In the interim or on November 9, 1961, TCT Nos.
23934
EN BANC
[G.R. No. 161656. June 29, 2005]
REPUBLIC OF THE PHILIPPINES, GENERAL ROMEO
ZULUETA, COMMODORE EDGARDO GALEOS,
ANTONIO CABALUNA, DOROTEO MANTOS &
FLORENCIO BELOTINDOS, petitioners, vs.
VICENTE G. LIM, respondent.
RESOLUTION
SANDOVAL-GUTIERREZ, J.:
Justice is the first virtue of social institutions. [1] When the
state wields its power of eminent domain, there arises a
correlative obligation on its part to pay the owner of the
expropriated property a just compensation. If it fails, there is a
clear case of injustice that must be redressed. In the present
case, fifty-seven (57) years have lapsed from the time the
Decision in the subject expropriation proceedings became final,
but still the Republic of the Philippines, herein petitioner, has not
compensated the owner of the property. To tolerate such
prolonged inaction on its part is to encourage distrust and
resentment among our people the very vices that corrode the
ties of civility and tempt men to act in ways they would otherwise
shun.
A revisit of the pertinent facts in the instant case is
imperative.
On September 5, 1938, the Republic of the Philippines
(Republic) instituted a special civil action for expropriation with
the Court of First Instance (CFI) of Cebu, docketed as Civil Case
No. 781, involving Lots 932 and 939 of the Banilad Friar Land
Estate, Lahug, Cebu City, for the purpose of establishing a
military reservation for the Philippine Army. Lot 932 was
registered in the name of Gervasia Denzon under Transfer
Certificate of Title (TCT) No. 14921 with an area of 25,137
square meters, while Lot 939 was in the name of Eulalia Denzon
and covered by TCT No. 12560 consisting of 13,164 square
meters.
After depositing P9,500.00 with the Philippine National
Bank, pursuant to the Order of the CFI dated October 19, 1938,
the Republic took possession of the lots. Thereafter, or on May
14, 1940, the CFI rendered its Decision ordering the Republic to
pay the Denzons the sum of P4,062.10 as just compensation.
The Denzons interposed an appeal to the Court of Appeals
but it was dismissed on March 11, 1948. An entry of judgment
was made on April 5, 1948.
In 1950, Jose Galeos, one of the heirs of the Denzons, filed
with the National Airports Corporation a claim for rentals for the
two lots, but it denied knowledge of the matter. Another heir,
Nestor Belocura, brought the claim to the Office of then
President Carlos Garcia who wrote the Civil Aeronautics
Administration and the Secretary of National Defense to
expedite action on said claim. On September 6, 1961, Lt.
Manuel Cabal rejected the claim but expressed willingness to
pay the appraised value of the lots within a reasonable time.
For failure of the Republic to pay for the lots, on September
20, 1961, the Denzons successors-in-interest, Francisca
Galeos-Valdehueza and Josefina Galeos-Panerio,[2] filed
with the same CFI an action for recovery of possession with
damages against the Republic and officers of the Armed Forces
of the Philippines in possession of the property. The case was
docketed as Civil Case No. R-7208.
and 23935 covering Lots 932 and 939 were issued in the names
of Francisca Valdehueza and Josefina Panerio, respectively.
Annotated thereon was the phrase subject to the priority of the
National Airports Corporation to acquire said parcels of land,
Lots 932 and 939 upon previous payment of a reasonable
market value.
On July 31, 1962, the CFI promulgated its Decision in favor
of Valdehueza and Panerio, holding that they are the owners
and have retained their right as such over Lots 932 and 939
because of the Republics failure to pay the amount
of P4,062.10, adjudged in the expropriation proceedings.
However, in view of the annotation on their land titles, they were
ordered to execute a deed of sale in favor of the Republic. In
view of the differences in money value from 1940 up to the
present, the court adjusted the market value at P16,248.40, to
be paid with 6% interest per annum from April 5, 1948, date of
entry in the expropriation proceedings, until full payment.
After their motion for reconsideration was denied,
Valdehueza and Panerio appealed from the CFI Decision, in
view of the amount in controversy, directly to this Court. The
case was docketed as No. L-21032.[3] On May 19, 1966, this
Court rendered its Decision affirming the CFI Decision. It held
that Valdehueza and Panerio are still the registered owners of
Lots 932 and 939, there having been no payment of just
compensation by the Republic. Apparently, this Court found
nothing in the records to show that the Republic paid the owners
or their successors-in-interest according to the CFI decision.
While it deposited the amount of P9,500,00, and said deposit
was allegedly disbursed, however, the payees could not be
ascertained.
Notwithstanding the above finding, this Court still ruled that
Valdehueza and Panerio are not entitled to recover possession
of the lots but may only demand the payment of their fair market
value, ratiocinating as follows:
Appellants would contend that: (1) possession of Lots 932 and
939 should be restored to them as owners of the same; (2) the
Republic should be ordered to pay rentals for the use of said
lots, plus attorneys fees; and (3) the court a quo in the present
suit had no power to fix the value of the lots and order the
execution of the deed of sale after payment.
It is true that plaintiffs are still the registered owners of the land,
there not having been a transfer of said lots in favor of the
Government. The records do not show that the Government
paid the owners or their successors-in-interest according to the
1940 CFI decision although, as stated, P9,500.00 was
deposited by it, and said deposit had been disbursed. With the
records lost, however, it cannot be known who received the
money (Exh. 14 says: It is further certified that the
corresponding Vouchers and pertinent Journal and Cash Book
were destroyed during the last World War, and therefore the
names of the payees concerned cannot be ascertained.) And
the Government now admits that there is no available
record showing that payment for the value of the lots in
question has been made (Stipulation of Facts, par. 9, Rec. on
Appeal, p. 28).
The points in dispute are whether such payment can still
be made and, if so, in what amount. Said lots have been
the subject of expropriation proceedings. By final and
executory judgment in said proceedings, they were
condemned for public use, as part of an airport, and
ordered sold to the Government. In fact, the
abovementioned title certificates secured by plaintiffs over
said lots contained annotations of the right of the National
Airports Corporation (now CAA) to pay for and acquire
them. It follows that both by virtue of the judgment, long
final, in the expropriation suit, as well as the annotations
upon their title certificates, plaintiffs are not entitled to
recover possession of their expropriated lots which are
still devoted to the public use for which they were
expropriated but only to demand the fair market value of
the same.
Meanwhile, in 1964, Valdehueza and Panerio mortgaged
Lot 932 to Vicente Lim, herein respondent,[4] as security for
their loans. For their failure to pay Lim despite demand, he had
the mortgage foreclosed in 1976. Thus, TCT No. 23934 was
cancelled, and in lieu thereof, TCT No. 63894 was issued in his
name.
On August 20, 1992, respondent Lim filed a complaint
for quieting of title with the Regional Trial Court (RTC), Branch
10, Cebu City, against General Romeo Zulueta, as Commander
of the Armed Forces of the Philippines, Commodore Edgardo
Galeos, as Commander of Naval District V of the Philippine
Navy, Antonio Cabaluna, Doroteo Mantos and Florencio
Belotindos, herein petitioners. Subsequently, he amended the
complaint to implead the Republic.
On May 4, 2001, the RTC rendered a decision in favor of
respondent, thus:
WHEREFORE, judgment is hereby rendered in favor of plaintiff
Vicente Lim and against all defendants, public and private,
declaring plaintiff Vicente Lim the absolute and exclusive
owner of Lot No. 932 with all the rights of an absolute
owner including the right to possession. The monetary
claims in the complaint and in the counter claims contained in
the answer of defendants are ordered Dismissed.
Petitioners elevated the case to the Court of Appeals,
docketed therein as CA-G.R. CV No. 72915. In its
Decision[5] dated September 18, 2003, the Appellate Court
sustained the RTC Decision, thus:
Obviously, defendant-appellant Republic evaded its duty
of paying what was due to the landowners. The
expropriation proceedings had already become final in the
late 1940s and yet, up to now, or more than fifty (50) years
after, the Republic had not yet paid the compensation
fixed by the court while continuously reaping benefits
from the expropriated property to the prejudice of the
landowner. x x x. This is contrary to the rules of fair play
because the concept of just compensation embraces not
only the correct determination of the amount to be paid to
the owners of the land, but also the payment for the land
within a reasonable time from its taking. Without prompt
payment, compensation cannot be considered just for the
property owner is made to suffer the consequence of
being immediately deprived of his land while being made
to wait for a decade or more, in this case more than 50
years, before actually receiving the amount necessary to
cope with the loss. To allow the taking of the landowners
properties, and in the meantime leave them empty-handed
by withholding payment of compensation while the
government speculates on whether or not it will pursue
expropriation, or worse, for government to subsequently
decide to abandon the property and return it to the
landowners, is undoubtedly an oppressive exercise of
eminent domain that must never be sanctioned. (Land
Bank of the Philippines vs. Court of Appeals, 258 SCRA 404).
xxxxxx
An action to quiet title is a common law remedy for the removal
of any cloud or doubt or uncertainty on the title to real property.
It is essential for the plaintiff or complainant to have a legal or
equitable title or interest in the real property, which is the
subject matter of the action. Also the deed, claim,
encumbrance or proceeding that is being alleged as cloud on
plaintiffs title must be shown to be in fact invalid or inoperative
despite its prima facie appearance of validity or legal efficacy
(Robles vs. Court of Appeals, 328 SCRA 97). In view of the
foregoing discussion, clearly, the claim of defendant-
appellant Republic constitutes a cloud, doubt or
uncertainty on the title of plaintiff-appellee Vicente Lim
that can be removed by an action to quiet title.
WHEREFORE, in view of the foregoing, and finding no
reversible error in the appealed May 4, 2001 Decision of
Branch 9, Regional Trial Court of Cebu City, in Civil Case No.
CEB-12701, the said decision is UPHELD AND
AFFIRMED. Accordingly, the appeal is DISMISSED for lack of
merit.
Undaunted, petitioners, through the Office of the Solicitor
General, filed with this Court a petition for review on
certiorari alleging that the Republic has remained the owner of
Lot 932 as held by this Court in Valdehueza vs. Republic.[6]
In our Resolution dated March 1, 2004, we denied the
petition outright on the ground that the Court of Appeals did not
commit a reversible error. Petitioners filed an urgent motion for
reconsideration but we denied the same with finality in our
Resolution of May 17, 2004.
On May 18, 2004, respondent filed an ex-parte motion for
the issuance of an entry of judgment. We only noted the motion
in our Resolution of July 12, 2004.
On July 7, 2004, petitioners filed an urgent plea/motion for
clarification, which is actually a second motion for
reconsideration. Thus, in our Resolution of September 6, 2004,
we simply noted without action the motion considering that the
instant petition was already denied with finality in our
Resolution of May 17, 2004.
On October 29, 2004, petitioners filed a very urgent motion
for leave to file a motion for reconsideration of our Resolution
dated September 6, 2004 (with prayer to refer the case to the En
Banc). They maintain that the Republics right of ownership has
been settled in Valdehueza.
The basic issue for our resolution is whether the Republic
has retained ownership of Lot 932 despite its failure to pay
respondents predecessors-in-interest the just compensation
therefor pursuant to the judgment of the CFI rendered as early
as May 14, 1940.
Initially, we must rule on the procedural obstacle.
While we commend the Republic for the zeal with which it
pursues the present case, we reiterate that its urgent motion for
clarification filed on July 7, 2004 is actually a second motion for
reconsideration. This motion is prohibited under Section 2, Rule
52, of the 1997 Rules of Civil Procedure, as amended, which
provides:
Sec. 2. Second motion for reconsideration. No second motion
for reconsideration of a judgment or final resolution by the
same party shall be entertained.
 Consequently, as mentioned earlier, we simply noted
without action the motion since petitioners petition was already
denied with finality.
Considering the Republics urgent and serious insistence
that it is still the owner of Lot 932 and in the interest of justice,
we take another hard look at the controversial issue in order to
determine the veracity of petitioners stance.
One of the basic principles enshrined in our Constitution is
that no person shall be deprived of his private property without
due process of law; and in expropriation cases, an essential
element of due process is that there must be just compensation
whenever private property is taken for public use.[7] Accordingly,
Section 9, Article III, of our Constitution mandates: Private
property shall not be taken for public use without just
compensation.
The Republic disregarded the foregoing provision when it
failed and refused to pay respondents predecessors-in-interest
the just compensation for Lots 932 and 939. The length of time
and the manner with which it evaded payment demonstrate its
arbitrary high-handedness and confiscatory attitude. The final
judgment in the expropriation proceedings (Civil Case No. 781)
was entered on April 5, 1948. More than half of a century has
passed, yet, to this day, the landowner, now respondent, has
remained empty-handed. Undoubtedly, over 50 years of delayed
payment cannot, in any way, be viewed as fair. This is more so
when such delay is accompanied by bureaucratic hassles.
Apparent from Valdehueza is the fact that respondents
predecessors-in-interest were given a run around by the
Republics officials and agents. In 1950, despite the benefits it
derived from the use of the two lots, the National Airports
Corporation denied knowledge of the claim of respondents
predecessors-in-interest. Even President Garcia, who sent a
letter to the Civil Aeronautics Administration and the Secretary
of National Defense to expedite the payment, failed in granting
relief to them. And, on September 6, 1961, while the Chief of
Staff of the Armed Forces expressed willingness to pay the
appraised value of the lots, nothing happened.
The Court of Appeals is correct in saying that Republics
delay is contrary to the rules of fair play, as just compensation
embraces not only the correct determination of the amount
to be paid to the owners of the land, but also the payment
for the land within a reasonable time from its taking.
Without prompt payment, compensation cannot be
considered just. In jurisdictions similar to ours, where an entry
to the expropriated property precedes the payment of
compensation, it has been held that if the compensation is not
paid in a reasonable time, the party may be treated as a
trespasser ab initio.[8]
Corollarily, in Provincial Government of Sorsogon vs. Vda.
De Villaroya,[9] similar to the present case, this Court expressed
its disgust over the governments vexatious delay in the payment
of just compensation, thus:
The petitioners have been waiting for more than thirty
years to be paid for their land which was taken for use as a
public high school. As a matter of fair procedure, it is the duty
of the Government, whenever it takes property from private
persons against their will, to supply all required documentation
and facilitate payment of just compensation. The imposition
of unreasonable requirements and vexatious delays before
effecting payment is not only galling and arbitrary but a
rich source of discontent with government. There should
be some kind of swift and effective recourse against
unfeeling and uncaring acts of middle or lower level
bureaucrats.
We feel the same way in the instant case.
More than anything else, however, it is the obstinacy of the
Republic that prompted us to dismiss its petition outright. As
early as May 19, 1966, in Valdehueza, this Court mandated the
Republic to pay respondents predecessors-in-interest the sum
of P16,248.40 as reasonable market value of the two lots in
question. Unfortunately, it did not comply and allowed several
decades to pass without obeying this Courts mandate. Such
prolonged obstinacy bespeaks of lack of respect to private rights
and to the rule of law, which we cannot countenance. It is
tantamount to confiscation of private property. While it is true
that all private properties are subject to the need of government,
and the government may take them whenever the necessity or
the exigency of the occasion demands, however, the
Constitution guarantees that when this governmental right of
expropriation is exercised, it shall be attended by
compensation.[10] From the taking of private property by the
government under the power of eminent domain, there arises an
implied promise to compensate the owner for his loss. [11]
Significantly, the above-mentioned provision of Section 9,
Article III of the Constitution is not a grant but a limitation of
power. This limiting function is in keeping with the philosophy of
the Bill of Rights against the arbitrary exercise of governmental
powers to the detriment of the individuals rights. Given this
function, the provision should therefore be strictly interpreted
against the expropriator, the government, and liberally in favor
of the property owner.[12]
Ironically, in opposing respondents claim, the Republic is
invoking this Courts Decision in Valdehueza, a Decision it utterly
defied. How could the Republic acquire ownership over Lot 932
when it has not paid its owner the just compensation, required
by law, for more than 50 years? The recognized rule is that title
to the property expropriated shall pass from the owner to the
expropriator only upon full payment of the just
compensation. Jurisprudence on this settled principle is
consistent both here and in other democratic jurisdictions.
In Association of Small Landowners in the Philippines, Inc. et al.,
vs. Secretary of Agrarian Reform,[13] thus:
Title to property which is the subject of condemnation
proceedings does not vest the condemnor until the
judgment fixing just compensation is entered and paid, but
the condemnors title relates back to the date on which the
petition under the Eminent Domain Act, or the commissioners
report under the Local Improvement Act, is filed.
x x x Although the right to appropriate and use land taken
for a canal is complete at the time of entry, title to the
property taken remains in the owner until payment is
actually made. (Emphasis supplied.)
In Kennedy v. Indianapolis, the US Supreme Court cited
several cases holding that title to property does not pass to the
condemnor until just compensation had actually been made. In
fact, the decisions appear to be uniform to this effect. As early
as 1838, in Rubottom v. McLure, it was held that actual
payment to the owner of the condemned property was a
condition precedent to the investment of the title to the
property in the State albeit not to the appropriation of it to
public use. In Rexford v. Knight, the Court of Appeals of New
York said that the construction upon the statutes was that the
fee did not vest in the State until the payment of the
compensation although the authority to enter upon and
appropriate the land was complete prior to the payment.
Kennedy further said that both on principle and authority the
rule is . . . that the right to enter on and use the property is
complete, as soon as the property is actually appropriated
under the authority of law for a public use, but that the title
does not pass from the owner without his consent, until
just compensation has been made to him.
Our own Supreme Court has held in Visayan Refining Co. v.
Camus and Paredes, that:
If the laws which we have exhibited or cited in the
preceding discussion are attentively examined it will be
apparent that the method of expropriation adopted in this
jurisdiction is such as to afford absolute reassurance that
no piece of land can be finally and irrevocably taken from
an unwilling owner until compensation is paid...(Emphasis
supplied.)
Clearly, without full payment of just compensation, there
can be no transfer of title from the landowner to the expropriator.
Otherwise stated, the Republics acquisition of ownership is
conditioned upon the full payment of just compensation within a
reasonable time.[14]
Significantly, in Municipality of Bian v. Garcia[15] this Court
ruled that the expropriation of lands consists of two stages, to
wit:
x x x The first is concerned with the determination of the
authority of the plaintiff to exercise the power of eminent
domain and the propriety of its exercise in the context of the
facts involved in the suit. It ends with an order, if not of
dismissal of the action, of condemnation declaring that the
plaintiff has a lawful right to take the property sought to be
condemned, for the public use or purpose described in the
complaint, upon the payment of just compensation to be
determined as of the date of the filing of the complaint x x x.
The second phase of the eminent domain action is concerned
with the determination by the court of the just compensation for
the property sought to be taken. This is done by the court with
the assistance of not more than three (3) commissioners. x x x.
It is only upon the completion of these two stages that
expropriation is said to have been completed. In Republic v.
Salem Investment Corporation,[16] we ruled that, the process is
not completed until payment of just compensation. Thus, here,
the failure of the Republic to pay respondent and his
predecessors-in-interest for a period of 57 years rendered the
expropriation process incomplete.
The Republic now argues that under Valdehueza,
respondent is not entitled to recover possession of Lot 932 but
only to demand payment of its fair market value. Of course, we
are aware of the doctrine that non-payment of just compensation
(in an expropriation proceedings) does not entitle the private
landowners to recover possession of the expropriated lots. This
is our ruling in the recent cases of Republic of the Philippines vs.
Court of Appeals, et al.,[17] and Reyes vs. National Housing
Authority.[18] However, the facts of the present case do not justify
its application. It bears stressing that the Republic was ordered
to pay just compensation twice, the first was in the
expropriation proceedings and the second, in Valdehueza. Fifty-
seven (57) years have passed since then. We cannot but
construe the Republics failure to pay just compensation as
a deliberate refusal on its part. Under such
circumstance, recovery of possession is in order. In several
jurisdictions, the courts held that recovery of possession may be
had when property has been wrongfully taken or is wrongfully
retained by one claiming to act under the power of eminent
domain[19] or where a rightful entry is made and the party
condemning refuses to pay the compensation which has
been assessed or agreed upon;[20] or fails or refuses to have
the compensation assessed and paid.[21]
The Republic also contends that where there have been
constructions being used by the military, as in this case, public
interest demands that the present suit should not be sustained.
It must be emphasized that an individual cannot be
deprived of his property for the public
convenience.[22] In Association of Small Landowners in the
Philippines, Inc. vs. Secretary of Agrarian Reform,[23]we ruled:
One of the basic principles of the democratic system is that
where the rights of the individual are concerned, the end does
not justify the means. It is not enough that there be a valid
objective; it is also necessary that the means employed to
pursue it be in keeping with the Constitution. Mere expediency
will not excuse constitutional shortcuts. There is no question
that not even the strongest moral conviction or the most
urgent public need, subject only to a few notable
exceptions, will excuse the bypassing of an individual's
rights. It is no exaggeration to say that a person invoking a
right guaranteed under Article III of the Constitution is a
majority of one even as against the rest of the nation who
would deny him that right.
The right covers the persons life, his liberty and his
property under Section 1 of Article III of the Constitution.
With regard to his property, the owner enjoys the added
protection of Section 9, which reaffirms the familiar rule
that private property shall not be taken for public use
without just compensation.
The Republics assertion that the defense of the State will
be in grave danger if we shall order the reversion of Lot 932 to
respondent is an overstatement. First, Lot 932 had ceased to
operate as an airport. What remains in the site is just the
National Historical Institutes marking stating that Lot 932 is
the former location of Lahug Airport. And second, there are only
thirteen (13) structures located on Lot 932, eight (8) of which
are residence apartments of military personnel. Only two (2)
buildings are actually used as training centers. Thus, practically
speaking, the reversion of Lot 932 to respondent will only affect
a handful of military personnel. It will not result to irreparable
damage or damage beyond pecuniary estimation, as what the
Republic vehemently claims.
We thus rule that the special circumstances prevailing in
this case entitle respondent to recover possession of the
expropriated lot from the Republic. Unless this form of swift and
effective relief is granted to him, the grave injustice committed
against his predecessors-in-interest, though no fault or
negligence on their part, will be perpetuated. Let this case,
therefore, serve as a wake-up call to the Republic that in the
exercise of its power of eminent domain, necessarily in
derogation of private rights, it must comply with the
Constitutional limitations. This Court, as the guardian of the
peoples right, will not stand still in the face of the Republics
oppressive and confiscatory taking of private property, as in this
case.
