14 Heirs of Alberto Suguitan v. City of Mandaluyong, G.R.

135087, March 14, 2000.

Doctrine: The power of eminent domain is essentially
legislative in nature. However, it may be validly delegated to
LGUs, other public entities and public utilities. The scope of
this delegated legislative power is necessarily narrower than
that of the delegating authority and may only be exercised in
strict compliance with the terms of the delegating law.
Courts have the duty of determining whether the power of
eminent domain is being exercised in accordance with the
delegating law. Courts have adopted a more censorious attitude
in resolving questions involving the proper exercise of this
delegated power by local bodies, as compared to instances
when it is directly exercised by the national legislature.
REQUISITES OF VALID EXERCISE OF EMINENT
DOMAIN POWER BY LGUs: Ordinance, purpose must be for
public welfare etc., just compensation, a valid but unaccepted
offer to buy.
Ordinance and resolution, distinguished: An ordinance is
a law, but a resolution is merely a declaration of the sentiment
or opinion of a lawmaking body on a specific matter. An
ordinance possesses a general and permanent character, but a
resolution is temporary in nature. Additionally, the two are
enacted differently a third reading is necessary for an
ordinance, but not for a resolution, unless decided otherwise
by a majority of all the Sanggunian members.
Facts:
 October 13, 1994, the Sangguniang Panlungsod of
Mandaluyong City (MANDA) issued Resolution No. 396,
S-1994 authorizing then MAYOR Benjamin ABALOS to
 institute expropriation proceedings over the property of
Alberto SUGUITAN.
o LOCATION: Boni Avenue cor. Sto. Rosario Sts.,
Mandaluyong City, beside the Mandaluyong Medical
Center.
o AREA & PARTICULARS: 414 m2, covered by TCT No.
56264 of the Registry of Deeds of Metro Manila
District II. A 2-storey building stood on the lot.
o PURPOSE OF EXPROPRIATION: Expansion of the
Mandaluyong Medical Center
 Mayor Abalos wrote Suguitan a letter dated January 20,
1995 offering to buy his property, but Suguitan refused to
sell.
 March 13, 1995 - Manda filed a complaint for
expropriation with the Pasig RTC.
 Suguitan moved to dismiss the complaint on the following
grounds
o (1) the power of eminent domain is not being
exercised in accordance with law
o (2) there is no public necessity to warrant
expropriation of subject property
o (3) Manda seeks to expropriate the said property
without payment of just compensation
o (4) Manda has no budget and appropriation for the
payment of the property being expropriated
o (5) expropriation of Suguitan' s property is but a ploy
of Mayor Abalos to acquire the same for his personal
use. Respondent filed its comment and opposition to
the motion.
  October 24, 1995 - RTC denied Suguitan's motion to
dismiss.
 November 14, 1995 - Upon motion, RTC issued an order
allowing Manda to take immediate possession of Suguitan's
property upon the deposit of P621,000 representing 15% of
the fair market value of the lot based upon its current tax
declaration.
 December 15, 1995 - Manda assumed possession of the
subject property by virtue of a writ of possession issued by
the RTC on December 14, 1995.
 July 28, 1998 - RTC granted the assailed order of
expropriation. Hence, this petition.
Issue: WON the expropriation was valid.
Suguitan’s Contention: Manda may only exercise its delegated
power of eminent domain by means of an ordinance as required
by LGC §19 and not by means of a mere resolution. The
resolution mentioned in Art. 36 of the IRR is for purposes of
granting administrative authority to the local chief executive
to file the expropriation case in court and to represent the local
government unit in such case, but does not dispense with the
necessity of an ordinance for the exercise of the power of
eminent domain under §19 of the Code.
Manda’s Contention: Exercise of eminent domain power was
valid and legal. Pursuant to Art. 36, Rule VI of the LGC’s IRR,
a resolution is a sufficient antecedent for the filing of
expropriation proceedings. A "resolution" empowering the City
Mayor to initiate such expropriation proceedings [is sufficient]
and thereafter when the court has already determine[d] with
certainty the amount of just compensation to be paid for the
property expropriated, then follows an Ordinance of the
Sanggunian Panlungsod appropriating funds for the payment of
the expropriated property. Admittedly, title to the property
expropriated shall pass from the owner to the expropriator only
upon full payment of the just compensation.
Ruling: No, the expropriation was not valid.
LGU power of eminent domain comes from legislative
delegation. It is therefore subject to the same limitations as if
the power was being exercised by the legislature itself. The
exercise by the LGUs has been guarded even more closely by
the courts. The nature of the LGU’s eminent domain power
must be analyzed.
REQUISITES OF VALID EXERCISE OF EMINENT DOMAIN
POWER BY LGUs (Mun. of Parañaque v. VM Realty)
1. An ordinance is enacted by the local legislative council
authorizing the local chief executive, in behalf of the local
government unit, to exercise the power of eminent domain or
pursue expropriation proceedings over a particular private
property.
2. The power of eminent domain is exercised for public use,
purpose or welfare, or for the benefit of the poor and the
landless.
3. There is payment of just compensation, as required under
§ 9, Art. III of the Constitution, and other pertinent laws.
4. A valid and definite offer has been previously made to the
owner of the property sought to be expropriated, but said offer
was not accepted.
In this case, Manda expropriated Suguitan’s property on
the basis of a mere resolution, in contravention of the first
requisite. The law in this case is clear and free from ambiguity.
§19 of the Code requires an ordinance, not a resolution.
15 ANUNCIACION VDA. DE OUANO vs. REPUBLIC
GR NO. 168770
Facts:
The Mactan Cebu International Airport Authority (MCIAA)
and/or its predecessor agency, the National Airport
Corporation (NAC) had not actually used the lots subject of the
final decree of expropriation in Civil Case No. R-1881 for the
purpose they were originally taken by the government, i.e., for
the expansion and development of Lahug Airport. In fact, the
Lahug Airport had been closed and abandoned. Also, in this
case, it was preponderantly established by evidence that the
NAC, through its team of negotiators, had given assurance to
the affected landowners that they would be entitled to
repurchase their respective lots in the event they are no longer
used for the airport purposes.
Issue:
WHETHER ABANDONMENT OF THE PUBLIC USE FOR
WHICH THE SUBJECT PROPERTIES WERE
EXPROPRIATED ENTITLES PETITIONERS OUANOS, ET
AL. AND RESPONDENTS INOCIAN, ET AL. TO
REACQUIRE THEM.
Ruling:
The SC held that the government acquires only such rights in
expropriated parcels of land as maybe allowed by the character
of its title over the properties. This means that in the event that
particular public use for which a parcel of land is expropriated
is abandoned, the owner shall not be entitled to recover or
repurchase it as a matter of right, unless such recovery or
repurchase is expressed in or irresistibly deductible from the
condemnation judgement.
The SC held that the decision in Civil Case no. R-1881 enjoined
MCIAA, as a condition of approving expropriation, to allow
recovery or repurchase upon abandonment of the Lahug
airport project. In effect, the government merely held the
properties condemned in trust until the proposed public use or
purpose for which the lots were condemned was actually
consummated by the government. Since the government failed
to perform the obligation that is the basis of the transfer of
property, then the lot owners can demand the reconveyance of
their old properties after the payment of the condemnation
price. A condemnor should commit to use the property
pursuant to the purpose stated in the petition for expropriation,
failing which it would file another petition for the new
purpose. If not, then it behooves the condemnor to return the
said property to its private owner, if the latter so desires. The
government cannot plausibly keep the property it expropriated
in any manner it pleases, and in the process dishonor the
judgement of expropriation.
16 LAGCAO vs. LABRA G.R. No. 155746, October 13, 2004
Doctrine: Local government units have no inherent power of
eminent domain and can exercise it only when expressly
authorized by the legislature. While the Court recognizes that
housing is one of the most serious social problems of the
country, local government units do not possess unbridled
authority to exercise their power of eminent domain in seeking
solutions to this problem.
Facts:
 The Province of Cebu donated 210 lots to the City of Cebu.
But then, in late 1965, the 210 lots, including Lot 1029,
reverted to the Province of Cebu.
 In 1965 petitioners purchased a lot (1029) on installment
basis from the province of Cebu.
 Consequently, the province tried to annul the sale of Lot
1029 by the City of Cebu to the petitioners. This prompted
the latter to sue the province for specific performance and
damages in the then Court of First Instance.
 The court a quo ruled in favor of petitioners and ordered
the Province of Cebu to execute the final deed of sale in
favor of petitioners.
 The Court of Appeals affirmed the decision of the trial
court.
 After acquiring title, petitioners tried to take possession of
the lot only to discover that it was already occupied by
squatters.
 Thus petitioners instituted ejectment proceedings against
the squatters in MTCC ordering the squatters to vacate the
lot.
 On appeal, the RTC affirmed the MTCC’s decision and
issued a writ of execution and order of demolition.
  However, when the demolition order was about to be
implemented, Cebu City Mayor Alvin Garcia wrote two
letters to the MTCC, requesting the deferment of the
demolition on the ground that the City was still looking for
a relocation site for the squatters. Acting on the mayor’s
request, the MTCC issued two orders suspending the
demolition.
 Unfortunately for petitioners, during the suspension
period, the Sangguniang Panlungsod (SP) of Cebu City
passed a resolution which identified Lot 1029 as a
socialized housing site pursuant to RA 7279.
 Petitioners filed with the RTC an action for declaration of
nullity of Ordinance No. 1843 for being unconstitutional.
Issue:
WON the Ordinance No. 1843 is unconstitutional as it
sanctions the expropriation of their property for the purpose of
selling it to the squatters, an endeavor contrary to the concept
of “public use” contemplated in the Constitution.
Ruling:
Ordinance No. 1843 is unconstitutional.
Local government units have no inherent power of
eminent domain and can exercise it only when expressly
authorized by the legislature. By virtue of RA 7160, Congress
conferred upon local government units the power to
expropriate.
Ordinance No. 1843 which authorized the expropriation of
petitioners’ lot was enacted by the SP of Cebu City to provide
socialized housing for the homeless and low-income residents
of the City.
 However, while the Court recognizes that housing is one
of the most serious social problems of the country, local
government units do not possess unbridled authority to
exercise their power of eminent domain in seeking solutions to
this problem.
There are two legal provisions which limit the exercise of
this power: Sec (1) and (9), Art. 3 of 1987 Constitution.
The ordinance is violative of the petitioners’ right to due
process since petitioners had already obtained a favorable
judgment of eviction against the illegal occupants of their
property. The judgment in this ejectment case had, in fact,
already attained finality, with a writ of execution and an order
of demolition. But Mayor Garcia requested the trial court to
suspend the demolition on the pretext that the City was still
searching for a relocation site for the squatters. However,
instead of looking for a relocation site during the suspension
period, the city council suddenly enacted Ordinance No. 1843
for the expropriation of petitioners' lot. It was trickery and bad
faith, pure and simple.
Ordinance 1843 also contravenes the constitution because
condemnation of private lands in an irrational or piecemeal
fashion or the random expropriation of small lots to
accommodate no more than a few tenants or squatters is
certainly not the condemnation for public use contemplated by
the Constitution. This is depriving a citizen of his property for
the convenience of a few without perceptible benefit to the
public.
Thus, the exercise by local government units of the power
of eminent domain is not absolute. In fact, Section 19 of RA
7160 itself explicitly states that such exercise must comply with
the provisions of the Constitution and pertinent laws.
17 Republic of the Philippines vs. Salem Investment Corporation
[GR 137569, 23 June 2000]
FACTS:
 On 17 February 1983, Batas Pambansa 340 was passed
authorizing the expropriation of parcels of lands in the
names of Maria del Carmen Roxas de Elizalde and
Concepcion Cabarrus Vda. de Santos, including a portion
of the land, consisting of 1,380 square meters, belonging to
Milagros and Inocentes De la Rama covered by TCT 16913.
 On 14 December 1988, or 5 years thereafter, Milagros and
Inocentes De la Rama entered into a contract with Alfredo
Guerrero whereby the De la Ramas agreed to sell to
Guerrero the entire property covered by TCT 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 3 November 1989, Guerrero filed in the Regional Trial
Court in Pasay City a complaint for specific performance
(Civil Case 6974-P) to compel the De la Ramas to proceed
with the sale.
 On 10 July 1990, while the case was pending, the Republic
of the Philippines filed the case (Civil Case 7327) for
expropriation pursuant to BP 340. 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% of the
approximate market value of the subject lands, a writ of
 possession was issued on 29 August 1990 in favor of the
government.
 On 2 May 1991, Guerrero filed a motion for intervention
alleging that the De la Ramas had agreed to sell to him the
entire Lot 834 on 14 December 1988 and that a case for
specific performance had been filed by him against the De
la Ramas.
 Trial court approved payment to the De la Ramas and
rendered a decision in the case for specific performance
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 CA but their petition was
dismissed. They tried to appeal to the Supreme Court but
again they failed in their bid as their petition for review
was denied.
 Meanwhile, Guerrero filed an Omnibus Motion 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 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.
 The Court of Appeals rendered a decision granting the writ
of mandamus. Nonetheless, the De la Ramas filed a Motion
for Authority to Withdraw the deposit made by the
Republic in 1991, which was denied on 7 May 1993.
 On 16 June 1993, the De la Ramas filed a Motion for
Execution again praying that the court's order dated 9
September 1991, approving the recommendation of the
appraisal committee, be enforced.
 On 22 June 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
9 September 1991 Order inequitable, impossible, or unjust.
Thus, with the decision in the action for specific
performance in Civil Case 6974-P having become final, an
order of execution was issued by the Pasay City RTC, and
as a result of which, a deed of absolute sale was executed
by the Branch Clerk of Court on 8 March 1994 in favor of
Guerrero upon payment by him of the sum of
P8,808,000.00 on 11 January 1994 and the further sum of
P1,608,900.00 on 1 February 1994 as full payment for the
balance of the purchase price under the contract to sell.
The entire amount was withdrawn and duly received by
the De la Ramas.
 Thereafter, the De la Ramas sought the nullification of the
22 June 1993 order of the trial by filing a petition for
certiorari and mandamus in the Court of Appeals. This
petition was, however, dismissed in a decision dated 29
