Session 4 Polirev Cases and Digests

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G.R. No.

L-30671 November 28, 1973 It is a fundamental postulate of constitutionalism flowing from the juristic concept of sovereignty that
the state as well as its government is immune from suit unless it gives its consent. It is readily
understandable why it must be so. In the classic formulation of Holmes: "A sovereign is exempt from
REPUBLIC OF THE PHILIPPINES, petitioner, 
suit, not because of any formal conception or obsolete theory, but on the logical and practical ground
vs.
that there can be no legal right as against the authority that makes the law on which the right
HON. GUILLERMO P. VILLASOR, as Judge of the Court of First Instance of Cebu, Branch I,
depends."5 Sociological jurisprudence supplies an answer not dissimilar. So it was indicated in a
THE PROVINCIAL SHERIFF OF RIZAL, THE SHERIFF OF QUEZON CITY, and THE SHERIFF OF
recent decision, Providence Washington Insurance Co. v. Republic of the Philippines,6 with its
THE CITY OF MANILA, THE CLERK OF COURT, Court of First Instance of Cebu, P. J. KIENER
affirmation that "a continued adherence to the doctrine of non-suability is not to be deplored for as
CO., LTD., GAVINO UNCHUAN, AND INTERNATIONAL CONSTRUCTION
against the inconvenience that may be caused private parties, the loss of governmental efficiency and
CORPORATION, respondents.
the obstacle to the performance of its multifarious functions are far greater if such a fundamental
principle were abandoned and the availability of judicial remedy were not thus restricted. With the
The Republic of the Philippines in this certiorari and prohibition proceeding challenges the validity of well known propensity on the part of our people to go to court, at the least provocation, the loss of
an order issued by respondent Judge Guillermo P. Villasor, then of the Court of First Instance of Cebu, time and energy required to defend against law suits, in the absence of such a basic principle that
Branch I,1 declaring a decision final and executory and of an alias writ of execution directed against constitutes such an effective obstacle, could very well be imagined."7
the funds of the Armed Forces of the Philippines subsequently issued in pursuance thereof, the
alleged ground being excess of jurisdiction, or at the very least, grave abuse of discretion. As thus
This fundamental postulate underlying the 1935 Constitution is now made explicit in the revised
simply and tersely put, with the facts being undisputed and the principle of law that calls for
charter. It is therein expressly provided: "The State may not be sued without its consent."8 A
application indisputable, the outcome is predictable. The Republic of the Philippines is entitled to the
corollary, both dictated by logic and sound sense from a basic concept is that public funds cannot be
writs prayed for. Respondent Judge ought not to have acted thus. The order thus impugned and the
the object of a garnishment proceeding even if the consent to be sued had been previously granted
alias writ of execution must be nullified.
and the state liability adjudged. Thus in the recent case of Commissioner of Public Highways v. San
Diego,9 such a well-settled doctrine was restated in the opinion of Justice Teehankee: "The universal
In the petition filed by the Republic of the Philippines on July 7, 1969, a summary of facts was set rule that where the State gives its consent to be sued by private parties either by general or special
forth thus: "7. On July 3, 1961, a decision was rendered in Special Proceedings No. 2156-R in favor of law, it may limit claimant's action 'only up to the completion of proceedings anterior to the stage of
respondents P. J. Kiener Co., Ltd., Gavino Unchuan, and International Construction Corporation, and execution' and that the power of the Courts ends when the judgment is rendered, since government
against the petitioner herein, confirming the arbitration award in the amount of P1,712,396.40, funds and properties may not be seized under writs of execution or garnishment to satisfy such
subject of Special Proceedings. 8. On June 24, 1969, respondent Honorable Guillermo P. Villasor, judgments, is based on obvious considerations of public policy. Disbursements of public funds must be
issued an Order declaring the aforestated decision of July 3, 1961 final and executory, directing the covered by the corresponding appropriation as required by law. The functions and public services
Sheriffs of Rizal Province, Quezon City [as well as] Manila to execute the said decision. 9. Pursuant to rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds
the said Order dated June 24, 1969, the corresponding Alias Writ of Execution [was issued] dated from their legitimate and specific objects, as appropriated by law." 10 Such a principle applies even to
June 26, 1969, .... 10. On the strength of the afore-mentioned Alias Writ of Execution dated June 26, an attempted garnishment of a salary that had accrued in favor of an employee. Director of
1969, the Provincial Sheriff of Rizal (respondent herein) served notices of garnishment dated June 28, Commerce and Industry v. Concepcion, 11 speaks to that effect. Justice Malcolm as ponente left no
1969 with several Banks, specially on the "monies due the Armed Forces of the Philippines in the form doubt on that score. Thus: "A rule which has never been seriously questioned, is that money in the
of deposits sufficient to cover the amount mentioned in the said Writ of Execution"; the Philippine hands of public officers, although it may be due government employees, is not liable to the creditors
Veterans Bank received the same notice of garnishment on June 30, 1969 .... 11. The funds of the of these employees in the process of garnishment. One reason is, that the State, by virtue of its
Armed Forces of the Philippines on deposit with the Banks, particularly, with the Philippine Veterans sovereignty, may not be sued in its own courts except by express authorization by the Legislature,
Bank and the Philippine National Bank [or] their branches are public funds duly appropriated and and to subject its officers to garnishment would be to permit indirectly what is prohibited directly.
allocated for the payment of pensions of retirees, pay and allowances of military and civilian Another reason is that moneys sought to be garnished, as long as they remain in the hands of the
personnel and for maintenance and operations of the Armed Forces of the Philippines, as per disbursing officer of the Government, belong to the latter, although the defendant in garnishment
Certification dated July 3, 1969 by the AFP Controller,..." 2. The paragraph immediately succeeding in may be entitled to a specific portion thereof. And still another reason which covers both of the
such petition then alleged: "12. Respondent Judge, Honorable Guillermo P. Villasor, acted in excess of foregoing is that every consideration of public policy forbids it." 12
jurisdiction [or] with grave abuse of discretion amounting to lack of jurisdiction in granting the
issuance of an alias writ of execution against the properties of the Armed Forces of the Philippines,
In the light of the above, it is made abundantly clear why the Republic of the Philippines could
hence, the Alias Writ of Execution and notices of garnishment issued pursuant thereto are null and
rightfully allege a legitimate grievance.
void."3 In the answer filed by respondents, through counsel Andres T. Velarde and Marcelo B. Fernan,
the facts set forth were admitted with the only qualification being that the total award was in the
amount of P2,372,331.40.4 WHEREFORE, the writs of certiorari and prohibition are granted, nullifying and setting aside both the
order of June 24, 1969 declaring executory the decision of July 3, 1961 as well as the alias writ of
execution issued thereunder. The preliminary injunction issued by this Court on July 12, 1969 is
The Republic of the Philippines, as mentioned at the outset, did right in filing this certiorari and
hereby made permanent.
prohibition proceeding. What was done by respondent Judge is not in conformity with the dictates of
the Constitution. .
Zaldivar (Chairman), Antonio, Fernandez and Aquino, JJ., concur.

1
Barredo, J, took no part.

Lutz v Araneta
GR No L-7859 December 22, 1955 

FACTS:
Walter Lutz, as Judicial Administrator of the Intestate Estate of Antonio Jayme Ledesma, sought to
recover the sum of 
P14,666.40 paid by the estate as taxes from the Commissioner under Section e of Commonwealth Act
567 or the Sugar Adjustment Act, alleging that such tax is unconstitutional as it levied for the aid and
support of the sugar industry exclusively, which is in his opinion not a public purpose. 

ISSUE:
Is the tax valid? 

HELD:
Yes. The tax is levied with a regulatory purpose, i.e. to provide means for the rehabilitation and
stabilization of the threatened sugar industry. The act is primarily an exercise of police power and is
not a pure exercise of taxing power. 
As sugar production is one of the great industries of the Philippines and its promotion, protection and
advancement redounds greatly to the general welfare, the legislature found that the general welfare
demanded that the industry should be stabilized, and provided that the distribution of benefits had to
sustain. 
Further, it cannot be said that the devotion of tax money to experimental stations to seek increase of
efficiency in sugar production, utilization of by-products, etc., as well as to the improvement of living
and working conditions in sugar mills and plantations without any part of such money being
channeled directly to private persons, constitute expenditure of tax money for private purposes. 
Hence, the tax is valid. 

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SEC. 6. All collections made under this Act shall accrue to a special fund in the Philippine
Treasury, to be known as the 'Sugar Adjustment and Stabilization Fund,' and shall be paid
out only for any or all of the following purposes or to attain any or all of the following
objectives, as may be provided by law.

Republic of the Philippines


First, to place the sugar industry in a position to maintain itself, despite the gradual loss of
SUPREME COURT
the preferntial position of the Philippine sugar in the United States market, and ultimately to
Manila
insure its continued existence notwithstanding the loss of that market and the consequent
necessity of meeting competition in the free markets of the world;
EN BANC
Second, to readjust the benefits derived from the sugar industry by all of the component
G.R. No. L-7859        December 22, 1955 elements thereof — the mill, the landowner, the planter of the sugar cane, and the laborers
in the factory and in the field — so that all might continue profitably to engage
WALTER LUTZ, as Judicial Administrator of the Intestate Estate of the deceased Antonio therein;lawphi1.net
Jayme Ledesma,plaintiff-appellant, 
vs. Third, to limit the production of sugar to areas more economically suited to the production
J. ANTONIO ARANETA, as the Collector of Internal Revenue, defendant-appellee. thereof; and

Ernesto J. Gonzaga for appellant. Fourth, to afford labor employed in the industry a living wage and to improve their living and
Office of the Solicitor General Ambrosio Padilla, First Assistant Solicitor General Guillermo E. Torres working conditions: Provided, That the President of the Philippines may, until the adjourment
and Solicitor Felicisimo R. Rosete for appellee. of the next regular session of the National Assembly, make the necessary disbursements
from the fund herein created (1) for the establishment and operation of sugar experiment
station or stations and the undertaking of researchers (a) to increase the recoveries of the
centrifugal sugar factories with the view of reducing manufacturing costs, (b) to produce and
propagate higher yielding varieties of sugar cane more adaptable to different district
conditions in the Philippines, (c) to lower the costs of raising sugar cane, (d) to improve the
REYES, J.B L., J.: buying quality of denatured alcohol from molasses for motor fuel, (e) to determine the
possibility of utilizing the other by-products of the industry, (f) to determine what crop or
crops are suitable for rotation and for the utilization of excess cane lands, and (g) on other
This case was initiated in the Court of First Instance of Negros Occidental to test the legality of the problems the solution of which would help rehabilitate and stabilize the industry, and (2) for
taxes imposed by Commonwealth Act No. 567, otherwise known as the Sugar Adjustment Act. the improvement of living and working conditions in sugar mills and sugar plantations,
authorizing him to organize the necessary agency or agencies to take charge of the
Promulgated in 1940, the law in question opens (section 1) with a declaration of emergency, due to expenditure and allocation of said funds to carry out the purpose hereinbefore enumerated,
the threat to our industry by the imminent imposition of export taxes upon sugar as provided in the and, likewise, authorizing the disbursement from the fund herein created of the necessary
Tydings-McDuffe Act, and the "eventual loss of its preferential position in the United States market"; amount or amounts needed for salaries, wages, travelling expenses, equipment, and other
wherefore, the national policy was expressed "to obtain a readjustment of the benefits derived from sundry expenses of said agency or agencies.
the sugar industry by the component elements thereof" and "to stabilize the sugar industry so as to
prepare it for the eventuality of the loss of its preferential position in the United States market and Plaintiff, Walter Lutz, in his capacity as Judicial Administrator of the Intestate Estate of Antonio Jayme
the imposition of the export taxes." Ledesma, seeks to recover from the Collector of Internal Revenue the sum of P14,666.40 paid by the
estate as taxes, under section 3 of the Act, for the crop years 1948-1949 and 1949-1950; alleging
In section 2, Commonwealth Act 567 provides for an increase of the existing tax on the manufacture that such tax is unconstitutional and void, being levied for the aid and support of the sugar industry
of sugar, on a graduated basis, on each picul of sugar manufactured; while section 3 levies on owners exclusively, which in plaintiff's opinion is not a public purpose for which a tax may be constitutioally
or persons in control of lands devoted to the cultivation of sugar cane and ceded to others for a levied. The action having been dismissed by the Court of First Instance, the plaintifs appealed the
consideration, on lease or otherwise —  case directly to this Court (Judiciary Act, section 17).

a tax equivalent to the difference between the money value of the rental or consideration The basic defect in the plaintiff's position is his assumption that the tax provided for in
collected and the amount representing 12 per centum of the assessed value of such land. Commonwealth Act No. 567 is a pure exercise of the taxing power. Analysis of the Act, and
particularly of section 6 (heretofore quoted in full), will show that the tax is levied with a regulatory
purpose, to provide means for the rehabilitation and stabilization of the threatened sugar industry. In
According to section 6 of the law — 
other words, the act is primarily an exercise of the police power.
3
This Court can take judicial notice of the fact that sugar production is one of the great industries of by-products and solution of allied problems, as well as to the improvements of living and working
our nation, sugar occupying a leading position among its export products; that it gives employment to conditions in sugar mills or plantations, without any part of such money being channeled directly to
thousands of laborers in fields and factories; that it is a great source of the state's wealth, is one of private persons, constitutes expenditure of tax money for private purposes, (compare Everson vs.
the important sources of foreign exchange needed by our government, and is thus pivotal in the plans Board of Education, 91 L. Ed. 472, 168 ALR 1392, 1400).
of a regime committed to a policy of currency stability. Its promotion, protection and advancement,
therefore redounds greatly to the general welfare. Hence it was competent for the legislature to find
The decision appealed from is affirmed, with costs against appellant. So ordered.
that the general welfare demanded that the sugar industry should be stabilized in turn; and in the
wide field of its police power, the lawmaking body could provide that the distribution of benefits
therefrom be readjusted among its components to enable it to resist the added strain of the increase Paras, C. J., Bengzon, Padilla, Reyes, A., Jugo, Bautista Angelo, Labrador, and Concepcion, JJ.,
in taxes that it had to sustain (Sligh vs. Kirkwood, 237 U. S. 52, 59 L. Ed. 835; Johnson vs. State ex concur.
rel. Marey, 99 Fla. 1311, 128 So. 853; Maxcy Inc. vs. Mayo, 103 Fla. 552, 139 So. 121).

As stated in Johnson vs. State ex rel. Marey, with reference to the citrus industry in Florida — 

The protection of a large industry constituting one of the great sources of the state's wealth
and therefore directly or indirectly affecting the welfare of so great a portion of the
population of the State is affected to such an extent by public interests as to be within the
police power of the sovereign. (128 Sp. 857).

Once it is conceded, as it must, that the protection and promotion of the sugar industry is a matter of
public concern, it follows that the Legislature may determine within reasonable bounds what is
necessary for its protection and expedient for its promotion. Here, the legislative discretion must be
allowed fully play, subject only to the test of reasonableness; and it is not contended that the means
provided in section 6 of the law (above quoted) bear no relation to the objective pursued or are
oppressive in character. If objective and methods are alike constitutionally valid, no reason is seen
why the state may not levy taxes to raise funds for their prosecution and attainment. Taxation may
be made the implement of the state's police power (Great Atl. & Pac. Tea Co. vs. Grosjean, 301 U. S.
412, 81 L. Ed. 1193; U. S. vs. Butler, 297 U. S. 1, 80 L. Ed. 477; M'Culloch vs. Maryland, 4 Wheat.
316, 4 L. Ed. 579).

That the tax to be levied should burden the sugar producers themselves can hardly be a ground of
complaint; indeed, it appears rational that the tax be obtained precisely from those who are to be
benefited from the expenditure of the funds derived from it. At any rate, it is inherent in the power to
tax that a state be free to select the subjects of taxation, and it has been repeatedly held that
"inequalities which result from a singling out of one particular class for taxation, or exemption infringe
no constitutional limitation" (Carmichael vs. Southern Coal & Coke Co., 301 U. S. 495, 81 L. Ed. 1245,
citing numerous authorities, at p. 1251).

From the point of view we have taken it appears of no moment that the funds raised under the Sugar
Stabilization Act, now in question, should be exclusively spent in aid of the sugar industry, since it is
that very enterprise that is being protected. It may be that other industries are also in need of similar
protection; that the legislature is not required by the Constitution to adhere to a policy of "all or
none." As ruled in Minnesota ex rel. Pearson vs. Probate Court, 309 U. S. 270, 84 L. Ed. 744, "if the
law presumably hits the evil where it is most felt, it is not to be overthrown because there are other
instances to which it might have been applied;" and that "the legislative authority, exerted within its
proper field, need not embrace all the evils within its reach" (N. L. R. B. vs. Jones & Laughlin Steel
Corp. 301 U. S. 1, 81 L. Ed. 893).

Even from the standpoint that the Act is a pure tax measure, it cannot be said that the devotion of
tax money to experimental stations to seek increase of efficiency in sugar production, utilization of
4
accruing to the owner in favour of the farmer.

A statute may be sustained under the police power only if there is concurrence of the lawful subject
and the method. 

Subject and purpose of the Agrarian Reform Law is valid, however what is to be determined is the
method employed to achieve it.

ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, INC., JUANITO D. GOMEZ,


GERARDO B. ALARCIO, FELIPE A. GUICO, JR., BERNARDO M. ALMONTE, CANUTO RAMIR B.
CABRITO, ISIDRO T. GUICO, FELISA I. LLAMIDO, FAUSTO J. SALVA, REYNALDO G.
ESTRADA, FELISA C. BAUTISTA, ESMENIA J. CABE, TEODORO B. MADRIAGA, AUREA J.
PRESTOSA, EMERENCIANA J. ISLA, FELICISIMA C. ARRESTO, CONSUELO M. MORALES,
BENJAMIN R. SEGISMUNDO, CIRILA A. JOSE & NAPOLEON S. FERRER, petitioners, 
vs.
HONORABLE SECRETARY OF AGRARIAN REFORM, 

Facts: Several petitions are the root of the case:

a. A petition alleging the constitutionality of PD No. 27, EO 228 and 229 and RA 6657. Subjects of the
petition are a 9-hectare and 5 hectare Riceland worked by four tenants. Tenants were declared full
owners by EO 228 as qualified farmers under PD 27. The petitioners now contend that President
Aquino usurped the legislature’s power. 

b. A petition by landowners and sugarplanters in Victoria’s Mill Negros Occidental against Proclamation
131 and EO 229. Proclamation 131 is the creation of Agrarian Reform Fund with initial fund of
P50Billion.

c. A petition by owners of land which was placed by the DAR under the coverage of Operation Land
Transfer.

d. A petition invoking the right of retention under PD 27 to owners of rice and corn lands not
exceeding seven hectares.

Issue: Whether or Not the aforementioned EO’s, PD, and RA were constitutional.

Held: The promulgation of PD 27 by President Marcos was valid in exercise of Police power


and eminent domain.

The power of President Aquino to promulgate Proc. 131 and EO 228 and 229 was authorized under
Sec. 6 of the Transitory Provisions of the 1987 Constitution. Therefore it is a valid exercise of Police
Power and EminentDomain.

RA 6657 is likewise valid. The carrying out of the regulation under CARP becomes necessary to
deprive owners of whatever lands they may own in excess of the maximum area allowed, there is
definitely a taking under the power of eminent domain for which payment of just compensation is
imperative. The taking contemplated is not a mere limitation of the use of the land. What is required
is the surrender of the title and the physical possession of said excess and all beneficial rights

5
G.R. No. 79777 July 14, 1989 

NICOLAS S. MANAAY and AGUSTIN HERMANO, JR., petitioners, 


vs.
HON. PHILIP ELLA JUICO, as Secretary of Agrarian Reform, and LAND BANK OF THE
PHILIPPINES, respondents. 

CRUZ,  J.:

In ancient mythology, Antaeus was a terrible giant who blocked and challenged Hercules for his life on
his way to Mycenae after performing his eleventh labor. The two wrestled mightily and Hercules flung
his adversary to the ground thinking him dead, but Antaeus rose even stronger to resume their
struggle. This happened several times to Hercules' increasing amazement. Finally, as they continued
grappling, it dawned on Hercules that Antaeus was the son of Gaea and could never die as long as
any part of his body was touching his Mother Earth. Thus forewarned, Hercules then held Antaeus up
in the air, beyond the reach of the sustaining soil, and crushed him to death. 

Mother Earth. The sustaining soil. The giver of life, without whose invigorating touch even the
G.R. No. 78742 July 14, 1989 powerful Antaeus weakened and died. 

ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, INC., JUANITO D. GOMEZ, The cases before us are not as fanciful as the foregoing tale. But they also tell of the elemental forces
GERARDO B. ALARCIO, FELIPE A. GUICO, JR., BERNARDO M. ALMONTE, CANUTO RAMIR B. of life and death, of men and women who, like Antaeus need the sustaining strength of the precious
CABRITO, ISIDRO T. GUICO, FELISA I. LLAMIDO, FAUSTO J. SALVA, REYNALDO G. earth to stay alive. 
ESTRADA, FELISA C. BAUTISTA, ESMENIA J. CABE, TEODORO B. MADRIAGA, AUREA J.
PRESTOSA, EMERENCIANA J. ISLA, FELICISIMA C. ARRESTO, CONSUELO M. MORALES,
BENJAMIN R. SEGISMUNDO, CIRILA A. JOSE & NAPOLEON S. FERRER, petitioners,  "Land for the Landless" is a slogan that underscores the acute imbalance in the distribution of this
vs. precious resource among our people. But it is more than a slogan. Through the brooding centuries, it
HONORABLE SECRETARY OF AGRARIAN REFORM, respondent.  has become a battle-cry dramatizing the increasingly urgent demand of the dispossessed among us
for a plot of earth as their place in the sun. 

G.R. No. 79310 July 14, 1989 


Recognizing this need, the Constitution in 1935 mandated the policy of social justice to "insure the
well-being and economic security of all the people," 1 especially the less privileged. In 1973, the new
ARSENIO AL. ACUNA, NEWTON JISON, VICTORINO FERRARIS, DENNIS JEREZA, Constitution affirmed this goal adding specifically that "the State shall regulate the acquisition,
HERMINIGILDO GUSTILO, PAULINO D. TOLENTINO and PLANTERS' COMMITTEE, INC., ownership, use, enjoyment and disposition of private property and equitably diffuse property
Victorias Mill District, Victorias, Negros Occidental, petitioners,  ownership and profits." 2 Significantly, there was also the specific injunction to "formulate and
vs. implement an agrarian reform program aimed at emancipating the tenant from the bondage of the
JOKER ARROYO, PHILIP E. JUICO and PRESIDENTIAL AGRARIAN REFORM soil." 3
COUNCIL, respondents.

The Constitution of 1987 was not to be outdone. Besides echoing these sentiments, it also adopted
G.R. No. 79744 July 14, 1989  one whole and separate Article XIII on Social Justice and Human Rights, containing grandiose but
undoubtedly sincere provisions for the uplift of the common people. These include a call in the
INOCENTES PABICO, petitioner,  following words for the adoption by the State of an agrarian reform program: 
vs.
HON. PHILIP E. JUICO, SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM, HON. SEC. 4. The State shall, by law, undertake an agrarian reform program founded on
JOKER ARROYO, EXECUTIVE SECRETARY OF THE OFFICE OF THE PRESIDENT, and Messrs. the right of farmers and regular farmworkers, who are landless, to own directly or
SALVADOR TALENTO, JAIME ABOGADO, CONRADO AVANCENA and ROBERTO collectively the lands they till or, in the case of other farmworkers, to receive a just
TAAY, respondents.  share of the fruits thereof. To this end, the State shall encourage and undertake the
6
just distribution of all agricultural lands, subject to such priorities and reasonable They contend that President Aquino usurped legislative power when she promulgated E.O. No. 228.
retention limits as the Congress may prescribe, taking into account ecological, The said measure is invalid also for violation of Article XIII, Section 4, of the Constitution, for failure
developmental, or equity considerations and subject to the payment of just to provide for retention limits for small landowners. Moreover, it does not conform to Article VI,
compensation. In determining retention limits, the State shall respect the right of Section 25(4) and the other requisites of a valid appropriation. 
small landowners. The State shall further provide incentives for voluntary land-
sharing. 
In connection with the determination of just compensation, the petitioners argue that the same may
be made only by a court of justice and not by the President of the Philippines. They invoke the recent
Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural Land Reform Code, had already cases of EPZA v. Dulay  5 andManotok v. National Food Authority. 6 Moreover, the just compensation
been enacted by the Congress of the Philippines on August 8, 1963, in line with the above-stated contemplated by the Bill of Rights is payable in money or in cash and not in the form of bonds or
principles. This was substantially superseded almost a decade later by P.D. No. 27, which was other things of value. 
promulgated on October 21, 1972, along with martial law, to provide for the compulsory acquisition of
private lands for distribution among tenant-farmers and to specify maximum retention limits for
In considering the rentals as advance payment on the land, the executive order also deprives the
landowners. 
petitioners of their property rights as protected by due process. The equal protection clause is also
violated because the order places the burden of solving the agrarian problems on the owners only of
The people power revolution of 1986 did not change and indeed even energized the thrust for agricultural lands. No similar obligation is imposed on the owners of other properties. 
agrarian reform. Thus, on July 17, 1987, President Corazon C. Aquino issued E.O. No. 228, declaring
full land ownership in favor of the beneficiaries of P.D. No. 27 and providing for the valuation of still
The petitioners also maintain that in declaring the beneficiaries under P.D. No. 27 to be the owners of
unvalued lands covered by the decree as well as the manner of their payment. This was followed on
the lands occupied by them, E.O. No. 228 ignored judicial prerogatives and so violated due process.
July 22, 1987 by Presidential Proclamation No. 131, instituting a comprehensive agrarian reform
Worse, the measure would not solve the agrarian problem because even the small farmers are
program (CARP), and E.O. No. 229, providing the mechanics for its implementation. 
deprived of their lands and the retention rights guaranteed by the Constitution. 

Subsequently, with its formal organization, the revived Congress of the Philippines took over
In his Comment, the Solicitor General stresses that P.D. No. 27 has already been upheld in the earlier
legislative power from the President and started its own deliberations, including extensive public
cases ofChavez v. Zobel,  7 Gonzales v. Estrella,  8 and Association of Rice and Corn Producers of the
hearings, on the improvement of the interests of farmers. The result, after almost a year of spirited
Philippines, Inc. v. The National Land Reform Council.  9 The determination of just compensation by
debate, was the enactment of R.A. No. 6657, otherwise known as the Comprehensive Agrarian
the executive authorities conformably to the formula prescribed under the questioned order is at best
Reform Law of 1988, which President Aquino signed on June 10, 1988. This law, while considerably
initial or preliminary only. It does not foreclose judicial intervention whenever sought or warranted. At
changing the earlier mentioned enactments, nevertheless gives them suppletory effect insofar as they
any rate, the challenge to the order is premature because no valuation of their property has as yet
are not inconsistent with its provisions. 4
been made by the Department of Agrarian Reform. The petitioners are also not proper parties
because the lands owned by them do not exceed the maximum retention limit of 7 hectares. 
The above-captioned cases have been consolidated because they involve common legal questions,
including serious challenges to the constitutionality of the several measures mentioned above. They
Replying, the petitioners insist they are proper parties because P.D. No. 27 does not provide for
will be the subject of one common discussion and resolution, The different antecedents of each case
retention limits on tenanted lands and that in any event their petition is a class suit brought in behalf
will require separate treatment, however, and will first be explained hereunder. 
of landowners with landholdings below 24 hectares. They maintain that the determination of just
compensation by the administrative authorities is a final ascertainment. As for the cases invoked by
G.R. No. 79777  the public respondent, the constitutionality of P.D. No. 27 was merely assumed in Chavez, while what
was decided in Gonzales was the validity of the imposition of martial law. 
Squarely raised in this petition is the constitutionality of P.D. No. 27, E.O. Nos. 228 and 229, and R.A.
No. 6657.  In the amended petition dated November 22, 1588, it is contended that P.D. No. 27, E.O. Nos. 228
and 229 (except Sections 20 and 21) have been impliedly repealed by R.A. No. 6657. Nevertheless,
this statute should itself also be declared unconstitutional because it suffers from substantially the
The subjects of this petition are a 9-hectare riceland worked by four tenants and owned by petitioner
same infirmities as the earlier measures. 
Nicolas Manaay and his wife and a 5-hectare riceland worked by four tenants and owned by petitioner
Augustin Hermano, Jr. The tenants were declared full owners of these lands by E.O. No. 228 as
qualified farmers under P.D. No. 27.  A petition for intervention was filed with leave of court on June 1, 1988 by Vicente Cruz, owner of a 1.
83- hectare land, who complained that the DAR was insisting on the implementation of P.D. No. 27
and E.O. No. 228 despite a compromise agreement he had reached with his tenant on the payment of
The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on grounds inter alia of
rentals. In a subsequent motion dated April 10, 1989, he adopted the allegations in the basic
separation of powers, due process, equal protection and the constitutional limitation that no private
amended petition that the above- mentioned enactments have been impliedly repealed by R.A. No.
property shall be taken for public use without just compensation. 
6657. 