At this point, it may be argued that respondent Vicente Lim
acted in bad faith in entering into a contract of mortgage with
Valdehueza and Panerio despite the clear annotation in TCT No.
23934 that Lot 932 is subject to the priority of the National
Airports Corporation [to acquire said parcels of land] x x x
upon previous payment of a reasonable market value.
 The issue of whether or not respondent acted in bad faith
is immaterial considering that the Republic did not complete the
expropriation process. In short, it failed to perfect its title over Lot
932 by its failure to pay just compensation. The issue of bad faith
would have assumed relevance if the Republic actually acquired
title over Lot 932. In such a case, even if respondents title was
registered first, it would be the Republics title or right of
ownership that shall be upheld. But now, assuming that
respondent was in bad faith, can such fact vest upon the
Republic a better title over Lot 932? We believe not. This is
because in the first place, the Republic has no title to speak of.
At any rate, assuming that respondent had indeed
knowledge of the annotation, still nothing would have prevented
him from entering into a mortgage contract involving Lot 932
while the expropriation proceeding was pending. Any person
who deals with a property subject of an expropriation does so
at his own risk, taking into account the ultimate possibility of
losing the property in favor of the government. Here, the
annotation merely served as a caveat that the Republic had
a preferential right to acquire Lot 932 upon its payment of a
reasonable market value. It did not proscribe Valdehueza and
Panerio from exercising their rights of ownership including their
right to mortgage or even to dispose of their property.
In Republic vs. Salem Investment Corporation,[24] we
recognized the owners absolute right over his property pending
completion of the expropriation proceeding, thus:
It is only upon the completion of these two stages that
expropriation is said to have been completed. Moreover, it is
only upon payment of just compensation that title over the
property passes to the government. Therefore, until the action
for expropriation has been completed and terminated,
ownership over the property being expropriated remains with
the registered owner. Consequently, the latter can
exercise all rights pertaining to an owner, including the
right to dispose of his property subject to the power of the
State ultimately to acquire it through expropriation.
It bears emphasis that when Valdehueza and Panerio
mortgaged Lot 932 to respondent in 1964, they were still the
owners thereof and their title had not yet passed to the petitioner
Republic. In fact, it never did. Such title or ownership was
rendered conclusive when we categorically ruled
in Valdehueza that: It is true that plaintiffs are still the
registered owners of the land, there not having been a
transfer of said lots in favor of the Government.
For respondents part, it is reasonable to conclude that he
entered into the contract of mortgage with Valdehueza and
Panerio fully aware of the extent of his right as a mortgagee. A
mortgage is merely an accessory contract intended to secure
the performance of the principal obligation. One of its
characteristics is that it is inseparable from the property. It
adheres to the property regardless of who its owner may
subsequently be.[25] Respondent must have known that even if
Lot 932 is ultimately expropriated by the Republic, still, his right
as a mortgagee is protected. In this regard, Article 2127 of the
Civil Code provides:
Art. 2127. The mortgage extends to the natural accessions, to
the improvements, growing fruits, and the rents or income not
yet received when the obligation becomes due, and to the
amount of the indemnity granted or owing to the proprietor
from the insurers of the property mortgaged, or in virtue of
expropriation for public use, with the declarations,
amplifications, and limitations established by law, whether the
estate remains in the possession of the mortgagor or it
passes in the hands of a third person.
In summation, while the prevailing doctrine is that the non-
payment of just compensation does not entitle the private
landowner to recover possession of the expropriated
lots,[26] however, in cases where the government failed to pay
just compensation within five (5)[27] years from the finality of
the judgment in the expropriation proceedings, the owners
concerned shall have the right to recover possession of their
property. This is in consonance with the principle that the
government cannot keep the property and dishonor the
judgment.[28] To be sure, the five-year period limitation will
encourage the government to pay just compensation punctually.
This is in keeping with justice and equity. After all, it is the duty
of the government, whenever it takes property from private
persons against their will, to facilitate the payment of just
compensation. In Cosculluela v. Court of Appeals,[29] we defined
just compensation as not only the correct determination of the
amount to be paid to the property owner but also the payment of
the property within a reasonable time. Without prompt
payment, compensation cannot be considered just.
WHEREFORE, the assailed Decision of the Court of
Appeals in CA-G.R. CV No. 72915 is AFFIRMED in toto.
The Republics motion for reconsideration of our Resolution
dated March 1, 2004 is DENIED with FINALITY. No further
pleadings will be allowed.
Let an entry of judgment be made in this case.
SO ORDERED.
Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Ynares-
Santiago, Carpio, Austria-Martinez, Corona, Carpio-Morales,
Callejo, Sr., Azcuna, Tinga, Chico-Nazario, and Garcia,
JJ., concur.
THIRD DIVISION
[G.R. No. 139495. November 27, 2000]
MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY
(MCIAA), petitioner, vs. THE HON. COURT OF
APPEALS and VIRGINIA
CHIONGBIAN, respondents.
DECISION
GONZAGA-REYES, J.:
This Petition for Review on Certiorari seeks the reversal of
the Decision of the Court of Appeals[1] in CA G.R. CV No. 56495
entitled Virginia Chiongbian vs. Mactan-Cebu International
Airport Authority which affirmed the Decision of the Regional
Trial Court[2], 7th Judicial Region, Branch 24, Cebu City.
The Court of Appeals rendered its decision based on the
following facts:
Subject of the action is Lot 941 consisting of 13,766 square
meters located in Lahug, Cebu City, adjoining the then Lahug
Airport and covered by TCT No. 120366 of the Registry of
Deeds of Cebu City, in the name of MCIAA.
During the liberation, the Lahug Airport was occupied by the
United States Army. Then, in 1947, it was turned over to the
Philippine Government through the Surplus Property
Commission. Subsequently, it was transferred to the Bureau of
Aeronautics which was succeeded by the National Airports
Corporation. When the latter was dissolved, it was replaced by
the Civil Aeronautics Administration (CAA).
On April 16, 1952, the Republic of the Philippines, represented
by the CAA, filed an expropriation proceeding, Civil Case No.
R-1881 (Court of First Instance of Cebu, Third Branch), on
several parcels of land in Lahug, Cebu City, which included Lot
941, for the expansion and improvement of Lahug Airport.
In June 1953, appellee Virginia Chiongbian purchased Lot 941
from its original owner, Antonina Faborada, the original
defendant in the expropriation case, for P8,000.00.
Subsequently, TCT No. 9919 was issued in her name (Exh. D).
Then, on December 29, 1961, judgment was rendered in the
expropriation case in favor of the Republic of the Philippines
which was made to pay Virginia Chiongbian the amount
of P34,415.00 for Lot 941, with legal interest computed from
November 16, 1947, the date when the government begun
using it. Virginia Chiongbian did not appeal therefrom.
Thereafter, absolute title to Lot 941 was transferred to the
Republic of the Philippines under TCT No. 27696 (Exhs. E and
2).
Then, in 1990, Republic Act No. 6958 was passed by
Congress creating the Mactan-Cebu International Airport
Authority to which the assets of the Lahug Airport was
transferred. Lot 941 was then transferred in the name of
MCIAA under TCT No. 120366 on May 8, 1992.
On July 24, 1995, Virginia Chiongbian filed a complaint for
reconveyance of Lot 941 with the Regional Trial Court of Cebu,
Branch 9, docketed as Civil Case No. CEB-17650 alleging, that
sometime in 1949, the National Airport Corporation (NAC)
ventured to expand the Cebu Lahug Airport. As a
consequence, it sought to acquire by expropriation or
negotiated sale several parcels of lands adjoining the Lahug
Airport, one of which was Lot 941 owned by Virginia
Chiongbian. Since she and other landowners could not agree
with the NACs offer for the compensation of their lands, a suit
for eminent domain was instituted on April 16, 1952, before the
then Court of First Instance of Cebu (Branch III), against forty-
five (45) landowners, including Virginia Chiongbian, docketed
as Civil Case No. R-1881, entitled Republic of the Philippine
vs. Damian Ouano, et al. It was finally decided on December
29, 1961 in favor of the Republic of the Philippines.
Some of the defendants-landowners, namely, Milagros Urgello,
Mamerto Escano, Inc. and Ma. Atega Vda. de Deen, appealed
the decision to the Court of Appeals under CA-G.R. No. 33045-
R, which rendered a modified judgment allowing them to
repurchase their expropriated properties. Virginia Chiongbian,
on the other hand, did not appeal and instead, accepted the
compensation for Lot 941 in the amount of P34,415, upon the
assurance of the NAC that she or her heirs would be given the
right of reconveyance for the same price once the land would
no longer be used as (sic) airport.
Consequently, TCT No. 9919 of Virginia Chiongbian was
cancelled and TCT No. 27696 was issued in the name of the
Republic of the Philippines. Then, with the creation of the
MCIAA, it was cancelled and TCT No. 120366 was issued in its
name.
However, no expansion of the Lahug Airport was undertaken
by MCIAA and its predecessors-in-interest. In fact, when
Mactan International Airport was opened for commercial flights,
the Lahug Airport was closed at the end of 1991 and all its
airport activities were undertaken at and transferred to the
Mactan International Airport. Thus, the purpose for which Lot
941 was taken ceased to exist.[3]
On June 3, 1997, the RTC rendered judgment in favor of
the respondent Virginia Chiongbian (CHIONGBIAN) the
dispositive portion of the decision reads:
WHEREFORE, in the light of the foregoing, the Court hereby
renders judgment in favor of the plaintiff, Virginia Chiongbian
and against the defendant, Mactan Cebu International
Authority (MCIAA), ordering the latter to restore to plaintiff the
possession and ownership of the property denominated as Lot
No. 941 upon reimbursement of the expropriation price paid to
plaintiff.
The Register of Deeds is therefore ordered to effect the
Transfer of the Certificate Title from the defendant to the
plaintiff on Lot No. 941, cancelling Transfer Certificate of Title
No. 120366 in the name of defendant MCIAA and to issue a
new title on the same lot in the name of Virginia Chiongbian.
No pronouncement as to cost.
SO ORDERED.[4]
Aggrieved by the holding of the trial court, the petitioner
Mactan Cebu International Airport Authority (MCIAA) appealed
the decision to the Court of Appeals, which affirmed the RTC
decision. Motion for Reconsideration was denied[5] hence this
petition where MCIAA raises the following grounds in support of
its petition:
I.
THE COURT OF APPEALS ERRED IN UPHOLDING THE
TRIAL COURTS JUDGMENT THAT THERE WAS A
REPURCHASE AGREEMENT AND IGNORING
PETITIONERS PROTESTATIONS THAT ADMISSION OF
RESPONDENTS ORAL EVIDENCE IS NOT ALLOWED
UNDER THE STATUE OF FRAUDS.
II.
THE COURT OF APPEALS ERRED IN HOLDING THAT THE
DECISION IN LIMBACO IS MATERIAL AND APPLICABLE
TO THE CASE AT BAR.
III.
THE COURT OF APPEALS ERRED IN HOLDING THAT THE
MODIFIED JUDGMENT IN CA-GR NO. 33045 SHOULD
INURE TO THE BENEFIT OF CHIONGBIAN EVEN IF SHE
WAS NOT A PARTY IN SAID APPEALED CASE.
IV.
THE COURT OF APPEALS ERRED IN RULING THAT THE
RIGHT OF VIRGINIA CHIONGBIAN TO REPURCHASE
SHOULD BE UNDER THE SAME TERMS AND CONDITIONS
AS THE OTHER LANDOWNERS SUCH THAT HER
REPURCHASE PRICE IS ONLY P 34, 415.00.[6]
MCIAA contends that the Republic of the Philippines
appropriated Lot No. 941 through expropriation proceedings in
Civil Case No. R-1881. The judgment rendered therein was
unconditional and did not contain a stipulation that ownership
thereof would revert to CHIONGBIAN nor did it give
CHIONGBIAN the right to repurchase the same in the event the
lot was no longer used for the purpose it was
expropriated. Moreover, CHIONGBIANs claim that there was a
repurchase agreement is not supported by documentary
evidence. The mere fact that twenty six (26) other landowners
repurchased their property located at the aforementioned Lahug
airport is of no consequence considering that said landowners
were able to secure a rider in their contracts entitling them to
repurchase their property.
MCIAA also argues that the Court of Appeals erroneously
concluded that it did not object to the evidence presented by
CHIONGBIAN to prove the alleged repurchase agreement
considering that the transcript of stenographic notes shows that
it manifested its objections thereto for being in violation of the
Statute of Frauds.
MCIAA also faults the Court of Appeals for applying the
ruling in the case of Limbaco vs. Court of Appeals[7]. It is the
position of MCIAA that the ruling in the case of Limbaco is not
squarely in point with respect to the present case for the reason
that the Limbaco case involved a contract of sale of real property
and not an expropriation.
Moreover, MCIAA alleges that the Court of Appeals erred
in ruling that the case of Escao, et. al. vs. Republic[8] proves the
existence of the repurchase agreement. MCIAA claims that
although the parties in said case were CHIONGBIANs co-
defendants in Civil Case No. R-1881, CHIONGBIAN did not join
in their appeal of the judgment of condemnation. The modified
judgment in CA G.R. No. 33045-R should not therefore redound
to CHIONGBIANs benefit who was no longer a party thereto or
to the compromise agreement which Escao et. al. entered into
with the Republic of the Philippines.
Finally, assuming for the sake of argument that
CHIONGBIAN has a right to repurchase Lot No. 941, MCIAA
claims that the Court of Appeals erred in ruling that the right of
CHIONGBIAN to purchase said lot should be under the same
terms and conditions given to the other landowners and not at
the prevailing market price. Such ruling is grossly unfair and
would result in unjustly enriching CHIONGBIAN for the reason
that she received just compensation for the property at the time
of its taking by the government and that the property is now
worth several hundreds of millions of pesos due to the
improvements introduced by MCIAA.[9]
On the other hand, aside from praying that this Court affirm
the decision of the Court of Appeals, the private respondent
CHIONGBIAN prays that the petition be denied for the reason
that it violates the 1997 Rules on Civil Procedure, more
specifically the requirement of a certification of non-forum
shopping. CHIONGBIAN claims that the Verification and
Certification on Non-Forum Shopping executed by the MCIAA
on September 13, 1999 was signed by a Colonel Marcelino A.
Cordova whose appointment as Assistant General Manager of
MCIAA was disapproved by the Civil Service Commission as
early as September 2, 1999. It is CHIONGBIANs position that
since his appointment was disapproved, the Verification
attached to the petition for review on certiorari cannot be
considered as having been executed by the plaintiff or principal
party who under Section 5, Rule 7 of the Rules of Court can
validly make the certification in the instant
petition. Consequently, the petition should be considered as not
being verified and as such should not be considered as having
been filed at all.
After a careful consideration of the arguments presented
by the parties, we resolve to grant the petition.
We first resolve the procedural issue.
We are not persuaded by CHIONGBIANs claim that the
Verification and Certification against forum shopping
accompanying MCIAAs petition was insufficient for allegedly
having been signed by one who was not qualified to do so. As
pointed out by the MCIAA, Colonel Cordova signed the
Verification and Certification against forum shopping as Acting
General Manager of the MCIAA, pursuant to Office Order No.
5322-99 dated September 10, 1999 issued by the General
Manager of MCIAA, Alfonso Allere.[10] Colonel Cordova did not
sign the Verification and Certification against forum shopping
pursuant to his appointment as assistant General Manager of
the MCIAA, which was later disapproved by the Commission on
Appointments. This fact has not been disputed by
CHIONGBIAN.
We come now to the substantive aspects of the case
wherein the issue to be resolved is whether the abandonment of
the public use for which Lot No. 941 was expropriated entitles
CHIONGBIAN to reacquire it.
In Fery vs. Municipality of Cabanatuan[11], this Court had
occasion to rule on the same issue as follows:
The answer to that question depends upon the character of the
title acquired by the expropriator, whether it be the State, a
province, a municipality, or a corporation which has the right to
acquire property under the power of eminent domain. If, for
example, land is expropriated for a particular purpose, with the
condition that when that purpose is ended or abandoned the
property shall return to its former owner, then, of course, when
the purpose is terminated or abandoned the former owner
reacquires the property so expropriated. If, for example, land is
expropriated for a public street and the expropriation is granted
upon condition that the city can only use it for a public street,
then, of course, when the city abandons its use as a public
street, it returns to the former owner, unless there is some
statutory provision to the contrary.Many other similar examples
might be given. If, upon the contrary, however, the decree of
expropriation gives to the entity a fee simple title, then, of
course, the land becomes the absolute property of the
expropriator, whether it be the State, a province, or
municipality, and in that case the non-user does not have the
effect of defeating the title acquired by the expropriation
proceedings.
When land has been acquired for public use in fee simple,
unconditionally, either by the exercise of eminent domain or by
purchase, the former owner retains no rights in the land, and
the public use may be abandoned, or the land may be devoted
to a different use, without any impairment of the estate or title
acquired, or any reversion to the former owner.[12]
In the present case, evidence reveals that Lot No. 941 was
appropriated by the Republic of the Philippines through
expropriation proceedings in Civil Case No. R-1881. The
dispositive portion of the decision in said case reads insofar as
pertinent as follows:
IN VIEW OF THE FOREGOING, judgment is hereby rendered:
1. Declaring the expropriation of Lots Nos. 75, 76, 89, 90, 91,
105, 106, 107, 108, 104, 921-A, 88, 93, 913-B, 72, 77, 916,
777-A, 918, 919, 920, 764-A, 988, 744-A, 745-A, 746, 747,
752-A, 263-A, 941, 942, 740-A, 743, 985, 956, 976-A, 984,
989-A; and 947, including in the Lahug Airport, Cebu City,
justified and in lawful exercise of the right of eminent domain;
2. Declaring the fair market values of the lots thus taken and
condemning the plaintiff to pay the same to the respective
owners with legal interest from the dates indicated therein, as
follows: Lots Nos. 75, 76, 89, 90, 91, 92, 105, 106, 107, 108-
P31, 977 (minus P10,639 or P21,278 as balance in favor of
Mamerto Escao, Inc., with legal interest from November 16,
1947 until fully paid; xxx Lot No. 941- P34,415.00 in favor of
Virginia Chiongbian, with legal interest from November 16,
1947 until fully paid; xxx
3. After the payment of the foregoing financial obligation to the
landowners, directing the latter to deliver to the plaintiff the
corresponding Transfer Certificate of Title to their
representative lots; and upon the presentation of the said titles
to the Register of Deeds, ordering the latter to cancel the same
and to issue, in lieu thereof, new Transfer Certificates of Title in
the name of the plaintiff.
NO COST.
SO ORDERED.[13] (Emphasis supplied)
The terms of the judgment are clear and unequivocal and
grant title to Lot No. 941 in fee simple to the Republic of the
Philippines. There was no condition imposed to the effect that
the lot would return to CHIONGBIAN or that CHIONGBIAN had
a right to repurchase the same if the purpose for which it was
expropriated is ended or abandoned or if the property was to be
used other than as the Lahug airport.
CHIONGBIAN cannot rely on the ruling in Mactan Cebu
International Airport vs. Court of Appeals [14] wherein the
presentation of parol evidence was allowed to prove the
existence of a written agreement containing the right to
repurchase. Said case did not involve expropriation proceedings
but a contract of sale. This Court consequently allowed the
presentation of parol evidence to prove the existence of an
agreement allowing the right of repurchase based on the
following ratiocination:
Under the parol evidence rule, when the terms of an
agreement have been reduced into writing, it is considered as
containing all the terms agreed upon, and there can be,
between the parties and their successors-in-interest, no
evidence of such terms other than the contents of the written
agreement. However, a party may present evidence to modify,
explain or add to the terms of the written agreement if he puts
in issue in his pleading, the failure of the written agreement to
express the true intent of the parties thereto. In the case at
bench, the fact which private respondents seek to establish by
parol evidence consists of the agreement or representation
made by the NAC that induced Inez Ouano to execute the
deed of sale; that the vendors and their heirs are given the
right of repurchase should the government no longer need the
property. Where a parol contemporaneous agreement was the
moving cause of the written contract, or where the parol
agreement forms part of the consideration of the written
contract, and it appears that the written contract was executed
on the faith of the parol contract or representation, such
evidence is admissible. It is recognized that proof is admissible
of any collateral parol agreement that is not inconsistent with
the terms of the written contract though it may relate to the
same subject matter. The rule excluding parol evidence to vary
or contradict a writing does not extend so far as to preclude the
admission of existing evidence to show prior or
contemporaneous collateral parol agreements between the
parties, but such evidence may be received, regardless of
whether or not the written agreement contains any reference to
such collateral agreement, and whether the action is at law or
in equity.
More importantly, no objection was made by petitioner when
private respondents introduced evidence to show the right of
repurchase granted by the NAC to Inez Ouano. It has been
repeatedly laid down as a rule of evidence that a protest or
objection against the admission of any evidence must be made
at the proper time, and if not so made, it will be understood to
have been waived.[15]
This pronouncement is not applicable to the present case
since the parol evidence rule which provides that when the terms
of a written agreement have been reduced to writing, it is
considered as containing all the terms agreed upon, and there
can be, between the parties and their successors-in-interest, no
evidence of such terms other than the contents of the written
agreement applies to written agreements and has no application
to a judgment of a court. To permit CHIONGBIAN to prove the
existence of a compromise settlement which she claims to have
entered into with the Republic of the Philippines prior to the
rendition of judgment in the expropriation case would result in a
modification of the judgment of a court which has long become
final and executory.
And even assuming for the sake of argument that
CHIONGBIAN could prove the existence of the alleged written
agreement acknowledging her right to repurchase Lot No. 941
through parol evidence, the Court of Appeals erred in holding
that the evidence presented by CHIONGBIAN was admissible.
Under 1403 of the Civil Code, a contract for the sale of real
property shall be unenforceable unless the same, or some note
or memorandum thereof, be in writing, and subscribed by the
party charged, or by his agent; evidence, therefore of the
agreement cannot be received without the writing or a
secondary evidence of its contents.
Contrary to the finding of the Court of Appeals, the records
reveal that MCIAA objected to the purpose for which the
testimonies of CHIONGBIAN[16] and Patrosinio
Bercede[17] (BERCEDE) were offered, i.e. to prove the existence
of the alleged written agreement evincing a right to repurchase
Lot No. 941 in favor of CHIONGBIAN, for being in violation of
the Statute of Frauds. MCIAA also objected to the purpose for
which the testimony of Attorney Manuel Pastrana (PASTRANA)
was offered, i.e. to prove the existence of the alleged written
agreement and an alleged deed of sale, on the same
ground.[18] Consequently, the testimonies of these witnesses are
inadmissible under the Statute of Frauds to prove the existence
of the alleged sale.