July 1994 of the appellate court.
 Finally, on 5 April 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. This decision was subsequently affirmed by the Court
of Appeals. The De la Ramas filed a petition for review.
ISSUE:
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?
Dela Rama’s contention:
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.
Alfredo Guerrero’s contention:
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.
HELD:
Guerrero is entitled to receive payment of just compensation
for the taking of the land.
Expropriation may be initiated by court action or by
legislation. In both instances, just compensation is determined
by the courts. The expropriation of lands consists of two stages
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. 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. 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, and the just
compensation for the subject property is provided in our
constitutional system.
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.
18 Republic v. Vda. de Castellvi 58 SCRA 336
GR L-20620, 15 August 1974
Doctrine: Eminent domain; “Taking” of property; Elements of
— A number of circumstances must be present in the “taking”
of property for purposes of eminent domain: (1) the
expropriator must enter a private property; (2) the entrance
into private property must be for more than a momentary
period; (3) the entry into the property should be under warrant
or color of legal authority; (4) the property must be devoted to
a public use or otherwise informally appropriated or injuriously
affected; and (5) the utilization of the property for public use
must be in such a way as to oust the owner and deprive him of
all beneficial enjoyment of the property.
Just compensation: Value of property expropriated
determined as of the date of the filing of the complaint.
Facts:
 1 July 1947 – Petitioner Republic of the Philippines
(Philippine Air Force) occupied the land situated in
Floridablanca, Pampanga of Carmen M. vda. de Castellvi,
the judicial administratrix of the estate of the late Alfonso
de Castellvi since by virtue of a contract of lease.
 30 June 1956 – Before the expiration of the contract of
lease, the Republic sought to renew the same but Castellvi
refused, intending to subdivide the lots for sale to the
general public; filed civil case for ejectment of AFP.
 26 June 1959 – In view of the difficulty for the army to
vacate the premises due to permanent installations and
other facilities, AFP filed expropriation proceedings and
was placed in possession of the lands on 10 August 1959.
 In its complaint, the Republic alleged, among other things,
that the fair market value of the above-mentioned lands,
 according to the Committee on Appraisal for the Province
of Pampanga, was not more than P2,000 per hectare
(P.20/sqm), or a total market value of P259,669.10 when
AFP first had the “taking” of the said property by virtue of
the special lease agreement. Respondents allege that their
lands are residential with a fair market value of not less
than P15/sqm.
 The trial court rendered its decision, finding that the
unanimous recommendation of the commissioners of
P10.00 per square meter for the 3 lots subject of the action
is fair and just compensation
Issue:
1. WON the “taking” of the properties under expropriation
commenced with the filing of the action.
2. WON the P10/sqm is fair and just compensation.
Ruling:
1. The "taking" of Catellvi's property for purposes of eminent
domain cannot be considered to have taken place in 1947
when the Republic commenced to occupy the property as
lessee.
Elements/Requisites of “taking” of property for purposes of
eminent domain:
1. Expropriator must enter a private property.
2. Entrance into private property must be for more than a
momentary period.
3. Entry into the property should be under warrant or color of
legal authority.
4. Property must be devoted to a public use or otherwise
informally appropriated or injuriously affected.
5. Utilization of the property for public use must be in such a
way as to oust the owner and deprive him of all beneficial
enjoyment of the property.
In this case, Elements 2 & 5 were not present when
Republic entered the properties in 1947.
2. Under Section 4 of Rule 67 of the Rules of Court, the “just
compensation” is to be determined as of the date of the filing
of the complaint.
The Court has ruled that when the taking of the property
sought to be expropriated coincides with the commencement
of the expropriation proceedings, or takes place subsequent to
the filing of the complaint for eminent domain, the just
compensation should be determined as of the date of the filing
of the complaint. Herein, it is undisputed that the Republic was
placed in possession of the Castellvi property, by authority of
the court, on 10 August 1959.
The “taking” of the Castellvi property for the purposes of
determining the just compensation to be paid should not be
paid based on 1947 fair market value amount.
Basic guidelines in determining the value of the land to be
expropriated:
 Same considerations are to be regarded as in a sale of property
between private parties.
 Estimated by reference to the use for which the property is
suitable, having regard to the existing business or wants of
the community, or such as may be reasonably expected in the
immediate future.
In expropriation proceedings, therefore, the owner of the
land has the right to its value for the use for which it would
bring the most in the market.
 The Supreme Court has arrived at the conclusion that the
price of P10/sqm is quite high. The price of P5/sqm would be a
fair valuation and would constitute a just compensation. They
considered the resolution of the Provincial Committee on
Appraisal of the province of Pampanga informing, that in the
year 1959 the lands could be sold for from P2.50- P4/sqm, and
the Court arrived at a happy medium between the price as
recommended by the commissioners and approved by the
court, and the price advocated by the Republic.
Note: Existence of necessity.
— To authorize the condemnation of any particular land by a
grantee of the power of eminent domain, a necessity must exist
for the taking thereof for the proposed uses and purposes. The
very `foundation of the right to exercise eminent domain is a
genuine necessity, and that necessity must be of a public
character. The ascertainment of the necessity must precede or
accompany, and not follow, the taking of the land (City of
Manila vs. Arellano Law Colleges, L-2929, February 28, 1950).
Necessity for expropriation of property for a particular purpose
does not mean absolute, but only reasonable or practical,
necessity, such as would combine the greatest benefit to the
public with the least inconvenience and expense to the parties
in interest, consistent with such benefit(Ilocos Norte vs.
Compania General de Tabacos, L-7361, April 20, 1956)
19 U.S. vs Causby
Facts:
Thomas Lee Causby owned a chicken farm outside of
Greensboro, North Carolina. The farm was located near an
airport used regularly by the United States military. According
to Causby, noise from the airport regularly frightened the
animals on his farm, resulting in the deaths of several chickens.
The problem became so severe that Causby was forced to
abandon his business. Under an ancient doctrine of the
common law, land ownership extended to the space above and
below the earth. Using this doctrine as a basis, Causby sued the
United States, arguing that he owned the airspace above his
farm. By flying planes in this airspace, he argued, the
government had confiscated his property without
compensation, thus violating the Takings Clause of the Fifth
Amendment. The United States Court of Claims accepted
Causby's argument, and ordered the government to pay
compensation.
Issue:
Did the flying of planes by the United States military over
Causby's farm constitute a violation of the Takings Clause of
the Fifth Amendment?
Ruling:
Yes, to an extent. In a 5-2 opinion authored by Justice William
O. Douglas, the Court concluded that the ancient common law
doctrine "has no place in the modern world." Justice Douglas
noted that, were the Court to accept the doctrine as valid,
"every transcontinental flight would subject the operator to
countless trespass suits. Common sense revolts at the idea."
However, while the Court rejected the unlimited reach above
and below the earth described in the common law doctrine, it
also ruled that, "if the landowner is to have full enjoyment of
the land, he must have exclusive control of the immediate
reaches of the enveloping atmosphere." Without defining a
specific limit, the Court stated that flights over the land could
be considered a violation of the Takings Clause if they led to "a
direct and immediate interference with the enjoyment and use
of the land." Given the damage caused by the particularly low,
frequent flights over his farm, the Court determined that the
government had violated Causby's rights, and he was entitled
to compensation.
(Chief Justice Harlan Fiske Stone died on April 22; Justice
Robert H. Jackson took no part in the consideration or decision
in the case, leaving the court with 7 members.)
20. Penn Central Transportation Co. v. New York City, 438 U.S.
104 (1978)
Doctrine: A city may, as part of a comprehensive program to
preserve historical landmarks, place restrictions on the
development of individual historical landmarks without
effecting a “taking” requiring the payment of “just
compensation” within the meaning of the Fifth Amendment to
the United States Constitution. The Court upheld the New
York law based on a finding that no taking had occurred by the
application of the law to the Appellant’s property. Note that in
this case the Appellant’s were not deprived of all economic use
of their land, only the right to build upwards on top of an
historical site.
Facts:
 Acting pursuant to The New York City Landmarks
Preservation Law, the Landmark Preservation Committee
(“Committee”) designated certain structures as landmark
sites.
 Once it had applied a landmark designation to a property,
the owner could appeal the decision through
administrative and judicial proceedings. The owner also
retained the right to transfer development rights to other
properties under its control.
 The Grand Central Terminal, owned by Penn Central
Transportation Co. (“Appellants”), was designated as such
a site. Designation as a landmark cite meant that a structure
was burdened with certain strictures concerning a
property owner’s use of the site.
 Thereafter, the Appellant entered into a renewable 50-
year lease with UGP Properties, Ltd., a United Kingdom
 company, under which the UGP agreed to construct a
multistory office building on top of the terminal.
 The plans for the new office building were submitted to
the Commission for approval, which was denied.
 The plans were in conformity with existing zoning
regulation, but the Commission of Landmarks Preservation
nonetheless denied the applications for certificates of “no
external effect” and for “appropriateness.”
 The Appellants did not pursue any administrative remedies
because none were available. The Appellants did not
decide to submit other plans to the Commission, either.
 Instead, the Appellants filed suit in state court seeking a
declaratory judgment, injunctive relief barring the City
from using the Landmarks Law to impede the construction
of any structure that might otherwise be lawfully
constructed.
 Thereupon, Appellants sued, claiming that the regulation
is depriving it of the gainful use of its “air rights” above the
Terminal; and arguing that the Commission's action under
the state law had constituted an unconstitutional taking of
property under the Fifth Amendment.
 The New York Court of Appeals affirmed, and summarily
rejected any claim that the Landmarks Commission had
taken any property without just compensation because the
law had not transferred control of the property to the city,
but only limited the Appellants’ use. The Appellants
appealed.
Issue:
WON the restrictions imposed by New York City’s law upon
Appellants’ exploitation of the Terminal site effect a taking of
Appellants’ property for public use.
Ruling: NO.
Several factors must be weighed to determine what is
essentially an ad hoc factually based determination: (1) The
economic impact of the regulation on the claimant and the
extent to which the regulation has interfered with distinct
investment backed expectations. (2) The character of the
government action.
A taking is more readily found when the government has
physically invaded the property rather than when interference
arises from some public program adjusting the benefits and
burdens of economic life to promote the common good.
In deciding whether a particular government action has
effected a taking, the Court focuses both on the character of the
action and the nature and extent of the interference with rights
in the parcel as a whole- here, the city tax block designated as
the “landmark site.”
Moreover, Appellants’ property was not “singled-out” to
endure financial hardship. New York has a comprehensive
scheme to preserve landmark structures under which 400
structures have been designated landmarks.
To consider whether a “taking” has occurred the Supreme
Court of the United States takes into account several factors,
namely (1) the nature of the interference with a property
interest; (2) the extent of the interference with the same; (3)
the number of units affected by the interference; (4) the ability
of the property owner to continue to put the subjected property
to its intended use; and (5) the legitimacy of the State’s interest
in restricting the property’s use.
The Appellants contended that a taking had resulted by the
diminished value of the terminal as the result of the Landmarks
Law. The Court pointed out that other precedent cases held
that diminished value as the result of rezoning did not amount
to a taking.
The Court concluded that the interference with
Appellants’ property was not such that the interference
amounted to a taking requiring just compensation. The Court
also held that the impact of the regulation on Appellants’ parcel
was insufficient to require the government to institute eminent
domain proceedings.
Appellants may continue to use the property precisely as it
has in the past. So, the law does not interfere with Appellants’
primary expectation concerning the use of the Terminal. In
addition, the restrictions imposed did not prevent Penn Central
from all construction on top of the terminal.
The prevention of the construction of the 50-plus story
buildings above the Terminal was a reasonable restriction
substantially related to the promotion of the general welfare.
Just compensation need not be paid.
Dissent. Justice Rehnquist: A multimillion dollar loss has been
imposed on Appellants; the loss is uniquely felt and is not offset
by any benefits flowing from the preservation of the other 400
landmarks. Moreover, Appellees have imposed a substantial
cost on les than one one-tenth of a percent of the buildings of
New York City. It is exactly this type of imposition the “taking”
protections are directed. Observing that fewer than 0.1 percent
of the buildings in New York City were affected by the law,
Rehnquist argued that the takings principle should prohibit
laws that impose substantial burdens on a very small group in
exchange for a small benefit to a very large group.
21 Ruckelhaus v. Monsanto Co. 467 U.S. 986 (1984)
Facts:
The Federal Insecticide, Fungicide, and Rodenticide Act
(FIFRA) was first adopted in 1947 to regulate the use of
pesticides. In 1972, Congress passed amendments to FIFRA.
Among other things, it added to FIFRA a new section that
governs the public disclosure of data submitted in support of an
application of registration. The 1972 Amendments allowed the
EPA to consider data submitted by one applicant for
registration in support of another application pertaining to a
similar chemical, provided that the subsequent applicant
offered to compensate the original applicant. If the parties