7
G.R. No. 79310  NASP alleges that President Aquino had no authority to fund the Agrarian Reform Program and that,
in any event, the appropriation is invalid because of uncertainty in the amount appropriated. Section
2 of Proc. No. 131 and Sections 20 and 21 of E.O. No. 229 provide for an initial appropriation of fifty
The petitioners herein are landowners and sugar planters in the Victorias Mill District, Victorias,
billion pesos and thus specifies the minimum rather than the maximum authorized amount. This is not
Negros Occidental. Co-petitioner Planters' Committee, Inc. is an organization composed of 1,400
allowed. Furthermore, the stated initial amount has not been certified to by the National Treasurer as
planter-members. This petition seeks to prohibit the implementation of Proc. No. 131 and E.O. No.
actually available. 
229. 

Two additional arguments are made by Barcelona, to wit, the failure to establish by clear and
The petitioners claim that the power to provide for a Comprehensive Agrarian Reform Program as
convincing evidence the necessity for the exercise of the powers of eminent domain, and the violation
decreed by the Constitution belongs to Congress and not the President. Although they agree that the
of the fundamental right to own property. 
President could exercise legislative power until the Congress was convened, she could do so only to
enact emergency measures during the transition period. At that, even assuming that the interim
legislative power of the President was properly exercised, Proc. No. 131 and E.O. No. 229 would still The petitioners also decry the penalty for non-registration of the lands, which is the expropriation of
have to be annulled for violating the constitutional provisions on just compensation, due process, and the said land for an amount equal to the government assessor's valuation of the land for tax
equal protection.  purposes. On the other hand, if the landowner declares his own valuation he is unjustly required to
immediately pay the corresponding taxes on the land, in violation of the uniformity rule. 
They also argue that under Section 2 of Proc. No. 131 which provides: 
In his consolidated Comment, the Solicitor General first invokes the presumption of constitutionality in
favor of Proc. No. 131 and E.O. No. 229. He also justifies the necessity for the expropriation as
Agrarian Reform Fund.-There is hereby created a special fund, to be known as the Agrarian Reform
explained in the "whereas" clauses of the Proclamation and submits that, contrary to the petitioner's
Fund, an initial amount of FIFTY BILLION PESOS (P50,000,000,000.00) to cover the estimated cost of
contention, a pilot project to determine the feasibility of CARP and a general survey on the people's
the Comprehensive Agrarian Reform Program from 1987 to 1992 which shall be sourced from the
opinion thereon are not indispensable prerequisites to its promulgation. 
receipts of the sale of the assets of the Asset Privatization Trust and Receipts of sale of ill-gotten
wealth received through the Presidential Commission on Good Government and such other sources as
government may deem appropriate. The amounts collected and accruing to this special fund shall be On the alleged violation of the equal protection clause, the sugar planters have failed to show that
considered automatically appropriated for the purpose authorized in this Proclamation the amount they belong to a different class and should be differently treated. The Comment also suggests the
appropriated is in futuro, not in esse. The money needed to cover the cost of the contemplated possibility of Congress first distributing public agricultural lands and scheduling the expropriation of
expropriation has yet to be raised and cannot be appropriated at this time.  private agricultural lands later. From this viewpoint, the petition for prohibition would be premature. 

Furthermore, they contend that taking must be simultaneous with payment of just compensation as it The public respondent also points out that the constitutional prohibition is against the payment of
is traditionally understood, i.e., with money and in full, but no such payment is contemplated in public money without the corresponding appropriation. There is no rule that only money already in
Section 5 of the E.O. No. 229. On the contrary, Section 6, thereof provides that the Land Bank of the existence can be the subject of an appropriation law. Finally, the earmarking of fifty billion pesos as
Philippines "shall compensate the landowner in an amount to be established by the government, Agrarian Reform Fund, although denominated as an initial amount, is actually the maximum sum
which shall be based on the owner's declaration of current fair market value as provided in Section 4 appropriated. The word "initial" simply means that additional amounts may be appropriated later
hereof, but subject to certain controls to be defined and promulgated by the Presidential Agrarian when necessary. 
Reform Council." This compensation may not be paid fully in money but in any of several modes that
may consist of part cash and part bond, with interest, maturing periodically, or direct payment in cash
On April 11, 1988, Prudencio Serrano, a coconut planter, filed a petition on his own behalf, assailing
or bond as may be mutually agreed upon by the beneficiary and the landowner or as may be
the constitutionality of E.O. No. 229. In addition to the arguments already raised, Serrano contends
prescribed or approved by the PARC. 
that the measure is unconstitutional because: 

The petitioners also argue that in the issuance of the two measures, no effort was made to make a
(1) Only public lands should be included in the CARP; 
careful study of the sugar planters' situation. There is no tenancy problem in the sugar areas that can
justify the application of the CARP to them. To the extent that the sugar planters have been lumped in
the same legislation with other farmers, although they are a separate group with problems exclusively (2) E.O. No. 229 embraces more than one subject which is not expressed in the
their own, their right to equal protection has been violated. title; 

A motion for intervention was filed on August 27,1987 by the National Federation of Sugarcane (3) The power of the President to legislate was terminated on July 2, 1987; and 
Planters (NASP) which claims a membership of at least 20,000 individual sugar planters all over the
country. On September 10, 1987, another motion for intervention was filed, this time by Manuel (4) The appropriation of a P50 billion special fund from the National Treasury did not
Barcelona, et al., representing coconut and riceland owners. Both motions were granted by the originate from the House of Representatives. 
Court. 

8
G.R. No. 79744  The incumbent president shall continue to exercise legislative powers until the first Congress is
convened. 
The petitioner alleges that the then Secretary of Department of Agrarian Reform, in violation of due
process and the requirement for just compensation, placed his landholding under the coverage of On the issue of just compensation, his position is that when P.D. No. 27 was promulgated on October
Operation Land Transfer. Certificates of Land Transfer were subsequently issued to the private 21. 1972, the tenant-farmer of agricultural land was deemed the owner of the land he was tilling. The
respondents, who then refused payment of lease rentals to him.  leasehold rentals paid after that date should therefore be considered amortization payments. 

On September 3, 1986, the petitioner protested the erroneous inclusion of his small landholding under In his Reply to the public respondents, the petitioner maintains that the motion he filed was resolved
Operation Land transfer and asked for the recall and cancellation of the Certificates of Land Transfer on December 14, 1987. An appeal to the Office of the President would be useless with the
in the name of the private respondents. He claims that on December 24, 1986, his petition was promulgation of E.O. Nos. 228 and 229, which in effect sanctioned the validity of the public
denied without hearing. On February 17, 1987, he filed a motion for reconsideration, which had not respondent's acts. 
been acted upon when E.O. Nos. 228 and 229 were issued. These orders rendered his motion moot
and academic because they directly effected the transfer of his land to the private respondents. 
G.R. No. 78742 

The petitioner now argues that: 


The petitioners in this case invoke the right of retention granted by P.D. No. 27 to owners of rice and
corn lands not exceeding seven hectares as long as they are cultivating or intend to cultivate the
(1) E.O. Nos. 228 and 229 were invalidly issued by the President of the Philippines.  same. Their respective lands do not exceed the statutory limit but are occupied by tenants who are
actually cultivating such lands. 
(2) The said executive orders are violative of the constitutional provision that no
private property shall be taken without due process or just compensation.  According to P.D. No. 316, which was promulgated in implementation of P.D. No. 27: 

(3) The petitioner is denied the right of maximum retention provided for under the No tenant-farmer in agricultural lands primarily devoted to rice and corn shall be
1987 Constitution.  ejected or removed from his farmholding until such time as the respective rights of
the tenant- farmers and the landowner shall have been determined in accordance
with the rules and regulations implementing P.D. No. 27. 
The petitioner contends that the issuance of E.0. Nos. 228 and 229 shortly before Congress convened
is anomalous and arbitrary, besides violating the doctrine of separation of powers. The legislative
power granted to the President under the Transitory Provisions refers only to emergency measures The petitioners claim they cannot eject their tenants and so are unable to enjoy their right of
that may be promulgated in the proper exercise of the police power.  retention because the Department of Agrarian Reform has so far not issued the implementing rules
required under the above-quoted decree. They therefore ask the Court for a writ of mandamus to
compel the respondent to issue the said rules. 
The petitioner also invokes his rights not to be deprived of his property without due process of law
and to the retention of his small parcels of riceholding as guaranteed under Article XIII, Section 4 of
the Constitution. He likewise argues that, besides denying him just compensation for his land, the In his Comment, the public respondent argues that P.D. No. 27 has been amended by LOI 474
provisions of E.O. No. 228 declaring that:  removing any right of retention from persons who own other agricultural lands of more than 7
hectares in aggregate area or lands used for residential, commercial, industrial or other purposes
from which they derive adequate income for their family. And even assuming that the petitioners do
Lease rentals paid to the landowner by the farmer-beneficiary after October 21,
not fall under its terms, the regulations implementing P.D. No. 27 have already been issued, to wit,
1972 shall be considered as advance payment for the land. 
the Memorandum dated July 10, 1975 (Interim Guidelines on Retention by Small Landowners, with an
accompanying Retention Guide Table), Memorandum Circular No. 11 dated April 21, 1978,
is an unconstitutional taking of a vested property right. It is also his contention that the inclusion of (Implementation Guidelines of LOI No. 474), Memorandum Circular No. 18-81 dated December
even small landowners in the program along with other landowners with lands consisting of seven 29,1981 (Clarificatory Guidelines on Coverage of P.D. No. 27 and Retention by Small Landowners),
hectares or more is undemocratic.  and DAR Administrative Order No. 1, series of 1985 (Providing for a Cut-off Date for Landowners to
Apply for Retention and/or to Protest the Coverage of their Landholdings under Operation Land
In his Comment, the Solicitor General submits that the petition is premature because the motion for Transfer pursuant to P.D. No. 27). For failure to file the corresponding applications for retention under
reconsideration filed with the Minister of Agrarian Reform is still unresolved. As for the validity of the these measures, the petitioners are now barred from invoking this right. 
issuance of E.O. Nos. 228 and 229, he argues that they were enacted pursuant to Section 6, Article
XVIII of the Transitory Provisions of the 1987 Constitution which reads:  The public respondent also stresses that the petitioners have prematurely initiated this case
notwithstanding the pendency of their appeal to the President of the Philippines. Moreover, the
issuance of the implementing rules, assuming this has not yet been done, involves the exercise of

9
discretion which cannot be controlled through the writ of mandamus. This is especially true if this In must be stressed that despite the inhibitions pressing upon the Court when confronted with
function is entrusted, as in this case, to a separate department of the government.  constitutional issues like the ones now before it, it will not hesitate to declare a law or act invalid
when it is convinced that this must be done. In arriving at this conclusion, its only criterion will be the
Constitution as God and its conscience give it the light to probe its meaning and discover its purpose.
In their Reply, the petitioners insist that the above-cited measures are not applicable to them because
Personal motives and political considerations are irrelevancies that cannot influence its decision.
they do not own more than seven hectares of agricultural land. Moreover, assuming arguendo that
Blandishment is as ineffectual as intimidation. 
the rules were intended to cover them also, the said measures are nevertheless not in force because
they have not been published as required by law and the ruling of this Court in Tanada v. Tuvera.10 As
for LOI 474, the same is ineffective for the additional reason that a mere letter of instruction could For all the awesome power of the Congress and the Executive, the Court will not hesitate to "make
not have repealed the presidential decree.  the hammer fall, and heavily," to use Justice Laurel's pithy language, where the acts of these
departments, or of any public official, betray the people's will as expressed in the Constitution. 

It need only be added, to borrow again the words of Justice Laurel, that —
Although holding neither purse nor sword and so regarded as the weakest of the three departments of
the government, the judiciary is nonetheless vested with the power to annul the acts of either the ... when the judiciary mediates to allocate constitutional boundaries, it does not
legislative or the executive or of both when not conformable to the fundamental law. This is the assert any superiority over the other departments; it does not in reality nullify or
reason for what some quarters call the doctrine of judicial supremacy. Even so, this power is not invalidate an act of the Legislature, but only asserts the solemn and sacred
lightly assumed or readily exercised. The doctrine of separation of powers imposes upon the courts a obligation assigned to it by the Constitution to determine conflicting claims of
proper restraint, born of the nature of their functions and of their respect for the other departments, authority under the Constitution and to establish for the parties in an actual
in striking down the acts of the legislative and the executive as unconstitutional. The policy, indeed, is controversy the rights which that instrument secures and guarantees to them. This
a blend of courtesy and caution. To doubt is to sustain. The theory is that before the act was done or is in truth all that is involved in what is termed "judicial supremacy" which properly
the law was enacted, earnest studies were made by Congress or the President, or both, to insure that is the power of judicial review under the Constitution. 16
the Constitution would not be breached. 
The cases before us categorically raise constitutional questions that this Court must categorically
In addition, the Constitution itself lays down stringent conditions for a declaration of resolve. And so we shall. 
unconstitutionality, requiring therefor the concurrence of a majority of the members of the Supreme
Court who took part in the deliberations and voted on the issue during their session en banc. 11 And as
II
established by judge made doctrine, the Court will assume jurisdiction over a constitutional question
only if it is shown that the essential requisites of a judicial inquiry into such a question are first
satisfied. Thus, there must be an actual case or controversy involving a conflict of legal rights We proceed first to the examination of the preliminary issues before resolving the more serious
susceptible of judicial determination, the constitutional question must have been opportunely raised challenges to the constitutionality of the several measures involved in these petitions. 
by the proper party, and the resolution of the question is unavoidably necessary to the decision of the
case itself. 12 The promulgation of P.D. No. 27 by President Marcos in the exercise of his powers under martial law
has already been sustained in Gonzales v. Estrella and we find no reason to modify or reverse it on
With particular regard to the requirement of proper party as applied in the cases before us, we hold that issue. As for the power of President Aquino to promulgate Proc. No. 131 and E.O. Nos. 228 and
that the same is satisfied by the petitioners and intervenors because each of them has sustained or is 229, the same was authorized under Section 6 of the Transitory Provisions of the 1987 Constitution,
in danger of sustaining an immediate injury as a result of the acts or measures complained of. 13 And quoted above. 
even if, strictly speaking, they are not covered by the definition, it is still within the wide discretion of
the Court to waive the requirement and so remove the impediment to its addressing and resolving the The said measures were issued by President Aquino before July 27, 1987, when the Congress of the
serious constitutional questions raised.  Philippines was formally convened and took over legislative power from her. They are not "midnight"
enactments intended to pre-empt the legislature because E.O. No. 228 was issued on July 17, 1987,
In the first Emergency Powers Cases, 14 ordinary citizens and taxpayers were allowed to question the and the other measures, i.e., Proc. No. 131 and E.O. No. 229, were both issued on July 22, 1987.
constitutionality of several executive orders issued by President Quirino although they were invoking Neither is it correct to say that these measures ceased to be valid when she lost her legislative power
only an indirect and general interest shared in common with the public. The Court dismissed the for, like any statute, they continue to be in force unless modified or repealed by subsequent law or
objection that they were not proper parties and ruled that "the transcendental importance to the declared invalid by the courts. A statute does not ipso facto become inoperative simply because of the
public of these cases demands that they be settled promptly and definitely, brushing aside, if we dissolution of the legislature that enacted it. By the same token, President Aquino's loss of legislative
must, technicalities of procedure." We have since then applied this exception in many other cases. 15 power did not have the effect of invalidating all the measures enacted by her when and as long as she
possessed it. 
The other above-mentioned requisites have also been met in the present petitions. 

10
Significantly, the Congress she is alleged to have undercut has not rejected but in fact substantially But for all their peremptoriness, these issuances from the President Marcos still had to comply with
affirmed the challenged measures and has specifically provided that they shall be suppletory to R.A. the requirement for publication as this Court held in Tanada v. Tuvera. 21 Hence, unless published in
No. 6657 whenever not inconsistent with its provisions. 17 Indeed, some portions of the said the Official Gazette in accordance with Article 2 of the Civil Code, they could not have any force and
measures, like the creation of the P50 billion fund in Section 2 of Proc. No. 131, and Sections 20 and effect if they were among those enactments successfully challenged in that case. LOI 474 was
21 of E.O. No. 229, have been incorporated by reference in the CARP Law. 18 published, though, in the Official Gazette dated November 29,1976.) 

That fund, as earlier noted, is itself being questioned on the ground that it does not conform to the Finally, there is the contention of the public respondent in G.R. No. 78742 that the writ of mandamus
requirements of a valid appropriation as specified in the Constitution. Clearly, however, Proc. No. 131 cannot issue to compel the performance of a discretionary act, especially by a specific department of
is not an appropriation measure even if it does provide for the creation of said fund, for that is not its the government. That is true as a general proposition but is subject to one important qualification.
principal purpose. An appropriation law is one the primary and specific purpose of which is to Correctly and categorically stated, the rule is that mandamus will lie to compel the discharge of the
authorize the release of public funds from the treasury. 19 The creation of the fund is only incidental to discretionary duty itself but not to control the discretion to be exercised. In other words, mandamus
the main objective of the proclamation, which is agrarian reform.  can issue to require action only but not specific action. 

It should follow that the specific constitutional provisions invoked, to wit, Section 24 and Section Whenever a duty is imposed upon a public official and an unnecessary and
25(4) of Article VI, are not applicable. With particular reference to Section 24, this obviously could not unreasonable delay in the exercise of such duty occurs, if it is a clear duty imposed
have been complied with for the simple reason that the House of Representatives, which now has the by law, the courts will intervene by the extraordinary legal remedy of mandamus to
exclusive power to initiate appropriation measures, had not yet been convened when the compel action. If the duty is purely ministerial, the courts will require specific action.
proclamation was issued. The legislative power was then solely vested in the President of the If the duty is purely discretionary, the courts by mandamus will require action only.
Philippines, who embodied, as it were, both houses of Congress.  For example, if an inferior court, public official, or board should, for an unreasonable
length of time, fail to decide a particular question to the great detriment of all
parties concerned, or a court should refuse to take jurisdiction of a cause when the
The argument of some of the petitioners that Proc. No. 131 and E.O. No. 229 should be invalidated
law clearly gave it jurisdiction mandamus will issue, in the first case to require a
because they do not provide for retention limits as required by Article XIII, Section 4 of the
decision, and in the second to require that jurisdiction be taken of the cause. 22
Constitution is no longer tenable. R.A. No. 6657 does provide for such limits now in Section 6 of the
law, which in fact is one of its most controversial provisions. This section declares: 
And while it is true that as a rule the writ will not be proper as long as there is still a plain, speedy
and adequate remedy available from the administrative authorities, resort to the courts may still be
Retention Limits. — Except as otherwise provided in this Act, no person may own or
permitted if the issue raised is a question of law. 23
retain, directly or indirectly, any public or private agricultural land, the size of which
shall vary according to factors governing a viable family-sized farm, such as
commodity produced, terrain, infrastructure, and soil fertility as determined by the III
Presidential Agrarian Reform Council (PARC) created hereunder, but in no case shall
retention by the landowner exceed five (5) hectares. Three (3) hectares may be
There are traditional distinctions between the police power and the power of eminent domain that
awarded to each child of the landowner, subject to the following qualifications: (1)
logically preclude the application of both powers at the same time on the same subject. In the case
that he is at least fifteen (15) years of age; and (2) that he is actually tilling the
of City of Baguio v. NAWASA, 24for example, where a law required the transfer of all municipal
land or directly managing the farm; Provided, That landowners whose lands have
waterworks systems to the NAWASA in exchange for its assets of equivalent value, the Court held
been covered by Presidential Decree No. 27 shall be allowed to keep the area
that the power being exercised was eminent domain because the property involved was wholesome
originally retained by them thereunder, further, That original homestead grantees or
and intended for a public use. Property condemned under the police power is noxious or intended for
direct compulsory heirs who still own the original homestead at the time of the
a noxious purpose, such as a building on the verge of collapse, which should be demolished for the
approval of this Act shall retain the same areas as long as they continue to cultivate
public safety, or obscene materials, which should be destroyed in the interest of public morals. The
said homestead. 
confiscation of such property is not compensable, unlike the taking of property under the power of
expropriation, which requires the payment of just compensation to the owner. 
The argument that E.O. No. 229 violates the constitutional requirement that a bill shall have only one
subject, to be expressed in its title, deserves only short attention. It is settled that the title of the bill
In the case of Pennsylvania Coal Co. v. Mahon, 25 Justice Holmes laid down the limits of the police
does not have to be a catalogue of its contents and will suffice if the matters embodied in the text are
power in a famous aphorism: "The general rule at least is that while property may be regulated to a
relevant to each other and may be inferred from the title. 20
certain extent, if regulation goes too far it will be recognized as a taking." The regulation that went
"too far" was a law prohibiting mining which might cause the subsidence of structures for human
The Court wryly observes that during the past dictatorship, every presidential issuance, by whatever habitation constructed on the land surface. This was resisted by a coal company which had earlier
name it was called, had the force and effect of law because it came from President Marcos. Such are granted a deed to the land over its mine but reserved all mining rights thereunder, with the grantee
the ways of despots. Hence, it is futile to argue, as the petitioners do in G.R. No. 79744, that LOI 474 assuming all risks and waiving any damage claim. The Court held the law could not be sustained
could not have repealed P.D. No. 27 because the former was only a letter of instruction. The without compensating the grantor. Justice Brandeis filed a lone dissent in which he argued that there
important thing is that it was issued by President Marcos, whose word was law during that time.  was a valid exercise of the police power. He said: 
11
Every restriction upon the use of property imposed in the exercise of the police In Penn Central Transportation Co. v. New York City,  29 decided by a 6-3 vote in 1978, the U.S
power deprives the owner of some right theretofore enjoyed, and is, in that sense, Supreme Court sustained the respondent's Landmarks Preservation Law under which the owners of
an abridgment by the State of rights in property without making compensation. But the Grand Central Terminal had not been allowed to construct a multi-story office building over the
restriction imposed to protect the public health, safety or morals from dangers Terminal, which had been designated a historic landmark. Preservation of the landmark was held to
threatened is not a taking. The restriction here in question is merely the prohibition be a valid objective of the police power. The problem, however, was that the owners of the Terminal
of a noxious use. The property so restricted remains in the possession of its owner. would be deprived of the right to use the airspace above it although other landowners in the area
The state does not appropriate it or make any use of it. The state merely prevents could do so over their respective properties. While insisting that there was here no taking, the Court
the owner from making a use which interferes with paramount rights of the public. nonetheless recognized certain compensatory rights accruing to Grand Central Terminal which it said
Whenever the use prohibited ceases to be noxious — as it may because of further would "undoubtedly mitigate" the loss caused by the regulation. This "fair compensation," as he called
changes in local or social conditions — the restriction will have to be removed and it, was explained by Prof. Costonis in this wise: 
the owner will again be free to enjoy his property as heretofore. 
In return for retaining the Terminal site in its pristine landmark status, Penn Central was authorized to
Recent trends, however, would indicate not a polarization but a mingling of the police power and the transfer to neighboring properties the authorized but unused rights accruing to the site prior to the
power of eminent domain, with the latter being used as an implement of the former like the power of Terminal's designation as a landmark — the rights which would have been exhausted by the 59-story
taxation. The employment of the taxing power to achieve a police purpose has long been building that the city refused to countenance atop the Terminal. Prevailing bulk restrictions on
accepted. 26 As for the power of expropriation, Prof. John J. Costonis of the University of Illinois neighboring sites were proportionately relaxed, theoretically enabling Penn Central to recoup its
College of Law (referring to the earlier case of Euclid v. Ambler Realty Co., 272 US 365, which losses at the Terminal site by constructing or selling to others the right to construct larger, hence
sustained a zoning law under the police power) makes the following significant remarks:  more profitable buildings on the transferee sites. 30

Euclid, moreover, was decided in an era when judges located the Police and eminent The cases before us present no knotty complication insofar as the question of compensable taking is
domain powers on different planets. Generally speaking, they viewed eminent concerned. To the extent that the measures under challenge merely prescribe retention limits for
domain as encompassing public acquisition of private property for improvements landowners, there is an exercise of the police power for the regulation of private property in
that would be available for public use," literally construed. To the police power, on accordance with the Constitution. But where, to carry out such regulation, it becomes necessary to
the other hand, they assigned the less intrusive task of preventing harmful deprive such owners of whatever lands they may own in excess of the maximum area allowed, there
externalities a point reflected in the Euclid opinion's reliance on an analogy to is definitely a taking under the power of eminent domain for which payment of just compensation is
nuisance law to bolster its support of zoning. So long as suppression of a privately imperative. The taking contemplated is not a mere limitation of the use of the land. What is required
authored harm bore a plausible relation to some legitimate "public purpose," the is the surrender of the title to and the physical possession of the said excess and all beneficial rights
pertinent measure need have afforded no compensation whatever. With the accruing to the owner in favor of the farmer-beneficiary. This is definitely an exercise not of the police
progressive growth of government's involvement in land use, the distance between power but of the power of eminent domain. 
the two powers has contracted considerably. Today government often employs
eminent domain interchangeably with or as a useful complement to the police
Whether as an exercise of the police power or of the power of eminent domain, the several measures
power-- a trend expressly approved in the Supreme Court's 1954 decision in
before us are challenged as violative of the due process and equal protection clauses. 
Berman v. Parker, which broadened the reach of eminent domain's "public use" test
to match that of the police power's standard of "public purpose." 27
The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the ground that no retention limits are
prescribed has already been discussed and dismissed. It is noted that although they excited many
The Berman case sustained a redevelopment project and the improvement of blighted areas in the
bitter exchanges during the deliberation of the CARP Law in Congress, the retention limits finally
District of Columbia as a proper exercise of the police power. On the role of eminent domain in the
agreed upon are, curiously enough, not being questioned in these petitions. We therefore do not
attainment of this purpose, Justice Douglas declared: 
discuss them here. The Court will come to the other claimed violations of due process in connection
with our examination of the adequacy of just compensation as required under the power of
If those who govern the District of Columbia decide that the Nation's Capital should expropriation. 
be beautiful as well as sanitary, there is nothing in the Fifth Amendment that stands
in the way. 
The argument of the small farmers that they have been denied equal protection because of the
absence of retention limits has also become academic under Section 6 of R.A. No. 6657. Significantly,
Once the object is within the authority of Congress, the right to realize it through they too have not questioned the area of such limits. There is also the complaint that they should not
the exercise of eminent domain is clear.  be made to share the burden of agrarian reform, an objection also made by the sugar planters on the
ground that they belong to a particular class with particular interests of their own. However, no
evidence has been submitted to the Court that the requisites of a valid classification have been
For the power of eminent domain is merely the means to the end. 28
violated. 

12
Classification has been defined as the grouping of persons or things similar to each other in certain sell, or cannot accept the price or other conditions offered by the vendee, that the
particulars and different from each other in these same particulars. 31 To be valid, it must conform to power of eminent domain will come into play to assert the paramount authority of
the following requirements: (1) it must be based on substantial distinctions; (2) it must be germane the State over the interests of the property owner. Private rights must then yield to
to the purposes of the law; (3) it must not be limited to existing conditions only; and (4) it must the irresistible demands of the public interest on the time-honored justification, as
apply equally to all the members of the class. 32 The Court finds that all these requisites have been in the case of the police power, that the welfare of the people is the supreme law. 
met by the measures here challenged as arbitrary and discriminatory. 
But for all its primacy and urgency, the power of expropriation is by no means absolute (as indeed no
Equal protection simply means that all persons or things similarly situated must be treated alike both power is absolute). The limitation is found in the constitutional injunction that "private property shall
as to the rights conferred and the liabilities imposed. 33 The petitioners have not shown that they not be taken for public use without just compensation" and in the abundant jurisprudence that has
belong to a different class and entitled to a different treatment. The argument that not only evolved from the interpretation of this principle. Basically, the requirements for a proper exercise of
landowners but also owners of other properties must be made to share the burden of implementing the power are: (1) public use and (2) just compensation. 
land reform must be rejected. There is a substantial distinction between these two classes of owners
that is clearly visible except to those who will not see. There is no need to elaborate on this matter. In
Let us dispose first of the argument raised by the petitioners in G.R. No. 79310 that the State should
any event, the Congress is allowed a wide leeway in providing for a valid classification. Its decision is
first distribute public agricultural lands in the pursuit of agrarian reform instead of immediately
accorded recognition and respect by the courts of justice except only where its discretion is abused to
disturbing property rights by forcibly acquiring private agricultural lands. Parenthetically, it is not
the detriment of the Bill of Rights. 
correct to say that only public agricultural lands may be covered by the CARP as the Constitution calls
for "the just distribution of all agricultural lands." In any event, the decision to redistribute private
It is worth remarking at this juncture that a statute may be sustained under the police power only if agricultural lands in the manner prescribed by the CARP was made by the legislative and executive
there is a concurrence of the lawful subject and the lawful method. Put otherwise, the interests of the departments in the exercise of their discretion. We are not justified in reviewing that discretion in the
public generally as distinguished from those of a particular class require the interference of the State absence of a clear showing that it has been abused. 
and, no less important, the means employed are reasonably necessary for the attainment of the
purpose sought to be achieved and not unduly oppressive upon individuals. 34 As the subject and
A becoming courtesy admonishes us to respect the decisions of the political departments when they
purpose of agrarian reform have been laid down by the Constitution itself, we may say that the first
decide what is known as the political question. As explained by Chief Justice Concepcion in the case
requirement has been satisfied. What remains to be examined is the validity of the method employed
of Tañada v. Cuenco: 36
to achieve the constitutional goal. 