Aside from being inadmissible under the provisions of the
Statute of Frauds, CHIONGBIANs and BERCEDEs testimonies
are also inadmissible for being hearsay in nature. Evidence is
hearsay if its probative value is not based on the personal
knowledge of the witness but on the knowledge of another
person who is not on the witness stand.[19] CHIONGBIAN,
through deposition, testified that:
ATTY. DUBLIN (To Witness)
 Q: Mrs. Chiongbian, you said a while ago that there was an
assurance by the government to return this property
to you in case Lahug Airport will be no longer used, is
that correct?
WITNESS:
A: Yes, sir. That is true.
ATTY. DUBLIN: (To witness)
Q: Can you recall when was this verbal assurance made?
A: I cannot remember anymore.
Q: You cannot also remember the year in which the alleged
assurance was made?
A: I cannot also remember because Im very forgetful.
Q: Now, can you tell us so far as you can remember who
was that person or government authority or employee
that made the alleged assurance?
A: The owner of the property.
Q: Now, how many times was this assurance being made
to you to return this property in case the Lahug Airport
will no longer be used?
A: 2 or 3, I cannot recall.
Q: You cannot also remember in what particular place or
places was this assurance being made?
A: In my previous residence in Mabolo.
DEPOSITION OFFICER:
The assurance was made in my previous residence at
Mabolo.
WITNESS:
A: I entrusted that to my lawyer, Atty. Pedro Calderon.
ATTY. DUBLIN: (to witness)
Q: You mean the assurance was made personally to your
lawyer at that time, Atty. Pedro Calderon?
A: Yes, sir.
Q: So you are now trying to tell us that that assurance was
never made to you personally. Is that right, Mam?
A: He assured me directly that the property will be returned
to me.
Q: When you said he, are you referring to your lawyer at
that time, Atty. Pedro Calderon
A: Yes, sir.
Q: So, in effect, it was your lawyer, Atty. Pedro Calderon,
who made the assurance to you that the property will
be returned in case Lahug Airport will be abandoned?
A: Yes, sir.[20]
CHIONGBIANs testimony shows that she had no personal
knowledge of the alleged assurance made by the Republic of
the Philippines that Lot No. 941 would be returned to her in the
event that the Lahug Airport was closed. She stated that she
only learned of the alleged assurance of the Republic of the
Philippines through her lawyer, Attorney Calderon, who was not
presented as a witness.
BERCEDEs testimony regarding the alleged agreement is
likewise inadmissible to prove the existence of the agreement
for also being hearsay in nature. Like CHIONGBIAN, BERCEDE
did not have personal knowledge of the alleged assurance made
by the Republic of the Philippines to his father that their land
would be returned should the Lahug Airport cease to operate for
he only learned of the alleged assurance through his father.
PASTRANAs testimony does little to help CHIONGBIANs
cause. He claims that subsequent to the execution of the alleged
written agreement but prior to the rendition of judgment in the
expropriation case, the Republic and CHIONGBIAN executed a
Deed of Sale over Lot No. 941 wherein CHIONGBIAN sold the
aforementioned lot to the Republic of the Philippines. However,
CHIONGBIAN never mentioned the existence of a deed of
sale.[21] In fact, the records disclose that Lot No. 941 was
transferred to the Republic of the Philippines pursuant to the
judgment of expropriation in Civil Case No. R-1881 which
CHIONGBIAN herself enforced by filing a motion for withdrawal
of the money after the decision was rendered.[22] Moreover,
since the very terms of the judgment in Civil Case No. R-1881
are silent regarding the alleged deed of sale or of the alleged
written agreement acknowledging the right of CHIONGBIAN to
repurchase Lot No. 941, the only logical conclusion is that no
sale in fact took place and that no compromise agreement was
executed prior to the rendition of the judgment. Had
CHIONGBIAN and the Republic executed a contract of sale as
claimed by PASTRANA, the Republic of the Philippines would
not have needed to pursue the expropriation case inasmuch as
it would be duplicitous and would result in the Republic of the
Philippines expropriating something it had already
owned. Expropriation lies only when it is made necessary by the
opposition of the owner to the sale or by the lack of agreement
as to the price.[23] Consequently, CHIONGBIAN cannot compel
MCIAA to reconvey Lot No. 941 to her since she has no cause
of action against MCIAA.
Finally, CHIONGBIAN cannot invoke the modified
judgment of the Court of Appeals in the case of Republic of the
Philippines vs. Escao, et. al.[24] where her co-defendants,
Mamerto Escao, Inc., Milagros Urgello and Maria Atega Vda. De
Deen entered into separate and distinct compromise
agreements with the Republic of the Philippines wherein they
agreed to sell their land subject of the expropriation proceedings
to the latter subject to the resolutory condition that in the event
the Republic of the Philippines no longer uses said property as
an airport, title and ownership of said property shall revert to its
respective owners upon reimbursement of the price paid
therefor without interest. MCIAA correctly points out that since
CHIONGBIAN did not appeal the judgment of expropriation in
Civil Case No. R-1881 and was not a party to the appeal of her
co-defendants, the judgment therein cannot redound to her
benefit. And even assuming that CHIONGBIAN was a party to
the appeal, she was not a party to the compromise agreements
entered into by her co-defendants. A compromise is a contract
whereby the parties, by making reciprocal concessions, avoid
litigation or put an end to one already
commenced.[25] Essentially, it is a contract perfected by mere
consent, the latter being manifested by the meeting of the offer
and the acceptance upon the thing and the cause which are to
constitute the contract.[26] A judicial compromise has the force of
law and is conclusive between the parties [27] and it is not valid
and binding on a party who did not sign the same. [28] Since
CHIONGBIAN was not a party to the compromise agreements,
she cannot legally invoke the same.
ACCORDINGLY, the Decision of the Court of Appeals is
hereby REVERSED and SET ASIDE. The complaint of Virgina
Chiongbian against the Mactan-Cebu International Airport
Authority for reconveyance of Lot No. 941 is DISMISSED.
 FIRST DIVISION
[G.R. No. 137152. January 29, 2001]
CITY OF MANDALUYONG, petitioner, vs. ANTONIO N.,
FRANCISCO N., THELMA N., EUSEBIO N.,
RODOLFO N., all surnamed
AGUILAR, respondents.
DECISION
PUNO, J.:
This is a petition for review under Rule 45 of the Rules of
Court of the Orders dated September 17, 1998 and December
29, 1998 of the Regional Trial Court, Branch 168, Pasig
City[1] dismissing the petitioners Amended Complaint in SCA
No. 1427 for expropriation of two (2) parcels of land in
Mandaluyong City.
The antecedent facts are as follows:
On August 4, 1997, petitioner filed with the Regional Trial
Court, Branch 168, Pasig City a complaint for expropriation
entitled City of Mandaluyong, plaintiff v. Antonio N., Francisco
N., Thelma N., Eusebio N., Rodolfo N., all surnamed Aguilar,
defendants. Petitioner sought to expropriate three (3) adjoining
parcels of land with an aggregate area of 1,847 square meters
registered under Transfer Certificates of Title Nos. 59780, 63766
and 63767 in the names of the defendants, herein respondents,
located at 9 de Febrero Street, Barangay Mauwag, City of
Mandaluyong; on a portion of the 3 lots, respondents
constructed residential houses several decades ago which they
had since leased out to tenants until the present; on the vacant
portion of the lots, other families constructed residential
structures which they likewise occupied; in 1983, the lots were
classified by Resolution No. 125 of the Board of the Housing and
Urban Development Coordinating Council as an Area for Priority
Development for urban land reform under Proclamation Nos.
1967 and 2284 of then President Marcos; as a result of this
classification, the tenants and occupants of the lots offered to
purchase the land from respondents, but the latter refused to
sell; on November 7, 1996, the Sangguniang Panlungsod of
petitioner, upon petition of the Kapitbisig, an association of
tenants and occupants of the subject land, adopted Resolution
No. 516, Series of 1996 authorizing Mayor Benjamin Abalos of
the City of Mandaluyong to initiate action for the expropriation of
the subject lots and construction of a medium-rise condominium
for qualified occupants of the land; on January 10, 1996, Mayor
Abalos sent a letter to respondents offering to purchase the said
property at P3,000.00 per square meter; respondents did not
answer the letter. Petitioner thus prayed for the expropriation of
the said lots and the fixing of just compensation at the fair market
value of P3,000.00 per square meter.[2]
In their answer, respondents, except Eusebio N. Aguilar
who died in 1995, denied having received a copy of Mayor
Abalos offer to purchase their lots. They alleged that the
expropriation of their land is arbitrary and capricious, and is not
for a public purpose; the subject lots are their only real property
and are too small for expropriation, while petitioner has several
properties inventoried for socialized housing; the fair market
value of P3,000.00 per square meter is arbitrary because the
zonal valuation set by the Bureau of Internal Revenue
is P7,000.00 per square meter. As counterclaim, respondents
prayed for damages of P21 million.[3]
Respondents filed a Motion for Preliminary Hearing
claiming that the defenses alleged in their Answer are valid
grounds for dismissal of the complaint for lack of jurisdiction over
the person of the defendants and lack of cause of
action. Respondents prayed that the affirmative defenses be set
for preliminary hearing and that the complaint be
dismissed.[4] Petitioner replied.
On November 5, 1997, petitioner filed an Amended
Complaint and named as an additional defendant Virginia N.
Aguilar and, at the same time, substituted Eusebio Aguilar with
his heirs. Petitioner also excluded from expropriation TCT No.
59870 and thereby reduced the area sought to be expropriated
from three (3) parcels of land to two (2) parcels totalling 1,636
square meters under TCT Nos. 63766 and 63767.[5]
The Amended Complaint was admitted by the trial court on
December 18, 1997. Respondents, who, with the exception of
Virginia Aguilar and the Heirs of Eusebio Aguilar had yet to be
served with summons and copies of the Amended Complaint,
filed a Manifestation and Motion adopting their Answer with
Counterclaim and Motion for Preliminary Hearing as their
answer to the Amended Complaint.[6]
The motion was granted. At the hearing of February 25,
1998, respondents presented Antonio Aguilar who testified and
identified several documentary evidence. Petitioner did not
present any evidence. Thereafter, both parties filed their
respective memoranda.[7]
On September 17, 1998, the trial court issued an order
dismissing the Amended Complaint after declaring respondents
as small property owners whose land is exempt from
expropriation under Republic Act No. 7279. The court also found
that the expropriation was not for a public purpose for petitioners
failure to present any evidence that the intended beneficiaries of
the expropriation are landless and homeless residents of
Mandaluyong. The court thus disposed of as follows:
WHEREFORE, the Amended Complaint is hereby ordered
dismissed without pronouncement as to cost.
SO ORDERED.[8]
Petitioner moved for reconsideration. On December 29,
1998, the court denied the motion. Hence this petition.
Petitioner claims that the trial court erred
IN UPHOLDING RESPONDENTS CONTENTION THAT THEY
QUALIFY AS SMALL PROPERTY OWNERS AND ARE THUS
EXEMPT FROM EXPROPRIATION.[9]
Petitioner mainly claims that the size of the lots in litigation
does not exempt the same from expropriation in view of the fact
that the said lots have been declared to be within the Area for
Priority Development (APD) No. 5 of Mandaluyong by virtue of
Proclamation No. 1967, as amended by Proclamation No. 2284
in relation to Presidential Decree No. 1517.[10] This declaration
allegedly authorizes petitioner to expropriate the property, ipso
facto, regardless of the area of the land.
Presidential Decree (P.D.) No. 1517, the Urban Land
Reform Act, was issued by then President Marcos in 1978. The
decree adopted as a State policy the liberation of human
communities from blight, congestion and hazard, and promotion
of their development and modernization, the optimum use of
land as a national resource for public welfare.[11] Pursuant to this
law, Proclamation No. 1893 was issued in 1979 declaring the
entire Metro Manila as Urban Land Reform Zone for purposes
of urban land reform. This was amended in 1980 by
Proclamation No. 1967 and in 1983 by Proclamation No. 2284
which identified and specified 245 sites in Metro Manila as Areas
for Priority Development and Urban Land Reform Zones.
In 1992, the Congress of the Philippines passed Republic
Act No. 7279, the Urban Development and Housing Act of 1992.
The law lays down as a policy that the state, in cooperation with
the private sector, undertake a comprehensive and continuing
Urban Development and Housing Program; uplift the conditions
of the underprivileged and homeless citizens in urban areas and
resettlement areas by making available to them decent housing
at affordable cost, basic services and employment opportunities
and provide for the rational use and development of urban land
to bring about, among others, equitable utilization of residential
lands; encourage more effective people's participation in the
urban development process and improve the capability of local
government units in undertaking urban development and
housing programs and projects.[12] Towards this end, all city and
municipal governments are mandated to conduct
an inventory of all lands and improvements within their
respective localities, and in coordination with the National
Housing Authority, the Housing and Land Use Regulatory
Board, the National Mapping Resource Information Authority,
and the Land Management Bureau, identify lands for socialized
housing and resettlement areas for the immediate and future
needs of the underprivileged and homeless in the urban
areas, acquire the lands, and dispose of said lands to the
beneficiaries of the program.[13]
The acquisition of lands for socialized housing is governed
by several provisions in the law. Section 9 of R.A. 7279
provides:
Sec. 9. Priorities in the Acquisition of Land.Lands for socialized
housing shall be acquired in the following order:
(a) Those owned by the Government or any of its
subdivisions, instrumentalities, or agencies,
including government-owned or controlled
corporations and their subsidiaries;
(b) Alienable lands of the public domain;
(c) Unregistered or abandoned and idle lands;
(d) Those within the declared Areas for Priority
Development, Zonal Improvement Program sites,
and Slum Improvement and Resettlement
Program sites which have not yet been acquired;
(e) Bagong Lipunan Improvement of Sites and
Services or BLISS Sites which have not yet been
acquired;
(f) Privately-owned lands.
Where on-site development is found more practicable and
advantageous to the beneficiaries, the priorities mentioned in
this section shall not apply. The local government units shall
give budgetary priority to on-site development of government
lands.
Lands for socialized housing are to be acquired in the
following order: (1) government lands; (2) alienable lands of the
public domain; (3) unregistered or abandoned or idle lands; (4)
lands within the declared Areas for Priority Development (APD),
Zonal Improvement Program (ZIP) sites, Slum Improvement and
Resettlement (SIR) sites which have not yet been acquired; (5)
BLISS sites which have not yet been acquired; and (6) privately-
owned lands.
There is no dispute that the two lots in litigation are
privately-owned and therefore last in the order of priority
acquisition. However, the law also provides that lands within the
declared APDs which have not yet been acquired by the
government are fourth in the order of priority. According to
petitioner, since the subject lots lie within the declared APD, this
fact mandates that the lots be given priority in acquisition.[14]
Section 9, however, is not a single provision that can be
read separate from the other provisions of the law. It must be
read together with Section 10 of R.A. 7279 which also provides:
Section 10. Modes of Land Acquisition.The modes of acquiring
lands for purposes of this Act shall include, among others,
community mortgage, land swapping, land assembly or
consolidation, land banking, donation to the Government, joint-
venture agreement, negotiated purchase, and
expropriation: Provided, however, That expropriation shall be
resorted to only when other modes of acquisition have
been exhausted: Provided, further, That where expropriation
is resorted to, parcels of land owned by small property
owners shall be exempted for purposes of this
Act: Provided, finally, That abandoned property, as herein
defined, shall be reverted and escheated to the State in a
proceeding analogous to the procedure laid down in Rule 91 of
the Rules of Court.[15]
For the purposes of socialized housing, government-owned
and foreclosed properties shall be acquired by the local
government units, or by the National Housing Authority
primarily through negotiated purchase: Provided, That qualified
beneficiaries who are actual occupants of the land shall be
given the right of first refusal.
Lands for socialized housing under R.A. 7279 are to be acquired
in several modes. Among these modes are the following: (1)
community mortgage; (2) land swapping, (3) land assembly or
consolidation; (4) land banking; (5) donation to the government;
(6) joint venture agreement; (7) negotiated purchase; and (8)
expropriation. The mode of expropriation is subject to two
conditions: (a) it shall be resorted to only when the other modes
of acquisition have been exhausted; and (b) parcels of land
owned by small property owners are exempt from such
acquisition.
Section 9 of R.A. 7279 speaks of priorities in the
acquisition of lands. It enumerates the type of lands to be
acquired and the heirarchy in their acquisition. Section 10 deals
with the modes of land acquisition or the process of acquiring
lands for socialized housing. These are two different
things. They mean that the type of lands that may be
acquired in the order of priority in Section 9 are to be
acquired only in the modes authorized under Section
10. The acquisition of the lands in the priority list must be made
subject to the modes and conditions set forth in the next
provision. In other words, land that lies within the APD, such as
in the instant case, may be acquired only in the modes under,
and subject to the conditions of, Section 10.
Petitioner claims that it had faithfully observed the different
modes of land acquisition for socialized housing under R.A.
7279 and adhered to the priorities in the acquisition for
socialized housing under said law.[16] It, however, did not state
with particularity whether it exhausted the other modes of
acquisition in Section 9 of the law before it decided to
expropriate the subject lots. The law states expropriation shall
be resorted to when other modes of acquisition have been
exhausted. Petitioner alleged only one mode of
acquisition, i.e., by negotiated purchase. Petitioner, through the
City Mayor, tried to purchase the lots from respondents but the
latter refused to sell.[17] As to the other modes of acquisition, no
mention has been made. Not even Resolution No. 516, Series
of 1996 of the Sangguniang Panlungsod authorizing the Mayor
of Mandaluyong to effect the expropriation of the subject
property states whether the city government tried to acquire the
same by community mortgage, land swapping, land assembly
or consolidation, land banking, donation to the government,
or joint venture agreement under Section 9 of the law.
Section 9 also exempts from expropriation parcels of land
owned by small property owners.[18] Petitioner argues that the
exercise of the power of eminent domain is not anymore
conditioned on the size of the land sought to be
expropriated.[19] By the expanded notion of public use, present
jurisprudence has established the concept that expropriation is
not anymore confined to the vast tracts of land and landed
estates, but also covers small parcels of land.[20] That only a few
could actually benefit from the expropriation of the property does
not diminish its public use character.[21] It simply is not possible
to provide, in one instance, land and shelter for all who need
them.[22]
While we adhere to the expanded notion of public use, the
passage of R.A. No. 7279, the Urban Development and Housing
Act of 1992 introduced a limitation on the size of the land sought
to be expropriated for socialized housing. The law expressly
exempted small property owners from expropriation of their land
for urban land reform. R.A. No. 7279 originated as Senate Bill
No. 234 authored by Senator Joey Lina [23] and House Bill No.
34310.Senate Bill No. 234 then provided that one of those lands
not covered by the urban land reform and housing program was
land actually used by small property owners within the just and
equitable retention limit as provided under this Act. [24] Small
property owners were defined in Senate Bill No. 234 as:
4. Small Property Ownersare those whose rights are protected
under Section 9, Article XIII of the Constitution of the
Philippines, who own small parcels of land within the fair and
just retention limit provided under this Act and which are
adequate to meet the reasonable needs of the small property
owners family and their means of livelihood.[25]
The exemption from expropriation of lands of small-
property owners was never questioned on the Senate
floor.[26] This exemption, although with a modified definition, was
actually retained in the consolidation of Senate Bill No. 234 and
House Bill No. 34310 which became R.A. No. 7279.[27]
The question now is whether respondents qualify as small
property owners as defined in Section 3 (q) of R.A.
7279. Section 3 (q) provides:
Section 3 x x x (q). Small property owners refers to those
whose only real property consists of residential lands not
exceeding three hundred square meters (300 sq.m.) in highly
urbanized cities and eight hundred square meters (800 sq.m.)
in other urban areas.
Small-property owners are defined by two elements: (1) those
owners of real property whose property consists of residential
lands with an area of not more than 300 square meters in highly
urbanized cities and 800 square meters in other urban areas;
and (2) that they do not own real property other than the same.
The case at bar involves two (2) residential lots in
Mandaluyong City, a highly urbanized city. The lot under TCT
No. 63766 is 687 square meters in area and the second under
TCT No. 63767 is 949 square meters, both totalling 1,636
square meters in area. TCT No. 63766 was issued in the names
of herein five (5) respondents, viz:
FRANCISCO N. AGUILAR, widower; THELMA N. AGUILAR,
single; EUSEBIO N. AGUILAR, JR., widower; RODOLFO N.
AGUILAR, single and ANTONIO N. AGUILAR, married to
Teresita Puig; all of legal age, Filipinos.[28]
TCT No. 63767 was issued in the names of the five (5)
respondents plus Virginia Aguilar, thus:
FRANCISCO N. AGUILAR, widower; THELMA N. AGUILAR,
single; EUSEBIO N. AGUILAR, JR., widower; RODOLFO N.
AGUILAR, single and ANTONIO N. AGUILAR, married to
Teresita Puig; and VIRGINIA N. AGUILAR, single, all of legal
age, Filipinos.[29]
Respondent Antonio Aguilar testified that he and the other
registered owners are all siblings who inherited the subject
property by intestate succession from their parents. [30] Their
father died in 1945 and their mother in 1976.[31] Both TCTs were
issued in the siblings names on September 2, 1987. [32] In 1986,
however, the siblings agreed to extrajudicially partition the lots
among themselves, but no action was taken by them to this
end. It was only eleven (11) years later, on November 28, 1997
that a survey of the two lots was made [33] and on February 10,
1998, a consolidation subdivision plan was approved by the
Lands Management Service of the Department of Environment
and Natural Resources.[34] The co-owners signed a Partition
Agreement on February 24, 1998[35] and on May 21, 1998, TCT
Nos. 63766 and 63767 were cancelled and new titles issued in
the names of the individual owners pursuant to the Partition
Agreement.
