THE CITY OF MANILA vs. CHINESE COMMUNITY OF MANILA, ET AL.

,
G.R. No. L-14355
October 31, 1919
FACTS:

On the 11th day of December, 1916, the City of Manila presented a petition in the
Court of First Instance of said city, praying that certain parcels of land situated in the district
of Binondo of said city within Block 83 of said district be expropriated for the purpose of
constructing a public improvement of the extension of Rizal Avenue, Manila, it is necessary
for the plaintiff to acquire ownership in fee simple of.

The defendant, the Comunidad de Chinos de Manila [Chinese Community of Manila],

answered the petition of the plaintiff denying that it was either necessary or expedient that
the said parcels be expropriated for street purposes; that existing street and roads furnished
ample means of communication for the public in the district covered by such proposed
expropriation; that if the construction of the street or road should be considered a public
necessity, other routes were available, which would fully satisfy the plaintiff's purposes, at
much less expense and without disturbing the resting places of the dead since the lands in
question was a cemetery, which had been used as such for many years, and was covered
with sepulchres and monuments, and that the same should not be converted into a street
for public purposes. They also alleged that the plaintiff was without right or authority to
expropriate said cemetery or any part or portion thereof for street purposes and that the
expropriation was not necessary as a public improvement. Honorable Simplicio del Rosario,
CFI judge, decided that there was no necessity for the expropriation of the particular strip of
land in question, and absolved each and all of the defendants from all liability under the
complaint, without any finding as to costs. The plaintiff appealed that the expropriation was
necessary. Hence, the petition.

ISSUE:

Whether or not the City of Manila can expropriate the said land for public use and
whether the courts can inquire into, and hear proof upon, the necessity of the
expropriation.

HELD:

Whether the purpose for the exercise of the right of eminent domain is public, is a
question of fact. Whether the land is public, is a question of fact; and, in our opinion, when
the legislature conferred upon the courts of the Philippine Islands the right to ascertain
upon trial whether the right exists for the exercise of eminent domain, it intended that the
courts should inquire into, and hear proof upon, those questions.

Upon the question whether expropriation is a legislative function exclusively, and

that the courts cannot intervene except for the purpose of determining the value of the land
in question, there is much legal legislature. Much has been written upon both sides of that
question. A careful examination of the discussions pro and con will disclose the fact that the
decisions depend largely upon particular constitutional or statutory provisions. It cannot be
denied, if the legislature under proper authority should grant the expropriation of
a certain or particular parcel of land for some specified public purpose, that the courts
would be without jurisdiction to inquire into the purpose of that legislation.

the Legislature should grant general authority to a municipal corporation to

expropriate private land for public purposes, we think the courts have ample authority in
this jurisdiction, under the provisions above quoted, to make inquiry and to hear proof,
upon an issue properly presented, concerning whether or not the lands were private and
whether the purpose was, in fact, public.

We are of the opinion that the power of the court is not limited to that question. The right
of expropriation is not an inherent power in a municipal corporation, and before it can
exercise the right some law must exist conferring the power upon it. When the courts come
to determine the question, they must only find (a) that a law or authority exists for the
exercise of the right of eminent domain, but (b) also that the right or authority is being
exercised in accordance with the law. In the present case there are two conditions imposed
upon the authority conceded to the City of Manila: First, the land must be private;
and, second, the purpose must be public. If the court, upon trial, finds that neither of these
conditions exists or that either one of them fails, certainly it cannot be contended that the
right is being exercised in accordance with law.

Whether the purpose for the exercise of the right of eminent domain is public, is a
question of fact. Whether the land is public, is a question of fact; and, in our opinion, when
the legislature conferred upon the courts of the Philippine Islands the right to ascertain
upon trial whether the right exists for the exercise of eminent domain, it intended that the
courts should inquire into, and hear proof upon, those questions.

The legislature, in providing for the exercise of the power of eminent domain, may
directly determine the necessity for appropriating private property for a particular
improvement for public use, and it may select the exact location of the improvement. In
such a case, it is well settled that the utility of the proposed improvement, the extent of the
public necessity for its construction, the expediency of constructing it, the suitableness of
the location selected and the consequent necessity of taking the land selected for its site,
are all questions exclusively for the legislature to determine, and the courts have no power
to interfere, or to substitute their own views for those of the representatives of the people.

In each case the legislature directly determined the necessity for the exercise of the
right of eminent domain in the particular case. It is not denied that if the necessity for the
exercise of the right of eminent domain is presented to the legislative department of the
government and that department decides that there exists a necessity for the exercise of
the right in a particular case, that then and in that case, the courts will not go behind the
action of the legislature and make inquiry concerning the necessity. But when
the statute does not designate the property to be taken nor how may be taken, then the
necessity of taking particular property is a question for the courts. Where the application to
condemn or appropriate is made directly to the court, the question (of necessity) should be
raised and decided in limene. (Wheeling, etc. R. R. Co. vs. Toledo, Ry, etc., Co.)
 There is a wide distinction between a legislative declaration that a municipality is
given authority to exercise the right of eminent domain, and a decision by the municipality
that there exist a necessity for the exercise of that right in a particular case. The first is a
declaration simply that there exist reasons why the right should be conferred upon
municipal corporation, while the second is the application of the right to a particular case.
Certainly, the legislative declaration relating to the advisability of granting the power cannot
be converted into a declaration that a necessity exists for its exercise in a particular case,
and especially so when, perhaps, the land in question was not within the territorial authority
was granted.

Whether it was wise, advisable, or necessary to confer upon a municipality the

power to exercise the right of eminent domain, is a question with which the courts are not
concerned. But when that right or authority is exercised for the purpose of depriving citizens
of their property, the courts are authorized, in this jurisdiction, to make inquiry and to hear
proof upon the necessity in the particular case, and not the general authority.

The taking of private property for any use which is not required by the necessities or
convenience of the inhabitants of the state, is an unreasonable exercise of the right of
eminent domain, and beyond the power of the legislature to delegate. (Bennett vs.Marion,
106 Iowa, 628, 633; Wilson vs. Pittsburg, etc. Co., 222 Pa. St., 541, 545; Greasy, etc.
Co. vs. Ely, etc. Co., 132 Ky., 692, 697.)

As long as there is a constitutional or statutory provision denying the right to take land for
any use other than a public use, it occurs to us that the question whether any particular
use is a public one or not is ultimately, at least, a judicial question. The legislative may, it is
true, in effect declare certain uses to be public, and, under the operation of the well-known
rule that a statute will not be declared to be unconstitutional except in a case free, or
comparatively free, from doubt, the courts will certainly sustain the action of the legislature
unless it appears that the particular use is clearly not of a public nature.

Article 349 of the Civil Code provides that: "No one may be deprived of his property unless it
be by competent authority, for some purpose of proven public utility, and after payment of
the proper compensation. Unless this requisite (proven public utility and payment) has
been complied with, it shall be the duty of the courts to protect the owner of such property
in its possession or to restore its possession to him , as the case may be."

The exercise of the right of eminent domain, whether directly by the State, or by its
authorized agents, is necessarily in derogation of private rights, and the rule in that case is
that the authority must be strictly construed. No species of property is held by individuals
with greater tenacity, and none is guarded by the constitution and laws more sedulously,
than the right to the freehold of inhabitants. When the legislature interferes with that right,
and, for greater public purposes, appropriates the land of an individual without his consent,
the plain meaning of the law should not be enlarged by doubtly interpretation.
(Bensely vs. Mountainlake Water Co., 13 Cal., 306 and cases cited [73 Am. Dec., 576].)

The right to take private property for public use originates in the necessity, and the
taking must be limited by such necessity. The appellant contends that inasmuch as the
legislature has given it general authority to take private property for public use, that the
legislature has, therefore, settled the question of the necessity in every case and that the
courts are closed to the owners of the property upon that question.

The general power to exercise the right of eminent domain must not be confused with the
right to exercise it in a particular case. The power of the legislature to confer, upon
municipal corporations and other entities within the State, general authority to exercise the
right of eminent domain cannot be questioned by the courts, but that general authority of
municipalities or entities must not be confused with the right to exercise it in particular
instances. The moment the municipal corporation or entity attempts to exercise the
authority conferred, it must comply with the conditions accompanying the authority. The
necessity for conferring the authority upon a municipal corporation to exercise the right of
eminent domain is admittedly within the power of the legislature.

In the case at bar, the record does not show conclusively that the plaintiff has definitely
decided that their exists a necessity for the appropriation of the particular land described in
the complaint.

Aside from insisting that there exists no necessity for the alleged improvements, the
defendants further contend that the street in question should not be opened through the
cemetery. One of the defendants alleges that said cemetery is public property. If that
allegations is true, then, of course, the city of Manila cannot appropriate it for public use.
The city of Manila can only expropriate private property.

While we do not contend that the dead must not give place to the living, and while it
is a matter of public knowledge that in the process of time sepulchres may become the seat
of cities and cemeteries traversed by streets and daily trod by the feet of millions of men,
yet, nevertheless such sacrifices and such uses of the places of the dead should not be made
unless and until it is fully established that there exists an eminent necessity therefor. While
cemeteries and sepulchres and the places of the burial of the dead are still within the
memory and command of the active care of the living; while they are still devoted to pious
uses and sacred regard, it is difficult to believe that even the legislature would adopt a law
expressly providing that such places, under such circumstances, should be violated.

In the present case, even granting that a necessity exists for the opening of the
street in question, the record contains no proof of the necessity of opening the same
through the cemetery. The record shows that adjoining and adjacent lands have been
offered to the city free of charge, which will answer every purpose of the plaintiff. Thus the
judgment of the lower court should be and is hereby affirmed, with costs against the
appellant.

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
 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 in-
law, appellant Babilonia, filed a written request with the incumbent municipal mayor for a
permit to construct a building adjacent to their gasoline station on a parcel of land
registered in Fajardo's name, located along the national highway and separated from the
public plaza by a creek (Exh. D). On January 16, 1954, the request was denied, for the reason
among others that the proposed building would destroy the view or beauty of the public
plaza (Exh. E). On January 18, 1954, defendants reiterated their request for a building permit
(Exh. 3), but again the request was turned down by the mayor. Whereupon, appellants
proceeded with the construction of the building without a permit, because they needed a
place of residence very badly, their former house having been destroyed by a typhoon and
hitherto they had been living on leased property.

On February 26, 1954, appellants were charged before and convicted by the justice of the
peace court of Baao, Camarines Sur, for violation of the ordinance in question. Defendants
appealed to the Court of First Instance, which affirmed the conviction, and sentenced
appellants to pay a fine of P35 each and the costs, as well as to demolish the building in
question because it destroys the view of the public plaza of Baao, in that "it hinders the view
of travelers from the National Highway to the said public plaza." From this decision, the
accused appealed to the Court of Appeals, but the latter forwarded the records to us
because the appeal attacks the constitutionality of the ordinance in question.

We find that the appealed conviction can not stand.