The term "political question" connotes what it means in ordinary parlance, namely,
One of the basic principles of the democratic system is that where the rights of the individual are
a question of policy. It refers to "those questions which, under the Constitution, are
concerned, the end does not justify the means. It is not enough that there be a valid objective; it is
to be decided by the people in their sovereign capacity; or in regard to which full
also necessary that the means employed to pursue it be in keeping with the Constitution. Mere
discretionary authority has been delegated to the legislative or executive branch of
expediency will not excuse constitutional shortcuts. There is no question that not even the strongest
the government." It is concerned with issues dependent upon the wisdom, not
moral conviction or the most urgent public need, subject only to a few notable exceptions, will excuse
legality, of a particular measure. 
the bypassing of an individual's rights. It is no exaggeration to say that a, person invoking a right
guaranteed under Article III of the Constitution is a majority of one even as against the rest of the
nation who would deny him that right.  It is true that the concept of the political question has been constricted with the enlargement of
judicial power, which now includes the authority of the courts "to determine whether or not there has
been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch
That right covers the person's life, his liberty and his property under Section 1 of Article III of the
or instrumentality of the Government." 37 Even so, this should not be construed as a license for us to
Constitution. With regard to his property, the owner enjoys the added protection of Section 9, which
reverse the other departments simply because their views may not coincide with ours. 
reaffirms the familiar rule that private property shall not be taken for public use without just
compensation. 
The legislature and the executive have been seen fit, in their wisdom, to include in the CARP the
redistribution of private landholdings (even as the distribution of public agricultural lands is first
This brings us now to the power of eminent domain. 
provided for, while also continuing apace under the Public Land Act and other cognate laws). The
Court sees no justification to interpose its authority, which we may assert only if we believe that the
IV  political decision is not unwise, but illegal. We do not find it to be so. 

Eminent domain is an inherent power of the State that enables it to forcibly acquire In U.S. v. Chandler-Dunbar Water Power Company,38 it was held: 
private lands intended for public use upon payment of just compensation to the
owner. Obviously, there is no need to expropriate where the owner is willing to sell
Congress having determined, as it did by the Act of March 3,1909 that the entire St.
under terms also acceptable to the purchaser, in which case an ordinary deed of
Mary's river between the American bank and the international line, as well as all of
sale may be agreed upon by the parties. 35 It is only where the owner is unwilling to
the upland north of the present ship canal, throughout its entire length, was
13
"necessary for the purpose of navigation of said waters, and the waters connected Objection is raised, however, to the manner of fixing the just compensation, which it is claimed is
therewith," that determination is conclusive in condemnation proceedings instituted entrusted to the administrative authorities in violation of judicial prerogatives. Specific reference is
by the United States under that Act, and there is no room for judicial review of the made to Section 16(d), which provides that in case of the rejection or disregard by the owner of the
judgment of Congress ... .  offer of the government to buy his land- 

As earlier observed, the requirement for public use has already been settled for us by the Constitution ... the DAR shall conduct summary administrative proceedings to determine the
itself No less than the 1987 Charter calls for agrarian reform, which is the reason why private compensation for the land by requiring the landowner, the LBP and other interested
agricultural lands are to be taken from their owners, subject to the prescribed maximum retention parties to submit evidence as to the just compensation for the land, within fifteen
limits. The purposes specified in P.D. No. 27, Proc. No. 131 and R.A. No. 6657 are only an elaboration (15) days from the receipt of the notice. After the expiration of the above period,
of the constitutional injunction that the State adopt the necessary measures "to encourage and the matter is deemed submitted for decision. The DAR shall decide the case within
undertake the just distribution of all agricultural lands to enable farmers who are landless to own thirty (30) days after it is submitted for decision. 
directly or collectively the lands they till." That public use, as pronounced by the fundamental law
itself, must be binding on us. 
To be sure, the determination of just compensation is a function addressed to the courts of justice
and may not be usurped by any other branch or official of the government. EPZA v. Dulay 44 resolved
The second requirement, i.e., the payment of just compensation, needs a longer and more thoughtful a challenge to several decrees promulgated by President Marcos providing that the just compensation
examination.  for property under expropriation should be either the assessment of the property by the government
or the sworn valuation thereof by the owner, whichever was lower. In declaring these decrees
unconstitutional, the Court held through Mr. Justice Hugo E. Gutierrez, Jr.: 
Just compensation is defined as the full and fair equivalent of the property taken from its owner by
the expropriator. 39 It has been repeatedly stressed by this Court that the measure is not the taker's
gain but the owner's loss. 40 The word "just" is used to intensify the meaning of the word The method of ascertaining just compensation under the aforecited decrees
"compensation" to convey the idea that the equivalent to be rendered for the property to be taken constitutes impermissible encroachment on judicial prerogatives. It tends to render
shall be real, substantial, full, ample. 41 this Court inutile in a matter which under this Constitution is reserved to it for final
determination. 
It bears repeating that the measures challenged in these petitions contemplate more than a mere
regulation of the use of private lands under the police power. We deal here with an actual taking of Thus, although in an expropriation proceeding the court technically would still have
private agricultural lands that has dispossessed the owners of their property and deprived them of all the power to determine the just compensation for the property, following the
its beneficial use and enjoyment, to entitle them to the just compensation mandated by the applicable decrees, its task would be relegated to simply stating the lower value of
Constitution.  the property as declared either by the owner or the assessor. As a necessary
consequence, it would be useless for the court to appoint commissioners under Rule
67 of the Rules of Court. Moreover, the need to satisfy the due process clause in the
As held in Republic of the Philippines v. Castellvi, 42 there is compensable taking when the following
taking of private property is seemingly fulfilled since it cannot be said that a judicial
conditions concur: (1) the expropriator must enter a private property; (2) the entry must be for more
proceeding was not had before the actual taking. However, the strict application of
than a momentary period; (3) the entry must be under warrant or color of legal authority; (4) the
the decrees during the proceedings would be nothing short of a mere formality or
property must be devoted to public use or otherwise informally appropriated or injuriously affected;
charade as the court has only to choose between the valuation of the owner and
and (5) the utilization of the property for public use must be in such a way as to oust the owner and
that of the assessor, and its choice is always limited to the lower of the two. The
deprive him of beneficial enjoyment of the property. All these requisites are envisioned in the
court cannot exercise its discretion or independence in determining what is just or
measures before us. 
fair. Even a grade school pupil could substitute for the judge insofar as the
determination of constitutional just compensation is concerned. 
Where the State itself is the expropriator, it is not necessary for it to make a deposit upon its taking
possession of the condemned property, as "the compensation is a public charge, the good faith of the
x x x 
public is pledged for its payment, and all the resources of taxation may be employed in raising the
amount." 43 Nevertheless, Section 16(e) of the CARP Law provides that: 
In the present petition, we are once again confronted with the same question of
whether the courts under P.D. No. 1533, which contains the same provision on just
Upon receipt by the landowner of the corresponding payment or, in case of rejection
compensation as its predecessor decrees, still have the power and authority to
or no response from the landowner, upon the deposit with an accessible bank
determine just compensation, independent of what is stated by the decree and to
designated by the DAR of the compensation in cash or in LBP bonds in accordance
this effect, to appoint commissioners for such purpose. 
with this Act, the DAR shall take immediate possession of the land and shall request
the proper Register of Deeds to issue a Transfer Certificate of Title (TCT) in the
name of the Republic of the Philippines. The DAR shall thereafter proceed with the This time, we answer in the affirmative. 
redistribution of the land to the qualified beneficiaries. 

14
x x x  (b) For lands above twenty-four (24) hectares
and up to fifty (50) hectares — Thirty percent
(30%) cash, the balance to be paid in
It is violative of due process to deny the owner the opportunity to prove that the
government financial instruments negotiable at
valuation in the tax documents is unfair or wrong. And it is repulsive to the basic
any time. 
concepts of justice and fairness to allow the haphazard work of a minor bureaucrat
or clerk to absolutely prevail over the judgment of a court promulgated only after
expert commissioners have actually viewed the property, after evidence and (c) For lands twenty-four (24) hectares and
arguments pro and con have been presented, and after all factors and below — Thirty-five percent (35%) cash, the
considerations essential to a fair and just determination have been judiciously balance to be paid in government financial
evaluated.  instruments negotiable at any time. 

A reading of the aforecited Section 16(d) will readily show that it does not suffer from the (2) Shares of stock in government-owned or controlled corporations, LBP preferred
arbitrariness that rendered the challenged decrees constitutionally objectionable. Although the shares, physical assets or other qualified investments in accordance with guidelines
proceedings are described as summary, the landowner and other interested parties are nevertheless set by the PARC; 
allowed an opportunity to submit evidence on the real value of the property. But more importantly,
the determination of the just compensation by the DAR is not by any means final and conclusive upon
(3) Tax credits which can be used against any tax liability; 
the landowner or any other interested party, for Section 16(f) clearly provides: 

(4) LBP bonds, which shall have the following features: 


Any party who disagrees with the decision may bring the matter to the court of
proper jurisdiction for final determination of just compensation. 
(a) Market interest rates aligned with 91-day
treasury bill rates. Ten percent (10%) of the
The determination made by the DAR is only preliminary unless accepted by all parties concerned.
face value of the bonds shall mature every year
Otherwise, the courts of justice will still have the right to review with finality the said determination in
from the date of issuance until the tenth (10th)
the exercise of what is admittedly a judicial function. 
year: Provided, That should the landowner
choose to forego the cash portion, whether in
The second and more serious objection to the provisions on just compensation is not as easily full or in part, he shall be paid correspondingly
resolved.  in LBP bonds; 

This refers to Section 18 of the CARP Law providing in full as follows:  (b) Transferability and negotiability. Such LBP
bonds may be used by the landowner, his
successors-in- interest or his assigns, up to the
SEC. 18. Valuation and Mode of Compensation. — The LBP shall compensate the
amount of their face value, for any of the
landowner in such amount as may be agreed upon by the landowner and the DAR
following: 
and the LBP, in accordance with the criteria provided for in Sections 16 and 17, and
other pertinent provisions hereof, or as may be finally determined by the court, as
the just compensation for the land.  (i) Acquisition of land or other real properties of
the government, including assets under the
Asset Privatization Program and other assets
The compensation shall be paid in one of the following modes, at the option of the
foreclosed by government financial institutions
landowner: 
in the same province or region where the lands
for which the bonds were paid are situated; 
(1) Cash payment, under the following terms and conditions: 
(ii) Acquisition of shares of stock of government-
(a) For lands above fifty (50) hectares, insofar owned or controlled corporations or shares of
as the excess hectarage is concerned — Twenty- stock owned by the government in private
five percent (25%) cash, the balance to be paid corporations; 
in government financial instruments negotiable
at any time. 

15
(iii) Substitution for surety or bail bonds for the loss sustained, which is the measure of the indemnity, not whatever gain would
provisional release of accused persons, or for accrue to the expropriating entity. The market value of the land taken is the just
performance bonds;  compensation to which the owner of condemned property is entitled, the market
value being 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
(iv) Security for loans with any government
given and received for such property. (Emphasis supplied.) 
financial institution, provided the proceeds of the
loans shall be invested in an economic
enterprise, preferably in a small and medium- In the United States, where much of our jurisprudence on the subject has been derived, the weight of
scale industry, in the same province or region as authority is also to the effect that just compensation for property expropriated is payable only in
the land for which the bonds are paid;  money and not otherwise. Thus —

(v) Payment for various taxes and fees to The medium of payment of compensation is ready money or cash. The condemnor
government: Provided, That the use of these cannot compel the owner to accept anything but money, nor can the owner compel
bonds for these purposes will be limited to a or require the condemnor to pay him on any other basis than the value of the
certain percentage of the outstanding balance of property in money at the time and in the manner prescribed by the Constitution and
the financial instruments; Provided, further, That the statutes. When the power of eminent domain is resorted to, there must be a
the PARC shall determine the percentages standard medium of payment, binding upon both parties, and the law has fixed that
mentioned above;  standard as money in cash. 47 (Emphasis supplied.)

(vi) Payment for tuition fees of the immediate Part cash and deferred payments are not and cannot, in the nature of things, be
family of the original bondholder in government regarded as a reliable and constant standard of compensation. 48
universities, colleges, trade schools, and other
institutions; 
"Just compensation" for property taken by condemnation means a fair equivalent in
money, which must be paid at least within a reasonable time after the taking, and it
(vii) Payment for fees of the immediate family of is not within the power of the Legislature to substitute for such payment future
the original bondholder in government hospitals; obligations, bonds, or other valuable advantage. 49(Emphasis supplied.) 
and 
It cannot be denied from these cases that the traditional medium for the payment of just
(viii) Such other uses as the PARC may from compensation is money and no other. And so, conformably, has just compensation been paid in the
time to time allow.  past solely in that medium. However, we do not deal here with the traditional excercise of the power
of eminent domain. This is not an ordinary expropriation where only a specific property of relatively
limited area is sought to be taken by the State from its owner for a specific and perhaps local
The contention of the petitioners in G.R. No. 79777 is that the above provision is unconstitutional
purpose. 
insofar as it requires the owners of the expropriated properties to accept just compensation therefor
in less than money, which is the only medium of payment allowed. In support of this contention, they
cite jurisprudence holding that:  What we deal with here is a revolutionary kind of expropriation. 

The fundamental rule in expropriation matters is that the owner of the property The expropriation before us affects all private agricultural lands whenever found and of whatever kind
expropriated is entitled to a just compensation, which should be neither more nor as long as they are in excess of the maximum retention limits allowed their owners. This kind of
less, whenever it is possible to make the assessment, than the money equivalent of expropriation is intended for the benefit not only of a particular community or of a small segment of
said property. Just compensation has always been understood to be the just and the population but of the entire Filipino nation, from all levels of our society, from the impoverished
complete equivalent of the loss which the owner of the thing expropriated has to farmer to the land-glutted owner. Its purpose does not cover only the whole territory of this country
suffer by reason of the expropriation . 45 (Emphasis supplied.)  but goes beyond in time to the foreseeable future, which it hopes to secure and edify with the vision
and the sacrifice of the present generation of Filipinos. Generations yet to come are as involved in this
program as we are today, although hopefully only as beneficiaries of a richer and more fulfilling life
In J.M. Tuazon Co. v. Land Tenure Administration, 46 this Court held: 
we will guarantee to them tomorrow through our thoughtfulness today. And, finally, let it not be
forgotten that it is no less than the Constitution itself that has ordained this revolution in the farms,
It is well-settled that just compensation means the equivalent for the value of the calling for "a just distribution" among the farmers of lands that have heretofore been the prison of
property at the time of its taking. Anything beyond that is more, and anything short their dreams but can now become the key at least to their deliverance. 
of that is less, than just compensation. It means a fair and full equivalent for the

16
Such a program will involve not mere millions of pesos. The cost will be tremendous. Considering the money, primarily because the small landowner will be needing it more than the big landowners, who
vast areas of land subject to expropriation under the laws before us, we estimate that hundreds of can afford a bigger balance in bonds and other things of value. No less importantly, the government
billions of pesos will be needed, far more indeed than the amount of P50 billion initially appropriated, financial instruments making up the balance of the payment are "negotiable at any time." The other
which is already staggering as it is by our present standards. Such amount is in fact not even fully modes, which are likewise available to the landowner at his option, are also not unreasonable because
available at this time.  payment is made in shares of stock, LBP bonds, other properties or assets, tax credits, and other
things of value equivalent to the amount of just compensation. 
We assume that the framers of the Constitution were aware of this difficulty when they called for
agrarian reform as a top priority project of the government. It is a part of this assumption that when Admittedly, the compensation contemplated in the law will cause the landowners, big and small, not a
they envisioned the expropriation that would be needed, they also intended that the just little inconvenience. As already remarked, this cannot be avoided. Nevertheless, it is devoutly hoped
compensation would have to be paid not in the orthodox way but a less conventional if more practical that these countrymen of ours, conscious as we know they are of the need for their forebearance and
method. There can be no doubt that they were aware of the financial limitations of the government even sacrifice, will not begrudge us their indispensable share in the attainment of the ideal of agrarian
and had no illusions that there would be enough money to pay in cash and in full for the lands they reform. Otherwise, our pursuit of this elusive goal will be like the quest for the Holy Grail.
wanted to be distributed among the farmers. We may therefore assume that their intention was to
allow such manner of payment as is now provided for by the CARP Law, particularly the payment of
The complaint against the effects of non-registration of the land under E.O. No. 229 does not seem to
the balance (if the owner cannot be paid fully with money), or indeed of the entire amount of the just
be viable any more as it appears that Section 4 of the said Order has been superseded by Section 14
compensation, with other things of value. We may also suppose that what they had in mind was a
of the CARP Law. This repeats the requisites of registration as embodied in the earlier measure but
similar scheme of payment as that prescribed in P.D. No. 27, which was the law in force at the time
does not provide, as the latter did, that in case of failure or refusal to register the land, the valuation
they deliberated on the new Charter and with which they presumably agreed in principle. 
thereof shall be that given by the provincial or city assessor for tax purposes. On the contrary, the
CARP Law says that the just compensation shall be ascertained on the basis of the factors mentioned
The Court has not found in the records of the Constitutional Commission any categorical agreement in its Section 17 and in the manner provided for in Section 16. 
among the members regarding the meaning to be given the concept of just compensation as applied
to the comprehensive agrarian reform program being contemplated. There was the suggestion to "fine
The last major challenge to CARP is that the landowner is divested of his property even before actual
tune" the requirement to suit the demands of the project even as it was also felt that they should
payment to him in full of just compensation, in contravention of a well- accepted principle of eminent
"leave it to Congress" to determine how payment should be made to the landowner and
domain. 
reimbursement required from the farmer-beneficiaries. Such innovations as "progressive
compensation" and "State-subsidized compensation" were also proposed. In the end, however, no
special definition of the just compensation for the lands to be expropriated was reached by the The recognized rule, indeed, is that title to the property expropriated shall pass from the owner to the
Commission. 50 expropriator only upon full payment of the just compensation. Jurisprudence on this settled principle
is consistent both here and in other democratic jurisdictions. Thus: 
On the other hand, there is nothing in the records either that militates against the assumptions we
are making of the general sentiments and intention of the members on the content and manner of the Title to property which is the subject of condemnation proceedings does not vest the condemnor until
payment to be made to the landowner in the light of the magnitude of the expenditure and the the judgment fixing just compensation is entered and paid, but the condemnor's title relates back to
limitations of the expropriator.  the date on which the petition under the Eminent Domain Act, or the commissioner's report under the
Local Improvement Act, is filed. 51
With these assumptions, the Court hereby declares that the content and manner of the just
compensation provided for in the afore- quoted Section 18 of the CARP Law is not violative of the ... although the right to appropriate and use land taken for a canal is complete at the time of entry,
Constitution. We do not mind admitting that a certain degree of pragmatism has influenced our title to the property taken remains in the owner until payment is actually made. 52 (Emphasis
decision on this issue, but after all this Court is not a cloistered institution removed from the realities supplied.) 
and demands of society or oblivious to the need for its enhancement. The Court is as acutely anxious
as the rest of our people to see the goal of agrarian reform achieved at last after the frustrations and In Kennedy v. Indianapolis, 53 the US Supreme Court cited several cases holding that title to property
deprivations of our peasant masses during all these disappointing decades. We are aware that does not pass to the condemnor until just compensation had actually been made. In fact, the
invalidation of the said section will result in the nullification of the entire program, killing the farmer's decisions appear to be uniformly to this effect. As early as 1838, in Rubottom v. McLure, 54 it was held
hopes even as they approach realization and resurrecting the spectre of discontent and dissent in the that "actual payment to the owner of the condemned property was a condition precedent to the
restless countryside. That is not in our view the intention of the Constitution, and that is not what we investment of the title to the property in the State" albeit "not to the appropriation of it to public use."
shall decree today.  In Rexford v. Knight, 55 the Court of Appeals of New York said that the construction upon the statutes
was that the fee did not vest in the State until the payment of the compensation although the
Accepting the theory that payment of the just compensation is not always required to be made fully in authority to enter upon and appropriate the land was complete prior to the payment. Kennedy further
money, we find further that the proportion of cash payment to the other things of value constituting said that "both on principle and authority the rule is ... that the right to enter on and use the property
the total payment, as determined on the basis of the areas of the lands expropriated, is not unduly is complete, as soon as the property is actually appropriated under the authority of law for a public
oppressive upon the landowner. It is noted that the smaller the land, the bigger the payment in

17
use, but that the title does not pass from the owner without his consent, until just compensation has the doctrine of exhaustion of administrative remedies need not preclude immediate resort to judicial
been made to him." action, there are factual issues that have yet to be examined on the administrative level, especially
the claim that the petitioners are not covered by LOI 474 because they do not own other agricultural
lands than the subjects of their petition. 
Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes,  56 that: 

Obviously, the Court cannot resolve these issues. In any event, assuming that the petitioners have
If the laws which we have exhibited or cited in the preceding discussion are
not yet exercised their retention rights, if any, under P.D. No. 27, the Court holds that they are
attentively examined it will be apparent that the method of expropriation adopted in
entitled to the new retention rights provided for by R.A. No. 6657, which in fact are on the whole
this jurisdiction is such as to afford absolute reassurance that no piece of land can
more liberal than those granted by the decree. 
be finally and irrevocably taken from an unwilling owner until compensation is
paid ... . (Emphasis supplied.) 

It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as October 21, 1972
and declared that he shall "be deemed the owner" of a portion of land consisting of a family-sized The CARP Law and the other enactments also involved in these cases have been the subject of bitter
farm except that "no title to the land owned by him was to be actually issued to him unless and until attack from those who point to the shortcomings of these measures and ask that they be scrapped
he had become a full-fledged member of a duly recognized farmers' cooperative." It was understood, entirely. To be sure, these enactments are less than perfect; indeed, they should be continuously re-
however, that full payment of the just compensation also had to be made first, conformably to the examined and rehoned, that they may be sharper instruments for the better protection of the
constitutional requirement.  farmer's rights. But we have to start somewhere. In the pursuit of agrarian reform, we do not tread
on familiar ground but grope on terrain fraught with pitfalls and expected difficulties. This is
inevitable. The CARP Law is not a tried and tested project. On the contrary, to use Justice Holmes's
When E.O. No. 228, categorically stated in its Section 1 that: 
words, "it is an experiment, as all life is an experiment," and so we learn as we venture forward, and,
if necessary, by our own mistakes. We cannot expect perfection although we should strive for it by all
All qualified farmer-beneficiaries are now deemed full owners as of October 21, means. Meantime, we struggle as best we can in freeing the farmer from the iron shackles that have
1972 of the land they acquired by virtue of Presidential Decree No. 27. (Emphasis unconscionably, and for so long, fettered his soul to the soil. 
supplied.) 
By the decision we reach today, all major legal obstacles to the comprehensive agrarian reform
it was obviously referring to lands already validly acquired under the said decree, after proof of full- program are removed, to clear the way for the true freedom of the farmer. We may now glimpse the
fledged membership in the farmers' cooperatives and full payment of just compensation. Hence, it day he will be released not only from want but also from the exploitation and disdain of the past and
was also perfectly proper for the Order to also provide in its Section 2 that the "lease rentals paid to from his own feelings of inadequacy and helplessness. At last his servitude will be ended forever. At
the landowner by the farmer- beneficiary after October 21, 1972 (pending transfer of ownership after last the farm on which he toils will be his farm. It will be his portion of the Mother Earth that will give
full payment of just compensation), shall be considered as advance payment for the land." him not only the staff of life but also the joy of living. And where once it bred for him only deep
despair, now can he see in it the fruition of his hopes for a more fulfilling future. Now at last can he
The CARP Law, for its part, conditions the transfer of possession and ownership of the land to the banish from his small plot of earth his insecurities and dark resentments and "rebuild in it the music
government on receipt by the landowner of the corresponding payment or the deposit by the DAR of and the dream." 
the compensation in cash or LBP bonds with an accessible bank. Until then, title also remains with the
landowner. 57 No outright change of ownership is contemplated either.  WHEREFORE, the Court holds as follows: 

Hence, the argument that the assailed measures violate due process by arbitrarily transferring title 1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and 229 are
before the land is fully paid for must also be rejected.  SUSTAINED against all the constitutional objections raised in the herein petitions. 

It is worth stressing at this point that all rights acquired by the tenant-farmer under P.D. No. 27, as 2. Title to all expropriated properties shall be transferred to the State only upon full
recognized under E.O. No. 228, are retained by him even now under R.A. No. 6657. This should payment of compensation to their respective owners. 
counter-balance the express provision in Section 6 of the said law that "the landowners whose lands
have been covered by Presidential Decree No. 27 shall be allowed to keep the area originally retained
3. All rights previously acquired by the tenant- farmers under P.D. No. 27 are
by them thereunder, further, That original homestead grantees or direct compulsory heirs who still
retained and recognized. 
own the original homestead at the time of the approval of this Act shall retain the same areas as long
as they continue to cultivate said homestead." 
4. Landowners who were unable to exercise their rights of retention under P.D. No.
27 shall enjoy the retention rights granted by R.A. No. 6657 under the conditions
In connection with these retained rights, it does not appear in G.R. No. 78742 that the appeal filed by
therein prescribed.
the petitioners with the Office of the President has already been resolved. Although we have said that
18
5. Subject to the above-mentioned rulings all the petitions are DISMISSED, without
pronouncement as to costs. 

SO ORDERED.

Ortigas & Co. v. CA (G.R. No. 126102. December 4, 2000)

18AUG
FACTS:
Ortigas & Co. sold to Emilia Hermoso a parcel of land located in Greenhills Subdivision, San Juan with
several restrictions in the contract of sale that said lot be used exclusively for residential purposes,
among others, until December 31, 2025. Later, a zoning ordinance was issued by MMC (now MMDA)
reclassifying the area as commercial. Private respondent (Ismael Mathay III) leased the subject lot
from Hermoso and built a single storey building for Greenhills Autohaus, Inc., a car sales company.
Ortigas & Co. filed a petition a complaint which sought the demolition of the constructed car sales
company to against Hermoso as it violated the terms and conditions of the Deed of Sale. Trial court
ruled in favor of Ortigas & Co. Mathay raised the issue to the Court of Appeals from which he sought
favorable ruling. Hence, the instant petition.

ISSUE:
Whether or not the zoning ordinance may impair contracts entered prior to its effectivity.

HELD:
Yes. The zoning ordinance, as a valid exercise of police power may be given effect over any standing
contract. Hence, petition is denied.

19
RATIO:
A law enacted in the exercise of police power to regulate or govern certain activities or transactions
could be given retroactive effect and may reasonably impair vested rights or contracts. Police power
legislation is applicable not only to future contracts, but equally to those already in existence. Non-
impairment of contracts or vested rights clauses will have to yield to the superior and legitimate
exercise by the State of police power to promote the health, morals, peace, education, good order,
safety, and general welfare of the people. Moreover, statutes in exercise of valid police power must be
read into every contract. Noteworthy, in Sangalang vs. Intermediate Appellate Court, the Supreme
Court already upheld subject ordinance as a legitimate police power measure.

G.R. No. 126102               December 4, 2000

ORTIGAS & CO. LTD., petitioner, 


vs.
THE COURT OF APPEALS and ISMAEL G. MATHAY III, respondents.

DECISION

QUISUMBING, J.:

This petition seeks to reverse the decision of the Court of Appeals, dated March 25, 1996, in CA-G.R.
SP No. 39193, which nullified the writ of preliminary injunction issued by the Regional Trial Court of
Pasig City, Branch 261, in Civil Case No. 64931. It also assails the resolution of the appellate court,
dated August 13, 1996, denying petitioner’s motion for reconsideration.

The facts of this case, as culled from the records, are as follows:

On August 25, 1976, petitioner Ortigas & Company sold to Emilia Hermoso, a parcel of land known as
Lot 1, Block 21, Psd-66759, with an area of 1,508 square meters, located in Greenhills Subdivision IV,
San Juan, Metro Manila, and covered by Transfer Certificate of Title No. 0737. The contract of sale
provided that the lot:

1. …(1) be used exclusively…for residential purposes only, and not more than one single-
family residential building will be constructed thereon,…

xxx

20
6. The BUYER shall not erect…any sign or billboard on the roof…for advertising purposes… On March 25, 1996, the appellate court disposed of the case as follows:

xxx WHEREFORE, in light of the foregoing, the petition is hereby GRANTED. The assailed orders are
hereby nullified and set aside.
11. No single-family residential building shall be erected…until the building plans,
specification…have been approved by the SELLER… SO ORDERED.2 

xxx In finding for Mathay III, the Court of Appeals held that the MMC Ordinance No. 81-01 effectively
nullified the restrictions allowing only residential use of the property in question.
14....restrictions shall run with the land and shall be construed as real covenants until
December 31, 2025 when they shall cease and terminate…1  Ortigas seasonably moved for reconsideration, but the appellate court denied it on August 13, 1996.