Petitioner argues that the consolidation of the subject lots
and their partition was made more than six (6) months after the
complaint for expropriation was filed on August 4, 1997, hence,
the partition was made in bad faith, for the purpose of
circumventing the provisions of R.A. 7279.[36]
At the time of filing of the complaint for expropriation, the
lots subject of this case were owned in common by
respondents. Under a co-ownership, the ownership of an
undivided thing or right belongs to different persons. [37]During
the existence of the co-ownership, no individual can claim title
to any definite portion of the community property until the
partition thereof; and prior to the partition, all that the co-owner
has is an ideal or abstract quota or proportionate share in the
entire land or thing.[38] Article 493 of the Civil Code however
provides that:
Art. 493. Each co-owner shall have the full ownership of his
part and of the fruits and benefits pertaining thereto, and he
may therefore alienate, assign or mortgage it, and even
substitute another person in its enjoyment, except when
personal rights are involved. But the effect of the alienation or
the mortgage, with respect to the co-owners shall be limited to
the portion which may be allotted to him in the division upon
termination of the co-ownership.[39]
Before partition in a co-ownership, every co-owner has the
absolute ownership of his undivided interest in the common
property. The co-owner is free to alienate, assign or mortgage
his interest, except as to purely personal rights.[40] He may also
validly lease his undivided interest to a third party independently
of the other co-owners.[41] The effect of any such transfer is
limited to the portion which may be awarded to him upon the
partition of the property.[42]
Article 493 therefore gives the owner of an undivided interest in
the property the right to freely sell and dispose of his undivided
interest.[43] The co-owner, however, has no right to sell or
alienate a concrete specific or determinate part of the thing
owned in common, because his right over the thing is
represented by a quota or ideal portion without any physical
adjudication.[44] If the co-owner sells a concrete portion, this,
nonetheless, does not render the sale void. Such a sale affects
only his own share, subject to the results of the partition but not
those of the other co-owners who did not consent to the
sale.[45]
In the instant case, the titles to the subject lots were issued
in respondents names as co-owners in 1987ten (10) years
before the expropriation case was filed in 1997. As co-owners,
all that the respondents had was an ideal or abstract quota or
proportionate share in the lots. This, however, did not mean that
they could not separately exercise any rights over the lots. Each
respondent had the full ownership of his undivided interest in the
property. He could freely sell or dispose of his interest
independently of the other co-owners. And this interest could
have even been attached by his creditors.[46] The partition in
1998, six (6) months after the filing of the expropriation case,
terminated the co-ownership by converting into certain and
definite parts the respective undivided shares of the co-
owners.[47] The subject property is not a thing essentially
indivisible. The rights of the co-owners to have the property
partitioned and their share in the same delivered to them cannot
be questioned for "[n]o co-owner shall be obliged to remain in
the co-ownership."[48] The partition was merely a necessary
incident of the co-ownership;[49]and absent any evidence to the
contrary, this partition is presumed to have been done in good
faith.
Upon partition, four (4) co-owners, namely, Francisco,
Thelma, Rodolfo and Antonio Aguilar each had a share of 300
square meters under TCT Nos. 13849, 13852, 13850,
13851.[50] Eusebio Aguilars share was 347 square meters under
TCT No. 13853[51] while Virginia Aguilars was 89 square meters
under TCT No. 13854.[52]
It is noted that Virginia Aguilar, although granted 89 square
meters only of the subject lots, is, at the same time, the sole
registered owner of TCT No. 59780, one of the three (3)
titles initially sought to be expropriated in the original
complaint. TCT No. 59780, with a land area of 211 square
meters, was dropped in the amended complaint. Eusebio
Aguilar was granted 347 square meters, which is 47 square
meters more than the maximum of 300 square meters set by
R.A. 7279 for small property owners. In TCT No. 13853,
Eusebios title, however, appears the following annotation:
subject to x x x, and to the prov. of Sec. 4 Rule 74 of the Rules
of Court with respect to the inheritance left by the deceased
Eusebio N. Aguilar.[53]
Eusebio died on March 23, 1995,[54] and, according to
Antonios testimony, the former was survived by five (5)
children.[55] Where there are several co-owners, and some of
them die, the heirs of those who die, with respect to that part
belonging to the deceased, become also co-owners of the
property together with those who survive.[56] After Eusebio died,
his five heirs became co-owners of his 347 square-meter
portion. Dividing the 347 square meters among the five entitled
each heir to 69.4 square meters of the land subject of litigation.
Consequently, the share of each co-owner did not exceed
the 300 square meter limit set in R.A. 7279. The second
question, however, is whether the subject property is the only
real property of respondents for them to comply with the second
requisite for small property owners.
Antonio Aguilar testified that he and most of the original co-
owners do not reside on the subject property but in their
ancestral home in Paco, Manila.[57] Respondents therefore
appear to own real property other than the lots in
litigation. Nonetheless, the records do not show that the
ancestral home in Paco, Manila and the land on which it stands
are owned by respondents or any one of them. Petitioner did not
present any title or proof of this fact despite Antonio Aguilars
testimony.
On the other hand, respondents claim that the subject lots
are their only real property[58] and that they, particularly two of
the five heirs of Eusebio Aguilar, are merely renting their houses
and therefore do not own any other real property in Metro
Manila.[59] To prove this, they submitted certifications from the
offices of the City and Municipal Assessors in Metro Manila
attesting to the fact that they have no registered real property
declared for taxation purposes in the respective
cities. Respondents were certified by the City Assessor of
Manila;[60] Quezon City;[61] Makati City;[62] Pasay
[63] [64]
City; Paranaque; Caloocan City;[65] Pasig
City;[66] Muntinlupa;[67] Marikina;[68] and the then municipality of
Las Pias[69] and the municipality of San Juan del Monte[70] as
having no real property registered for taxation in their individual
names.
Finally, this court notes that the subject lots are now in the
possession of respondents. Antonio Aguilar testified that he and
the other co-owners filed ejectment cases against the occupants
of the land before the Metropolitan Trial Court, Mandaluyong,
Branches 59 and 60. Orders of eviction were issued and
executed on September 17, 1997 which resulted in the eviction
of the tenants and other occupants from the land in question.[71]
IN VIEW WHEREOF, the petition is DENIED and the
orders dated September 17, 1998 and December 29, 1998 of
the Regional Trial Court, Branch 168, Pasig City in SCA No.
1427 are AFFIRMED.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Kapunan,
Pardo, and Ynares-Santiago, JJ., concur.
MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY
and AIR TRANSPORTATION OFFICE,
Petitioners,
- versus –
BERNARDO L. LOZADA, SR., and the
HEIRS OF ROSARIO MERCADO, namely, VICENTE
LOZADA, MARIO M. LOZADA, MARCIA L. GODINEZ,
VIRGINIA L. FLORES, BERNARDO LOZADA, JR.,
DOLORES GACASAN, SOCORRO CAFARO and ROSARIO
LOZADA, represented by MARCIA LOZADA GODINEZ,
Respondents.
DECISION
NACHURA, J.:
This is a petition for review on certiorari under Rule 45 of the
Rules of Court, seeking to reverse, annul, and set aside the
Decision[1] dated February 28, 2006 and the Resolution[2] dated
February 7, 2007 of the Court of Appeals (CA) (Cebu City),
Twentieth Division, in CA-G.R. CV No. 65796.
The antecedent facts and proceedings are as follows:

Subject of this case is Lot No. 88-SWO-25042 (Lot No. 88), with
an area of 1,017 square meters, more or less, located in
Lahug, Cebu City. Its original owner was Anastacio Deiparine
when the same was subject to expropriation proceedings,
initiated by the Republic of the Philippines (Republic),
represented by the then Civil Aeronautics Administration (CAA),
for the expansion and improvement of the Lahug Airport. The
case was filed with the then Court of First Instance of Cebu,
Third Branch, and docketed as Civil Case No. R-1881.
As early as 1947, the lots were already occupied by the U.S.
Army. They were turned over to the Surplus Property
Commission, the Bureau of Aeronautics, the National Airport
Corporation and then to the CAA.
During the pendency of the expropriation proceedings,
respondent Bernardo L. Lozada, Sr. acquired Lot No. 88 from
Deiparine. Consequently, Transfer Certificate of Title (TCT) No.
9045 was issued in Lozadas name.
On December 29, 1961, the trial court rendered judgment in
favor of the Republic and ordered the latter to pay Lozada the
fair market value of Lot No. 88, adjudged at P3.00 per square
meter, with consequential damages by way of legal interest
computed from November 16, 1947the time when the lot was
first occupied by the airport. Lozada received the amount
of P3,018.00 by way of payment.
The affected landowners appealed. Pending appeal, the Air
Transportation Office (ATO), formerly CAA, proposed a
compromise settlement whereby the owners of the lots affected
by the expropriation proceedings would either not appeal or
withdraw their respective appeals in consideration of a
commitment that the expropriated lots would be resold at the
price they were expropriated in the event that the ATO would
abandon the Lahug Airport, pursuant to an established policy
involving similar cases. Because of this promise, Lozada did not
pursue his appeal.Thereafter, Lot No. 88 was transferred and
registered in the name of the Republic under TCT No. 25057.
The projected improvement and expansion plan of the
old Lahug Airport, however, was not pursued.
Lozada, with the other landowners, contacted then CAA Director
Vicente Rivera, Jr., requesting to repurchase the lots, as per
previous agreement. The CAA replied that there might still be a
need for the Lahug Airport to be used as an emergency DC-3
airport. It reiterated, however, the assurance that should this
Office dispose and resell the properties which may be found to
be no longer necessary as an airport, then the policy of this
Office is to give priority to the former owners subject to the
approval of the President.
On November 29, 1989, then President Corazon C. Aquino
issued a Memorandum to the Department of Transportation,
directing the transfer of general aviation operations of
the Lahug Airport to the Mactan International Airport before the
end of 1990 and, upon such transfer, the closure of
the Lahug Airport.
Sometime in 1990, the Congress of the Philippines passed
Republic Act (R.A.) No. 6958, entitled An Act Creating the
Mactan-Cebu International Airport Authority, Transferring
Existing Assets of the Mactan International Airport and the
Lahug Airport to the Authority, Vesting the Authority with Power
to Administer and Operate the Mactan International Airport and
the Lahug Airport, and For Other Purposes.
From the date of the institution of the expropriation proceedings
up to the present, the public purpose of the said expropriation
(expansion of the airport) was never actually initiated, realized,
or implemented. Instead, the old airport was converted into a
commercial complex. Lot No. 88 became the site of a jail known
as Bagong Buhay Rehabilitation Complex, while a portion
thereof was occupied by squatters.[3] The old airport was
converted into what is now known as the Ayala I.T. Park, a
commercial area.
Thus, on June 4, 1996, petitioners initiated a complaint for the
recovery of possession and reconveyance of ownership of Lot
No. 88. The case was docketed as Civil Case No. CEB-18823
and was raffled to the Regional Trial Court (RTC), Branch
57, Cebu City. The complaint substantially alleged as follows:
(a) Spouses Bernardo and Rosario Lozada
were the registered owners of Lot No.
88 covered by TCT No. 9045;
(b) In the early 1960s, the Republic sought to
acquire by expropriation Lot No. 88,
among others, in connection with its
program for the improvement and
expansion of the Lahug Airport;
(c) A decision was rendered by the Court of
First Instance in favor of the
Government and against the land
owners, among whom was Bernardo
Lozada, Sr. appealed therefrom;
(d) During the pendency of the appeal, the
parties entered into a compromise
settlement to the effect that the subject
property would be resold to the original
owner at the same price when it was
expropriated in the event that the
Government abandons
the Lahug Airport;
(e) Title to Lot No. 88 was subsequently
transferred to the Republic of
the Philippines (TCT No. 25057);
(f) The projected expansion and improvement
of the Lahug Airport did not
materialize;
(g) Plaintiffs sought to repurchase their
property from then CAA Director
Vicente Rivera. The latter replied by
giving as assurance that priority would
be given to the previous owners,
subject to the approval of the
President, should CAA decide to
dispose of the properties;
(h) On November 29, 1989, then President
Corazon C. Aquino, through a
Memorandum to the Department of
Transportation and Communications
(DOTC), directed the transfer of
general aviation operations at
the Lahug Airport to the Mactan-Cebu
International Airport Authority;
(i) Since the public purpose for the
expropriation no longer exists, the
 property must be returned to the
plaintiffs.[4]
In their Answer, petitioners asked for the immediate dismissal of
the complaint. They specifically denied that the Government had
made assurances to reconvey Lot No. 88 to respondents in the
event that the property would no longer be needed for airport
operations. Petitioners instead asserted that the judgment of
condemnation was unconditional, and respondents were,
therefore, not entitled to recover the expropriated property
notwithstanding non-use or abandonment thereof.
After pretrial, but before trial on the merits, the parties stipulated
on the following set of facts:
(1) The lot involved is Lot No. 88-SWO-25042
of the Banilad Estate, situated in the
City of Cebu, containing an area of
One Thousand Seventeen (1,017)
square meters, more or less;
(2) The property was expropriated among
several other properties in Lahug in
favor of the Republic of
the Philippines by virtue of a Decision
dated December 29, 1961 of the CFI of
Cebu in Civil Case No. R-1881;
(3) The public purpose for which the property
was expropriated was for the purpose
of the Lahug Airport;
(4) After the expansion, the property was
transferred in the name of MCIAA;
[and]
(5) On November 29, 1989, then President
Corazon C. Aquino directed the
Department of Transportation and
Communication to transfer general
aviation operations of the Lahug
Airport to the Mactan-Cebu
International Airport Authority and to
close the Lahug Airport after such
transfer[.][5]
During trial, respondents presented Bernardo Lozada, Sr. as
their lone witness, while petitioners presented their own witness,
Mactan-Cebu International Airport Authority legal assistant
Michael Bacarisas.
On October 22, 1999, the RTC rendered its Decision, disposing
as follows:
WHEREFORE, in the light of the foregoing,
the Court hereby renders judgment in favor of
the plaintiffs, Bernardo L. Lozada, Sr., and the
heirs of Rosario Mercado, namely, Vicente M.
Lozada, Marcia L. Godinez, Virginia L. Flores,
Bernardo M. Lozada, Jr., Dolores L. Gacasan,
Socorro L. Cafaro and Rosario M. Lozada,
represented by their attorney-in-fact Marcia
Lozada Godinez, and against defendants
Cebu-Mactan International Airport Authority
(MCIAA) and Air Transportation Office (ATO):
1. ordering MCIAA and ATO to
restore to plaintiffs the possession and
ownership of their land, Lot No. 88 Psd-821
(SWO-23803), upon payment of the
expropriation price to plaintiffs; and
2. ordering the Register of Deeds to
effect the transfer of the Certificate of Title
from defendant[s] to plaintiffs on Lot No. [88],
cancelling TCT No. 20357 in the name of
defendant MCIAA and to issue a new title on
the same lot in the name of Bernardo L.
Lozada, Sr. and the heirs of Rosario Mercado,
namely: Vicente M. Lozada, Mario M. Lozada,
Marcia L. Godinez, Virginia L. Flores,
Bernardo M. Lozada, Jr., Dolores L. Gacasan,
Socorro L. Cafaro and Rosario M. Lozada.
No pronouncement as to costs.
SO ORDERED.[6]
Aggrieved, petitioners interposed an appeal to the CA. After the
filing of the necessary appellate briefs, the CA rendered its
assailed Decision dated February 28, 2006, denying petitioners
appeal and affirming in toto the Decision of the RTC, Branch
57, Cebu City. Petitioners motion for reconsideration was,
likewise, denied in the questioned CA Resolution dated
February 7, 2007.
Hence, this petition arguing that: (1) the respondents utterly
failed to prove that there was a repurchase agreement or
compromise settlement between them and the Government; (2)
the judgment in Civil Case No. R-1881 was absolute and
unconditional, giving title in fee simple to the Republic; and (3)
the respondents claim of verbal assurances from government
officials violates the Statute of Frauds.
The petition should be denied.
Petitioners anchor their claim to the controverted property on the
supposition that the Decision in the pertinent expropriation
proceedings did not provide for the condition that should the
intended use of Lot No. 88 for the expansion of
the Lahug Airport be aborted or abandoned, the property would
revert to respondents, being its former owners. Petitioners cite,
in support of this position, Fery v. Municipality of
Cabanatuan,[7] which declared that the Government acquires
only such rights in expropriated parcels of land as may be
allowed by the character of its title over the properties
If x x x land is expropriated for a particular
purpose, with the condition that when that
purpose is ended or abandoned the property
shall return to its former owner, then, of
course, when the purpose is terminated or
abandoned the former owner reacquires the
property so expropriated. If x x x land is
expropriated for a public street and the
expropriation is granted upon condition that
the city can only use it for a public street, then,
of course, when the city abandons its use as
a public street, it returns to the former owner,
unless there is some statutory provision to the
contrary. x x x. If, upon the contrary, however,
the decree of expropriation gives to the entity
a fee simple title, then, of course, the land
becomes the absolute property of the
 expropriator, whether it be the State, a
province, or municipality, and in that case the
non-user does not have the effect of defeating
the title acquired by the expropriation
proceedings. x x x.
When land has been acquired for
public use in fee simple, unconditionally,
either by the exercise of eminent domain or by
purchase, the former owner retains no right in
the land, and the public use may be
abandoned, or the land may be devoted to a
different use, without any impairment of the
estate or title acquired, or any reversion to the
former owner. x x x.[8]
Contrary to the stance of petitioners, this Court had
ruled otherwise in Heirs of Timoteo Moreno and Maria Rotea v.
Mactan-Cebu International Airport Authority,[9] thus
Moreover, respondent MCIAA has brought to
our attention a significant and telling portion in
the Decision in Civil Case No. R-1881
validating our discernment that the
expropriation by the predecessors of
respondent was ordered under the running
impression that Lahug Airport would continue
in operation
As for the public purpose of
the expropriation
proceeding, it cannot now
be
doubted. Although Mactan
Airport is being
constructed, it does not
take away the actual
usefulness and importance
of the Lahug Airport: it is
handling the air traffic both
civilian and military. From it
aircrafts fly to Mindanao
and Visayas and pass thru
it on their flights to the
North and Manila. Then, no
evidence was adduced to
show how soon is
the Mactan Airport to be
placed in operation and
whether
the Lahug Airport will be
closed immediately
thereafter. It is up to the
other departments of the
Government to determine
said matters. The Court
cannot substitute its
judgment for those of the
said departments or
agencies. In the absence of
such showing, the Court
will presume that
the Lahug Airport will
continue to be in operation
(emphasis supplied).
While in the trial in Civil Case No. R-1881 [we]
could have simply acknowledged the
presence of public purpose for the exercise of
eminent domain regardless of the survival
of Lahug Airport, the trial court in
its Decision chose not to do so but instead
prefixed its finding of public purpose upon its
understanding that Lahug Airport will
continue to be in operation. Verily, these
meaningful statements in the body of
the Decision warrant the conclusion that the
expropriated properties would remain to be so
until it was confirmed that Lahug Airport was
no longer in operation. This inference further
implies two (2) things: (a) after
the LahugAirport ceased its undertaking as
such and the expropriated lots were not being
used for any airport expansion project, the
rights vis--vis the expropriated Lots Nos. 916
and 920 as between the State and their
former owners, petitioners herein, must be
equitably adjusted; and (b) the foregoing
unmistakable declarations in the body of
the Decision should merge with and become
an intrinsic part of the fallo thereof which
under the premises is clearly inadequate
since the dispositive portion is not in accord
with the findings as contained in the body
thereof.[10]
Indeed, the Decision in Civil Case No. R-1881 should be read in
its entirety, wherein it is apparent that the acquisition by the
Republic of the expropriated lots was subject to the condition
that the Lahug Airport would continue its operation. The
condition not having materialized because the airport had been
abandoned, the former owner should then be allowed to
reacquire the expropriated property.[11]
On this note, we take this opportunity to revisit our ruling in Fery,
which involved an expropriation suit commenced upon parcels
of land to be used as a site for a public market. Instead of putting
up a public market, respondent Cabanatuan constructed
residential houses for lease on the area. Claiming that the
municipality lost its right to the property taken since it did not
pursue its public purpose, petitioner Juan Fery, the former owner
of the lots expropriated, sought to recover his
properties. However, as he had admitted that, in 1915,
respondent Cabanatuan acquired a fee simple title to the lands
in question, judgment was rendered in favor of the municipality,
following American jurisprudence, particularly City of Fort
Wayne v. Lake Shore & M.S. RY. Co.,[12] McConihay v.
Theodore Wright,[13] and Reichling v. Covington Lumber
Co.,[14] all uniformly holding that the transfer to a third party of
the expropriated real property, which necessarily resulted in the
abandonment of the particular public purpose for which the
property was taken, is not a ground for the recovery of the same
by its previous owner, the title of the expropriating agency being
one of fee simple.
Obviously, Fery was not decided pursuant to our now sacredly
held constitutional right that private property shall not be taken
for public use without just compensation.[15] It is well settled that
the taking of private property by the Governments power of
eminent domain is subject to two mandatory requirements: (1)
that it is for a particular public purpose; and (2) that just
compensation be paid to the property owner. These
requirements partake of the nature of implied conditions that
should be complied with to enable the condemnor to keep the
property expropriated.[16]
More particularly, with respect to the element of public use, the
expropriator should commit to use the property pursuant to the
purpose stated in the petition for expropriation filed, failing
which, it should file another petition for the new purpose. If not,
it is then incumbent upon the expropriator to return the said
property to its private owner, if the latter desires to reacquire the
same. Otherwise, the judgment of expropriation suffers an
intrinsic flaw, as it would lack one indispensable element for the
proper exercise of the power of eminent domain, namely, the
particular public purpose for which the property will be
devoted. Accordingly, the private property owner would be
denied due process of law, and the judgment would violate the
property owners right to justice, fairness, and equity.
In light of these premises, we now expressly hold that the taking
of private property, consequent to the Governments exercise of
its power of eminent domain, is always subject to the condition
that the property be devoted to the specific public purpose for
which it was taken. Corollarily, if this particular purpose or intent
is not initiated or not at all pursued, and is peremptorily
abandoned, then the former owners, if they so desire, may seek
the reversion of the property, subject to the return of the amount
of just compensation received. In such a case, the exercise of
the power of eminent domain has become improper for lack of
the required factual justification.[17]
Even without the foregoing declaration, in the instant case, on
the question of whether respondents were able to establish the
existence of an oral compromise agreement that entitled them
to repurchase Lot No. 88 should the operations of
the Lahug Airport be abandoned, we rule in the affirmative.
