14 Id. at 93-94. 15 Id. at 115. 16 Id. at 116.

26 Id. at 215-218. 27 CA rollo, pp. 76-78. 28 Id. at 77-78. 29 Id. at 55. 30 G.R. No. 150936, August 18, 2004, 437 SCRA 60. 31 CA rollo, p. 176. 32 Id. at 178-189. 33 Id. at 195-196. 34 Id. at 22. 35 National Power Corporation v. Court of Appeals, G.R. No. 113194, March 11, 1996, 254 SCRA 577, 592. 36 Rollo, pp. 23-24.

17 Id. at 161. 37 Id. at 25. 18 Id. at 240-242. 38 Id. at 26. 19 Id. at 242. 39 Republic of the Philippines v. Court of Appeals, 433 Phil. 106, 122 (2002). 20 Id. at 240-242. 40 Napocor v. Sps. Igmedio, 452 Phil. 649, 664 (2003). 21 Id. at 245-246. 41 Id. at 236. 22 Id. at 250. 42 Id. at 238. 23 Id. at 202-211. 43 Id. at 239. 24 Id. at 210-211. 44 Id. at 226-227. 25 Id. at 212.

45 Id. at 224. 46 Id. at 228-234. 47 No. L-59603, April 29, 1987, 149 SCRA 305. 48 Id. at 315-316. 49 National Power Corporation v. Manubay Agro-Industrial Development Corporation, G.R. No. 150936, August 18, 2004, 437 SCRA 60, 69. 50 Records, p. 239. 51 Bank of the Philippine Islands v. Court of Appeals, G.R. No. 160890, November 10, 2004, 441 SCRA 637, 644. 52 Records, p. 34. 53 Id. at 20 and 258. 54 G.R. No. 155065, July 28, 2005, 464 SCRA 481. 55 Id. at 493-494.

U.S. Supreme Court

(a) The common law doctrine that ownership of land extends to the periphery of the universe has no place in the modern world. Pp. 328 U. S. 260-261. (b) The air above the minimum safe altitude of flight prescribed by the Civil Aeronautics Authority is a public highway and part of the public domain, as declared by Congress in the Air Commerce Act of 1926, as amended by the Civil Aeronautics Act of 1938. Pp. 328 U. S. 260-261, 328 U. S. 266. (c) Flights below that altitude are not within the navigable air space which Congress placed within the public domain, even though they are within the path of glide approved by the Civil Aeronautics Authority. Pp. 328 U. S. 263-264. chanroblesvirtualawlibrary Page 328 U. S. 257

United States v. Causby, 328 U.S. 256 (1946)


No. 630 Argued May 1, 1946 Decided May 27, 1946 328 U.S. 256

CERTIORARI TO THE COURT OF CLAIMS Syllabus Respondents owned a dwelling and a chicken farm near a municipal airport. The safe path of glide to one of the runways of the airport passed directly over respondents' property at 83 feet, which was 67 feet above the house, 63 feet above the barn and 18 feet above the highest tree. It was used 4% of the time in taking off and 7% of the time in landing. The Government leased the use of the airport for a term of one month commencing June 1, 1942, with a provision for renewals until June 30, 1967, or six months after the end of the national emergency, whichever was earlier. Various military aircraft of the United States used the airport. They frequently came so close to respondents' property that they barely missed the tops of trees, the noise was startling, and the glare from their landing lights lighted the place up brightly at night. This destroyed the use of the property as a chicken farm and caused loss of sleep, nervousness, and fright on the part of respondents. They sued in the Court of Claims to recover for an alleged taking of their property and for damages to their poultry business. The Court of Claims found that the Government had taken an easement over respondents' property, and that the value of the property destroyed and the easement taken was $2,000; but it made no finding as to the precise nature or duration of the easement. Held: 1. A servitude has been imposed upon the land for which respondents are entitled to compensation under the Fifth Amendment. Pp. 328 U. S. 260-267.

(d) Flights of aircraft over private land which are so low and frequent as to be a direct and immediate interference with the enjoyment and use of the land are as much an appropriation of the use of the land as a more conventional entry upon it. Pp. 328 U. S. 261-262, 328 U. S. 264-267. 2. Since there was a taking of private property for public use, the claim was "founded upon the Constitution," within the meaning of 141(1) of the Judicial Code, and the Court of Claims had jurisdiction to hear and determine it. P. 328 U. S. 267. 3. Since the court's findings of fact contain no precise description of the nature or duration of the easement taken, the judgment is reversed, and the cause is remanded to the Court of Claims so that it may make the necessary findings. Pp. 328 U. S. 267-268. (a) An accurate description of the easement taken is essential, since that interest vests in the United States. P. 328 U. S. 267. (b) Findings of fact on every "material issue" are a statutory requirement, and a deficiency in the findings cannot be rectified by statements in the opinion. Pp. 328 U. S. 267-268. (c) A conjecture in lieu of a conclusion from evidence would not be a proper foundation for liability of the United States. P. 328 U. S. 268. 104 Ct.Cls. 342, 60 F.Supp. 751, reversed and remanded.

The Court of Claims granted respondents a judgment for the value of property destroyed and damage to their property resulting from the taking of an easement over their property by low-flying military aircraft of the United States, but failed to include in its findings of fact a specific description of the nature or duration of the easement. 104 Ct.Cls. 342, 60 F.Supp. 751. This Court granted certiorari. 327 U.S. 775. Reversed and remanded, p. 328 U. S. 268. chanroblesvirtualawlibrary Page 328 U. S. 258

MR. JUSTICE DOUGLAS delivered the opinion of the Court. This is a case of first impression. The problem presented is whether respondents' property was taken within the meaning of the Fifth Amendment by frequent and regular flights of army and navy aircraft over respondents' land at low altitudes. The Court of Claims held that there was a taking, and entered judgment for respondent, one judge dissenting. 60 F.Supp. 751. The case is here on a petition for a writ of certiorari which we granted because of the importance of the question presented. Respondents own 2.8 acres near an airport outside of Greensboro, North Carolina. It has on it a dwelling house, and also various outbuildings which were mainly used for raising chickens. The end of the airport's northwest-southeast runway is 2,220 feet from respondents' barn and 2,275 feet from their house. The path of glide to this runway passes directly over the property -- which is 100 feet wide and 1,200 feet long. The 30 to 1 safe glide angle [Footnote 1] approved by the Civil Aeronautics Authority [Footnote 2] passes over this property at 83 feet, which is 67 feet above the house, 63 feet above the barn and 18 feet above the highest tree. [Footnote 3] The use by the United States of this airport is pursuant to a lease executed in May, 1942, for a term commencing June 1, 1942 and ending June 30, 1942, with a provision for renewals until June 30, 1967, or six chanroblesvirtualawlibrary Page 328 U. S. 259 months after the end of the national emergency, whichever is the earlier. Various aircraft of the United States use this airport -- bombers, transports, and fighters. The direction of the prevailing wind determines when a particular runway is used. The northwestsoutheast runway in question is used about four percent of the time in taking off and about seven percent of the time in landing. Since the United States began operations in May, 1942, its four-motored heavy bombers, other planes of the heavier type, and its fighter planes have frequently passed over respondents' land buildings in considerable numbers and rather close

together. They come close enough at times to appear barely to miss the tops of the trees, and at times so close to the tops of the trees as to blow the old leaves off. The noise is startling. And, at night, the glare from the planes brightly lights up the place. As a result of the noise, respondents had to give up their chicken business. As many as six to ten of their chickens were killed in one day by flying into the walls from fright. The total chickens lost in that manner was about 150. Production also fell off. The result was the destruction of the use of the property as a commercial chicken farm. Respondents are frequently deprived of their sleep, and the family has become nervous and frightened. Although there have been no airplane accidents on respondents' property, there have been several accidents near the airport and close to respondents' place. These are the essential facts found by the Court of Claims. On the basis of these facts, it found that respondents' property had depreciated in value. It held that the United States had taken an easement over the property on June 1, 1942, and that the value of the property destroyed and the easement taken was $2,000. chanroblesvirtualawlibrary Page 328 U. S. 260

I. The United States relies on the Air Commerce Act of 1926, 44 Stat. 568, 49 U.S.C. 171 et seq., as amended by the Civil Aeronautics Act of 1938, 52 Stat. 973, 49 U.S.C. 401 et seq. Under those statutes, the United States has "complete and exclusive national sovereignty in the air space" over this country. 49 U.S.C. 176(a). They grant any citizen of the United States "a public right of freedom of transit in air commerce [Footnote 4] through the navigable air space of the United States." 49 U.S.C. 403. And "navigable air space" is defined as "airspace above the minimum safe altitudes of flight prescribed by the Civil Aeronautics Authority." 49 U.S.C. 180. And it is provided that "such navigable airspace shall be subject to a public right of freedom of interstate and foreign air navigation." Id. It is therefore argued that, since these flights were within the minimum safe altitudes of flight which had been prescribed, they were an exercise of the declared right of travel through the airspace. The United States concludes that, when flights are made within the navigable airspace without any physical invasion of the property of the landowners, there has been no taking of property. It says that, at most, there was merely incidental damage occurring as a consequence of authorized air navigation. It also argues that the landowner does not own superadjacent airspace which he has not subjected to possession by the erection of structures or other occupancy. Moreover, it is argued that, even if the United States took airspace owned by respondents, no compensable damage was shown. Any damages are said to be merely consequential for which no compensation may be obtained under the Fifth Amendment. It is ancient doctrine that at common law ownership of the land extended to the periphery of the universe -- cujus chanroblesvirtualawlibrary

Page 328 U. S. 261 est solum ejus est usque and coelum. [Footnote 5] But that doctrine has no place in the modern world. The air is a public highway, as Congress has declared. Were that not true, every transcontinental flight would subject the operator to countless trespass suits. Common sense revolts at the idea. To recognize such private claims to the airspace would clog these highways, seriously interfere with their control and development in the public interest, and transfer into private ownership that to which only the public has a just claim. But that general principle does not control the present case. For the United States conceded on oral argument that, if the flights over respondents' property rendered it uninhabitable, there would be a taking compensable under the Fifth Amendment. It is the owner's loss, not the taker's gain, which is the measure of the value of the property taken. United States v. Miller, 317 U. S. 369. Market value fairly determined is the normal measure of the recovery. Id. And that value may reflect the use to which the land could readily be converted, as well as the existing use. United States v. Powelson, 319 U. S. 266, 319 U. S. 275, and cases cited. If, by reason of the frequency and altitude of the flights, respondents could not use this land for any purpose, their loss would be complete. [Footnote 6] It would be as complete as if the United States had entered upon the surface of the land and taken exclusive possession of it. We agree that, in those circumstances, there would be a taking. Though it would be only an easement of flight chanroblesvirtualawlibrary Page 328 U. S. 262 which was taken, that easement, if permanent and not merely temporary, normally would be the equivalent of a fee interest. It would be a definite exercise of complete dominion and control over the surface of the land. The fact that the planes never touched the surface would be as irrelevant as the absence in this day of the feudal livery of seisin on the transfer of real estate. The owner's right to possess and exploit the land -- that is to say, his beneficial ownership of it -- would be destroyed. It would not be a case of incidental damages arising from a legalized nuisance, such as was involved in Richards v. Washington Terminal Co., 233 U. S. 546. In that case, property owners whose lands adjoined a railroad line were denied recovery for damages resulting from the noise, vibrations, smoke, and the like, incidental to the operations of the trains. In the supposed case, the line of flight is over the land. And the land is appropriated as directly and completely as if it were used for the runways themselves. There is no material difference between the supposed case and the present one, except that, here, enjoyment and use of the land are not completely destroyed. But that does not seem to

us to be controlling. The path of glide for airplanes might reduce a valuable factory site to grazing land, an orchard to a vegetable patch, a residential section to a wheat field. Some value would remain. But the use of the airspace immediately above the land would limit the utility of the land and cause a diminution in its value. [Footnote 7] That was the philosophy of 260 U. S. 330. And see Delta Air Corp. v. Kersey, 193 Ga. 862, 20 S.E.2d 245. Cf. United States v. 357.25 Acres of Land,@ 55 F.Supp. 461. The fact that the path of glide taken by the planes was that approved by the Civil Aeronautics Authority does not change the result. The navigable airspace which Congress has placed in the public domain is "airspace above the minimum safe altitudes of flight prescribed by the Civil Aeronautics Authority." 49 U.S.C. 180. If that agency prescribed 83 feet as the minimum safe altitude, then we would have presented the question of the validity of the regulation. But nothing of the sort has been done. The path of glide governs the method of operating -- of landing or taking off. The altitude required for that operation is not the minimum safe altitude of flight which is the downward reach of the navigable airspace. The minimum prescribed by the authority is 500 feet during the day and 1000 feet at night for air carriers (Civil Air Regulations, Pt. 61, 61.7400, 61.7401, Code Fed.Reg.Cum.Supp., Tit. 14, ch. 1) and from 300 to 1000 feet for chanroblesvirtualawlibrary Page 328 U. S. 264 other aircraft depending on the type of plane and the character of the terrain. Id., Pt. 60, 60.350-60.3505, Fed.Reg.Cum.Supp., supra. Hence, the flights in question were not within the navigable airspace which Congress placed within the public domain. If any airspace needed for landing or taking off were included, flights which were so close to the land as to render it uninhabitable would be immune. But the United States concedes, as we have said, that, in that event, there would be a taking. Thus, it is apparent that the path of glide is not the minimum safe altitude of flight within the meaning of the statute. The Civil Aeronautics Authority has, of course, the power to prescribe air traffic rules. But Congress has defined navigable airspace only in terms of one of them -- the minimum safe altitudes of flight. We have said that the airspace is a public highway. Yet it is obvious that, if the landowner is to have full enjoyment of the land, he must have exclusive control of the immediate reaches of the enveloping atmosphere. Otherwise buildings could not be erected, trees could not be planted, and even fences could not be run. The principle is recognized when the law gives a remedy in case overhanging structures are erected on adjoining land. [Footnote 9] The landowner owns at least as much of the space above the ground as the can occupy or use in connection with the land. See Hinman v. Pacific Air Transport, 84 F.2d 755. The fact that he does not occupy it in a physical sense -- by the erection of buildings and the like -- is not material. As we have said, the flight of airplanes, which skim the surface but do not touch it, is

as much an appropriation of the use of the land as a more conventional entry upon it. We would not doubt that, if the United States erected chanroblesvirtualawlibrary Page 328 U. S. 265 an elevated railway over respondents' land at the precise altitude where its planes now fly, there would be a partial taking, even though none of the supports of the structure rested on the land. [Footnote 10] The reason is that there would be an intrusion so immediate and direct as to subtract from the owner's full enjoyment of the property and to limit his exploitation of it. While the owner does not in any physical manner occupy that stratum of airspace or make use of it in the conventional sense, he does use it in somewhat the same sense that space left between buildings for the purpose of light and air is used. The superadjacent airspace at this low altitude is so close to the land that continuous invasions of it affect the use of the surface of the land itself. We think that the landowner, as an incident to his ownership, has a claim to it, and that invasions of it are in the same category as invasions of the surface. [Footnote 11] In this case, as in Portsmouth Harbor Land & Hotel Co. v. United States, supra, the damages were not merely consequential. They were the product of a direct invasion of respondents' domain. chanroblesvirtualawlibrary Page 328 U. S. 266 As stated in United States v. Cress, 243 U. S. 316, 243 U. S. 328, ". . . it is the character of the invasion, not the amount of damage resulting from it, so long as the damage is substantial, that determines the question whether it is a taking." We said in United States v. Powelson, supra, p. 319 U. S. 279, that, while the meaning of "property" as used in the Fifth Amendment was a federal question, "it will normally obtain its content by reference to local law." If we look to North Carolina law, we reach the same result. Sovereignty in the airspace rests in the State "except where granted to and assumed by the United States." Gen.Stats.1943, 63-11. The flight of aircraft is lawful "unless at such a low altitude as to interfere with the then existing use to which the land or water, or the space over the land or water, is put by the owner, or unless so conducted as to be imminently dangerous to persons or property lawfully on the land or water beneath." Id., 63-13. Subject to that right of flight, "ownership of the space above the lands and waters of this State is declared to be vested in the several owners of the surface beneath." Id., 63-

12. Our holding that there was an invasion of respondents' property is thus not inconsistent with the local law governing a landowner's claim to the immediate reaches of the superadjacent airspace. The airplane is part of the modern environment of life, and the inconveniences which it causes are normally not compensable under the Fifth Amendment. The airspace, apart from the immediate reaches above the land, is part of the public domain. We need not determine at this time what those precise limits are. Flights over private land are not a taking, unless they are so low and so frequent as to be a direct and immediate interference with the enjoyment and use of the land. We need not speculate on that phase of the present case. For the findings of the Court chanroblesvirtualawlibrary Page 328 U. S. 267 of Claims plainly establish that there was a diminution in value of the property, and that the frequent, low-level flights were the direct and immediate cause. We agree with the Court of Claims that a servitude has been imposed upon the land. II. By 145(1) of the Judicial Code, 28 U.S.C. 250(1), the Court of Claims has jurisdiction to hear and determine "All claims (except for pensions) founded upon the Constitution of the United States or . . . upon any contract, express or implied, with the Government of the United States." We need not decide whether repeated trespasses might give rise to an implied contract. Cf. Portsmouth Harbor Land & Hotel Co. v. United States, supra. If there is a taking, the claim is "founded upon the Constitution," and within the jurisdiction of the Court of Claims to hear and determine. See Hollister v. Benedict & Burnham Mfg. Co., 113 U. S. 59, 113 U. S. 67; Hurley v. Kincaid, 285 U. S. 95, 285 U. S. 104; Yearsley v. W. A. Ross Construction Co., 309 U. S. 18, 309 U. S. 21. Thus, the jurisdiction of the Court of Claims in this case is clear. III. The Court of Claims held, as we have noted, that an easement was taken. But the findings of fact contain no precise description as to its nature. It is not described in terms of frequency of flight, permissible altitude, or type of airplane. Nor is there a finding as to whether the easement taken was temporary or permanent. Yet an accurate description of the property taken is essential, since that interest vests in the United States. United States v. Cress, supra, 243 U. S. 328-329, and cases cited. It is true that the Court of Claims stated in its opinion that the easement taken was permanent. But the deficiency in findings cannot be rectified by statements in the opinion. United States v. Esnault-Pelterie, 299 U. S. 201, 299 U. S. 205-206;

United States v. Seminole Nation, 299 U. S. 417, 299 U. S. 422. Findings of fact on every "material issue" are a statutory chanroblesvirtualawlibrary Page 328 U. S. 268 requirement. 53 Stat. 752, 28 U.S.C. 288. The importance of findings of fact based on evidence is emphasized here by the Court of Claims' treatment of the nature of the easement. It stated in its opinion that the easement was permanent because the United States "no doubt intended to make some sort of arrangement whereby it could use the airport for its military planes whenever it had occasion to do so." That sounds more like conjecture, rather than a conclusion from evidence, and if so, it would not be a proper foundation for liability of the United States. We do not stop to examine the evidence to determine whether it would support such a finding, if made. For that is not our function. United States v. Esnault-Pelterie, supra, p. 299 U. S. 206. Since on this record it is not clear whether the easement taken is a permanent or a temporary one, it would be premature for us to consider whether the amount of the award made by the Court of Claims was proper. The judgment is reversed, and the cause is remanded to the Court of Claims so that it may make the necessary findings in conformity with this opinion. Reversed. MR. JUSTICE JACKSON took no part in the consideration or decision of this case. [Footnote 1] A 30 to 1 glide angle means one foot of elevation or descent for every 30 feet of horizontal distance. [Footnote 2] Military planes are subject to the rules of the Civil Aeronautics Board where, as in the present case, there are no Army or Navy regulations to the contrary. Cameron v. Civil Aeronautics Board, 140 F.2d 482. [Footnote 3] The house is approximately 16 feet high, the barn 20 feet, and the tallest tree 65 feet.