A first objection to the validity of the ordinance in question is that under it the mayor has
absolute discretion to issue or deny a permit. The ordinance fails to state any policy, or to
set up any standard to guide or limit the mayor's action. No purpose to be attained by
requiring the permit is expressed; no conditions for its grant or refusal are enumerated. It is
not merely a case of deficient standards; standards are entirely lacking. The ordinance thus
confers upon the mayor arbitrary and unrestricted power to grant or deny the issuance of
building permits, and it is a settled rule that such an undefined and unlimited delegation of
power to allow or prevent an activity, per se lawful, is invalid (People vs. Vera, 65 Phil., 56;
Primicias vs. Fugoso, 80 Phil., 71; Schloss Poster Adv. Co. vs. Rock Hill, 2 SE (2d) 392)

The ordinance in question in no way controls or guides the discretion vested thereby
in the respondents. It prescribes no uniform rule upon which the special permission
of the city is to be granted. Thus the city is clothed with the uncontrolled power to
capriciously grant the privilege to some and deny it others; to refuse the application
of one landowner or lessee and to grant that of another, when for all material
purposes, the two applying for precisely the same privileges under the same
circumstances. The danger of such an ordinance is that it makes possible arbitrary
discriminations and abuses in its execution, depending upon no conditions or
qualifications whatever, other than the unregulated arbitrary will of the city
authorities as the touchstone by which its validity is to be tested. Fundamental rights
under our government do not depend for their existence upon such a slender and
uncertain thread. Ordinances which thus invest a city council with a discretion which
is purely arbitrary, and which may be exercised in the interest of a favored few, are
unreasonable and invalid. The ordinance should have established a rule by which its
impartial enforcement could be secured. All of the authorities cited above sustain
this conclusion.
 As was said in City of Richmond vs. Dudley, 129 Ind. 112,28 N. E. 312, 314 13 L. R. A.
587, 28 Am. St. Rep. 180: "It seems from the foregoing authorities to be well
established that municipal ordinances placing restrictions upon lawful conduct or the
lawful use of property must, in order to be valid, specify the rules and conditions to
be observed in such conduct or business; and must admit of the exercise of the
privilege of all citizens alike who will comply with such rules and conditions; and
must not admit of the exercise, or of an opportunity for the exercise, of any arbitrary
discrimination by the municipal authorities between citizens who will so comply.
(Schloss Poster Adv. Co., Inc. vs. City of Rock Hill, et al., 2 SE (2d), pp. 394-395).

It is contended, on the other hand, that the mayor can refuse a permit solely in case that the
proposed building "destroys the view of the public plaza or occupies any public property"
(as stated in its section 3); and in fact, the refusal of the Mayor of Baao to issue a building
permit to the appellant was predicated on the ground that the proposed building would
"destroy the view of the public plaza" by preventing its being seen from the public highway.
Even thus interpreted, the ordinance is unreasonable and oppressive, in that it operates to
permanently deprive appellants of the right to use their own property; hence, it oversteps
the bounds of police power, and amounts to a taking of appellants property without just
compensation. We do not overlook that the modern tendency is to regard the beautification
of neighborhoods as conducive to the comfort and happiness of residents. But while
property may be regulated in the interest of the general welfare, and in its pursuit, the State
may prohibit structures offensive to the sight (Churchill and Tait vs. Rafferty, 32 Phil. 580),
the State may not, under the guise of police power, permanently divest owners of the
beneficial use of their property and practically confiscate them solely to preserve or assure
the aesthetic appearance of the community. As the case now stands, every structure that
may be erected on appellants' land, regardless of its own beauty, stands condemned under
the ordinance in question, because it would interfere with the view of the public plaza from
the highway. The appellants would, in effect, be constrained to let their land remain idle and
unused for the obvious purpose for which it is best suited, being urban in character. To
legally achieve that result, the municipality must give appellants just compensation and an
opportunity to be heard.

An ordinance which permanently so restricts the use of property that it can not be
used for any reasonable purpose goes, it is plain, beyond regulation and must be
recognized as a taking of the property. The only substantial difference, in such case,
between restriction and actual taking, is that the restriction leaves the owner subject
to the burden of payment of taxation, while outright confiscation would relieve him
of that burden. (Arverne Bay Constr. Co. vs. Thatcher (N.Y.) 117 ALR. 1110, 1116).

A regulation which substantially deprives an owner of all beneficial use of his

property is confiscation and is a deprivation within the meaning of the 14th
Amendment. (Sundlum vs. Zoning Bd., 145 Atl. 451; also Eaton vs. Sweeny, 177 NE
412; Taylor vs. Jacksonville, 133 So. 114).

Zoning which admittedly limits property to a use which can not reasonably be made
of it cannot be said to set aside such property to a use but constitutes the taking of
such property without just compensation. Use of property is an element of
 ownership therein. Regardless of the opinion of zealots that property may properly,
by zoning, be utterly destroyed without compensation, such principle finds no
support in the genius of our government nor in the principles of justice as we known
them. Such a doctrine shocks the sense of justice. If it be of public benefit that
property remain open and unused, then certainly the public, and not the private
individuals, should bear the cost of reasonable compensation for such property under
the rules of law governing the condemnation of private property for public use. (Tews
vs. Woolhiser (1933) 352 I11. 212, 185 N.E. 827) (Emphasis supplied.)

The validity of the ordinance in question was justified by the court below under section
2243, par. (c), of the Revised Administrative Code, as amended. This section provides:

SEC. 2243. Certain legislative powers of discretionary character. — The municipal

council shall have authority to exercise the following discretionary powers:

xxx xxx xxx

(c) To establish fire limits in populous centers, prescribe the kinds of buildings that
may be constructed or repaired within them, and issue permits for the creation or
repair thereof, charging a fee which shall be determined by the municipal council
and which shall not be less than two pesos for each building permit and one peso for
each repair permit issued. The fees collected under the provisions of this subsection
shall accrue to the municipal school fund.

Under the provisions of the section above quoted, however, the power of the municipal
council to require the issuance of building permits rests upon its first establishing fire limits
in populous parts of the town and prescribing the kinds of buildings that may be constructed
or repaired within them. As there is absolutely no showing in this case that the municipal
council had either established fire limits within the municipality or set standards for the kind
or kinds of buildings to be constructed or repaired within them before it passed the
ordinance in question, it is clear that said ordinance was not conceived and promulgated
under the express authority of sec. 2243 (c) aforequoted.

We rule that the regulation in question, Municipal Ordinance No. 7, Series of 1950, of the
Municipality of Baao, Camarines Sur, was beyond the authority of said municipality to enact,
and is therefore null and void. Hence, the conviction of herein appellants is reversed, and
said accused are acquitted, with costs de oficio. So ordered.

Paras, C. J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo, Concepcion, Endencia
and Felix, JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-18841 January 27, 1969

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.ñêt

SEC. 79. The Bureau of Telecommunications shall exercise the following powers and duties:

(a) To operate and maintain existing wire-telegraph and radio-telegraph offices,

stations, and facilities, and those to be established to restore the pre-war
telecommunication service under the Bureau of Posts, as well as such additional
offices or stations as may hereafter be established to provide telecommunication
service in places requiring such service;

(b) To investigate, consolidate, negotiate for, operate and maintain wire-telephone

or radio telephone communication service throughout the Philippines by utilizing
such existing facilities in cities, towns, and provinces as may be found feasible and
under such terms and conditions or arrangements with the present owners or
operators thereof as may be agreed upon to the satisfaction of all concerned;
 (c) To prescribe, subject to approval by the Department Head, equitable rates of
charges for messages handled by the system and/or for time calls and other services
that may be rendered by said system;

(d) To establish and maintain coastal stations to serve ships at sea or aircrafts and,
when public interest so requires, to engage in the international telecommunication
service in agreement with other countries desiring to establish such service with the
Republic of the Philippines; and

(e) To abide by all existing rules and regulations prescribed by the International
Telecommunication Convention relative to the accounting, disposition and exchange
of messages handled in the international service, and those that may hereafter be
promulgated by said convention and adhered to by the Government of the Republic
of the Philippines. 1

The defendant, Philippine Long Distance Telephone Company (PLDT for short), is a public
service corporation holding a legislative franchise, Act 3426, as amended by Commonwealth
Act 407, to install, operate and maintain a telephone system throughout the Philippines and
to carry on the business of electrical transmission of messages within the Philippines and
between the Philippines and the telephone systems of other countries. 2 The RCA
Communications, Inc., (which is not a party to the present case but has contractual relations
with the parties) is an American corporation authorized to transact business in the
Philippines and is the grantee, by assignment, of a legislative franchise to operate a
domestic station for the reception and transmission of long distance wireless messages (Act
2178) and to operate broadcasting and radio-telephone and radio-telegraphic
communications services (Act 3180). 3

Sometime in 1933, the defendant, PLDT, and the RCA Communications, Inc., entered into
an agreement whereby telephone messages, coming from the United States and received by
RCA's domestic station, could automatically be transferred to the lines of PLDT; and vice-
versa, for calls collected by the PLDT for transmission from the Philippines to the United
States. The contracting parties agreed to divide the tolls, as follows: 25% to PLDT and 75% to
RCA. The sharing was amended in 1941 to 30% for PLDT and 70% for RCA, and again
amended in 1947 to a 50-50 basis. The arrangement was later extended to radio-telephone
messages to and from European and Asiatic countries. Their contract contained a stipulation
that either party could terminate it on a 24-month notice to the other. 4 On 2 February 1956,
PLDT gave notice to RCA to terminate their contract on 2 February 1958. 5

Soon after its creation in 1947, the Bureau of Telecommunications set up its own
Government Telephone System by utilizing its own appropriation and equipment and by
renting trunk lines of the PLDT to enable government offices to call private parties. 6 Its
application for the use of these trunk lines was in the usual form of applications for
telephone service, containing a statement, above the signature of the applicant, that the
latter will abide by the rules and regulations of the PLDT which are on file with the Public
Service Commission. 7 One of the many rules prohibits the public use of the service furnished
the telephone subscriber for his private use. 8 The Bureau has extended its services to the
general public since 1948, 9 using the same trunk lines owned by, and rented from, the
PLDT, and prescribing its (the Bureau's) own schedule of rates. 10 Through these trunk lines,
a Government Telephone System (GTS) subscriber could make a call to a PLDT subscriber in
the same way that the latter could make a call to the former.

On 5 March 1958, the plaintiff, through the Director of Telecommunications, entered into
an agreement with RCA Communications, Inc., for a joint overseas telephone service
whereby the Bureau would convey radio-telephone overseas calls received by RCA's station
to and from local residents. 11 Actually, they inaugurated this joint operation on 2 February
1958, under a "provisional" agreement. 12

On 7 April 1958, the defendant Philippine Long Distance Telephone Company, complained
to the Bureau of Telecommunications that said bureau was violating the conditions under
which their Private Branch Exchange (PBX) is inter-connected with the PLDT's facilities,
referring to the rented trunk lines, for the Bureau had used the trunk lines not only for the
use of government offices but even to serve private persons or the general public, in
competition with the business of the PLDT; and gave notice that if said violations were not
stopped by midnight of 12 April 1958, the PLDT would sever the telephone
connections. 13 When the PLDT received no reply, it disconnected the trunk lines being
rented by the Bureau at midnight on 12 April 1958. 14The result was the isolation of the
Philippines, on telephone services, from the rest of the world, except the United States. 15

At that time, the Bureau was maintaining 5,000 telephones and had 5,000 pending
applications for telephone connection. 16 The PLDT was also maintaining 60,000 telephones
and had also 20,000 pending applications. 17 Through the years, neither of them has been
able to fill up the demand for telephone service.

The Bureau of Telecommunications had proposed to the PLDT on 8 January 1958 that both
enter into an interconnecting agreement, with the government paying (on a call basis) for all
calls passing through the interconnecting facilities from the Government Telephone System
to the PLDT. 18 The PLDT replied that it was willing to enter into an agreement on overseas
telephone service to Europe and Asian countries provided that the Bureau would submit to
the jurisdiction and regulations of the Public Service Commission and in consideration of 37
1/2% of the gross revenues. 19 In its memorandum in lieu of oral argument in this Court
dated 9 February 1964, on page 8, the defendant reduced its offer to 33 1/3 % (1/3) as its
share in the overseas telephone service. The proposals were not accepted by either party.

On 12 April 1958, plaintiff Republic commenced suit against the defendant, Philippine Long
Distance Telephone Company, in the Court of First Instance of Manila (Civil Case No. 35805),
praying in its complaint for judgment commanding the PLDT to execute a contract with
plaintiff, through the Bureau, for the use of the facilities of defendant's telephone system
throughout the Philippines under such terms and conditions as the court might consider
reasonable, and for a writ of preliminary injunction against the defendant company to
restrain the severance of the existing telephone connections and/or restore those severed.