It bears stressing that both the RTC, Branch 57, Cebu and the
CA have passed upon this factual issue and have declared, in
no uncertain terms, that a compromise agreement was, in fact,
entered into between the Government and respondents, with the
former undertaking to resell Lot No. 88 to the latter if the
improvement and expansion of the Lahug Airport would not be
pursued. In affirming the factual finding of the RTC to this effect,
the CA declared
Lozadas testimony is cogent. An
octogenarian widower-retiree and a resident
of Moon Park, California since 1974, he
testified that government representatives
verbally promised him and his late wife while
the expropriation proceedings were on-going
that the government shall return the property
if the purpose for the expropriation no longer
exists. This promise was made at the
premises of the airport. As far as he could
remember, there were no expropriation
proceedings against his property in 1952
because the first notice of expropriation he
received was in 1962. Based on the promise,
he did not hire a lawyer. Lozada was firm that
he was promised that the lot would be
reverted to him once the public use of the lot
ceases. He made it clear that the verbal
promise was made in Lahug with other lot
owners before the 1961 decision was handed
down, though he could not name the
government representatives who made the
promise. It was just a verbal promise;
nevertheless, it is binding. The fact that he
could not supply the necessary details for the
establishment of his assertions during cross-
examination, but that When it will not be used
as intended, it will be returned back, we just
believed in the government, does not
dismantle the credibility and truthfulness of
his allegation. This Court notes that he was 89
years old when he testified in November 1997
for an incident which happened decades
ago. Still, he is a competent witness capable
of perceiving and making his perception
known. The minor lapses are immaterial. The
decision of the competency of a witness rests
primarily with the trial judge and must not be
disturbed on appeal unless it is clear that it
was erroneous. The objection to his
competency must be made before he has
given any testimony or as soon as the
incompetency becomes apparent. Though
Lozada is not part of the compromise
agreement,[18] he nevertheless adduced
sufficient evidence to support his claim.[19]
As correctly found by the CA, unlike in Mactan Cebu
International Airport Authority v. Court of Appeals,[20] cited by
petitioners, where respondent therein offered testimonies which
were hearsay in nature, the testimony of Lozada was based on
personal knowledge as the assurance from the government was
personally made to him. His testimony on cross-examination
destroyed neither his credibility as a witness nor the truthfulness
of his words.
Verily, factual findings of the trial court, especially when
affirmed by the CA, are binding and conclusive on this Court and
may not be reviewed. A petition for certiorari under Rule 45 of
the Rules of Court contemplates only questions of law and not
of fact.[21] Not one of the exceptions to this rule is present in this
case to warrant a reversal of such findings.
As regards the position of petitioners that respondents
testimonial evidence violates the Statute of Frauds, suffice it to
state that the Statute of Frauds operates only with respect to
executory contracts, and does not apply to contracts which have
been completely or partially performed, the rationale thereof
being as follows:
In executory contracts there is a wide field for
fraud because unless they be in writing there
is no palpable evidence of the intention of the
contracting parties. The statute has precisely
been enacted to prevent fraud.However, if a
contract has been totally or partially
performed, the exclusion of parol evidence
would promote fraud or bad faith, for it would
enable the defendant to keep the benefits
already delivered by him from the transaction
in litigation, and, at the same time, evade the
obligations, responsibilities or liabilities
assumed or contracted by him thereby.[22]
In this case, the Statute of Frauds, invoked by petitioners to bar
the claim of respondents for the reacquisition of Lot No. 88,
cannot apply, the oral compromise settlement having been
partially performed. By reason of such assurance made in their
favor, respondents relied on the same by not pursuing their
appeal before the CA. Moreover, contrary to the claim of
petitioners, the fact of Lozadas eventual conformity to the
appraisal of Lot No. 88 and his seeking the correction of a
clerical error in the judgment as to the true area of Lot No. 88 do
not conclusively establish that respondents absolutely parted
with their property. To our mind, these acts were simply meant
to cooperate with the government, particularly because of the
oral promise made to them.
The right of respondents to repurchase Lot No. 88 may be
enforced based on a constructive trust constituted on the
property held by the government in favor of the former. On this
note, our ruling in Heirs of Timoteo Moreno is instructive, viz.:
Mactan-Cebu International Airport Authority is
correct in stating that one would not find an
express statement in the Decision in Civil
Case No. R-1881 to the effect that the
[condemned] lot would return to [the
landowner] or that [the landowner] had a right
to repurchase the same if the purpose for
which it was expropriated is ended or
abandoned or if the property was to be used
other than as the Lahug Airport. This
omission notwithstanding, and while the
inclusion of this pronouncement in the
judgment of condemnation would have been
ideal, such precision is not absolutely
necessary nor is it fatal to the cause of
petitioners herein. No doubt, the return or
repurchase of the condemned properties of
petitioners could be readily justified as the
manifest legal effect or consequence of the
trial courts underlying presumption that Lahug
Airport will continue to be in operation when it
granted the complaint for eminent domain and
the airport discontinued its activities.
The predicament of petitioners involves a
constructive trust, one that is akin to the
implied trust referred to in Art. 1454 of
the Civil Code, If an absolute conveyance of
property is made in order to secure the
performance of an obligation of the grantor
toward the grantee, a trust by virtue of law is
established. If the fulfillment of the obligation
is offered by the grantor when it becomes due,
he may demand the reconveyance of the
property to him. In the case at bar, petitioners
conveyed Lots No. 916 and 920 to the
government with the latter obliging itself to
use the realties for the expansion of Lahug
Airport; failing to keep its bargain, the
government can be compelled by petitioners
to reconvey the parcels of land to them,
otherwise, petitioners would be denied the
use of their properties upon a state of affairs
that was not conceived nor contemplated
when the expropriation was authorized.
Although the symmetry between the instant
case and the situation contemplated by Art.
1454 is not perfect, the provision is
undoubtedly applicable. For, as explained by
an expert on the law of trusts: The only
problem of great importance in the field of
constructive trust is to decide whether in the
numerous and varying fact situations
presented to the courts there is a wrongful
holding of property and hence a threatened
unjust enrichment of the
defendant. Constructive trusts are fictions of
equity which are bound by no unyielding
formula when they are used by courts as
devices to remedy any situation in which the
holder of legal title may not in good
conscience retain the beneficial interest.
In constructive trusts, the arrangement is
temporary and passive in which the trustees
sole duty is to transfer the title and possession
over the property to the plaintiff-
beneficiary. Of course, the wronged party
seeking the aid of a court of equity in
establishing a constructive trust must himself
do equity. Accordingly, the court will exercise
its discretion in deciding what acts are
required of the plaintiff-beneficiary as
conditions precedent to obtaining such
decree and has the obligation to reimburse
the trustee the consideration received from
the latter just as the plaintiff-beneficiary would
if he proceeded on the theory of rescission. In
the good judgment of the court, the trustee
may also be paid the necessary expenses he
may have incurred in sustaining the property,
his fixed costs for improvements thereon, and
the monetary value of his services in
managing the property to the extent that
plaintiff-beneficiary will secure a benefit from
his acts.
The rights and obligations between the
constructive trustee and the beneficiary, in
this case, respondent MCIAA and petitioners
over Lots Nos. 916 and 920, are echoed in
Art. 1190 of the Civil Code, When the
conditions have for their purpose the
extinguishment of an obligation to give, the
parties, upon the fulfillment of said conditions,
shall return to each other what they have
received x x x In case of the loss, deterioration
or improvement of the thing, the provisions
which, with respect to the debtor, are laid
down in the preceding article shall be applied
to the party who is bound to return x x x.[23]
On the matter of the repurchase price, while petitioners are
obliged to reconvey Lot No. 88 to respondents, the latter must
return to the former what they received as just compensation for
the expropriation of the property, plus legal interest to be
computed from default, which in this case runs from the time
petitioners comply with their obligation to respondents.
Respondents must likewise pay petitioners the necessary
expenses they may have incurred in maintaining Lot No. 88, as
well as the monetary value of their services in managing it to the
extent that respondents were benefited thereby.
Following Article 1187[24] of the Civil Code, petitioners may keep
whatever income or fruits they may have obtained from Lot No.
88, and respondents need not account for the interests that the
amounts they received as just compensation may have earned
in the meantime.
In accordance with Article 1190[25] of the Civil Code vis--vis
Article 1189, which provides that (i)f a thing is improved by its
nature, or by time, the improvement shall inure to the benefit of
the creditor x x x, respondents, as creditors, do not have to pay,
as part of the process of restitution, the appreciation in value of
Lot No. 88, which is a natural consequence of nature and
time.[26]
WHEREFORE, the petition is DENIED. The February 28, 2006
Decision of the Court of Appeals, affirming the October 22, 1999
Decision of the Regional Trial Court, Branch 87, Cebu City, and
its February 7, 2007 Resolution
are AFFIRMED with MODIFICATION as follows:
1. Respondents are ORDERED to return to petitioners the just
compensation they received for the expropriation of Lot No. 88,
plus legal interest, in the case of default, to be computed from
the time petitioners comply with their obligation to reconvey Lot
No. 88 to them;
2. Respondents are ORDERED to pay petitioners the
necessary expenses the latter incurred in maintaining Lot No.
88, plus the monetary value of their services to the extent that
respondents were benefited thereby;
3. Petitioners are ENTITLED to keep whatever fruits
and income they may have obtained from Lot No. 88; and
4. Respondents are also ENTITLED to keep whatever interests
the amounts they received as just compensation may have
earned in the meantime, as well as the appreciation in value of
Lot No. 88, which is a natural consequence of nature and time;
In light of the foregoing modifications, the case
is REMANDED to the Regional Trial Court, Branch
57, Cebu City, only for the purpose of receiving evidence on the
amounts that respondents will have to pay petitioners in
accordance with this Courts decision. No costs.
SO ORDERED.
THIRD DIVISION
[G.R. No. 147511. January 20, 2003]
MARINA Z. REYES; ALFREDO A. FRANCISCO; ANGELITA
Z. GARCIA; ALFREDO Z. FRANCISCO, JR;
ARMANDO Z. FRANCISCO; ALMA C. FRANCISCO;
EUGENIA Z. LUNA; CLARITA Z. ZABALLERO,
LEONARDO Z. ZABALLERO, JR, and TEODORO Z.
ZABALLERO, in substitution of LEONARDO M.
ZABALLERO; AUGUSTO M. ZABALLERO; FRINE
A. ZABALLERO; ELENA FRONDA ZABALLERO;
VICTOR GREGORIO F. ZABALLERO; MARIA
ELENA F. ZABALLERO; LOURDES ZABALLERO-
LAVA; SOCORRO EMILIA ZABALLERO-YAP; and
TERESITA F. ZABALLERO, petitioners, vs.
NATIONAL HOUSING AUTHORITY, respondent.
DECISION
PUNO, J.:
This is an appeal by certiorari from the decision of the
Court of Appeals in CA-GR CV No. 51641 dated September 29,
2000[1] affirming the judgment of the Regional Trial Court of
Quezon City, Branch 79 which dismissed the complaint for
forfeiture of rights filed by herein petitioners, as well as the
Resolution dated March 13, 2001 denying petitioners motion for
reconsideration.
Records show that in 1977, respondent National Housing
Authority (NHA) filed separate complaints for the expropriation
of sugarcane lands, particularly Lot Nos. 6450, 6448-E, 6198-A
and 6199 of the cadastral survey of Dasmarias, Cavite
belonging to the petitioners, before the then Court of First
Instance of Cavite, and docketed as Civil Case Nos. T.G.-392,
T.G.-396 and T.G.-417. The stated public purpose of the
expropriation was the expansion of the Dasmarias Resettlement
Project to accommodate the squatters who were relocated from
the Metropolitan Manila area. The trial court rendered judgment
ordering the expropriation of these lots and the payment of just
compensation. This was affirmed by the Supreme Court in a
decision rendered on October 29, 1987 in the case of NHA vs.
Zaballero[2] and which became final on November 26, 1987.[3]
On February 24, 1989, the expropriation court (now Branch
18, Regional Trial Court of Tagaytay City) issued an Order[4] the
dispositive portion of which reads:
WHEREFORE, and resolving thus, let an Alias Writ of
Execution be immediately issued and that:
(1) The Register of Deeds of the Province of Cavite is hereby
ordered to transfer, in the name of the plaintiff National
Housing Authority, the following:
(a) Transfer Certificate No. RT-638 containing
an area of 79,167 square meters situated in
Barrio Bangkal, Dasmarias, Cavite;
(b) Transfer Certificate of Title No. T-55702
containing an area of 20,872 square meters
situated in Barrio Bangkal, Dasmarias,
Cavite;
(c) Transfer Certificate of Title No. RT-639 and
RT-4641 covering Lot Nos. 6198-A and
6199 with an aggregate area of 159,985
square meters also situated in Barrio
Bangkal, Dasmarias, Cavite.
(2) Plaintiff National Housing Authority is likewise hereby
ordered, under pain of contempt, to immediately pay the
defendants, the amounts stated in the Writ of Execution as the
adjudicated compensation of their expropriated properties,
which process was received by it according to the records, on
September 26, 1988, segregating therefrom, and in separate
check, the lawyers fees in favor of Atty. Bobby P. Yuseco, in
the amount of P322,123.05, as sustained by their contract as
gleaned from the records, with no other deduction, paying on
its own (NHA) account, the necessary legal expenses incident
to the registration or issuance of new certificates of title,
pursuant to the provisions of the Property Registration Law (PD
1529);
(3) Defendants, however, are directed to pay the
corresponding capital gains tax on the subject properties,
directing them additionally, to coordinate with the plaintiff NHA
in this regard, in order to facilitate the termination of this case,
put an end to this controversy and consign the same to its final
rest.
For the alleged failure of respondent NHA to comply with
the above order, petitioners filed on April 28, 1992 a
complaint[5] for forfeiture of rights before the Regional Trial Court
of Quezon City, Branch 79, in Civil Case No. Q-92-12093. They
alleged that respondent NHA had not relocated squatters from
the Metropolitan Manila area on the expropriated lands in
violation of the stated public purpose for expropriation and had
not paid the just compensation fixed by the court. They prayed
that respondent NHA be enjoined from disposing and alienating
the expropriated properties and that judgment be rendered
forfeiting all its rights and interests under the expropriation
judgment. In its Answer,[6] respondent NHA averred that it had
already paid a substantial amount to herein petitioners and that
the expropriation judgment could not be executed in view of
several issues raised by respondent NHA before the
expropriation court (now Branch 18, RTC, Tagaytay City)
concerning capital gains tax, registration fees and other
expenses for the transfer of title to respondent NHA, as well as
the claims for attorneys fees of Atty. Joaquin Yuseco, Jr.,
collaborating counsel for petitioners.
Ocular inspections[7] conducted by the trial court on the
subject properties show that:
1. 80% of Lot No. 6198-A with an area of 120,146 square
meters is already occupied by relocatees whose houses are
made of light materials with very few houses partly made of
hollow blocks. The relocatees were relocated only on (sic)
March of 1994;
2. Most of the area covered by Lot No. 2075 is almost occupied
by houses and structures, most of which are made of concrete
materials. These houses are not being occupied by squatters
relocated to the said lot by the defendant NHA;
3. Lot No. 6199 is also occupied by concrete houses and
structures but likewise there are no relocatees in said lot. A
large area of the same is still unoccupied.
On September 29, 1995, the trial court rendered judgment
dismissing the complaint. Finding that the failure of respondent
NHA to pay just compensation and of petitioners to pay capital
gains tax are both unjustified and unreasonable, the trial court
held that: (1) respondent NHA is not deemed to have abandoned
the public purpose for which the subject properties were
expropriated because the relocation of squatters involves a long
and tedious process. It ruled that respondent NHA actually
pursued the public purpose of the expropriation when it entered
into a contract with Arceo C. Cruz involving the construction of
low cost housing on the expropriated lots to be sold to qualified
low income beneficiaries; (2) there is no condition imposed in
the expropriation judgment that the subject properties shall
revert back to its original owners in case the purpose of
expropriation is terminated or abandoned; (3) the payment of
just compensation is independent of the obligation of herein
petitioners to pay capital gains tax; and (4) in the payment of just
compensation, the basis should be the value at the time the
property was taken. On appeal, the Court of Appeals affirmed
the decision of the trial court.
Petitioners are now before us raising the following
assignment of errors:
1. The Honorable Court of Appeals had decided a
question of substance not in accord with
justice and equity when it ruled that, as the
judgment of the expropriation court did not
contain a condition that should the
expropriated property be not used for the
intended purpose it would revert to the
condemnee, the action to declare the
forfeiture of rights under the expropriation
judgment can not prosper;
2. The Honorable Court of Appeals decided a
question of substance not in accord with
jurisprudence, justice and equity when it ruled
that the non-payment is not a ground for
forfeiture;
3. The Honorable Court of Appeals erred in not
declaring the judgment of expropriation
forfeited in light of the failure of respondent to
use the expropriated property for the intended
purpose but for a totally different purpose.
The petition is not impressed with merit.
Petitioners contend that respondent NHA violated the
stated public purpose for the expansion of the Dasmarias
Resettlement Project when it failed to relocate the squatters
from the Metro Manila area, as borne out by the ocular
inspection conducted by the trial court which showed that most
of the expropriated properties remain unoccupied. Petitioners
likewise question the public nature of the use by respondent
NHA when it entered into a contract for the construction of low
cost housing units, which is allegedly different from the stated
public purpose in the expropriation proceedings. Hence, it is
claimed that respondent NHA has forfeited its rights and
interests by virtue of the expropriation judgment and the
expropriated properties should now be returned to herein
petitioners. We are not persuaded.
The 1987 Constitution explicitly provides for the exercise
of the power of eminent domain over private properties upon
payment of just compensation. More specifically, section 9,
Article III states that private property shall not be taken for public
use without just compensation. The constitutional restraints are
public use and just compensation.
Petitioners cannot insist on a restrictive view of the eminent
domain provision of the Constitution by contending that the
contract for low cost housing is a deviation from the stated public
use. It is now settled doctrine that the concept of public use is
no longer limited to traditional purposes. Here, as elsewhere, the
idea that public use is strictly limited to clear cases of use by the
public has been abandoned. The term public use has now been
held to be synonymous with public interest, public benefit, public
welfare, and public convenience.[8] The rationale for this new
approach is well explained in the case of Heirs of Juancho
Ardona, et al. vs. Reyes, et al.,[9] to wit:
The restrictive view of public use may be appropriate for a
nation which circumscribes the scope of government activities
and public concerns and which possesses big and correctly
located public lands that obviate the need to take private
property for public purposes. Neither circumstance applies to
the Philippines. We have never been a laissez faire State. And
the necessities which impel the exertion of sovereign power
are all too often found in areas of scarce public land or limited
government resources.
xxxxxxxxx
The taking to be valid must be for public use. There was a time
when it was felt that a literal meaning should be attached to
such a requirement. Whatever project is undertaken must be
for the public to enjoy, as in the case of streets or
parks. Otherwise, expropriation is not allowable. It is not
anymore. As long as the purpose of the taking is public, then
the power of eminent domain comes into play. As just noted,
the constitution in at least two cases, to remove any doubt,
determines what is public use. One is the expropriation of
lands to be subdivided into small lots for resale at cost to
individuals. The other is in the transfer, through the exercise of
this power, of utilities and other private enterprise to the
government. It is accurate to state then that at
present whatever may be beneficially employed for the
general welfare satisfies the requirement of public
use. (emphasis supplied)
The act of respondent NHA in entering into a contract with
a real estate developer for the construction of low cost housing
on the expropriated lots to be sold to qualified low income
beneficiaries cannot be taken to mean as a deviation from the
stated public purpose of their taking. Jurisprudence has it that
the expropriation of private land for slum clearance and urban
development is for a public purpose even if the developed area
is later sold to private homeowners, commercials firms,
entertainment and service companies, and other private
concerns.[10]
Moreover, the Constitution itself allows the State to
undertake, for the common good and in cooperation with the
private sector, a continuing program of urban land reform
and housing which will make at affordable cost decent housing
and basic services to underprivileged and homeless citizens in
urban centers and resettlement areas.[11] The expropriation of
private property for the purpose of socialized housing for the
marginalized sector is in furtherance of the social justice
provision under Section 1, Article XIII of the Constitution which
provides that:
SECTION 1. The Congress shall give highest priority to the
enactment of measures that protect and enhance the right of
all the people to human dignity, reduce social, economic, and
political inequalities, and remove cultural inequities by
equitably diffusing wealth and political power for the common
good.
To this end, the State shall require the acquisition, ownership,
use and disposition of property and its increments.
It follows that the low cost housing project of respondent
NHA on the expropriated lots is compliant with the public use
requirement.
We likewise do not subscribe to petitioners contention that
the stated public purpose was abandoned when respondent
NHA failed to occupy the expropriated lots by relocating
squatters from the Metro Manila area. The expropriation
judgment declared that respondent NHA has a lawful right to
take petitioners properties for the public use or purpose of
expanding the Dasmarias Resettlement Project. The taking here
is absolute, without any condition, restriction or
qualification. Contrary to petitioners submission, the ruling
enunciated in the early case of Fery vs. Municipality of
Cabanatuan,[12] is still good and sound doctrine, viz.:
x x x If, for example, land is expropriated for a particular
purpose, with the condition that when that purpose is ended or
abandoned the property shall return to its former owner, then,
of course, when the purpose is terminated or abandoned the
former owner reacquires the property so expropriated. x x x If,
upon the contrary, however, the decree of expropriation gives
to the entity a fee simple title, then, of course, the land
becomes the absolute property of the expropriator x x x.
When land has been acquired for public use in fee simple
unconditionally, either by the exercise of eminent domain
or by purchase, the former owner retains no rights in the
land, and the public use may be abandoned, or the land
may be devoted to a different use, without any impairment
of the estate or title acquired, or any reversion to the
former owner.
Petitioners further aver that the continued failure of
respondent NHA to pay just compensation for a long period of
time justifies the forfeiture of its rights and interests over the
expropriated lots. They demand the return of the expropriated
lots. Respondent NHA justifies the delay to pay just
compensation by reason of the failure of petitioners to pay the
capital gains tax and to surrender the owners duplicate
certificates of title.
In the recent case of Republic of the Philippines vs.
Court of Appeals, et al.,[13] the Court ruled that non-payment of
just compensation does not entitle the private landowners to
recover possession of their expropriated lots. Thus:
Thus, in Valdehueza vs. Republic where the private
landowners had remained unpaid ten years after the
termination of the expropriation proceedings, this Court ruled
The points in dispute are whether such payment can still be
made and, if so, in what amount. Said lots have been the
subject of expropriation proceedings. By final and executory
judgment in said proceedings, they were condemned for public
use, as part of an airport, and ordered sold to the
government. x x x. It follows that both by virtue of the judgment,
long final, in the expropriation suit, as well as the annotations
upon their title certificates, plaintiffs are not entitled to recover
possession of their expropriated lots which are still devoted to
the public use for which they were expropriated but only to
demand the market value of the same.