[Footnote 4] "Air commerce" is defined as including "any operation or navigation of aircraft which directly affects, or which may endanger safety in, interstate, overseas, or foreign air commerce." 49 U.S.C. 401(3). [Footnote 5] 1 Coke, Institutes, 19th Ed. 1832, ch. 1, 1(4a); 2 Blackstone, Commentaries, Lewis Ed.1902, p. 18; 3 Kent, Commentaries, Gould Ed. 1896, p. 621. [Footnote 6] The destruction of all uses of the property by flooding has been held to constitute a taking. Pumpelly v. Green Bay Co., 13 Wall. 166; United States v. Lynah, 188 U. S. 445; United States v. Welch, 217 U. S. 333. [Footnote 7] It was stated in United States v. General Motors Corp., 323 U. S. 373, 323 U. S. 378, "The courts have held that the deprivation of the former owner, rather than the accretion of a right or interest to the sovereign, constitutes the taking. Governmental action short of acquisition of title or occupancy has been held, if its effects are so complete as to deprive the owner of all or most of his interest in the subject matter, to amount to a taking." The present case falls short of the General Motors case. This is not a case where the United States has merely destroyed property. It is using a part of it for the flight of its planes. Cf. Warren Township School Dist. v. Detroit, 308 Mich. 460, 14 N.W.2d 134; Smith v. New England Aircraft Co., 270 Mass. 511, 170 N.E. 385; Burnham v. Beverly Airways, Inc., 311 Mass. 628, 42 N.E.2d 575. [Footnote 8] On remand, the allegations in the petition were found not to be supported by the facts. 64 Ct.Cls. 572. [Footnote 9]

Baten's Case, 9 Coke R. 53b; Meyer v. Metzler, 51 Cal. 142; Codman v. Evans, 7 Allen 431, 89 Mass. 431; Harrington v. McCarthy, 169 Mass. 492, 48 N.E. 278. See Ball, The Vertical Extent of Ownership in Land, 76 U.Pa.L.Rev. 631, 658-671. [Footnote 10] It was held in Butler v. Frontier Telephone Co., 186 N.Y. 486, 79 N.E. 716, that ejectment would lie where a telephone wire was strung across the plaintiff's property, even though it did not touch the soil. The court stated, pp. 491-492: ". . . an owner is entitled to the absolute and undisturbed possession of every part of his premises, including the space above, as much as a mine beneath. If the wire had been a huge cable, several inches thick and but a foot above the ground, there would have been a difference in degree, but not in principle. Expand the wire into a beam supported by posts standing upon abutting lots without touching the surface of plaintiff's land, and the difference would still be one of degree only. Enlarge the beam into a bridge, and yet space only would be occupied. Erect a house upon the bridge, and the air above the surface of the land would alone be disturbed." [Footnote 11] See Bouve, Private Ownership of Navigable Airspace Under the Commerce Clause, 21 Amer.Bar Assoc.Journ. 416, 421-422; Hise, Ownership and Sovereignty of the Air, 16 Ia.L.Rev. 169; Eubank, The Doctrine of the Airspace Zone of Effective Possession, 12 Boston Univ.L.Rev. 414. MR. JUSTICE BLACK, dissenting. The Fifth Amendment provides that "private property" shall not "be taken for public use, without just compensation." The Court holds today that the Government has "taken" respondents' property by repeatedly flying Army bombers directly above respondents' land at a height of eighty-three feet where the light and noise from these planes caused respondents to lose sleep, and their chickens to be killed. Since the effect of the Court's decision is chanroblesvirtualawlibrary Page 328 U. S. 269 to limit, by the imposition of relatively absolute Constitutional barriers, possible future adjustments through legislation and regulation which might become necessary with the

growth of air transportation, and since, in my view, the Constitution does not contain such barriers, I dissent. The following is a brief statement of the background and of the events that the Court's opinion terms a "taking" within the meaning of the Fifth Amendment: since 1928, there has been an airfield some eight miles from Greensboro, North Carolina. In April, 1942, this airport was taken over by the Greensboro-High Point Municipal Airport Authority, and it has since then operated as a municipal airport. In 1942, the Government, by contract, obtained the right to use the field "concurrently, jointly, and in common" with other users. Years before, in 1934, respondents had bought their property, located more than one-third of a mile from the airport. Private planes from the airport flew over their land and farm buildings from 1934 to 1942. and are still doing so. But though these planes disturbed respondents to some extent, Army bombers, which started to fly over the land in 1942 at a height of eighty-three feet, disturbed them more, because they were larger, came over more frequently, made a louder noise, and, at night, a greater glare was caused by their lights. This noise and glare disturbed respondents' sleep, frightened them, and made them nervous. The noise and light also frightened respondents' chickens so much that many of them flew against buildings and were killed. The Court's opinion seems to indicate that the mere flying of planes through the column of air directly above respondents' land does not constitute a "taking." Consequently, it appears to be noise and glare, to the extent and under the circumstances shown here, which make the government a seizer of private property. But the allegation chanroblesvirtualawlibrary Page 328 U. S. 270 of noise and glare resulting in damages constitutes at best, an action in tort where there might be recovery if the noise and light constituted a nuisance, a violation of a statute, [Footnote 2/1] or were the result of negligence. [Footnote 2/2] But the Government has not consented to be sued in the Court of Claims except in actions based on express or implied contract. And there is no implied contract here, unless, by reason of the noise and glare caused by the bombers, the Government can be said to have "taken" respondents' property in a Constitutional sense. The concept of taking property, as used in the Constitution, has heretofore never been given so sweeping a meaning. The Court's opinion presents no case where a man who makes noise or shines light onto his neighbor's property has been ejected from that property for wrongfully taking possession of it. Nor would anyone take seriously a claim that noisy automobiles passing on a highway are taking wrongful possession of the homes located thereon, or that a city elevated train which greatly interferes with the sleep of those who live next to it wrongfully takes their property. Even the one case in this Court which, in considering the sufficiency of a complaint, gave the most elastic meaning to the

phrase "private property be taken," as used in the Fifth Amendment, did not go so far. Portsmouth Harbor Land & Hotel Co. v. United States, 260 U.S. chanroblesvirtualawlibrary Page 328 U. S. 271 327. I am not willing, nor do I think the Constitution and the decisions authorize me, to extend that phrase so as to guarantee an absolute Constitutional right to relief not subject to legislative change, which is based on averments that, at best, show mere torts committed by Government agents while flying over land. The future adjustment of the rights and remedies of property owners, which might be found necessary because of the flight of planes at safe altitudes, should, especially in view of the imminent expansion of air navigation, be left where I think the Constitution left it -- with Congress. Nor do I reach a different conclusion because of the fact that the particular circumstance which under the Court's opinion makes the tort here absolutely actionable is the passing of planes through a column of air at an elevation of eighty-three feet directly over respondents' property. It is inconceivable to me that the Constitution guarantees that the airspace of this Nation needed for air navigation is owned by the particular persons who happen to own the land beneath to the same degree as they own the surface below. [Footnote 2/3] No rigid Constitutional rule, in my judgment, commands that the air must be considered as marked off into separate compartments by imaginary metes and bounds in order to synchronize air ownership with land ownership. I think that the Constitution entrusts Congress with full power to control all navigable airspace. Congress has already acted under that power. It has by statute, 44 Stat. 568, 52 Stat. 973, provided that "the United States of America is . . . to possess and exercise complete and exclusive national sovereignty in the Page 328 U. S. 272 air space [over] the United States." This was done under the assumption that the Commerce Clause of the Constitution gave Congress the same plenary power to control navigable airspace as its plenary power over navigable waters. H.Rep. No. 572, 69th Cong., 1st Sess., p. 10; H.Rep. No. 1162, 69th Cong., 1st Sess., p. 14; United States v. Commodore Park, Inc., 324 U. S. 386. To make sure that the airspace used for air navigation would remain free, Congress further declared that "navigable airspace shall be subject to a public right of freedom of interstate and foreign air navigation," and finally stated emphatically that there exists "a public right of freedom of transit . . . through the navigable airspace of the United States." Congress thus declared that the air is

free -- not subject to private ownership and not subject to delimitation by the courts. Congress and those acting under its authority were the only ones who had power to control and regulate the flight of planes. "Navigable air-space" was defined as "airspace above the minimum safe altitudes of flight prescribed by the Civil Aeronautics Authority." 49 U.S.C. 180. Thus, Congress has given the Civil Aeronautics Authority exclusive power to determine what is navigable airspace subject to its exclusive control. This power derives specifically from the Section which authorizes the Authority to prescribe "air traffic rules governing the flight of, and for the navigation, protection, and identification of, aircraft, including rules as to safe altitudes of flight and rules for the prevention of collisions between aircraft, and between aircraft and land or water vehicles." Here, there was no showing that the bombers flying over respondents' land violated any rule or regulation of the Civil Aeronautics Authority. Yet, unless we hold the Act unconstitutional, at least such a showing would be necessary before the courts could act without interfering with the exclusive authority which Congress gave to the administrative agency. Not even a chanroblesvirtualawlibrary Page 328 U. S. 273 showing that the Authority has not acted at all would be sufficient. For, in that event, were the courts to have any authority to act in this case at all, they should stay their hand till the Authority has acted. The broad provisions of the Congressional statute cannot properly be circumscribed by making a distinction, as the Court's opinion does, between rules of safe altitude of flight while on the level of cross-country flight and rules of safe altitude during landing and taking off. First, such a distinction cannot be maintained from the practical standpoint. It is unlikely that Congress intended that the Authority prescribe safe altitudes for planes making cross-country flights while, at the same time, it left the more hazardous landing and take-off operations unregulated. The legislative history, moreover, clearly shows that the Authority's power to prescribe air traffic rules includes the power to make rules governing landing and take-off. Nor is the Court justified in ignoring that history by labeling rules of safe altitude while on the level of cross-country flight as rules prescribing the safe altitude proper and rules governing take-off and landing as rules of operation. For the Conference Report explicitly states that such distinctions were purposely eliminated from the original House Bill in order that the Section on air traffic rules "might be given the broadest construction by the . . . [Civil Aeronautics Authority] . . . and the courts." [Footnote 2/4] In construing the statute narrowly the Court chanroblesvirtualawlibrary

Page 328 U. S. 274 thwarts the intent of Congress. A proper broad construction, such as Congress commanded, would not permit the Court to decide what it has today without declaring the Act of Congress unconstitutional. I think the Act given the broad construction intended is constitutional. No greater confusion could be brought about in the coming age of air transportation than that which would result were courts by Constitutional interpretation to hamper Congress in its efforts to keep the air free. Old concepts of private ownership of land should not be introduced into the field of air regulation. I have no doubt that Congress will, if not handicapped by judicial interpretations of the Constitution, preserve the freedom of the air, and at the same time, satisfy the just claims of aggrieved persons. The noise of newer, larger, and more powerful planes may grow louder and louder and disturb people more and more. But the solution of the problems precipitated by these technological advances and new ways of living cannot come about through the application of rigid Constitutional restraints formulated and enforced by the courts. What adjustments may have to be made, only the future can reveal. It seems certain, however, chanroblesvirtualawlibrary Page 328 U. S. 275 the courts do not possess the techniques or the personnel to consider and act upon the complex combinations of factors entering into the problems. The contribution of courts must be made through the awarding of damages for injuries suffered from the flying of planes, or by the granting of injunctions to prohibit their flying. When these two simple remedial devices are elevated to a Constitutional level under the Fifth Amendment, as the Court today seems to have done, they can stand as obstacles to better adapted techniques that might be offered by experienced experts and accepted by Congress. Today's opinion is, I fear, an opening wedge for an unwarranted judicial interference with the power of Congress to develop solutions for new and vital and national problems. In my opinion, this case should be reversed on the ground that there has been no "taking" in the Constitutional sense. [Footnote 2/1] Neiswonger v. Goodyear Tire & Rubber Co., 35 F.2d 761. [Footnote 2/2] As to the damage to chickens, Judge Madden, dissenting from this judgment against the Government said,

"When railroads were new, cattle in fields in sight and hearing of the trains were alarmed, thinking that the great moving objects would turn aside and harm them. Horses ran away at the sight and sound of a train or a threshing machine engine. The farmer's chickens have to get over being alarmed at the incredible racket of the tractor starting up suddenly in the shed adjoining the chicken house. These sights and noises are a part of our world, and airplanes are now and will be to a greater degree, likewise a part of it. These disturbances should not be treated as torts in the case of the airplane any more than they are so treated in the case of the railroad or public highway." 104 Ct.Cls. 342, 358. [Footnote 2/3] The House, in its report on the Air Commerce Act of 1926, stated: "The public right of flight in the navigable air space owes its source to the same constitutional basis which, under decisions of the Supreme Court, has given rise to a public easement of navigation in the navigable waters of the United States regardless of the ownership of adjacent or subjacent soil." House Report No. 572, 69th Congress, First Session, page 10. [Footnote 2/4] The full statement read: "The substitute provides that the Secretary shall by regulation establish air traffic rules for the navigation, protection, and identification of all aircraft, including rules for the safe altitudes of flight and rules for the prevention of collisions between vessels and aircraft. The provision as to rules for taking off and alighting, for instance, was eliminated as unnecessary specification, for the reason that such rules are but one class of air traffic rules for the navigation and protection of aircraft. Rules as to marking were eliminated for the reason that such rules were fairly included within the scope of air rules for the identification of aircraft. No attempt is made by either the Senate bill or the House amendment to fully define the various classes of rules that would fall within the scope of air traffic traffic rules, as, for instance, lights and signals along airways and at airports and upon emergency landing fields. In general, these rules would relate to the same subjects as those covered by navigation laws and regulations and by the various State motor vehicle traffic codes. As noted above, surplusage was eliminated in specifying particular air traffic rules in order that the term might be given the broadest possible construction by the Department of Commerce and the courts."

House Report No. 1162, 69th Congress, 1st Session, p. 12. That the rules for landing and take-off are rules prescribing "minimum safe altitudes of flight" is shown by the following further statement in the House Report: ". . . the minimum safe altitudes of flight . . . would vary with the terrain and location of cities and would coincide with the surface of the land or water at airports." Id. at p. 14.