These and the other conditions were duly annotated on the certificate of title issued to Emilia. Hence, the instant petition.

In 1981, the Metropolitan Manila Commission (now Metropolitan Manila Development Authority) In its Memorandum, petitioner now submits that the "principal issue in this case is whether
enacted MMC Ordinance No. 81-01, also known as the Comprehensive Zoning Area for the National respondent Court of Appeals correctly set aside the Order dated June 16, 1995 of the trial court which
Capital Region. The ordinance reclassified as a commercial area a portion of Ortigas Avenue from issued the writ of preliminary injunction on the sole ground that MMC Ordinance No. 81-01 nullified
Madison to Roosevelt Streets of Greenhills Subdivision where the lot is located. the building restriction imposing exclusive residential use on the property in question." 3 It also asserts
that "Mathay III lacks legal capacity to question the validity of conditions of the deed of sale; and he
is barred by estoppel or waiver to raise the same question like his principals, the owners." 4 Lastly, it
On June 8, 1984, private respondent Ismael Mathay III leased the lot from Emilia Hermoso and J.P.
avers that the appellate court "unaccountably failed to address" several questions of fact.
Hermoso Realty Corp.. The lease contract did not specify the purposes of the lease. Thereupon,
private respondent constructed a single story commercial building for Greenhills Autohaus, Inc., a car
sales company. Principally, we must resolve the issue of whether the Court of Appeals erred in holding that the trial
court committed grave abuse of discretion when it refused to apply MMC Ordinance No.81-01 to Civil
Case No. 64931.
On January 18, 1995, petitioner filed a complaint against Emilia Hermoso with the Regional Trial Court
of Pasig, Branch 261. Docketed as Civil Case No. 64931, the complaint sought the demolition of the
said commercial structure for having violated the terms and conditions of the Deed of Sale. But first, we must address petitioner’s allegation that the Court of Appeals "unaccountably failed to
Complainant prayed for the issuance of a temporary restraining order and a writ of preliminary address" questions of fact. For basic is the rule that factual issues may not be raised before this Court
injunction to prohibit petitioner from constructing the commercial building and/or engaging in in a petition for review and this Court is not duty-bound to consider said questions. 5 CA-G.R. SP No.
commercial activity on the lot. The complaint was later amended to implead Ismael G. Mathay III and 39193 was a special civil action for certiorari, and the appellate court only had to determine if the trial
J.P. Hermoso Realty Corp., which has a ten percent (10%) interest in the lot. court committed grave abuse of discretion amounting to want or excess of jurisdiction in issuing the
writ of preliminary injunction. Thus, unless vital to our determination of the issue at hand, we shall
refrain from further consideration of factual questions.
In his answer, Mathay III denied any knowledge of the restrictions on the use of the lot and filed a
cross-claim against the Hermosos.
Petitioner contends that the appellate court erred in limiting its decision to the cited zoning ordinance.
It avers that a contractual right is not automatically discarded once a claim is made that it conflicts
On June 16, 1995, the trial court issued the writ of preliminary injunction. On June 29, 1995, Mathay
with police power. Petitioner submits that the restrictive clauses in the questioned contract is not in
III moved to set aside the injunctive order, but the trial court denied the motion.
conflict with the zoning ordinance. For one, according to petitioner, the MMC Ordinance No. 81-01 did
not prohibit the construction of residential buildings. Petitioner argues that even with the zoning
Mathay III then filed with the Court of Appeals a special civil action for certiorari, docketed as CA-G.R. ordinance, the seller and buyer of the re-classified lot can voluntarily agree to an exclusive residential
SP No. 39193, ascribing to the trial court grave abuse of discretion in issuing the writ of preliminary use thereof. Hence, petitioner concludes that the Court of Appeals erred in holding that the condition
injunction. He claimed that MMC Ordinance No. 81-01 classified the area where the lot was located as imposing exclusive residential use was effectively nullified by the zoning ordinance.
commercial area and said ordinance must be read into the August 25, 1976 Deed of Sale as a
concrete exercise of police power.
In its turn, private respondent argues that the appellate court correctly ruled that the trial court had
acted with grave abuse of discretion in refusing to subject the contract to the MMC Ordinance No. 81-
Ortigas and Company averred that inasmuch as the restrictions on the use of the lot were duly 01. He avers that the appellate court properly held the police power superior to the non-impairment
annotated on the title it issued to Emilia Hermoso, said restrictions must prevail over the ordinance, of contract clause in the Constitution. He concludes that the appellate court did not err in dissolving
specially since these restrictions were agreed upon before the passage of MMC Ordinance No. 81-01. the writ of preliminary injunction issued by the trial court in excess of its jurisdiction.
21
We note that in issuing the disputed writ of preliminary injunction, the trial court observed that the as a lessee is merely an agent of the owners, and could not override and rise above the status of his
contract of sale was entered into in August 1976, while the zoning ordinance was enacted only in principals. Petitioner submits that he could not have a higher interest than those of the owners, the
March 1981. The trial court reasoned that since private respondent had failed to show that MMC Hermosos, and thus had no locus standi to file CA-G.R. SP No. 39193 to dissolve the injunctive writ
Ordinance No. 81-01 had retroactive effect, said ordinance should be given prospective application issued by the RTC of Pasig City.
only,6 citing Co vs. Intermediate Appellate Court, 162 SCRA 390 (1988).
For his part, private respondent argues that as the lessee who built the commercial structure, it is he
In general, we agree that laws are to be construed as having only prospective operation. Lex and he alone who stands to be either benefited or injured by the results of the judgment in Civil Case
prospicit, non respicit.Equally settled, only laws existing at the time of the execution of a contract are No. 64931. He avers he is the party with real interest in the subject matter of the action, as it would
applicable thereto and not later statutes, unless the latter are specifically intended to have retroactive be his business, not the Hermosos’, which would suffer had not the respondent court dissolved the
effect.7 A later law which enlarges, abridges, or in any manner changes the intent of the parties to the writ of preliminary injunction.
contract necessarily impairs the contract itself8 and cannot be given retroactive effect without violating
the constitutional prohibition against impairment of contracts.9 
A real party in interest is defined as "the party who stands to be benefited or injured by the judgment
or the party entitled to the avails of the suit." "Interest" within the meaning of the rule means
But, the foregoing principles do admit of certain exceptions. One involves police power. A law enacted material interest, an interest in issue and to be affected by the decree, as distinguished from mere
in the exercise of police power to regulate or govern certain activities or transactions could be given interest in the question involved, or a mere incidental interest. 21 By real interest is meant a present
retroactive effect and may reasonably impair vested rights or contracts. Police power legislation is substantial interest, as distinguished from a mere expectancy or a future, contingent, subordinate, or
applicable not only to future contracts, but equally to those already in existence. 10 Nonimpairment of consequential interest.22 
contracts or vested rights clauses will have to yield to the superior and legitimate exercise by the
State of police power to promote the health, morals, peace, education, good order, safety, and
Tested by the foregoing definition, private respondent in this case is clearly a real party in
general welfare of the people.11 Moreover, statutes in exercise of valid police power must be read into
interest.1âwphi1 It is not disputed that he is in possession of the lot pursuant to a valid lease. He is a
every contract.12 Noteworthy, in Sangalang vs. Intermediate Appellate Court, 13 we already upheld MMC
possessor in the concept of a "holder of the thing" under Article 525 of the Civil Code. 23 He was
Ordinance No. 81-01 as a legitimate police power measure.
impleaded as a defendant in the amended complaint in Civil Case No. 64931. Further, what petitioner
seeks to enjoin is the building by respondent of a commercial structure on the lot. Clearly, it is private
The trial court’s reliance on the Co vs. IAC,14 is misplaced. In Co, the disputed area was agricultural respondent’s acts which are in issue, and his interest in said issue cannot be a mere incidental
and Ordinance No. 81-01 did not specifically provide that "it shall have retroactive effect so as to interest. In its amended complaint, petitioner prayed for, among others, judgment "ordering the
discontinue all rights previously acquired over lands located within the zone which are neither demolition of all improvements illegally built on the lot in question."24 These show that it is petitioner
residential nor light industrial in nature,"15 and stated with respect to agricultural areas covered that Mathay III, doing business as "Greenhills Autohaus, Inc.," and not only the Hermosos, who will be
"the zoning ordinance should be given prospective operation only."16 The area in this case involves not adversely affected by the court’s decree.
agricultural but urban residential land. Ordinance No. 81-01 retroactively affected the operation of the
zoning ordinance in Greenhills by reclassifying certain locations therein as commercial.
Petitioner also cites the rule that a stranger to a contract has no rights or obligations under it, 25 and
thus has no standing to challenge its validity.26 But in seeking to enforce the stipulations in the deed
Following our ruling in Ortigas & Co., Ltd. vs. Feati Bank & Trust Co., 94 SCRA 533 (1979), the of sale, petitioner impleaded private respondent as a defendant. Thus petitioner must recognize that
contractual stipulations annotated on the Torrens Title, on which Ortigas relies, must yield to the where a plaintiff has impleaded a party as a defendant, he cannot subsequently question the latter’s
ordinance. When that stretch of Ortigas Avenue from Roosevelt Street to Madison Street was standing in court.27 
reclassified as a commercial zone by the Metropolitan Manila Commission in March 1981, the
restrictions in the contract of sale between Ortigas and Hermoso, limiting all construction on the
WHEREFORE, the instant petition is DENIED. The challenged decision of the Court of Appeals dated
disputed lot to single-family residential buildings, were deemed extinguished by the retroactive
March 25, 1996, as well as the assailed resolution of August 13, 1996, in CA-G.R. SP No. 39193 is
operation of the zoning ordinance and could no longer be enforced. While our legal system upholds
AFFIRMED. Costs against petitioner.
the sanctity of contract so that a contract is deemed law between the contracting
parties,17 nonetheless, stipulations in a contract cannot contravene "law, morals, good customs, public
order, or public policy."18 Otherwise such stipulations would be deemed null and void. Respondent SO ORDERED.
court correctly found that the trial court committed in this case a grave abuse of discretion amounting
to want of or excess of jurisdiction in refusing to treat Ordinance No. 81-01 as applicable to Civil Case
No. 64931. In resolving matters in litigation, judges are not only duty-bound to ascertain the facts
and the applicable laws,19 they are also bound by their oath of office to apply the applicable law.20 

As a secondary issue, petitioner contends that respondent Mathay III, as a mere lessee of the lot in
question, is a total stranger to the deed of sale and is thus barred from questioning the conditions of
said deed. Petitioner points out that the owners of the lot voluntarily agreed to the restrictions on the
use of the lot and do not question the validity of these restrictions. Petitioner argues that Mathay III

22
G.R. No. 144681             June 21, 2004

PROFESSIONAL REGULATION COMMISSION (PRC), CHAIRMAN HERMOGENES P. POBRE,


ASSOCIATE COMMISSIONER ARMANDO PASCUAL, BOARD OF MEDICINE, CHAIRMAN
RODOLFO P. DE GUZMAN, JOSE S. RAMIREZ, JUANITO B. BILLOTE, RUBEN R. POLICARPIO,
EDGARDO T. FERNANDO and RICARDO D. FULGENCIO II, petitioners, 
vs.
ARLENE V. DE GUZMAN, VIOLETA V. MENESES, CELERINA S. NAVARRO, JOSE RAMONCITO P.
NAVARRO, ARNEL V. HERRERA and GERALDINE ELIZABETH M. PAGILAGAN, ELNORA R.
RAQUENO, MARISSA A. REGODON, LAURA M. SANTOS, KARANGALAN D. SERRANO, DANILO
A. VILLAVER, MARIA ROSARIO L. LEONOR, ALICIA S. LIZANO, MARITEL M. ECHIVERRI,
BERNADETTE T. MENDOZA, FERNANDO F. MANDAPAT, ALELI A. GOLLAYAN, ELCIN C.
ARRIOLA, HERMINIGILDA E. CONEJOS, SALLY B. BUNAGAN, ROGELIO B. ANCHETA, OSCAR
H. PADUA, JR., EVELYN D. GRAJO, EVELYN S. ACOSTA, MARGARITA BELINDA L. VICENCIO,
VALENTINO P. ARBOLEDA, EVELYN O. RAMOS, ACHILLES J. PERALTA, CORAZON M. CRUZ,
LEUVINA P. CHICO, JOSEPH A. JAO, MA. LUISA S. GUTIERREZ, LYDIA C. CHAN, OPHELIA C.
HIDALGO, FERNANDO T. CRUZ, MELVIN M. USITA, RAFAEL I. TOLENTINO, GRACE E. UY,
CHERYL R. TRIGUERO, MICHAEL L. SERRANO, FEDERICO L. CASTILLO, MELITA J. CAÑEDO,
SAMUEL B. BANGOY, BERNARDITA B. SY, GLORIA T. JULARBAL, FREDERICK D. FRANCISCO,
CARLOS M. BERNARDO, JR., HUBERT S. NAZARENO, CLARISSA B. BACLIG, DAYMINDA G.
BONTUYAN, BERNADETTE H. CABUHAT, NANCY J. CHAVEZ, MARIO D. CUARESMA, ERNESTO
L. CUE, EVELYN C. CUNDANGAN, RHONEIL R. DEVERATURDA, DERILEEN D. DORADO,
SAIBZUR N. EDDING, VIOLETA C. FELIPE, HERMINIO V. FERNANDEZ, JR., MARIA VICTORIA
M. LACSAMANA, NORMA G. LAFAVILLA, RUBY B. LANTIN, MA. ELOISA Q. MALLARI, CLARISA

23
SJ. NICOLAS, PERCIVAL H. PANGILINAN, ARNULFO A. SALVADOR, ROBERT B. SANCHEZ, be a cause "strong enough to eliminate the normal variations that one should expect from the
MERLY D. STA. ANA and YOLANDA P. UNICA, respondents. examinees [of Fatima College] in terms of talent, effort, energy, etc."5

DECISION For its part, the NBI found that "the questionable passing rate of Fatima examinees in the [1993]
Physician Examination leads to the conclusion that the Fatima examinees gained early access to the
test questions."6
TINGA, J.:

On July 5, 1993, respondents Arlene V. De Guzman, Violeta V. Meneses, Celerina S. Navarro, Jose
This petition for review under Rule 45 of the 1997 Rules of Civil Procedure seeks to nullify
Ramoncito P. Navarro, Arnel V. Herrera, and Geraldine Elizabeth M. Pagilagan (Arlene V. De Guzman
the Decision,1 dated May 16, 2000, of the Court of Appeals in CA-G.R. SP No. 37283. The appellate
et al., for brevity) filed a special civil action for mandamus, with prayer for preliminary mandatory
court affirmed the judgment2 dated December 19, 1994, of the Regional Trial Court (RTC) of Manila,
injunction docketed as Civil Case No. 93-66530 with the Regional Trial Court (RTC) of Manila, Branch
Branch 52, in Civil Case No. 93-66530. The trial court allowed the respondents to take their
52. Their petition was adopted by the other respondents as intervenors. 
physician’s oath and to register as duly licensed physicians. Equally challenged is
the Resolution3 promulgated on August 25, 2000 of the Court of Appeals, denying petitioners’ Motion
for Reconsideration. Meanwhile, the Board issued Resolution No. 26, dated July 21, 1993, charging respondents with
"immorality, dishonest conduct, fraud, and deceit" in connection with the Bio-Chem and Ob-Gyne
examinations. It recommended that the test results of the Fatima examinees be nullified. The case
The facts of this case are as follows: 
was docketed as Adm. Case No. 1687 by the PRC. 

The respondents are all graduates of the Fatima College of Medicine, Valenzuela City, Metro
On July 28, 1993, the RTC issued an Order in Civil Case No. 93-66530 granting the preliminary
Manila. They passed the Physician Licensure Examination conducted in February 1993 by the
mandatory injunction sought by the respondents. It ordered the petitioners to administer the
Board of Medicine (Board). Petitioner Professional Regulation Commission (PRC) then
physician’s oath to Arlene V. De Guzman et al., and enter their names in the rolls of the PRC. 
released their names as successful examinees in the medical licensure examination.

The petitioners then filed a special civil action for certiorari with the Court of Appeals to set aside the
Shortly thereafter, the Board observed that the grades of the seventy-nine successful
mandatory injunctive writ, docketed as CA-G.R. SP No. 31701. 
examinees from Fatima College in the two most difficult subjects in the medical licensure
exam, Biochemistry (Bio-Chem) and Obstetrics and Gynecology (OB-Gyne), were unusually
and exceptionally high. Eleven Fatima examinees scored 100% in Bio-Chem and ten got On October 21, 1993, the appellate court decided CA-G.R. SP No. 31701, with the dispositive portion
100% in OB-Gyne, another eleven got 99% in Bio-Chem, and twenty-one scored 99% in OB- of the Decision ordaining as follows:
Gyne. The Board also observed that many of those who passed from Fatima got marks of
95% or better in both subjects, and no one got a mark lower than 90%. A comparison of the
WHEREFORE, this petition is GRANTED. Accordingly, the writ of preliminary mandatory
performances of the candidates from other schools was made. The Board observed that
injunction issued by the lower court against petitioners is hereby nullified and set aside.
strangely, the unusually high ratings were true only for Fatima College examinees. It was a
record-breaking phenomenon in the history of the Physician Licensure Examination.
SO ORDERED.7
On June 7, 1993, the Board issued Resolution No. 19, withholding the registration as physicians of all
the examinees from the Fatima College of Medicine. 4 The PRC asked the National Bureau of Arlene V. de Guzman, et al., then elevated the foregoing Decision to this Court in G.R. No. 112315. In
Investigation (NBI) to investigate whether any anomaly or irregularity marred the February 1993 our Resolution dated May 23, 1994, we denied the petition for failure to show reversible error on the
Physician Licensure Examination. part of the appellate court.

Prior to the NBI investigation, the Board requested Fr. Bienvenido F. Nebres, S.J., an expert Meanwhile, on November 22, 1993, during the pendency of the instant petition, the pre-trial
mathematician and authority in statistics, and later president of the Ateneo de Manila University, to conference in Civil Case No. 93-66530 was held. Then, the parties, agreed to reduce the testimonies
conduct a statistical analysis of the results in Bio-Chem and Ob-Gyne of the said examination.  of their respective witnesses to sworn questions-and-answers. This was without prejudice to cross-
examination by the opposing counsel. 
On June 10, 1993, Fr. Nebres submitted his report. He reported that a comparison of the scores in
Bio-Chem and Ob-Gyne, of the Fatima College examinees with those of examinees from De La Salle On December 13, 1993, petitioners’ counsel failed to appear at the trial in the mistaken belief that the
University and Perpetual Help College of Medicine showed that the scores of Fatima College trial was set for December 15. The trial court then ruled that petitioners waived their right to cross-
examinees were not only incredibly high but unusually clustered close to each other. He concluded examine the witnesses.
that there must be some unusual reason creating the clustering of scores in the two subjects. It must

24
On January 27, 1994, counsel for petitioners filed a Manifestation and Motion stating the reasons for failed to appear. Thus, the trial court denied the Motion to Inhibit and declared Civil Case No. 93-
her non-appearance and praying that the cross-examination of the witnesses for the opposing parties 66530 deemed submitted for decision. 
be reset. The trial court denied the motion for lack of notice to adverse counsel. It also denied
the Motion for Reconsideration that followed on the ground that adverse counsel was notified less
On December 19, 1994, the trial court handed down its judgment in Civil Case No. 93-66530, the fallo
than three (3) days prior to the hearing.
of which reads:

Meanwhile, to prevent the PRC and the Board from proceeding with Adm. Case No. 1687, the
WHEREFORE, judgment is rendered ordering the respondents to allow the petitioners and
respondents herein moved for the issuance of a restraining order, which the lower court granted in
intervenors (except those with asterisks and footnotes in pages 1 & 2 of this decision)
its Order dated April 4, 1994.
[sic],9 to take the physician’s oath and to register them as physicians.

The petitioners then filed with this Court a petition for certiorari docketed as G.R. No. 115704, to
It should be made clear that this decision is without prejudice to any administrative
annul the Orders of the trial court dated November 13, 1993, February 28, 1994, and April 4, 1994.
disciplinary action which may be taken against any of the petitioners for such causes and in
We referred the petition to the Court of Appeals where it was docketed as CA-G.R. SP No. 34506.
the manner provided by law and consistent with the requirements of the Constitution as any
other professionals.
On August 31, 1994, the appellate court decided CA-G.R. SP No. 34506 as follows:
No costs. 
WHEREFORE, the present petition for certiorari with prayer for temporary restraining
order/preliminary injunction is GRANTED and the Orders of December 13, 1993, February 7,
SO ORDERED.10
1994, February 28, 1994, and April 4, 1994 of the RTC-Manila, Branch 52, and all further
proceedings taken by it in Special Civil Action No. 93-66530 are hereby DECLARED NULL and
VOID. The said RTC-Manila is ordered to allow petitioners’ counsel to cross-examine the As a result of these developments, petitioners filed with this Court a petition for review on certiorari
respondents’ witnesses, to allow petitioners to present their evidence in due course of trial, docketed as G.R. No. 118437, entitled Professional Regulation Commission v. Hon. David G. Nitafan,
and thereafter to decide the case on the merits on the basis of the evidence of the parties. praying inter alia, that (1) G.R. No. 118437 be consolidated with G.R. No. 117817; (2) the decision of
Costs against respondents. the Court of Appeals dated August 31, 1994 in CA-G.R. SP No. 34506 be nullified for its failure to
decree the dismissal of Civil Case No. 93-66530, and in the alternative, to set aside the decision of
the trial court in Civil Case No. 93-66530, order the trial court judge to inhibit himself, and Civil Case
IT IS SO ORDERED.8
No. 93-66530 be re-raffled to another branch. 

The trial was then set and notices were sent to the parties. 
On December 26, 1994, the petitioners herein filed their Notice of Appeal11 in Civil Case No. 93-
66530, thereby elevating the case to the Court of Appeals, where it was docketed as CA-G.R. SP No.
A day before the first hearing, on September 22, 1994, the petitioners filed an Urgent Ex-Parte 37283. 
Manifestation and Motion praying for the partial reconsideration of the appellate court’s decision in
CA-G.R. SP No. 34506, and for the outright dismissal of Civil Case No. 93-66530. The petitioners
In our Resolution of June 7, 1995, G.R. No. 118437 was consolidated with G.R. No. 117817. 
asked for the suspension of the proceedings.

On July 9, 1998, we disposed of G.R. Nos. 117817 and 118437 in this wise:
In its Order dated September 23, 1994, the trial court granted the aforesaid motion, cancelled the
scheduled hearing dates, and reset the proceedings to October 21 and 28, 1994. 
WHEREFORE, the petition in G.R. No. 117817 is DISMISSED for being moot. The petition in
G.R. No. 118437 is likewise DISMISSED on the ground that there is a pending appeal before
Meanwhile, on October 25, 1994, the Court of Appeals denied the partial motion for reconsideration in
the Court of Appeals. Assistant Solicitor General Amparo M. Cabotaje-Tang is advised to be
CA-G.R. SP No. 34506. Thus, petitioners filed with the Supreme Court a petition for review docketed
more circumspect in her dealings with the courts as a repetition of the same or similar acts
as G.R. No. 117817, entitled Professional Regulation Commission, et al. v. Court of Appeals, et al. 
will be dealt with accordingly.

On November 11, 1994, counsel for the petitioners failed to appear at the trial of Civil Case No. 93-
SO ORDERED.12
66530. Upon motion of the respondents herein, the trial court ruled that herein petitioners waived
their right to cross-examine the herein respondents. Trial was reset to November 28, 1994.
While CA-G.R. SP No. 37283 was awaiting disposition by the appellate court, Arnel V. Herrera, one of
the original petitioners in Civil Case No. 93-66530, joined by twenty-seven intervenors, to wit:
On November 25, 1994, petitioners’ counsel moved for the inhibition of the trial court judge for
Fernando F. Mandapat, Ophelia C. Hidalgo, Bernadette T. Mendoza, Ruby B. Lantin-Tan, Fernando T.
alleged partiality. On November 28, 1994, the day the Motion to Inhibit was to be heard, petitioners
Cruz, Marissa A. Regodon, Ma. Eloisa Q. Mallari-Largoza, Cheryl R. Triguero, Joseph A. Jao,

25
Bernadette H. Cabuhat, Evelyn S. Acosta-Cabanes, Laura M. Santos, Maritel M. Echiverri, Bernadette The petitioners submit that a writ of mandamus will not lie in this case. They point out that for a writ
C. Escusa, Carlosito C. Domingo, Alicia S. Lizano, Elnora R. Raqueno-Rabaino, Saibzur N. Edding, of mandamus to issue, the applicant must have a well-defined, clear and certain legal right to the
Derileen D. Dorado-Edding, Robert B. Sanchez, Maria Rosario L. Leonor-Lacandula, Geraldine thing demanded and it is the duty of the respondent to perform the act required. Thus, mandamus
Elizabeth M. Pagilagan-Palma, Margarita Belinda L. Vicencio-Gamilla, Herminigilda E. Conejos, Leuvina may be availed of only when the duty sought to be performed is a ministerial and not a discretionary
P. Chico-Paguio, Elcin C. Arriola-Ocampo, and Jose Ramoncito P. Navarro, manifested that they were one. The petitioners argue that the appellate court’s decision in CA-G.R. SP No. 37283 upholding the
no longer interested in proceeding with the case and moved for its dismissal. A similar manifestation decision of the trial court in Civil Case No. 93-66530 overlooked its own pronouncement in CA-G.R. SP
and motion was later filed by intervenors Mary Jean I. Yeban-Merlan, Michael L. Serrano, Norma G. No. 31701. The Court of Appeals held in CA-G.R. SP No. 31701 that the issuance of a license to
Lafavilla, Arnulfo A. Salvador, Belinda C. Rabara, Yolanda P. Unica, Dayminda G. Bontuyan, Clarissa engage in the practice of medicine becomes discretionary on the PRC if there exists some doubt that
B. Baclig, Ma. Luisa S. Gutierrez, Rhoneil R. Deveraturda, Aleli A. Gollayan, Evelyn C. Cundangan, the successful examinee has not fully met the requirements of the law. The petitioners stress that this
Frederick D. Francisco, Violeta V. Meneses, Melita J. Cañedo, Clarisa SJ. Nicolas, Federico L. Castillo, Court’s Resolution dated May 24, 1994 in G.R. No. 112315 held that there was no showing "that the
Karangalan D. Serrano, Danilo A. Villaver, Grace E. Uy, Lydia C. Chan, and Melvin M. Usita. The Court Court of Appeals had committed any reversible error in rendering the questioned judgment" in CA-
of Appeals ruled that its decision in CA-G.R. SP No. 37283 would not apply to them. G.R. SP No. 31701. The petitioners point out that our Resolution in G.R. No. 112315 has long become
final and executory. 
On May 16, 2000, the Court of Appeals decided CA-G.R. SP No. 37283, with the following fallo, to wit:
Respondents counter that having passed the 1993 licensure examinations for physicians, the
petitioners have the obligation to administer to them the oath as physicians and to issue their
WHEREFORE, finding no reversible error in the decision appealed from, We hereby AFFIRM
certificates of registration as physicians pursuant to Section 2016 of Rep. Act No. 2382. The Court of
the same and DISMISS the instant appeal.
Appeals in CA-G.R. SP No. 37283, found that respondents complied with all the requirements of Rep.
Act No. 2382. Furthermore, respondents were admitted by the Medical Board to the licensure
No pronouncement as to costs. examinations and had passed the same. Hence, pursuant to Section 20 of Rep. Act No. 2382, the
petitioners had the obligation to administer their oaths as physicians and register them. 
SO ORDERED.13
Mandamus is a command issuing from a court of competent jurisdiction, in the name of the state or
In sustaining the trial court’s decision, the appellate court ratiocinated that the respondents complied the sovereign, directed to some inferior court, tribunal, or board, or to some corporation or person
with all the statutory requirements for admission into the licensure examination for physicians in requiring the performance of a particular duty therein specified, which duty results from the official
February 1993. They all passed the said examination. Having fulfilled the requirements of Republic station of the party to whom the writ is directed, or from operation of law. 17 Section 3 of Rule 6518 of
Act No. 2382,14 they should be allowed to take their oaths as physicians and be registered in the rolls the 1997 Rules of Civil Procedure outlines two situations when a writ of mandamus may issue, when
of the PRC.  any tribunal, corporation, board, officer or person unlawfully (1) neglects the performance of an act
which the law specifically enjoins as a duty resulting from an office, trust, or station; or (2) excludes
another from the use and enjoyment of a right or office to which the other is entitled. 
Hence, this petition raising the following issues:

We shall discuss the issues successively.