Said relief may be granted under plaintiffs prayer for such other
remedies, which may be deemed just and equitable under the
premises.
The Court proceeded to reiterate its pronouncement in Alfonso
vs. Pasay City where the recovery of possession of property
taken for public use prayed for by the unpaid landowner was
denied even while no requisite expropriation proceedings were
first instituted. The landowner was merely given the relief of
recovering compensation for his property computed at its
market value at the time it was taken and appropriated by the
State.
The judgment rendered by the Bulacan RTC in 1979 on the
expropriation proceedings provides not only for the payment
of just compensation to herein respondents but likewise
adjudges the property condemned in favor of petitioner
over which parties, as well as their privies, are
bound. Petitioner has occupied, utilized and, for all intents
and purposes, exercised dominion over the property
pursuant to the judgment. The exercise of such rights
vested to it as the condemnee indeed has amounted to at
least a partial compliance or satisfaction of the 1979
judgment, thereby preempting any claim of bar by prescription
on grounds of non-execution. In arguing for the return of
their property on the basis of non-payment, respondents
ignore the fact that the right of the expropriating authority
is far from that of an unpaid seller in ordinary sales, to
which the remedy of rescission might perhaps apply. An in
rem proceeding, condemnation acts upon the
property. After condemnation, the paramount title is in the
public under a new and independent title; thus, by giving notice
to all claimants to a disputed title, condemnation proceedings
provide a judicial process for securing better title against all the
world than may be obtained by voluntary
conveyance. (emphasis supplied)
 We, however, likewise find the refusal of respondent NHA
to pay just compensation, allegedly for failure of petitioners to
pay capital gains tax and surrender the owners duplicate
certificates of title, to be unfounded and unjustified.
First, under the expropriation judgment the payment of just
compensation is not subject to any condition. Second, it is a
recognized rule that although the right to enter upon and
appropriate the land to public use is completed prior to payment,
title to the property expropriated shall pass from the owner to the
expropriator only upon full payment of the just compensation. In
the case of Association of Small Landowners in the Phils.,
Inc., et al. vs. Secretary of Agrarian Reform,[14] it was held
that:
Title to property which is the subject of condemnation
proceedings does not vest the condemnor until the judgment
fixing just compensation is entered and paid, but the
condemnors title relates back to the date on which the petition
under the Eminent Domain Act, or the commissioners report
under the Local Improvement Act, is filed.
x x x Although the right to appropriate and use land taken
for a canal is complete at the time of entry, title to the
property taken remains in the owner until payment is
actually made.
In Kennedy v. Indianapolis, the US Supreme Court cited
several cases holding that title to property does not pass to the
condemnor until just compensation had actually been made. In
fact, the decisions appear to be uniformly to this effect. As
early as 1838, in Rubottom v. McLure, it was held that actual
payment to the owner of the condemned property was a
condition precedent to the investment of the title to the property
in the State albeit not to the appropriation of it to public use. In
Rexford v. Knight, the Court of Appeals of New York said that
the construction upon the statutes was that the fee did not vest
in the State until the payment of the compensation although the
authority to enter upon and appropriate the land was complete
prior to the payment. Kennedy further said that both on
principle and authority the rule is x x x that the right to enter
on and use the property is complete, as soon as the
property is actually appropriated under the authority of
law for a public use, but that the title does not pass from
the owner without his consent, until just compensation
has been made to him.
Our own Supreme Court has held in Visayan Refining Co. v.
Camus and Paredes, that:
If the laws which we have exhibited or cited in the preceding
discussion are attentively examined it will be apparent that the
method of expropriation adopted in this jurisdiction is such as
to afford absolute reassurance that no piece of land can be
finally and irrevocably taken from an unwilling owner until
compensation is paid. x x x. (emphasis supplied)
With respect to the amount of the just compensation still
due and demandable from respondent NHA, the lower courts
erred in not awarding interest computed from the time the
property is actually taken to the time when compensation is
actually paid or deposited in court. In Republic, et al. vs. Court
of Appeals, et al.,[15] the Court imposed interest at 12% per
annum in order to help eliminate the issue of the constant
fluctuation and inflation of the value of the currency over time,
thus:
The constitutional limitation of just compensation is considered
to be the sum equivalent to the market value of the property,
broadly described to be the price fixed by the seller in open
market in the usual and ordinary course of legal action and
competition or the fair value of the property as between one
who receives, and one who desires to sell, it being fixed at the
time of the actual taking by the government. Thus, if property is
taken for public use before compensation is deposited with the
court having jurisdiction over the case, the final compensation
must include interests on its just value to be computed from the
time the property is taken to the time when compensation is
actually paid or deposited with the court. In fine, between the
taking of the property and the actual payment, legal interests
accrue in order to place the owner in a position as good as (but
not better than) the position he was in before the taking
occurred.
x x x This allowance of interest on the amount found to be the
value of the property as of the time of the taking computed,
being an effective forbearance, at 12% per annum should help
eliminate the issue of the constant fluctuation and inflation of
the value of the currency over time. Article 1250 of the Civil
Code, providing that, in case of extraordinary inflation or
deflation, the value of the currency at the time of the
establishment of the obligation shall be the basis for the
payment when no agreement to the contrary is stipulated, has
strict application only to contractual obligations. In other words,
a contractual agreement is needed for the effects of
extraordinary inflation to be taken into account to alter the
value of the currency.
Records show that there is an outstanding balance
of P1,218,574.35 that ought to be paid to petitioners. [16] It is not
disputed that respondent NHA took actual possession of the
expropriated properties in 1977.[17] Perforce, while petitioners
are not entitled to the return of the expropriated property, they
are entitled to be paid the balance of P1,218,574.35 with legal
interest thereon at 12% per annum computed from the taking of
the property in 1977 until the due amount shall have been fully
paid.
WHEREFORE, the appealed judgment is modified as
follows:
1. Ordering respondent National Housing Authority
to pay petitioners the amount of P1,218,574.35
with legal interest thereon at 12% per annum
computed from the taking of the expropriated
properties in 1997 until the amount due shall
have been fully paid;
2. Ordering petitioners to pay the capital gains tax;
and
3. Ordering petitioners to surrender to respondent
National Housing Authority the owners duplicate
certificates of title of the expropriated properties
upon full payment of just compensation.
SO ORDERED.
 SECOND DIVISION
[G.R. No. 137569. June 23, 2000]
REPUBLIC OF THE PHILIPPINES, plaintiff-appellee,
vs. SALEM INVESTMENT CORPORATION, MARIA DEL
CARMEN ROXAS DE ELIZALDE, CONCEPCION
CABARRUS VDA. DE SANTOS, defendants-appellees.
MILAGROS AND INOCENTES DE LA RAMA, petitioners,
ALFREDO GUERRERO, respondent.
DECISION
MENDOZA, J.:
The main petition in this case is for determination of just
compensation for the expropriation of lands under B.P. Blg.
340. Alfredo Guerrero intervened in this proceeding arguing
that, instead of the De la Ramas, he should receive the just
compensation for the subject land. The trial court and the Court
of Appeals declared him the rightful recipient of the amount.
This is an appeal from the decision[1] of the Court of Appeals.
We affirm.
The facts are as follows:
On February 17, 1983, Batas Pambansa Blg. 340 was passed
authorizing the expropriation of parcels of lands in the names
of defendants in this case, including a portion of the land,
consisting of 1,380 square meters, belonging to Milagros and
Inocentes De la Rama covered by TCT No. 16213.
On December 14, 1988, or five years thereafter, Milagros and
Inocentes De la Rama entered into a contract[2] with intervenor
Alfredo Guerrero whereby the De la Ramas agreed to sell to
Guerrero the entire property covered by TCT No. 16213,
consisting of 4,075 square meters for the amount of
P11,800,000.00. The De la Ramas received the sum of
P2,200,000.00 as partial payment of the purchase price, the
balance thereof to be paid upon release of the title by the
Philippine Veterans Bank.
On November 3, 1989, Guerrero filed in the Regional Trial
Court in Pasay City a complaint for specific performance (Civil
Case No. 6974-P) to compel the De la Ramas to proceed with
the sale.
On July 10, 1990, while this case for specific performance was
pending, the Republic of the Philippines filed the present case
(Civil Case No. 7327) for expropriation pursuant to B.P. Blg.
340.[3] Among the defendants named in the complaint were
Milagros and Inocentes De la Rama as registered owners of
Lot 834, a portion of which (Lot 834-A) was part of the
expropriated property. Upon the deposit of P12,970,350.00
representing 10 percent of the approximate market value of the
subject lands, a writ of possession[4] was issued on August 29,
1990 in favor of the government.
On May 2, 1991, Guerrero filed a motion for
intervention[5] alleging that the De la Ramas had agreed to sell
to him the entire Lot 834 (TCT No. 16213) on December 14,
1988 and that a case for specific performance had been filed
by him against the De la Ramas.
On September 9, 1991, based on the report of the committee
on appraisers appointed by the court and the submissions of
defendants, the trial court approved payment to the De la
Ramas at the rate of P23,976.00 per square meter for the
taking of 920 square meters out of the 1,380 square meters to
be expropriated under B.P. Blg. 340.[6]
Meanwhile, on September 18, 1991, the trial court rendered a
decision in the case for specific performance (Civil Case No.
6974-P)[7] upholding the validity of the contract to sell and
ordering the De la Ramas to execute the corresponding deed
of sale covering the subject property in favor of Guerrero. The
De la Ramas appealed to the Court of Appeals (CA-G.R. No.
CV-35116) but their petition was dismissed on July 28, 1992.
They tried to appeal to this Court (G.R. No. 106488) but again
they failed in their bid as their petition for review was denied on
December 7, 1992.
Meanwhile, on October 2, 1991, Guerrero filed an Omnibus
Motion[8] praying that the just compensation for the land be
deposited in court pursuant to Rule 67, 9 of the Rules of Court.
As his motion for intervention and omnibus motion had not yet
been resolved, Guerrero filed with the Court of Appeals a
petition for mandamus, certiorari, and injunction with temporary
restraining order[9] (C.A.-G.R. SP No. 28311) to enjoin the
Republic from releasing or paying to the De la Ramas any
amount corresponding to the payment of the expropriated
property and to compel the trial court to resolve his two
motions.
On January 12, 1993, the Court of Appeals rendered a
decision granting the writ of mandamus.[10]
Nonetheless, the De la Ramas filed on March 17, 1993 a
Motion for Authority to Withdraw[11] the deposit made by the
Republic in 1991. This motion was denied as the trial court, on
May 7, 1993, allowed the intervention of Guerrero and ordered
the Republic to deposit the amount of just compensation with
the Clerk of Court of RTC, Pasay City.[12]
On June 16, 1993, the De la Ramas filed a Motion for
Execution[13] again praying that the courts order dated
September 9, 1991, approving the recommendation of the
appraisal committee, be enforced. This was duly opposed by
Guerrero.[14]
On June 22, 1993, the trial court denied the motion of the De la
Ramas holding that there had been a change in the situation of
the parties, therefore, making the execution of the September
9, 1991 Order inequitable, impossible, or unjust. [15]
As if to further delay the proceedings of this case, the De la
Ramas then filed an Omnibus Motion seeking clarification of
the September 18, 1991 decision of the trial court in the case
for specific performance, upholding the validity of the contract
to sell, insofar as the area covered by the contract was
concerned, and asking that a restraining order be issued until
this motion was granted.
In its order dated October 7, 1993, the trial court clarified that
the area of land covered by the contract to sell included the
portion expropriated by the Republic. It stated:
 WHEREFORE, by way of clarification, the
court holds that the transfer of title to the
plaintiff under the Contract to Sell dated
December 14, 1988 covers the entire Lot
834 consisting of 4,075 square meters
(including the expropriated portion); that this
change of owner over the entire property is
necessarily junior or subject to the superior
rights of the REPUBLIC over the
expropriated portion (the metes and bounds
of which are clearly defined in Section 1 6 of
B.P. Blg. 340); that the Contract to Sell dated
December 14, 1988 executed by the parties
is a valid document that authorizes the
plaintiff to step into the shoes of the
defendants in relation to the property
covered by TCT No. 16213; and that the
transfer shall be free from all liens and
encumbrances except for the expropriated
portion of 1,380 square meters.[16]
The decision in the action for specific performance in Civil
Case No. 6974-P having become final, an order of
execution[17] was issued by the Pasay City RTC, and as a
result of which, a deed of absolute sale[18]was executed by the
Branch Clerk of Court on March 8, 1994 in favor of Guerrero
upon payment by him of the sum of P8,808,000.00 on January
11, 1994 and the further sum of P1,608,900.00 on February 1,
1994 as full payment for the balance of the purchase price
under the contract to sell of December 14, 1988. The entire
amount was withdrawn and duly received by the De la
Ramas.[19]
Thereafter, the De la Ramas sought the nullification of the June
22, 1993 order of the trial court in this case, denying their
motion for execution of the order approving the
recommendation of the appraisal committee, by filing a petition
for certiorari and mandamus in the Court of Appeals. This
petition was, however, dismissed in a decision dated July 29,
1994 of the appellate court.[20]
On April 5, 1995, the Pasay City Regional Trial Court, Branch
111, declared Guerrero the rightful owner of the 920-square
meter expropriated property and ordered payment to him of
just compensation for the taking of the land. The dispositive
portion of its decision reads:
WHEREFORE, respondent-intervenor
Alfredo Guerrero is hereby declared as the
rightful person entitled to receive the just
compensation of the 920-square meter
portion of the property described in TCT No.
16213 of the Register of Deeds of Pasay City
and ordering the Philippine National Bank to
release and deliver to Uniland Realty and
Development Corporation, the assignee of
Guerrero, the amount of P20,000,000.00
representing the deposit made by the plaintiff
through the Department of Public Works and
Highways in the Philippine National Bank,
Escolta Branch with the check solely payable
to said Uniland Realty and Development
Corporation, as assignee of Alfredo
Guerrero.[21]
This decision was subsequently affirmed by the Court of
Appeals.[22] Hence, this petition.
The De la Ramas contend:
I. THE COURT OF APPEALS WRONGLY
INTERPRETED B.P. NO. 340 BY HOLDING
THAT BATAS PAMBANSA BLG. 340
MERELY AUTHORIZED THE
EXPROPRIATION OF THE LANDS OF THE
DEFENDANTS, INCLUDING THAT
PORTION BELONGING TO THE HEREIN
PETITIONERS DE LA RAMAS COVERED
BY TCT NO. 16213.
II. THE COURT OF APPEALS WRONGLY
INTERPRETED THE CONTRACT TO SELL
BY HOLDING THAT THE PETITIONERS DE
LA RAMAS HAD CONVEYED TO THE
RESPONDENT GUERRERO THE WHOLE
PROPERTY COVERED BY TCT NO. 16213,
INCLUDING THE EXPROPRIATED AREA.
III.THE HONORABLE COURT OF APPEALS
WRONGLY DECLARED THAT THE
PETITIONERS DE LA RAMAS COULD
STILL SELL IN 1988 THEIR PROPERTY AS
TITLE THERETO HAD NOT YET PASSED
TO THE GOVERNMENT IN 1983.
IV.THE COURT OF APPEALS GRAVELY
ERRED IN WRONGLY INTERPRETING
THE CONTRACT TO SELL, BY HOLDING
THAT PETITIONERS DE LA RAMAS HAD
CONVEYED TO THE RESPONDENT
GUERRERO THE RIGHT TO RECEIVE
THE JUST COMPENSATION FOR THE
EXPROPRIATED AREA.
V. THE COURT OF APPEALS GRAVELY
ERRED IN HOLDING THAT THE RIGHT TO
RECEIVE THE JUST COMPENSATION
FOR THE EXPROPRIATED AREA BECAME
VESTED UPON THE RESPONDENT
GUERRERO THROUGH SUBROGATION.
VI.THE COURT OF APPEALS GRAVELY
ERRED IN HOLDING THAT THE
RESPONDENT GUERRERO HAD PAID TO
PETITIONERS RAMAS THE FULL
PURCHASE PRICE OF P11,800,00.00
STIPULATED IN THE CONTRACT TO SELL
OF 14 DECEMBER 1988.[23]
As already stated, the De la Ramas and Guerrero entered into
a contract to sell with respect to Lot 834. This lot has an area
of 4,075 square meters. This contract was executed on
December 14, 1988, after B.P. Blg. 340 was passed
authorizing the expropriation of a portion of the land, consisting
of 1,380 square meters, of the De la Ramas. The only issue in
this case is who, between the De la Ramas and Guerrero,
is/are entitled to receive payment of just compensation for the
taking of 920 square meters of the land in question?
The De la Ramas claim that they should receive the amount of
just compensation because when they agreed to sell Lot 834 in
1988 to Guerrero, it did not include the portion expropriated by
the Republic since, at that time, such portion had been
expropriated by the government by virtue of B.P. Blg. 340,
which took effect on February 17, 1983. They state:
In 1988, the petitioners Ramas could no
longer agree to sell to another person the
expropriated property itself. For one thing,
the property was already expropriated and
petitioners Ramas for not objecting in effect
conveyed the same to the Government.
Secondly, the physical and juridical
possession of the property was already in
the Government. Thirdly, the equitable and
beneficial title over the property was already
vested in the Government, and therefore the
property itself was already outside the
commerce of man. As a matter of fact, the
property was already part of a Government
infrastructure.[24]
On the other hand, Alfredo Guerrero argues that the title to the
expropriated portion of Lot 834 did not immediately pass to the
government upon the enactment of B.P. Blg. 340 in 1983, as
payment of just compensation was yet to be made before
ownership of the land was transferred to the government. As a
result, petitioners still owned the entire Lot 834 at the time they
agreed to sell it to Guerrero. Therefore, since Guerrero
obtained ownership of Lot 834, including the 920 square
meters expropriated by the government, he has the right to
receive the just compensation over the said property.
We find the De la Ramas contention without merit. We hold
that Guerrero is entitled to receive payment of just
compensation for the taking of the land.
The power of eminent domain
The power of eminent domain is an inherent power of the
State. No constitutional conferment is necessary to vest it in
the State. The constitutional provision on eminent domain, Art.
III, 9, provides a limitation rather than a basis for the exercise
of such power by the government. Thus, it states that "Private
property shall not be taken for public use without just
compensation."
Expropriation may be initiated by court action or by
legislation.[25] In both instances, just compensation is
determined by the courts.[26]
The expropriation of lands consists of two stages. As explained
in Municipality of Bian v. Garcia:[27]
The first is concerned with the determination
of the authority of the plaintiff to exercise the
power of eminent domain and the propriety
of its exercise in the context of the facts
involved in the suit. It ends with an order, if
not of dismissal of the action, "of
condemnation declaring that the plaintiff has
a lawful right to take the property sought to
be condemned, for the public use or purpose
described in the complaint, upon the
payment of just compensation to be
determined as of the date of the filing of the
complaint". . . .
The second phase of the eminent domain
action is concerned with the determination by
the court of "the just compensation for the
property sought to be taken." This is done by
the court with the assistance of not more
than three (3) commissioners. . . .
It is only upon the completion of these two stages that
expropriation is said to have been completed. Moreover, it is
only upon payment of just compensation that title over the
property passes to the government.[28] Therefore, until the
action for expropriation has been completed and terminated,
ownership over the property being expropriated remains with
the registered owner. Consequently, the latter can exercise all
rights pertaining to an owner, including the right to dispose of
his property, subject to the power of the State ultimately to
acquire it through expropriation.
In the case at hand, the first stage of expropriation was
completed when B.P. Blg. 340 was enacted providing for the
expropriation of 1,380 square meters of the land in question.
The constitutionality of this law was upheld in the case
of Republic v. De Knecht.[29] In 1990, the government
commenced the second stage of expropriation through the
filing of a petition for the determination of just compensation.
This stage was not completed, however, because of the
intervention of Guerrero which gave rise to the question of
ownership of the subject land. Therefore, the title to the
expropriated property of the De la Ramas remained with them
and did not at that point pass to the government.
The De la Ramas are mistaken in arguing that the two stages
of expropriation cited above only apply to judicial, and not to
legislative, expropriation. Although Congress has the power to
determine what land to take, it can not do so arbitrarily. Judicial
determination of the propriety of the exercise of the power, for
instance, in view of allegations of partiality and prejudice by
those adversely affected,[30] and the just compensation for the
subject property is provided in our constitutional system.
We see no point in distinguishing between judicial and
legislative expropriation as far as the two stages mentioned
above are concerned. Both involve these stages and in both
the process is not completed until payment of just
compensation is made. The Court of Appeals was correct in
saying that B.P. Blg. 340 did not effectively expropriate the
land of the De la Ramas. As a matter of fact, it merely
commenced the expropriation of the subject property.
Thus, in 1988, the De la Ramas still had authority to transfer
ownership of their land and convey all rights, including the right
to receive just compensation, to Guerrero.
The Contract to Sell and the Deed of Absolute Sale
The contract to sell between the De la Ramas and Guerrero,
executed on December 14, 1988, reads:
CONTRACT TO SELL
KNOW ALL MEN BY THESE PRESENTS:
This CONTRACT is made and executed by and between:
MILAGROS DE LA RAMA and INOCENTES DE LA
RAMA, of legal age, both single, Filipinos Citizen and with
residence and postal address at 2838 F.B. Harrison St.,
Pasay City, Metro Manila, hereinafter referred to as the
SELLERS.
- and -
ALFREDO S. GUERRERO, of legal age, Filipino, married
to SUSANA C. PASCUAL and with residence and postal
address at No. 17 Mangyan, La Vista, Quezon City,
hereinafter referred to as the BUYER.
WITNESSETH:
WHEREAS, the SELLERS are the registered owners of a
parcel of land consisting of 4,075 square meters together
with all the improvements thereon situated at 2838 F.B.
Harrison St., Pasay City, covered by Transfer Certificate
of Title No. 16213 of the Registry of Deeds of Pasay City
and more particularly described as follows:
A PARCEL OF LAND (Lot 834 of the Cadastral Survey of
Pasay, L.R.C. Cad. Rec. No.), situated in the City of
Pasay. Bounded on the N., along line 1-2 by Lot 835; and
along line 2-3 by Lot 836, on the NE., and SE., along
lines 3-4-5 by Lot 833, all of Pasay Cadastre; and on the
SW., along lines 5-6-1 by Calle F.B. Harrison. Beginning
at a point marked "1" on plan, being N. 3 deg. 50E.,
100.44 m. from B.L.L.M. 5, Pasay Cadastre; thence N. 84
deg. 19E., 73.79 m. to point 2; thence N. 84 deg. 19E.,
14.47 m. to point 3; thence S. 93 deg. 11E., 45.69 m. to
point 4; thence S. 33 deg. 10W., 87.39 m. to point 5;
thence N. 10 deg. 46W., 11.82 m. to point 6; thence N. 10
deg. 46W., 35.70 m. to point of beginning; containing an
area of FOUR THOUSAND AND SEVENTY FIVE (4,075)
SQUARE METERS. All points referred to are indicated on
the plan and marked on the ground by Old Points;
bearing true date of the cadastral survey, Oct., 1928 to
Nov., 1930.