Acting on the application of the plaintiff, and on the ground that the severance of
telephone connections by the defendant company would isolate the Philippines from other
countries, the court a quo, on 14 April 1958, issued an order for the defendant:
 (1) to forthwith reconnect and restore the seventy-eight (78) trunk lines that it has
disconnected between the facilities of the Government Telephone System, including
its overseas telephone services, and the facilities of defendant; (2) to refrain from
carrying into effect its threat to sever the existing telephone communication
between the Bureau of Telecommunications and defendant, and not to make
connection over its telephone system of telephone calls coming to the Philippines
from foreign countries through the said Bureau's telephone facilities and the radio
facilities of RCA Communications, Inc.; and (3) to accept and connect through its
telephone system all such telephone calls coming to the Philippines from foreign
countries — until further order of this Court.

On 28 April 1958, the defendant company filed its answer, with counterclaims.

It denied any obligation on its part to execute a contrary of services with the Bureau of
Telecommunications; contested the jurisdiction of the Court of First Instance to compel it to
enter into interconnecting agreements, and averred that it was justified to disconnect the
trunk lines heretofore leased to the Bureau of Telecommunications under the existing
agreement because its facilities were being used in fraud of its rights. PLDT further claimed
that the Bureau was engaging in commercial telephone operations in excess of authority, in
competition with, and to the prejudice of, the PLDT, using defendants own telephone poles,
without proper accounting of revenues.

After trial, the lower court rendered judgment that it could not compel the PLDT to enter
into an agreement with the Bureau because the parties were not in agreement; that under
Executive Order 94, establishing the Bureau of Telecommunications, said Bureau was not
limited to servicing government offices alone, nor was there any in the contract of lease of
the trunk lines, since the PLDT knew, or ought to have known, at the time that their use by
the Bureau was to be public throughout the Islands, hence the Bureau was neither guilty of
fraud, abuse, or misuse of the poles of the PLDT; and, in view of serious public prejudice
that would result from the disconnection of the trunk lines, declared the preliminary
injunction permanent, although it dismissed both the complaint and the counterclaims.

Both parties appealed.

Taking up first the appeal of the Republic, the latter complains of the action of the trial
court in dismissing the part of its complaint seeking to compel the defendant to enter into
an interconnecting contract with it, because the parties could not agree on the terms and
conditions of the interconnection, and of its refusal to fix the terms and conditions therefor.

We agree with the court below that parties can not be coerced to enter into a contract
where no agreement is had between them as to the principal terms and conditions of the
contract. Freedom to stipulate such terms and conditions is of the essence of our
contractual system, and by express provision of the statute, a contract may be annulled if
tainted by violence, intimidation, or undue influence (Articles 1306, 1336, 1337, Civil Code
of the Philippines). But the court a quo has apparently overlooked that while the Republic
may not compel the PLDT to celebrate a contract with it, the Republic may, in the exercise
of the sovereign power of eminent domain, require the telephone company to permit
interconnection of the government telephone system and that of the PLDT, as the needs of
the government service may require, subject to the payment of just compensation to be
determined by the court. Nominally, of course, the power of eminent domain results in the
taking or appropriation of title to, and possession of, the expropriated property; but no
cogent reason appears why the said power may not be availed of to impose only a burden
upon the owner of condemned property, without loss of title and possession. It is
unquestionable that real property may, through expropriation, be subjected to an easement
of right of way. The use of the PLDT's lines and services to allow inter-service connection
between both telephone systems is not much different. In either case private property is
subjected to a burden for public use and benefit. If, under section 6, Article XIII, of the
Constitution, the State may, in the interest of national welfare, transfer utilities to public
ownership upon payment of just compensation, there is no reason why the State may not
require a public utility to render services in the general interest, provided just compensation
is paid therefor. Ultimately, the beneficiary of the interconnecting service would be the
users of both telephone systems, so that the condemnation would be for public use.

The Bureau of Telecommunications, under section 78 (b) of Executive Order No. 94, may
operate and maintain wire telephone or radio telephone communications throughout the
Philippines by utilizing existing facilities in cities, towns, and provinces under such terms and
conditions or arrangement with present owners or operators as may be agreed upon to the
satisfaction of all concerned; but there is nothing in this section that would exclude resort to
condemnation proceedings where unreasonable or unjust terms and conditions are exacted,
to the extent of crippling or seriously hampering the operations of said Bureau.

A perusal of the complaint shows that the Republic's cause of action is predicated upon the
radio telephonic isolation of the Bureau's facilities from the outside world if the severance
of interconnection were to be carried out by the PLDT, thereby preventing the Bureau of
Telecommunications from properly discharging its functions, to the prejudice of the general
public. Save for the prayer to compel the PLDT to enter into a contract (and the prayer is no
essential part of the pleading), the averments make out a case for compulsory rendering of
inter-connecting services by the telephone company upon such terms and conditions as the
court may determine to be just. And since the lower court found that both parties "are
practically at one that defendant (PLDT) is entitled to reasonable compensation from
plaintiff for the reasonable use of the former's telephone facilities" (Decision, Record on
Appeal, page 224), the lower court should have proceeded to treat the case as one of
condemnation of such services independently of contract and proceeded to determine the
just and reasonable compensation for the same, instead of dismissing the petition.

This view we have taken of the true nature of the Republic's petition necessarily results in
overruling the plea of defendant-appellant PLDT that the court of first instance had no
jurisdiction to entertain the petition and that the proper forum for the action was the Public
Service Commission. That body, under the law, has no authority to pass upon actions for the
taking of private property under the sovereign right of eminent domain. Furthermore, while
the defendant telephone company is a public utility corporation whose franchise,
equipment and other properties are under the jurisdiction, supervision and control of the
Public Service Commission (Sec. 13, Public Service Act), yet the plaintiff's
telecommunications network is a public service owned by the Republic and operated by an
instrumentality of the National Government, hence exempt, under Section 14 of the Public
Service Act, from such jurisdiction, supervision and control. The Bureau of
Telecommunications was created in pursuance of a state policy reorganizing the
government offices —

to meet the exigencies attendant upon the establishment of the free and
independent Government of the Republic of the Philippines, and for the purpose of
promoting simplicity, economy and efficiency in its operation (Section 1, Republic
Act No. 51) —

and the determination of state policy is not vested in the Commission (Utilities Com. vs.
Bartonville Bus Line, 290 Ill. 574; 124 N.E. 373).

Defendant PLDT, as appellant, contends that the court below was in error in not holding
that the Bureau of Telecommunications was not empowered to engage in commercial
telephone business, and in ruling that said defendant was not justified in disconnecting the
telephone trunk lines it had previously leased to the Bureau. We find that the court a quo
ruled correctly in rejecting both assertions.

Executive Order No. 94, Series of 1947, reorganizing the Bureau of Telecommunications,
expressly empowered the latter in its Section 79, subsection (b), to "negotiate for, operate
and maintain wire telephone or radio telephone communication service throughout the
Philippines", and, in subsection (c), "to prescribe, subject to approval by the Department
Head, equitable rates of charges for messages handled by the system and/or for time calls
and other services that may be rendered by the system". Nothing in these provisions limits
the Bureau to non-commercial activities or prevents it from serving the general public. It
may be that in its original prospectuses the Bureau officials had stated that the service
would be limited to government offices: but such limitations could not block future
expansion of the system, as authorized by the terms of the Executive Order, nor could the
officials of the Bureau bind the Government not to engage in services that are authorized by
law. It is a well-known rule that erroneous application and enforcement of the law by public
officers do not block subsequent correct application of the statute (PLDT vs. Collector of
Internal Revenue, 90 Phil. 676), and that the Government is never estopped by mistake or
error on the part of its agents (Pineda vs. Court of First Instance of Tayabas, 52 Phil. 803,
807; Benguet Consolidated Mining Co. vs. Pineda, 98 Phil. 711, 724).

The theses that the Bureau's commercial services constituted unfair competition, and that
the Bureau was guilty of fraud and abuse under its contract, are, likewise, untenable.

First, the competition is merely hypothetical, the demand for telephone service being very
much more than the supposed competitors can supply. As previously noted, the PLDT had
20,000 pending applications at the time, and the Bureau had another 5,000. The telephone
company's inability to meet the demands for service are notorious even now. Second, the
charter of the defendant expressly provides:

SEC. 14. The rights herein granted shall not be exclusive, and the rights and power
to grant to any corporation, association or person other than the grantee franchise
 for the telephone or electrical transmission of message or signals shall not be
impaired or affected by the granting of this franchise: — (Act 3436)

And third, as the trial court correctly stated, "when the Bureau of Telecommunications
subscribed to the trunk lines, defendant knew or should have known that their use by the
subscriber was more or less public and all embracing in nature, that is, throughout the
Philippines, if not abroad" (Decision, Record on Appeal, page 216).

The acceptance by the defendant of the payment of rentals, despite its knowledge that the
plaintiff had extended the use of the trunk lines to commercial purposes, continuously since
1948, implies assent by the defendant to such extended use. Since this relationship has
been maintained for a long time and the public has patronized both telephone systems, and
their interconnection is to the public convenience, it is too late for the defendant to claim
misuse of its facilities, and it is not now at liberty to unilaterally sever the physical
connection of the trunk lines.

..., but there is high authority for the position that, when such physical connection
has been voluntarily made, under a fair and workable arrangement and guaranteed
by contract and the continuous line has come to be patronized and established as a
great public convenience, such connection shall not in breach of the agreement be
severed by one of the parties. In that case, the public is held to have such an interest
in the arrangement that its rights must receive due consideration. This position finds
approval in State ex rel. vs. Cadwaller, 172 Ind. 619, 636, 87 N.E. 650, and is stated in
the elaborate and learned opinion of Chief Justice Myers as follows: "Such physical
connection cannot be required as of right, but if such connection is voluntarily made
by contract, as is here alleged to be the case, so that the public acquires an interest
in its continuance, the act of the parties in making such connection is equivalent to a
declaration of a purpose to waive the primary right of independence, and it imposes
upon the property such a public status that it may not be disregarded" — citing
Mahan v. Mich. Tel. Co., 132 Mich. 242, 93 N.W. 629, and the reasons upon which it
is in part made to rest are referred to in the same opinion, as follows: "Where
private property is by the consent of the owner invested with a public interest or
privilege for the benefit of the public, the owner can no longer deal with it as private
property only, but must hold it subject to the right of the public in the exercise of
that public interest or privilege conferred for their benefit." Allnut v. Inglis (1810) 12
East, 527. The doctrine of this early case is the acknowledged law. (Clinton-Dunn Tel.
Co. v. Carolina Tel. & Tel. Co., 74 S.E. 636, 638).

It is clear that the main reason for the objection of the PLDT lies in the fact that said
appellant did not expect that the Bureau's telephone system would expand with such
rapidity as it has done; but this expansion is no ground for the discontinuance of the service
agreed upon.

The last issue urged by the PLDT as appellant is its right to compensation for the use of its
poles for bearing telephone wires of the Bureau of Telecommunications. Admitting that
section 19 of the PLDT charter reserves to the Government —
 the privilege without compensation of using the poles of the grantee to attach one
ten-pin cross-arm, and to install, maintain and operate wires of its telegraph system
thereon; Provided, however, That the Bureau of Posts shall have the right to place
additional cross-arms and wires on the poles of the grantee by paying a
compensation, the rate of which is to be agreed upon by the Director of Posts and
the grantee; —

the defendant counterclaimed for P8,772.00 for the use of its poles by the plaintiff,
contending that what was allowed free use, under the aforequoted provision, was one ten-
pin cross-arm attachment and only for plaintiff's telegraph system, not for its telephone
system; that said section could not refer to the plaintiff's telephone system, because it did
not have such telephone system when defendant acquired its franchise. The implication of
the argument is that plaintiff has to pay for the use of defendant's poles if such use is for
plaintiff's telephone system and has to pay also if it attaches more than one (1) ten-pin
cross-arm for telegraphic purposes.