Republic of the Philippines SUPREME COURT Manila EN BANC

periodical is circulated to enable the candidates to make known their qualifications, their stand on public issues and their platforms and programs of government. "Comelec Space" shall also be used by the Commission for dissemination of vital election information. Sec. 4. Allocation of Comelec Space. (a) "Comelec Space" shall also be available to all candidates during the periods stated in Section 2 hereof. Its allocation shall be equal and impartial among all candidates for the same office. All candidates concerned shall be furnished a copy of the allocation of "Comelec Space" for their information, guidance and compliance. (b) Any candidate desiring to avail himself of "Comelec Space" from newspapers or publications based in the Metropolitan Manila Area shall submit an application therefor, in writing, to the Committee on Mass Media of the Commission. Any candidate desiring to avail himself of "Comelec Space" in newspapers or publications based in the provinces shall submit his application therefor, in writing, to the Provincial Election Supervisor concerned. Applications for availment of "Comelec Space" maybe filed at any time from the date of effectivity of this Resolution. (c) The Committee on Mass Media and the Provincial Election Supervisors shall allocate available "Comelec Space" among the candidates concerned by lottery of which said candidates shall be notified in advance, in writing, to be present personally or by representative to witness the lottery at the date, time and place specified in the notice. Any party objecting to the result of the lottery may appeal to the Commission. (d) The candidates concerned shall be notified by the Committee on Mass Media or the Provincial Election Supervisor, as the case maybe, sufficiently in advance and in writing of the date of issue and the newspaper or publication allocated to him, and the time within which he must submit the written material for publication in the "Comelec Space". xxx xxx xxx

G.R. No. L-119694 May 22, 1995 PHILIPPINE PRESS INSTITUTE, INC., for and in behalf of 139 members, represented by its President, Amado P. Macasaet and its Executive Director Ermin F. Garcia, Jr., petitioner, vs. COMMISSION ON ELECTIONS, respondent. RESOLUTION

FELICIANO, J.: The Philippine Press Institute, Inc. ("PPI") is before this Court assailing the constitutional validity of Resolution No. 2772 issued by respondent Commission on Elections ("Comelec") and its corresponding Comelec directive dated 22 March 1995, through a Petition for Certiorari and Prohibition. Petitioner PPI is a non-stock, non-profit organization of newspaper and magazine publishers. On 2 March 1995, Comelec promulgated Resolution No. 2772, which reads in part: xxx xxx xxx Sec. 2. Comelec Space. The Commission shall procure free print space of not less than one half (1/2) page in at least one newspaper of general circulation in every province or city for use as "Comelec Space" from March 6, 1995 in the case of candidates for senator and from March 21, 1995 until May 12, 1995. In the absence of said newspaper, "Comelec Space" shall be obtained from any magazine or periodical of said province or city. Sec. 3. Uses of Comelec Space. "Comelec Space" shall be allocated by the Commission, free of charge, among all candidates within the area in which the newspaper, magazine or

Sec. 8. Undue Reference to Candidates/Political Parties in Newspapers. No newspaper or publication shall allow to be printed or published in the news, opinion, features, or other sections of the newspaper or publication accounts or comments which manifestly favor or oppose any candidate or political party by unduly or repeatedly referring to or including therein said candidate or political party. However, unless the facts and circumstances clearly indicate otherwise, the Commission will respect the determination by the publisher and/or

editors of the newspapers or publications that the accounts or views published are significant, newsworthy and of public interest. (Emphasis supplied) Apparently in implementation of this Resolution, Comelec through Commissioner Regalado E. Maambong sent identical letters, dated 22 March 1995, to various publishers of newspapers like the Business World, the Philippine Star, the Malaya and the Philippine Times Journal, all members of PPI. These letters read as follows: This is to advise you that pursuant to Resolution No. 2772 of the Commission on Elections, you are directed to provide free print space of not less than one half (1/2) page for use as "Comelec Space" or similar to the print support which you have extended during the May 11, 1992 synchronized elections which was 2 full pages for each political party fielding senatorial candidates, from March 6, 1995 to May 6, 1995, to make known their qualifications, their stand on public issues and their platforms and programs of government. We shall be informing the political parties and candidates to submit directly to you their pictures, biographical data, stand on key public issues and platforms of government either as raw data or in the form of positives or camera-ready materials. Please be reminded that the political parties/candidates may be accommodated in your publication any day upon receipt of their materials until May 6, 1995 which is the last day for campaigning. We trust you to extend your full support and cooperation in this regard. (Emphasis supplied) In this Petition for Certiorari and Prohibition with prayer for the issuance of a Temporary Restraining Order, PPI asks us to declare Comelec Resolution No. 2772 unconstitutional and void on the ground that it violates the prohibition imposed by the Constitution upon the government, and any of its agencies, against the taking of private property for public use without just compensation. Petitioner also contends that the 22 March 1995 letter directives of Comelec requiring publishers to give free "Comelec Space" and at the same time process raw data to make it camera-ready, constitute impositions of involuntary servitude, contrary to the provisions of Section 18 (2), Article III of the 1987 Constitution. Finally, PPI argues that Section 8 of Comelec Resolution No. 2772 is violative of the constitutionally guaranteed freedom of speech, of the press and of expression. 1 On 20 April 1995, this Court issued a Temporary Restraining Order enjoining Comelec from enforcing and implementing Section 2 of Resolution No. 2772, as well as the Comelec directives addressed to various print media enterprises all dated 22 March 1995. The Court also required the respondent to file a Comment on the Petition.

The Office of the Solicitor General filed its Comment on behalf of respondent Comelec alleging that Comelec Resolution No. 2772 does not impose upon the publishers any obligation to provide free print space in the newspapers as it does not provide any criminal or administrative sanction for non-compliance with that Resolution. According to the Solicitor General, the questioned Resolution merely established guidelines to be followed in connection with the procurement of "Comelec space," the procedure for and mode of allocation of such space to candidates and the conditions or requirements for the candidate's utilization of the "Comelec space" procured. At the same time, however, the Solicitor General argues that even if the questioned Resolution and its implementing letter directives are viewed as mandatory, the same would nevertheless be valid as an exercise of the police power of the State. The Solicitor General also maintains that Section 8 of Resolution No. 2772 is a permissible exercise of the power of supervision or regulation of the Comelec over the communication and information operations of print media enterprises during the election period to safeguard and ensure a fair, impartial and credible election. 2 At the oral hearing of this case held on 28 April 1995, respondent Comelec through its Chairman, Hon. Bernardo Pardo, in response to inquiries from the Chief Justice and other Members of the Court, stated that Resolution No. 2772, particularly Section 2 thereof and the 22 March 1995 letters dispatched to various members of petitioner PPI, were not intended to compel those members to supply Comelec with free print space. Chairman Pardo represented to the Court that Resolution and the related letter-directives were merely designed to solicit from the publishers the same free print space which many publishers had voluntarily given to Comelec during the election period relating to the 11 May 1992 elections. Indeed, the Chairman stated that the Comelec would, that very afternoon, meet and adopt an appropriate amending or clarifying resolution, a certified true copy of which would forthwith be filed with the Court. On 5 May 1995, the Court received from the Office of the Solicitor General a manifestation which attached a copy of Comelec Resolution No. 2772-A dated 4 May 1995. The operative portion of this Resolution follows: NOW THEREFORE, pursuant to the powers vested in it by the Constitution, the Omnibus Election Code, Republic Acts No. 6646 and 7166 and other election laws, the Commission on Elections RESOLVED to clarify Sections 2 and 8 of Res. No. 2772 as follows: 1. Section 2 of Res. No. 2772 shall not be construed to mean as requiring publishers of the different mass media print publications to provide print space under pain of prosecution, whether administrative, civil or criminal, there being no sanction or penalty for violation of

said Section provided for either in said Resolution or in Section 90 of Batas Pambansa Blg. 881, otherwise known as the Omnibus Election Code, on the grant of "Comelec space." 2. Section 8 of Res. No. 2772 shall not be construed to mean as constituting prior restraint on the part of publishers with respect to the printing or publication of materials in the news, opinion, features or other sections of their respective publications or other accounts or comments, it being clear from the last sentence of said Section 8 that the Commission shall, "unless the facts and circumstances clearly indicate otherwise . . . respect the determination by the publisher and/or editors of the newspapers or publications that the accounts or views published are significant, newsworthy and of public interest." This Resolution shall take effect upon approval. (Emphasis in the original) While, at this point, the Court could perhaps simply dismiss the Petition for Certiorari and Prohibition as having become moot and academic, we consider it not inappropriate to pass upon the first constitutional issue raised in this case. Our hope is to put this issue to rest and prevent its resurrection. Section 2 of Resolution No. 2772 is not a model of clarity in expression. Section 1 of Resolution No. 2772-A did not try to redraft Section 2; accordingly, Section 2 of Resolution No. 2772 persists in its original form. Thus, we must point out that, as presently worded, and in particular as interpreted and applied by the Comelec itself in its 22 March 1995 letterdirectives to newspaper publishers, Section 2 of Resolution No. 2772 is clearly susceptible of the reading that petitioner PPI has given it. That Resolution No. 2772 does not, in express terms, threaten publishers who would disregard it or its implementing letters with some criminal or other sanction, does not by itself demonstrate that the Comelec's original intention was simply to solicit or request voluntary donations of print space from publishers. A written communication officially directing a print media company to supply free print space, dispatched by a government (here a constitutional) agency and signed by a member of the Commission presumably legally authorized to do so, is bound to produce a coercive effect upon the company so addressed. That the agency may not be legally authorized to impose, or cause the imposition of, criminal or other sanctions for disregard of such directions, only aggravates the constitutional difficulties inhearing in the present situation. The enactment or addition of such sanctions by the legislative authority itself would be open to serious constitutional objection. To compel print media companies to donate "Comelec-space" of the dimensions specified in Section 2 of Resolution No. 2772 (not less than one-half page), amounts to "taking" of private personal property for public use or purposes. Section 2 failed to specify the intended frequency of such compulsory "donation:" only once during the period from 6 March 1995 (or

21 March 1995) until 12 May 1995? or everyday or once a week? or as often as Comelec may direct during the same period? The extent of the taking or deprivation is not insubstantial; this is not a case of a de minimis temporary limitation or restraint upon the use of private property. The monetary value of the compulsory "donation," measured by the advertising rates ordinarily charged by newspaper publishers whether in cities or in non-urban areas, may be very substantial indeed. The taking of print space here sought to be effected may first be appraised under the rubric of expropriation of private personal property for public use. The threshold requisites for a lawful taking of private property for public use need to be examined here: one is the necessity for the taking; another is the legal authority to effect the taking. The element of necessity for the taking has not been shown by respondent Comelec. It has not been suggested that the members of PPI are unwilling to sell print space at their normal rates to Comelec for election purposes. Indeed, the unwillingness or reluctance of Comelec to buy print space lies at the heart of the problem. 3 Similarly, it has not been suggested, let alone demonstrated, that Comelec has been granted the power of eminent domain either by the Constitution or by the legislative authority. A reasonable relationship between that power and the enforcement and administration of election laws by Comelec must be shown; it is not casually to be assumed. That the taking is designed to subserve "public use" is not contested by petitioner PPI. We note only that, under Section 3 of Resolution No. 2772, the free "Comelec space" sought by the respondent Commission would be used not only for informing the public about the identities, qualifications and programs of government of candidates for elective office but also for "dissemination of vital election information" (including, presumably, circulars, regulations, notices, directives, etc. issued by Comelec). It seems to the Court a matter of judicial notice that government offices and agencies (including the Supreme Court) simply purchase print space, in the ordinary course of events, when their rules and regulations, circulars, notices and so forth need officially to be brought to the attention of the general public. The taking of private property for public use is, of course, authorized by the Constitution, but not without payment of "just compensation" (Article III, Section 9). And apparently the necessity of paying compensation for "Comelec space" is precisely what is sought to be avoided by respondent Commission, whether Section 2 of Resolution No. 2772 is read as petitioner PPI reads it, as an assertion of authority to require newspaper publishers to "donate" free print space for Comelec purposes, or as an exhortation, or perhaps an appeal, to publishers to donate free print space, as Section 1 of Resolution No. 2772-A attempts to suggest. There is nothing at all to prevent newspaper and magazine publishers from voluntarily giving free print space to Comelec for the purposes contemplated in Resolution No. 2772. Section 2 of Resolution No. 2772 does not, however, provide a constitutional basis

for compelling publishers, against their will, in the kind of factual context here present, to provide free print space for Comelec purposes. Section 2 does not constitute a valid exercise of the power of eminent domain. We would note that the ruling here laid down by the Court is entirely in line with the theory of democratic representative government. The economic costs of informing the general public about the qualifications and programs of those seeking elective office are most appropriately distributed as widely as possible throughout our society by the utilization of public funds, especially funds raised by taxation, rather than cast solely on one small sector of society, i.e., print media enterprises. The benefits which flow from a heightened level of information on and the awareness of the electoral process are commonly thought to be community-wide; the burdens should be allocated on the same basis. As earlier noted, the Solicitor General also contended that Section 2 of Resolution No. 2772, even if read as compelling publishers to "donate" "Comelec space, " may be sustained as a valid exercise of the police power of the state. This argument was, however, made too casually to require prolonged consideration on our part. Firstly, there was no effort (and apparently no inclination on the part of Comelec) to show that the police power essentially a power of legislation has been constitutionally delegated to respondent Commission. 4 Secondly, while private property may indeed be validly taken in the legitimate exercise of the police power of the state, there was no attempt to show compliance in the instant case with the requisites of a lawful taking under the police power. 5 Section 2 of Resolution No. 2772 is a blunt and heavy instrument that purports, without a showing of existence of a national emergency or other imperious public necessity, indiscriminately and without regard to the individual business condition of particular newspapers or magazines located in differing parts of the country, to take private property of newspaper or magazine publishers. No attempt was made to demonstrate that a real and palpable or urgent necessity for the taking of print space confronted the Comelec and that Section 2 of Resolution No. 2772 was itself the only reasonable and calibrated response to such necessity available to the Comelec. Section 2 does not constitute a valid exercise of the police power of the State. We turn to Section 8 of Resolution No. 2772, which needs to be quoted in full again: Sec. 8. Undue Reference to Candidates/Political Parties in Newspapers. No newspaper or publication shall allow to be printed or published in the news, opinion, features, or other sections of the newspaper or publication accounts or comments which manifestly favor or oppose any candidate or political party by unduly or repeatedly referring to or including therein said candidate or political party. However, unless the facts and circumstances clearly

indicate otherwise, the Commission will respect the determination by the publisher and/or editors of the newspapers or publications that the accounts or views published are significant, newsworthy and of public interest. It is not easy to understand why Section 8 was included at all in Resolution No. 2772. In any case, Section 8 should be viewed in the context of our decision in National Press Club v. Commission on Elections. 6 There the Court sustained the constitutionality of Section 11 (b) of R.A. No. 6646, known as the Electoral Reforms Law of 1987, which prohibits the sale or donation of print space and airtime for campaign or other political purposes, except to the Comelec. In doing so, the Court carefully distinguished (a) paid political advertisements which are reached by the prohibition of Section 11 (b), from (b) the reporting of news, commentaries and expressions of belief or opinion by reporters, broadcasters, editors, commentators or columnists which fall outside the scope of Section 11 (b) and which are protected by the constitutional guarantees of freedom of speech and of the press: Secondly, and more importantly, Section 11 (b) is limited in its scope of application. Analysis of Section 11 (b) shows that it purports to apply only to the purchase and sale, including purchase and sale disguised as a donation, of print space and air time for campaign or other political purposes. Section 11 (b) does not purport in any way to restrict the reporting by newspapers or radio or television stations of news or news-worthy events relating to candidates, their qualifications, political parties and programs of government. Moreover, Section 11 (b) does not reach commentaries and expressions of belief or opinion by reporters or broadcaster or editors or commentators or columnists in respect of candidates, their qualifications, and programs and so forth, so long at least as such comments, opinions and beliefs are not in fact advertisements for particular candidates covertly paid for. In sum, Section 11 (b) is not to be read as reaching any report or commentary or other coverage that, in responsible media, is not paid for by candidates for political office. We read Section 11 (b) as designed to cover only paid political advertisements of particular candidates. The above limitation in scope of application of Section 11 (b) that it does not restrict either the reporting of or the expression of belief or opinion or comment upon the qualifications and programs and activities of any and all candidates for office constitutes the critical distinction which must be made between the instant case and that of Sanidad v. Commission on Elections. . . . 7 (Citations omitted; emphasis supplied) Section 8 of Resolution No. 2772 appears to represent the effort of the Comelec to establish a guideline for implementation of the above-quoted distinction and doctrine in National Press Club an effort not blessed with evident success. Section 2 of Resolution No. 2772-A while possibly helpful, does not add substantially to the utility of Section 8 of Resolution No. 2772. The distinction between paid political advertisements on the one hand and news reports,

commentaries and expressions of belief or opinion by reporters, broadcasters, editors, etc. on the other hand, can realistically be given operative meaning only in actual cases or controversies, on a case-to-case basis, in terms of very specific sets of facts. At all events, the Court is bound to note that PPI has failed to allege any specific affirmative action on the part of Comelec designed to enforce or implement Section 8. PPI has not claimed that it or any of its members has sustained actual or imminent injury by reason of Comelec action under Section 8. Put a little differently, the Court considers that the precise constitutional issue here sought to be raised whether or not Section 8 of Resolution No. 2772 constitutes a permissible exercise of the Comelec's power under Article IX, Section 4 of the Constitution to supervise or regulate the enjoyment or utilization of all franchise or permits for the operation of media of communication or information [for the purpose of ensuring] equal opportunity, time and space, and the right of reply, including reasonable, equal rates therefore, for public information campaigns and forums among candidates in connection with the objective of holding free, orderly honest, peaceful and credible elections is not ripe for judicial review for lack of an actual case or controversy involving, as the very lis mota thereof, the constitutionality of Section 8. Summarizing our conclusions: 1. Section 2 of Resolution No. 2772, in its present form and as interpreted by Comelec in its 22 March 1995 letter directives, purports to require print media enterprises to "donate" free print space to Comelec. As such, Section 2 suffers from a fatal constitutional vice and must be set aside and nullified. 2. To the extent it pertains to Section 8 of Resolution No. 2772, the Petition for Certiorari and Prohibition must be dismissed for lack of an actual, justiciable case or controversy. WHEREFORE, for all the foregoing, the Petition for Certiorari and Prohibition is GRANTED in part and Section 2 of Resolution No. 2772 in its present form and the related letter-directives dated 22 March 1995 are hereby SET ASIDE as null and void, and the Temporary Restraining Order is hereby MADE PERMANENT. The Petition is DISMISSED in part, to the extent it relates to Section 8 of Resolution No. 2772. No pronouncement as to costs. Narvasa, C.J., Padilla, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza and Francisco, JJ., concur.

Quiason, J., is on leave.