WHEREAS, the SELLERS offer to sell and the BUYER
agrees to buy the above-described real property;
NOW, THEREFORE, for and in consideration of the
amount of ELEVEN MILLION EIGHT HUNDRED
THOUSAND PESOS (P11,800.000.00) the parties hereby
agree to enter unto the Contract subject to such terms
and conditions as follows:
1. Upon execution of this Contract, the BUYER shall pay
the SELLERS the sum of TWO MILLION TWO
HUNDRED THOUSAND PESOS (P2,200,000.00) it being
understood and agreed that this payment shall be for the
purpose of liquidating in full the mortgage indebtedness
and affecting the redemption of the property subject of the
sale as annotated at the back of the title;
2. The balance of EIGHT MILLION EIGHT HUNDRED
THOUSAND PESOS (P8,800,000.00) shall be paid by
the BUYER upon release of the title by Phil. Veterans
Bank and execution of the Deed of Absolute Sale;
3. The amount of P800,000.00 shall be paid by the
BUYER upon payment of Capital Gains Tax and
documentary sales stamp by the SELLERS and their
vacation of the premises.
4. All existing improvements shall be assigned to the
BUYER;
5. The SELLERS shall settle all realty taxes up to the end
of 1988, water and electric bills;
6. The SELLERS shall pay three percent (3%) of the total
consideration as brokers commission to be computed in
the purchase price of P11,000,000.00;
7. It is hereby agreed and covenanted and stipulated by
and between the parties hereto that the SELLERS shall
execute and deliver to the BUYER a formal Absolute
Deed of Sale free from all liens and encumbrances;
8. That the SELLERS shall vacate the premises and or
deliver the physical possession of the property within
thirty (30) days from the date of sale, that is upon
complete payment by the BUYER of the agreed purchase
price and execution of Deed of Sale;
9. That the execution of all legal documents in connection
with this sale transaction shall be done thru SELLERS
legal counsel;
10. The BUYER shall assume payment of transfer and
registration expenses.
IN WITNESS WHEREOF, the parties have hereunto set
their hands this 14th day of December 1988 at Manila,
Metro Manila.[31]
The land, as described above in the Contract to Sell, includes
the land expropriated under B.P. Blg. 340, to wit:
6. A parcel of land (a portion of Lot No. 834
of the Cadastral Survey of Pasay, Cadastral
Case No. 23, G.L.R.O. Cadastral Record No.
1368), situated in the City of Pasay, bounded
on the southeast, along lines 1-2-3 by Lot
No. 833, Pasay Cadastre; and on the
southwest, along lines 3-4-5 by Calle F.B.
Harrison; and on the north, points 5-17-17-1
by the remaining portion of Lot 834;
beginning at point marked "1" on plan, being
S. 32 deg. 17 44"E., 267.187 meters from
BLLM No. 5, Pasay Cadastre; thence S.9
deg. 11E., 11.579 m. to point "2"; thence
S.82 deg. 10W., 87.390 m. to point "3";
thence N. 10 deg. 45 58"W., 11.82 m. to
point "4"; thence N. 10 deg. 46 W., 15,568.4
m. to point "5"; thence S.15 deg. 37 27"E.,
3.287 m. to point "6"; thence S.34 deg..
3227"E., 3.287 m. to point "7"; thence S. 53
deg. 2650"E., 3.287 m. to point "8"; thence
S. 72 deg. 2251"E., 3.287 m. to point "9";
thence N. 88 deg. 4032"E., 3.287 m. to point
"10"; thence N. 72 deg. 0053"E., 6.480 m. to
point "11"; thence N. 84 deg. 55 05"E.,
10.375 m. to point "12"; thence N. 85 deg.
3814"E., 10.375 m. to point "13"; thence N.
86 deg. 21 10"E., 10.375 m. to point "14";
thence N. 87 deg. 04 18"E., 10.375 m. to
 point "15"; thence N. 87 deg. 97 06"E.,
10.375 m. to point "16"; thence N. 88 deg.
3011"E., 10.375 m. to point "17"; thence N.
89 deg. 1256"E., 9.422 m. to the point of
beginning, containing an area of one
thousand three hundred eighty square
meters (1,380.00 Sq.M.), more or less.[32]
As the trial court in the case for specific performance ruled, the
contract to sell covered the entire Lot 834, including the
expropriated area, which was then owned by the De la Ramas.
It is true that the contract to sell did not convey to Guerrero the
subject parcel of land described therein. However, it created an
obligation on the part of the De la Ramas to convey the land,
subject to the fulfillment of the suspensive conditions therein
stated. The declaration of this contracts validity, which paved
the way for the subsequent execution of the Deed of Absolute
Sale on March 8, 1994, following the order of the Regional Trial
Court for its execution, by the Clerk of Court, Branch 113,
Pasay City, effectively conveyed ownership of said parcel of
land to Guerrero.
The contention that the Deed of Absolute Sale excluded the
portion expropriated by the government is untenable. The
Deed of Absolute Sale reads in pertinent parts:
That for and in consideration of the sum of
ELEVEN MILLION PESOS (P11,000,000),
Philippine Currency, paid by the VENDEE,
the VENDORS, by these presents hereby
SELL, TRANSFER, CONVEY and ASSIGN,
unto the herein VENDEE, his heirs,
successors-in-interest and assigns, by way
of absolute sale, a parcel of land located in
2838 F.B. Harrison Street, Pasay City,
formerly covered by Transfer Certificate of
Title No. 16213 of the land records of Pasay
City, presently covered by the new Transfer
Certificate of Title No. 132995, together with
all improvements thereon, free from all liens
and encumbrances whatsoever except over
a portion equal to one thousand three
hundred eighty (1,380) square meters
expropriated by the Republic of the
Philippines under and by virtue of Batas
Pambansa Blg. 340 which took effect on
February 17, 1983, the technical description
of which is found therein, and which Lot 834
in its entirety is more particularly described
as follows:
A PARCEL OF LAND (Lot 834 of the Cadastral Survey of
Pasay, L.R.C. Cad. Rec No. ), situated in the City of
Pasay. Bounded on the N. along line 1-2 by Lot 835, and
along line 2-3 by Lot 836; on the NE., and SE., along
lines 3-4-5 by Lot 833; all of Pasay Cadastre; and on the
SW., along lines 5-6-1 by Calle F.B. Harrison. Beginning
at a point marked "1" on plan, being N. 3 deg. 50E.,
100.44 from B.I.I.M. 5; Pasay Cadastre; thence N. 84
deg. 19E., 73.79 m. to point 2; thence N. 84 deg. 19E.,
14.47 m. to point 3; thence S. 9 deg. 11E., 45.69 m. to
point 4; thence S.53 deg. 10W., 87.39 m. to point 5;
thence N. 10 deg. 46W., 11.82 m. to point 6; thence N. 10
deg. 46W., 35. 70 m. to point of beginning; containing an
area of FOUR THOUSAND AND SEVENTY FIVE (4,075)
SQUARE METERS. All points referred to are indicated on
the plan and are marked on the ground by Old Points;
bearing true date of the Cadastral Survey, Oct. 1928 to
Nov. 1, 1930.[33]
The underscored phrase does not say that the expropriated
portion of the lot was excluded from the sale. Rather, it states
that the entire property, consisting of 4,075 square meters, was
being sold free from all liens and encumbrances except the lien
in favor of the government over the portion being expropriated
by it. Stated in another way, Guerrero was buying the entire
property free from all claims of third persons except those of
the government.
Evidently, Lot 834 was conveyed in 1994 to Guerrero by virtue
of the Deed of Absolute Sale. This contract was registered in
the Register of Deeds and, accordingly, a new transfer
certificate of title was issued to Guerrero.[34] Pursuant thereto,
and by virtue of subrogation, the latter became the rightful
owner entitled to receive the just compensation from the
Republic.
The De la Ramas make much of the fact that ownership of the
land was transferred to the government because the equitable
and the beneficial title was already acquired by it in 1983,
leaving them with only the naked title. However, as this Court
held in Association of Small Landowners in the Phil., Inc. v.
Secretary of Agrarian Reform:[35]
The recognized rule, indeed, is that title to the property
expropriated shall pass from the owner to the
expropriator only upon full payment of the just
compensation. Jurisprudence on this settled principle is
consistent both here and in other democratic
jurisdictions. Thus:
. . . although the right to expropriate and use land
taken for a canal is complete at the time of
entry, title to the property taken remains in the
owner until payment is actually made. (Emphasis
supplied).
In Kennedy v. Indianapolis, the US Supreme Court cited
several cases holding that title to property does not
pass to the condemnor until just compensation had
actually been made. In fact, the decisions appear to be
uniformly to this effect. As early as 1838, in Rubottom v.
McLure, it was held that "actual payment to the owner of
the condemned property was a condition precedent to
the investment of the title to the property in the State"
albeit "not to the appropriation of it to public use." In
Rexford v. Knight, the Court of Appeals of New York
said that the construction upon the statutes was that the
fee did not vest in the State until the payment of the
compensation although the authority to enter upon and
appropriate the land was complete prior to the payment.
Kennedy further said that "both on principle and
authority the rule is . . . that the right to enter on and use
the property is complete, as soon as the property is
actually appropriated under the authority of law for a
public use, but that the title does not pass from the
owner without his consent, until just compensation has
been made to him."
The amount paid by Guerrero
Lastly, the De la Ramas contend that Guerrero only paid
P7,417,000.00 and not P8,800,000.00 as stipulated in the
contract to sell. However, Guerrero explained in his comment
in this case:
In making such misleading allegations, petitioners
withheld the information that on January 25, 1994,
Branch 114 of the Pasay City Regional Trial Court had
issued an order which explained very clearly why the
sum of P7,417,000.00 deposited by Guerrero constitute
full payment of the agreed price, viz:
Plaintiffs motion is meritorious. The decision
dated September 18, 1991 rendered in this case
has long become final and executory. Paragraph
4 of the dispositive portion of said decision reads
as follows:
4. Ordering defendants Milagros dela Rama and
Inocentes dela Rama to execute the
corresponding deed of sale conveying the
subject property, free from all liens and
encumbrances in favor of the plaintiff upon
payment of the latter of his balance of
P8,800,000.00:
....
6. Ordering both defendants, jointly and
severally, to pay the plaintiff the following:
a.....the sum of P500,000.00 by way of
moral damages;
b.....the sum of P200,000.00 by way of
exemplary damages;
c.....the sum of P100,000.00 by way of
attorneys fees;
d.....legal interest of the amount of
P2,200,000.00 from August 2, 1989
until the deed of absolute sale is
executed in favor of the plaintiff;
The plaintiff [Alfredo Guerrero] is
therefore entitled to collect from the
defendants [Milagros and Inocentes de
la Rama] the sum of P800,000.00 in
damages and attorneys fees, and
interest at the legal rate. The earlier
computation of the courts Branch
Sheriff Edilberto Santiago is wrong.
The legal rate of interest for damages,
and even for loans where interest was
not stipulated, is 6% per annum (Art.
2209, Civil Code). The rate of 12% per
annum was established by the
Monetary Board when, under the
power vested in it by P.D. 116 to
amend Act No. 2655 (more commonly
known as the Anti Usury Law), it
amended Section 1 by increasing the
rate of legal interest for loans, renewals
and forbearance thereof, as well as for
judgments, from 6% per annum to 12%
per annum. Inasmuch as the Monetary
Board may not repeal or amend the
Civil Code, in the face of the apparent
conflict between Art. 2209 and Act No.
2655 as amended, it is this courts
persuasion that the ruling of the
Monetary Board applies only to banks,
financing companies, pawnshops and
intermediaries performing quasi-
banking functions, all of which are
under the control and supervision of
the Central Bank and of the Monetary
Board.
The interest rate on the P2,200,000.00
paid to the defendants by the plaintiff at
the inception of the transactions should
be only 6% per annum from August 2,
1989, and as of January 2, 1994 this
amounts to the sum of P583,000.00
and P11,000.00 every month thereafter
until the deed of absolute sale over the
property subject matter of this case is
executed. The amounts payable by the
defendants to the plaintiff therefore
stands at a total of P1,383,000.00.
Offsetting this amount from the balance
of P8,800,000.00, the plaintiff must still
pay to the defendants the sum of
P7,417,000.00. The plaintiff has
already deposited with the Clerk of
Court of this court the sum of
P5,808,100.00 as of January 11, 1994;
he should add to this the sum of
P1,608,900.00.[36]
The De la Ramas question this ruling of the lower court. They
say:
That Petitioners do not agree with the
explanation of the lower Court, which held
that the Petitioners are liable to pay legal
interest on the initial payment of P2,200.000
that petitioners received under the Contract
To Sell as part of the purchase price. Why
should Petitioners pay legal interest on a
sum of money that was payable to them and
which they received as initial payment of the
purchase price? This ruling is absurd and
preposterous. It is a legal monstrosity.[37]
Petitioners can no longer question a judgment which has
already become final and executory. The order of the Regional
Trial Court on the payment of legal interest was issued on
September 18, 1991 in the case for specific performance
against the De la Ramas (Civil Case No. 6974-P). Hence, they
are already barred from questioning it now in this proceeding.
Finally, we take note of the fact that the De la Ramas have
withdrawn and appropriated for themselves the amount paid by
Guerrero. This amount represented the purchase price of the
entire 4,075 square meters of land, including the expropriated
portion, which was the subject of their agreement. The
payment, therefore, to them of the value of the expropriated from Mr. Raz or any one from the petitioners office since
portion would unjustly enrich them. then. Sometime in July or August of 1995, the petitioners agents
again trespassed on the subject property, presenting to the
WHEREFORE, the decision of the Court of Appeals is respondents caretaker a letter of authority purportedly written by
AFFIRMED. respondent Jose C. Campos, Jr. When the caretaker demanded
that the letter be given to him for verification with respondent
Jose C. Campos, Jr. himself, the petitioners agents refused to
SO ORDERED. do so. Consequently, the caretaker ordered the agents to leave
the subject property.[4]
SECOND DIVISION
The complaint further alleged that on December 12, 1995,
[G.R. No. 143643. June 27, 2003] the petitioner instituted an expropriation case involving the
subject property before the RTC of Imus, Cavite, Branch 22. The
NATIONAL POWER CORPORATION, petitioner, vs. SPS. case was docketed as Civil Case No. 1174-95. The petitioner
JOSE C. CAMPOS, JR. and MA. CLARA LOPEZ- alleged in its complaint therein that the subject property was
CAMPOS, respondents. selected in a manner compatible with the greatest public good
and the least private injury and that it (petitioner) had tried to
DECISION negotiate with the respondents for the acquisition of the right-of-
way easement on the subject property but that the parties failed
CALLEJO, SR., J.: to reach an amicable settlement.[5]
The respondents maintained that, contrary to the
This is a petition for review of the Decision [1] dated June
petitioners allegations, there were other more suitable or
16, 2000 of the Court of Appeals in CA-G.R. CV No. 54265. The
appropriate sites for the petitioners all-steel transmission lines
assailed decision affirmed in toto the Decision[2] of the Regional
and that the petitioner chose the subject property in a whimsical
Trial Court (RTC) of Quezon City, Branch 98, which ordered
and capricious manner. The respondents averred that the
petitioner National Power Corporation to pay, among others,
proposed right-of-way was not the least injurious to them as the
actual, moral and nominal damages in the total amount
system design prepared by the petitioner could be further
of P1,980,000 to respondents Spouses Jose C. Campos, Jr. and
revised to avoid having to traverse the subject property. The
Ma. Clara A. Lopez-Campos.
respondents vigorously denied negotiating with the petitioner in
The petition at bar stemmed from the following connection with the latters acquisition of a right-of-way on the
antecedents: subject property.[6]

On February 2, 1996, the respondents filed with the court a Finally, the complaint alleged that unaware of the
quo an action for sum of money and damages against the petitioners intention to expropriate a portion of the subject
petitioner. In their complaint, the respondents alleged that they property, the respondents sold the same to Solar Resources,
are the owners of a parcel of land situated in Bo. San Agustin, Inc. As a consequence, the respondents stand to lose a
Dasmarias, Cavite, consisting of 66,819 square meters (subject substantial amount of money derived from the proceeds of the
property) covered by Transfer Certificate of Title (TCT) No. T- sale of the subject property should the buyer (Solar Resources,
957323. Sometime in the middle of 1970, Dr. Paulo C. Campos, Inc.) decide to annul the sale because of the contemplated
who was then the President of the Cavite Electric Cooperative expropriation of the subject property.[7]
and brother of respondent Jose C. Campos, Jr., verbally
The complaint a quo thus prayed that the petitioner be
requested the respondents to grant the petitioner a right-of-way
adjudged liable to pay the respondents, among others, actual,
over a portion of the subject property. Wooden electrical posts
nominal and moral damages:
and transmission lines were to be installed for the electrification
of Puerto Azul. The respondents acceded to this request upon
the condition that the said installation would only be temporary WHEREFORE, premises considered, it is respectfully prayed
in nature. The petitioner assured the respondents that the that the Honorable Court award the plaintiffs:
arrangement would be temporary and that the wooden electric
posts would be relocated as soon as permanent posts and a. Actual damages for the use of defendants
transmission lines shall have been installed. Contrary to the property since middle 1970s, including legal
verbal agreement of the parties, however, the petitioner interest thereon, as may be established
continued to use the subject property for its wooden electrical during the trial;
posts and transmission lines without compensating the
respondents therefor.[3]
b. P1,000,000.00 as nominal damages;
The complaint likewise alleged that some time in 1994, the
petitioners agents trespassed on the subject property and c. P1,000,000.00 as moral damages;
conducted engineering surveys thereon. The respondents
caretaker asked these agents to leave the property. Thereafter,
d. Lost business opportunity as may be established
in 1995, a certain Mr. Raz, who claimed to be the petitioners
during the trial;
agent, went to the office of respondent Jose C. Campos, Jr.,
then Associate Justice of the Supreme Court, and requested
permission from the latter to enter the subject property and e. P250,000.00 as attorneys fees;
conduct a survey in connection with the petitioners plan to erect
an all-steel transmission line tower on a 24-square meter area f. Costs of suit.
inside the subject property. Respondent Jose Campos, Jr.,
refused to grant the permission and expressed his preference to
talk to the Chief of the Calaca Sub-station or the head of the Plaintiffs pray for other, further and different reliefs as may be
petitioners Quezon City office.The respondents did not hear just and equitable under the premises.[8]
 Upon receipt of the summons and complaint, the petitioner
moved for additional time to file its responsive
pleading. However, instead of filing an answer to the complaint,
the petitioner filed a motion to dismiss on the ground that the
action had prescribed and that there was another action pending
between the same parties for the same cause (litis
pendencia). The respondents opposed said motion. On May 2,
1996, the RTC issued an order denying the petitioners motion to
dismiss.
The petitioner then moved for reconsideration of the
aforesaid order. The respondents opposed the same and moved
to declare the petitioner in default on the ground that its motion
for reconsideration did not have the required notice of hearing;
hence, it did not toll the running of the reglementary period to file
an answer.
On July 15, 1996, the RTC issued an order denying the
petitioners motion for reconsideration. Subsequently, on July
24, 1996, it issued another order granting the respondents
motion and declared the petitioner in default for its failure to file
an answer. The petitioner filed a motion to set aside the order of
default but the same was denied by the RTC.
The petitioner filed a petition for certiorari, prohibition and
preliminary injunction with the Court of Appeals, docketed as
CA-G.R. SP No. 41782, assailing the May 2, 1996, July 15, 1996
and July 24, 1996 Orders issued by the RTC as having been
issued with grave abuse of discretion and to enjoin it from
proceeding with the case. On February 13, 1996, the CA
dismissed the petition for certiorari, prohibition and preliminary
injunction filed by the petitioner in CA-G.R. SP No. 41782.
In the meantime, the respondents adduced their
evidence ex parte in the RTC. As synthesized by the trial court,
the respondents adduced evidence, thus:
From the evidence thus far submitted, it appears that the
plaintiffs spouses, both of whom professional of high standing
in society, are the absolute owners of a certain parcel of land
situated in Bo. San Agustin, Dasmarias, Cavite, consisting of
66,819 square meters, more or less, covered and embraced in
TCT No. T-95732. Sometime in the mid-1970, Dr. Paulo C.
Campos, brother of Justice Jose Campos, Jr., then President
of the Cavite Electric Cooperative, approached the latter and
confided to him the desire of the National Power Corporation to
be allowed to install temporary wooden electric posts on the
portion of his wifes property in order that the high-tension
transmission line coming from Kaliraya passing thru that part of
Cavite can be continued to the direction of Puerto Azul.
Having heard the plea of his brother and the fact that National
Power Corporation was under pressure because at the time
that Puerto Azul was being developed there was no electricity
nor was there electrical lines towards that place and acting on
the belief that the installation of wooden electric posts would be
temporary in nature, plaintiffs gave oral permission for the NPC
personnel to enter the said parcel of land. Dr. Paulo C.
Campos, assured him that it was just a temporary measure to
meet the emergency need of the Puerto Azul and that the
wooden electric posts will be relocated when a permanent
posts and transmission lines shall have been
installed. Pursuant to their understanding, the National Power
Corporation installed wooden posts across a portion of
plaintiffs property occupying a total area of about 2,000 square
meters more or less. To date, defendant NPC has been using
the plaintiffs property for its wooden electrical posts and
transmission lines; that the latter has estimated that the
aggregate rental (which they peg at the conservative rate
of P1.00 per square meter) of the 2,000 square meters for
twenty-four (24) years period, would amount to the aggregate
sum of P480,000.00.