As there is no proof that the telephone wires strain the poles of the PLDT more than the
telegraph wires, nor that they cause more damage than the wires of the telegraph system,
or that the Government has attached to the poles more than one ten-pin cross-arm as
permitted by the PLDT charter, we see no point in this assignment of error. So long as the
burden to be borne by the PLDT poles is not increased, we see no reason why the
reservation in favor of the telegraph wires of the government should not be extended to its
telephone lines, any time that the government decided to engage also in this kind of
communication.

In the ultimate analysis, the true objection of the PLDT to continue the link between its
network and that of the Government is that the latter competes "parasitically" (sic) with its
own telephone services. Considering, however, that the PLDT franchise is non-exclusive;
that it is well-known that defendant PLDT is unable to adequately cope with the current
demands for telephone service, as shown by the number of pending applications therefor;
and that the PLDT's right to just compensation for the services rendered to the Government
telephone system and its users is herein recognized and preserved, the objections of
defendant-appellant are without merit. To uphold the PLDT's contention is to subordinate
the needs of the general public to the right of the PLDT to derive profit from the future
expansion of its services under its non-exclusive franchise.

WHEREFORE, the decision of the Court of First Instance, now under appeal, is affirmed,
except in so far as it dismisses the petition of the Republic of the Philippines to compel the
Philippine Long Distance Telephone Company to continue servicing the Government
telephone system upon such terms, and for a compensation, that the trial court may
determine to be just, including the period elapsed from the filing of the original complaint
or petition. And for this purpose, the records are ordered returned to the court of origin for
further hearings and other proceedings not inconsistent with this opinion. No costs.

Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Fernando, Capistrano,

Teehankee and Barredo, JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-26400 February 29, 1972

VICTORIA AMIGABLE, plaintiff-appellant,

vs.
NICOLAS CUENCA, as Commissioner of Public Highways and REPUBLIC OF THE
PHILIPPINES, defendants-appellees.

MAKALINTAL, J.:p

This is an appeal from the decision of the Court of First Instance of Cebu in its Civil Case No.
R-5977, dismissing the plaintiff's complaint.

Victoria Amigable, the appellant herein, is the registered owner of Lot No. 639 of the
Banilad Estate in Cebu City as shown by Transfer Certificate of Title No. T-18060, which
superseded Transfer Certificate of Title No. RT-3272 (T-3435) issued to her by the Register of
Deeds of Cebu on February 1, 1924. No annotation in favor of the government of any right
or interest in the property appears at the back of the certificate. Without prior expropriation
or negotiated sale, the government used a portion of said lot, with an area of 6,167 square
meters, for the construction of the Mango and Gorordo Avenues.

It appears that said avenues were already existing in 1921 although "they were in bad
condition and very narrow, unlike the wide and beautiful avenues that they are now," and
"that the tracing of said roads was begun in 1924, and the formal construction in
1925." *

On March 27, 1958 Amigable's counsel wrote the President of the Philippines, requesting
payment of the portion of her lot which had been appropriated by the government. The
claim was indorsed to the Auditor General, who disallowed it in his 9th Indorsement dated
December 9, 1958. A copy of said indorsement was transmitted to Amigable's counsel by
the Office of the President on January 7, 1959.

On February 6, 1959 Amigable filed in the court a quo a complaint, which was later
amended on April 17, 1959 upon motion of the defendants, against the Republic of the
Philippines and Nicolas Cuenca, in his capacity as Commissioner of Public Highways for the
recovery of ownership and possession of the 6,167 square meters of land traversed by the
Mango and Gorordo Avenues. She also sought the payment of compensatory damages in
the sum of P50,000.00 for the illegal occupation of her land, moral damages in the sum of
P25,000.00, attorney's fees in the sum of P5,000.00 and the costs of the suit.
Within the reglementary period the defendants filed a joint answer denying the material
allegations of the complaint and interposing the following affirmative defenses, to wit: (1)
that the action was premature, the claim not having been filed first with the Office of the
Auditor General; (2) that the right of action for the recovery of any amount which might be
due the plaintiff, if any, had already prescribed; (3) that the action being a suit against the
Government, the claim for moral damages, attorney's fees and costs had no valid basis since
as to these items the Government had not given its consent to be sued; and (4) that
inasmuch as it was the province of Cebu that appropriated and used the area involved in the
construction of Mango Avenue, plaintiff had no cause of action against the defendants.

During the scheduled hearings nobody appeared for the defendants notwithstanding due
notice, so the trial court proceeded to receive the plaintiff's evidence ex parte. On July 29,
1959 said court rendered its decision holding that it had no jurisdiction over the plaintiff's
cause of action for the recovery of possession and ownership of the portion of her lot in
question on the ground that the government cannot be sued without its consent; that it had
neither original nor appellate jurisdiction to hear, try and decide plaintiff's claim for
compensatory damages in the sum of P50,000.00, the same being a money claim against the
government; and that the claim for moral damages had long prescribed, nor did it have
jurisdiction over said claim because the government had not given its consent to be sued.
Accordingly, the complaint was dismissed. Unable to secure a reconsideration, the plaintiff
appealed to the Court of Appeals, which subsequently certified the case to Us, there being
no question of fact involved.

The issue here is whether or not the appellant may properly sue the government under the
facts of the case.

In the case of Ministerio vs. Court of First Instance of Cebu,1involving a claim for payment of
the value of a portion of land used for the widening of the Gorordo Avenue in Cebu City, this
Court, through Mr. Justice Enrique M. Fernando, held that where the government takes
away property from a private landowner for public use without going through the legal
process of expropriation or negotiated sale, the aggrieved party may properly maintain a
suit against the government without thereby violating the doctrine of governmental
immunity from suit without its consent. We there said: .

... . If the constitutional mandate that the owner be compensated for

property taken for public use were to be respected, as it should, then a suit
of this character should not be summarily dismissed. The doctrine of
governmental immunity from suit cannot serve as an instrument for
perpetrating an injustice on a citizen. Had the government followed the
procedure indicated by the governing law at the time, a complaint would
have been filed by it, and only upon payment of the compensation fixed by
the judgment, or after tender to the party entitled to such payment of the
amount fixed, may it "have the right to enter in and upon the land so
condemned, to appropriate the same to the public use defined in the
judgment." If there were an observance of procedural regularity, petitioners
would not be in the sad plaint they are now. It is unthinkable then that
precisely because there was a failure to abide by what the law requires, the
 government would stand to benefit. It is just as important, if not more so,
that there be fidelity to legal norms on the part of officialdom if the rule of
law were to be maintained. It is not too much to say that when the
government takes any property for public use, which is conditioned upon the
payment of just compensation, to be judicially ascertained, it makes manifest
that it submits to the jurisdiction of a court. There is no thought then that the
doctrine of immunity from suit could still be appropriately invoked.

Considering that no annotation in favor of the government appears at the back of her
certificate of title and that she has not executed any deed of conveyance of any portion of
her lot to the government, the appellant remains the owner of the whole lot. As registered
owner, she could bring an action to recover possession of the portion of land in question at
anytime because possession is one of the attributes of ownership. However, since
restoration of possession of said portion by the government is neither convenient nor
feasible at this time because it is now and has been used for road purposes, the only relief
available is for the government to make due compensation which it could and should have
done years ago. To determine the due compensation for the land, the basis should be the
price or value thereof at the time of the taking.2

As regards the claim for damages, the plaintiff is entitled thereto in the form of legal
interest on the price of the land from the time it was taken up to the time that payment is
made by the government.3 In addition, the government should pay for attorney's fees, the
amount of which should be fixed by the trial court after hearing.

WHEREFORE, the decision appealed from is hereby set aside and the case remanded to the
court a quo for the determination of compensation, including attorney's fees, to which the
appellant is entitled as above indicated. No pronouncement as to costs.

Concepcion, C.J., Reyes, J.B.L., Zaldivar, Castro, Fernando, Teehankee, Barredo, Villamor and
Makasiar JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

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:

A parcel of land (Portion Lot Blk-1, Bureau of Lands Plan Psd, 26254. Bounded
on the NE by Lot 3, on the SE by Lot 3; on the SW by Lot 1-B, Blk. 2
(equivalent to Lot 199-B Swo 23666; on the NW by AFP military reservation.
Containing an area of 450,273 square meters, more or less and registered in
the name of Maria Nieves Toledo-Gozun under TCT No. 8708 of the Register
of Deeds of Pampanga. ..., and

A parcel of land (Portion of lot 3, Blk-1, Bureau of Lands Plan Psd 26254.
Bounded on the NE by Lot No. 3, on the SE by school lot and national road, on
the SW by Lot 1-B Blk 2 (equivalent to Lot 199-B Swo 23666), on the NW by
Lot 1-B, Blk-1. Containing an area of 88,772 square meters, more or less, and
registered in the name of Maria Nieves Toledo Gozun under TCT No. 8708 of
the Register of Deeds of Pampanga, ....

In its complaint, the Republic alleged, among other things, that the fair market value of the
above-mentioned lands, according to the Committee on Appraisal for the Province of
Pampanga, was not more than P2,000 per hectare, or a total market value of P259,669.10;
and prayed, that the provisional value of the lands be fixed at P259.669.10, that the court
authorizes plaintiff to take immediate possession of the lands upon deposit of that amount
with the Provincial Treasurer of Pampanga; that the court appoints three commissioners to
ascertain and report to the court the just compensation for the property sought to be
expropriated, and that the court issues thereafter a final order of condemnation.
On June 29, 1959 the trial court issued an order fixing the provisional value of the lands at
P259,669.10.

In her "motion to dismiss" filed on July 14, 1959, Castellvi alleged, among other things, that
the land under her administration, being a residential land, had a fair market value of
P15.00 per square meter, so it had a total market value of P11,389,485.00; that the
Republic, through the Armed Forces of the Philippines, particularly the Philippine Air Force,
had been, despite repeated demands, illegally occupying her property since July 1, 1956,
thereby preventing her from using and disposing of it, thus causing her damages by way of
unrealized profits. This defendant prayed that the complaint be dismissed, or that the
Republic be ordered to pay her P15.00 per square meter, or a total of P11,389,485.00, plus
interest thereon at 6% per annum from July 1, 1956; that the Republic be ordered to pay her
P5,000,000.00 as unrealized profits, and the costs of the suit.

By order of the trial court, dated August, 1959, Amparo C. Diaz, Dolores G. viuda de Gil,
Paloma Castellvi, Carmen Castellvi, Rafael Castellvi, Luis Castellvi, Natividad Castellvi de
Raquiza, Jose Castellvi and Consuelo Castellvi were allowed to intervene as parties
defendants. Subsequently, Joaquin V. Gozun, Jr., husband of defendant Nieves Toledo
Gozun, was also allowed by the court to intervene as a party defendant.

After the Republic had deposited with the Provincial Treasurer of Pampanga the amount of
P259,669.10, the trial court ordered that the Republic be placed in possession of the lands.
The Republic was actually placed in possession of the lands on August 10,
1959.1

In her "motion to dismiss", dated October 22, 1959, Toledo-Gozun alleged, among other
things, that her two parcels of land were residential lands, in fact a portion with an area of
343,303 square meters had already been subdivided into different lots for sale to the
general public, and the remaining portion had already been set aside for expansion sites of
the already completed subdivisions; that the fair market value of said lands was P15.00 per
square meter, so they had a total market value of P8,085,675.00; and she prayed that the
complaint be dismissed, or that she be paid the amount of P8,085,675.00, plus interest
thereon at the rate of 6% per annum from October 13, 1959, and attorney's fees in the
amount of P50,000.00.