cannot agree on an amount of compensation, compensation
may be determined through a binding arbitration. However, if
the original party designated the information a trade secret, it
could not be used by another applicant. In 1978, Congress
passed new amendments that did away with the protections for
trade secrets. Monsanto, a developer of pesticides, brought suit
in the district court, seeking injunctive and declaratory relief
from the data-disclosure provisions of FIFRA. Monsanto
argued that the provisions were a taking of property without
just compensation under the Fifth Amendment. The district
court concluded that it was a taking and that the arbitration
scheme did not adequately provide compensation for the
taking. The district court declared the relevant portions of
FIFRA unconstitutional and enjoined the EPA from enforcing
them.
Issues:
Applying the Just-Compensation Clause generally involves
three issues:
(1) whether the interest asserted is "property."
(2) whether there has been "taking" by the government, and
(3) whether the taking was for public use. (If the taking is for
private use, it is unlawful, for the government cannot take from
one private party to enrich another.)
Ruling:
22 OSG v. Ayala September 18, 2009 600 SCRA 617
Doctrine: The Supreme Court has declared that mall owners are
not obliged to provide free parking spaces in their malls to their
patrons and the general public. The total prohibition against
the collection by mall owners of parking fees from persons who
use the mall parking facilities has no basis in the National
Building Code or its IRR. The State also cannot impose the same
prohibition by generally invoking police power, since said
prohibition amounts to a taking of respondents’ property
without payment of just compensation.
Facts:
 Respondents are operators of shopping malls in various
locations in Metro Manila that have parking facilities
(inside the main buildings, in separate buildings and/or in
adjacent lots solely provided for parking use). The
respondents are also the one which maintains the parking
spaces and in turn, they collect parking fees subject to their
imposed parking rates.
 The Senate Committee on Trade and Commerce and on
Justice and Human Rights conducted a joint investigation
to inquire on the legality of the parking fees and to find out
the basis and reasonableness of the parking rates. More
importantly, to determine the legality of the policy of the
shopping malls denying liability in cases of theft, robbery
or carnapping by invoking the waiver clause at the back of
the parking tickets.
 After the public hearings, the Senate Committees jointly
concluded that the collection parking fee is contrary to the
National Building Code and that the reasonable
interpretation of the code is that the parking spaces are for
free; thus, the Committee recommended that the Office of
 the Solicitor General should institute the necessary action
to enjoin the collection of parking fees as well as to enforce
the penal sanctions of the National Building Code.
 The senate committee recommended the following: first,
that the OSG should institute necessary action to enjoin
the collection of parking fees; second, that the DTI should
enforce the consumer act of the Philippines; and third, that
the congress must amend the provisions of the national
building code putting specifics thereof that parking fee
collections should not be allowed.
 Two civil cases arise and by being of the same subject
matter, the RTC Makati issued an order to consolidate the
cases. The RTC ruled that the respondents are not
obligated to provide parking spaces that are free of charge,
compelling them to do so would be an unlawful taking of
property right without just compensation. The petitioners
sought for relief by filing a Motion for Reconsideration in
the Court of Appeals but the appellate court denied the
appeal and affirmed the joint decision by the RTC.
 Hence, this present petition with a single assignment of
error that the Court of Appeals erred in affirming the
ruling of the lower court.
Issue:
Whether or not Respondents can be compelled to provide
free parking spaces to their customers considering that there is
an alleged responsibility for them to provide such based on the
law on buildings and considering further that such
responsibility or obligation of respondents are only a
presumption hence, the source thereof is allegedly
unconstitutional.
Ruling:
No. respondents cannot be compelled to provide free
parking spaces for their customers.
Statutory construction has it that if a statute is clear and
unequivocal, it must be given its literal meaning and applied
without any attempt at interpretation. Since Section 803 of the
National Building Code and Rule XIX of its IRR do not mention
parking fees, then simply, said provisions do not regulate the
collection of the same. The RTC and the Court of Appeals
correctly applied Article 1158 of the New Civil Code, which
states: Art. 1158. Obligations derived from law are not
presumed. Only those expressly determined in this Code or in
special laws are demandable, and shall be regulated by the
precepts of the law which establishes them.
Constitutional Aspect of the Case
From the RTC all the way to this Court, the OSG
repeatedly referred to Republic v. Gonzales and City of Ozamis
v. Lumapas to support its position that the State has the power
to regulate parking spaces to promote the health, safety, and
welfare of the public; and it is by virtue of said power that
respondents may be required to provide free parking facilities.
The OSG, though, failed to consider the substantial differences
in the factual and legal backgrounds of these two cases from
those of the Petition at bar.
Without using the term outright, the OSG is actually
invoking police power to justify the regulation by the State,
through the DPWH Secretary and local building officials, of
privately owned parking facilities, including the collection by
the owners/operators of such facilities of parking fees from the
public for the use thereof. The Court finds, however, that in
totally prohibiting respondents from collecting parking fees
from the public for the use of the mall parking facilities, the
State would be acting beyond the bounds of police power.
Police power is the power of promoting the public welfare
by restraining and regulating the use of liberty and property. It
is usually exerted in order to merely regulate the use and
enjoyment of the property of the owner. The power to regulate,
however, does not include the power to prohibit. Police power
does not involve the taking or confiscation of property, with
the exception of a few cases where there is a necessity to
confiscate private property in order to destroy it for the purpose
of protecting peace and order and of promoting the general
welfare. When there is a taking or confiscation of private
property for public use, the State is no longer exercising police
power, but another of its inherent powers, namely, eminent
domain. Eminent domain enables the State to forcibly acquire
private lands intended for public use upon payment of just
compensation to the owner.
In the present case, although the title to and/or possession
of the parking facilities remain/s with respondents, the
prohibition against their collection of parking fees from the
public, for the use of said facilities, is already tantamount to a
taking or confiscation of their properties. The State is not only
requiring that respondents devote a portion of the latter’s
properties for use as parking spaces, but is also mandating that
they give the public access to said parking spaces for free. Such
is already an excessive intrusion into the property rights of
respondents. Not only are they being deprived of the right to
use a portion of their properties as they wish, they are further
prohibited from profiting from its use or even just recovering
therefrom the expenses for the maintenance and operation of
the required parking facilities.
23 Sumulong v Hon. Guerrero and the NHA
(GR L-48685; 1987)
Doctrine:
 The "public use" requirement for and exercise of the power
of eminent domain is a flexible and evolving concept
influenced by changing conditions.
 It is accurate to state then that at present whatever may be
beneficially employed for the general welfare satisfies the
requirement of public use.
Facts:
 On December 5, 1977 the NHA filed a complaint for
expropriation of parcels of land covering approximately 25
hectares, in Antipolo, Rizal including the lots of petitioners
with an area of 6,667 square meters and 3,333 square
meters respectively.
 The land sought to be expropriated were valued by the
NHA at P1.00 per square meter adopting the market value
fixed by the provincial assessor in accordance with
presidential decrees prescribing the valuation of property
in expropriation proceedings.
 Together with the complaint was a motion for immediate
possession of the properties.
 The NHA deposited the amount of P158,980.00 with the
Philippine National Bank, representing the "total market
value" of the subject twenty five hectares of land, pursuant
to Presidential Decree No. 1224 which defines "the policy
on the expropriation of private property for socialized
housing upon payment of just compensation."
 The judge issued the writ of possession which the
petitioners assail on the ground that they had been
deprived of the possession of their property without due
process of law.
 This was however, denied.
 Petitioners challenge the orders of respondent Judge and
assailing the constitutionality of Pres. Decree No. 1224, as
amended
o The order was issued without notice and without
hearing
o Pres. Decree l224, as amended, is unconstitutional for
being violative of the due process clause, specifically
 The Decree would allow the taking of property
regardless of size and no matter how small the
area to be expropriated;
 Socialized housing" for the purpose of
condemnation proceeding, as defined in said
Decree, is not really for a public purpose;
 The Decree violates procedural due process as it
allows immediate taking of possession, control
and disposition of property without giving the
owner his day in court;
 The Decree would allow the taking of private
property upon payment of unjust and unfair
valuations arbitrarily fixed by government
assessors;
 The Decree would deprive the courts of their
judicial discretion to determine what would be
the "just compensation" in each and every raise of
expropriation.
Issue: Whether the requirement of “public use” in
expropriating the subject land has been satisfied.
Held: YES.
Public use
a) Socialized Housing
 Petitioners contend that "socialized housing" as defined in
Pres. Decree No. 1224, as amended, for the purpose of
condemnation proceedings is not "public use" since it will
benefit only "a handful of people, bereft of public
character."
 "Socialized housing" is defined as, "the construction of
dwelling units for the middle and lower class members of
our society, including the construction of the supporting
infrastructure and other facilities" (Pres. Decree No. 1224,
par. 1).
 The "public use" requirement for and exercise of the power
of eminent domain is a flexible and evolving concept
influenced by changing conditions. (NOTE)
 In this jurisdiction, the statutory and judicial trend has
been summarized as follows:
The taking to be valid must be for public use. There was a time
when it was felt that a literal meaning should be attached to
such a requirement. Whatever project is undertaken must be
for the public to enjoy, as in the case of streets or parks.
Otherwise, expropriation is not allowable. It is not anymore.
As long as the purpose of the taking is public, then the power
of eminent domain comes into play. As just noted, the
constitution in at least two cases, to remove any doubt,
determines what is public use. One is the expropriation of lands
to be subdivided into small lots for resale at cost to individuals.
The other is in the transfer, through the exercise of this power,
of utilities and other private enterprise to the government. It is
accurate to state then that at present whatever may be
beneficially employed for the general welfare satisfies the
requirement of public use. (NOTE)
 The term "public use" has acquired a more comprehensive
coverage.
 To the literal import of the term signifying strict use or
employment by the public has been added the broader
notion of indirect public benefit or advantage.
 Specifically, urban renewal or redevelopment and the
construction of low-cost housing is recognized as a public
purpose, not only because of the expanded concept of public
use but also because of specific provisions in the
Constitution.
 The 1987 Constitution goes even further by providing that:
The State shall promote a just and dynamic social order that
will ensure the prosperity and independence of the nation and
free the people from poverty through policies that provide
adequate social services, promote full employment, a rising
standard of living and an improved quality of life for all. [Art.
II, sec. 9]
The state shall by law, and for the common good, undertake, in
cooperation with the private sector, a continuing program of
urban land reform and housing which will make available at
affordable cost decent housing and basic services to
underprivileged and homeless citizens in urban centers and
resettlement areas. It shall also promote adequate employment
opportunities to such citizens. In the implementation of such
program the State shall respect the rights of small property
owners. (Art. XIII, sec. 9, Emphaisis supplied)
 Housing is a basic human need.
 Shortage in housing is a matter of state concern since it
directly and significantly affects public health, safety, the
environment and in sum, the general welfare.
 The public character of housing measures does not change
because units in housing projects cannot be occupied by all
but only by those who satisfy prescribed qualifications.
 A beginning has to be made, for it is not possible to provide
housing for are who need it, all at once.
 In the light of the foregoing, this Court is satisfied that
"socialized housing" fans within the confines of "public
use".
 It is, particularly important to draw attention to paragraph
(d) of Pres. Dec. No. 1224 which opportunities inextricably
linked with low-cost housing, or slum clearance,
relocation and resettlement, or slum improvement
emphasize the public purpose of the project.
 In the case at bar, the use to which it is proposed to put the
subject parcels of land meets the requisites of "public use".
 The lands in question are being expropriated by the NHA
for the expansion of Bagong Nayon Housing Project to
provide housing facilities to low-salaried government
employees.
b) Size of Property
 Petitioners further contend that Pres. Decree 1224, as
amended, would allow the taking of "any private land"
 regardless of the size and no matter how small the area of
the land to be expropriated.
 Petitioners claim that "there are vast areas of lands in
Mayamot, Cupang, and San Isidro, Antipolo, Rizal
hundreds of hectares of which are owned by a few
landowners only.
 It is surprising [therefore] why respondent National
Housing Authority [would] include [their] two man lots ..."
 In J.M. Tuason Co., Inc. vs. Land Tenure Administration
this Court earlier ruled that expropriation is not confined to
landed estates.
 The State acting through the NHA is vested with broad
discretion to designate the particular property/properties
to be taken for socialized housing purposes and how much
thereof may be expropriated.
 Absent a clear showing of fraud, bad faith, or gross abuse of
discretion, which petitioners herein failed to demonstrate,
the Court will give due weight to and leave undisturbed the
NHA's choice and the size of the site for the project.
 The property owner may not interpose objections merely
because in their judgment some other property would have
been more suitable, or just as suitable, for the purpose.
 The right to the use, enjoyment and disposal of private
property is tempered by and has to yield to the demands of
the common good.