Footnotes 1 Petition, pp. 6-11; Rollo, pp. 7-12. 2 Comment, pp. 5-15; Rollo, pp. 70-80. 3 As I.A. Cruz, Constitutional Law, p. 59 (1991 ed.), citing Noble v. City of Manila, 67 Phil. 1 (1938), stressed: [w]here private properties needed for conversion to some public use, the first thing obviously that the government should do is to offer to buy it. If the owner is willing to sell and the parties can agree on the price and the other conditions of the sale, a voluntary transaction can then be concluded and the transfer effected without the necessity of judicial action. But if the owner of the private property is unwilling to part with it, or, being willing, cannot agree to the conditions of the transfer, then it will be necessary for the government to use its coercive authority. By its power of eminent domain, it can then, upon payment of just compensation, forcibly acquire the needed property in order to devote it to the intended public use. (Emphases supplied) 4 See, in this connection, Cruz, surpra note 3 at pp. 44-45. The police power may be delegated by the legislative authority to local governments under the general welfare clause (Section 16, R.A. No. 7160, "Local Government Code of 1991"), to the President and administrative agencies. See also Binay v. Domingo, 201 SCRA 508 (1991); Philippine Association of Service Exporters, Inc. v. Drilon, 163 SCRA 386 (1988); Villacosta v. Bernardo, 143 SCRA 480 (1986). 5 See National Development Company v. Philippine Veterans Bank, 192 SCRA 257 (1990); Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, 175 SCRA 343 (1989). 6 207 SCRA 1 (1992). 7 207 SCRA at 10-11.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

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. Guerrero streets in Tondo, Manila which were owned by Mr. Enrique Quijano Gutierrez, petitioner's predecessor-in-interest. The said properties were to be sold and distributed to qualified tenants of the area pursuant to the Land Use Development Program of the City of Manila. On May 23, 1994, respondent City of Manila filed a complaint for eminent domain (Civil Case No. 94-70560) before the RTC of Manila, Branch 42, 5 seeking to expropriate the aforecited parcels of land owned by petitioner Filstream which are situated at Antonio Rivera Street, Tondo II, Manila. 6

G.R. No. 125218 January 23, 1998 FILSTREAM INTERNATIONAL INCORPORATED, petitioner, vs. COURT OF APPEALS, JUDGE FELIPE S. TONGCO and THE CITY OF MANILA, respondents. G.R. No. 128077 January 23, 1998 FILSTREAM INTERNATIONAL INCORPORATED, petitioner, vs. COURT OF APPEALS, ORLANDO MALIT, ANTONIO CAGUIAT, ALICIA CABRERA, ARMANDO LACHICA, JACINTO CAGUIAT, GLORIA ANTONIO, ELIZALDE NAVARRA, DOLORES FUENTES, SUSANA ROY, ANTONIO IBANEZ, BENIGNO BASILIO, LUCERIA DEMATULAC, FLORENCIA GOMEZ, LAZARO GOMEZ, JOSE GOMEZ VENANCIO MANALOTO, CRISTINO UMALI, DEMETRIA GATUS, PRISCILLA MALONG, DOMINGO AGUILA, RAMON SAN AGUSTIN, JULIAN FERRER, JR., FRANCISCO GALANG, FLORENTINO MALIWAT, SEVERINA VILLAR, TRINIDAD NAGUIT, JOSE NAGUIT, FORTUNATO AGUSTIN CABRERA, GAUDENCIO INTAL, DANILO DAVID, ENRIQUE DAVID, VICENTE DE GUZMAN, POLICARPIO LUMBA, BELEN PALMA, ELEN SOMVILLO, LEONARDO MANICAD, OPRENG MICLAT, BENITA MATA, GREGORIO LOPEZ, MARCELINA SAPNO, JESUS MERCADO and CALIXTO GOMEZ, respondents.

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

Pursuant to the complaint filed by respondent City of Manila, the trial court issued a Writ of Possession 7 in favor of the former which ordered the transfer of possession over the disputed premises to the City of Manila. At this juncture, petitioner Filstream filed a motion to dismiss the complaint for eminent domain as well as a motion to quash the writ of possession. The motion to dismiss was premised on the following grounds: no valid cause of action; the petition does not satisfy the requirements of public use and a mere clandestine maneuver to circumvent the writ of execution issued by the RTC of Manila, Branch 4 in the ejectment suit; violation of the constitutional guarantee against non-impairment of obligations and contracts; price offered was too low hence violative of the just compensation provision of the constitution and the said amount is without the certification of the City Treasurer for availability of funds. 8 With respect to the motion to quash the writ of possession, petitioner raised the following objections: failure to comply with Section 2 of Rule 67 of the Rules of Court, Ordinance No. 7813 is a void enactment for it was approved without a public hearing and violative of the constitutional guarantee against impairment of obligations and contracts; the price is too low and unconscionable violating the just compensation provision of the constitution, and the said writ is tainted with infirmity considering the absence of a certification from the City of Manila that there is an immediately available fund for the subject expropriation. 9 Respondent City of Manila filed its opposition 10 to petitioner Filstream's two motions and to which petitioner accordingly filed a reply. 11 On September 30, 1994, the RTC of Manila, Branch 42, issued an order denying petitioner Filstream's motion to dismiss and the motion to quash the Writ of Possession and declared as follows: IN FINE, the defendant's motion to dismiss and motion to quash writ of possession are both without merit and are hereby DENIED and the subject parcels of lands covered by TCT Nos. 203937, 203936, 169198, 169199, 169200 and 169202 (of the Register of Deeds of Manila) located at Antonio Rivera Street, Tondo II, Manila with a total area of 3,571.10 square meters are hereby declared CONDEMNED in favor of the City of Manila for distribution and resale to all poor and landless qualified residents/tenants in the said area under the city's "land-for-the landless" program upon payment of just compensation which is yet to be determined by this Court. 12 Petitioner filed a motion for reconsideration 13 as well as a supplemental motion for reconsideration 14 seeking the reversal of the above-quoted order but the same were denied. 15 Still, petitioner filed a subsequent motion to be allowed to file a second motion for reconsideration but it was also denied.

Aggrieved, petitioner filed on March 31, 1996, a Petition for Certiorari with the Court of Appeals (CA-G.R. SP No. 36904) seeking to set aside the September 30, 1994 order of the RTC of Manila, Branch 42. However, on March 18, 1996, respondent CA issued a resolution dismissing the petition in this wise: It appearing that the above-entitled petition is insufficient in form and substance it does not comply with Section 2(a), Rule 6 of the Revised Internal Rules of the Court of Appeals which requires that the "petition shall be . . . accompanied by . . . other pertinent documents and papers," aside from the fact that copies of the pleadings attached to the petition are blurred and unreadable this Court resolved to summarily DISMISS the same (petition). 16 Petitioner filed a motion for reconsideration and attached clearer copies of the pertinent documents and papers pursuant to Section 2(a), Rule 6 of the Revised Internal Rules of the Court of Appeals. But on May 20, 1996, respondent CA issued a resolution denying the motion as petitioner failed to submit clearer and readable copies of the pleadings. 17 This prompted petitioner to proceed to this Court giving rise to the instant petition for review on certiorari under Rule 45 and docketed herein as G.R. No. 125218, assailing the dismissal of its petition by the CA in its resolution dated March 18, 1996 as well as that of its motion for reconsideration in the resolution dated May 20, 1996. Meanwhile, owing to the finality of the decision in the ejectment suit (Civil Case No. 140817CV), the MTC of Manila, Branch 15, upon motion of petitioner Filstream, issued a Writ of Execution as well as a Notice to Vacate the disputed premises. 18 Private respondents filed a Motion to Recall/Quash the Writ of Execution and Notice to Vacate 19 alleging the existence of a supervening event in that the properties subject of the dispute have already been ordered condemned in an expropriation proceeding in favor of the City of Manila for the benefit of the qualified occupants thereof, thus execution shall be stayed. Petitioner opposed the motion, reiterating that the decision in the ejectment case is already final and executory and disputed private respondents' right to interpose the expropriation proceedings as a defense because the latter were not parties to the same. For its part, the City of Manila filed on March 13, 1996, a motion for intervention with prayer to stay/quash the writ of execution on the ground that it is the present possessor of the property subject of execution. In its order dated March 14, 1996, the MTC of Manila, Branch 14, denied private respondents' motion as it found the allegations therein bereft of merit and upheld the issuance of the Writ of Execution and Notice to Vacate in petitioner's favor. 20 Subsequently, the trial court also denied the motion filed by the City of Manila.

On April 22, 1996, the trial court issued an order commanding the demolition of the structure erected on the disputed premises. To avert the demolition, private respondents filed before the RTC of Manila, Branch 14, a Petition for Certiorari and Prohibition with prayer for the issuance of a temporary restraining order and preliminary injunction (docketed as Civil Case No. 96-78098). On April 29, 1996, the RTC of Manila, Branch 33, issued a TRO enjoining the execution of the writ issued in Civil Case No. 140817-CV by the MTC of Manila, Branch 14. 21 Subsequently, the RTC issued a writ of preliminary injunction on May 14, 1996. 22 On May 15, 1996, the City of Manila filed its Petition for Certiorari and Prohibition with prayer for the issuance of a temporary restraining order and preliminary injunction which was raffled to Branch 23 of the RTC of Manila (docketed as Civil Case No. 96-78382), seeking the reversal of the orders issued by the MTC of Manila, Branch 14, which denied its motion to intervene and quash the writ of execution in Civil Case No. 140817-CV. Thereafter, upon motion filed by the City of Manila, an order was issued by the RTC of Manila, Branch 10, ordering the consolidation of Civil Case No. 96-78382 with Civil Case No. 96-78098 pending before Branch 14 of the RTC of Manila. 23 On May 21, 1996, the RTC of Manila, Branch 14, issued an injunction in Civil Case No. 96-78098 enjoining the implementation of the writ of execution until further orders from the court. 24 Petitioner Filstream filed a Motion to Dissolve the Writ of Preliminary Injunction and to be allowed to post a counterbond but the trial court denied the same. Filstream then filed a motion for reconsideration from the order of denial but pending resolution of this motion, it filed a motion for voluntary inhibition of the presiding judge of the RTC of Manila, Branch 14. The motion for inhibition was granted 25 and as a result, the consolidated cases (Civil Case No. 96-78382 and 9678098) were re-raffled to the RTC of Manila, Branch 33. During the proceedings before the RTC of Manila, Branch 33, petitioner Filstream moved for the dismissal of the consolidated cases (Civil Case No. 96-78382 and No. 96-78098) for violation of Supreme Court Circular No. 04-94 (forum shopping) because the same parties, causes of action and subject matter involved therein have already been disposed of in the decision in the ejectment case (Civil Case No. 140817) which has already became final and executory prior to the filing of these consolidated cases. On December 9, 1996, an order was issued by the RTC of Manila, Branch 33, ordering the dismissal of Civil Case Nos. 96-78382 and 96-78098 for violation of Supreme Court Circular No. 04-94. 26 Immediately thereafter, petitioner Filstream filed an Ex-parte Motion for Issuance of an Alias Writ of Demolition and Ejectment and a supplemental motion to the same dated January 10 and 13, 1997, respectively, 27 before the MTC of Manila, Branch 15, which promulgated the decision in the ejectment suit (Civil Case No. 140817-CV). On January 23, 1997, the court granted the motion and issued the corresponding writ of demolition.

As a consequence of the dismissal of the consolidated cases, herein private respondents filed a Petition for Certiorari and Prohibition with prayer for the issuance of a temporary restraining order and preliminary injunction before the Court of Appeals (docketed as CA-G.R. SP No. 43101) 28 assailing the above-mentioned order of dismissal by the RTC of Manila, Branch 33, as having been issued with grave abuse of discretion tantamount to lack or in excess of jurisdiction. In a resolution dated January 28, 1997, the Court of Appeals granted herein private respondents prayer for the issuance of a temporary restraining order and directed the MTC of Manila, Branch 15, to desist from implementing the order of demolition dated January 23, 1997, unless otherwise directed. 29 At the conclusion of the hearing for the issuance of a writ of preliminary injunction, the Court of Appeals, in its resolution dated February 18, 1997, found merit in private respondents' allegations in support of their application of the issuance of the writ and granted the same, to wit: Finding that the enforcement or implementation of the writ of execution and notice to vacate issued in Civil Case No. 140817-CV, the ejectment case before respondent Judge Jiro, during the pendency of the instant petition, would probably be in violation of petitioners' right, and would tend to render the judgment in the instant case ineffectual, and probably work injustice to the petitioners, the application for the issuance of a writ of preliminary injunction is hereby GRANTED. WHEREFORE, upon the filing of a bond in the amount of P150,000.00, let a writ of preliminary injunction be issued enjoining respondents, their employees, agents, representatives and anyone acting in their behalf from enforcing or executing the writ of execution and notice to vacate issued in Civil Case No. 140817-CV of the court of respondent Judge Jiro, or otherwise disturbing the status quo, until further orders of this Court. 30 In turn, petitioner Filstream is now before this Court via a Petition for Certiorari under Rule 65 (G.R. No. 128077), seeking to nullify the Resolutions of the Court of Appeals dated January 28, 1997 and February 18, 1997 which granted herein private respondents' prayer for a TRO and Writ of Preliminary Injunction, the same being null and void for having been issued in grave abuse of discretion. Upon motion filed by petitioner Filstream, in order to avoid any conflicting decisions on the legal issues raised in the petitions, the Court ordered that the later petition, G.R. No. 128077 be consolidated with G.R. No. 128077 in the resolution of March 5, 1997. 31

The issue raised in G.R. No. 125218 is purely a procedural and technical matter. Petitioner takes exception to the resolutions of respondent CA dated March 18, 1996 and May 20, 1996 which ordered the dismissal of its Petition for Certiorari for non-compliance with Sec. 2(a) of Rule 6 of the Revised Internal Rules of the Court of Appeals by failing to attach to its petition other pertinent documents and papers and for attaching copies of pleadings which are blurred and unreadable. Petitioner argues that respondent appellate court seriously erred in giving more premium to form rather than substance. We agree with the petitioner. A strict adherence to the technical and procedural rules in this case would defeat rather than meet the ends of justice as it would result in the violation of the substantial rights of petitioner. At stake in the appeal filed by petitioner before the CA is the exercise of their property rights over the disputed premises which have been expropriated and have in fact been ordered condemned in favor of the City of Manila. In effect, the dismissal of their appeal in the expropriation proceedings based on the aforementioned grounds is tantamount to a deprivation of property without due process of law as it would automatically validate the expropriation proceedings which the petitioner is still disputing. It must be emphasized that where substantial rights are affected, as in this case, the stringent application of procedural rules may be relaxed if only to meet the ends of substantial justice. In these instances, respondent CA can exercise its discretion to suspend its internal rules and allow the parties to present and litigate their causes of action so that the Court can make an actual and complete disposition of the issues presented in the case. Rather than simply dismissing the petition summarily for non-compliance with respondent court's internal rules, respondent CA should have instead entertained petitioner Filstream's petition for review on certiorari, and ordered petitioner to submit the corresponding pleadings which it deems relevant and replace those which are unreadable. This leniency could not have caused any prejudice to the rights of the other parties. With regard to the other petition, G.R. No. 128077, petitioner Filstream objects to the issuance by respondent CA of the restraining order and the preliminary injunction enjoining the execution of the writ of demolition issued in the ejectment suit (Civil Case No. 140817-CV) as an incident to private respondents' pending petition assailing the dismissal by the RTC of Manila, Branch 33, of the consolidated petitions for certiorari filed by private respondents and the City of Manila on the ground of forum shopping. The propriety of the issuance of the restraining order and the writ of preliminary injunction is but a mere incident to the actual controversy which is rooted in the assertion of the conflicting rights of the parties in this case over the disputed premises. In order to determine

whether private respondents are entitled to the injunctive reliefs granted by respondent CA, we deemed it proper to extract the source of discord. Petitioner Filstream anchors its claim by virtue of its ownership over the properties and the existence of a final and executory judgment against private respondents ordering the latter's ejectment from the premises (Civil Case No. 140817-CV). Private respondents' claim on the other hand hinges on an alleged supervening event which has rendered the enforcement of petitioner's rights moot, that is, the expropriation proceedings (Civil Case No. 94-70560) undertaken by the City of Manila over the disputed premises for the benefit of herein private respondents. For its part, the City of Manila is merely exercising its power of eminent domain within its jurisdiction by expropriating petitioner's properties for public use. There is no dispute as to the existence of a final and executory judgment in favor of petitioner Filstream ordering the ejectment of private respondents from the properties subject of this dispute. The judgment in the ejectment suit became final and executory after private respondents failed to interpose any appeal from the adverse decision of the Court of Appeals dated August 25, 1994 in CA-G.R. SP No. 33714. Thus, petitioner has every right to assert the execution of this decision as it had already become final and executory. However, it must also be conceded that the City of Manila has an undeniable right to exercise its power of eminent domain within its jurisdiction. The right to expropriate private property for public use is expressly granted to it under Section 19 of the 1991 Local Government Code, to wit: Sec. 19. Eminent Domain. A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose, or welfare for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws: Provided, however, That the power of eminent domain may not be exercised unless a valid and definite offer has been previously made to the owner, and such offer was not accepted; Provided, further, That the local government unit may immediately take possession of the property upon the filing of the expropriation proceedings and upon making a deposit with the proper court of at least fifteen (15%) of the fair market value of the property based on the current tax declaration of the property to be expropriated: Provided, finally, That, the amount to be paid for the expropriated property shall be determined by the proper court, based on the fair market value at the time of the taking of the property. (Emphasis supplied).