Intervenors Jose Castellvi and Consuelo Castellvi in their answer, filed on February 11, 1960,
and also intervenor Joaquin Gozun, Jr., husband of defendant Maria Nieves Toledo-Gozun,
in his motion to dismiss, dated May 27, 1960, all alleged that the value of the lands sought
to be expropriated was at the rate of P15.00 per square meter.

On November 4, 1959, the trial court authorized the Provincial Treasurer of Pampanga to
pay defendant Toledo-Gozun the sum of P107,609.00 as provisional value of her lands.2 On
May 16, 1960 the trial Court authorized the Provincial Treasurer of Pampanga to pay
defendant Castellvi the amount of P151,859.80 as provisional value of the land under her
administration, and ordered said defendant to deposit the amount with the Philippine
National Bank under the supervision of the Deputy Clerk of Court. In another order of May
16, 1960 the trial Court entered an order of condemnation.3
The trial Court appointed three commissioners: Atty. Amadeo Yuzon, Clerk of Court, as
commissioner for the court; Atty. Felicisimo G. Pamandanan, counsel of the Philippine
National Bank Branch at Floridablanca, for the plaintiff; and Atty. Leonardo F. Lansangan,
Filipino legal counsel at Clark Air Base, for the defendants. The Commissioners, after having
qualified themselves, proceeded to the performance of their duties.

On March 15,1961 the Commissioners submitted their report and recommendation,

wherein, after having determined that the lands sought to be expropriated were residential
lands, they recommended unanimously that the lowest price that should be paid was
P10.00 per square meter, for both the lands of Castellvi and Toledo-Gozun; that an
additional P5,000.00 be paid to Toledo-Gozun for improvements found on her land; that
legal interest on the compensation, computed from August 10, 1959, be paid after
deducting the amounts already paid to the owners, and that no consequential damages be
awarded.4 The Commissioners' report was objected to by all the parties in the case — by
defendants Castellvi and Toledo-Gozun, who insisted that the fair market value of their
lands should be fixed at P15.00 per square meter; and by the Republic, which insisted that
the price to be paid for the lands should be fixed at P0.20 per square meter. 5

After the parties-defendants and intervenors had filed their respective memoranda, and the
Republic, after several extensions of time, had adopted as its memorandum its objections to
the report of the Commissioners, the trial court, on May 26, 1961, rendered its decision6 the
dispositive portion of which reads as follows:

WHEREFORE, taking into account all the foregoing circumstances, and that
the lands are titled, ... the rising trend of land values ..., and the lowered
purchasing power of the Philippine peso, the court finds that the unanimous
recommendation of the commissioners of ten (P10.00) pesos per square
meter for the three lots of the defendants subject of this action is fair and
just.

xxx xxx xxx

The plaintiff will pay 6% interest per annum on the total value of the lands of
defendant Toledo-Gozun since (sic) the amount deposited as provisional
value from August 10, 1959 until full payment is made to said defendant or
deposit therefor is made in court.

In respect to the defendant Castellvi, interest at 6% per annum will also be

paid by the plaintiff to defendant Castellvi from July 1, 1956 when plaintiff
commenced its illegal possession of the Castellvi land when the instant action
had not yet been commenced to July 10, 1959 when the provisional value
thereof was actually deposited in court, on the total value of the said
(Castellvi) land as herein adjudged. The same rate of interest shall be paid
from July 11, 1959 on the total value of the land herein adjudged minus the
amount deposited as provisional value, or P151,859.80, such interest to run
until full payment is made to said defendant or deposit therefor is made in
 court. All the intervenors having failed to produce evidence in support of
their respective interventions, said interventions are ordered dismissed.

The costs shall be charged to the plaintiff.

On June 21, 1961 the Republic filed a motion for a new trial and/or reconsideration, upon
the grounds of newly-discovered evidence, that the decision was not supported by the
evidence, and that the decision was against the law, against which motion defendants
Castellvi and Toledo-Gozun filed their respective oppositions. On July 8, 1961 when the
motion of the Republic for new trial and/or reconsideration was called for hearing, the
Republic filed a supplemental motion for new trial upon the ground of additional newly-
discovered evidence. This motion for new trial and/or reconsideration was denied by the
court on July 12, 1961.

On July 17, 1961 the Republic gave notice of its intention to appeal from the decision of May
26, 1961 and the order of July 12, 1961. Defendant Castellvi also filed, on July 17, 1961, her
notice of appeal from the decision of the trial court.

The Republic filed various ex-parte motions for extension of time within which to file its
record on appeal. The Republic's record on appeal was finally submitted on December 6,
1961.

Defendants Castellvi and Toledo-Gozun filed not only a joint opposition to the approval of
the Republic's record on appeal, but also a joint memorandum in support of their
opposition. The Republic also filed a memorandum in support of its prayer for the approval
of its record on appeal. On December 27, 1961 the trial court issued an order declaring both
the record on appeal filed by the Republic, and the record on appeal filed by defendant
Castellvi as having been filed out of time, thereby dismissing both appeals.

On January 11, 1962 the Republic filed a "motion to strike out the order of December 27,
1961 and for reconsideration", and subsequently an amended record on appeal, against
which motion the defendants Castellvi and Toledo-Gozun filed their opposition. On July 26,
1962 the trial court issued an order, stating that "in the interest of expediency, the
questions raised may be properly and finally determined by the Supreme Court," and at the
same time it ordered the Solicitor General to submit a record on appeal containing copies of
orders and pleadings specified therein. In an order dated November 19, 1962, the trial court
approved the Republic's record on appeal as amended.

Defendant Castellvi did not insist on her appeal. Defendant Toledo-Gozun did not appeal.

The motion to dismiss the Republic's appeal was reiterated by appellees Castellvi and
Toledo-Gozun before this Court, but this Court denied the motion.

In her motion of August 11, 1964, appellee Castellvi sought to increase the provisional value
of her land. The Republic, in its comment on Castellvi's motion, opposed the same. This
Court denied Castellvi's motion in a resolution dated October 2,1964.
The motion of appellees, Castellvi and Toledo-Gozun, dated October 6, 1969, praying that
they be authorized to mortgage the lands subject of expropriation, was denied by this Court
or October 14, 1969.

On February 14, 1972, Attys. Alberto Cacnio, and Associates, counsel for the estate of the
late Don Alfonso de Castellvi in the expropriation proceedings, filed a notice of attorney's
lien, stating that as per agreement with the administrator of the estate of Don Alfonso de
Castellvi they shall receive by way of attorney's fees, "the sum equivalent to ten per centum
of whatever the court may finally decide as the expropriated price of the property subject
matter of the case."

---------

Before this Court, the Republic contends that the lower court erred:

1. In finding the price of P10 per square meter of the lands subject of the
instant proceedings as just compensation;

2. In holding that the "taking" of the properties under expropriation

commenced with the filing of this action;

3. In ordering plaintiff-appellant to pay 6% interest on the adjudged value of

the Castellvi property to start from July of 1956;

4. In denying plaintiff-appellant's motion for new trial based on newly

discovered evidence.

In its brief, the Republic discusses the second error assigned as the first issue to be
considered. We shall follow the sequence of the Republic's discussion.

1. In support of the assigned error that the lower court erred in holding that the "taking" of
the properties under expropriation commenced with the filing of the complaint in this case,
the Republic argues that the "taking" should be reckoned from the year 1947 when by virtue
of a special lease agreement between the Republic and appellee Castellvi, the former was
granted the "right and privilege" to buy the property should the lessor wish to terminate the
lease, and that in the event of such sale, it was stipulated that the fair market value should
be as of the time of occupancy; and that the permanent improvements amounting to more
that half a million pesos constructed during a period of twelve years on the land, subject of
expropriation, were indicative of an agreed pattern of permanency and stability of
occupancy by the Philippine Air Force in the interest of national Security.7

Appellee Castellvi, on the other hand, maintains that the "taking" of property under the
power of eminent domain requires two essential elements, to wit: (1) entrance and
occupation by condemn or upon the private property for more than a momentary or limited
period, and (2) devoting it to a public use in such a way as to oust the owner and deprive
him of all beneficial enjoyment of the property. This appellee argues that in the instant case
the first element is wanting, for the contract of lease relied upon provides for a lease from
year to year; that the second element is also wanting, because the Republic was paying the
lessor Castellvi a monthly rental of P445.58; and that the contract of lease does not grant
the Republic the "right and privilege" to buy the premises "at the value at the time of
occupancy."8

Appellee Toledo-Gozun did not comment on the Republic's argument in support of the
second error assigned, because as far as she was concerned the Republic had not taken
possession of her lands prior to August 10, 1959.9

In order to better comprehend the issues raised in the appeal, in so far as the Castellvi
property is concerned, it should be noted that the Castellvi property had been occupied by
the Philippine Air Force since 1947 under a contract of lease, typified by the contract
marked Exh. 4-Castellvi, the pertinent portions of which read:

CONTRACT OF LEASE

This AGREEMENT OF LEASE MADE AND ENTERED into by and between

INTESTATE ESTATE OF ALFONSO DE CASTELLVI, represented by CARMEN M.
DE CASTELLVI, Judicial Administratrix ... hereinafter called the LESSOR and
THE REPUBLIC OF THE PHILIPPINES represented by MAJ. GEN. CALIXTO
DUQUE, Chief of Staff of the ARMED FORCES OF THE PHILIPPINES, hereinafter
called the LESSEE,

WITNESSETH:

1. For and in consideration of the rentals hereinafter reserved and the mutual
terms, covenants and conditions of the parties, the LESSOR has, and by these
presents does, lease and let unto the LESSEE the following described land
together with the improvements thereon and appurtenances thereof, viz:

Un Terreno, Lote No. 27 del Plano de subdivision Psu 34752, parte de la

hacienda de Campauit, situado en el Barrio de San Jose, Municipio de
Floridablanca Pampanga. ... midiendo una extension superficial de cuatro
milliones once mil cuatro cientos trienta y cinco (4,001,435) [sic] metros
cuadrados, mas o menos.

Out of the above described property, 75.93 hectares thereof are actually
occupied and covered by this contract. .

Above lot is more particularly described in TCT No. 1016, province of

Pampanga ...

of which premises, the LESSOR warrants that he/she/they/is/are the registered owner(s)
and with full authority to execute a contract of this nature.

2. The term of this lease shall be for the period beginning July 1, 1952 the
date the premises were occupied by the PHILIPPINE AIR FORCE, AFP until
June 30, 1953, subject to renewal for another year at the option of the
LESSEE or unless sooner terminated by the LESSEE as hereinafter provided.
3. The LESSOR hereby warrants that the LESSEE shall have quiet, peaceful and
undisturbed possession of the demised premises throughout the full term or
period of this lease and the LESSOR undertakes without cost to the LESSEE to
eject all trespassers, but should the LESSOR fail to do so, the LESSEE at its
option may proceed to do so at the expense of the LESSOR. The LESSOR
further agrees that should he/she/they sell or encumber all or any part of the
herein described premises during the period of this lease, any conveyance
will be conditioned on the right of the LESSEE hereunder.

4. The LESSEE shall pay to the LESSOR as monthly rentals under this lease the
sum of FOUR HUNDRED FIFTY-FIVE PESOS & 58/100 (P455.58) ...