24. City of Manila vs Estrada 25 Phil 208

Section 9: “Private property shall not be taken for public use
without just compensation.”

Summary:
‘Compensation’ under the Spanish Code of Civil Procedure
means an equivalent for the value of the land taken. Anything
beyond that is more and anything short of that is less than
compensation. The word ‘just’ is used merely to intensify the
meaning of the word ‘compensation’. Determination of
compensation is a judicial and not a legislative function.
Facts:
The city of Manila sought to expropriate an entire parcel of
land with its improvements for use in connection with a new
market at that time being erected in the district of Paco. The
opinion of two disinterested real estate appraisers were the
basis of the plaintiff corporation that the land was worth P10
per square meter, their statements being based upon the prices
obtained for land in the open market in the vicinity. The court
held that P10 per square meter was just compensation for the
land, and rendered its decision accordingly.
The defendant Estrada testified that it was worth P25 per
square meter, basing his statement on the price obtained three
years previously by the owner of the parcel on the opposite side
of the road that surrounds it. The defendant also assails the
testimony of the two witnesses for the plaintiff who allegedly
fixed the price of P10 per square meter.
The general rule that the market value of the land taken is the
just compensation to which the owner of condemned property
is entitled under the law meets with our unqualified approval.
Such was our holding in Manila R. Co. vs. Fabie (17 Phil. Rep.,
206).
Issue:
WON there is just compensation on the value of the land
taken from the defendant.
Held:
Yes, there is just compensation as to the value of the land.
Section 9, Article III of the 1987 Philippine constitution
provides that private property shall not be taken for public use
without just compensation. The exercise of the power
compensation being necessary for the public good, and all
property being held subject to its exercise when, and as the
public good requires it, it would be unjust to the public that it
should be required to pay the owner more than a fair indemnity
for such loss. To arrive at this fair indemnity, the interests of
the public and of the owner and all the circumstance of the
particular appropriation should be taken into consideration.
In this case, the court empowered commissioners to assess the
said land since assessment is considered as a judicial act. The
commissioners' power is limited to assessing the value and to
determining the amount of the damages. They are to discharge
the trust reposed in them according to well established rules
and form their judgment upon correct legal principles. This
court, after an examination of the evidence, that a just
compensation for the land taken was P10 per square meter,
and, in a short opinion, rendered judgment accordingly.
25 SECRETARY OF THE DEPARTMENT OF PUBLIC WORKS
AND HIGHWAYS vs. SPOUSES TECSON
G.R. No. 179334, July 01, 2013
Facts:
 Respondent spouses Heracleo and Ramona Tecson are co-
owners of a parcel of land with an area of 7,268 square
meters located in San Pablo, Malolos, Bulacan and covered
by Transfer Certificate of Title (TCT) No. T-43006 of the
Register of Deeds of Bulacan. Said parcel of land was
among the properties taken by the government sometime
in 1940 without the owners’ consent and without the
necessary expropriation proceedings and used for the
construction of the MacArthur Highway.
 In a letter dated December 15, 1994, respondents
demanded the payment of the fair market value of the
subject parcel of land. Petitioner Celestino R. Contreras,
then District Engineer of the First Bulacan Engineering
District of DPWH, offered to pay the subject land at the
rate of P0.70 per square meter per Resolution of the
Provincial Appraisal Committee (PAC) of Bulacan.
Unsatisfied with the offer, respondents demanded for the
return of their property or the payment of compensation
at the current fair market value.
 As their demand remained unheeded, respondents filed a
Complaint for recovery of possession with damages against
petitioners, praying that they be restored to the possession
of the subject parcel of land and that they be paid
attorney’s fees.
 Instead of filing their Answer, petitioners moved for the
dismissal of the complaint on the following grounds: (1)
 that the suit is against the State which may not be sued
without its consent; (2) that the case has already
prescribed; (3) that respondents have no cause of action for
failure to exhaust administrative remedies; and (4) if
respondents are entitled to compensation, they should be
paid only the value of the property in 1940 or 1941.
 On June 28, 1995, the RTC issued an Order granting the
motion to dismiss based on the doctrine of state immunity
from suit.
 The CA reversed and set aside the dismissal of the
complaint and consequently remanded the case to the trial
court for the purpose of determining the just compensation
because the doctrine of state immunity from suit is not
applicable and the recovery of compensation is the only
relief available. To deny such relief would undeniably
cause injustice to the landowner.
 The trial proceeded in the RTC with the Branch Clerk of
Court appointed as the Commissioner and designated as
the Chairman of the Committee that would determine just
compensation.
 Later the case was referred to the PAC for the submission
of a recommendation report on the value of the subject
property. The PAC recommended the amount of P1,500.00
per square meter as the just compensation for the subject
property per PAC Resolution No. 99- 007 dated December
19, 2001.
 On March 22, 2002, the RTC rendered a Decision directing
DPWH to pay the amount of One Thousand Five Hundred
Pesos (P1,500.00) per square meter for the subject lot in
accordance with PAC Resolution.
  The CA affirmed the above decision with the modification
that the just compensation stated above should earn
interest of six percent (6%) per annum computed from the
filing of the action on March 17, 1995 until full payment.
 Hence, this petition.
Issues:
1. Whether or not the Court of Appeals gravely erred in
granting just compensation to respondents considering the
highly dubious and questionable circumstances of their alleged
ownership of the subject property.
2. Whether or not the court of appeals gravely erred in
awarding just compensation to respondents because their
complaint for recovery of possession and damages is already
barred by prescription and laches.
3. Whether or not the court of appeals gravely erred in
affirming the trial court’s decision ordering the payment of just
compensation based on the current market value of the alleged
property of respondents.
Held:
It is undisputed that the subject property was taken by
petitioners without the benefit of expropriation proceedings
for the construction of the MacArthur Highway. After the
lapse of more than fifty years, the property owners sought
recovery of the possession of their property.
Both equity and the law direct that a property owner should be
compensated if his property is taken for public use. There is a
long-standing rule that where private property is taken by the
Government for public use without first acquiring title thereto
either through expropriation or negotiated sale, the owner’s
action to recover the land or the value thereof does not
prescribe.
For failure of respondents to question the lack of expropriation
proceedings for a long period of time, they are deemed to have
waived and are estopped from assailing the power of the
government to expropriate or the public use for which the
power was exercised. What is left to respondents is the right of
compensation.
Just compensation is the fair value of the property as between
one who receives, and one who desires to sell fixed as of the
date when it was taken and not the date of the filing of the
proceedings. The owner of private property should be
compensated only for what he actually loses; it is not intended
that his compensation shall extend beyond his loss or injury.
And what he loses is only the actual value of his property at the
time it is taken. The fair market value of the subject property
in 1940 was P0.70/square meter. Hence, it should therefore be
used in determining the amount due respondents instead of the
higher value which is P1,500.00.
26 NPC v. Zabala January 30, 2013 689 SCRA 554
Doctrine: No legislative enactments or executive issuances can
prevent the courts from determining whether the right of the
property owners to just compensation has been violated. It is a
judicial function that cannot be usurped by any other branch
or official of the government. Statutes and executive issuances
fixing or providing for the method of computing just
compensation are not binding on courts and, at best, are treated
as mere guidelines in ascertaining the amount thereof.
Facts:
 October 27, 1994 – plaintiff-appellant NPC filed a
complaint for Eminent Domain against defendants-
appellees Sps. R. Zabala & L. Baylon, before the RTC,
Balanga City, Bataan alleging that Spouses Zabala and
Baylon own parcels of land located in Balanga City, Bataan
and that it urgently needed an easement of right of way
over the affected areas for its 230 KV Limay-Hermosa
Transmission Lines.
 Dec. 4, 1997 – the Commissioners submitted their
Report/Recommendation fixing the just compensation for
the use of Spouses Zabala’s property as easement of right of
way at P150 per square meter without considering the
consequential damages.
 NPC prayed that the report be recommitted to the
commissioners for the modification of the report and the
substantiation of the same with reliable and competent
documentary evidence based on the value of the property
at the time of its taking. The Commissioners submitted
their Final Report fixing the just compensation at P500.00
per square meter.
  Aug. 20, 2003 – The Commissioners submitted their Final
Report fixing the just compensation at P500 per square
meter.
 June 28, 2004 – the RTC rendered its Partial Decision and
ordered Napocor to pay Php150.00 per square meter for
the 6,820 square meters determined as of the date of the
taking of the property.
 NPC appealed to the CA arguing that the Commissioners
reports are not supported by documentary evidence.
Napocor argued that the RTC did not apply Section 3A of
R.A. No. 6395 which limits its liability to easement fee of
not more than 10% of the market value of the property
traversed by its transmission lines. CA affirmed the RTCs
Partial Decision.
Issue:
Whether or not the RTC erred in fixing the amount of
Php150.00 per square meter as the fair market value of the
property subject of the easement right of way of NPC?
Ruling:
The petition is partially meritorious.
CONSTITUTIONAL LAW: just compensation
Sec. 3A of RA No. 6395 cannot restrict the constitutional
power of the courts to determine just compensation. The
payment of just compensation for private property taken for
public use is guaranteed no less by our Constitution and is
included in the Bill of Rights. As such, no legislative
enactments or executive issuances can prevent the courts from
determining whether the right of the property owners to just
compensation has been violated. It is a judicial function that
cannot be usurped by any other branch or official of the
government. Statutes and executive issuances fixing or
providing for the method of computing just compensation are
not binding on courts and, at best, are treated as mere
guidelines in ascertaining the amount thereof.
Moreover, Section 3A-(b) of R.A. No. 6395, as amended, is
not binding on the Court. It has been repeatedly emphasized
that the determination of just compensation in eminent
domain cases is a judicial function and that any valuation for
just compensation laid down in the statutes may serve only as
a guiding principle or one of the factors in determining just
compensation but it may not substitute the court’s own
judgment as to what amount should be awarded and how to
arrive at such amount.
The Supreme Court has held in a long line of cases that
since the high- tension electric current passing through the
transmission lines will perpetually deprive the property owners
of the normal use of their land, it is only just and proper to
require NPC to recompense them for the full market value of
their property.
Just compensation has been defined as "the full and fair
equivalent of the property taken from its owner by the expropriator.
The measure is not the taker's gain, but the owner’s loss. The word
‘just’ is used to qualify the meaning of the word ‘compensation’ and
to convey thereby the idea that the amount to be tendered for the
property to be taken shall be real, substantial, full and ample."
It has likewise been a consistent ruling that just compensation
cannot be arrived at arbitrarily. Several factors must be considered,
such as, but not limited to, acquisition cost, current market value of
like properties, tax value of the condemned property, its size, shape,
and location. But before these factors can be considered and given
weight, the same must be supported by documentary evidence.
27 Republic v BPI GR 203039 | September 11, 2013
DOCTRINE: The general rule is that the just compensation to
which the owner of the condemned property is entitled to is
the market value. Market value is that sum of money which a
person desirous but not compelled to buy, and an owner willing
but not compelled to sell, would agree on as a price to be paid
by the buyer and received by the seller.
The general rule, however, is modified where only a part
of a certain property is expropriated. In such a case, the owner
is not restricted to compensation for the portion actually taken;
he is also entitled to recover the consequential damage, if any,
to the remaining part of the property
FACTS:
 DPWH filed with RTC Las Piñas a case for expropriation
against portions of the properties of BPI and of Bayan
Villanueva, situated in Pamplona, Las Piñas.
o DPWH needed 281 square meters of BPI’s lot and 177
square meters from Villanueva’s lot for the
construction of the Zapote-Alabang Fly-Over.
 Neither BPI nor Villanueva objected to the propriety of the
expropriation.
 RTC constituted a Board of Commissioners to determine
the just compensation.
o In the Report, the amount of P40,000 per square meter
was recommended as the fair market value.
• RTC, in its decision, set the fair market value at
P40,000 per square meter.
 BPI: 281 sq. m. x P40,000 = P11,240,000
 Villanueva: 177 sq. m. x P40, 000 = P7,080,000
 The acting branch clerk of court issued a Certification,
stating that the said decision has become final, executory
and unappealable.
 BPI filed a Motion for Partial New Trial to determine the
just compensation of the building, which was not included
in the RTC decision.
o RTC granted partial new trial
 Due to the failure of counsel for petitioner, despite notice,
to appear during the scheduled hearing for the
determination of the just compensation of the building,
RTC allowed BPI to present its evidence ex-parte.
o After an ocular inspection of the building, Leticia
Agbayani, commissioner, reported the following
findings:
• A new building was constructed, and said building
was attached and made as an integral part of the
original building.
• The building was moved back when it was
constructed to conform with the requirement of
the Building Code.
• Improvements were introduced around the
building
 RTC ruled that just compensation for the building was due,
and ordered petitioner to pay the additional amount of
P2.6M.
 Petitioner moved for MR, on the ground that the
proceeding fixing the just compensation of the building is
null and void for not complying with the mandatory
procedure laid out in the Rules of Court.
 o RTC granted MR of petitioner; BPI filed MR, stating
that there was substantial compliance with the Rules;
RTC denied MR of BPI.
 RTC gave petitioner and BPI ten days to submit their
respective nominees and their oaths of office.
 BPI nominated Roland Savellano.
 Petitioner, instead of submitting its nominee, filed a
Manifestation and Motion, objecting to the propriety of
paying just compensation for BPI’s building and praying
that BPI’s claim for additional just compensation was
denied.
o Petitioner claimed that the building was never taken
by the government.
• In support, petitioner attached a letter from the
DPWH:
 x x x the original plan affecting the subject
property was not implemented. The width of
the sidewalk at the premises under
consideration was reduced from 2.5m to
2.35m to avoid the costly structure of the
bank.
 BPI claimed that it was not aware that the original plan
was not implemented. • After being ordered to submit its
nominee, petitioner nominated Romulo Gervacio, the OIC
of the City Assessor’s Office in Las Piñas City.
o BPI’s Savellano recommended the amount of P2.6M,
based on the appraisal conducted by an independent
professional business and property consultant.
 o Petitioner’s Gervacio recommended P1.9M, which
was the market value indicated on the tax declaration
of said building.
 RTC adopted the recommendation of Gervacio.
o Petitioner filed an appeal with CA, stating that the
previous decision which was declared final and
executory has attained finality.
• CA dismissed appeal, and affirmed the RTC
ruling; petitioner filed the present petition before
SC.
ISSUE: Whether or not the award of additional just
compensation for BPI’s building is constitutional.
HELD: Yes
The findings of the lower courts are borne by the records.
Hence, there was proper basis for the determination of just
compensation for the building for consequential damages.
Eminent domain is the authority and right of the State, as
sovereign, to take private property for public use upon
observance of due process of law and payment of just
compensation. The State’s power of eminent domain is limited
by the constitutional mandate that private property shall not
be taken for public use without just compensation.
Just compensation is the full and fair equivalent of the property
sought to be expropriated. The general rule is that the just
compensation to which the owner of the condemned property
is entitled to is the market value. Market value is that sum of
money which a person desirous but not compelled to buy, and
an owner willing but not compelled to sell, would agree on as
a price to be paid by the buyer and received by the seller. The
general rule, however, is modified where only a part of a
certain property is expropriated. In such a case, the owner is
not restricted to compensation for the portion actually taken;
he is also entitled to recover the consequential damage, if any,
to the remaining part of the property. 63 x x x No actual taking
of the building is necessary to grant consequential damages.
Consequential damages are awarded if as a result of the
expropriation, the remaining property of the owner suffers
from impairment or decrease in value. The rules on
expropriation clearly provide a legal basis for the award of
consequential damages. Section 6 of Rule 67 of the Rules of
Court provides: x x x The commissioners shall assess the
consequential damages to the property not taken and deduct
from such consequential damages the consequential benefits to
be derived by the owner from the public use or public purpose
of the property taken, the operation of its franchise by the
corporation or the carrying on of the business of the
corporation or person taking the property. But in no case shall
the consequential benefits assessed exceed the consequential
damages assessed, or the owner be deprived of the actual value
of his property so taken.
DISPOSITION: The Supreme Court denied the petition and
affirms the decision of the Court of Appeals.
NOTE:
 Eminent domain is the authority and right of the State, as
sovereign, to take private property for public use upon
observance of due process of law and payment of just
compensation.
 o Just compensation is the full and fair equivalent of the
property sought to be expropriated.
 The general rule is that the just compensation to which the
owner of the condemned property is entitled to is the
market value.
o Market value is that sum of money which a person
desirous but not compelled to buy, and an owner
willing but not compelled to sell, would agree on as a
price to be paid by the buyer and received by the
seller.
 The general rule is modified where only a part of a certain
property is expropriated. § In this case, the owner is not
restricted to compensation for the portion actually taken,
as he is also entitled to recover the consequential damage,
if any, to the remaining part of the property.
o In the present case, petitioner contends that BPI’s
building was never taken by petitioner, and that to
award consequential damages for the building was
unfounded and without legal basis.
 SC held that no actual taking of the building is necessary
to grant consequential damages.
o Consequential damages are awarded if, as a result of
the expropriation, the remaining property of the
owner suffers from an impairment or decrease in
value.
 To determine just compensation, the trial court should first
as certain the market value of the property, to which
should be added the consequential damages after
deducting therefrom the consequential benefits which
may arise from the expropriation.
 o If the consequential benefits should exceed the
consequential damages, these items are regarded
altogether as the basic value of the property, which
should be paid in every case.