More specifically, the City of Manila has the power to expropriate private property in the pursuit of its urban land reform and housing program as explicitly laid out in the Revised Charter of the City of Manila (R.A. No. 409) as follows: General powers. The city may have a common seal and alter the same at pleasure, and may take, purchase, receive, hold, lease, convey, and dispose of real and personal property for the general interest of the city, condemn private property for public use, contract and be contracted with, sue and be sued, and prosecute and defend to final judgment and execution, and exercise all the powers hereinafter conferred. (R.A. 409, Sec. 3; Emphasis supplied). xxx xxx xxx Sec. 100. The City of Manila is authorized to acquire private lands in the city and to subdivide the same into home lots for sale on easy terms to city residents, giving first priority to the bona fide tenants or occupants of said lands, and second priority to laborers and low-salaried employees. For the purpose of this section, the city may raise the necessary funds by appropriations of general funds, by securing loans or by issuing bonds, and, if necessary, may acquire the lands through expropriation proceedings in accordance with law, with the approval of the President . . . . (Emphasis supplied). In fact, the City of Manila's right to exercise these prerogatives notwithstanding the existence of a final and executory judgment over the property to be expropriated has been upheld by this Court in the case of Philippine Columbian Association vs. Panis, G.R. No. 106528, December 21, 1993. 32 Relying on the aforementioned provisions of the Revised Charter of the City of Manila, the Court declared that: The City of Manila, acting through its legislative branch, has the express power to acquire private lands in the city and subdivide these lands into home lots for sale to bona-fide tenants or occupants thereof, and to laborers and low-salaried employees of the city. That only a few could actually benefit from the expropriation of the property does not diminish its public use character. It is simply not possible to provide all at once land and shelter for all who need them (Sumulong v. Guerrero, 154 SCRA 461 [1987]). Corollary to the expanded notion of public use, expropriation is not anymore confined to vast tracts of land and landed estates (Province of Camarines Sur v. Court of Appeals, G. R. No. 103125, May 17, 1993; J. M. Tuason and Co., Inc. v. Land Tenure Administration, 31 SCRA 413 [1970]). It is therefore of no moment that the land sought to be expropriated in this case is less than half a hectare only (Pulido v. Court of Appeals, 122 SCRA 63 [1983]).

Through the years, the public use requirement in eminent domain has evolved into a flexible concept, influenced by changing conditions (Sumulong v. Guerrero, supra; Manotok v. National Housing Authority, 150 SCRA 89 [1987]; Heirs of Juancho Ardona v. Reyes, 125 SCRA 220 [1983]). Public use now includes the broader notion of indirect public benefit or advantage, including in particular, urban land reform and housing. 33 We take judicial notice of the fact that urban land reform has become a paramount task in view of the acute shortage of decent housing in urban areas particularly in Metro Manila. Nevertheless, despite the existence of a serious dilemma, local government units are not given an unbridled authority when exercising their power of eminent domain in pursuit of solutions to these problems. The basic rules still have to be followed, which are as follows: "no person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws (Art. 3, Sec. 1, 1987 Constitution); private property shall not be taken for public use without just compensation (Art. 3, Section 9, 1987 Constitution)". Thus, the exercise by local government units of the power of eminent domain is not without limitations. Even Section 19 of the 1991 Local Government Code is very explicit that it must comply with the provisions of the Constitution and pertinent laws, to wit: Sec. 19. Eminent Domain. A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose, or welfare for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws: . . . (Emphasis supplied). The governing law that deals with the subject of expropriation for purposes of urban land reform and housing is Republic Act No. 7279 (Urban Development and Housing Act of 1992) and Sections 9 and 10 of which specifically provide as follows: Sec. 9. Priorities in the acquisition of Land. Lands for socialized housing shall be acquired in the following order: (a) Those owned by the Government or any of its subdivisions, instrumentalities, or agencies, including government-owned or controlled corporations and their subsidiaries; (b) Alienable lands of the public domain; (c) Unregistered or abandoned and idle lands; (d) Those within the declared Areas for Priority Development, Zonal Improvement sites, and Slum Improvement and Resettlement Program sites which have not yet been acquired;

(e) Bagong Lipunan Improvement of Sites and Services or BLISS sites which have not yet been acquired; and (f) Privately-owned lands. Where on-site development is found more practicable and advantageous to the beneficiaries, the priorities mentioned in this section shall not apply. The local government units shall give budgetary priority to on-site development of government lands. Sec. 10. Modes of Land Acquisition. The modes of acquiring lands for purposes of this Act shall include, among others, community mortgage, land swapping, land assembly or consolidation, land banking, donation to the Government, joint-venture agreement, negotiated purchase, and expropriation. Provided, however, That expropriation shall be resorted to only when other modes of acquisition have been exhausted. Provided further, That where expropriation is resorted to, parcels of land owned by small property owners shall be exempted for purposes of this Act. Provided, finally, That abandoned property, as herein defined, shall be reverted and escheated to the State in a proceeding analogous to the procedure laid down in Rule 91 of the Rules of Court. For the purpose of socialized housing, government-owned and foreclosed properties shall be acquired by the local government units, or by the National Housing Authority primarily through negotiated purchase: Provided, That qualified beneficiaries who are actual occupants of the land shall be given the right of first refusal. (Emphasis supplied). Very clear from the abovequoted provisions are the limitations with respect to the order of priority in acquiring private lands and in resorting to expropriation proceedings as a means to acquire the same. Private lands rank last in the order of priority for purposes of socialized housing. In the same vein, expropriation proceedings are to be resorted to only when the other modes of acquisition have been exhausted. Compliance with these conditions must be deemed mandatory because these are the only safeguards in securing the right of owners of private property to due process when their property is expropriated for public use. Proceeding from the parameters laid out in the above disquisitions, we now pose the crucial question: Did the City of Manila comply with the abovementioned conditions when it expropriated petitioner Filstream's properties? We have carefully scrutinized the records of this case and found nothing that would indicate that respondent City of Manila complied with Sec. 9 and Sec. 10 of R.A. 7279. Petitioner Filstream's properties were expropriated and ordered condemned in favor of the City of Manila sans any showing that resort to the acquisition of other lands listed under Sec. 9 of RA 7279 have proved futile. Evidently, there

was a violation of petitioner Filstream's right to due process which must accordingly be rectified. Indeed, it must be emphasized that the State has a paramount interest in exercising its power of eminent domain for the general good considering that the right of the State to expropriate private property as long as it is for public use always takes precedence over the interest of private property owners. However we must not lose sight of the fact that the individual rights affected by the exercise of such right are also entitled to protection, bearing in mind that the exercise of this superior right cannot override the guarantee of due process extended by the law to owners of the property to be expropriated. In this regard, vigilance over compliance with the due process requirements is in order. WHEREFORE, the petitions are hereby GRANTED. In G.R. 125218, the resolutions of the Court of Appeals in CA-G. R. SP NO. 36904 dated March 18, 1996 and May 20, 1996 are hereby REVERSED and SET ASIDE. In G.R. No. 128077, the resolution of the Court of Appeals in CAG.R. SP No. 43101 dated January 28, 1997 and February 18, 1997 are REVERSED and SET ASIDE. SO ORDERED. Narvasa, C.J., Romero, Melo and Panganiban, JJ., concur. Footnotes 1 Annex C, G.R. No. 128077, Rollo, pp. 72-79. 2 G.R. No. 128077, Rollo, pp. 204-211. 3 Annex E, G.R. No. 128077, Rollo, p. 86. 4 Annex F, G.R. No. 128077, Rollo, p. 88. 5 G.R. No. 125218, Rollo, p. 44. 6 Covered by T.C.T. Nos. 203937, 203936, 169198, 169199, 169200 and 199202 of the Registry of Deeds of Manila. 7 G.R. No. 125218, Rollo, p. 62. 8 G.R. No. 125218, Rollo, pp. 50-51.

9 G.R. No. 125218, Rollo, pp. 68-70. 10 G.R. No. 125218, Rollo, pp. 71, 76. 11 G.R. No. 125218, Rollo, pp. 79. 12 G.R. No. 125218, Rollo, p. 85. 13 G.R. No. 125218, Rollo, p. 86. 14 G. R. No. 125218, Rollo, p. 90. 15 G.R. No. 125218, Rollo, p. 95. 16 G.R. No. 125218, Rollo, p. 41. 17 G.R. No. 125218, Rollo, p. 43. 18 G.R. No. 128077, Rollo, pp. 106, 107. 19 G.R. No. 128077, Rollo, p. 108. 20 G.R. No. 125218, Rollo, p. 119. 21 G.R. No. 125218, Rollo, p. 137. 22 G.R. No. 125218, Rollo, p. 138. 23 G.R. No. 125218, Rollo, p. 157. 24 G.R. No. 125218, Rollo, p. 159. 25 G.R. No. 128077, Rollo, p. 181. 26 G.R. No. 125218, Rollo, p. 194. 27 G.R. No. 125218, Rollo, pp. 190-191. 28 G.R. No. 125218, Rollo, p. 42.

29 G.R. No. 125218, Rollo, p. 32. 30 G.R. No. 125218, Rollo, pp. 40-41. 31 G.R. No. 125218, Rollo, p. 427. 32 228 SCRA 668. 33 228 SCRA 668, 673.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 137152 January 29, 2001

land; on January 10, 1996, Mayor Abalos sent a letter to respondents offering to purchase the said property at P3,000.00 per square meter; respondents did not answer the letter. Petitioner thus prayed for the expropriation of the said lots and the fixing of just compensation at the fair market value of P3,000.00 per square meter.2 In their answer, respondents, except Eusebio N. Aguilar who died in 1995, denied having received a copy of Mayor Abalos' offer to purchase their lots. They alleged that the expropriation of their land is arbitrary and capricious, and is not for a public purpose; the subject lots are their only real property and are too small for expropriation, while petitioner has several properties inventoried for socialized housing; the fair market value of P3,000.00 per square meter is arbitrary because the zonal valuation set by the Bureau of Internal Revenue is P7,000.00 per square meter. As counterclaim, respondents prayed for damages of P21 million.3 Respondents filed a "Motion for Preliminary Hearing" claiming that the defenses alleged in their Answer are valid grounds for dismissal of the complaint for lack of jurisdiction over the person of the defendants and lack of cause of action. Respondents prayed that the affirmative defenses be set for preliminary hearing and that the complaint be dismissed.4 Petitioner replied. On November 5, 1997, petitioner filed an Amended Complaint and named as an additional defendant Virginia N. Aguilar and, at the same time, substituted Eusebio Aguilar with his heirs. Petitioner also excluded from expropriation TCT No. 59870 and thereby reduced the area sought to be expropriated from three (3) parcels of land to two (2) parcels totalling 1,636 square meters under TCT Nos. 63766 and 63767.5 The Amended Complaint was admitted by the trial court on December 18, 1997. Respondents, who, with the exception of Virginia Aguilar and the Heirs of Eusebio Aguilar had yet to be served with summons and copies of the Amended Complaint, filed a "Manifestation and Motion" adopting their "Answer with Counterclaim" and "Motion for Preliminary Hearing" as their answer to the Amended Complaint.6 The motion was granted. At the hearing of February 25, 1998, respondents presented Antonio Aguilar who testified and identified several documentary evidence. Petitioner did not present any evidence. Thereafter, both parties filed their respective memoranda.7 On September 17, 1998, the trial court issued an order dismissing the Amended Complaint after declaring respondents as "small property owners" whose land is exempt from expropriation under Republic Act No. 7279. The court also found that the expropriation was not for a public purpose for petitioner's failure to present any evidence that the intended

CITY OF MANDALUYONG, petitioner, vs. ANTONIO N., FRANCISCO N., THELMA N., EUSEBIO N., RODOLFO N., all surnamed AGUILAR, respondents. PUNO, J.: This is a petition for review under Rule 45 of the Rules of Court of the Orders dated September 17, 1998 and December 29, 1998 of the Regional Trial Court, Branch 168, Pasig City1 dismissing the petitioner's Amended Complaint in SCA No. 1427 for expropriation of two (2) parcels of land in Mandaluyong City. 1wphi1.nt The antecedent facts are as follows: On August 4, 1997, petitioner filed with the Regional Trial Court, Branch 168, Pasig City a complaint for expropriation entitled "City of Mandaluyong, plaintiff v. Antonio N., Francisco N, Thelma N, Eusebio N, Rodolfo N., all surnamed Aguilar, defendants." Petitioner sought to expropriate three (3) adjoining parcels of land with an aggregate area of 1,847 square meters registered under Transfer Certificates of Title Nos. 59780, 63766 and 63767 in the names of the defendants, herein respondents, located at 9 de Febrero Street, Barangay Mauwag, City of Mandaluyong; on a portion of the 3 lots, respondents constructed residential houses several decades ago which they had since leased out to tenants until the present; on the vacant portion of the lots, other families constructed residential structures which they likewise occupied; in 1983, the lots were classified by Resolution No. 125 of the Board of the Housing and Urban Development Coordinating Council as an Area for Priority Development for urban land reform under Proclamation Nos. 1967 and 2284 of then President Marcos; as a result of this classification, the tenants and occupants of the lots offered to purchase the land from respondents, but the latter refused to sell; on November 7, 1996, the Sangguniang Panlungsod of petitioner, upon petition of the Kapitbisig, an association of tenants and occupants of the subject land, adopted Resolution No. 516, Series of 1996 authorizing Mayor Benjamin Abalos of the City of Mandaluyong to initiate action for the expropriation of the subject lots and construction of a medium-rise condominium for qualified occupants of the

beneficiaries of the expropriation are landless and homeless residents of Mandaluyong. The court thus disposed of as follows: "WHEREFORE, the Amended Complaint is hereby ordered dismissed without pronouncement as to cost. SO ORDERED."8 Petitioner moved for reconsideration. On December 29, 1998, the court denied the motion. Hence this petition. Petitioner claims that the trial court erred "IN UPHOLDING RESPONDENT'S CONTENTION THAT THEY QUALIFY AS SMALL PROPERTY OWNERS AND ARE THUS EXEMPT FROM EXPROPRIATION."9 Petitioner mainly claims that the size of the lots in litigation does not exempt the same from expropriation in view of the fact that the said lots have been declared to be within the Area for Priority Development (APD) No. 5 of Mandaluyong by virtue of Proclamation No. 1967, as amended by Proclamation No. 2284 in relation to Presidential Decree No. 1517.10 This declaration allegedly authorizes petitioner to expropriate the property, ipso facto, regardless of the area of the land. Presidential Decree (P.D.) No. 1517, the Urban Land Reform Act, was issued by then President Marcos in 1978. The decree adopted as a State policy the liberation of human communities from blight, congestion and hazard, and promotion of their development and modernization, the optimum use of land as a national resource for public welfare.11 Pursuant to this law, Proclamation No. 1893 was issued in 1979 declaring the entire Metro Manila as Urban Land Reform Zone for purposes of urban land reform. This was amended in 1980 by Proclamation No. 1967 and in 1983 by Proclamation No. 2284 which identified and specified 245 sites in Metro Manila as Areas for Priority Development and Urban Land Reform Zones. In 1992, the Congress of the Philippines passed Republic Act No. 7279, the "Urban Development and Housing Act of 1992." The law lays down as a policy that the state, in cooperation with the private sector, undertake a comprehensive and continuing Urban Development and Housing Program; uplift the conditions of the underprivileged and homeless citizens in urban, areas and resettlement areas by making available to them decent housing at affordable cost, basic services and employment opportunities and provide for the rational use and development of urban land to bring about, among others, equitable utilization of residential lands; encourage more effective people's participation in the urban

development process and improve the capability of local government units in undertaking urban development and housing programs and projects.12 Towards this end, all city and municipal governments are mandated to conduct an inventory of all lands and improvements within their respective localities, and in coordination with the National Housing Authority, the Housing and Land Use Regulatory Board, the National Mapping Resource Information Authority, and the Land Management Bureau, identify lands for socialized housing and resettlement areas for the immediate and future needs of the underprivileged and homeless in the urban areas, acquire the lands, and dispose of said lands to the beneficiaries of the program.13 The acquisition of lands for socialized housing is governed by several provisions in the law. Section 9 of R.A. 7279 provides: "Sec. 9. Priorities in the Acquisition of Land. Lands for socialized housing shall be acquired in the following order: (a) Those owned by the Government or any of its subdivisions, instrumentalities, or agencies, including government-owned or controlled corporations and their subsidiaries; (b) Alienable lands of the public domain; (c) Unregistered or abandoned and idle lands; (d) Those within the declared Areas for Priority Development, Zonal Improvement Program sites, and Slum Improvement and Resettlement Program sites which have not yet been acquired; (e) Bagong Lipunan Improvement of Sites and Services or BLISS Sites which have not yet been acquired; (f) Privately-owned lands. Where on-site development is found more practicable and advantageous to the beneficiaries, the priorities mentioned in this section shall not apply. The local government units shall give budgetary priority to on-site development of government lands." Lands for socialized housing are to be acquired in the following order: (1) government lands; (2) alienable lands of the public domain; (3) unregistered or abandoned or idle lands; (4) lands within the declared Areas for Priority Development (APD), Zonal Improvement Program (ZIP)

sites, Slum Improvement and Resettlement (SIR) sites which have not yet been acquired; (5) BLISS sites which have not yet been acquired; and (6) privately-owned lands. There is no dispute that the two lots in litigation are privately-owned and therefore last in the order of priority acquisition. However, the law also provides that lands within the declared APD's which have not yet been acquired by the government are fourth in the order of priority. According to petitioner, since the subject lots lie within the declared APD, this fact mandates that the lots be given priority in acquisition.14 Section 9, however, is not a single provision that can be read separate from the other provisions of the law. It must be read together with Section 10 of R.A. 7279 which also provides: "Section 10. Modes of Land Acquisition. The modes of acquiring lands for purposes of this Act shall include, among others, community mortgage, land swapping, land assembly or consolidation, land banking, donation to the Government, joint-venture agreement, negotiated purchase, and expropriation: Provided, however, That expropriation shall be resorted to only when other modes of acquisition have been exhausted: Provided, further, That where expropriation is resorted to, parcels of land owned by small property owners shall be exempted for purposes of this Act: Provided, finally, That abandoned property, as herein defined, shall be reverted and escheated to the State in a proceeding analogous to the procedure laid down in Rule 91 of the Rules of Court.15 For the purposes of socialized housing, government-owned and foreclosed properties shall be acquired by the local government units, or by the National Housing Authority primarily through negotiated purchase: Provided, That qualified beneficiaries who are actual occupants of the land shall be given the right of first refusal." Lands for socialized housing under R.A. 7279 are to be acquired in several modes. Among these modes are the following: (1) community mortgage; (2) land swapping, (3) land assembly or consolidation; (4) land banking; (5) donation to the government; (6) joint venture agreement; (7) negotiated purchase; and (8) expropriation. The mode of expropriation is subject to two conditions: (a) it shall be resorted to only when the other modes of acquisition have been exhausted; (b) parcels of land owned by small property owners are exempt from such acquisition. Section 9 of R.A. 7279 speaks of priorities in the acquisition of lands. It enumerates the type of lands to be acquired and the heirarchy in their acquisition. Section 10 deals with the modes of land acquisition or the process of acquiring lands for socialized housing. These are two different things. They mean that the type of lands that may be acquired in the order of

priority in Section 9 are to be acquired only in the modes authorized under Section 10. The acquisition of the lands in the priority list must be made subject to the modes and conditions set forth in the next provision. In other words, land that lies within the APD, such as in the instant case, may be acquired only in the modes under, and subject to the conditions of, Section 10. Petitioner claims that it had faithfully observed the different modes of land acquisition for socialized housing under R.A. 7279 and adhered to the priorities in the acquisition for socialized housing under said law.16 It, however, did not state with particularity whether it exhausted the other modes of acquisition in Section 9 of the law before it decided to expropriate the subject lots. The law states "expropriation shall be resorted to when other modes of acquisition have been exhausted." Petitioner alleged only one mode of acquisition, i.e., by negotiated purchase. Petitioner, through the City Mayor, tried to purchase the lots from respondents but the latter refused to sell.17 As to the other modes of acquisition, no mention has been made. Not even Resolution No. 516, Series of 1996 of the Sangguniang Panlungsod authorizing the Mayor of Mandaluyong to effect the expropriation of the subject property states whether the city government tried to acquire the same by community mortgage, land swapping, land assembly or consolidation, land banking, donation to the government, or joint venture agreement under Section 9 of the law. Section 9 also exempts from expropriation parcels of land owned by small property owners.18 Petitioner argues that the exercise of the power of eminent domain is not anymore conditioned on the size of the land sought to be expropriated.19 By the expanded notion of public use, present jurisprudence has established the concept that expropriation is not anymore confined to the vast tracts of land and landed estates, but also covers small parcels of land.20 That only a few could actually benefit from the expropriation of the property does not diminish its public use character.21 It simply is not possible to provide, in one instance, land and shelter for all who need them.22 While we adhere to the expanded notion of public use, the passage of R.A. No. 7279, the "Urban Development and Housing Act of 1992" introduced a limitation on the size of the land sought to be expropriated for socialized housing. The law expressly exempted "small property owners" from expropriation of their land for urban land reform. R.A. No. 7279 originated as Senate Bill No. 234 authored by Senator Joey Lina23 and House Bill No. 34310. Senate Bill No. 234 then provided that one of those lands not covered by the urban land reform and housing program was "land actually used by small property owners within the just and equitable retention limit as provided under this Act."24 "Small property owners" were defined in Senate Bill No. 234 as:

"4. Small Property Owners are those whose rights are protected under Section 9, Article XIII of the Constitution of the Philippines, who own small parcels of land within the fair and just retention limit provided under this Act and which are adequate to meet the reasonable needs of the small property owner's family and their means of livelihood.25 The exemption from expropriation of lands of small-property owners was never questioned on the Senate floor.26 This exemption, although with a modified definition, was actually retained in the consolidation of Senate Bill No. 234 and House Bill No. 34310 which became R.A. No. 7279.27 The question now is whether respondents qualify as "small property owners" as defined in Section 3 (q) of R.A. 7279. Section 3 (q) provides: "Section 3 x x x (q). "Small property owners" refers to those whose only real property consists of residential lands not exceeding three hundred square meters (300 sq.m.) in highly urbanized cities and eight hundred square meters (800 sq.m.) in other urban areas." "Small-property owners" are defined by two elements: (1) those owners of real property whose property consists of residential lands with an area of not more than 300 square meters in highly urbanized cities and 800 square meters in other urban areas; and (2) that they do not own real property other than the same. The case at bar involves two (2) residential lots in Mandaluyong City, a highly urbanized city. The lot under TCT No. 63766 is 687 square meters in area and the second under TCT No. 63767 is 949 square meters, both totalling 1,636 square meters in area. TCT No. 63766 was issued in the names of herein five (5) respondents, viz: "FRANCISCO N. AGUILAR, widower; THELMA N. AGUILAR, single; EUSEBIO N. AGUILAR, JR., widower; RODOLFO N. AGUILAR, single and ANTONIO N. AGUILAR, married to Teresita Puig; all of legal age, Filipinos."28 TCT No. 63767 was issued in the names of the five (5) respondents plus Virginia Aguilar, thus: "FRANCISCO N. AGUILAR, widower; THELMA N. AGUILAR, single; EUSEBIO N. AGUILAR, JR., widower; RODOLFO N. AGUILAR, single and ANTONIO N. AGUILAR, married to Teresita Puig; and VIRGINIA N. AGUILAR, single, all of legal age, Filipinos."29 Respondent Antonio Aguilar testified that he and the other registered owners are all siblings who inherited the subject property by intestate succession from their parents.30 Their father died in 1945 and their mother in 1976.31 Both TCT's were issued in the siblings' names on

September 2, 1987.31 In 1986, however, the siblings agreed to extrajudicially partition the lots among themselves, but no action was taken by them to this end. It was only eleven (11) years later, on November 28, 1997 that a survey of the two lots was made33 and on February 10, 1998, a consolidation subdivision plan was approved by the Lands Management Service of the Department of Environment and Natural Resources.34 The co-owners signed a Partition Agreement on February 24, 199835 and on May 21, 1998, TCT Nos. 63766 and 63767 were cancelled and new titles issued in the names of the individual owners pursuant to the Partition Agreement. Petitioner argues that the consolidation of the subject lots and their partition was made more than six (6) months after the complaint for expropriation was filed on August 4, 1997, hence, the partition was made in bad faith, for the purpose of circumventing the provisions of R.A. 7279.36 At the time of filing of the complaint for expropriation, the lots subject of this case were owned in common by respondents; Under a co-ownership, the ownership of an undivided thing or right belongs to different persons.37 During the existence of the co-ownership, no individual can claim title to any definite portion of the community property until the partition thereof; and prior to the partition, all that the co-owner has is an ideal or abstract quota or proportionate share in the entire land or thing.38 Article 493 of the Civil Code however provides that: "Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners shall be limited to the portion which may be allotted to him in the division upon termination of the co-ownership.39 Before partition in a co-ownership, every co-owner has the absolute ownership of his undivided interest in the common property. The co-owner is free to alienate, assign or mortgage his interest, except as to purely personal rights.40 He may also validly lease his undivided interest to a third party independently of the other co-owners.41 The effect of any such transfer is limited to the portion which may be awarded to him upon the partition of the property.42 Article 493 therefore gives the owner of an undivided interest in the property the right to freely sell and dispose of his undivided interest.43 The co-owner, however, has no right to sell or alienate a concrete specific or determinate part of the thing owned in common, because his right over the thing is represented by a quota or ideal portion without any physical adjudication.44 If the co-owner sells a concrete portion, this, nonetheless, does not render the

sale void. Such a sale affects only his own share, subject to the results of the partition but not those of the other co-owners who did not consent to the sale.45 In the instant case, the titles to the subject lots were issued in respondents' names as coowners in 1987ten (10) years before the expropriation case was filed in 1997. As co-owners, all that the respondents had was an ideal or abstract quota or proportionate share in the lots. This, however, did not mean that they could not separately exercise any rights over the lots. Each respondent had the full ownership of his undivided interest in the property. He could freely sell or dispose of his interest independently of the other co-owners. And this interest could have even been attached by his creditors.46 The partition in 1998, six (6) months after the filing of the expropriation case, terminated the co-ownership by converting into certain and definite parts the respective undivided shares of the co-owners.47 The subject property is not a thing essentially indivisible. The rights of the co-owners to have the property partitioned and their share in the same delivered to them cannot be questioned for "[n]o coowner shall be obliged to remain in the co-ownership."48 The partition was merely a necessary incident of the co-ownership;49 and absent any evidence to the contrary, this partition is presumed to have been done in good faith. Upon partition, four (4) co-owners, namely, Francisco, Thelma, Rodolfo and Antonio Aguilar each had a share of 300 square meters under TCT Nos. 13849, 13852, 13850, 13851.50 Eusebio Aguilar's share was 347 square meters under TCT No. 1385351 while Virginia Aguilar's was 89 square meters under TCT No. 13854.52 It is noted that Virginia Aguilar, although granted 89 square meters only of the subject lots, is, at the same time, the sole registered owner of TCT No. 59780, one of the three (3) titles initially sought to be expropriated in the original complaint. TCT No. 59780, with a land area of 211 square meters, was dropped in the amended complaint. Eusebio Aguilar was granted 347 square meters, which is 47 square meters more than the maximum of 300 square meters set by R.A. 7279 for small property owners. In TCT No. 13853, Eusebio's title, however, appears the following annotation: "... subject to x x x, and to the prov. of Sec. 4 Rule 74 of the Rules of Court with respect to the inheritance left by the deceased Eusebio N. Aguilar."53 Eusebio died on March 23, 1995,54 and, according to Antonio's testimony, the former was survived by five (5) children.55 Where there are several co-owners, and some of them die, the heirs of those who die, with respect to that part belonging to the deceased, become also coowners of the property together with those who survive.56 After Eusebio died, his five heirs became co-owners of his 347 square-meter portion. Dividing the 347 square meters among the five entitled each heir to 69.4 square meters of the land subject of litigation.

Consequently, the share of each co-owner did not exceed the 300 square meter limit set in R.A. 7279. The second question, however, is whether the subject property is the only real property of respondents for them to comply with the second requisite for small property owners. Antonio Aguilar testified that he and most of the original co-owners do not reside on the subject property but in their ancestral home in Paco, Manila.57 Respondents therefore appear to own real property other than the lots in litigation. Nonetheless, the records do not show that the ancestral home in Paco, Manila and the land on which it stands are owned by respondents or anyone of them. Petitioner did not present any title or proof of this fact despite Antonio Aguilar's testimony. On the other hand, respondents claim that the subject lots are their only real property58 and that they, particularly two of the five heirs of Eusebio Aguilar, are merely renting their houses and therefore do not own any other real property in Metro Manila.59 To prove this, they submitted certifications from the offices of the City and Municipal Assessors in Metro Manila attesting to the fact that they have no registered real property declared for taxation purposes in the respective cities. Respondents were certified by the City Assessor of Manila;60 Quezon City;61 Makati City;62 Pasay City;63 Paranaque;64 Caloocan City;65 Pasig City;66 Muntinlupa;67 Marikina;68 and the then municipality of Las Pias69 and the municipality of San Juan del Monte70 as having no real property registered for taxation in their individual names.1wphi1.nt Finally, this court notes that the subject lots are now in the possession of respondents. Antonio Aguilar testified that he and the other co-owners filed ejectment cases against the occupants of the land before the Metropolitan Trial Court, Mandaluyong, Branches 59 and 60. Orders of eviction were issued and executed on September 17, 1997 which resulted in the eviction of the tenants and other occupants from the land in question.71 IN VIEW WHEREOF, the petition is DENIED and the orders dated September 17. 1998 and December 29, 1998 of the Regional Trial Court, Branch 168, Pasig City in SCA No. 1427 are AFFIRMED. SO ORDERED. Davide, Jr., Kapunan, Pardo, and Ynares-Santiago, JJ., concur.

Footnotes:

1 Penned by Judge Benjamin v. Pelayo. 2 Complaint, Records, pp. 2-6. 3 Answer with Counterclaim, Records, pp. 73-84. 4 Records, pp. 97-109.

form part of the public domain. These lands shall be disposed of or utilized by the Government for such purposes that conform with their land use plans. Expropriation proceedings shall be instituted if, after the lapse of one (1) year following receipt of notice of acquisition, the owner fails to introduce improvements as defined in Section 3 (f) hereof, except in the case of force majeure and other fortuitous events. Exempted from this provision, however, are residential lands owned by small property owners or those the ownership of which is subject of a pending litigation." 19 Petition, pp. 8-10, Rollo, pp. 10-12.

5 Amended Complaint, Records, pp. 117-121. 6 Records, p. 134. 7 Records, pp. 257-283, 285-291. 8 Records, p. 297. 22 Ibid. 9 Petition, p. 3, Rollo, p. 5. 23 Co-authored by Senators Estrada, Saguisag, Tanada, Herrera and Romulo. 10 Petition, pp. 4, 6, Rollo, pp. 6, 8. 11 Section 2, P.D. 1517. 12 Section 2, R.A. 7279. 13 R.A. No. 7279, Secs. 7 and 8, 9 and 12. 14 Petition, p. 6, Rollo, p. 8. 15 Emphasis supplied. 16 Petition, p. 6, Rollo, p. 8. 28 Exhibit "1," Records, p. 123. 17 Petition, p. 4, Rollo, p. 6. 29 Exhibit "2," Records, p. 124. 18 Likewise exempt are idle residential lands also owned by small property owners under Section 11 of the law which reads: Sec. 11. Expropriation of idle lands. All idle lands in urban lands in urban and urbanizable areas, as defined and identified in accordance with this Act, shall be expropriated and shall 30 TSN of February 25, 1998, pp. 10-12. 31 TSN of June 17, 1998, pp. 7-8, 10. 24 Sec. 4 (5), Senate Bill No. 234, Record of the Senate, Sept. 2, 1991, Vol. I, No. 20, p. 740741. 25 Record of the Senate, Sept. 2, 1991, Vol. I, No. 20, p. 741. 26 See Interpellations, Record of the Senate, act. 22, 1991, Vol. II, No. 47, pp. 374-376; act. 23, 1991, Vol. II, No. 47, pp. 409-412; Nov. 26, 1991, Vol. II, No. 55, pp. 689-693; Nov. 28, 1991, Vol. II, No. 57, pp. 764-768; Feb. 3, 1992, Vol. IV, No. 60, pp. 79, 81. 27 See Conference Committee Report, Record of the Senate, Feb. 3, 1992, Vol. IV, No. 60, pp. 84, 85-86. 20 Phil. Columbian Association v. Panis, 228 SCRA 668, 673 [1993]; J. M. Tuason & Co., Inc. v. Land Tenure Administration, 31 SCRA 413, 427-428 [1970]. 21 Phil. Columbian Association v. Panis, supra, at 673; Sumulong v. Guerrero, 154 SCRA 461 [1987].

32 Exhibits "1" and "2," Records, pp. 123-124. 48 Article 494, Civil Code; see also Ferrer v. Rilloraza, 55 O.G., No. 9, 1575, 1580 [1959]. 33 Exhibit "3," Records, p. 164. 34 Ibid. 35 Exhibit "4," Records, pp. 171-175. 36 Petition, p. 5, Rollo, p. 7. 37 Article 484, Civil Code; Alejandrino v. Court of Appeals, 295 SCRA 536, 548 [1998]. 38 Oliveras v. Lopez, 168 SCRA 431, 437 [1988]; Diversified Credit Corp. v. Rosado, 135 Phil. 491, 495 [1968]; see also cases in Aquino, Civil Code, vol. I, p. 508 [1990]. 39 Article 493, Civil Code. 55 TSN of February 25, 1998, p. 22; TSN of June 17, 1998, pp. 6- 7. 40 The term "personal rights" refers to the personal relations of one co-owner to the others, as when the family residence is used by the children as co-owners Padilla, Civil Code, vol. II, pp. 300 & 301 [1972]; Tolentino, Civil Code, Bk. II, p. 203 [1992]. 41 Vda. De Castro v. Atienza, 53 SCRA 264, 268 [1973]. 42 Ramirez v. Bautista, 14 Phil. 528, 532-533 [1909]; also cited in Padilla, Civil Code, vol. II, p. 302 [1972] and Aquino, Civil Code, vol. I, p. 510 [1990]. 43 Acebedo v. Abesamis, 217 SCRA 186, 194-195 [1993]; Tolentino, Civil Code, vol. II, p. 201 [1992]. 44 Abad v. Court of Appeals, 179 SCRA 817, 826 [1989]; Bai1on-Casilao v. Court of Appeals, 160 SCRA 738, 745 [1988]; Santos v. Buenconsejo, 14 SCRA 407, 409 [1965]; Ramirez v. Bautista, supra. 45 Bailon-Casilao v. Court of Appeals, 160 SCRA 738, 745 [1988]; Lopez v. Gonzaga Vda. de Cuaycong, 74 Phil. 601, 607 [1944]; Punsalan v. Boon Liat, 44 Phil. 320, 324 [1923]. 46 Gotauco & Co. v. Register of Deeds, 59 Phil. 756, 757 [1934]; see also Tolentino, supra, at 201, citing Cadag v. Trinanes, (C.A.), 40 O.G., No. 8, 4th Suppl. 324 [1939]. 47 Tolentino, supra, at 204, citing 3 Manresa 508. 56 Cid v. Peralta, 24 Phil. 142, 147-148 [1913]; also cited in Tolentino, Civil Code, Bk. II, pp. 162-163 [1992]. 57 TSN of February 25, 1998, pp. 35-36. 58 Exhibits "8," ""8-e," and "8-f," Records, pp. 179, 184-185. 59 Exhibits "8-ddd" and "8-eee," Records, pp. 235, 236. 60 Exhibits "8-g," "8-h," "8-i" to "8-r," "8-fff," Records, pp. 186-196, 237. 61 Exhibits "8-r" to "8-x," Records, pp. 197-203. 62 Exhibit "8-y, Records, p. 204. 63 Exhibits "8-z," "8-aa" to "8-ee," Records, pp. 205-210. 64 Exhibit "8-zz," Records, p. 231. 65 Exhibits "8-ff" to "8-kk," Records, pp. 211-216. 66 Exhibit "8-b," Records, p. 181. 49 Ferrer v. Rilloraza, (C.A.) 55 O.G. 1575, 1580 [1959]; also cited in Tolentino, supra, at 204205. 50 Exhibits "12" to "15," Records, pp. 242-245. 51 Exhibit "16," Records, p. 246. 52 Exhibit "17," Records, p. 247. 53 Exhibit "16," Records, p. 246. 54 Exhibit "7," Records, p. 178.