5. The LESSEE may, at any time prior to the termination of this lease, use the
property for any purpose or purposes and, at its own costs and expense make
alteration, install facilities and fixtures and errect additions ... which facilities
or fixtures ... so placed in, upon or attached to the said premises shall be and
remain property of the LESSEE and may be removed therefrom by the LESSEE
prior to the termination of this lease. The LESSEE shall surrender possession
of the premises upon the expiration or termination of this lease and if so
required by the LESSOR, shall return the premises in substantially the same
condition as that existing at the time same were first occupied by the AFP,
reasonable and ordinary wear and tear and damages by the elements or by
circumstances over which the LESSEE has no control excepted: PROVIDED,
that if the LESSOR so requires the return of the premises in such condition,
the LESSOR shall give written notice thereof to the LESSEE at least twenty
(20) days before the termination of the lease and provided, further, that
should the LESSOR give notice within the time specified above, the LESSEE
shall have the right and privilege to compensate the LESSOR at the fair value
or the equivalent, in lieu of performance of its obligation, if any, to restore
the premises. Fair value is to be determined as the value at the time of
occupancy less fair wear and tear and depreciation during the period of this
lease.

6. The LESSEE may terminate this lease at any time during the term hereof by
giving written notice to the LESSOR at least thirty (30) days in advance ...

7. The LESSEE should not be responsible, except under special legislation for
any damages to the premises by reason of combat operations, acts of GOD,
the elements or other acts and deeds not due to the negligence on the part
of the LESSEE.

8. This LEASE AGREEMENT supersedes and voids any and all agreements and
undertakings, oral or written, previously entered into between the parties
covering the property herein leased, the same having been merged herein.
This AGREEMENT may not be modified or altered except by instrument in
writing only duly signed by the parties. 10
It was stipulated by the parties, that "the foregoing contract of lease (Exh. 4, Castellvi) is
'similar in terms and conditions, including the date', with the annual contracts entered into
from year to year between defendant Castellvi and the Republic of the Philippines (p. 17,
t.s.n., Vol. III)". 11 It is undisputed, therefore, that the Republic occupied Castellvi's land from
July 1, 1947, by virtue of the above-mentioned contract, on a year to year basis (from July 1
of each year to June 30 of the succeeding year) under the terms and conditions therein
stated.

Before the expiration of the contract of lease on June 30, 1956 the Republic sought to
renew the same but Castellvi refused. When the AFP refused to vacate the leased premises
after the termination of the contract, on July 11, 1956, Castellvi wrote to the Chief of Staff,
AFP, informing the latter that the heirs of the property had decided not to continue leasing
the property in question because they had decided to subdivide the land for sale to the
general public, demanding that the property be vacated within 30 days from receipt of the
letter, and that the premises be returned in substantially the same condition as before
occupancy (Exh. 5 — Castellvi). A follow-up letter was sent on January 12, 1957, demanding
the delivery and return of the property within one month from said date (Exh. 6 Castellvi).
On January 30, 1957, Lieutenant General Alfonso Arellano, Chief of Staff, answered the
letter of Castellvi, saying that it was difficult for the army to vacate the premises in view of
the permanent installations and other facilities worth almost P500,000.00 that were erected
and already established on the property, and that, there being no other recourse, the
acquisition of the property by means of expropriation proceedings would be recommended
to the President (Exhibit "7" — Castellvi).

Defendant Castellvi then brought suit in the Court of First Instance of Pampanga, in Civil
Case No. 1458, to eject the Philippine Air Force from the land. While this ejectment case was
pending, the Republic instituted these expropriation proceedings, and, as stated earlier in
this opinion, the Republic was placed in possession of the lands on August 10, 1959, On
November 21, 1959, the Court of First Instance of Pampanga, dismissed Civil Case No. 1458,
upon petition of the parties, in an order which, in part, reads as follows:

1. Plaintiff has agreed, as a matter of fact has already signed an agreement

with defendants, whereby she has agreed to receive the rent of the lands,
subject matter of the instant case from June 30, 1966 up to 1959 when the
Philippine Air Force was placed in possession by virtue of an order of the
Court upon depositing the provisional amount as fixed by the Provincial
Appraisal Committee with the Provincial Treasurer of Pampanga;

2. That because of the above-cited agreement wherein the administratrix

decided to get the rent corresponding to the rent from 1956 up to 1959 and
considering that this action is one of illegal detainer and/or to recover the
possession of said land by virtue of non-payment of rents, the instant case
now has become moot and academic and/or by virtue of the agreement
signed by plaintiff, she has waived her cause of action in the above-entitled
case. 12
The Republic urges that the "taking " of Castellvi's property should be deemed as of the year
1947 by virtue of afore-quoted lease agreement. In American Jurisprudence, Vol. 26, 2nd
edition, Section 157, on the subject of "Eminent Domain, we read the definition of "taking"
(in eminent domain) as follows:

Taking' under the power of eminent domain may be defined generally as

entering upon private property for more than a momentary period, and,
under the warrant or color of legal authority, devoting it to a public use, or
otherwise informally appropriating or injuriously affecting it in such a way as
substantially to oust the owner and deprive him of all beneficial enjoyment
thereof. 13

Pursuant to the aforecited authority, a number of circumstances must be present in the

"taking" of property for purposes of eminent domain.

First, the expropriator must enter a private property. This circumstance is present in the
instant case, when by virtue of the lease agreement the Republic, through the AFP, took
possession of the property of Castellvi.

Second, the entrance into private property must be for more than a momentary period.
"Momentary" means, "lasting but a moment; of but a moment's duration" (The Oxford
English Dictionary, Volume VI, page 596); "lasting a very short time; transitory; having a very
brief life; operative or recurring at every moment" (Webster's Third International Dictionary,
1963 edition.) The word "momentary" when applied to possession or occupancy of (real)
property should be construed to mean "a limited period" — not indefinite or permanent.
The aforecited lease contract was for a period of one year, renewable from year to year. The
entry on the property, under the lease, is temporary, and considered transitory. The fact
that the Republic, through the AFP, constructed some installations of a permanent nature
does not alter the fact that the entry into the land was transitory, or intended to last a year,
although renewable from year to year by consent of 'The owner of the land. By express
provision of the lease agreement the Republic, as lessee, undertook to return the
premises in substantially the same condition as at the time the property was first occupied
by the AFP. It is claimed that the intention of the lessee was to occupy the land
permanently, as may be inferred from the construction of permanent improvements. But
this "intention" cannot prevail over the clear and express terms of the lease contract. Intent
is to be deduced from the language employed by the parties, and the terms 'of the contract,
when unambiguous, as in the instant case, are conclusive in the absence of averment and
proof of mistake or fraud — the question being not what the intention was, but what is
expressed in the language used. (City of Manila v. Rizal Park Co., Inc., 53 Phil. 515, 525);
Magdalena Estate, Inc. v. Myrick, 71 Phil. 344, 348). Moreover, in order to judge the
intention of the contracting parties, their contemporaneous and subsequent acts shall be
principally considered (Art. 1371, Civil Code). If the intention of the lessee (Republic) in 1947
was really to occupy permanently Castellvi's property, why was the contract of lease
entered into on year to year basis? Why was the lease agreement renewed from year to
year? Why did not the Republic expropriate this land of Castellvi in 1949 when, according to
the Republic itself, it expropriated the other parcels of land that it occupied at the same
time as the Castellvi land, for the purpose of converting them into a jet air base? 14 It might
really have been the intention of the Republic to expropriate the lands in question at some
future time, but certainly mere notice - much less an implied notice — of such intention on
the part of the Republic to expropriate the lands in the future did not, and could not, bind
the landowner, nor bind the land itself. The expropriation must be actually commenced in
court (Republic vs. Baylosis, et al., 96 Phil. 461, 484).

Third, the entry into the property should be under warrant or color of legal authority. This
circumstance in the "taking" may be considered as present in the instant case, because the
Republic entered the Castellvi property as lessee.

Fourth, the property must be devoted to a public use or otherwise informally appropriated
or injuriously affected. It may be conceded that the circumstance of the property being
devoted to public use is present because the property was used by the air force of the AFP.

Fifth, the utilization of the property for public use must be in such a way as to oust the
owner and deprive him of all beneficial enjoyment of the property. In the instant case, the
entry of the Republic into the property and its utilization of the same for public use did not
oust Castellvi and deprive her of all beneficial enjoyment of the property. Castellvi remained
as owner, and was continuously recognized as owner by the Republic, as shown by the
renewal of the lease contract from year to year, and by the provision in the lease contract
whereby the Republic undertook to return the property to Castellvi when the lease was
terminated. Neither was Castellvi deprived of all the beneficial enjoyment of the property,
because the Republic was bound to pay, and had been paying, Castellvi the agreed monthly
rentals until the time when it filed the complaint for eminent domain on June 26, 1959.

It is clear, therefore, that the "taking" of Catellvi's property for purposes of eminent domain
cannot be considered to have taken place in 1947 when the Republic commenced to occupy
the property as lessee thereof. We find merit in the contention of Castellvi that two
essential elements in the "taking" of property under the power of eminent domain, namely:
(1) that the entrance and occupation by the condemnor must be for a permanent, or
indefinite period, and (2) that in devoting the property to public use the owner was ousted
from the property and deprived of its beneficial use, were not present when the Republic
entered and occupied the Castellvi property in 1947.

Untenable also is the Republic's contention that although the contract between the parties
was one of lease on a year to year basis, it was "in reality a more or less permanent right to
occupy the premises under the guise of lease with the 'right and privilege' to buy the
property should the lessor wish to terminate the lease," and "the right to buy the property
is merged as an integral part of the lease relationship ... so much so that the fair market
value has been agreed upon, not, as of the time of purchase, but as of the time of
occupancy" 15 We cannot accept the Republic's contention that a lease on a year to year
basis can give rise to a permanent right to occupy, since by express legal provision a lease
made for a determinate time, as was the lease of Castellvi's land in the instant case, ceases
upon the day fixed, without need of a demand (Article 1669, Civil Code). Neither can it be
said that the right of eminent domain may be exercised by simply leasing the premises to be
expropriated (Rule 67, Section 1, Rules of Court). Nor can it be accepted that the Republic
would enter into a contract of lease where its real intention was to buy, or why the Republic
should enter into a simulated contract of lease ("under the guise of lease", as expressed by
counsel for the Republic) when all the time the Republic had the right of eminent domain,
and could expropriate Castellvi's land if it wanted to without resorting to any guise
whatsoever. Neither can we see how a right to buy could be merged in a contract of lease in
the absence of any agreement between the parties to that effect. To sustain the contention
of the Republic is to sanction a practice whereby in order to secure a low price for a land
which the government intends to expropriate (or would eventually expropriate) it would
first negotiate with the owner of the land to lease the land (for say ten or twenty years)
then expropriate the same when the lease is about to terminate, then claim that the
"taking" of the property for the purposes of the expropriation be reckoned as of the date
when the Government started to occupy the property under the lease, and then assert that
the value of the property being expropriated be reckoned as of the start of the lease, in
spite of the fact that the value of the property, for many good reasons, had in the meantime
increased during the period of the lease. This would be sanctioning what obviously is a
deceptive scheme, which would have the effect of depriving the owner of the property of its
true and fair market value at the time when the expropriation proceedings were actually
instituted in court. The Republic's claim that it had the "right and privilege" to buy the
property at the value that it had at the time when it first occupied the property as lessee
nowhere appears in the lease contract. What was agreed expressly in paragraph No. 5 of the
lease agreement was that, should the lessor require the lessee to return the premises in the
same condition as at the time the same was first occupied by the AFP, the lessee would
have the "right and privilege" (or option) of paying the lessor what it would fairly cost to put
the premises in the same condition as it was at the commencement of the lease, in lieu of
the lessee's performance of the undertaking to put the land in said condition. The "fair
value" at the time of occupancy, mentioned in the lease agreement, does not refer to the
value of the property if bought by the lessee, but refers to the cost of restoring the property
in the same condition as of the time when the lessee took possession of the property. Such
fair value cannot refer to the purchase price, for purchase was never intended by the parties
to the lease contract. It is a rule in the interpretation of contracts that "However general the
terms of a contract may be, they shall not be understood to comprehend things that are
distinct and cases that are different from those upon which the parties intended to agree"
(Art. 1372, Civil Code).