No actual taking of the building is necessary to grant

consequential damages. Consequential damages are awarded if
as a result of the expropriation, the remaining property of the
owner suffers from impairment or decrease in value.
28 NATIONAL POWER CORPORATION vs. ELIZABETH
MANALASTAS and BEA CASTILLO
G.R. No. 196140, January 27, 2016
Just Compensation
The formula for determination of just compensation to
landowners does not include the factor for inflation rate, as
inflation is properly accounted for through payment of interest
on the amount due to the landowner, and through the award
of exemplary damages and attorney's fees in cases where there
was irregularity in the taking of property.

Estoppel inoperative against Government

Estoppel generally finds no application against the State when
it acts to rectify mistakes, errors, irregularities, or illegal acts,
of its officials and agents, irrespective of rank. This ensures
efficient conduct of the affairs of the State without any
hindrance on the part of the government from implementing
laws and regulations, despite prior mistakes or even illegal acts
of its agents shackling government operations and allowing
others, some by malice, to profit from official error or
misbehavior.

FACTS:
Petitioner, a government-owned and controlled corporation
involved in the development of hydro-electric generation of
power and production of electricity, and the construction,
operation and maintenance of power plants, transmission lines,
power stations and substations, on respondents' parcel of land
affecting an area of 26,919 square meters. Petitioner entered
said land without the knowledge or consent of respondents,
without properly initiating expropriation proceedings, and
without any compensation to respondents-landowners.
Because of said transmission lines, respondents alleged that
they could no longer use their land as part of a subdivision
project as originally intended, which ultimately caused
financial loss to their family. Thus, respondents filed a
complaint against petitioner and its officers with the Regional
Trial Court. Respondents demanded the removal of the power
lines and its accessories and payment of damages, or in the
alternative, payment of the fair market value of the affected
areas totalling 26,000 square meters of respondents' land at
P800.00 per square meter.

RTC issued a Decision ordering defendant NAPOCOR to pay

plaintiffs the amount of P92,827,351.00, by way of just
compensation and to pay an Attorney's fees.

On appeal to the CA, herein petitioner argued that the RTC

erred in factoring the devaluation of the peso in the
computation of the fair market value of respondents' land.
Petitioners maintain that such inclusion of the inflation rate in
arriving at the value of just compensation has no legal basis.
None of the parties contest the finding that the fair market
value of the property at the time of taking was Php170.00 per
square meter.

The CA affirmed the RTC judgment with modification,

reducing the award to P1,678,908.00. The CA ruled that
petitioner could no longer assail the valuation that petitioner
itself recommended, the same being a judicial admission.
ISSUES:
1. Whether the Court committed an error when it includes
the inflation rate of the Philippine Peso in determining the
just compensation due to respondents?
2. Whether the estoppel is operative against the Government
rendering it unable to assail the valuation it recommended,
the same being a judicial admission?

HELD:
1. Yes. The formula for determination of just compensation to
landowners does not include the factor for inflation rate, as
inflation is properly accounted for through payment of interest
on the amount due to the landowner, and through the award
of exemplary damages and attorney's fees in cases where there
was irregularity in the taking of property.

Just compensation is the value of the property at the time of

taking that is controlling for purposes of compensation. The
State is not obliged to pay premium to the property owner for
appropriating the latter's property; it is only bound to make
good the loss sustained by the landowner, with due
consideration of the circumstances availing at the time the
property was taken. More, the concept of just compensation
does not imply fairness to the property owner alone.
Compensation must also be just to the public, which ultimately
bears the cost of expropriation. The Court recognize that the
owner's loss is not only his property but also its income-
generating potential. Thus, when property is taken, full
compensation of its value must immediately be paid to achieve
a fair exchange for the property and the potential income
lost. The rationale for imposing the interest is to compensate the
petitioners for the income they would have made had they been
properly compensated for their properties at the time of the
taking.

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, i[f] 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 interest[s] 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 interest[s] 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.The just compensation due to the
landowners amounts to an effective forbearance on the part of
the State—a proper subject of interest computed from the time
the property was taken until the full amount of just
compensation is paid—in order to eradicate the issue of the
constant variability of the value of the currency over time. In
the Court's own words:
The Bulacan trial court, in its 1979 decision, was correct in
imposing interests on the zonal value of the property to be
computed from the time petitioner instituted condemnation
proceedings and "took" the property in September 1969. 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 x x x.

The foregoing clearly dictates that valuation of the land for

purposes of determining just compensation should not include
the inflation rate of the Philippine Peso because the delay in
payment of the price of expropriated land is sufficiently
recompensed through payment of interest on the market value
of the land as of the time of taking from the landowner.

2. No. Estoppel generally finds no application against the State

when it acts to rectify mistakes, errors, irregularities, or illegal
acts, of its officials and agents, irrespective of rank. This ensures
efficient conduct of the affairs of the State without any
hindrance on the part of the government from implementing
laws and regulations, despite prior mistakes or even illegal acts
of its agents shackling government operations and allowing
others, some by malice, to profit from official error or
misbehavior. The rule holds true even if the rectification
prejudices parties who had meanwhile received benefits. Even
granting that the persons representing the government were
negligent, the doctrine of estoppel cannot be taken against the
Republic.
The fact that it was petitioner's own counsel below that
recommended the inclusion of the inflation rate in the
determination of just compensation should not be taken against
petitioner. After all, it is ultimately the courts' mandated duty
to adjudge whether the parties' submissions are correct. It is the
courts, not the litigants, who decide on the proper
interpretation or application of the law and, thus, only the
courts may determine the rightful compensation in accordance
with the law and evidence presented by the parties. It is
incongruous for the court below to uphold a proposition
merely because it was recommended by a party, despite the
same being erroneous.