I

1. On The Existence of a Duty of the Board of Medicine To Issue Certificates of Registration as


WHETHER OR NOT RESPONDENTS HAVE A VALID CAUSE OF ACTION FOR MANDAMUS Physicians under Rep. Act No. 2382.
AGAINST PETITIONERS IN THE LIGHT OF THE RESOLUTION OF THIS HONORABLE COURT IN
G.R. NO. 112315 AFFIRMING THE COURT OF APPEALS’ DECISION DECLARING THAT IF EVER
THERE IS SOME DOUBT AS TO THE MORAL FITNESS OF EXAMINEES, THE ISSUANCE OF For mandamus to prosper, there must be a showing that the officer, board, or official concerned, has
LICENSE TO PRACTICE MEDICINE IS NOT AUTOMATICALLY GRANTED TO THE SUCCESSFUL a clear legal duty, not involving discretion.19 Moreover, there must be statutory authority for the
EXAMINEES. performance of the act,20 and the performance of the duty has been refused.21 Thus, it must be
pertinently asked now: Did petitioners have the duty to administer the Hippocratic Oath and register
respondents as physicians under the Medical Act of 1959?
II

As found by the Court of Appeals, on which we agree on the basis of the records: 
WHETHER OR NOT THE PETITION FOR MANDAMUS COULD PROCEED DESPITE THE
PENDENCY OF ADMINISTRATIVE CASE NO. 1687, WHICH WAS PRECISELY LODGED TO
DETERMINE THE MORAL FITNESS OF RESPONDENTS TO BECOME DOCTORS.15 It bears emphasizing herein that petitioner-appellees and intervenor-appellees have fully
complied with all the statutory requirements for admission into the licensure examinations
for physicians conducted and administered by the respondent-appellants on February 12, 14,
To our mind, the only issue is: Did the Court of Appeals commit a reversible error of law in sustaining 20 and 21, 1993. Stress, too, must be made of the fact that all of them successfully passed
the judgment of the trial court that respondents are entitled to a writ of mandamus? the same examinations.22

26
The crucial query now is whether the Court of Appeals erred in concluding that petitioners should The respondents nevertheless argue that under Section 20, the Board shall not issue a certificate of
allow the respondents to take their oaths as physicians and register them, steps which would enable registration only in the following instances: (1) to any candidate who has been convicted by a court of
respondents to practice the medical profession23 pursuant to Section 20 of the Medical Act of 1959? competent jurisdiction of any criminal offense involving moral turpitude; (2) or has been found guilty
of immoral or dishonorable conduct after the investigation by the Board; or (3) has been declared to
be of unsound mind. They aver that none of these circumstances are present in their case. 
The appellate court relied on a single provision, Section 20 of Rep. Act No. 2382, in concluding that
the petitioners had the ministerial obligation to administer the Hippocratic Oath to respondents and
register them as physicians. But it is a basic rule in statutory construction that each part of a statute Petitioners reject respondents’ argument. We are informed that in Board Resolution No. 26, 29 dated
should be construed in connection with every other part to produce a harmonious whole, not confining July 21, 1993, the Board resolved to file charges against the examinees from Fatima College of
construction to only one section.24 The intent or meaning of the statute should be ascertained from Medicine for "immorality, dishonesty, fraud, and deceit in the Obstetrics-Gynecology and Biochemistry
the statute taken as a whole, not from an isolated part of the provision. Accordingly, Section 20, of examinations." It likewise sought to cancel the examination results obtained by the examinees from
Rep. Act No. 2382, as amended should be read in conjunction with the other provisions of the Act. the Fatima College. 
Thus, to determine whether the petitioners had the ministerial obligation to administer the Hippocratic
Oath to respondents and register them as physicians, recourse must be had to the entirety of the
Section 830 of Rep. Act No. 2382 prescribes, among others, that a person who aspires to practice
Medical Act of 1959.
medicine in the Philippines, must have "satisfactorily passed the corresponding Board Examination."
Section 22, in turn, provides that the oath may only be administered "to physicians who qualified in
A careful reading of Section 20 of the Medical Act of 1959 discloses that the law uses the word "shall" the examinations." The operative word here is "satisfactorily," defined as "sufficient to meet a
with respect to the issuance of certificates of registration. Thus, the petitioners "shall sign and issue condition or obligation" or "capable of dispelling doubt or ignorance." 31 Gleaned from Board Resolution
certificates of registration to those who have satisfactorily complied with the requirements of the No. 26, the licensing authority apparently did not find that the respondents "satisfactorily passed" the
Board." In statutory construction the term "shall" is a word of command. It is given imperative licensure examinations. The Board instead sought to nullify the examination results obtained by the
meaning. Thus, when an examinee satisfies the requirements for the grant of his physician’s license, respondents. 
the Board is obliged to administer to him his oath and register him as a physician, pursuant to Section
20 and par. (1) of Section 2225 of the Medical Act of 1959.
2. On the Right Of The Respondents To Be Registered As Physicians

However, the surrounding circumstances in this case call for serious inquiry concerning the
The function of mandamus is not to establish a right but to enforce one that has been established by
satisfactory compliance with the Board requirements by the respondents. The unusually high scores in
law. If no legal right has been violated, there can be no application of a legal remedy, and the writ of
the two most difficult subjects was phenomenal, according to Fr. Nebres, the consultant of PRC on the
mandamus is a legal remedy for a legal right.32 There must be a well-defined, clear and certain legal
matter, and raised grave doubts about the integrity, if not validity, of the tests. These doubts have to
right to the thing demanded.33 It is long established rule that a license to practice medicine is a
be appropriately resolved.
privilege or franchise granted by the government.34

Under the second paragraph of Section 22, the Board is vested with the power to conduct
It is true that this Court has upheld the constitutional right 35 of every citizen to select a profession or
administrative investigations and "disapprove applications for examination or registration," pursuant
course of study subject to a fair, reasonable, and equitable admission and academic
to the objectives of Rep. Act No. 2382 as outlined in Section 1 26 thereof. In this case, after the
requirements.36 But like all rights and freedoms guaranteed by the Charter, their exercise may be so
investigation, the Board filed before the PRC, Adm. Case No. 1687 against the respondents to
regulated pursuant to the police power of the State to safeguard health, morals, peace, education,
ascertain their moral and mental fitness to practice medicine, as required by Section 927 of Rep. Act
order, safety, and general welfare of the people.37 Thus, persons who desire to engage in the learned
No. 2382. In its Decision dated July 1, 1997, the Board ruled:
professions requiring scientific or technical knowledge may be required to take an examination as a
prerequisite to engaging in their chosen careers. This regulation takes particular pertinence in the
WHEREFORE, the BOARD hereby CANCELS the respondents[’] examination papers in the field of medicine, to protect the public from the potentially deadly effects of incompetence and
Physician Licensure Examinations given in February 1993 and further DEBARS them from ignorance among those who would practice medicine. In a previous case, it may be recalled, this
taking any licensure examination for a period of ONE (1) YEAR from the date of the Court has ordered the Board of Medical Examiners to annul both its resolution and certificate
promulgation of this DECISION. They may, if they so desire, apply for the scheduled authorizing a Spanish subject, with the degree of Licentiate in Medicine and Surgery from the
examinations for physicians after the lapse of the period imposed by the BOARD. University of Barcelona, Spain, to practice medicine in the Philippines, without first passing the
examination required by the Philippine Medical Act.38 In another case worth noting, we upheld the
power of the State to upgrade the selection of applicants into medical schools through admission
SO ORDERED.28
tests.39

Until the moral and mental fitness of the respondents could be ascertained, according to petitioners,
It must be stressed, nevertheless, that the power to regulate the exercise of a profession or pursuit of
the Board has discretion to hold in abeyance the administration of the Hippocratic Oath and the
an occupation cannot be exercised by the State or its agents in an arbitrary, despotic, or oppressive
issuance of the certificates to them. The writ of mandamus does not lie to compel performance of an
manner. A political body that regulates the exercise of a particular privilege has the authority to both
act which is not duly authorized. 
forbid and grant such privilege in accordance with certain conditions. Such conditions may not,
however, require giving up ones constitutional rights as a condition to acquiring the license. 40 Under
27
the view that the legislature cannot validly bestow an arbitrary power to grant or refuse a license on a appeal the unfavorable judgment to the PRC; (b) should the PRC ruling still be unfavorable, to elevate
public agency or officer, courts will generally strike down license legislation that vests in public the matter on appeal to the Office of the President; and (c) should they still be unsatisfied, to ask for
officials discretion to grant or refuse a license to carry on some ordinarily lawful business, profession, a review of the case or to bring the case to court viaa special civil action of certiorari. Thus, as a rule,
or activity without prescribing definite rules and conditions for the guidance of said officials in the mandamus will not lie when administrative remedies are still available.46 However, the doctrine of
exercise of their power.41 exhaustion of administrative remedies does not apply where, as in this case, a pure question of law is
raised.47 On this issue, no reversible error may, thus, be laid at the door of the appellate court in CA-
G.R. SP No. 37283, when it refused to dismiss Civil Case No. 93-66530. 
In the present case, the aforementioned guidelines are provided for in Rep. Act No. 2382, as
amended, which prescribes the requirements for admission to the practice of medicine, the
qualifications of candidates for the board examinations, the scope and conduct of the examinations, As we earlier pointed out, herein respondents Arnel V. Herrera, Fernando F. Mandapat, Ophelia C.
the grounds for denying the issuance of a physician’s license, or revoking a license that has been Hidalgo, Bernadette T. Mendoza, Ruby B. Lantin-Tan, Fernando T. Cruz, Marissa A. Regodon, Ma.
issued. Verily, to be granted the privilege to practice medicine, the applicant must show that he Eloisa Q. Mallari-Largoza, Cheryl R. Triguero, Joseph A. Jao, Bernadette H. Cabuhat, Evelyn S. Acosta-
possesses all the qualifications and none of the disqualifications. Furthermore, it must appear that he Cabanes, Laura M. Santos, Maritel M. Echiverri, Bernadette C. Escusa, Carlosito C. Domingo, Alicia S.
has fully complied with all the conditions and requirements imposed by the law and the licensing Lizano, Elnora R. Raqueno-Rabaino, Saibzur N. Edding, Derileen D. Dorado-Edding, Robert B.
authority. Should doubt taint or mar the compliance as being less than satisfactory, then the privilege Sanchez, Maria Rosario Leonor-Lacandula, Geraldine Elizabeth M. Pagilagan-Palma, Margarita Belinda
will not issue. For said privilege is distinguishable from a matter of right, which may be demanded if L. Vicencio-Gamilla, Herminigilda E. Conejos, Leuvina P. Chico-Paguio, Elcin C. Arriola-Ocampo, and
denied. Thus, without a definite showing that the aforesaid requirements and conditions have been Jose Ramoncito P. Navarro manifested to the Court of Appeals during the pendency of CA-G.R. SP No.
satisfactorily met, the courts may not grant the writ of mandamus to secure said privilege without 37283, that they were no longer interested in proceeding with the case and moved for its dismissal
thwarting the legislative will.  insofar as they were concerned. A similar manifestation and motion were later filed by intervenors
Mary Jean I. Yeban-Merlan, Michael L. Serrano, Norma G. Lafavilla, Arnulfo A. Salvador, Belinda C.
Rabarra, Yolanda P. Unica, Dayminda G. Bontuyan, Clarissa B. Baclig, Ma. Luisa S. Gutierrez, Rhoneil
3. On the Ripeness of the Petition for Mandamus
R. Deveraturda, Aleli A. Gollayan, Evelyn C. Cundangan, Frederick D. Francisco, Violeta V. Meneses,
Melita J. Cañedo, Clarisa SJ. Nicolas, Federico L. Castillo, Karangalan D. Serrano, Danilo A. Villaver,
Lastly, the petitioners herein contend that the Court of Appeals should have dismissed the petition for Grace E. Uy, Lydia C. Chan, and Melvin M. Usita. Following these manifestations and motions, the
mandamus below for being premature. They argue that the administrative remedies had not been appellate court in CA-G.R. SP No. 37283 decreed that its ruling would not apply to them. Thus,
exhausted. The records show that this is not the first time that petitioners have sought the dismissal inasmuch as the instant case is a petition for review of the appellate court’s ruling in CA-G.R. SP No.
of Civil Case No. 93-66530. This issue was raised in G.R. No. 115704, which petition we referred to 37283, a decision which is inapplicable to the aforementioned respondents will similarly not apply to
the Court of Appeals, where it was docketed as CA-G.R. SP No. 34506. On motion for reconsideration them. 
in CA-G.R. SP No. 34506, the appellate court denied the motion to dismiss on the ground that the
prayers for the nullification of the order of the trial court and the dismissal of Civil Case No. 93-66530
As to Achilles J. Peralta, Evelyn O. Ramos, Sally B. Bunagan, Rogelio B. Ancheta, Oscar H. Padua, Jr.,
were inconsistent reliefs. In G.R. No. 118437, the petitioners sought to nullify the decision of the
Evelyn D. Grajo, Valentino P. Arboleda, Carlos M. Bernardo, Jr., Mario D. Cuaresma, Violeta C. Felipe,
Court of Appeals in CA-G.R. SP No. 34506 insofar as it did not order the dismissal of Civil Case No.
Percival H. Pangilinan, Corazon M. Cruz and Samuel B. Bangoy, herein decision shall not apply
93-66530. In our consolidated decision, dated July 9, 1998, in G.R. Nos. 117817 & 118437, this Court
pursuant to the Orders of the trial court in Civil Case No. 93-66530, dropping their names from the
speaking through Justice Bellosillo opined that:
suit.

Indeed, the issue as to whether the Court of Appeals erred in not ordering the dismissal of
Consequently, this Decision is binding only on the remaining respondents, namely: Arlene V. de
Civil Case No. 93-66530 sought to be resolved in the instant petition has been rendered
Guzman, Celerina S. Navarro, Rafael I. Tolentino, Bernardita B. Sy, Gloria T. Jularbal, Hubert S.
meaningless by an event taking place prior to the filing of this petition and denial thereof
Nazareno, Nancy J. Chavez, Ernesto L. Cue, Herminio V. Fernandez, Jr., Maria Victoria M. Lacsamana
should follow as a logical consequence.42 There is no longer any justiciable controversy so
and Merly D. Sta. Ana, as well as the petitioners.
that any declaration thereon would be of no practical use or value.43 It should be recalled
that in its decision of 19 December 1994 the trial court granted the writ of mandamus prayed
for by private respondents, which decision was received by petitioners on 20 December WHEREFORE, the instant petition is GRANTED. Accordingly, (1) the assailed decision dated May 16,
1994. Three (3) days after, or on 23 December 1994, petitioners filed the instant petition. By 2000, of the Court of Appeals, in CA-G.R. SP No. 37283, which affirmed the judgment dated
then, the remedy available to them was to appeal the decision to the Court of Appeals, which December 19, 1994, of the Regional Trial Court of Manila, Branch 52, in Civil Case No. 93-66530,
they in fact did, by filing a notice of appeal on 26 December 1994.44 ordering petitioners to administer the physician’s oath to herein respondents as well as the resolution
dated August 25, 2000, of the appellate court, denying the petitioners’ motion for reconsideration, are
REVERSED and SET ASIDE; and (2) the writ of mandamus, issued in Civil Case No. 93-66530, and
The petitioners have shown no cogent reason for us to reverse the aforecited ruling. Nor will their
affirmed by the appellate court in CA-G.R. SP No. 37283 is NULLIFIED AND SET ASIDE. 
reliance upon the doctrine of the exhaustion of administrative remedies in the instant case advance
their cause any. 
SO ORDERED.
Section 26  of the Medical Act of 1959 provides for the administrative and judicial remedies that
45

respondents herein can avail to question Resolution No. 26 of the Board of Medicine, namely: (a)
28
FRANCISCO I. CHAVEZ Petitioner, 
vs.
HON. ALBERTO G. ROMULO, IN HIS CAPACITY AS EXECUTIVE SECRETARY; DIRECTOR

29
GENERAL HERMOGENES E. EBDANE, JR., IN HIS CAPACITY AS THE CHIEF OF THE PNP, ET.
AL., respondents

Facts: GMA delivered a speech to PNP directing PNP Chief Hermogenes Ebdane to suspend the

issuance pf Permit to Carry Firearms Outside of Residence PTCFOR). Ebdane issued guidelines

banning carrying firearms outside of residence. Petitioner, Francisco Chaves requested DILG to

reconsider the implementation. The request was denied. Hence the petition for prohibition and

injunction against Executive Secretary Alberto Romulo and PNP Chief Ebdane.

Issue: Whether or not revocation of PTCFOR is a violation of right to property? Whether or not the

banning of carrying firearms outside the residence is a valid exercise of police power?

Decision: Petition dismissed. Just like ordinary licenses in other regulated fields, PTCFOR may be

revoked any time. It does not confer an absolute right, but only a personal privilege to be exercised

under existing restrictions. A licensee takes his license subject to such conditions as the Legislature

sees fit to impose, and one of the statutory conditions of this license is that it might be revoked.

Revocation of it does not deprive the defendant of any property, immunity, or privilege.

The basis for its issuance was the need for peace and order in the society. the assailed Guidelines do

not entirely prohibit possession of firearms. What they proscribe is merely the carrying of firearms

outside of residence. However, those who wish to carry their firearms outside of their residences may

re-apply for a new PTCFOR. This is a reasonable regulation. If the carrying of firearms is regulated,

necessarily, crime incidents will be curtailed.

30
UNIFORMED MEN IN THE MILITARY AND AUTHORIZED LAW ENFORCEMENT
OFFICERS CAN CARRY FIREARMS IN PUBLIC PLACES, AND ONLY PURSUANT TO
EXISTING LAW. CIVILIAN OWNERS MAY NO LONGER BRING THEIR FIREARMS
OUTSIDE THEIR RESIDENCES. THOSE WHO WANT TO USE THEIR GUNS FOR
TARGET PRACTICE WILL BE GIVEN SPECIAL AND TEMPORARY PERMITS FROM TIME
G.R. No. 157036             June 9, 2004 TO TIME ONLY FOR THAT PURPOSE. AND THEY MAY NOT LOAD THEIR GUNS WITH
BULLETS UNTIL THEY ARE IN THE PREMISES OF THE FIRING RANGE.
FRANCISCO I. CHAVEZ Petitioner, 
vs. WE CANNOT DISREGARD THE PARAMOUNT NEED FOR LAW AND ORDER. JUST AS
HON. ALBERTO G. ROMULO, IN HIS CAPACITY AS EXECUTIVE SECRETARY; DIRECTOR WE CANNOT BE HEEDLESS OF OUR PEOPLE’S ASPIRATIONS FOR PEACE." 
GENERAL HERMOGENES E. EBDANE, JR., IN HIS CAPACITY AS THE CHIEF OF THE PNP, ET.
AL., respondents.
Acting on President Arroyo’s directive, respondent Ebdane issued the assailed Guidelines quoted as
follows:
DECISION
"TO : All Concerned
SANDOVAL-GUTIERREZ, J.:
FROM : Chief, PNP
The right of individuals to bear arms is not absolute, but is subject to regulation. The maintenance of
peace and order1 and the protection of the people against violence are constitutional duties of the
SUBJECT : Guidelines in the Implementation of the Ban on the Carrying of Firearms
State, and the right to bear arms is to be construed in connection and in harmony with these
Outside of Residence.
constitutional duties. 

DATE : January 31, 2003


Before us is a petition for prohibition and injunction seeking to enjoin the implementation of the
"Guidelines in the Implementation of the Ban on the Carrying of Firearms Outside of
Residence"2 (Guidelines) issued on January 31, 2003, by respondent Hermogenes E. Ebdane, Jr., 1. Reference: PD 1866 dated June 29, 1983 and its Implementing Rules and Regulations.
Chief of the Philippine National Police (PNP).
2. General:
The facts are undisputed:
The possession and carrying of firearms outside of residence is a privilege granted by the
In January 2003, President Gloria Macapagal-Arroyo delivered a speech before the members State to its citizens for their individual protection against all threats of lawlessness and
of the PNP stressing the need for a nationwide gun ban in all public places to avert the rising security.
crime incidents. She directed the then PNP Chief, respondent Ebdane, to suspend the
issuance of Permits to Carry Firearms Outside of Residence (PTCFOR), thus: 
As a rule, persons who are lawful holders of firearms (regular license, special permit,
certificate of registration or MR) are prohibited from carrying their firearms outside of
"THERE IS ALSO NEED TO FOCUS ON THE HIGH PROFILE CRIMES THAT TEND TO residence. However, the Chief, Philippine National Police may, in meritorious cases as
DISTURB THE PSYCHOLOGICAL PERIMETERS OF THE COMMUNITY – THE LATEST determined by him and under conditions as he may impose, authorize such person or
BEING THE KILLING OF FORMER NPA LEADER ROLLY KINTANAR. I UNDERSTAND persons to carry firearms outside of residence.
WE ALREADY HAVE THE IDENTITY OF THE CULPRIT. LET US BRING THEM TO THE
BAR OF JUSTICE. 
3. Purposes:

THE NPA WILL FIND IT MORE DIFFICULT TO CARRY OUT THEIR PLOTS IF OUR LAW
This Memorandum prescribes the guidelines in the implementation of the ban on the carrying
ENFORCEMENT AGENCIES CAN RID THEMSELVES OF RASCALS IN UNIFORM, AND
of firearms outside of residence as provided for in the Implementing Rules and
ALSO IF WE ENFORCE A GUN BAN IN PUBLIC PLACES. 
Regulations, Presidential Decree No. 1866, dated June 29, 1983 and as directed by
PGMA. It also prescribes the conditions, requirements and procedures under which
THUS, I AM DIRECTING THE PNP CHIEF TO SUSPEND INDEFINITELY THE ISSUANCE exemption from the ban may be granted.
OF PERMIT TO CARRY FIREARMS IN PUBLIC PLACES. THE ISSUANCE OF PERMITS
WILL NOW BE LIMITED ONLY TO OWNERSHIP AND POSSESSION OF GUNS AND
4. Specific Instructions on the Ban on the Carrying of Firearms:
NOT TO CARRYING THEM IN PUBLIC PLACES. FROM NOW ON, ONLY THE

31
a. All PTCFOR are hereby revoked. Authorized holders of licensed firearms covered Applications for renewal of PTCFOR shall be processed in accordance with the provisions of
with valid PTCFOR may re-apply for a new PTCFOR in accordance with the par. 6 above. e. Application for possession and carrying of firearms by diplomats in the
conditions hereinafter prescribed. Philippines shall be processed in accordance with NHQ PNP Memo dated September 25, 2000,
with Subj: Possession and Carrying of Firearms by Diplomats in the Philippines. 8.
Restrictions in the Carrying of Firearms: a. The firearm must not be displayed or exposed to
b. All holders of licensed or government firearms are hereby prohibited from
public view, except those authorized in uniform and in the performance of their official
carrying their firearms outside their residence except those covered with
duties. b. The firearm shall not be brought inside public drinking and amusement places, and
mission/letter orders and duty detail orders issued by competent authority pursuant
all other commercial or public establishments." 
to Section 5, IRR, PD 1866, provided, that the said exception shall pertain only to
organic and regular employees.
Petitioner Francisco I. Chavez, a licensed gun owner to whom a PTCFOR has been issued, requested
the Department of Interior and Local Government (DILG) to reconsider the implementation of the
5. The following persons may be authorized to carry firearms outside of residence.
assailed Guidelines. However, his request was denied. Thus, he filed the present petition impleading
public respondents Ebdane, as Chief of PNP; Alberto G. Romulo, as Executive Secretary; and Gerry L.
a. All persons whose application for a new PTCFOR has been approved, provided, Barias, as Chief of the PNP-Firearms and Explosives Division. He anchored his petition on the following
that the persons and security of those so authorized are under actual threat, or by grounds:
the nature of their position, occupation and profession are under imminent danger.
"I
b. All organic and regular employees with Mission/Letter Orders granted by their
respective agencies so authorized pursuant to Section 5, IRR, PD 1866, provided,
THE PRESIDENT HAS NO POWER OR AUTHORITY – MUCH LESS BY A MERE SPEECH – TO
that such Mission/Letter Orders is valid only for the duration of the official mission
ALTER, MODIFY OR AMEND THE LAW ON FIREARMS BY IMPOSING A GUN BAN AND
which in no case shall be more than ten (10) days.
CANCELING EXISTING PERMITS FOR GUNS TO BE CARRIED OUTSIDE RESIDENCES.

c. All guards covered with Duty Detail Orders granted by their respective security
II
agencies so authorized pursuant to Section 4, IRR, PD 1866, provided, that such
DDO shall in no case exceed 24-hour duration. d. Members of duly recognized Gun
Clubs issued Permit to Transport (PTT) by the PNP for purposes of practice and OFFICIALLY, THERE IS NO PRESIDENTIAL ISSUANCE ON THE GUN BAN; THE PRESIDENTIAL
competition, provided, that such firearms while in transit must not be loaded with SPEECH NEVER INVOKED POLICE POWER TO JUSTIFY THE GUN BAN; THE PRESIDENT’S
ammunition and secured in an appropriate box or case detached from the person. e. VERBAL DECLARATION ON GUN BAN VIOLATED THE PEOPLE’S RIGHT TO PROTECT LIFE AND
Authorized members of the Diplomatic Corps. 6. Requirements for issuance of new THEIR PROPERTY RIGHT TO CARRY FIREARMS. 
PTCFOR: a. Written request by the applicant addressed to Chief, PNP stating his
qualification to possess firearm and the reasons why he needs to carry firearm
III
outside of residence. b. Xerox copy of current firearm license duly authenticated by
Records Branch, FED; c. Proof of actual threat, the details of which should be issued
by the Chief of Police/Provincial or City Directors and duly validated by C, RIID; d. THE PNP CHIEF HAS NO POWER OR AUTHORITY TO ISSUE THE QUESTIONED GUIDELINES
Copy of Drug Test Clearance, duly authenticated by the Drug Testing Center, if BECAUSE:
photocopied; e. Copy of DI/ RIID clearance, duly authenticated by ODI/RIID, if
photocopied; f. Copy of Neuro-Psychiatric Clearance duly authenticated by NP 1) THERE IS NO LAW, STATUTE OR EXECUTIVE ORDER WHICH GRANTS THE PNP
Testing Center, if photocopied; g. Copy of Certificate of Attendance to a Gun Safety CHIEF THE AUTHORITY TO PROMULGATE THE PNP GUIDELINES.
Seminar, duly validated by Chief, Operations Branch, FED; h. NBI Clearance; i. Two
(2) ID pictures (2" x 2") taken not earlier than one (1) year from date of filing of
application; and j. Proof of Payment  2) THE IMPLEMENTING RULES AND REGULATIONS OF PD 1866 CANNOT BE THE
SUBJECT OF ANOTHER SET OF IMPLEMENTING GUIDELINES.

7. Procedures: a. Applications may be filed directly to the Office of the PTCFOR Secretariat in
Camp Crame. In the provinces, the applications may also be submitted to the Police Regional 3) THE PRESIDENT’S SPEECH CANNOT BE A BASIS FOR THE PROMULGATION OF
Offices (PROs) and Provincial/City Police Offices (P/CPOs) for initial processing before they IMPLEMENTNG GUIDELINES ON THE GUN BAN.
are forwarded to the office of the PTCFOR Secretariat. The processors, after ascertaining that
the documentary requirements are in order, shall issue the Order of Payment (OP) indicating IV
the amount of fees payable by the applicant, who in turn shall pay the fees to the Land Bank.
b. Applications, which are duly processed and prepared in accordance with existing rules and
regulations, shall be forwarded to the OCPNP for approval. c. Upon approval of the
application, OCPNP will issue PTCFOR valid for one (1) year from date of issue. d.
32
ASSUMING ARGUENDO, THAT THE PNP GUIDELINES IMPLEMENT PD 1866, AND THE VIII
AMENDMENTS THERETO, THE PNP CHIEF STILL HAS NO POWER OR AUTHORITY TO ISSUE
THE SAME BECAUSE –
THE PNP GUIDELINES VIOLATE THE EQUAL PROTECTION CLAUSE OF THE CONSTITUTION
BECAUSE THEY ARE DIRECTED AT AND OPPRESSIVE ONLY TO LAW-ABIDING GUN OWNERS
1) PER SEC 6, RA 8294, WHICH AMENDS PD 1866, THE IRR SHALL BE WHILE LEAVING OTHER GUN-OWNERS – THE LAWBREAKERS (KIDNAPPERS, ROBBERS,
PROMULGATED JOINTLY BY THE DOJ AND THE DILG. HOLD-UPPERS, MNLF, MILF, ABU SAYYAF COLLECTIVELY, AND NPA) – UNTOUCHED.

2) SEC. 8, PD 1866 STATES THAT THE IRR SHALL BE PROMULGATED BY THE CHIEF IX
OF THE PHILIPPINE CONSTABULARY.
THE PNP GUIDELINES ARE UNJUST, OPPRESSIVE AND UNFAIR BECAUSE THEY WERE
V IMPLEMENTED LONG BEFORE THEY WERE PUBLISHED.