We hold, therefore, that the "taking" of the Castellvi property should not be reckoned as of
the year 1947 when the Republic first occupied the same pursuant to the contract of lease,
and that the just compensation to be paid for the Castellvi property should not be
determined on the basis of the value of the property as of that year. The lower court did not
commit an error when it held that the "taking" of the property under expropriation
commenced with the filing of the complaint in this case.

Under Section 4 of Rule 67 of the Rules of Court, 16 the "just compensation" is to be

determined as of the date of the filing of the complaint. This Court has ruled that when the
taking of the property sought to be expropriated coincides with the commencement of the
expropriation proceedings, or takes place subsequent to the filing of the complaint for
eminent domain, the just compensation should be determined as of the date of the filing of
the complaint. (Republic vs. Philippine National Bank, L-14158, April 12, 1961, 1 SCRA 957,
961-962). In the instant case, it is undisputed that the Republic was placed in possession of
the Castellvi property, by authority of the court, on August 10, 1959. The "taking" of the
Castellvi property for the purposes of determining the just compensation to be paid must,
therefore, be reckoned as of June 26, 1959 when the complaint for eminent domain was
filed.

Regarding the two parcels of land of Toledo-Gozun, also sought to be expropriated, which
had never been under lease to the Republic, the Republic was placed in possession of said
lands, also by authority of the court, on August 10, 1959, The taking of those lands,
therefore, must also be reckoned as of June 26, 1959, the date of the filing of the complaint
for eminent domain.

2. Regarding the first assigned error — discussed as the second issue — the Republic
maintains that, even assuming that the value of the expropriated lands is to be determined
as of June 26, 1959, the price of P10.00 per square meter fixed by the lower court "is not
only exhorbitant but also unconscionable, and almost fantastic". On the other hand, both
Castellvi and Toledo-Gozun maintain that their lands are residential lands with a fair market
value of not less than P15.00 per square meter.

The lower court found, and declared, that the lands of Castellvi and Toledo-Gozun are
residential lands. The finding of the lower court is in consonance with the unanimous
opinion of the three commissioners who, in their report to the court, declared that the lands
are residential lands.

The Republic assails the finding that the lands are residential, contending that the plans of
the appellees to convert the lands into subdivision for residential purposes were only on
paper, there being no overt acts on the part of the appellees which indicated that the
subdivision project had been commenced, so that any compensation to be awarded on the
basis of the plans would be speculative. The Republic's contention is not well taken. We find
evidence showing that the lands in question had ceased to be devoted to the production of
agricultural crops, that they had become adaptable for residential purposes, and that the
appellees had actually taken steps to convert their lands into residential subdivisions even
before the Republic filed the complaint for eminent domain. In the case of City of Manila vs.
Corrales (32 Phil. 82, 98) this Court laid down basic guidelines in determining the value of
the property expropriated for public purposes. This Court said:

In determining the value of land appropriated for public purposes, the same
consideration are to be regarded as in a sale of property between private
parties. The inquiry, in such cases, must be what is the property worth in the
market, viewed not merely with reference to the uses to which it is at the
time applied, but with reference to the uses to which it is plainly adapted,
that is to say, What is it worth from its availability for valuable uses?

So many and varied are the circumstances to be taken into account in

determining the value of property condemned for public purposes, that it is
practically impossible to formulate a rule to govern its appraisement in all
cases. Exceptional circumstances will modify the most carefully guarded rule,
but, as a general thing, we should say that the compensation of the owner is
 to be estimated by reference to the use for which the property is suitable,
having regard to the existing business or wants of the community, or such as
may be reasonably expected in the immediate future. (Miss. and Rum River
Boom Co. vs. Patterson, 98 U.S., 403).

In expropriation proceedings, therefore, the owner of the land has the right to its value for
the use for which it would bring the most in the market. 17 The owner may thus show every
advantage that his property possesses, present and prospective, in order that the price it
could be sold for in the market may be satisfactorily determined. 18 The owner may also
show that the property is suitable for division into village or town lots. 19

The trial court, therefore, correctly considered, among other circumstances, the proposed
subdivision plans of the lands sought to be expropriated in finding that those lands are
residential lots. This finding of the lower court is supported not only by the unanimous
opinion of the commissioners, as embodied in their report, but also by the Provincial
Appraisal Committee of the province of Pampanga composed of the Provincial Treasurer,
the Provincial Auditor and the District Engineer. In the minutes of the meeting of the
Provincial Appraisal Committee, held on May 14, 1959 (Exh. 13-Castellvi) We read in its
Resolution No. 10 the following:

3. Since 1957 the land has been classified as residential in view of its
proximity to the air base and due to the fact that it was not being devoted to
agriculture. In fact, there is a plan to convert it into a subdivision for
residential purposes. The taxes due on the property have been paid based on
its classification as residential land;

The evidence shows that Castellvi broached the idea of subdividing her land into residential
lots as early as July 11, 1956 in her letter to the Chief of Staff of the Armed Forces of the
Philippines. (Exh. 5-Castellvi) As a matter of fact, the layout of the subdivision plan was
tentatively approved by the National Planning Commission on September 7, 1956. (Exh. 8-
Castellvi). The land of Castellvi had not been devoted to agriculture since 1947 when it was
leased to the Philippine Army. In 1957 said land was classified as residential, and taxes
based on its classification as residential had been paid since then (Exh. 13-Castellvi). The
location of the Castellvi land justifies its suitability for a residential subdivision. As found by
the trial court, "It is at the left side of the entrance of the Basa Air Base and bounded on two
sides by roads (Exh. 13-Castellvi), paragraphs 1 and 2, Exh. 12-Castellvi), the poblacion, (of
Floridablanca) the municipal building, and the Pampanga Sugar Mills are closed by. The
barrio schoolhouse and chapel are also near (T.S.N. November 23,1960, p. 68)." 20

The lands of Toledo-Gozun (Lot 1-B and Lot 3) are practically of the same condition as the
land of Castellvi. The lands of Toledo-Gozun adjoin the land of Castellvi. They are also
contiguous to the Basa Air Base, and are along the road. These lands are near the barrio
schoolhouse, the barrio chapel, the Pampanga Sugar Mills, and the poblacion of
Floridablanca (Exhs. 1, 3 and 4-Toledo-Gozun). As a matter of fact, regarding lot 1-B it had
already been surveyed and subdivided, and its conversion into a residential subdivision was
tentatively approved by the National Planning Commission on July 8, 1959 (Exhs. 5 and 6
Toledo-Gozun). As early as June, 1958, no less than 32 man connected with the Philippine
Air Force among them commissioned officers, non-commission officers, and enlisted men
had requested Mr. and Mrs. Joaquin D. Gozun to open a subdivision on their lands in
question (Exhs. 8, 8-A to 8-ZZ-Toledo-Gozun). 21

We agree with the findings, and the conclusions, of the lower court that the lands that are
the subject of expropriation in the present case, as of August 10, 1959 when the same were
taken possession of by the Republic, were residential lands and were adaptable for use as
residential subdivisions. Indeed, the owners of these lands have the right to their value for
the use for which they would bring the most in the market at the time the same were taken
from them. The most important issue to be resolved in the present case relates to the
question of what is the just compensation that should be paid to the appellees.

The Republic asserts that the fair market value of the lands of the appellees is P.20 per
square meter. The Republic cites the case of Republic vs. Narciso, et al., L-6594, which this
Court decided on May 18, 1956. The Narciso case involved lands that belonged to Castellvi
and Toledo-Gozun, and to one Donata Montemayor, which were expropriated by the
Republic in 1949 and which are now the site of the Basa Air Base. In the Narciso case this
Court fixed the fair market value at P.20 per square meter. The lands that are sought to be
expropriated in the present case being contiguous to the lands involved in the Narciso case,
it is the stand of the Republic that the price that should be fixed for the lands now in
question should also be at P.20 per square meter.

We can not sustain the stand of the Republic. We find that the price of P.20 per square
meter, as fixed by this Court in the Narciso case, was based on the allegation of the
defendants (owners) in their answer to the complaint for eminent domain in that case that
the price of their lands was P2,000.00 per hectare and that was the price that they asked
the court to pay them. This Court said, then, that the owners of the land could not be given
more than what they had asked, notwithstanding the recommendation of the majority of
the Commission on Appraisal — which was adopted by the trial court — that the fair market
value of the lands was P3,000.00 per hectare. We also find that the price of P.20 per square
meter in the Narciso case was considered the fair market value of the lands as of the year
1949 when the expropriation proceedings were instituted, and at that time the lands were
classified as sugar lands, and assessed for taxation purposes at around P400.00 per hectare,
or P.04 per square meter. 22 While the lands involved in the present case, like the lands
involved in the Narciso case, might have a fair market value of P.20 per square meter in
1949, it can not be denied that ten years later, in 1959, when the present proceedings were
instituted, the value of those lands had increased considerably. The evidence shows that
since 1949 those lands were no longer cultivated as sugar lands, and in 1959 those lands
were already classified, and assessed for taxation purposes, as residential lands. In 1959 the
land of Castellvi was assessed at P1.00 per square meter. 23

The Republic also points out that the Provincial Appraisal Committee of Pampanga, in its
resolution No. 5 of February 15, 1957 (Exhibit D), recommended the sum of P.20 per square
meter as the fair valuation of the Castellvi property. We find that this resolution was made
by the Republic the basis in asking the court to fix the provisional value of the lands sought
to be expropriated at P259,669.10, which was approved by the court. 24 It must be
considered, however, that the amount fixed as the provisional value of the lands that are
being expropriated does not necessarily represent the true and correct value of the land.
The value is only "provisional" or "tentative", to serve as the basis for the immediate
occupancy of the property being expropriated by the condemnor. The records show that
this resolution No. 5 was repealed by the same Provincial Committee on Appraisal in its
resolution No. 10 of May 14, 1959 (Exhibit 13-Castellvi). In that resolution No. 10, the
appraisal committee stated that "The Committee has observed that the value of the land in
this locality has increased since 1957 ...", and recommended the price of P1.50 per square
meter. It follows, therefore, that, contrary to the stand of the Republic, that resolution No. 5
of the Provincial Appraisal Committee can not be made the basis for fixing the fair market
value of the lands of Castellvi and Toledo-Gozun.