The cases cited by the lower court to justify its ruling that
petitioner is bound by the recommendation made by its counsel
before the trial court, are all inapplicable to the present case as
said cases do not involve agencies or instrumentalities of the
State.
29 De Knecht v. Bautista
Eminent Domain> Genuine Necessity
Facts:
 The plan to extend EDSA to Roxas Boulevard to be
ultimately linked to the Cavite Coastal Road Project,
originally called for the expropriation of properties along
Cuneta Avenue in Pasay City.
 Later on, however, the Ministry of Public Highways
decided to make the proposed extension pass through
Fernando Rein and Del Pan Streets.
 Because of the protests of residents of the latter, the
Commission on Human Settlements recommended the
reversion to the original plan, but the Ministry argued the
new route withh save the government P2 million. The
government filed expropriation proceedings against the
owners of Fernando Rein and Del Pan streets, among
whom was petitioner De Knecht
Petitioner’s contention:
 The choice of property to be expropriated cannot be
without rhyme or reason. The condemnor may not choose
any property it wants. Where the legislature has delegated
a power of eminent do-main, the question of the necessity
for taking a particular fine for the intended improvement
rests in the discretion of the grantee power subject
however to review by the courts in case of fraud, bad faith
or gross abuse of discretion. The choice of property must
be examined for bad faith, arbitrariness or capriciousness
and due process determination as to whether or not the
proposed location was proper in terms of the public
interests. Even the claim of respondent's Secretary Baltazar
 Aquino that there would be a saving of P2 million under
his new plan must be reviewed for it bears no relation to
the site of the proposed EDSA extension As envisioned by
the government, the EDSA extension would be linked to
the Cavite Expressway. Logically then, the proposed
extension must point to the south and not detour to the
north.
Respondent’s counter-argument:
 There was no sudden change of plan in the selection of the
site of the EDSA Extension to Roxas Blvd.
 When the Ministry of Public Highways decided to change
the site of EDSA Extension to Roxas Boulevard from
Cuneta Avenue to the Del Pan - Fernando Streets, the
residents of Del Pan and Fernando Rein Streets who were
to be adversely affected by the construction of EDSA
Extension to Roxas Boulevard along Del Pan - Fernando
Rein Streets were duly notified of such proposed project.
Petitioner herein was one of those notified.
 It be conceded that the Cuneta Avenue line goes
southward and outward (from the city center while the Del
Pan - Fernando Rein Streets line follows northward and
inward direction. It must be stated that both lines, Cuneta
Avenue and Del Pan - Fernando Rein Streets lines, meet
satisfactorily planning and design criteria and therefore are
both acceptable. In selecting the Del Pan - Fernando Rein
Streets line the Government did not do so because it
wanted to save the motel located along Cuneta Avenue but
because it wanted to minimize the social impact factor or
problem involved
Issue: WON there is a genuine need to expropriate the
properties owned by De Knecht and others similarly situated
on the ground that the choice of properties to be expropriated
seemed arbitrarily made by the DPWH
Ruling:
NO. The choice of Fernando Rein and Del Pan Streets is
arbitrary and should not receive judicial approval. The Human
Settlements Commission concluded that the cost factor is so
minimal that it can be disregarded in making a choice between
the two lines. The factor of functionality strongly militates
against the choice of Fernando Rein and Del Pan streets, while
the factor of social and economic impact bears grievously on
the residents of Cuneta Avenue. While the issue would seem to
boil down to a choice between people, on one hand, and
progress and development, on the other, it is to be remembered
that progress and development are carried out for the benefit
of the people.
WHEREFORE, the petition for certiorari and prohibition is
hereby granted. The order of June 14, 1979 authorizing the
Republic of the Philippines to take or enter upon the possession
of the properties sought to be condemned is set aside and the
respondent Judge is permanently enjoined from taking any
further action on Civil Case No. 7001-P, entitled "Republic of
the Philippines vs. Concepcion Cabarrus Vda. de Santos, etc."
except to dismiss said case.
30 Republic v. De Knecht 182 SCRA 141
Doctrine: Expropriation of lands by the government may be
undertaken not only by voluntary negotiation with the land
owners, but also by taking appropriate court action or by
legislation.
Facts:
 February 20, 1979 –the Republic of the Philippines filed in
the CFI of Rizal in Pasay City an expropriation proceedings
against the owners of the houses standing along Fernando
Rein-Del Pan streets among them was respondent, Cristina
De Knecht.
 March 29, 1979 – de Knecht filed an ex parte urgent
motion for the issuance by the trial court of a restraining
order to restrain the Republic from proceeding with the
taking of immediate possession and control of the property
sought to be condemned.
 June 1979 – the Republic filed a motion for the issuance of
a writ of possession of the property In an order, the lower
court issued a writ of possession authorizing the Republic
to enter into and take possession of the properties sought
to be condemned.
 July 16, 1979 – de Knecht filed with the SC a petition for
certiorari and prohibition docketed as G.R. No. L-51078
(Knecht vs. Bautista).
 October 30, 1980 – the SC granted the petition on the
ground that "choice of the Fernando Rein-Del Pan streets
as the line through which the EDSA should be extended to
Roxas Boulevard is arbitrary and should not receive
judicial approval." It is based on the recommendation of
the Human Settlements Commission that the choice of
Cuneta street as the line of the extension will minimize the
 social impact factor as the buildings and improvement
therein are mostly motels.
 August 8, 1981 – other defendants moved to dismiss the
expropriation action in compliance with the aforesaid
decision of this Court which had become final and in order
to avoid further damage to same defendants who were
denied possession of their properties. The Republic had no
objection to the said motion to dismiss as it was in
accordance with the aforestated decision.
 September 2, 1983 – however, the Republic filed a motion
to dismiss said case due to the enactment of the Batas
Pambansa Blg. 340 expropriating the same properties and
for the same purpose.
 The lower court dismissed the defendant’s case (filed
August 8, 1981) by reason of the enactment of the said law.
The motion for reconsideration thereof was denied by the
lower court.
 On appeal before the CA, the order of the RTC was set
aside and the expropriation proceedings were dismissed.
Hence, this petition.
Issue:
Whether or not an expropriation proceeding that was
determined by a final judgment of the Court may be the subject
of a subsequent legislation for expropriation.
Ruling:
While it is true that said final judgment of the Court in
G.R. No. L-51078 (Knecht vs. Bautista) becomes the law of the
case between the parties, it is equally true that the right of the
petitioner to take private properties for public use upon the
payment of the just compensation is so provided in the
Constitution and our laws. Such expropriation proceedings
may be undertaken by the petitioner not only by voluntary
negotiation with the land owners but also by taking appropriate
court action or by legislation.
When on February 17, 1983 the Batasang Pambansa passed
B.P. Blg. 340 expropriating the very properties subject of the
present proceedings, and for the same purpose, it appears that
it was based on supervening events that occurred after the
decision of this Court was rendered in De Knecht in 1980
justifying the expropriation through the Fernando Rein-Del
Pan Streets.
The social impact factor which persuaded the Court to
consider this extension to be arbitrary had disappeared. All
residents in the area have been relocated and duly
compensated. Eighty percent of the EDSA outfall and 30% of
the EDSA extension had been completed. Only private
respondent remains as the solitary obstacle to this project that
will solve not only the drainage and flood control problem but
also minimize the traffic bottleneck in the area.
The Court finds justification in proceeding with the said
expropriation proceedings through the Fernando Rein-Del Pan
streets from ESDA to Roxas Boulevard due to the aforestated
supervening events after the rendition of the decision of the
Court in De Knecht.
B.P. Blg. 340 therefore effectively superseded the aforesaid
final and executory decision of this Court. And the trial court
committed no grave abuse of discretion in dismissing the case
pending before it on the ground of the enactment of B.P. Blg.
340.
Moreover, the said decision, is no obstacle to the legislative
arm of the Government in thereafter (over two years later in
this case) making its own independent assessment of the
circumstances then prevailing as to the propriety of
undertaking the expropriation of the properties in question and
thereafter by enacting the corresponding legislation as it did in
this case. The Court agrees in the wisdom and necessity of
enacting B.P. Blg. 340. Thus the anterior decision of the Court
must yield to this subsequent legislative flat.
WHEREFORE, the petition is hereby GRANTED and the
questioned decision of the Court of Appeals dated December
28, 1988 and its resolution dated March 9, 1989 are hereby
REVERSED and SET ASIDE and the order of Branch III of the
then Court of First Instance of Rizal in Pasay City in Civil Case
No. 7001-P dated September 2, 1983 is hereby reinstated
without pronouncement as to costs.
SO ORDERED.
31 Home Building and Loan Association v. Blaisdell
290 U.S. 398 (1934)
BRIEF FACT SUMMARY: Minnesota’s Mortgage Moratorium
Law, which was passed in order to grant relief to those with
mortgages during the Depression, was upheld as an emergency
measure despite its interference with private contracts between
mortgagors and mortgagees.
SYNOPSIS OF RULE OF LAW: The protective power of the
state, the police power, may be exercised in directly preventing
the immediate and literal enforcement of contractual
obligations by a temporary and conditional restraint where
vital public interests would otherwise suffer.
FACTS: The Minnesota Mortgage Moratorium Law of 1933
authorized relief from mortgage foreclosures and execution
sales of real property during the Depression. It granted local
courts authority to extend the period of redemption for
foreclosure sales “for such additional time as the court may
deem just and equitable but not beyond May 1, 1935.” Such
extensions were conditioned upon an order requiring the
mortgagor to “pay all or a reasonable part” of the fair income of
rental value of the property toward the payment of taxes,
insurance, interest and principal.” No deficiency judgment
could be brought during such a court-extended period of
redemption. The Defendants, the Blaisdells, obtained a court
order under the Act extending the period of redemption on
condition that they pay the Association $40 per month, thus,
the court modified the lender’s contractual right to foreclose.
The highest state court sustained the law as an “emergency”
measure.
OR
In 1933, Minnesota enacted the Mortgage Moratorium Law in
an effort to combat the economic emergency posed by the
Great Depression. The law extended the time period in which
borrowers could pay back their debts on property to lenders.
The state argued that this was a legitimate use of its police
powers since Minnesota faced massive economic difficulties.
ISSUE: Whether or not the provision for this temporary and
conditional relief exceeds the power of the state by reason of
the contracts clause.
OR
Did the Minnesota law violate both Article I, Section 10 of the
Constitution which prevents a state from "impairing the
Obligation of Contracts" and the due process and equal
protection clauses of the Fourteenth Amendment?
HELD: No. Judgment of the highest state court affirmed. Not
only is the contracts clause qualified by the measure of control
which the state retains over the remedial processes, but the
state also continues to possess authority to safeguard the vital
interests of its people. The protective power of the state, the
police power, may be exercised in directly preventing the
immediate and literal enforcement of contractual obligations
by a temporary and conditional restraint where vital public
interests would otherwise suffer. Here, the conditions upon
which the period of redemption is extended do not appear
unreasonable. Therefore, the Minnesota statute does not
violate the contracts clause.
OR
The Court held that the law did not violate the Constitution.
In his opinion, Chief Justice Hughes explored the relationship
of emergency to constitutional power, the historical setting in
which the Contract Clause was adopted, and its judicial
development. Hughes argued that the sanctity of contracts in
the United States and the Contract Clause, while important,
had never been absolute or meant to be interpreted literally.
Thus, in an attempt to "safeguard the vital interests of its
people" a state could adopt legislation which had the effect of
"modifying or abrogating contracts already in effect." Since the
demands of the Great Depression were vital to all of the state's
citizens, the law was a legitimate use of Minnesota's police
power.
DISSENT: The contracts clause was meant to foreclose state
action impairing the obligations of contracts — primarily and
especially in respect to such action aimed at giving relief to
debtors in time of emergency.
DISCUSSION: The majority incorporates a broad interpretation
of the police power in holding that a state may use its police
power to impair private contracts where certain conditions are
met.
Evaluation
The Court’s ruling placed greater importance on allowing
short-term solutions than on protecting Constitutional
precedents. Allowing state legislation to blatantly violate the
Contract Clause in response to hard times threatens the future
security of all Constitutional protections.
32 RUTTER vs. ESTEBAN
G.R. No. L-3708; May 18, 1953; 93 Phil. 68
Doctrine: Inherent powers of the State; Police Power; The
national economy
FACTS:
In August 20, 1941, Rutter sold to Esteban 2 parcels of land
in Manila. Esteban paid 3/4ths of the purchase price and they
constituted a mortgage over one of the parcels to secure the
payment of the balance.
However, the war broke out and somehow, Esteban was
not able to pay the balance of the purchase price on the due
date and so, on August 2, 1949, Rutter instituted an action to
recover the balance with the CFI.
Esteban admitted the averments of the complaint but as a
defense, he claimed that his obligation was a pre-war obligation
covered by the moratorium embodied in R.A. No. 342.
Section 2 of Republic Act No. 342 provides that “all debts
and other monetary obligations contracted before December 8,
1941, any provision in the contract creating the same or any
subsequent aggreement affecting such obligation to the
contrary notwithstanding, shall not due and demandable for a
period of eight (8) years from and after settlement of the war
damage claim of the debtor by the Philippine War Damage
Commission.”
The CFI ruled in favor of the debtor Esteban. This brings
us to the sole issue raised by petitioner on appeal
ISSUE:
Whether or not R.A. No. 342, which declared a
moratorium on certain pre-war obligations, is unconstitutional
for violation of the Constitutional provision prohibiting the
impairment of the obligation of contracts.
HELD:
Yes. R.A. No. 342 is unconstitutional.
Statutes declaring a moratorium on obligations are generally
constitutional
Statutes declaring a moratorium on obligations are not
new: “For some 1,400 years western civilization has made use
of extraordinary devices for saving the credit structure, devices
generally known as moratoria. The moratorium is
postponement of fulfillment of obligations decreed by the state
through the medium of the courts or the legislature. Its essence
is the application of the sovereign power.”
Such laws were often passed during or after times of
financial distress such as wars and disasters. Similar laws were
passed in some US states after the civil war and they have been
declared constitutional. Some laws however, were declared
unconstitutional where the period of moratorium prescribed is
indefinite or unreasonable.
The argument that moratorium laws impair the obligation
of contracts does not hold water. It is justified as a valid exercise
of the state of it's police power.
In the US case, Home Building and Loan Association vs.
Blaisdell, it was held that:
The economic interests of the State may justify the exercise
of its continuing and dominant protective power
notwithstanding interference with contracts. . . .
xxx
 Similarly, where the protective power of the State is
exercised in a manner otherwise appropriate in the regulation
of a business it is no objection that the performance of existing
contracts may be frustrated by the prohibition of injurious
practices. . . .
. . . . The question is not whether the legislative action
affects contracts incidentally, or directly or indirectly, but
whether the legislation is addressed to a legitimate end and the
measures taken are reasonable and appropriate to that end.
Thus the “true test” of constitutionality of a moratorium
statute “lies in the determination of the period of a suspension
of the remedy. It is required that such suspension be definite and
reasonable, otherwise it would be violative of the constitution.”
R.A. No. 342 is unconstitutional for being unreasonable
The moratorium law, enacted in 1948, came on the heels
of executive orders likewise declaring moratoriums. With its 8
year moratorium period, it is clearly unreasonable for creditors
who have to “observe a vigil of 12 years” to collect on debts
which have become demandable as early as 1941. And the
injustice is more patent when, under the law, the debtor is not
even required to pay interest during the operation of the relief.
The court also noted that the reconstruction is paying off
and that the Philippines is headed to better times. Hence the
Supreme Court declared R.A. No. 342 unreasonable and
oppressive and hence, null and void and without effect.
Disposition:
Esteban was ordered to pay the balance with interest at the
rate of 7% per annum with 12% attorneys fees.