67 Exhibit "8-rr," Records, p. 223. 68 Exhibit "8-ss," Records, pp. 224. 69 Exhibits "8-ll" to "8-qq," Records, pp. 217-222. 70 Exhibits "8-tt" to "8-yy," Records, pp. 225-230. 71 TSN of February 25, 1998, pp. 20-21; Exhibits "5" and "6," Delivery Receipts of subject property, Records, pp. 176-177.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 155746 October 13, 2004

City, rendered a decision on April 1, 1998, ordering the squatters to vacate the lot. On appeal, the RTC affirmed the MTCCs decision and issued a writ of execution and order of demolition.1avvphi1 However, when the demolition order was about to be implemented, Cebu City Mayor Alvin Garcia wrote two letters4 to the MTCC, requesting the deferment of the demolition on the ground that the City was still looking for a relocation site for the squatters. Acting on the mayors request, the MTCC issued two orders suspending the demolition for a period of 120 days from February 22, 1999. Unfortunately for petitioners, during the suspension period, the Sangguniang Panlungsod (SP) of Cebu City passed a resolution which identified Lot 1029 as a socialized housing site pursuant to RA 7279.5 Then, on June 30, 1999, the SP of Cebu City passed Ordinance No. 17726 which included Lot 1029 among the identified sites for socialized housing. On July, 19, 2000, Ordinance No. 18437 was enacted by the SP of Cebu City authorizing the mayor of Cebu City to initiate expropriation proceedings for the acquisition of Lot 1029 which was registered in the name of petitioners. The intended acquisition was to be used for the benefit of the homeless after its subdivision and sale to the actual occupants thereof. For this purpose, the ordinance appropriated the amount of P6,881,600 for the payment of the subject lot. This ordinance was approved by Mayor Garcia on August 2, 2000. On August 29, 2000, petitioners filed with the RTC an action for declaration of nullity of Ordinance No. 1843 for being unconstitutional. The trial court rendered its decision on July 1, 2002 dismissing the complaint filed by petitioners whose subsequent motion for reconsideration was likewise denied on August 26, 2002. In this appeal, petitioners argue that Ordinance No. 1843 is unconstitutional as it sanctions the expropriation of their property for the purpose of selling it to the squatters, an endeavor contrary to the concept of "public use" contemplated in the Constitution.8 They allege that it will benefit only a handful of people. The ordinance, according to petitioners, was obviously passed for politicking, the squatters undeniably being a big source of votes.1avvphi1 In sum, this Court is being asked to resolve whether or not the intended expropriation by the City of Cebu of a 4,048-square-meter parcel of land owned by petitioners contravenes the Constitution and applicable laws. Under Section 48 of RA 7160,9 otherwise known as the Local Government Code of 1991,10 local legislative power shall be exercised by the Sangguniang Panlungsod of the city. The legislative acts of the Sangguniang Panlungsod in the exercise of its lawmaking authority are denominated ordinances.

DIOSDADO LAGCAO, DOROTEO LAGCAO and URSULA LAGCAO, petitioners, vs. JUDGE GENEROSA G. LABRA, Branch 23, Regional Trial Court, Cebu, and the CITY OF CEBU, respondent. DECISION CORONA, J.: Before us is a petition for review of the decision dated July 1, 2002 of the Regional Trial Court, Branch 23, Cebu City1 upholding the validity of the City of Cebus Ordinance No. 1843, as well as the lower courts order dated August 26, 2002 denying petitioners motion for reconsideration. In 1964, the Province of Cebu donated 210 lots to the City of Cebu. One of these lots was Lot 1029, situated in Capitol Hills, Cebu City, with an area of 4,048 square meters. In 1965, petitioners purchased Lot 1029 on installment basis. But then, in late 1965, the 210 lots, including Lot 1029, reverted to the Province of Cebu.2 Consequently, the province tried to annul the sale of Lot 1029 by the City of Cebu to the petitioners. This prompted the latter to sue the province for specific performance and damages in the then Court of First Instance. On July 9, 1986, the court a quo ruled in favor of petitioners and ordered the Province of Cebu to execute the final deed of sale in favor of petitioners. On June 11, 1992, the Court of Appeals affirmed the decision of the trial court. Pursuant to the ruling of the appellate court, the Province of Cebu executed on June 17, 1994 a deed of absolute sale over Lot 1029 in favor of petitioners. Thereafter, Transfer Certificate of Title (TCT) No. 129306 was issued in the name of petitioners and Crispina Lagcao.3

After acquiring title, petitioners tried to take possession of the lot only to discover that it was already occupied by squatters. Thus, on June 15, 1997, petitioners instituted ejectment proceedings against the squatters. The Municipal Trial Court in Cities (MTCC), Branch 1, Cebu

Local government units have no inherent power of eminent domain and can exercise it only when expressly authorized by the legislature.11 By virtue of RA 7160, Congress conferred upon local government units the power to expropriate. Ordinance No. 1843 was enacted pursuant to Section 19 of RA 7160: SEC. 19. Eminent Domain. A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose, or welfare for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws xxx. (italics supplied). Ordinance No. 1843 which authorized the expropriation of petitioners lot was enacted by the SP of Cebu City to provide socialized housing for the homeless and low-income residents of the City. However, while we recognize that housing is one of the most serious social problems of the country, local government units do not possess unbridled authority to exercise their power of eminent domain in seeking solutions to this problem. There are two legal provisions which limit the exercise of this power: (1) no person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws;12 and (2) private property shall not be taken for public use without just compensation.13 Thus, the exercise by local government units of the power of eminent domain is not absolute. In fact, Section 19 of RA 7160 itself explicitly states that such exercise must comply with the provisions of the Constitution and pertinent laws. The exercise of the power of eminent domain drastically affects a landowners right to private property, which is as much a constitutionally-protected right necessary for the preservation and enhancement of personal dignity and intimately connected with the rights to life and liberty.14 Whether directly exercised by the State or by its authorized agents, the exercise of eminent domain is necessarily in derogation of private rights.15 For this reason, the need for a painstaking scrutiny cannot be overemphasized. The due process clause cannot be trampled upon each time an ordinance orders the expropriation of a private individuals property. The courts cannot even adopt a hands -off policy simply because public use or public purpose is invoked by an ordinance, or just compensation has been fixed and determined. In De Knecht vs. Bautista,16 we said: It is obvious then that a land-owner is covered by the mantle of protection due process affords. It is a mandate of reason. It frowns on arbitrariness, it is the antithesis of any

governmental act that smacks of whim or caprice. It negates state power to act in an oppressive manner. It is, as had been stressed so often, the embodiment of the sporting idea of fair play. In that sense, it stands as a guaranty of justice. That is the standard that must be met by any governmental agency in the exercise of whatever competence is entrusted to it. As was so emphatically stressed by the present Chief Justice, "Acts of Congress, as well as those of the Executive, can deny due process only under pain of nullity. xxx. The foundation of the right to exercise eminent domain is genuine necessity and that necessity must be of public character.17 Government may not capriciously or arbitrarily choose which private property should be expropriated. In this case, there was no showing at all why petitioners property was singled out for expropriation by the city ordinance or what necessity impelled the particular choice or selection. Ordinance No. 1843 stated no reason for the choice of petitioners property as the site of a socialized housing project. Condemnation of private lands in an irrational or piecemeal fashion or the random expropriation of small lots to accommodate no more than a few tenants or squatters is certainly not the condemnation for public use contemplated by the Constitution. This is depriving a citizen of his property for the convenience of a few without perceptible benefit to the public.18 RA 7279 is the law that governs the local expropriation of property for purposes of urban land reform and housing. Sections 9 and 10 thereof provide: SEC 9. Priorities in the Acquisition of Land. Lands for socialized housing shall be acquired in the following order: (a) Those owned by the Government or any of its subdivisions, instrumentalities, or agencies, including government-owned or controlled corporations and their subsidiaries; (b) Alienable lands of the public domain; (c) Unregistered or abandoned and idle lands; (d) Those within the declared Areas or Priority Development, Zonal Improvement Program sites, and Slum Improvement and Resettlement Program sites which have not yet been acquired; (e) Bagong Lipunan Improvement of Sites and Services or BLISS which have not yet been acquired; and

(f) Privately-owned lands. Where on-site development is found more practicable and advantageous to the beneficiaries, the priorities mentioned in this section shall not apply. The local government units shall give budgetary priority to on-site development of government lands. (Emphasis supplied). SEC. 10. Modes of Land Acquisition. The modes of acquiring lands for purposes of this Act shall include, among others, community mortgage, land swapping, land assembly or consolidation, land banking, donation to the Government, joint venture agreement, negotiated purchase, and expropriation: Provided, however, That expropriation shall be resorted to only when other modes of acquisition have been exhausted: Provided further, That where expropriation is resorted to, parcels of land owned by small property owners shall be exempted for purposes of this Act: xxx. (Emphasis supplied). In the recent case of Estate or Heirs of the Late Ex-Justice Jose B.L. Reyes et al. vs. City of Manila,19 we ruled that the above-quoted provisions are strict limitations on the exercise of the power of eminent domain by local government units, especially with respect to (1) the order of priority in acquiring land for socialized housing and (2) the resort to expropriation proceedings as a means to acquiring it. Private lands rank last in the order of priority for purposes of socialized housing. In the same vein, expropriation proceedings may be resorted to only after the other modes of acquisition are exhausted. Compliance with these conditions is mandatory because these are the only safeguards of oftentimes helpless owners of private property against what may be a tyrannical violation of due process when their property is forcibly taken from them allegedly for public use. We have found nothing in the records indicating that the City of Cebu complied strictly with Sections 9 and 10 of RA 7279. Ordinance No. 1843 sought to expropriate petit ioners property without any attempt to first acquire the lands listed in (a) to (e) of Section 9 of RA 7279. Likewise, Cebu City failed to establish that the other modes of acquisition in Section 10 of RA 7279 were first exhausted. Moreover, prior to the passage of Ordinance No. 1843, there was no evidence of a valid and definite offer to buy petitioners property as required by Section 19 of RA 7160.20 We therefore find Ordinance No. 1843 to be constitutionally infirm for being violative of the petitioners right to due process. It should also be noted that, as early as 1998, petitioners had already obtained a favorable judgment of eviction against the illegal occupants of their property. The judgment in this ejectment case had, in fact, already attained finality, with a writ of execution and an order of demolition. But Mayor Garcia requested the trial court to suspend the demolition on the pretext that the City was still searching for a relocation site for the squatters. However, instead of looking for a relocation site during the suspension period, the city council suddenly

enacted Ordinance No. 1843 for the expropriation of petitioners lot. It was trickery and bad faith, pure and simple. The unconscionable manner in which the questioned ordinance was passed clearly indicated that respondent City transgressed the Constitution, RA 7160 and RA 7279. For an ordinance to be valid, it must not only be within the corporate powers of the city or municipality to enact but must also be passed according to the procedure prescribed by law. It must be in accordance with certain well-established basic principles of a substantive nature. These principles require that an ordinance (1) must not contravene the Constitution or any statute (2) must not be unfair or oppressive (3) must not be partial or discriminatory (4) must not prohibit but may regulate trade (5) must be general and consistent with public policy, and (6) must not be unreasonable.21 Ordinance No. 1843 failed to comply with the foregoing substantive requirements. A clear case of constitutional infirmity having been thus established, this Court is constrained to nullify the subject ordinance. We recapitulate: first, as earlier discussed, the questioned ordinance is repugnant to the pertinent provisions of the Constitution, RA 7279 and RA 7160; second, the precipitate manner in which it was enacted was plain oppression masquerading as a pro-poor ordinance; third, the fact that petitioners small property was singled out for expropriation for the purpose of awarding it to no more than a few squatters indicated manifest partiality against petitioners, and fourth, the ordinance failed to show that there was a reasonable relation between the end sought and the means adopted. While the objective of the City of Cebu was to provide adequate housing to slum dwellers, the means it employed in pursuit of such objective fell short of what was legal, sensible and called for by the circumstances. Indeed, experience has shown that the disregard of basic liberties and the use of shortsighted methods in expropriation proceedings have not achieved the desired results. Over the years, the government has tried to remedy the worsening squatter problem. Far from solving it, however, governments kid-glove approach has only resulted in the multiplication and proliferation of squatter colonies and blighted areas. A pro-poor program that is well-studied, adequately funded, genuinely sincere and truly respectful of everyones basic rights is what this problem calls for, not the improvident enactment of politics-based ordinances targeting small private lots in no rational fashion.

10 The law was approved on October 10, 1991 and it became effective on January 1, 1992. WHEREFORE, the petition is hereby GRANTED. The July 1, 2002 decision of Branch 23 of the Regional Trial Court of Cebu City is REVERSED and SET ASIDE. SO ORDERED. Davide, Jr., Puno, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Carpio Morales*, Callejo, Sr., Azcuna*, Tinga, and Chico-Nazario*, JJ., concur. Footnotes * on leave 1 Presided by Judge Generosa G. Labra. 2 The records of the case do not state why and how the lots reverted to the Province of Cebu. 3 Now deceased. 4 Dated February 22, 1999 and May 20, 1999. 5 The Urban Development and Housing Act of 1992 (Lina Law). 6 Entitled, "AN ORDINANCE FURTHER AMENDING ORDINANCE NO. 1656 AS AMENDED BY ORDINANCE NO. 1684 OTHERWISE KNOWN AS THE 1966 REVISED ZONING ORDINANCE OF THE CITY OF CEBU, BY INCORPORATING THEREIN A NEW DISTRICT CALLED SOCIALIZED HOUSING SITES." 7 Entitled "AN ORDINANCE AUTHORIZING THE CITY MAYOR OF CEBU CITY TO INSTITUTE EXPROPRIATION PROCEEDINGS AGAINST MRS. CRISPINA VDA. DE LAGCAO, OWNER OF LOT NO. 1029 LOCATED AT GREEN VALLEY, CAPITOL SITE, CEBU CITY, TO ACQUIRE THE SAME FOR PUBLIC USE OR PURPOSE." 8 Article IV, Section 9 "Private property shall not be taken for public use without just compensation." 9 Section 48. Local Legislative Power Local legislative power shall be exercised by the sangguniang panlalawigan for the province; the sangguniang panlungsod for the city; the sangguniang bayan for the municipality; and the sangguniang barangay for the barangay. 11 City of Cincinnati vs. Vester, 281 US 439, 74 L. ed 950, 50 S Ct. 360. 12 Article 3, Section 1, 1987 Constitution. 13 Article 3, Section 9, 1987 Constitution. 14 Joaquin G. Bernas, The Constitution of the Republic of the Philippines: A Commentary, vol. 1. p. 43, 1987. 15 City of Manila vs. Chinese Community of Manila, 40 Phil. 349, 1919. 16 G.R. No. L-51078, 30 October 1980, 100 SCRA 660. 17 City of Manila vs. Chinese Community of Manila, supra. 18 Urban Estates, Inc. vs. Montesa, 88 Phil. 348 (1951). 19 G.R. Nos. 132431 and 137146, February 13, 2004. 20 Sec 19. Eminent Domain "xxx. 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: xxx." 21 Tatel vs. Municipality of Virac, G.R. No. 40243, 11 March 1992, 207 SCRA 157.