From the time National Power Corporation installed those
temporary wooden posts, no notice was ever served upon the
plaintiffs of their intention to relocate the same or to install
permanent transmission line on the property. Also, there was
no personal contact between them. However, in late 1994,
plaintiffs overseer found a group of persons of the defendant
NPC conducting survey inside the said property, and were
asked to leave the premises upon being discovered that they
have no authority to do so from the owners
thereof. Subsequently thereafter, or sometime in 1995, a
person by the name of Mr. Paz, bearing a letter from Calaca
Regional Office, went to see Justice Jose C. Campos, Jr. in his
office, informing the latter that he was authorized by the
National Power Corporation to acquire private lands. In the
same breath, Mr. Paz requested his permission to let NPC men
enter the subject property and to conduct a survey in
connection with its plan to erect an all steel transmission line
tower on a 24 square meter area inside plaintiffs property, but
same was denied. Justice Campos, however, expressed his
preference to talk instead to the Chief of the Calaca Sub-
station or the Head of the NPC, Quezon City office. Since then,
nothing however transpired.
Sometime in July or August 1995, plaintiffs learned that
defendants agents again entered the subject property. This
time, they have presented to the caretaker a letter of authority
supposedly from Justice Jose C. Campos, Jr. And, when
prodded to see the letter for verification, defendants agents
refused to do so. So, they were ordered out of the
vicinity. Plaintiffs stressed that defendants repeated intrusions
into their property without their expressed knowledge and
consent had impugned on their constitutional right to protection
over their property.
Later, on December 12, 1995, plaintiffs received copy of
summons and complaint in Civil Case No. 1174-95 filed by the
defendant before the Regional Trial Court, Fourth Judicial
Region, Branch 22, Imus, Cavite for the expropriation of 5,320
square meters of plaintiffs above-described property to be used
as right-of-way for the all-steel transmission line tower of the
Calaca-Dasmarias 230 KV T/L Project. But what had caused
plaintiffs discomfiture is the allegation in said complaint stating
that the parcel of land sought to be expropriated has not been
applied to nor expropriated for any public use and is selected
by plaintiff in a manner compatible with the greatest good and
the least private injury and that defendant had negotiated with
(plaintiffs) for the acquisition of the right-of-way easement over
the portion of the same for the public purpose as above-stated
at a price prescribed by law, but failed to reach an agreement
with them notwithstanding the repeated negotiations between
the parties.
Plaintiffs assert that at no instance was there a negotiation
between them and the NPC or its representative. The alleged
talk initiated by Mr. Paz with Justice Campos, Jr. just ended in
the latters remonstrance and in prevailing upon the former of
his preference to discuss the matter with a more responsible
officer of the National Power Corporation, such as the Chief of
the Calaca Sub-Station or the Head of NPCs Office in Quezon
City. But plaintiffs plea just fell on the deaf ear. The next thing
they know was Civil Case No. Q-1174-95 already filed in
court. A party to a case shall not do falsehood nor shall
mislead or misrepresent the contents of its pleading. That
gross misrepresentation had been made by the National Power
Corporation in their said pleading is irrefutable.
Plaintiffs-spouses Campos declared that there are other areas
more suitable or appropriate that can be utilized as alternative
sites for the all-steel transmission line tower. Just a few meters
from the planned right-of-way is an abandoned road occupied
by squatters; it is a government property and the possession of
which the NPC need not compensate. The latter had not
exercised judiciously in the proper selection of the property to
be appropriated.Evidently, NPCs choice was whimsical and
capricious. Such arbitrary selection of plaintiffs property despite
the availability of another property in a manner compatible with
the greatest public good and the least private injury, constitutes
an impermissible encroachment of plaintiffs proprietary rights
and their right to due process and equal protection.
Concededly, NPCs intention is to expropriate a portion of
plaintiffs property. This limitation on the right of ownership is
the paramount right of the National Power Corporation granted
by law. But before a person can be deprived of his property
through the exercise of the power of eminent domain, the
requisites of law must strictly be complied with. (Endencia vs.
Lualhati, 9 Phil. 177) No person shall be deprived of his
property except by competent authority and for public use and
always upon payment of just compensation. Should this
requirement be not first complied with, the courts shall protect
and, in a proper case, restore the owner in his
possession. (Art. 433 Civil Code of the Philippines)
Records disclose that in breach of such verbal promise,
defendant NPC had not withdrawn the wooden electrical posts
and transmission lines; said wooden electrical posts and
transmission lines still occupy a portion of plaintiffs property;
that the NPC had benefited from them for a long period of time
already, sans compensation to the owners thereof.
Without first complying with the primordial requisites
appurtenant to the exercise of the power of eminent domain,
defendant NPC again boldly intruded into plaintiffs property by
conducting engineering surveys with the end in view of
expropriating 5,320 square meters thereof to be used as right-
of-way for the all-steel transmission line tower of the Calaca-
Dasmarias 230 KV T/L Project. Such acts constitute a
deprivation of ones property for public use without due
compensation. It would therefore seem that the expropriation
had indeed departed from its own purpose and turns out to be
an instrument to repudiate compliance with obligation legally
and validly contracted.[9]
On September 26, 1996, the RTC rendered a decision
finding the petitioner liable for damages to the respondents. The
dispositive portion of the RTC decision reads:
WHEREFORE, in view of the foregoing consideration, justment
[sic] is hereby rendered in favor of the plaintiffs, condemning
the defendant to pay
(a) Actual damages of P480,000.00 for the use of
plaintiffs property;
(b) One Million Pesos (P1,000,000.00) as moral
damages;
(c ) Five Hundred Thousand Pesos (P500,000.00)
as nominal damages;
(d) One Hundred Fifty Thousand Pesos
(P150,000.00) as attorneys fees; and
(e) Costs of suit in the amount of P11,239.00.
SO ORDERED.[10]
The petitioner appealed the decision to the Court of
Appeals which on June 16, 1990 rendered a decision affirming
the ruling of the RTC.
Essentially, the CA held that the respondents claim for
compensation and damages had not prescribed because
Section 3(i) of the petitioners Charter, Republic Act No. 6395, as
amended, is not applicable to the case. The CA likewise gave
scant consideration to the petitioners claim that the respondents
complaint should be dismissed on the ground of litis
pendencia. According to the CA, the complaint a quo was the
more appropriate action considering that the venue for the
expropriation case (Civil Case No. 1174-95) was initially
improperly laid. The petitioner filed the expropriation
proceedings with the RTC in Imus, Cavite, when the subject
property is located in Dasmarias, Cavite. Moreover, the parties
in the two actions are not the same since the respondents were
no longer included as defendants in the petitioners amended
complaint in the expropriation case (Civil Case No. 1174-95) but
were already replaced by Solar Resources, Inc., the buyer of the
subject property, as defendant therein.
The CA likewise found the damages awarded by the RTC
in favor of the respondents just and reasonable under the
circumstances obtaining in the case.
The petitioner now comes to this Court seeking to reverse
and set aside the assailed decision. The petitioner alleges as
follows:
I
The Court of Appeals grievously erred and labored under a
gross misapprehension of fact in finding that the Complaint
below should not be dismissed on the ground of prescription.
II
The Court of Appeals erred in affirming the award of nominal
and moral damages, attorneys fees and costs of litigation.[11]
Citing Article 620 of the Civil Code, the petitioner contends
that it had already acquired the easement of right-of-way over
the portion of the subject property by prescription, the said
easement having been allegedly continuous and apparent for a
period of about twenty-three (23) years, i.e., from about the
middle of 1970 to the early part of 1994. The petitioner further
invokes Section 3(i) of its Charter in asserting that the
respondents already waived their right to institute any action for
compensation and/or damages concerning the acquisition of the
easement of right-of-way in the subject property. Accordingly,
the petitioner concludes that the award of damages in favor of
the respondents is not warranted.
The petition is bereft of merit.
The petitioners claim that, under Article 620 of the Civil
Code, it had already acquired by prescription the easement of
right-of-way over that portion of the subject property where its
wooden electric posts and transmission lines were erected is
untenable. Article 620 of the Civil Code provides that:
Art. 620. Continuous and apparent easements are acquired
either by virtue of a title or by prescription of ten years.
 Prescription as a mode of acquisition requires the
existence of the following: (1) capacity to acquire by prescription;
(2) a thing capable of acquisition by prescription; (3) possession
of the thing under certain conditions; and (4) lapse of time
provided by law.[12] Acquisitive prescription may either be
ordinary, in which case the possession must be in good faith and
with just title,[13] or extraordinary, in which case there is neither
good faith nor just title. In either case, there has to be
possession which must be in the concept of an owner, public,
peaceful and uninterrupted.[14] As a corollary, Article 1119 of the
Civil Code provides that:
Art. 1119. Acts of possessory character executed in virtue of
license or by mere tolerance of the owner shall not be available
for the purposes of possession.
In this case, the records clearly reveal that the petitioners
possession of that portion of the subject property where it
erected the wooden posts and transmission lines was merely
upon the tolerance of the respondents. Accordingly, this
permissive use by the petitioner of that portion of the subject
property, no matter how long continued, will not create an
easement of right-of-way by prescription. The case of Cuaycong
vs. Benedicto[15] is particularly instructive. In that case, the
plaintiffs for more than twenty years made use of the road that
passed through the hacienda owned by the defendants, being
the only road that connected the plaintiffs hacienda to the public
road. The defendants closed the road in question and refused
the use of the same unless a toll was paid. The plaintiffs therein
brought an action to enjoin the defendants from interfering with
the use of the road. In support of their action, the plaintiffs
presented evidence tending to show that they have acquired the
right-of-way through the road by prescription. This Court
rejected the contention, holding as follows:
Had it been shown that the road had been maintained at the
public expense, with the acquiescence of the owners of the
estates crossed by it, this would indicate such adverse
possession by the government as in course of time would ripen
into title or warrant the presumption of a grant or of a
dedication. But in this case there is no such evidence, and the
claims of plaintiffs, whether regarded as members of the public
asserting a right to use the road as such, or as persons
claiming a private easement of way over the land of another
must be regarded as resting upon the mere fact of user.
If the owner of a tract of land, to accommodate his neighbors or
the public in general, permits them to cross his property, it is
reasonable to suppose that it is not his intention, in so doing, to
divest himself of the ownership of the land so used, or to
establish an easement upon it, and that the persons to whom
such permission, tacit or express, is granted, do not regard
their privilege of use as being based upon anything more than
the mere tolerance of the owner. Clearly, such permissive use
is in its inception based upon an essentially revocable
license. If the use continues for a long period of time, no
change being made in the relations of the parties by any
express or implied agreement, does the owner of the property
affected lose his right of revocation? Or, putting the same
question in another form, does the mere permissive use ripen
into title by prescription?
It is a fundamental principle of the law in this jurisdiction
concerning the possession of real property that such
possession is not affected by acts of a possessory character
which are merely tolerated by the possessor, which are or due
to his license (Civil Code, arts. 444 and 1942). This principle is
applicable not only with respect to the prescription of
the dominium as a whole, but to the prescription of right in
rem. In the case of Cortes vs. Palanca Yu-Tibo (2 Phil. Rep.,
24, 38), the Court said:
The provision of article 1942 of the Civil Code to the effect that
acts which are merely tolerated produce no effect with respect
to possession is applicable as much to the prescription of real
rights as to the prescription of the fee, it being a glaring and
self-evident error to affirm the contrary, as does the appellant
in his motion papers. Possession is the fundamental basis of
prescription. Without it no kind of prescription is possible, not
even the extraordinary.Consequently, if acts of mere tolerance
produce no effect with respect to possession, as that article
provides, in conformity with article 444 of the same Code, it is
evident that they can produce no effect with respect to
prescription, whether ordinary or extraordinary. This is true
whether the prescriptive acquisition be of a fee or of real rights,
for the same reason holds in one and the other case; that is,
that there has been no true possession in the legal sense of
the word. (Citations omitted)
Possession, under the Civil Code, to constitute the foundation
of a prescriptive right, must be possession under claim of title
(en concepto de dueo), or to use the common law equivalent of
the term, it must be adverse. Acts of possessory character
performed by one who holds by mere tolerance of the owner
are clearly not en concepto de dueo, and such possessory
acts, no matter how long so continued, do not start the running
of the period of prescription.[16]
Following the foregoing disquisition, the petitioners claim
that it had acquired the easement of right-of-way by prescription
must perforce fail. As intimated above, possession is the
fundamental basis of prescription, whether ordinary or
extraordinary. The petitioner never acquired the requisite
possession in this case. Its use of that portion of the subject
property where it erected the wooden poles and transmission
lines was due merely to the tacit license and tolerance of the
respondents. As such, it cannot be made the basis of the
acquisition of an easement of right-of-way by prescription.
Neither can the petitioner invoke Section 3(i) of its Charter
(Rep. Act No. 6395, as amended) to put up the defense of
prescription against the respondents. The said provision reads
in part:
Sec. 3(i). The Corporation or its representatives may also enter
upon private property in the lawful performance or prosecution
of its business or purposes, including the construction of
transmission lines thereon; Provided, that the owner of such
private property shall be paid the just compensation therefor in
accordance with the provisions hereinafter
provided; Provided, further, that any action by any person
claiming compensation and/or damages shall be filed within
five years after the right-of-way, transmission lines,
substations, plants or other facilities shall have been
established: Provided, finally, that after the said period no suit
shall be brought to question the said right-of-way, transmission
lines, substations, plants or other facilities nor the amounts of
compensation and/or damages involved;
Two requisites must be complied before the above
provision of law may be invoked:
1. The petitioner entered upon the private property in
the lawful performance or prosecution of its
businesses or purposes; and
 2.The owner of the private property shall be paid the
just compensation therefor.
As correctly asserted by the respondents, Section 3(i) of
Rep. Act No. 6395, as amended, presupposes that the petitioner
had already taken the property through a negotiated sale or the
exercise of the power of eminent domain, and not where, as in
this case, the petitioner was merely temporarily allowed to erect
wooden electrical posts and transmission lines on the subject
property. Significantly, the provision uses the term just
compensation, implying that the power of eminent domain must
first be exercised by the petitioner in accordance with Section 9,
Article III of the Constitution, which provides that no private
property shall be taken for public use without just compensation.
This Courts ruling in Lopez vs. Auditor General[17] is
likewise in point:
The petitioner brought this case to this Court on the sole issue
of prescription. He cites Alfonso vs. Pasay City in which a lot
owner was allowed to bring an action to recover compensation
for the value of his land, which the Government had taken for
road purposes, despite the lapse of thirty years (1924-
1954). On the other hand, the respondents base their defense
of prescription on Jaen vs. Agregado which held an action for
compensation for land taken in building a road barred by
prescription because it was brought after more than ten years
(i.e., thirty three years, from 1920 to 1953). They argue that the
ruling in Alfonso cannot be applied to this case because, unlike
Alfonso who made repeated demands for compensation within
ten years, thereby interrupting the running of the period of
prescription, the petitioner here filed his claim only in 1959.
It is true that in Alfonso vs. Pasay City this Court made the
statement that registered lands are not subject to prescription
and that on grounds of equity, the government should pay for
private property which it appropriates though for the benefit of
the public, regardless of the passing of time. But the rationale
in that case is that where private property is taken by the
Government for public use without first acquiring title thereto
either through expropriation or negotiated sale, the owners
action to recover the land or the value thereof does not
prescribe. This is the point that has been overlooked by both
parties.
On the other hand, where private property is acquired by the
Government and all that remains is the payment of the price,
the owners action to collect the price must be brought within
ten years otherwise it would be barred by the statue of
limitations.[18]
Thus, the five-year period provided under Section 3(i) of
Rep. Act No. 6395, as amended, within which all claims for
compensation and/or damages may be allowed against the
petitioner should be reckoned from the time that it acquired title
over the private property on which the right-of-way is sought to
be established. Prior thereto, the claims for compensation
and/or damages do not prescribe. In this case, the findings of
the CA is apropos:
Undeniably, NPC never acquired title over the property over
which its wooden electrical posts and transmission lines were
erected. It never filed expropriation proceedings against such
property. Neither did it negotiate for the sale of the same. It
was merely allowed to temporarily enter into the premises. As
NPCs entry was gained through permission, it had no intention
to acquire ownership either by voluntary purchase or by the
exercise of eminent domain.[19]
The petitioner instituted the expropriation proceedings only
on December 12, 1995. Indisputably, the petitioner never
acquired title to that portion of the subject property where it
erected the wooden electrical posts and transmission lines. Until
such time, the five-year prescriptive period within which the
respondents right to file an action to claim for compensation
and/or damages for the petitioners use of their property does not
even commence to run. The CA thus correctly ruled that Section
3(i) of Rep. Act No. 6395, as amended, finds no application in
this case and that the respondents action against the petitioner
has not prescribed.
With respect to the damages awarded in favor of the
respondents, the petitioner avers, thus:
The Court of Appeals erred in
affirming the award of nominal
and moral damages, attorneys
fees and costs of litigation.
It follows from Section 31(c) of R.A. 6395 that the award moral
and nominal damages, as well as attorneys fees and costs are
baseless. The right to claim them has likewise prescribed.[20]
With our ruling that the claims of the respondents had not
prescribed, the petitioners contention that the respondents are
not entitled to moral and nominal damages and attorneys fees
must fail. In affixing the award for moral and nominal damages
and attorneys fees, the CA ratiocinated:
With respect to the fourth assignment of error, this Court is not
persuaded to reverse much less modify the court a quos
findings.
An award of moral damages would require certain conditions to
be met, to wit: (1) first, there must be an injury, whether
physical, mental or psychological, clearly sustained by the
claimant; (2) second, there must be a culpable act or omission
factually established; (3) third, the wrongful act or omission of
the defendant is the proximate cause of the injury sustained by
the claimant; and (4) fourth, the award of damages is
predicated on any of the cases stated in Article 2219 of the
Civil Code.
NPC made it appear that it negotiated with the appellees when
no actual negotiations took place. This allegation seriously
affected the on-going sale of the property to Solar Resources,
Inc. as appellees seemed to have sold the property knowing
fully well that a portion thereof was being expropriated. Such
an act falls well within Article 21 of the Civil Code. NPCs
subterfuge certainly besmirched the reputation and
professional standing of Justice Jose C. Campos, Jr. and
Professor Maria Clara A. Lopez-Campos, and caused them
physical suffering, mental anguish, moral shock and wounded
feelings.
The records show that Justice Campos career included, among
other[s], being a Professor of Law at the University of the
Philippines; Acting Chairman of the Board of Transportation;
Presiding Judge of the Court of First Instance of Pasay City,
and Associate Justice of the Court of Appeals. Such career
reached its apex when he was appointed Associate Justice of
the Supreme Court in 1992. Justice Campos was a member of
the Judicial and Bar Council when NPC filed its Civil Case No.
1174-95. Professor Maria Clara A. Lopez-Campos is a noted
authority in Corporate and Banking Laws and is a Professor
Emerita of the University of the Philippines from 1981 to the
present. She had taught more than three decades at the
College of Law. Against such backdrop, it does not take too
much imagination to conclude that the oppressive and wanton
manner in which NPC sought to exercise its statutory right of
eminent domain warranted the grant of moral damages.
On the award of nominal damages, such are adjudicated in
order that a right of the plaintiff, which has been violated or
invaded by the defendant, may be vindicated or recognized,
and not for the purpose of indemnifying the plaintiff for any loss
suffered by him. As previously discussed, it does not brood
well for a government entity such as NPC to disregard the
tenets of private property enshrined in the Constitution. NPC
not only intentionally trespassed on appellees property and
conducted engineering surveys thereon but also sought to fool
the appellees caretaker by claiming that such entry was
authorized. Moreover, NPC even justifies such trespass as
falling under its right to expropriate the property. Under the
circumstances, the award of nominal damages is sustained.
That NPCs highhanded exercise of its right of eminent domain
constrained the appellees to engage the services of counsel is
obvious. As testified upon, the appellees engaged their counsel
for an agreed fee of P250,000.00. The trial court substantially
reduced this to P150,000.00. Inasmuch as such services
included not only the present action but also those for Civil
Case No. 1174-95 erroneously filed by NPC with the Regional
Trial Court of Imus, Cavite, and the Petition for Certiorari in CA-
GR No. 41782, this Court finds such attorneys fees to be
reasonable and equitable.[21]
defendant, may be vindicated or recognized, and not for the
purpose of indemnifying the plaintiff for any loss suffered by
him.[23] Similarly, the court may award nominal damages in
every case where any property right has been invaded. [24] The
petitioner, in blatant disregard of the respondents proprietary
right, trespassed the subject property and conducted
engineering surveys thereon. It even attempted to deceive the
respondents caretaker by claiming that its agents were
authorized by the respondents to enter the property when in fact,
the respondents never gave such authority. Under the
circumstances, the award of nominal damages is likewise
warranted.
Finally, the award of attorneys fees as part of damages is
deemed just and equitable considering that by the petitioners
unjustified acts, the respondents were obviously compelled to
litigate and incur expenses to protect their interests over the
subject property.[25]
WHEREFORE, the petition is hereby DENIED for lack of
merit. The assailed Decision dated June 16, 2000 of the Court
of Appeals in CA-G.R. CV No. 54265 is AFFIRMED in toto.
SO ORDERED.

We agree with the CA.

The award of moral damages in favor of the respondents
is proper given the circumstances obtaining in this case. As
found by the CA:

NPC made it appear that it negotiated with the appellees when

no actual negotiation took place. This allegation seriously
affected the on-going sale of the property to Solar Resources,
Inc. as appellees seemed to have sold the property knowing
fully well that a portion thereof was being expropriated. Such
an act falls well within Article 21 of the Civil Code. NPCs
subterfuge certainly besmirched the reputation and
professionally standing of Justice Jose C. Campos, Jr. and
Professor Maria Clara A. Lopez-Campos, and caused them
physical suffering, mental anguish, moral shock and wounded
feelings.

The records show that Justice Campos career included, among

other[s], being a Professor of Law at the University of the
Philippines; Acting Chairman of the Board of Transportation;
Presiding Judge of the Court of First Instance of Pasay City,
and Associate Justice of the Court of Appeals. Such career
reached its apex when he was appointed Associate Justice of
the Supreme Court in 1992. Justice Campos was a member of
the Judicial and Bar Council when NPC filed its Civil Case No.
1174-95. Professor Maria Clara A. Lopez-Campos is a noted
authority in Corporate and Banking Laws and is a Professor
Emerita of the University of the Philippines from 1981 to the
present. She had taught more than three decades at the
College of Law. Against such backdrop, it does not take too
much imagination to conclude that the oppressive and wanton
manner in which NPC sought to exercise its statutory right of
eminent domain warranted the grant of moral damages. [22]

Further, nominal damages are adjudicated in order that a

right of the plaintiff, which has been violated or invaded by the