33 ORTIGAS VS. FEATI BANK 94 SCRA 533

Facts:
On March 4, 1952, Ortigas sold Lot 5 and 6, Block 31 of the
Highway Hills Subdivision at Mandaluyong to Augusto Padilla
y Angeles and Natividad Angeles. The latter transferred their
rights in favour of Emma Chavez, upon completion of payment
a deed was executed with stipulations, one of which is that the
use of the lots are to be exclusive for residential purposes only.
This was annotated in the Transfer Certificate of Titles No.
101509 and 101511. Feati then acquired Lot 5 directly from
Emma Chavez and Lot 6 from Republic Flour Mills. On May 5,
1963, Feati started construction of a building on both lots to be
devoted for banking purposes but could also be for residential
use. Ortigas sent a written demand to stop construction but
Feati continued contending that the building was being
constructed according to the zoning regulations as stated in
Municipal Resolution 27 declaring the area along the West part
of EDSA to be a commercial and industrial zone. Civil case No.
7706 was made and decided in favour of Feati.
Issue:
Whether or not Resolution number 27 declaring Lot 5 and
6 to be part of an industrial and commercial zone is valid
considering the contract stipulation in the Transfer Certificate
of Titles.
Held:
Resolution No. 27 prevails over the contract stipulations.
Section 3 of RA 2264 of the Local Autonomy Act
empowers a Municipal Council to adopt zoning and subdivision
ordinances or regulations for the Municipality. Section 12 or
RA 2264 states that implied power of the municipality should
be “liberally construed in it’s favour”, “to give more power to
the local government in promoting economic conditions, social
welfare, and material progress in the community”. This is found
in the General Welfare Clause of the said act.
Although non-impairment of contracts is constitutionally
guaranteed, it is not absolute since it has to be reconciled with
the legitimate exercise of police power, e.g. the power to
promote health, morals, peace, education, good order or safety
and general welfare of the people.
In this case, Resolution No. 27 was obviously passed in
exercise of police power to safeguard health, safety, peace and
order and the general welfare of the people in the locality as it
would not be a conducive residential area considering the
amount of traffic, pollution, and noise which results in the
surrounding industrial and commercial establishments.

34 Goldenway Merchandising Corp v. Equitable PCI

G.R. No. 195540 March 13, 2013
Doctrine: The purpose of the non-impairment clause of the
Constitution is to safeguard the integrity of contracts against
unwarranted interference by the State. Generally contracts
should not be tampered with by subsequent laws that would
change or modify the rights and obligation of the parties.
Facts:
 November 29, 1985; Goldenway Merchandising
Corporation (goldenway) executed a Real Estate Mortgage
in favor of Equitable PCI Bank (PCI) over its real properties
in Valenzuela, Bulacan. The mortgage secured the 2
million peso loan granted to goldenway and was registered.
 Goldenway failed to settle its loan obligation, so PCI
extrajudicially foreclosed on Dec. 13, 2000. The properties
were sold for 3,500,000 to PCI. On Feb. 6, 2001, a deed of
sale was registered.
 Goldenway offered to redeem the foreclosed property by
tendering a check of 3,500,000. The counsel of Goldenway
was stating that it had intention to exercise its right to
redemption while PCI said that it was no longer possible
because the certificate of sale had already been registered.
 Dec. 7, 2001; Goldenway filed a complaint for specific
performance stating that R.A. no 3135 should apply rather
than R.A. no 8791. The former had a one year period of
redemption while the latter stated that the right would last
until but not after the registration of the certificate of the
foreclosure of sale, or three months after foreclosure,
whichever comes first.
 Trial court rendered a decision, dismissing the complaint
for the reason that no issue of constitutionality was raised,
 the redemption was late and the persons were not properly
authorized. Court of Appeals affirmed the trial court’s
decision. Goldenway could not justify the declarant of
unconstitutionality and the assailed law plainly reveals the
intention to shorten the period for JURIDICAL Persons.
MR denied by CA.
 In the present case, Goldenway is again arguing against the
constitutionality of Sec. (47) R.A. No. 8791.
Issue:
WON the application Sec. 47 of RA No. 8791 in their contract
is unconstitutional as it is violative of the constitutional
prohibition against impairment of obligations of contract.
Ruling:
The application Sec. 47 of RA No. 8791 in the contract is
CONSTITUTIONAL .
SECTION 47. Foreclosure of Real Estate Mortgage. — In the event of
foreclosure, whether judicially or extrajudicially, of any mortgage on
real estate which is security for any loan or other credit
accommodation granted, the mortgagor or debtor whose real property
has been sold for the full or partial payment of his obligation shall have
the right within one year after the sale of the real estate, to redeem
the property by paying the amount due under the mortgage deed, with
interest thereon at the rate specified in the mortgage, and all the costs
and expenses incurred by the bank or institution from the sale and
custody of said property less the income derived therefrom. However,
the purchaser at the auction sale concerned whether in a judicial or
extrajudicial foreclosure shall have the right to enter upon and take
possession of such property immediately after the date of the
confirmation of the auction sale and administer the same in
accordance with law. Any petition in court to enjoin or restrain the
conduct of foreclosure proceedings instituted pursuant to this
provision shall be given due course only upon the filing by the
petitioner of a bond in an amount fixed by the court conditioned that
he will pay all the damages which the bank may suffer by the
enjoining or the restraint of the foreclosure proceeding.
Notwithstanding Act 3135, juridical persons whose property is
being sold pursuant to an extrajudicial foreclosure, shall have the right
to redeem the property in accordance with this provision until, but
not after, the registration of the certificate of foreclosure sale with the
applicable Register of Deeds which in no case shall be more than three
(3) months after foreclosure, whichever is earlier. Owners of property
that has been sold in a foreclosure sale prior to the effectivity of this
Act shall retain their redemption rights until their expiration.
(Emphasis supplied.)
When confronted with a constitutional question, it is
elementary that every court must approach it with grave care
and considerable caution bearing in mind that every statute is
presumed valid and every reasonable doubt should be resolved
in favor of its constitutionality. For a law to be nullified, it
must be shown that there is a clear and unequivocal breach of
the Constitution. The ground for nullity must be clear and
beyond reasonable doubt.
In this case, Petitioner’s contention that Section 47 of R.A.
8791 violates the constitutional proscription against
impairment of the obligation of contract has no basis.
The purpose of the non-impairment clause of the
Constitution is to safeguard the integrity of contracts against
unwarranted interference by the State. As a rule, contracts
should not be tampered with by subsequent laws that would
change or modify the rights and obligations of the
parties. Impairment is anything that diminishes the efficacy of
the contract. There is an impairment if a subsequent law
changes the terms of a contract between the parties, imposes
new conditions, dispenses with those agreed upon or
withdraws remedies for the enforcement of the rights of the
parties.
The said section 47 does not divest the right of redemption
from juridical persons but only modifies the time for the
exercise of such right by reducing the one-year period
originally provided in Act No. 3135. There is likewise no
retroactive application of the new redemption period because
Section 47 exempts from its operation those properties
foreclosed prior to its effectivity and whose owners shall retain
their redemption rights under Act No. 3135.
(In this case, the sale was effected before RA 8791. However,
RA 8791 was already in effect nung na foreclose ang property.
Kaya inapply sya.)

35. PRYCE CORP V. CHINA BANKING CORP

G. R. No. 172302 February 18, 2014
Art. III, Sec. 10 FACTS:
FACTS:
The present case originated from a petition for corporate
rehabilitation filed by petitioner Pryce Corporation on July 9,
2004 with the Regional Trial Court of Makati which found the
petition sufficient in form and substance and issued a stay order
and appointing Gener T. Mendoza as rehabilitation receiver.
On February 23, 2005, respondent China Banking Corporation
elevated the case to the Court of Appeals. Its petition
questioned the January 17, 2005 order that included the
following terms:
1. The indebtedness to China Banking Corporation and Bank
of the Philippine Islands as well as the long term
commercial papers will be paid through a dacion en pago
of developed real estate assets of the petitioner.
2. All accrued penalties are waived.
3. Interests shall accrue only up to July 13, 2004, the date of
issuance of the stay order.
4. No interest will accrue during the pendency of petitioner’s
corporate rehabilitation.
5. Dollar-denominated loans will be converted to Philippine
Pesos on the date of the issuance of this Order using the
reference rate of the Philippine Dealing System as of this
date.
Respondent China Banking Corporation contended that the
rehabilitation plan’s approval impaired the obligations of
contracts. It argued that neither the provisions of Presidential
Decree No. 902-A nor the Interim Rules of Procedure on
Corporate Rehabilitation (Interim Rules) empowered
commercial courts "to render without force and effect valid
contractual stipulations." Moreover, the plan’s approval
authorizing dacion en pago of petitioner Pryce Corporation’s
properties without respondent China Banking Corporation’s
consent not only violated "mutuality of contract and due
process, but was also antithetical to the avowed policies of the
state to maintain a competitive financial system.
Court of Appeals Seventh (7th) Division granted respondent
China Banking Corporation's petition, and reversed and set
aside the rehabilitation. Hence this petition.
ISSUE: Whether or not the rehabilitation plan is a violation of
the constitutional proscription against impairment of
contractual obligations.
HELD: No. The constitutional guaranty of non-impairment of
obligations is limited by the exercise of the police power of the
State for the common good of the general public. Successful
rehabilitation of a distressed corporation will benefit its
debtors, creditors, employees, and the economy in general. The
court may approve a rehabilitation plan even over the
opposition of creditors holding a majority of the total liabilities
of the debtor if, in its judgment, the rehabilitation of the debtor
is feasible and the opposition of the creditors is manifestly
unreasonable. The rehabilitation plan, once approved, is
binding upon the debtor and all persons who may be affected
by it, including the creditors.
Corporate rehabilitation is one of many statutorily provided
remedies for businesses that experience a downturn. Rather
than leave the various creditors unprotected, legislation now
provides for an orderly procedure of equitably and fairly
addressing their concerns. Corporate rehabilitation allows a
court-supervised process to rejuvenate a corporation.
This option is preferred so as to avoid what Garrett Hardin
called the Tragedy of Commons. Here, Hardin submits that
"coercive government regulation is necessary to prevent the
degradation of commonpool resources, since individual
resource appropriators receive the full benefit of their use and
bear only a share of their cost.
Allowing the corporation room to get back on its feet will
retain if not increase employment opportunities for the market
as a whole. Indirectly, the services offered by the corporation
will also benefit the market as "[t]he fundamental impulse that
sets and keeps the capitalist engine in motion comes from [the
constant entry of] new consumers’ goods, the new methods of
production or transportation, the new markets, [and] the new
forms of industrial organization that capitalist enterprise
creates.
DISPOSITION: The Supreme Court granted Pryce
Corporation’s motion, reconsidering and setting aside the the
court’s February 4, 2008 decision.