THE PNP GUIDELINES VIOLATE THE DUE PROCESS CLAUSE OF THE CONSTITUTION X
BECAUSE:
THE PNP GUIDELINES ARE EFFECTIVELY AN EX POST FACTO LAW SINCE THEY APPLY
1) THE RIGHT TO OWN AND CARRY A FIREARM IS NECESSARILY INTERTWINED RETROACTIVELY AND PUNISH ALL THOSE WHO WERE ALREADY GRANTED PERMITS TO
WITH THE PEOPLE’S INHERENT RIGHT TO LIFE AND TO PROTECT LIFE. THUS, THE CARRY OUTSIDE OF RESIDENCE LONG BEFORE THEIR PROMULGATION."
PNP GUIDELINES DEPRIVE PETITIONER OF THIS RIGHT WITHOUT DUE PROCESS OF
LAW FOR:
Petitioner’s submissions may be synthesized into five (5) major issues:

A) THE PNP GUIDELINES DEPRIVE PETITIONER OF HIS MOST POTENT, IF


First, whether respondent Ebdane is authorized to issue the assailed Guidelines; 
NOT HIS ONLY, MEANS TO DEFEND HIMSELF.

Second, whether the citizens’ right to bear arms is a constitutional right?; 


B) THE QUESTIONED GUIDELINES STRIPPED PETITIONER OF HIS MEANS
OF PROTECTION AGAINST CRIME DESPITE THE FACT THAT THE STATE
COULD NOT POSSIBLY PROTECT ITS CITIZENS DUE TO THE INADEQUACY Third, whether the revocation of petitioner’s PTCFOR pursuant to the assailed Guidelines is a
AND INEFFICIENCY OF THE POLICE FORCE. violation of his right to property?; 

2) THE OWNESHIP AND CARRYING OF FIREARMS ARE CONSTITUTIONALLY Fourth, whether the issuance of the assailed Guidelines is a valid exercise of police power?;
PROTECTED PROPERTY RIGHTS WHICH CANNOT BE TAKEN AWAY WITHOUT DUE and
PROCESS OF LAW AND WITHOUT JUST CAUSE.
Fifth, whether the assailed Guidelines constitute an ex post facto law? 
VI
The Solicitor General seeks the dismissal of the petition pursuant to the doctrine of hierarchy of
ASSUMING ARGUENDO, THAT THE PNP GUIDELINES WERE ISSUED IN THE courts. Nonetheless, in refutation of petitioner’s arguments, he contends that: (1) the PNP Chief is
EXERCISE OF POLICE POWER, THE SAME IS AN INVALID EXERCISE THEREOF SINCE authorized to issue the assailed Guidelines; (2) petitioner does not have a constitutional right to own
THE MEANS USED THEREFOR ARE UNREASONABLE AND UNNCESSARY FOR THE and carry firearms; (3) the assailed Guidelines do not violate the due process clause of the
ACCOMPLISHMENT OF ITS PURPOSE – TO DETER AND PREVENT CRIME –THEREBY Constitution; and (4) the assailed Guidelines do not constitute an ex post facto law. 
BECOMING UNDULY OPPRESSIVE TO LAW-ABIDING GUN-OWNERS.
Initially, we must resolve the procedural barrier.
VII
On the alleged breach of the doctrine of hierarchy of courts, suffice it to say that the doctrine is not
THE PNP GUIDELINES ARE UNJUST, OPPRESSIVE AND CONFISCATORY SINCE IT REVOKED an iron-clad dictum. In several instances where this Court was confronted with cases of national
ALL EXISTING PERMITS TO CARRY WITHOUT, HOWEVER, REFUNDING THE PAYMENT THE interest and of serious implications, it never hesitated to set aside the rule and proceed with the
PNP RECEIVED FROM THOSE WHO ALREADY PAID THEREFOR. judicial determination of the cases.3 The case at bar is of similar import as it involves the citizens’
right to bear arms. 

33
I Section 3 imparts: "The Chief of Constabulary may, in meritorious cases as determined by him and
under such conditions as he may impose, authorize lawful holders of firearms to carry them outside of
residence." These provisions are issued pursuant to the general power granted by P.D. No. 1866
Authority of the PNP Chief
empowering him to promulgate rules and regulations for the effective implementation of the
decree.17 At this juncture, it bears emphasis that P.D. No. 1866 is the chief law governing possession
Relying on the principle of separation of powers, petitioner argues that only Congress can withhold his of firearms in the Philippines and that it was issued by President Ferdinand E. Marcos in the exercise
right to bear arms. In revoking all existing PTCFOR, President Arroyo and respondent Ebdane of his legislative power.18 In an attempt to evade the application of the above-mentioned laws and
transgressed the settled principle and arrogated upon themselves a power they do not possess – the regulations, petitioner argues that the "Chief of the PNP" is not the same as the "Chief of the
legislative power. Constabulary," the PC being a mere unit or component of the newly established PNP. He contends
further that Republic Act No. 829419 amended P.D. No. 1866 such that the authority to issue rules and
We are not persuaded. regulations regarding firearms is now jointly vested in the Department of Justice and the DILG, not
the Chief of the Constabulary.20

It is true that under our constitutional system, the powers of government are distributed among three
coordinate and substantially independent departments: the legislative, the executive and the Petitioner’s submission is bereft of merit. 
judiciary. Each has exclusive cognizance of the matters within its jurisdiction and is supreme within its
own sphere.4 By virtue of Republic Act No. 6975,21 the Philippine National Police (PNP) absorbed the Philippine
Constabulary (PC). Consequently, the PNP Chief succeeded the Chief of the Constabulary and,
Pertinently, the power to make laws – the legislative power – is vested in Congress. 5 Congress may therefore, assumed the latter’s licensing authority. Section 24 thereof specifies, as one of PNP’s
not escape its duties and responsibilities by delegating that power to any other body or authority. Any powers, the issuance of licenses for the possession of firearms and explosives in accordance with
attempt to abdicate the power is unconstitutional and void, on the principle that "delegata potestas law.22 This is in conjunction with the PNP Chief’s "power to issue detailed implementing policies and
non potest delegari" – "delegated power may not be delegated."6 instructions" on such "matters as may be necessary to effectively carry out the functions, powers and
duties" of the PNP.23

The rule which forbids the delegation of legislative power, however, is not absolute and
inflexible. It admits of exceptions. An exception sanctioned by immemorial practice permits the Contrary to petitioner’s contention, R.A. No. 8294 does not divest the Chief of the Constabulary (now
legislative body to delegate its licensing power to certain persons, municipal corporations, towns, the PNP Chief) of his authority to promulgate rules and regulations for the effective implementation of
boards, councils, commissions, commissioners, auditors, bureaus and directors. 7 Such licensing power P.D. No. 1866. For one, R.A. No. 8294 did not repeal entirely P.D. No. 1866. It merely provides for
includes the power to promulgate necessary rules and regulations.8 the reduction of penalties for illegal possession of firearms. Thus, the provision of P.D. No. 1866
granting to the Chief of the Constabulary the authority to issue rules and regulations regarding
firearms remains effective. Correspondingly, the Implementing Rules and Regulations dated
The evolution of our laws on firearms shows that since the early days of our Republic, the legislature’s September 15, 1997 jointly issued by the Department of Justice and the DILG pursuant to Section 6
tendency was always towards the delegation of power. Act No. 1780, 9 delegated upon the Governor- of R.A. No. 8294 deal only with the automatic review, by the Director of the Bureau of Corrections or
General (now the President) the authority (1) to approve or disapprove applications of any person for the Warden of a provincial or city jail, of the records of convicts for violations of P.D. No. 1866. The
a license to deal in firearms or to possess the same for personal protection, hunting and other lawful Rules seek to give effect to the beneficent provisions of R.A. No. 8294, thereby ensuring the early
purposes; and (2) to revoke such license any time.10 Further, it authorized him to issue regulations release and reintegration of the convicts into the community. 
which he may deem necessary for the proper enforcement of the Act.11 With the enactment of Act No.
2711, the "Revised Administrative Code of 1917," the laws on firearms were integrated. 12 The Act
retained the authority of the Governor General provided in Act No. 1780. Subsequently, the growing Clearly, both P.D. No. 1866 and R.A. No. 6975 authorize the PNP Chief to issue the assailed
complexity in the Office of the Governor-General resulted in the delegation of his authority to the guidelines. 
Chief of the Constabulary. On January 21, 1919, Acting Governor-General Charles E. Yeater issued
Executive Order No. 813 authorizing and directing the Chief of Constabulary to act on his behalf in Corollarily, petitioner disputes President Arroyo’s declaration of a nationwide gun ban, arguing that
approving and disapproving applications for personal, special and hunting licenses. This was followed "she has no authority to alter, modify, or amend the law on firearms through a mere speech." 
by Executive Order No. 6114 designating the Philippine Constabulary (PC) as the government
custodian of all firearms, ammunitions and explosives. Executive Order No. 215,15 issued by President
First, it must be emphasized that President Arroyo’s speech was just an expression of her policy and a
Diosdado Macapagal on December 3, 1965, granted the Chief of the Constabulary, not only the
directive to her subordinate. It cannot, therefore, be argued that President Arroyo enacted a law
authority to approve or disapprove applications for personal, special and hunting license, but also the
through a mere speech. 
authority to revoke the same. With the foregoing developments, it is accurate to say that the Chief of
the Constabulary had exercised the authority for a long time. In fact, subsequent issuances such as
Sections 2 and 3 of the Implementing Rules and Regulations of Presidential Decree No. Second, at the apex of the entire executive officialdom is the President. Section 17, Article VII of the
186616 perpetuate such authority of the Chief of the Constabulary. Section 2 specifically provides that Constitution specifies his power as Chief Executive, thus: "The President shall have control of all the
any person or entity desiring to possess any firearm "shall first secure the necessary executive departments, bureaus and offices. He shall ensure that the laws be faithfully executed." As
permit/license/authority from the Chief of the Constabulary." With regard to the issuance of PTCFOR, Chief Executive, President Arroyo holds the steering wheel that controls the course of her

34
government. She lays down policies in the execution of her plans and programs. Whatever policy she The same doctrine was re-echoed in Cases vs. United States.27 Here, the Circuit Court of Appeals held
chooses, she has her subordinates to implement them. In short, she has the power of that the Federal Firearms Act, as applied to appellant, does not conflict with the Second Amendment.
control. Whenever a specific function is entrusted by law or regulation to her subordinate, It ruled that: 
she may act directly or merely direct the performance of a duty.24 Thus, when President Arroyo
directed respondent Ebdane to suspend the issuance of PTCFOR, she was just directing a subordinate
"While [appellant’s] weapon may be capable of military use, or while at least familiarity with
to perform an assigned duty. Such act is well within the prerogative of her office.
it might be regarded as of value in training a person to use a comparable weapon of military
type and caliber, still there is no evidence that the appellant was or ever had been a
II member of any military organization or that his use of the weapon under the
circumstances disclosed was in preparation for a military career. In fact, the only
inference possible is that the appellant at the time charged in the indictment was in
Right to bear arms: Constitutional or Statutory?
possession of, transporting, and using the firearm and ammunition purely and
simply on a frolic of his own and without any thought or intention of contributing to
Petitioner earnestly contends that his right to bear arms is a constitutionally-protected right. This, he the efficiency of the well regulated militia which the Second amendment was
mainly anchors on various American authorities. We therefore find it imperative to determine the designed to foster as necessary to the security of a free state." 
nature of the right in light of American jurisprudence. 
With the foregoing jurisprudence, it is erroneous to assume that the US Constitution grants upon the
The bearing of arms is a tradition deeply rooted in the English and American society. It antedates not American people the right to bear arms. In a more explicit language, the United States vs.
only the American Constitution but also the discovery of firearms.25 Cruikshank28 decreed: "The right of the people to keep and bear arms is not a right granted by
the Constitution. Neither is it in any way dependent upon that instrument." Likewise,
A provision commonly invoked by the American people to justify their possession of firearms is the in People vs. Persce,29 the Court of Appeals said: "Neither is there any constitutional provision
Second Amendment of the Constitution of the United States of America, which reads:  securing the right to bear arms which prohibits legislation with reference to such weapons as are
specifically before us for consideration. The provision in the Constitution of the United States
that the right of the people to keep and bear arms shall not be infringed is not designed to
"A well regulated militia, being necessary for the security of free state, the right of the people to keep control legislation by the state." 
and bear Arms, shall not be infringed."

With more reason, the right to bear arms cannot be classified as fundamental under the 1987
An examination of the historical background of the foregoing provision shows that it pertains to the Philippine Constitution. Our Constitution contains no provision similar to the Second Amendment, as
citizens’ "collective right" to take arms in defense of the State, not to the citizens’ "individual right" to we aptly observed in the early case of United States vs. Villareal:30
own and possess arms. The setting under which the right was contemplated has a profound
connection with the keeping and maintenance of a militia or an armed citizenry. That this is how the
right was construed is evident in early American cases. "The only contention of counsel which would appear to necessitate comment is the claim that
the statute penalizing the carrying of concealed weapons and prohibiting the keeping and the
use of firearms without a license, is in violation of the provisions of section 5 of the Philippine
The first case involving the interpretation of the Second Amendment that reached the United States Bill of Rights.
Supreme Court is United States vs. Miller.26 Here, the indictment charged the defendants with
transporting an unregistered "Stevens shotgun" without the required stamped written order, contrary
to the National Firearms Act. The defendants filed a demurrer challenging the facial validity of the Counsel does not expressly rely upon the prohibition in the United States
indictment on the ground that the National Firearms Act offends the inhibition of the Second Constitution against the infringement of the right of the people of the United States
Amendment. The District Court sustained the demurrer and quashed the indictment. On appeal, the to keep and bear arms (U. S. Constitution, amendment 2), which is not included in
Supreme Court interpreted the right to bear arms under the Second Amendment as referring to the the Philippine Bill. But it may be well, in passing, to point out that in no event could
collective right of those comprising the Militia – a body of citizens enrolled for military discipline. It this constitutional guaranty have any bearing on the case at bar, not only because
does not pertain to the individual right of citizen to bear arm. Miller expresses its holding as follows:  it has not been expressly extended to the Philippine Islands, but also because it
has been uniformly held that both this and similar provisions in State constitutions
apply only to arms used in civilized warfare (see cases cited in 40 Cyc., 853, note
"In the absence of any evidence tending to show that possession or use of a ‘shotgun having 18); x x x."
a barrel of less than eighteen inches in length’ at this time has some reasonable
relationship to the preservation or efficiency of a well regulated militia, we cannot
say that the Second Amendment guarantees the right to keep and bear such an Evidently, possession of firearms by the citizens in the Philippines is the exception, not the rule. The
instrument. Certainly it is not within judicial notice that this weapon is any part of the right to bear arms is a mere statutory privilege, not a constitutional right. It is a mere statutory
ordinary military equipment or that its use could contribute to the common defense. creation. What then are the laws that grant such right to the Filipinos? The first real firearm
law is Act No. 1780 enacted by the Philippine Commission on October 12, 1907. It was passed to
regulate the importation, acquisition, possession, use and transfer of firearms. Section 9 thereof
provides:
35
"SECTION 9. Any person desiring to possess one or more firearms for personal Petitioner’s reliance on Bell is misplaced. This case involves a driver’s license, not a license to bear
protection, or for use in hunting or other lawful purposes only, and ammunition arms. The catena of American jurisprudence involving license to bear arms is perfectly in accord with
therefor, shall make application for a license to possess such firearm or firearms or our ruling that a PTCFOR is neither a property nor a property right. In Erdelyi vs. O’Brien,36 the
ammunition as hereinafter provided. Upon making such application, and before receiving plaintiff who was denied a license to carry a firearm brought suit against the defendant who was the
the license, the applicant shall make a cash deposit in the postal savings bank in the sum of Chief of Police of the City of Manhattan Beach, on the ground that the denial violated her
one hundred pesos for each firearm for which the license is to be issued, or in lieu thereof he constitutional rights to due process and equal protection of the laws. The United States Court of
may give a bond in such form as the Governor-General may prescribe, payable to the Appeals Ninth Circuit ruled that Erdelyi did not have a property interest in obtaining a license to carry
Government of the Philippine Islands, in the sum of two hundred pesos for each such a firearm, ratiocinating as follows:
firearm: PROVIDED, HOWEVER, That persons who are actually members of gun clubs, duly
formed and organized at the time of the passage of this Act, who at such time have a license
"Property interests protected by the Due Process Clause of the Fourteenth Amendment do not arise
to possess firearms, shall not be required to make the deposit or give the bond prescribed by
whenever a person has only ‘an abstract need or desire for’, or ‘unilateral expectation of a benefit. x x
this section, and the bond duly executed by such person in accordance with existing law shall
x Rather, they arise from ‘legitimate claims of entitlement… defined by existing rules or understanding
continue to be security for the safekeeping of such arms." 
that stem from an independent source, such as state law. x x x Concealed weapons are closely
regulated by the State of California. x x x Whether the statute creates a property interest in concealed
The foregoing provision was restated in Section 88731 of Act No. 2711 that integrated the firearm weapons licenses depends ‘largely upon the extent to which the statute contains mandatory language
laws. Thereafter, President Ferdinand E. Marcos issued P.D. No. 1866. It codified the laws on illegal that restricts the discretion of the [issuing authority] to deny licenses to applicants who claim to meet
possession, manufacture, dealing in, acquisition of firearms, ammunitions or explosives and imposed the minimum eligibility requirements. x x x Where state law gives the issuing authority broad
stiffer penalties for their violation. R.A. No. 8294 amended some of the provisions of P.D. No. 1866 by discretion to grant or deny license application in a closely regulated field, initial applicants do not have
reducing the imposable penalties. Being a mere statutory creation, the right to bear arms cannot be a property right in such licenses protected by the Fourteenth Amendment. See Jacobson, supra, 627
considered an inalienable or absolute right.  F.2d at 180 (gaming license under Nevada law);" 

III Similar doctrine was announced in Potts vs. City of Philadelphia, 37 Conway vs. King,38 Nichols vs.
County of Sta. Clara,39 and Gross vs. Norton.40 These cases enunciated that the test whether the
statute creates a property right or interest depends largely on the extent of discretion granted to the
Vested Property Right
issuing authority.

Section 1, Article III of the Constitution provides that "no person shall be deprived of life, liberty or
In our jurisdiction, the PNP Chief is granted broad discretion in the issuance of PTCFOR. This is
property without due process of law." Petitioner invokes this provision, asserting that the revocation
evident from the tenor of the Implementing Rules and Regulations of P.D. No. 1866 which state that
of his PTCFOR pursuant to the assailed Guidelines deprived him of his "vested property right" without
"the Chief of Constabulary may, in meritorious cases as determined by him and under such
due process of law and in violation of the equal protection of law.
conditions as he may impose, authorize lawful holders of firearms to carry them outside of
residence." Following the American doctrine, it is indeed logical to say that a PTCFOR does not
Petitioner cannot find solace to the above-quoted Constitutional provision.  constitute a property right protected under our Constitution. 

In evaluating a due process claim, the first and foremost consideration must be whether life, liberty or Consequently, a PTCFOR, just like ordinary licenses in other regulated fields, may be revoked any
property interest exists.32 The bulk of jurisprudence is that a license authorizing a person to enjoy a time. It does not confer an absolute right, but only a personal privilege to be exercised under existing
certain privilege is neither a property nor property right. In Tan vs. The Director of Forestry,33 we restrictions, and such as may thereafter be reasonably imposed.41 A licensee takes his license subject
ruled that "a license is merely a permit or privilege to do what otherwise would be unlawful, and is not to such conditions as the Legislature sees fit to impose, and one of the statutory conditions of this
a contract between the authority granting it and the person to whom it is granted; neither is it license is that it might be revoked by the selectmen at their pleasure. Such a license is not a
property or a property right, nor does it create a vested right." In a more emphatic pronouncement, contract, and a revocation of it does not deprive the defendant of any property, immunity, or privilege
we held in Oposa vs. Factoran, Jr.34 that:  within the meaning of these words in the Declaration of Rights.42 The US Supreme Court, in Doyle vs.
Continental Ins. Co,43 held: "The correlative power to revoke or recall a permission is a necessary
"Needless to say, all licenses may thus be revoked or rescinded by executive action. consequence of the main power. A mere license by the State is always revocable."
It is not a contract, property or a property right protected by the due process
clause of the Constitution." The foregoing jurisprudence has been resonating in the Philippines as early as 1908. Thus, in The
Government of the Philippine Islands vs. Amechazurra44 we ruled:
Petitioner, in arguing that his PTCFOR is a constitutionally protected property right, relied heavily on
Bell vs. Burson35 wherein the U.S. Supreme Court ruled that "once a license is issued, continued "x x x no private person is bound to keep arms. Whether he does or not is entirely optional
possession may become essential in the pursuit of livelihood. Suspension of issued licenses thus with himself, but if, for his own convenience or pleasure, he desires to possess arms, he
involves state action that adjudicates important interest of the licensees."  must do so upon such terms as the Government sees fit to impose, for the right to keep and
bear arms is not secured to him by law. The Government can impose upon him such terms
36
as it pleases. If he is not satisfied with the terms imposed, he should decline to accept them, "We think there can be no question as to the reasonableness of a statutory regulation
but, if for the purpose of securing possession of the arms he does agree to such conditions, prohibiting the carrying of concealed weapons as a police measure well calculated to restrict
he must fulfill them." the too frequent resort to such weapons in moments of anger and excitement. We do not
doubt that the strict enforcement of such a regulation would tend to increase the security of
life and limb, and to suppress crime and lawlessness, in any community wherein the practice
IV
of carrying concealed weapons prevails, and this without being unduly oppressive upon the
individual owners of these weapons. It follows that its enactment by the legislature is a
Police Power proper and legitimate exercise of the police power of the state."

At any rate, assuming that petitioner’s PTCFOR constitutes a property right protected by the V
Constitution, the same cannot be considered as absolute as to be placed beyond the reach of the
State’s police power. All property in the state is held subject to its general regulations, necessary to
Ex post facto law
the common good and general welfare. 

In Mekin vs. Wolfe,48 an ex post facto law has been defined as one – (a) which makes an action done
In a number of cases, we laid down the test to determine the validity of a police measure, thus:
before the passing of the law and which was innocent when done criminal, and punishes such action;
or (b) which aggravates a crime or makes it greater than it was when committed; or (c) which
(1) The interests of the public generally, as distinguished from those of a particular class, changes the punishment and inflicts a greater punishment than the law annexed to the crime when it
require the exercise of the police power; and was committed; or (d) which alters the legal rules of evidence and receives less or different testimony
than the law required at the time of the commission of the offense in order to convict the defendant. 
(2) The means employed are reasonably necessary for the accomplishment of the purpose
and not unduly oppressive upon individuals. We see no reason to devote much discussion on the matter. Ex post facto law prohibits retrospectivity
of penal laws.49 The assailed Guidelines cannot be considered as an ex post facto law because it is
Deeper reflection will reveal that the test merely reiterates the essence of the constitutional prospective in its application. Contrary to petitioner’s argument, it would not result in the punishment
guarantees of substantive due process, equal protection, and non-impairment of property rights.  of acts previously committed. 

It is apparent from the assailed Guidelines that the basis for its issuance was the need for peace and WHEREFORE, the petition is hereby DISMISSED. 
order in the society. Owing to the proliferation of crimes, particularly those committed by the New
People’s Army (NPA), which tends to disturb the peace of the community, President Arroyo deemed it SO ORDERED.
best to impose a nationwide gun ban. Undeniably, the motivating factor in the issuance of the assailed
Guidelines is the interest of the public in general.

The only question that can then arise is whether the means employed are appropriate and reasonably
necessary for the accomplishment of the purpose and are not unduly oppressive. In the instant case,
the assailed Guidelines do not entirely prohibit possession of firearms. What they proscribe is merely
the carrying of firearms outside of residence. However, those who wish to carry their firearms outside
of their residences may re-apply for a new PTCFOR. This we believe is a reasonable regulation. If the
carrying of firearms is regulated, necessarily, crime incidents will be curtailed. Criminals carry their
weapon to hunt for their victims; they do not wait in the comfort of their homes. With the revocation
of all PTCFOR, it would be difficult for criminals to roam around with their guns. On the other hand, it
would be easier for the PNP to apprehend them. 

Notably, laws regulating the acquisition or possession of guns have frequently been upheld as
reasonable exercise of the police power.45 In State vs. Reams,46 it was held that the legislature may
regulate the right to bear arms in a manner conducive to the public peace. With the promotion of
public peace as its objective and the revocation of all PTCFOR as the means, we are convinced that
the issuance of the assailed Guidelines constitutes a reasonable exercise of police power. The ruling in
United States vs. Villareal,47 is relevant, thus:

37
applicable, shall be included in their gross sales receipts for tax purposes and shall be subject to
proper documentation and to the provisions of the National Internal Revenue Code, as amended.
Ÿ  The DSWD, on May 8, 2004, approved and adopted the Implementing Rules and Regulations of RA No.
9275, Rule VI, Article 8 which contains the proviso that the implementation of the tax deduction shall
be subject to the Revenue Regulations to be issued by the BIR and approved by the DOF.  With the
new law, the Drug Stores Association of the Philippines wanted a clarification of the meaning of tax
deduction.  The DOF clarified that under a tax deduction scheme, the tax deduction on discounts was
subtracted from Net Sales together with other deductions which are considered as operating expenses
before the Tax Due was computed based on the Net Taxable Income. On the other hand, under a tax
credit scheme, the amount of discounts which is the tax credit item, was deducted directly from the
tax due amount. 
Ÿ  The DOH issued an Administrative Order that the twenty percent discount shall include both prescription
and non-prescription medicines, whether branded or generic.  It stated that such discount would be
provided in the purchase of medicines from all establishments supplying medicines for the exclusive
use of the senior citizens.  
Ÿ  Drug store owners assail the law with the contention that granting the discount would result to loss of
profit and capital especially that such law failed to provide a scheme to justly compensate the
discount.

ISSUE: WON Section 4(a) of the Expanded Senior Citizens Act is unconstitutional or not violative of
Article 3 Section 9 of the Constitution which provides that private property shall not be taken for
public use without just compensation and the equal protection clause of Article 3 Section 1.

HELD:
Ÿ  The permanent reduction in their total revenues is a forced subsidy corresponding to the taking of
private property for public use or benefit. This constitutes compensable taking for which petitioners
would ordinarily become entitled to a just compensation. Just compensation is defined as the full and
fair equivalent of the property taken from its owner by the expropriator. The measure is not the
taker’s gain but the owner’s loss. The word just is used to intensify the meaning of the word
CARLOS SUPERDRUG CORP. vs. DSWD, ET. AL compensation, and to convey the idea that the equivalent to be rendered for the property to be taken
GR No. 166494, June 29, 2007 shall be real, substantial, full and ample.
Ÿ  The law grants a twenty percent discount to senior citizens for medical and dental services, and
diagnostic and laboratory fees; admission fees charged by theaters, concert halls, circuses, carnivals,
FACTS: and other similar places of culture, leisure and amusement; fares for domestic land, air and sea
Ÿ  Petitioners, belonging to domestic corporations and proprietors operating drugstores in the Philippines, travel; utilization of services in hotels and similar lodging establishments, restaurants and recreation
are praying for preliminary injunction assailing the constitutionality of Section 4(a) of Republic Act centers; and purchases of medicines for the exclusive use or enjoyment of senior citizens. As a form
(R.A.) No. 9257, otherwise known as the “Expanded Senior Citizens Act of 2003.” On February 26, of reimbursement, the law provides that business establishments extending the twenty percent
2004, R.A. No. 9257, amending R.A. No. 7432, was signed into law by President Gloria Macapagal- discount to senior citizens may claim the discount as a tax deduction. 
Arroyo and it became effective on March 21, 2004. Section 4(a) of the Act states: Ÿ  The law is a legitimate exercise of police power which, similar to the power of eminent domain, has
general welfare for its object. Police power is not capable of an exact definition, but has been
SEC. 4. Privileges for the Senior Citizens. – The senior citizens shall be entitled to the following: purposely veiled in general terms to underscore its comprehensiveness to meet all exigencies and
provide enough room for an efficient and flexible response to conditions and circumstances, thus
(a) the grant of twenty percent (20%) discount from all establishments relative to the utilization of assuring the greatest benefits. Accordingly, it has been described as “the most essential, insistent and
services in hotels and similar lodging establishments, restaurants and recreation centers, and the least limitable of powers, extending as it does to all the great public needs.” It is “[t]he power
purchase of medicines in all establishments for the exclusive use or enjoyment of senior citizens, vested in the legislature by the constitution to make, ordain, and establish all manner of wholesome
including funeral and burial services for the death of senior citizens; and reasonable laws, statutes, and ordinances, either with penalties or without, not repugnant to the
constitution, as they shall judge to be for the good and welfare of the commonwealth, and of the
Ÿ  The establishment may claim the discounts granted under (a), (f), (g) and (h) as tax deduction based subjects of the same.”
on the net cost of the goods sold or services rendered: Provided, That the cost of the discount shall
be allowed as deduction from gross income for the same taxable year that the discount is granted.
Provided, further, That the total amount of the claimed tax deduction net of value added tax if

38
AZCUNA, J.:

This is a petition1 for Prohibition with Prayer for Preliminary Injunction assailing the constitutionality of
Section 4(a) of Republic Act (R.A.) No. 9257,2 otherwise known as the "Expanded Senior Citizens Act
of 2003."