The Republic further relied on the certification of the Acting Assistant Provincial Assessor of
Pampanga, dated February 8, 1961 (Exhibit K), to the effect that in 1950 the lands of Toledo-
Gozun were classified partly as sugar land and partly as urban land, and that the sugar land
was assessed at P.40 per square meter, while part of the urban land was assessed at P.40
per square meter and part at P.20 per square meter; and that in 1956 the Castellvi land was
classified as sugar land and was assessed at P450.00 per hectare, or P.045 per square meter.
We can not also consider this certification of the Acting Assistant Provincial Assessor as a
basis for fixing the fair market value of the lands of Castellvi and Toledo-Gozun because, as
the evidence shows, the lands in question, in 1957, were already classified and assessed for
taxation purposes as residential lands. The certification of the assessor refers to the year
1950 as far as the lands of Toledo-Gozun are concerned, and to the year 1956 as far as the
land of Castellvi is concerned. Moreover, this Court has held that the valuation fixed for the
purposes of the assessment of the land for taxation purposes can not bind the landowner
where the latter did not intervene in fixing it. 25

On the other hand, the Commissioners, appointed by the court to appraise the lands that
were being expropriated, recommended to the court that the price of P10.00 per square
meter would be the fair market value of the lands. The commissioners made their
recommendation on the basis of their observation after several ocular inspections of the
lands, of their own personal knowledge of land values in the province of Pampanga, of the
testimonies of the owners of the land, and other witnesses, and of documentary evidence
presented by the appellees. Both Castellvi and Toledo-Gozun testified that the fair market
value of their respective land was at P15.00 per square meter. The documentary evidence
considered by the commissioners consisted of deeds of sale of residential lands in the town
of San Fernando and in Angeles City, in the province of Pampanga, which were sold at prices
ranging from P8.00 to P20.00 per square meter (Exhibits 15, 16, 17, 18, 19, 20, 21, 22, 23-
Castellvi). The commissioners also considered the decision in Civil Case No. 1531 of the
Court of First Instance of Pampanga, entitled Republic vs. Sabina Tablante, which was
expropriation case filed on January 13, 1959, involving a parcel of land adjacent to the Clark
Air Base in Angeles City, where the court fixed the price at P18.00 per square meter (Exhibit
14-Castellvi). In their report, the commissioners, among other things, said:

... This expropriation case is specially pointed out, because the circumstances
and factors involved therein are similar in many respects to the defendants'
lands in this case. The land in Civil Case No. 1531 of this Court and the lands
in the present case (Civil Case No. 1623) are both near the air bases, the Clark
 Air Base and the Basa Air Base respectively. There is a national road fronting
them and are situated in a first-class municipality. As added advantage it may
be said that the Basa Air Base land is very near the sugar mill at Del Carmen,
Floridablanca, Pampanga, owned by the Pampanga Sugar Mills. Also just
stone's throw away from the same lands is a beautiful vacation spot at
Palacol, a sitio of the town of Floridablanca, which counts with a natural
swimming pool for vacationists on weekends. These advantages are not
found in the case of the Clark Air Base. The defendants' lands are nearer to
the poblacion of Floridablanca then Clark Air Base is nearer (sic) to the
poblacion of Angeles, Pampanga.

The deeds of absolute sale, according to the undersigned commissioners, as

well as the land in Civil Case No. 1531 are competent evidence, because they
were executed during the year 1959 and before August 10 of the same year.
More specifically so the land at Clark Air Base which coincidentally is the
subject matter in the complaint in said Civil Case No. 1531, it having been
filed on January 13, 1959 and the taking of the land involved therein was
ordered by the Court of First Instance of Pampanga on January 15, 1959,
several months before the lands in this case were taken by the plaintiffs ....

From the above and considering further that the lowest as well as the highest
price per square meter obtainable in the market of Pampanga relative to
subdivision lots within its jurisdiction in the year 1959 is very well known by
the Commissioners, the Commission finds that the lowest price that can be
awarded to the lands in question is P10.00 per square meter. 26

The lower court did not altogether accept the findings of the Commissioners based on the
documentary evidence, but it considered the documentary evidence as basis for comparison
in determining land values. The lower court arrived at the conclusion that "the unanimous
recommendation of the commissioners of ten (P10.00) pesos per square meter for the three
lots of the defendants subject of this action is fair and just". 27 In arriving at its conclusion,
the lower court took into consideration, among other circumstances, that the lands are
titled, that there is a rising trend of land values, and the lowered purchasing power of the
Philippine peso.

In the case of Manila Railroad Co. vs. Caligsihan, 40 Phil. 326, 328, this Court said:

A court of first instance or, on appeal, the Supreme Court, may change or
modify the report of the commissioners by increasing or reducing the amount
of the award if the facts of the case so justify. While great weight is attached
to the report of the commissioners, yet a court may substitute therefor its
estimate of the value of the property as gathered from the record in certain
cases, as, where the commissioners have applied illegal principles to the
evidence submitted to them, or where they have disregarded a clear
preponderance of evidence, or where the amount allowed is either palpably
inadequate or excessive. 28
The report of the commissioners of appraisal in condemnation proceedings are not binding,
but merely advisory in character, as far as the court is concerned. 29 In our analysis of the
report of the commissioners, We find points that merit serious consideration in the
determination of the just compensation that should be paid to Castellvi and Toledo-Gozun
for their lands. It should be noted that the commissioners had made ocular inspections of
the lands and had considered the nature and similarities of said lands in relation to the lands
in other places in the province of Pampanga, like San Fernando and Angeles City. We cannot
disregard the observations of the commissioners regarding the circumstances that make the
lands in question suited for residential purposes — their location near the Basa Air Base, just
like the lands in Angeles City that are near the Clark Air Base, and the facilities that obtain
because of their nearness to the big sugar central of the Pampanga Sugar mills, and to the
flourishing first class town of Floridablanca. It is true that the lands in question are not in the
territory of San Fernando and Angeles City, but, considering the facilities of modern
communications, the town of Floridablanca may be considered practically adjacent to San
Fernando and Angeles City. It is not out of place, therefore, to compare the land values in
Floridablanca to the land values in San Fernando and Angeles City, and form an idea of the
value of the lands in Floridablanca with reference to the land values in those two other
communities.

The important factor in expropriation proceeding is that the owner is awarded the just
compensation for his property. We have carefully studied the record, and the evidence, in
this case, and after considering the circumstances attending the lands in question We have
arrived at the conclusion that the price of P10.00 per square meter, as recommended by the
commissioners and adopted by the lower court, is quite high. It is Our considered view that
the price of P5.00 per square meter would be a fair valuation of the lands in question and
would constitute a just compensation to the owners thereof. In arriving at this conclusion
We have particularly taken into consideration the resolution of the Provincial Committee on
Appraisal of the province of Pampanga informing, among others, that in the year 1959 the
land of Castellvi could be sold for from P3.00 to P4.00 per square meter, while the land of
Toledo-Gozun could be sold for from P2.50 to P3.00 per square meter. The Court has
weighed all the circumstances relating to this expropriations proceedings, and in fixing the
price of the lands that are being expropriated the Court arrived at a happy medium between
the price as recommended by the commissioners and approved by the court, and the price
advocated by the Republic. This Court has also taken judicial notice of the fact that the value
of the Philippine peso has considerably gone down since the year 1959. 30 Considering that
the lands of Castellvi and Toledo-Gozun are adjoining each other, and are of the same
nature, the Court has deemed it proper to fix the same price for all these lands.

3. The third issue raised by the Republic relates to the payment of interest.
The Republic maintains that the lower court erred when it ordered the
Republic to pay Castellvi interest at the rate of 6% per annum on the total
amount adjudged as the value of the land of Castellvi, from July 1, 1956 to
July 10, 1959. We find merit in this assignment of error.

In ordering the Republic to pay 6% interest on the total value of the land of Castellvi from
July 1, 1956 to July 10, 1959, the lower court held that the Republic had illegally possessed
the land of Castellvi from July 1, 1956, after its lease of the land had expired on June 30,
1956, until August 10, 1959 when the Republic was placed in possession of the land
pursuant to the writ of possession issued by the court. What really happened was that the
Republic continued to occupy the land of Castellvi after the expiration of its lease on June
30, 1956, so much so that Castellvi filed an ejectment case against the Republic in the Court
of First Instance of Pampanga. 31 However, while that ejectment case was pending, the
Republic filed the complaint for eminent domain in the present case and was placed in
possession of the land on August 10, 1959, and because of the institution of the
expropriation proceedings the ejectment case was later dismissed. In the order dismissing
the ejectment case, the Court of First Instance of Pampanga said:

Plaintiff has agreed, as a matter of fact has already signed an agreement with
defendants, whereby she had agreed to receive the rent of the lands, subject
matter of the instant case from June 30, 1956 up to 1959 when the Philippine
Air Force was placed in possession by virtue of an order of the Court upon
depositing the provisional amount as fixed by the Provincial Appraisal
Committee with the Provincial Treasurer of
Pampanga; ...

If Castellvi had agreed to receive the rentals from June 30, 1956 to August 10, 1959, she
should be considered as having allowed her land to be leased to the Republic until August
10, 1959, and she could not at the same time be entitled to the payment of interest during
the same period on the amount awarded her as the just compensation of her land. The
Republic, therefore, should pay Castellvi interest at the rate of 6% per annum on the value
of her land, minus the provisional value that was deposited, only from July 10, 1959 when it
deposited in court the provisional value of the land.

4. The fourth error assigned by the Republic relates to the denial by the lower court of its
motion for a new trial based on nearly discovered evidence. We do not find merit in this
assignment of error.

After the lower court had decided this case on May 26, 1961, the Republic filed a motion for
a new trial, supplemented by another motion, both based upon the ground of newly
discovered evidence. The alleged newly discovered evidence in the motion filed on June 21,
1961 was a deed of absolute sale-executed on January 25, 1961, showing that a certain
Serafin Francisco had sold to Pablo L. Narciso a parcel of sugar land having an area of
100,000 square meters with a sugar quota of 100 piculs, covered by P.A. No. 1701, situated
in Barrio Fortuna, Floridablanca, for P14,000, or P.14 per square meter.

In the supplemental motion, the alleged newly discovered evidence were: (1) a deed of sale
of some 35,000 square meters of land situated at Floridablanca for P7,500.00 (or about P.21
per square meter) executed in July, 1959, by the spouses Evelyn D. Laird and Cornelio G.
Laird in favor of spouses Bienvenido S. Aguas and Josefina Q. Aguas; and (2) a deed of
absolute sale of a parcel of land having an area of 4,120,101 square meters, including the
sugar quota covered by Plantation Audit No. 161 1345, situated at Floridablanca, Pampanga,
for P860.00 per hectare (a little less than P.09 per square meter) executed on October 22,
1957 by Jesus Toledo y Mendoza in favor of the Land Tenure Administration.
We find that the lower court acted correctly when it denied the motions for a new trial.

To warrant the granting of a new trial based on the ground of newly discovered evidence, it
must appear that the evidence was discovered after the trial; that even with the exercise of
due diligence, the evidence could not have been discovered and produced at the trial; and
that the evidence is of such a nature as to alter the result of the case if admitted. 32 The
lower court correctly ruled that these requisites were not complied with.

The lower court, in a well-reasoned order, found that the sales made by Serafin Francisco to
Pablo Narciso and that made by Jesus Toledo to the Land Tenure Administration were
immaterial and irrelevant, because those sales covered sugarlands with sugar quotas, while
the lands sought to be expropriated in the instant case are residential lands. The lower court
also concluded that the land sold by the spouses Laird to the spouses Aguas was a sugar
land.

We agree with the trial court. In eminent domain proceedings, in order that evidence as to
the sale price of other lands may be admitted in evidence to prove the fair market value of
the land sought to be expropriated, the lands must, among other things, be shown to be
similar.

But even assuming, gratia argumenti, that the lands mentioned in those deeds of sale were
residential, the evidence would still not warrant the grant of a new trial, for said evidence
could have been discovered and produced at the trial, and they cannot be considered newly
discovered evidence as contemplated in Section 1(b) of Rule 37 of the Rules of Court.
Regarding this point, the trial court said:

The Court will now show that there was no reasonable diligence employed.

The land described in the deed of sale executed by Serafin Francisco, copy of
which is attached to the original motion, is covered by a Certificate of Title
issued by the Office of the Register of Deeds of Pampanga. There is no
question in the mind of the court but this document passed through the
Office of the Register of Deeds for the purpose of transferring the title or
annotating the sale on the certificate of title. It is true that Fiscal Lagman
went to the Office of the Register of Deeds to check conveyances which may
be presented in the evidence in this case as it is now sought to be done by
virtue of the motions at bar, Fiscal Lagman, one of the lawyers of the plaintiff,
did not exercise reasonable diligence as required by the rules. The assertion
that he only went to the office of the Register of Deeds 'now and then' to
check the records in that office only shows the half-hazard [sic] manner by
which the plaintiff looked for evidence to be presented during the hearing
before the Commissioners, if 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.