Republic of the Philippines SUPREME COURT SECOND DIVISION G.R. No. 152230. August 9, 2005 JESUS IS LORD CHRISTIAN SCHOOL FOUNDATION, INC., Petitioners, vs. MUNICIPALITY (now CITY) OF PASIG, METRO MANILA, Respondent. DECISION CALLEJO, SR., J.: Before us is a petition for review of the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 59050, and its Resolution dated February 18, 2002, denying the motion for reconsideration thereof. The assailed decision affirmed the order of the Regional Trial Court (RTC) of Pasig, Branch 160, declaring the respondent Municipality (now City) of Pasig as having the right to expropriate and take possession of the subject property. The Antecedents The Municipality of Pasig needed an access road from E. R. Santos Street, a municipal road near the Pasig Public Market, to Barangay Sto. Tomas Bukid, Pasig, where 60 to 70 houses, mostly made of light materials, were located. The road had to be at least three meters in width, as required by the Fire Code, so that fire trucks could pass through in case of conflagration.2 Likewise, the residents in the area needed the road for water and electrical outlets.3 The municipality then decided to acquire 51 square meters out of the 1,791-square meter property of Lorenzo Ching Cuanco, Victor Ching Cuanco and Ernesto Ching Cuanco Kho covered by Transfer Certificate of Title (TCT) No. PT-66585,4 which is abutting E. R. Santos Street. On April 19, 1993, the Sangguniang Bayan of Pasig approved an Ordinance5 authorizing the municipal mayor to initiate expropriation proceedings to acquire the said property and appropriate the fund therefor. The ordinance stated that the property owners were notified of the municipalitys 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 plaintiffs motion, the RTC issued a writ of possession over the property sought to be expropriated. On November 26, 1993, the plaintiff caused the annotation of a notice of lis pendens at the dorsal portion of TCT No. PT-92579 under the name of the Jesus Is Lord Christian School Foundation, Incorporated (JILCSFI) which had purchased the property.7 Thereafter, the plaintiff constructed therein a cemented road with a width of three meters; the road was called Damayan Street. In their answer,8 the defendants claimed that, as early as February 1993, they had sold the said property to JILCSFI as evidenced by a deed of sale9 bearing the signature of defendant Ernesto Ching Cuanco Kho and his wife. When apprised about the complaint, JILCSFI filed a motion for leave to intervene as defendant-in-intervention, which motion the RTC granted on August 26, 1994.10 In its answer-in-intervention, JILCSFI averred, by way of special and affirmative defenses, that the plaintiffs 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 attorneys fees.12 During trial, Rolando Togonon, the plaintiffs 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 Engineers Office testified that, sometime in 1992, the plaintiff constructed a road perpendicular from E. R. Santos Street to Sto. Tomas Bukid; he was the Project Engineer for the said undertaking. Before the construction of the road, the lot was raw and they had to put filling materials so that vehicles could use it. According to him, the length of the road which they constructed was 70 meters long and 3 meters wide so that a fire truck could pass through. He averred that there is no other road through which a fire truck could pass to go to Sto. Tomas Bukid.15 Manuel Tembrevilla, the Fire Marshall, averred that he had seen the new road, that is, Damayan Street, and found that a fire truck could pass through it. He estimated the houses in the area to be around 300 to 400. Tembrevilla also stated that Damayan Street is the only road in the area.16 Finally, Bonifacio Maceda, Jr., Tax Mapper IV, testified that, according to their records, JILCSFI became the owner of the property only on January 13, 1994.17 The plaintiff offered in evidence a photocopy of the letter of Engr. Jose Reyes addressed to Lorenzo Ching Cuanco to prove that the plaintiff made a definite and valid offer to acquire the property to the co-owners. However, the RTC rejected the same letter for being a mere photocopy.18 For the defendant-intervenor, Normita del Rosario, owner of the property located across the subject property, testified that there are other roads leading to E. R. Santos Street. She asserted that only about ten houses of the urban poor are using the new road because the other residents are using an alternative right-of-way. She averred that she did not actually occupy her property; but there were times that she visited it.19 Danilo Caballero averred that he had been a resident of Sto. Tomas Bukid for seven years. From his house, he could use three streets to go to E. R. Santos Street, namely, Catalina Street, Damayan Street and Bagong Taon Street. On cross-examination, he admitted that no vehicle could enter Sto. Tomas Bukid except through the newly constructed Damayan Street.20

Eduardo Villanueva, Chairman of the Board of Trustees and President of JILCSFI, testified that the parcel of land was purchased for purposes of constructing a school building and a church as worship center. He averred that the realization of these projects was delayed due to the passing of the ordinance for expropriation.21 The intervenor adduced documentary evidence that on February 27, 1993, Lorenzo Ching Cuanco and the co-owners agreed to sell their property covered by TCT No. PT-66585 for P1,719,000.00.22 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 Sale23 over the property on December 13, 1993. On December 21, 1993, TCT No. PT-92579 was issued in the name of JILCSFI.24 It declared the property for taxation purposes under its name.25 On September 3, 1997, the RTC issued an Order in favor of the plaintiff, the dispositive portion of which reads: WHEREFORE, in view of the foregoing and in accordance with Section 4, Rule 67 of the Revised Rules of Court, the Court Resolves to DECLARE the plaintiff as having a lawful right to take the property in question for purposes for which the same is expropriated. The plaintiff and intervenor are hereby directed to submit at least two (2) names of their recommended commissioners for the determination of just compensation within ten (10) days from receipt hereof. SO ORDERED.26 The RTC held that, as gleaned from the declaration in Ordinance No. 21, there was substantial compliance with the definite and valid offer requirement of Section 19 of R.A. No. 7160, and that the expropriated portion is the most convenient access to the interior of Sto. Tomas Bukid. Dissatisfied, JILCSFI elevated the case to the CA on the following assignment of errors: First Assignment of Error THE LOWER COURT SERIOUS[LY] ERRED WHEN IT RULED THAT PLAINTIFF-APPELLEE SUBSTANTIALLY COMPLIED WITH THE LAW WHEN IT EXPROPRIATED JILS PROPERTY TO BE USED AS A RIGHT OF WAY. Second Assignment of Error

THE LOWER COURT ERRED IN DISREGARDING JILS EVIDENCE PROVING THAT THERE WAS NO PUBLIC NECESSITY TO WARRANT THE EXPROPRIATION OF THE SUBJECT PROPERTY.27 The Court of Appeals Decision In a Decision dated March 13, 2001, the CA affirmed the order of the RTC.28 The CA agreed with the trial court that the plaintiff substantially complied with Section 19 of R.A. No. 7160, particularly the requirement that a valid and definite offer must be made to the owner. The CA declared that the letter of Engr. Reyes, inviting Lorenzo Ching Cuanco to a conference to discuss with him the road project and the price of the lot, was a substantial compliance with the "valid and definite offer" requirement under said Section 19. In addition, the CA noted that there was also constructive notice to the defendants of the expropriation proceedings since a notice of lis pendens was annotated at the dorsal portion of TCT No. PT-92579 on November 26, 1993.29 Finally, the CA upheld the public necessity for the subject property based on the findings of the trial court that the portion of the property sought to be expropriated appears to be, not only the most convenient access to the interior of Sto. Tomas Bukid, but also an easy path for vehicles entering the area, particularly fire trucks. Moreover, the CA took into consideration the provision of Article 33 of the Rules and Regulations Implementing the Local Government Code, which regards the "construction or extension of roads, streets, sidewalks" as public use, purpose or welfare.30 On April 6, 2001, JILCSFI filed a motion for reconsideration of the said decision alleging that the CA erred in relying on the photocopy of Engr. Reyes letter to Lorenzo Ching Cuanco because the same was not admitted in evidence by the trial court for being a mere photocopy. It also contended that the CA erred in concluding that constructive notice of the expropriation proceeding, in the form of annotation of the notice of lis pendens, could be considered as a substantial compliance with the requirement under Section 19 of the Local Government Code for a valid and definite offer. JILCSFI also averred that no inspection was ever ordered by the trial court to be conducted on the property, and, if there was one, it had the right to be present thereat since an inspection is considered to be part of the trial of the case.31 The CA denied the motion for reconsideration for lack of merit. It held that it was not precluded from considering the photocopy32 of the letter, notwithstanding that the same was excluded by the trial court, since the fact of its existence was duly established by corroborative evidence. This corroborative evidence consisted of the testimony of the plaintiffs 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 respondents 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 CAs 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 offerors promise into a contractual obligation.52 Corollarily, the offer must be complete, indicating with sufficient clearness the kind of contract intended and definitely

stating the essential conditions of the proposed contract.53 An offer would require, among other things, a clear certainty on both the object and the cause or consideration of the envisioned contract.54 The purpose of the requirement of a valid and definite offer to be first made to the owner is to encourage settlements and voluntary acquisition of property needed for public purposes in order to avoid the expense and delay of a court action.55 The law is designed to give to the owner the opportunity to sell his land without the expense and inconvenience of a protracted and expensive litigation. This is a substantial right which should be protected in every instance.56 It encourages acquisition without litigation and spares not only the landowner but also the condemnor, the expenses and delays of litigation. It permits the landowner to receive full compensation, and the entity acquiring the property, immediate use and enjoyment of the property. A reasonable offer in good faith, not merely perfunctory or pro forma offer, to acquire the property for a reasonable price must be made to the owner or his privy.57 A single bona fide offer that is rejected by the owner will suffice. The expropriating authority is burdened to make known its definite and valid offer to all the owners of the property. However, it has a right to rely on what appears in the certificate of title covering the land to be expropriated. Hence, it is required to make its offer only to the registered owners of the property. After all, it is well-settled that persons dealing with property covered by a Torrens certificate of title are not required to go beyond what appears on its face.58 In the present case, the respondent failed to prove that before it filed its complaint, it made a written definite and valid offer to acquire the property for public use as an access road. The only evidence adduced by the respondent to prove its compliance with Section 19 of the Local Government Code is the photocopy of the letter purportedly bearing the signature of Engr. Jose Reyes, to only one of the co-owners, Lorenzo Ching Cuanco. The letter reads: MR. LORENZO CHING CUANCO 18 Alcalde Jose Street Capasigan, Pasig Metro Manila Dear Mr. Cuanco:

This refers to your parcel of land located along E. Santos Street, Barangay Palatiw, Pasig, Metro Manila embraced in and covered by TCT No. 66585, a portion of which with an area of fifty-one (51) square meters is needed by the Municipal Government of Pasig for conversion into a road-right of way for the benefit of several residents living in the vicinity of your property. Attached herewith is the sketch plan for your information. In this connection, may we respectfully request your presence in our office to discuss this project and the price that may be mutually agreed upon by you and the Municipality of Pasig. Thank you. Very truly yours, (Sgd.) ENGR. JOSE L. REYES Technical Asst. to the Mayor on Infrastructure59 It bears stressing, however, that the respondent offered the letter only to prove its desire or intent to acquire the property for a right-of-way.60 The document was not offered to prove that the respondent made a definite and valid offer to acquire the property. Moreover, the RTC rejected the document because the respondent failed to adduce in evidence the original copy thereof.61 The respondent, likewise, failed to adduce evidence that copies of the letter were sent to and received by all the co-owners of the property, namely, Lorenzo Ching Cuanco, Victor Ching Cuanco and Ernesto Kho. The respondent sought to prove, through the testimony of its messenger, Rolando Togonon, that Lorenzo Ching Cuanco received the original of the said letter. But Togonon testified that he merely gave the letter to a lady, whom he failed to identify. He stated that the lady went inside the store of Lorenzo Ching Cuanco, and later gave the letter back to him bearing the signature purportedly of one Luz Bernarte. However, Togonon admitted, on crossexamination, 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, Maam. 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, isnt 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 CAs ruling that the annotation of a notice of lis pendens at the dorsal portion of petitioners 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 Sea 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 individ ual 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 Manalos) 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 petitioners entire par cel of land, thereby splitting the lot into two halves, and making it impossible for the petitioner to put up its school building and worship center. The subject property is expropriated for the purpose of constructing a road. The respondent is not mandated to comply with the essential requisites for an easement of right-of-way under the New Civil Code. Case law has it that in the absence of legislative restriction, the grantee of the power of eminent domain may determine the location and route of the land to be taken66 unless such determination is capricious and wantonly injurious.67 Expropriation is justified so long as it is for the public good and there is genuine necessity of public character.68 Government may not capriciously choose what private property should be taken.69 The respondent has demonstrated the necessity for constructing a road from E. R. Santos Street to Sto. Tomas Bukid. The witnesses, who were residents of Sto. Tomas Bukid, testified that although there were other ways through which one can enter the vicinity, no vehicle, however, especially fire trucks, could enter the area except through the newly constructed Damayan Street. This is more than sufficient to establish that there is a genuine necessity for the construction of a road in the area. After all, absolute necessity is not required, only reasonable and practical necessity will suffice.70 Nonetheless, the respondent failed to show the necessity for constructing the road particularly in the petitioners 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 respondents complaint also alleged that the said portion of the petitioners lot has been surveyed as the best possible ingress and egress. However, the respondent failed to adduce a preponderance of evidence to prove its claims.

On this point, the trial court made the following findings: The contention of the defendants that there is an existing alley that can serve the purpose of the expropriator is not accurate. An inspection of the vicinity reveals that the alley being referred to by the defendants actually passes thru Bagong Taon St. but only about one-half (1/2) of its entire length is passable by vehicle and the other half is merely a foot-path. It would be more inconvenient to widen the alley considering that its sides are occupied by permanent structures and its length from the municipal road to the area sought to be served by the expropriation is considerably longer than the proposed access road. The area to be served by the access road is composed of compact wooden houses and literally a slum area. As a result of the expropriation of the 51-square meter portion of the property of the intervenor, a 3-meter wide road open to the public is created. This portion of the property of the intervenor is the most convenient access to the interior of Sto. Tomas Bukid since it is not only a short cut to the interior of the Sto. Tomas Bukid but also an easy path for vehicles entering the area, not to mention the 3-meter wide road requirement of the Fire Code.72 However, as correctly pointed out by the petitioner, there is no showing in the record that an ocular inspection was conducted during the trial. If, at all, the trial court conducted an ocular inspection of the subject property during the trial, the petitioner was not notified thereof. The petitioner was, therefore, deprived of its right to due process. It bears stressing that an ocular inspection is part of the trial as evidence is thereby received and the parties are entitled to be present at any stage of the trial.73 Consequently, where, as in this case, the petitioner was not notified of any ocular inspection of the property, any factual finding of the court based on the said inspection has no probative weight. The findings of the trial court based on the conduct of the ocular inspection must, therefore, be rejected. IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision and Resolution of the Court of Appeals are REVERSED AND SET ASIDE. The RTC is ordered to dismiss the complaint of the respondent without prejudice to the refiling thereof. SO ORDERED. Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.

Footnotes 1 Penned by Associate Justice Portia Alio-Hormachuelos, with Associate Justices Fermin A. Martin, Jr. and Mercedes Gozo-Dadole, concurring; Rollo, pp. 6-14.

2 TSN, 9 January 1996, pp. 4-9. 3 TSN, 1 August 1994, p. 17. 4 Records, p. 17. 5 Exhibit "C," Id. at 59-60. 6 Records, pp. 19-20. 7 Id. at 56. 8 Id. at 21. 9 Exhibits "2" and "3." 10 Id. at 24. 11 Records, p. 26. 12 Id. at 31-32. 13 TSN, 1 August 1994, pp. 3-8. 14 TSN, 1 August 1994, pp. 15-18. 15 TSN, 9 January 1996, pp. 5-10. 16 TSN, 30 January 1996, pp. 9-10. 17 TSN, 13 March 1996, p. 5. 18 Records, p. 41. 19 TSN, 15 July 1996, pp. 17-19. 20 TSN, 19 August 1996, pp. 8-13. 21 TSN, 25 September 1996, pp. 7-9.

22 Exhibit "3." 23 Exhibit "5." 24 Exhibit "1." 25 Exhibit "2." 26 Rollo, pp. 58-59. 27 CA Rollo, p. 46. 28 Rollo, p. 13. 29 Id. at 10-11. 30 Rollo, pp. 12-13. 31 CA Rollo, pp. 143-148. 32 Exhibit "H." 33 Rollo, p. 18. 34 Rollo, pp. 159-162. 35 Rollo, pp. 168-175. 36 Id. at 196. 37 Id. at 97-98. 38 Vicente v. Planters Development Bank, G.R. No. 136112, 28 January 2003, 396 SCRA 282. 39 Larena v. Mapili, G.R. No. 146341, 7 August 2003, 408 SCRA 484. 40 Chan v. Maceda, Jr., G.R. No. 142591, 30 April 2003, 402 SCRA 352. 41 Heirs of Alberto Suguitan v. City of Mandaluyong, G.R. No. 135087, 14 March 2000, 328 SCRA 137.

60 Id. at 38. 42 City of Manila v. Chinese Community of Manila, 40 Phil. 349 (1919). 61 Records, p. 41. 43 District Board of Trustees of the Daytona Beach Community College v. Allen, 428 So.2d 704 (1983). 44 Pequonnock Yacht Club, Inc. v. City of Bridgeport, 259 Conn. 592, 790 A.2d 1178 (2002). 45 City of Birmingham v. Brown, 241 Ala. 203, 2 So.2d 305 (1941). 46 Gordon v. Conroe Independent School District, 789 S.W.2d 395 (1990). 47 Heirs of Alberto Suguitan v. City of Mandaluyong, supra. 48 Wampler v. Trustees of Indiana University, 241 Ind. 449, 172 N.E.2d 67 (1961). 49 Pequonnock Yacht Club, Inc. v. City of Bridgeport, supra. 50 Casino Reinvestment Development Authority v. Katz, 334 N.J.Super 473, 759 A.2d 1247 (2000). 51 Tolentino, Arturo M., Commentaries and Jurisprudence on the Civil Code of the Philippines, Volume IV, 1991 Edition, p. 448. 52 Blacks Law Dictionary, 5th Edition, p. 976. 53 Tolentino, supra, p. 449. 69 Moday v. Court of Appeals, G.R. No. 107916, 20 February 1997, 268 SCRA 586. 54 Swedish Match, AB v. Court of Appeals, G.R. No. 128120, 20 October 2004, 441 SCRA 1. 70 Manotok v. National Housing Authority, G.R. No. L-55166, 21 May 1987, 150 SCRA 89. 55 City of Atlantic v. Cynwyd Investments, 148 N.J. 55, 689 A.2d 712 (1997). 56 In Re University of Avenue in City of Rochester, 82 Misc. 598, 144 N.Y.S. 1086 (1913). 57 Chambers v. Public Service Company of Indiana, Inc., 265 Ind. 336, 355 N.E.2d 781 (1976). 58 Orquiola v. Court of Appeals, G.R. No. 141463, 6 August 2002, 386 SCRA 301. 72 Rollo, pp. 57-58. 59 Records, p. 57. 71 See City of Manila v. Chinese Community of Manila, supra, where the Court noted that the record contains no proof of the necessity of opening the same through the cemetery; Manotok v. National Housing Authority, supra, where the Court observed that there is no showing as to why the properties involved were singled out for expropriation or what necessity impelled the particular choices or selection. 62 TSN, 1 August 1994, pp. 6-8. 63 Los Baos Rural Bank, Inc. v. Africa, G.R. No. 143994, 11 July 2002, 384 SCRA 535. 64 Section 10, Rule 8 of the Rules of Court provides: Section 10. Specific denial. A defendant must specify each material allegation of fact the truth of which he does not admit and whenever practicable, shall set forth the substance of the matters upon which he relies to support his denial. Where a defendant desires to deny only a part of an averment, he shall specify so much of it as is true and material and shall deny only the remainder. Where a defendant is without knowledge or information sufficient to form a belief as to the truth of a material averment made in the complaint, he shall so state, and this shall have the effect of a denial. (Emphasis supplied) 65 G.R. No. 106440, 29 January 1996, 252 SCRA 412. 66 Alabama Elec. Co-op., Inc. v. Watson, 419 So. 2d 1351 (1982). 67 Alabama Power Co. v. Tauton, 465 So. 2d 1105 (1984). 68 Municipality of Meycauayan, Bulacan v. Intermediate Appellate Court, G.R. No. L-72126, 29 January 1988, 157 SCRA 640.

73 Ricardo J. Francisco, Evidence, 3rd ed., 1996, p. 52, citing Benton v. State, 30 Ark. 329; Denver Omnibus & Cab Co. v. War Auction Co., 47 Colo. 446, 1076 Pac. 1073.

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