Petitioners are domestic corporations and proprietors operating drugstores in the Philippines.

Public respondents, on the other hand, include the Department of Social Welfare and Development
(DSWD), the Department of Health (DOH), the Department of Finance (DOF), the Department of
Justice (DOJ), and the Department of Interior and Local Government (DILG) which have been
specifically tasked to monitor the drugstores’ compliance with the law; promulgate the implementing
rules and regulations for the effective implementation of the law; and prosecute and revoke the
licenses of erring drugstore establishments.

The antecedents are as follows:

On February 26, 2004, R.A. No. 9257, amending R.A. No. 7432, 3 was signed into law by President
Gloria Macapagal-Arroyo and it became effective on March 21, 2004. Section 4(a) of the Act states:

SEC. 4. Privileges for the Senior Citizens. – The senior citizens shall be entitled to the following:

(a) the grant of twenty percent (20%) discount from all establishments relative to the utilization of
services in hotels and similar lodging establishments, restaurants and recreation centers, and
purchase of medicines in all establishments for the exclusive use or enjoyment of senior citizens,
including funeral and burial services for the death of senior citizens;

...

The establishment may claim the discounts granted under (a), (f), (g) and (h) as tax
deduction based on the net cost of the goods sold or services rendered: Provided, That the cost of
the discount shall be allowed as deduction from gross income for the same taxable year that the
discount is granted. Provided, further, That the total amount of the claimed tax deduction net of value
G.R. No. 166494              June 29, 2007 added tax if applicable, shall be included in their gross sales receipts for tax purposes and shall be
subject to proper documentation and to the provisions of the National Internal Revenue Code, as
CARLOS SUPERDRUG CORP., doing business under the name and style "Carlos Superdrug," amended.4
ELSIE M. CANO, doing business under the name and style "Advance Drug," Dr. SIMPLICIO
L. YAP, JR., doing business under the name and style "City Pharmacy," MELVIN S. DELA On May 28, 2004, the DSWD approved and adopted the Implementing Rules and Regulations of R.A.
SERNA, doing business under the name and style "Botica dela Serna," and LEYTE SERV- No. 9257, Rule VI, Article 8 of which states:
WELL CORP., doing business under the name and style "Leyte Serv-Well
Drugstore," petitioners, 
vs. Article 8. Tax Deduction of Establishments. – The establishment may claim the discounts granted
DEPARTMENT OF SOCIAL WELFARE and DEVELOPMENT (DSWD), DEPARTMENT OF HEALTH under Rule V, Section 4 – Discounts for Establishments;5 Section 9, Medical and Dental Services in
(DOH), DEPARTMENT OF FINANCE (DOF), DEPARTMENT OF JUSTICE (DOJ), and Private Facilities[,]6 and Sections 107 and 118 – Air, Sea and Land Transportation as tax deduction
DEPARTMENT OF INTERIOR and LOCAL GOVERNMENT (DILG), respondents. based on the net cost of the goods sold or services rendered. Provided, That the cost of the discount
shall be allowed as deduction from gross income for the same taxable year that the discount is
granted; Provided, further, That the total amount of the claimed tax deduction net of value added tax
DECISION if applicable, shall be included in their gross sales receipts for tax purposes and shall be subject to

39
proper documentation and to the provisions of the National Internal Revenue Code, as amended; A simple illustration might help amplify the points discussed above, as follows:
Provided, finally, that the implementation of the tax deduction shall be subject to the Revenue
Regulations to be issued by the Bureau of Internal Revenue (BIR) and approved by the Department of
Tax Deduction Tax Credit
Finance (DOF).9

Gross Sales x x x x x x x x x x x x
On July 10, 2004, in reference to the query of the Drug Stores Association of the Philippines (DSAP)
concerning the meaning of a tax deduction under the Expanded Senior Citizens Act, the DOF, through
Director IV Ma. Lourdes B. Recente, clarified as follows: Less : Cost of goods sold x x x x x x x x x x

1) The difference between the Tax Credit (under the Old Senior Citizens Act) and Tax Deduction Net Sales x x x x x x x x x x x x
(under the Expanded Senior Citizens Act).
Less: Operating Expenses:
1.1. The provision of Section 4 of R.A. No. 7432 (the old Senior Citizens Act) grants twenty percent
(20%) discount from all establishments relative to the utilization of transportation services, hotels and Tax Deduction on Discounts x x x x --
similar lodging establishment, restaurants and recreation centers and purchase of medicines
anywhere in the country, the costs of which may be claimed by the private establishments concerned
as tax credit. Other deductions: x x x x x x x x

Effectively, a tax credit is a peso-for-peso deduction from a taxpayer’s tax liability due to the Net Taxable Income x x x x x x x x x x
government of the amount of discounts such establishment has granted to a senior citizen. The
establishment recovers the full amount of discount given to a senior citizen and hence, the Tax Due x x x x x x
government shoulders 100% of the discounts granted.
Less: Tax Credit -- ______x x
It must be noted, however, that conceptually, a tax credit scheme under the Philippine tax system,
necessitates that prior payments of taxes have been made and the taxpayer is attempting to recover
this tax payment from his/her income tax due. The tax credit scheme under R.A. No. 7432 is, Net Tax Due -- x x
therefore, inapplicable since no tax payments have previously occurred.
As shown above, under a tax deduction scheme, the tax deduction on discounts was subtracted
1.2. The provision under R.A. No. 9257, on the other hand, provides that the establishment from Net Sales together with other deductions which are considered as operating expenses before the
concerned may claim the discounts under Section 4(a), (f), (g) and (h) as tax deduction from gross Tax Due was computed based on the Net Taxable Income. On the other hand, under a tax
income, based on the net cost of goods sold or services rendered. credit scheme, the amount of discounts which is the tax credit item, was deducted directly from the
tax due amount.10

Under this scheme, the establishment concerned is allowed to deduct from gross income, in
computing for its tax liability, the amount of discounts granted to senior citizens. Effectively, the Meanwhile, on October 1, 2004, Administrative Order (A.O.) No. 171 or the Policies and Guidelines to
government loses in terms of foregone revenues an amount equivalent to the marginal tax rate the Implement the Relevant Provisions of Republic Act 9257, otherwise known as the "Expanded Senior
said establishment is liable to pay the government. This will be an amount equivalent to 32% of the Citizens Act of 2003"11was issued by the DOH, providing the grant of twenty percent (20%) discount
twenty percent (20%) discounts so granted. The establishment shoulders the remaining portion of the in the purchase of unbranded generic medicines from all establishments dispensing medicines for the
granted discounts. exclusive use of the senior citizens.

It may be necessary to note that while the burden on [the] government is slightly diminished in terms On November 12, 2004, the DOH issued Administrative Order No 17712 amending A.O. No. 171. Under
of its percentage share on the discounts granted to senior citizens, the number of potential A.O. No. 177, the twenty percent discount shall not be limited to the purchase of unbranded generic
establishments that may claim tax deductions, have however, been broadened. Aside from the medicines only, but shall extend to both prescription and non-prescription medicines whether branded
establishments that may claim tax credits under the old law, more establishments were added under or generic. Thus, it stated that "[t]he grant of twenty percent (20%) discount shall be provided in the
the new law such as: establishments providing medical and dental services, diagnostic and laboratory purchase of medicines from all establishments dispensing medicines for the exclusive use of the
services, including professional fees of attending doctors in all private hospitals and medical facilities, senior citizens."
operators of domestic air and sea transport services, public railways and skyways and bus transport
services. Petitioners assail the constitutionality of Section 4(a) of the Expanded Senior Citizens Act based on
the following grounds:13

40
1) The law is confiscatory because it infringes Art. III, Sec. 9 of the Constitution which provides that Having said that, this raises the question of whether the State, in promoting the health and welfare of
private property shall not be taken for public use without just compensation; a special group of citizens, can impose upon private establishments the burden of partly subsidizing a
government program.
2) It violates the equal protection clause (Art. III, Sec. 1) enshrined in our Constitution which states
that "no person shall be deprived of life, liberty or property without due process of law, nor shall any The Court believes so.
person be denied of the equal protection of the laws;" and
The Senior Citizens Act was enacted primarily to maximize the contribution of senior citizens to
3) The 20% discount on medicines violates the constitutional guarantee in Article XIII, Section 11 that nation-building, and to grant benefits and privileges to them for their improvement and well-being as
makes "essential goods, health and other social services available to all people at affordable cost."14 the State considers them an integral part of our society.20

Petitioners assert that Section 4(a) of the law is unconstitutional because it constitutes deprivation of The priority given to senior citizens finds its basis in the Constitution as set forth in the law itself.
private property. Compelling drugstore owners and establishments to grant the discount will result in Thus, the Act provides:
a loss of profit
SEC. 2. Republic Act No. 7432 is hereby amended to read as follows:
and capital because 1) drugstores impose a mark-up of only 5% to 10% on branded medicines; and
2) the law failed to provide a scheme whereby drugstores will be justly compensated for the discount.
SECTION 1. Declaration of Policies and Objectives. – Pursuant to Article XV, Section 4 of the
Constitution, it is the duty of the family to take care of its elderly members while the State may
Examining petitioners’ arguments, it is apparent that what petitioners are ultimately questioning is design programs of social security for them. In addition to this, Section 10 in the Declaration of
the validity of the tax deduction scheme as a reimbursement mechanism for the twenty percent Principles and State Policies provides: "The State shall provide social justice in all phases of national
(20%) discount that they extend to senior citizens. development." Further, Article XIII, Section 11, provides: "The State shall adopt an integrated and
comprehensive approach to health development which shall endeavor to make essential goods, health
and other social services available to all the people at affordable cost. There shall be priority for the
Based on the afore-stated DOF Opinion, the tax deduction scheme does not fully reimburse petitioners
needs of the underprivileged sick, elderly, disabled, women and children." Consonant with these
for the discount privilege accorded to senior citizens. This is because the discount is treated as a
constitutional principles the following are the declared policies of this Act:
deduction, a tax-deductible expense that is subtracted from the gross income and results in a lower
taxable income. Stated otherwise, it is an amount that is allowed by law 15 to reduce the income prior
to the application of the tax rate to compute the amount of tax which is due. 16 Being a tax deduction, ...
the discount does not reduce taxes owed on a peso for peso basis but merely offers a fractional
reduction in taxes owed.
(f) To recognize the important role of the private sector in the improvement of the welfare
of senior citizens and to actively seek their partnership.21
Theoretically, the treatment of the discount as a deduction reduces the net income of the private
establishments concerned. The discounts given would have entered the coffers and formed part of the
To implement the above policy, the law grants a twenty percent discount to senior citizens for medical
gross sales of the private establishments, were it not for R.A. No. 9257.
and dental services, and diagnostic and laboratory fees; admission fees charged by theaters, concert
halls, circuses, carnivals, and other similar places of culture, leisure and amusement; fares for
The permanent reduction in their total revenues is a forced subsidy corresponding to the taking of domestic land, air and sea travel; utilization of services in hotels and similar lodging establishments,
private property for public use or benefit.17 This constitutes compensable taking for which petitioners restaurants and recreation centers; and purchases of medicines for the exclusive use or enjoyment of
would ordinarily become entitled to a just compensation. senior citizens. As a form of reimbursement, the law provides that business establishments extending
the twenty percent discount to senior citizens may claim the discount as a tax deduction.
Just compensation is defined as the full and fair equivalent of the property taken from its owner by
the expropriator. The measure is not the taker’s gain but the owner’s loss. The word just is used to The law is a legitimate exercise of police power which, similar to the power of eminent domain, has
intensify the meaning of the word compensation, and to convey the idea that the equivalent to be general welfare for its object. Police power is not capable of an exact definition, but has been
rendered for the property to be taken shall be real, substantial, full and ample.18 purposely veiled in general terms to underscore its comprehensiveness to meet all exigencies and
provide enough room for an efficient and flexible response to conditions and circumstances, thus
assuring the greatest benefits. 22 Accordingly, it has been described as "the most essential, insistent
A tax deduction does not offer full reimbursement of the senior citizen discount. As such, it would not
and the least limitable of powers, extending as it does to all the great public needs." 23 It is "[t]he
meet the definition of just compensation.19
power vested in the legislature by the constitution to make, ordain, and establish all manner of
wholesome and reasonable laws, statutes, and ordinances, either with penalties or without, not
repugnant to the constitution, as they shall judge to be for the good and welfare of the
commonwealth, and of the subjects of the same."24

41
For this reason, when the conditions so demand as determined by the legislature, property rights the realities of business and the State, in the exercise of police power, can intervene in the operations
must bow to the primacy of police power because property rights, though sheltered by due process, of a business which may result in an impairment of property rights in the process.
must yield to general welfare.25
Moreover, the right to property has a social dimension. While Article XIII of the Constitution provides
Police power as an attribute to promote the common good would be diluted considerably if on the the precept for the protection of property, various laws and jurisprudence, particularly on agrarian
mere plea of petitioners that they will suffer loss of earnings and capital, the questioned provision is reform and the regulation of contracts and public utilities, continuously serve as a reminder that the
invalidated. Moreover, in the absence of evidence demonstrating the alleged confiscatory effect of the right to property can be relinquished upon the command of the State for the promotion of public
provision in question, there is no basis for its nullification in view of the presumption of validity which good.30
every law has in its favor.26
Undeniably, the success of the senior citizens program rests largely on the support imparted by
Given these, it is incorrect for petitioners to insist that the grant of the senior citizen discount is petitioners and the other private establishments concerned. This being the case, the means employed
unduly oppressive to their business, because petitioners have not taken time to calculate correctly in invoking the active participation of the private sector, in order to achieve the purpose or objective
and come up with a financial report, so that they have not been able to show properly whether or not of the law, is reasonably and directly related. Without sufficient proof that Section 4(a) of R.A. No.
the tax deduction scheme really works greatly to their disadvantage.27 9257 is arbitrary, and that the continued implementation of the same would be unconscionably
detrimental to petitioners, the Court will refrain from quashing a legislative act.31
In treating the discount as a tax deduction, petitioners insist that they will incur losses because,
referring to the DOF Opinion, for every ₱1.00 senior citizen discount that petitioners would give, ₱0.68 WHEREFORE, the petition is DISMISSED for lack of merit.
will be shouldered by them as only ₱0.32 will be refunded by the government by way of a tax
deduction.
No costs.

To illustrate this point, petitioner Carlos Super Drug cited the anti-hypertensive maintenance
SO ORDERED.
drug Norvasc as an example. According to the latter, it acquires Norvasc from the distributors at
₱37.57 per tablet, and retails it at ₱39.60 (or at a margin of 5%). If it grants a 20% discount to
senior citizens or an amount equivalent to ₱7.92, then it would have to sell Norvasc at ₱31.68 which
translates to a loss from capital of ₱5.89 per tablet. Even if the government will allow a tax deduction,
only ₱2.53 per tablet will be refunded and not the full amount of the discount which is ₱7.92. In short,
only 32% of the 20% discount will be reimbursed to the drugstores.28

Petitioners’ computation is flawed. For purposes of reimbursement, the law states that the cost of the
discount shall be deducted from gross income,29 the amount of income derived from all sources before
deducting allowable expenses, which will result in net income. Here, petitioners tried to show a loss
on a per transaction basis, which should not be the case. An income statement, showing an
accounting of petitioners’ sales, expenses, and net profit (or loss) for a given period could have
accurately reflected the effect of the discount on their income. Absent any financial statement,
petitioners cannot substantiate their claim that they will be operating at a loss should they give the
discount. In addition, the computation was erroneously based on the assumption that their customers
consisted wholly of senior citizens. Lastly, the 32% tax rate is to be imposed on income, not on the
amount of the discount.

Furthermore, it is unfair for petitioners to criticize the law because they cannot raise the prices of
their medicines given the cutthroat nature of the players in the industry. It is a business decision on
the part of petitioners to peg the mark-up at 5%. Selling the medicines below acquisition cost, as
alleged by petitioners, is merely a result of this decision. Inasmuch as pricing is a property right,
petitioners cannot reproach the law for being oppressive, simply because they cannot afford to raise
their prices for fear of losing their customers to competition.

The Court is not oblivious of the retail side of the pharmaceutical industry and the competitive pricing
component of the business. While the Constitution protects property rights, petitioners must accept

42
LUCENA GRAND CENTRAL TERMINAL, INC., petitioner, vs. JAC LINER, INC., respondent.
G.R. No. 148339. February 23, 2005

Facts:

 The City of Lucena enacted an ordinance which provides, inter alia, that: all buses, mini-buses and
out-of-town passenger jeepneys shall be prohibited from entering the city and are hereby directed to
proceed to the common terminal, for picking-up and/or dropping of their passengers; and (b) all
temporary terminals in the City of Lucena are hereby declared inoperable starting from the effectivity
of this ordinance. It also provides that all jeepneys, mini-buses, and buses shall use the grand central
terminal of the city. JAC Liner, Inc. assailed the city ordinance as unconstitutional on the ground that,
inter alia, the same constituted an invalid exercise of police power, an undue taking of private
property, and a violation of the constitutional prohibition against monopolies.

Issue: 

 Whether or not the ordinance satisfies the requisite of valid exercise of police power, i.e. lawful
subject and lawful means.

Held:

 The local government may be considered as having properly exercised its police power only if the
following requisites are met: (1) the interests of the public generally, as distinguished from those of a
particular class, require the interference of the State, and (2) the means employed are reasonably
necessary for the attainment of the object sought to be accomplished and not unduly oppressive upon
individuals. Otherwise stated, there must be a concurrence of a lawful subject and lawful method
The questioned ordinances having been enacted with the objective of relieving traffic congestion in
the City of Lucena, they involve public interest warranting the interference of the State. The first
requisite for the proper exercise of police power is thus present. This leaves for determination the
issue of whether the means employed by the Lucena Sangguniang Panlungsod to attain its professed
objective were reasonably necessary and not unduly oppressive upon individuals. The ordinances
assailed herein are characterized by overbreadth. They go beyond what is reasonably necessary to
solve the traffic problem. Additionally, since the compulsory use of the terminal operated by petitioner
would subject the users thereof to fees, rentals and charges, such measure is unduly oppressive, as
correctly found by the appellate court. What should have been done was to determine exactly where
the problem lies and then to stop it right there.

The true role of Constitutional Law is to effect an equilibrium between authority and liberty so that
rights are exercised within the framework of the law and the laws are enacted with due deference to
rights. It is its reasonableness, not its effectiveness, which bears upon its constitutionality. If the
constitutionality of a law were measured by its effectiveness, then even tyrannical laws may be
justified whenever they happen to be effective.

43
G.R. No. 148339             February 23, 2005

LUCENA GRAND CENTRAL TERMINAL, INC., petitioner, 


vs.
JAC LINER, INC., Respondent.

DECISION

CARPIO MORALES, J.:

Respondent, JAC Liner, Inc., a common carrier operating buses which ply various routes to and from
Lucena City, assailed, via a petition for prohibition and injunction 1 against the City of Lucena, its
Mayor, and the Sangguniang Panlungsod of Lucena before the Regional Trial Court (RTC) of Lucena
City, City Ordinance Nos. 1631 and 1778 as unconstitutional on the ground that, inter alia, the same
constituted an invalid exercise of police power, an undue taking of private property, and a violation of
the constitutional prohibition against monopolies. The salient provisions of the ordinances are:

Ordinance No. 16312 

AN ORDINANCE GRANTING THE LUCENA GRAND CENTRAL TERMINAL, INC., A FRANCHISE TO


CONSTRUCT, FINANCE, ESTABLISH, OPERATE AND MAINTAIN A COMMON BUS-JEEPNEY TERMINAL
FACILITY IN THE CITY OF LUCENA

xxx

SECTION 1. – There is hereby granted to the Lucena Grand Central Terminal, Inc., its successors or
assigns, hereinafter referred to as the "grantee", a franchise to construct, finance, establish, operate,
and maintain a common bus-jeepney terminal facility in the City of Lucena.

SECTION 2. – This franchise shall continue for a period of twenty-five years, counted from the
approval of this Ordinance, and renewable at the option of the grantee for another period of twenty-
five (25) years upon such expiration.

xxx

SECTION 4. – Responsibilities and Obligations of the City Government of Lucena. – During the
existence of the franchise, the City Government of Lucena shall have the following responsibilities and
obligations:

xxx
44
(c) It shall not grant any third party any privilege and/or concession to operate a bus, mini-bus Terminal which is hereby designated as the officially sanctioned common terminal for the
and/or jeepney terminal. City of Lucena;

xxx e) Section 5 of Ordinance No. 1557, Series of 1995, is hereby amended to read as follows:

Ordinance No. 17783  The Lucena Grand Central Terminal is the permanent common terminal as this is the entity 


which was giventhe exclusive franchise by the Sangguniang Panglungsod under Ordinance 
No. 1631; (Emphasis and underscoring supplied)
AN ORDINANCE REGULATING THE ENTRANCE TO THE CITY OF LUCENA OF ALL BUSES, MINI-BUSES
AND OUT-OF-TOWN PASSENGER JEEPNEYS AND FOR THIS PURPOSE, AMENDING ORDINACE NO.
1420, SERIES OF 1993, AND ORDINANCE NO. 1557, SERIES OF 1995 These ordinances, by granting an exclusive franchise for twenty five years, renewable for another
twenty five years, to one entity for the construction and operation of one common bus and jeepney
terminal facility in Lucena City, to be located outside the city proper, were professedly aimed towards
xxx
alleviating the traffic congestion alleged to have been caused by the existence of various bus and
jeepney terminals within the city, as the "Explanatory Note"-Whereas Clause adopting Ordinance No.
SECTION 1. – The entrance to the City of Lucena of all buses, mini-buses and out-of-town passenger 1778 states:
jeepneys is hereby regulated as follows:
WHEREAS, in line with the worsening traffic condition of the City of Lucena, and with the purpose of
(a) All buses, mini-buses and out-of-town passenger jeepneys shall be prohibited from easing and regulating the flow of the same, it is imperative that the Buses, Mini-Buses and out-of-
entering the cityand are hereby directed to proceed to the common terminal, for picking-up town jeepneys be prohibited from maintaining terminals within the City, but instead directing to
and/or dropping of their passengers. proceed to the Lucena Grand Central Terminal for purposes of picking-up and/or dropping off their
passengers;4 
(b) All temporary terminals in the City of Lucena are hereby  declared inoperable starting
from the effectivity of this ordinance. Respondent, who had maintained a terminal within the city, was one of those affected by the
ordinances.
xxx
Petitioner, Lucena Grand Central Terminal, Inc., claiming legal interest as the grantee of the exclusive
SECTION 3. – a) Section 1 of Ordinance No. 1557, Series of 1995, is hereby amended to read as franchise for the operation of the common terminal,5 was allowed to intervene in the petition before
follows: the trial court. 

Buses, mini-buses, and jeepney type mini-buses from other municipalities and/or local government In the hearing conducted on November 25, 1998, all the parties agreed to dispense with the
units going to Lucena City are directed to proceed to the Common Terminal located at Diversion Road, presentation of evidence and to submit the case for resolution solely on the basis of the pleadings
Brgy. Ilayang Dupay, to unload and load passengers. filed.6 

xxx By Order of March 31, 1999, 7 Branch 54 of the Lucena RTC rendered judgment, the dispositive portion
of which reads:

c) Section 3 of Ordinance No. 1557, Series of 1995, is hereby amended to read as follows:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered, as follows:

Passenger buses, mini-buses, and jeepney type mini-buses coming from other municipalities
and/or local government units shall utilize the facilities of the Lucena Grand Central Terminal 1. Declaring City Ordinance No. 1631 as valid, having been issued in the exercise of the
at Diversion Road, Brgy. Ilayang Dupay, this City, and no other terminals shall be police power of the City Government of Lucena insofar as the grant of franchise to the
situated inside or within the City of Lucena; Lucena Grand Central Terminal, Inc., to construct, finance, establish, operate and maintain
common bus-jeepney terminal facility in the City of Lucena;

d) Section 4 of Ordinance No. 1557, Series of 1995, is hereby amended to read as follows:
2. But however, declaring the provision of Sec. 4(c) of Ordinance No. 1631 to the effect that
the City Government shall not grant any third party any privilege and/or concession to
Passenger buses, mini-buses, and jeepney type mini-buses coming from other municipalities operate a bus, mini-bus and/or jeepney terminal, as illegal and ultra vires because it
and/or local government units shall avail of the facilities of the Lucena Grand Central

45
contravenes the provisions of Republic Act No. 7160, otherwise known as "The Local Furthermore, petitioner invokes Sections 3 and 4 of Rule 63 which respectively provide:
Government Code";
SEC. 3. Notice on Solicitor General. – In any action which involves the validity of a statute, executive
3. Declaring City Ordinance No. 1778 as null and void, the same being also an ultra vires act order or regulation, or any other governmental regulation, the Solicitor General shall be notified by
of the City Government of Lucena arising from an invalid, oppressive and unreasonable the party assailing the same and shall be entitled to be heard upon such question.
exercise of the police power, more specifically, declaring illegal [sections 1(b), 3(c) and
3(e)];
SEC. 4. Local government ordinances. – In any action involving the validity of a local government
ordinance, the corresponding prosecutor or attorney of the local government unit involved shall be
4. Ordering the issuance of a Writ of Prohibition and/or Injunction directing the respondents similarly notified and entitled to be heard. If such ordinance is alleged to be  unconstitutional, the
public officials, the City Mayor and the Sangguniang Panglungsod of Lucena, to cease and Solicitor General shall also be notified and entitled to be heard. (Emphasis and underscoring supplied)
desist from implementing Ordinance No. 1778 insofar as said ordinance prohibits or
curtails petitioner from maintaining and operating its own bus terminal subject to
Nowhere, however, is it stated in the above-quoted rules that failure to notify the Solicitor General
the conditions provided for in Ordinance No. 1557, Sec. 3, which authorizes the construction
about the action is a jurisdictional defect.
of terminal outside the poblacion of Lucena City; and likewise, insofar as said ordinance
directs and compels the petitioner to use the Lucena Grand Central Terminal Inc.,
and furthermore, insofar as it declares that no other terminals shall be situated, In fact, Rule 3, Section 22 gives the courts in any action involving the "validity" of
constructed, maintained or established inside or within the City of Lucena; and any ordinance, inter alia, "discretion" to notify the Solicitor General.
furthermore,
Section 4 of Rule 63, which more specifically deals with cases assailing the constitutionality, not just
5. The Motion to Dismiss filed by the Intervenor, Lucena Grand Central Terminal Inc., dated the validity, of a local government ordinance, directs that the Solicitor General "shall also be notified
October 19, 1998, is hereby DENIED for lack of merit. and entitled to be heard." Who will notify him, Sec. 3 of the same rule provides — it is the party
which is assailing the local government’s ordinance.
SO ORDERED. (Emphasis and underscoring supplied)8 
More importantly, however, this Court finds that no procedural defect, fatal or otherwise, attended the
disposition of the case. For respondent actually served a copy of its petition upon the Office of the
Petitioner’s Motion for Reconsideration9 of the trial court’s order having been denied by Order of
Solicitor General on October 1, 1998, two days after it was filed. The Solicitor General has issued a
August 6, 1999,10 it elevated it via petition for review under Rule 45 before this Court.11 This Court, by
Certification to that effect.17 There was thus compliance with above-quoted rules.
Resolution of November 24, 1999,12 referred the petition to the Court of Appeals with which it has
concurrent jurisdiction, no special and important reason having been cited for it to take cognizance
thereof in the first instance. Respecting the issue of whether police power was properly exercised when the subject ordinances
were enacted: As with the State, the local government may be considered as having properly
exercised its police power only if the following requisites are met: (1) the interests of the public
By Decision of December 15, 2000,13 the appellate court dismissed the petition and affirmed the
generally, as distinguished from those of a particular class, require the interference of the State, and
challenged orders of the trial court. Its motion for reconsideration 14 having been denied by the
(2) the means employed are reasonably necessary for the attainment of the object sought to be
appellate court by Resolution dated June 5, 2001,15 petitioner once again comes to this Court via
accomplished and not unduly oppressive upon individuals. Otherwise stated, there must be a
petition for review,16 this time assailing the Decision and Resolution of the Court of Appeals.
concurrence of a lawful subject and lawful method.18 

Decision on the petition hinges on two issues, to wit: (1) whether the trial court has jurisdiction over
That traffic congestion is a public, not merely a private, concern, cannot be gainsaid. In Calalang v.
the case, it not having furnished the Office of the Solicitor General copy of the orders it issued
Williams19 which involved a statute authorizing the Director of Public Works to promulgate rules and
therein, and (2) whether the City of Lucena properly exercised its police power when it enacted the
regulations to regulate and control traffic on national roads, this Court held:
subject ordinances.

In enacting said law, therefore, the National Assembly was prompted by considerations of public
Petitioner argues that since the trial court failed to serve a copy of its assailed orders upon the Office
convenience and welfare. It was inspired by a desire to relieve congestion of traffic, which is, to
of the Solicitor General, it never acquired jurisdiction over the case, it citing Section 22, Rule 3 of
say the least, a menace to public safety. Public welfare, then, lies at the bottom of the enactment of
the Rules which provides:
said law, and the state in order to promote the general welfare may interfere with personal liberty,
with property, and with business and occupations.20 (Emphasis supplied)
SEC. 22. Notice to the Solicitor General.—In any action involving the validity of any treaty,
law, ordinance, executive order, presidential decree, rules or regulations, the court in its discretion ,
The questioned ordinances having been enacted with the objective of relieving traffic congestion in
may require the appearance of the Solicitor General who may be heard in person or through
the City of Lucena, they involve public interest warranting the interference of the State. The first
representative duly designated by him. (Emphasis and underscoring supplied) 
requisite for the proper exercise of police power is thus present.
46
Respondent’s suggestion to have this Court look behind the explicit objective of the ordinances which, depriving them of legitimate means of review or preparation on those last three precious days when
to it, was actually to benefit the private interest of petitioner by coercing all bus operators to they should be refreshing themselves with all that they have learned in the review classes and
patronize its terminal does not lie.21 Lim v. Pacquing22 instructs: preparing their mental and psychological make-up for the examination day itself — would be like
uprooting the tree to get rid of a rotten branch. What is needed to be done by the
respondent is to find out the source of such leakages and stop it right there. If corrupt
. . . [T]his Court cannot look into allegations that PD No. 771 was enacted to benefit a select group
officials or personnel should be terminated from their loss, then so be it. Fixers or swindlers should be
which was later given authority to operate the jai-alai under PD No. 810. The examination of
flushed out. Strict guidelines to be observed by examiners should be set up and if violations are
legislative motivation is generally prohibited. (Palmer v. Thompson, 403 U.S. 217, 29 L. Ed. 2d 438
committed, then licenses should be suspended or revoked. x x x (Emphasis and underscoring
[1971] per Black, J.) There is, in the first place, absolute lack of evidence to support ADC’s allegation
supplied)28 
of improper motivation in the issuance of PD No. 771. In the second place, as already averred, this
Court cannot go behind the expressed and proclaimed purposes of PD No. 771, which are reasonable
and even laudable. (Underscoring supplied)23  As in De la Cruz29 and Lupangco,30 the ordinances assailed herein are characterized by overbreadth.
They go beyond what is reasonably necessary to solve the traffic problem. Additionally, since the
compulsory use of the terminal operated by petitioner would subject the users thereof to fees, rentals
This leaves for determination the issue of whether the means employed by the Lucena Sangguniang
and charges, such measure is unduly oppressive, as correctly found by the appellate court. 31 What
Panlungsod to attain its professed objective were reasonably necessary and not unduly oppressive
should have been done was to determine exactly where the problem lies and then to stop it right
upon individuals.
there.

With the aim of localizing the source of traffic congestion in the city to a single location,24 the subject
The true role of Constitutional Law is to effect an equilibrium between authority and liberty so that
ordinances prohibit the operation of all bus and jeepney terminals within Lucena, including those
rights are exercised within the framework of the law and the laws are enacted with due deference to
already existing, and allow the operation of only one common terminal located outside the city
rights. (Underscoring supplied)32 
proper, the franchise for which was granted to petitioner. The common carriers plying routes to and
from Lucena City are thus compelled to close down their existing terminals and use the facilities of
petitioner. A due deference to the rights of the individual thus requires a more careful formulation of solutions to
societal problems.
In De la Cruz v. Paras,25 this Court declared unconstitutional an ordinance characterized by
overbreadth. In that case, the Municipality of Bocaue, Bulacan prohibited the operation of all night From the memorandum33 filed before this Court by petitioner, it is gathered that the Sangguniang
clubs, cabarets and dance halls within its jurisdiction for the protection of public morals. Held the Panlungsod had identified the cause of traffic congestion to be the indiscriminate loading and
Court: unloading of passengers by buses on the streets of the city proper, hence, the conclusion that the
terminals contributed to the proliferation of buses obstructing traffic on the city streets. 
It cannot be said that such a sweeping exercise of a lawmaking power by Bocaue could qualify under t
he termreasonable. The objective of fostering public morals, a worthy and desirable end can be attain Bus terminals per se do not, however, impede or help impede the flow of traffic. How the outright
ed by a measure thatdoes not encompass too wide a field. Certainly the ordinance on its face is chara proscription against the existence of all terminals, apart from that franchised to petitioner, can be
cterized by overbreadth. Thepurpose sought to be achieved could have been attained by reasonable r considered as reasonably necessary to solve the traffic problem, this Court has not been enlightened.
estrictions rather than by an absoluteprohibition. The admonition in Salaveria should be heeded: "The If terminals lack adequate space such that bus drivers are compelled to load and unload passengers
Judiciary should not lightly set aside legislative action when there is not a clear invasion of personal or on the streets instead of inside the terminals, then reasonable specifications for the size of terminals
property rights under the guise of police regulation." It is clear that in the guise of a police regulation, could be instituted, with permits to operate the same denied those which are unable to meet the
there was in this instance a clear invasion of personal or property rights, personal in the case of those specifications.
individuals desirous of patronizing those night clubs and property in terms of the investments made
and salaries to be earned by those therein employed. (Underscoring supplied)26 
In the subject ordinances, however, the scope of the proscription against the maintenance of
terminals is so broad that even entities which might be able to provide facilities better than the
In Lupangco v. Court of Appeals,27 this Court, in declaring unconstitutional the resolution subject franchised terminal are barred from operating at all.
thereof, advanced a similar consideration. That case involved a resolution issued by the Professional
Regulation Commission which prohibited examinees from attending review classes and receiving
Petitioner argues, however, that other solutions for the traffic problem have already been tried but
handout materials, tips, and the like three days before the date of examination in order to preserve
proven ineffective. But the grant of an exclusive franchise to petitioner has not been shown to be the
the integrity and purity of the licensure examinations in accountancy. Besides being unreasonable on
only solution to the problem.
its face and violative of academic freedom, the measure was found to be more sweeping than what
was necessary, viz:
While the Sangguniang Panlungsod, via Ordinance No. 1557,34 previously directed bus owners and
operators to put up their terminals "outside the poblacion of Lucena City," petitioner informs that said
Needless to say, the enforcement of Resolution No. 105 is not a guarantee that the alleged leakages
ordinance only resulted in the relocation of terminals to other well-populated barangays, thereby
in the licensure examinations will be eradicated or at least minimized. Making the examinees suffer by
giving rise to traffic congestion in those areas.35 Assuming that information to be true, the
47
Sangguniang Panlungsod was not without remedy. It could have defined, among other considerations, There is no question that not even the strongest moral conviction or the most urgent public need,
in a more precise manner, the area of relocation to avoid such consequences. subject only to a few notable exceptions, will excuse the bypassing of an individual's rights. It is no
exaggeration to say that a person invoking a right guaranteed under Article III of the Constitution is a
majority of one even as against the rest of the nation who would deny him that right.40 
As for petitioner’s argument that the challenged ordinances were enacted pursuant to the power of
the Sangguniang Panlungsod to "[r]egulate traffic on all streets and bridges; prohibit encroachments
or obstacles thereon and, when necessary in the interest of public welfare, authorize the removal of WHEREFORE, the petition is hereby DENIED.
encroachments and illegal constructions in public places":36 Absent any showing, nay allegation, that
the terminals are encroaching upon public roads, they are not obstacles. The buses which
SO ORDERED.
indiscriminately load and unload passengers on the city streets are. The power then of the
Sangguniang Panlungsod to prohibit encroachments and obstacles does not extend to
terminals.1a\^/phi1.net

Neither are terminals public nuisances as petitioner argues. For their operation is a legitimate
business which, by itself, cannot be said to be injurious to the rights of property, health, or comfort of
the community.

But even assuming that terminals are nuisances due to their alleged indirect effects upon the flow of
traffic, at most they are nuisance per accidens, not per se.

Unless a thing is nuisance per se, however, it may not be abated via an ordinance, without judicial
proceedings, as was done in the case at bar.

In Estate of Gregoria Francisco v. Court of Appeals,37 this Court held:

Respondents can not seek cover under the general welfare clause authorizing the abatement of
nuisances without judicial proceedings. That tenet applies to a nuisance per se, or one which affects Facts: Respondent Comelec promulgated Resolution No. 2772 directing newspapers to provide free
the immediate safety of persons and property and may be summarily abated under the undefined law Comelec space of not less than one-half page for the common use of political parties and candidates.
of necessity (Monteverde v. Generoso, 52 Phil. 123 [1982]). The storage of copra in the quonset The Comelec space shall be allocated by the Commission, free of charge, among all candidates to
building is a legitimate business. By its nature, it can not be said to be injurious to rights of property, enable them to make known their qualifications, their stand on public Issue and their platforms
of health or of comfort of the community. If it be a nuisance per accidens it may be so proven in a of government. The Comelec space shall also be used by the Commission for dissemination of vital
hearing conducted for that purpose. It is not per se a nuisance warranting its summary abatement election information.
without judicial intervention.l^vvphi1.net (Underscoring supplied)38 1awphi1.nét
Petitioner Philippine Press Institute, Inc. (PPI), a non-profit organization of newspaper and magazine
publishers, asks the Supreme Court to declare Comelec Resolution No. 2772 unconstitutional and void
In Pampanga Bus Co., Inc. v. Municipality of Tarlac39 where the appellant-municipality similarly argued on the ground that it violates the prohibition imposed by the Constitution upon
that the terminal involved therein is a nuisance that may be abated by the Municipal Council via an the government against the taking of private property for public use without just compensation. On
ordinance, this Court held: "Suffice it to say that in the abatement of nuisances the provisions of the behalf of the respondent Comelec, the Solicitor General claimed that the Resolution is a
Civil Code (Articles 694-707) must be observed and followed. This appellant failed to do." permissible exercise of the power of supervision (police power) of the Comelec over the information
operations of print media enterprises during the election period to safeguard and ensure a
As for petitioner’s claim that the challenged ordinances have actually been proven effective in easing fair, impartial and credible election.
traffic congestion: Whether an ordinance is effective is an issue different from whether it is reasonably
necessary. It is its reasonableness, not its effectiveness, which bears upon its constitutionality. If the
constitutionality of a law were measured by its effectiveness, then even tyrannical laws may be Issue:
justified whenever they happen to be effective.
Whether or not Comelec Resolution No. 2772 is unconstitutional.
The Court is not unaware of the resolutions of various barangays in Lucena City supporting the
establishment of a common terminal, and similar expressions of support from the private sector,
Held: The Supreme Court declared the Resolution as unconstitutional. It held that to
copies of which were submitted to this Court by petitioner. The weight of popular opinion, however,
compel print media companies to donate “Comelec space” amounts to “taking” of private personal
must be balanced with that of an individual’s rights.
property without payment of the just compensation required in expropriation cases. Moreover, the
48
element of necessity for the taking has not been established by respondent Comelec, considering that
the newspapers were not unwilling to sell advertising space. The taking of private property for public
use is authorized by the constitution, but not without payment of just compensation. Also Resolution
No. 2772 does not constitute a valid exercise of the police power of the state. In the case at bench,
there is no showing of existence of a national emergency to take private property of newspaper or
magazine publishers.

G.R. No. L-119694 May 22, 1995

PHILIPPINE PRESS INSTITUTE, INC., for and in behalf of 139 members, represented by its
President, Amado P. Macasaet and its Executive Director Ermin F. Garcia, Jr., petitioner, 
vs.
COMMISSION ON ELECTIONS, respondent.

RESOLUTION

FELICIANO, J.:

The Philippine Press Institute, Inc. ("PPI") is before this Court assailing the constitutional validity of
Resolution No. 2772 issued by respondent Commission on Elections ("Comelec") and its corresponding
Comelec directive dated 22 March 1995, through a Petition for Certiorari and Prohibition. Petitioner
PPI is a non-stock, non-profit organization of newspaper and magazine publishers.

On 2 March 1995, Comelec promulgated Resolution No. 2772, which reads in part:

49
xxx xxx xxx Sec. 8. Undue Reference to Candidates/Political Parties in Newspapers. — No
newspaper or publication shall allow to be printed or published in the news, opinion,
features, or other sections of the newspaper or publication accounts or comments
Sec. 2. Comelec Space. — The Commission shall procure free print space of not less
which manifestly favor or oppose any candidate or political party by unduly or
than one half (1/2) page in at least one newspaper of general circulation in every
repeatedly referring to or including therein said candidate or political party.
province or city for use as "Comelec Space" from March 6, 1995 in the case of
However, unless the facts and circumstances clearly indicate otherwise, the
candidates for senator and from March 21, 1995 until May 12, 1995. In the absence
Commission will respect the determination by the publisher and/or editors of the
of said newspaper, "Comelec Space" shall be obtained from any magazine or
newspapers or publications that the accounts or views published are significant,
periodical of said province or city.
newsworthy and of public interest. (Emphasis supplied)

Sec. 3. Uses of Comelec Space. — "Comelec Space" shall be allocated by the


Apparently in implementation of this Resolution, Comelec through Commissioner Regalado E.
Commission, free of charge, among all candidates within the area in which the
Maambong sent identical letters, dated 22 March 1995, to various publishers of newspapers like
newspaper, magazine or periodical is circulated to enable the candidates to make
the Business World, the Philippine Star, the Malaya and the Philippine Times Journal, all members of
known their qualifications, their stand on public issues and their platforms and
PPI. These letters read as follows:
programs of government.

This is to advise you that pursuant to Resolution No. 2772 of the Commission on
"Comelec Space" shall also be used by the Commission for dissemination of vital
Elections, you are directed to provide free print space of not less than one half (1/2)
election information.
page for use as "Comelec Space" or similar to the print support which you have
extended during the May 11, 1992 synchronized elections which was 2 full pages for
Sec. 4. Allocation of Comelec Space. — (a) "Comelec Space" shall also be available each political party fielding senatorial candidates, from March 6, 1995 to May 6,
to all candidates during the periods stated in Section 2 hereof. Its allocation shall be 1995, to make known their qualifications, their stand on public issues and their
equal and impartial among all candidates for the same office. All candidates platforms and programs of government.
concerned shall be furnished a copy of the allocation of "Comelec Space" for their
information, guidance and compliance.
We shall be informing the political parties and candidates to submit directly to
you their pictures, biographical data, stand on key public issues and platforms of
(b) Any candidate desiring to avail himself of "Comelec Space" from newspapers or government either as raw data or in the form of positives or camera-ready
publications based in the Metropolitan Manila Area shall submit an application materials.
therefor, in writing, to the Committee on Mass Media of the Commission. Any
candidate desiring to avail himself of "Comelec Space" in newspapers or publications
Please be reminded that the political parties/candidates may be accommodated in
based in the provinces shall submit his application therefor, in writing, to the
your publication any day upon receipt of their materials until May 6, 1995 which is
Provincial Election Supervisor concerned. Applications for availment of "Comelec
the last day for campaigning.
Space" maybe filed at any time from the date of effectivity of this Resolution.

We trust you to extend your full support and cooperation in this regard. (Emphasis
(c) The Committee on Mass Media and the Provincial Election Supervisors
supplied)
shall allocate available "Comelec Space" among the candidates concerned by
lottery of which said candidates shall be notified in advance, in writing, to be
present personally or by representative to witness the lottery at the date, time and In this Petition for Certiorari and Prohibition with prayer for the issuance of a Temporary Restraining
place specified in the notice. Any party objecting to the result of the lottery may Order, PPI asks us to declare Comelec Resolution No. 2772 unconstitutional and void on the ground
appeal to the Commission. that it violates the prohibition imposed by the Constitution upon the government, and any of its
agencies, against the taking of private property for public use without just compensation. Petitioner
also contends that the 22 March 1995 letter directives of Comelec requiring publishers to give free
(d) The candidates concerned shall be notified by the Committee on Mass Media or
"Comelec Space" and at the same time process raw data to make it camera-ready, constitute
the Provincial Election Supervisor, as the case maybe, sufficiently in advance and in
impositions of involuntary servitude, contrary to the provisions of Section 18 (2), Article III of the
writing of the date of issue and the newspaper or publication allocated to him, and
1987 Constitution. Finally, PPI argues that Section 8 of Comelec Resolution No. 2772 is violative of
the time within which he must submit the written material for publication in the
the constitutionally guaranteed freedom of speech, of the press and of expression.1
"Comelec Space".

On 20 April 1995, this Court issued a Temporary Restraining Order enjoining Comelec from enforcing
xxx xxx xxx
and implementing Section 2 of Resolution No. 2772, as well as the Comelec directives addressed to
various print media enterprises all dated 22 March 1995. The Court also required the respondent to
file a Comment on the Petition.

50
The Office of the Solicitor General filed its Comment on behalf of respondent Comelec alleging that respective publications or other accounts or
Comelec Resolution No. 2772 does not impose upon the publishers any obligation to provide free print comments, it being clear from the last sentence
space in the newspapers as it does not provide any criminal or administrative sanction for non- of said Section 8 that the Commission shall,
compliance with that Resolution. According to the Solicitor General, the questioned Resolution merely "unless the facts and circumstances clearly
established guidelines to be followed in connection with the procurement of "Comelec space," the indicate otherwise . . . respect the
procedure for and mode of allocation of such space to candidates and the conditions or requirements determination by the publisher and/or editors of
for the candidate's utilization of the "Comelec space" procured. At the same time, however, the the newspapers or publications that the
Solicitor General argues that even if the questioned Resolution and its implementing letter directives accounts or views published are significant,
are viewed as mandatory, the same would nevertheless be valid as an exercise of the police power of newsworthy and of public interest."
the State. The Solicitor General also maintains that Section 8 of Resolution No. 2772 is a permissible
exercise of the power of supervision or regulation of the Comelec over the communication and
This Resolution shall take effect upon approval. (Emphasis in the original)
information operations of print media enterprises during the election period to safeguard and ensure a
fair, impartial and credible election.2
While, at this point, the Court could perhaps simply dismiss the Petition for Certiorari and Prohibition
as having become moot and academic, we consider it not inappropriate to pass upon the first
At the oral hearing of this case held on 28 April 1995, respondent Comelec through its Chairman,
constitutional issue raised in this case. Our hope is to put this issue to rest and prevent its
Hon. Bernardo Pardo, in response to inquiries from the Chief Justice and other Members of the Court,
resurrection.
stated that Resolution No. 2772, particularly Section 2 thereof and the 22 March 1995 letters
dispatched to various members of petitioner PPI, were not intended to compel those members to
supply Comelec with free print space. Chairman Pardo represented to the Court that Resolution and Section 2 of Resolution No. 2772 is not a model of clarity in expression. Section 1 of Resolution No.
the related letter-directives were merely designed to solicit from the publishers the same free print 2772-A did not try to redraft Section 2; accordingly, Section 2 of Resolution No. 2772 persists in its
space which many publishers had voluntarily given to Comelec during the election period relating to original form. Thus, we must point out that, as presently worded, and in particular as interpreted and
the 11 May 1992 elections. Indeed, the Chairman stated that the Comelec would, that very afternoon, applied by the Comelec itself in its 22 March 1995 letter-directives to newspaper publishers, Section 2
meet and adopt an appropriate amending or clarifying resolution, a certified true copy of which would of Resolution No. 2772 is clearly susceptible of the reading that petitioner PPI has given it. That
forthwith be filed with the Court. Resolution No. 2772 does not, in express terms, threaten publishers who would disregard it or its
implementing letters with some criminal or other sanction, does not by itself demonstrate that the
Comelec's original intention was simply to solicit or request voluntary donations of print space from
On 5 May 1995, the Court received from the Office of the Solicitor General a manifestation which
publishers. A written communication officially directing a print media company to supply free print
attached a copy of Comelec Resolution No. 2772-A dated 4 May 1995. The operative portion of this
space, dispatched by a government (here a constitutional) agency and signed by a member of the
Resolution follows:
Commission presumably legally authorized to do so, is bound to produce a coercive effect upon the
company so addressed. That the agency may not be legally authorized to impose, or cause the
NOW THEREFORE, pursuant to the powers vested in it by the Constitution, the imposition of, criminal or other sanctions for disregard of such directions, only aggravates the
Omnibus Election Code, Republic Acts No. 6646 and 7166 and other election laws, constitutional difficulties inhearing in the present situation. The enactment or addition of such
the Commission on Elections RESOLVED to clarify Sections 2 and 8 of Res. No. 2772 sanctions by the legislative authority itself would be open to serious constitutional objection.
as follows:
To compel print media companies to donate "Comelec-space" of the dimensions specified in Section 2
1. Section 2 of Res. No. 2772 shall not be of Resolution No. 2772 (not less than one-half page), amounts to "taking" of private personal
construed to mean as requiring publishers of the property for public use or purposes. Section 2 failed to specify the intended frequency of such
different mass media print publications to compulsory "donation:" only once during the period from 6 March 1995 (or 21 March 1995) until 12
provide print space under pain of prosecution, May 1995? or everyday or once a week? or as often as Comelec may direct during the same period?
whether administrative, civil or criminal, there The extent of the taking or deprivation is not insubstantial; this is not a case of a de
being no sanction or penalty for violation of said minimistemporary limitation or restraint upon the use of private property. The monetary value of the
Section provided for either in said Resolution or compulsory "donation," measured by the advertising rates ordinarily charged by newspaper publishers
in Section 90 of Batas Pambansa Blg. 881, whether in cities or in non-urban areas, may be very substantial indeed.
otherwise known as the Omnibus Election Code,
on the grant of "Comelec space."
The taking of print space here sought to be effected may first be appraised under the rubric of
expropriation of private personal property for public use. The threshold requisites for a lawful taking
2. Section 8 of Res. No. 2772 shall not be of private property for public use need to be examined here: one is the necessity for the taking;
construed to mean as constituting prior restraint another is the legal authority to effect the taking. The element of necessity for the taking has not
on the part of publishers with respect to the been shown by respondent Comelec. It has not been suggested that the members of PPI are
printing or publication of materials in the news, unwilling to sell print space at their normal rates to Comelec for election purposes. Indeed, the
opinion, features or other sections of their unwillingness or reluctance of Comelec to buy print space lies at the heart of the problem. 3 Similarly,

51
it has not been suggested, let alone demonstrated, that Comelec has been granted the power of made to demonstrate that a real and palpable or urgent necessity for the taking of print space
eminent domain either by the Constitution or by the legislative authority. A reasonable relationship confronted the Comelec and that Section 2 of Resolution No. 2772 was itself the only reasonable and
between that power and the enforcement and administration of election laws by Comelec must be calibrated response to such necessity available to the Comelec. Section 2 does not constitute a valid
shown; it is not casually to be assumed. exercise of the police power of the State.

That the taking is designed to subserve "public use" is not contested by petitioner PPI. We note only We turn to Section 8 of Resolution No. 2772, which needs to be quoted in full again:
that, under Section 3 of Resolution No. 2772, the free "Comelec space" sought by the respondent
Commission would be used not only for informing the public about the identities, qualifications and
Sec. 8. Undue Reference to Candidates/Political Parties in Newspapers. — No
programs of government of candidates for elective office but also for "dissemination of vital election
newspaper or publication shall allow to be printed or published in the news, opinion,
information" (including, presumably, circulars, regulations, notices, directives, etc. issued by
features, or other sections of the newspaper or publication accounts or comments
Comelec). It seems to the Court a matter of judicial notice that government offices and agencies
which manifestly favor or oppose any candidate or political party by unduly or
(including the Supreme Court) simply purchase print space, in the ordinary course of events, when
repeatedly referring to or including therein said candidate or political party.
their rules and regulations, circulars, notices and so forth need officially to be brought to the attention
However, unless the facts and circumstances clearly indicate otherwise, the
of the general public.
Commission will respect the determination by the publisher and/or editors of the
newspapers or publications that the accounts or views published are significant,
The taking of private property for public use is, of course, authorized by the Constitution, but not newsworthy and of public interest.
without payment of "just compensation" (Article III, Section 9). And apparently the necessity of
paying compensation for "Comelec space" is precisely what is sought to be avoided by respondent
It is not easy to understand why Section 8 was included at all in Resolution No. 2772. In any case,
Commission, whether Section 2 of Resolution No. 2772 is read as petitioner PPI reads it, as an
Section 8 should be viewed in the context of our decision in National Press Club v. Commission on
assertion of authority to require newspaper publishers to "donate" free print space for Comelec
Elections. 6 There the Court sustained the constitutionality of Section 11 (b) of R.A. No. 6646, known
purposes, or as an exhortation, or perhaps an appeal, to publishers to donate free print space, as
as the Electoral Reforms Law of 1987, which prohibits the sale or donation of print space and airtime
Section 1 of Resolution No. 2772-A attempts to suggest. There is nothing at all to prevent newspaper
for campaign or other political purposes, except to the Comelec. In doing so, the Court carefully
and magazine publishers from voluntarily giving free print space to Comelec for the purposes
distinguished (a) paid political advertisements which are reached by the prohibition of Section 11 (b),
contemplated in Resolution No. 2772. Section 2 of Resolution No. 2772 does not, however, provide a
from (b) the reporting of news, commentaries and expressions of belief or opinion by reporters,
constitutional basis for compelling publishers, against their will, in the kind of factual context here
broadcasters, editors, commentators or columnists which fall outside the scope of Section 11 (b) and
present, to provide free print space for Comelec purposes. Section 2 does not constitute a valid
which are protected by the constitutional guarantees of freedom of speech and of the press:
exercise of the power of eminent domain.

Secondly, and more importantly, Section 11 (b) is limited in its scope of application.
We would note that the ruling here laid down by the Court is entirely in line with the theory of
Analysis of Section 11 (b) shows that it purports to apply only to the purchase and
democratic representative government. The economic costs of informing the general public about the
sale, including purchase and sale disguised as a donation, of print space and air
qualifications and programs of those seeking elective office are most appropriately distributed as
time for campaign or other political purposes. Section 11 (b) does not purport in
widely as possible throughout our society by the utilization of public funds, especially funds raised by
any way to restrict the reporting by newspapers or radio or television stations of
taxation, rather than cast solely on one small sector of society, i.e., print media enterprises. The
news or news-worthy events relating to candidates, their qualifications, political
benefits which flow from a heightened level of information on and the awareness of the electoral
parties and programs of government. Moreover, Section 11 (b) does not reach
process are commonly thought to be community-wide; the burdens should be allocated on the same
commentaries and expressions of belief or opinion by reporters or broadcaster or
basis.
editors or commentators or columnists in respect of candidates, their qualifications,
and programs and so forth, so long at least as such comments, opinions and beliefs
As earlier noted, the Solicitor General also contended that Section 2 of Resolution No. 2772, even if are not in fact advertisements for particular candidates covertly paid for. In sum,
read as compelling publishers to "donate" "Comelec space, " may be sustained as a valid exercise of Section 11 (b) is not to be read as reaching any report or commentary or other
the police power of the state. This argument was, however, made too casually to require prolonged coverage that, in responsible media, is not paid for by candidates for political
consideration on our part. Firstly, there was no effort (and apparently no inclination on the part of office. We read Section 11 (b) as designed to cover only paid political
Comelec) to show that the police power — essentially a power of legislation — has been advertisements of particular candidates.
constitutionally delegated to respondent Commission.4 Secondly, while private property may indeed
be validly taken in the legitimate exercise of the police power of the state, there was no attempt to
The above limitation in scope of application of Section 11 (b) — that it does not
show compliance in the instant case with the requisites of a lawful taking under the police power. 5
restrict either the reporting of or the expression of belief or opinion or comment
upon the qualifications and programs and activities of any and all candidates for
Section 2 of Resolution No. 2772 is a blunt and heavy instrument that purports, without a showing of office — constitutes the critical distinction which must be made between the instant
existence of a national emergency or other imperious public necessity, indiscriminately and without case and that of Sanidad v. Commission on Elections. . . . 7 (Citations omitted;
regard to the individual business condition of particular newspapers or magazines located in differing emphasis supplied)
parts of the country, to take private property of newspaper or magazine publishers. No attempt was

52
Section 8 of Resolution No. 2772 appears to represent the effort of the Comelec to establish a
guideline for implementation of the above-quoted distinction and doctrine in National Press Club an
effort not blessed with evident success. Section 2 of Resolution No. 2772-A while possibly helpful,
does not add substantially to the utility of Section 8 of Resolution No. 2772. The distinction between
paid political advertisements on the one hand and news reports, commentaries and expressions of
belief or opinion by reporters, broadcasters, editors, etc. on the other hand, can realistically be given
operative meaning only in actual cases or controversies, on a case-to-case basis, in terms of very
specific sets of facts.

At all events, the Court is bound to note that PPI has failed to allege any specific affirmative action on
the part of Comelec designed to enforce or implement Section 8. PPI has not claimed that it or any of
its members has sustained actual or imminent injury by reason of Comelec action under Section 8.
Put a little differently, the Court considers that the precise constitutional issue here sought to be
raised — whether or not Section 8 of Resolution No. 2772 constitutes a permissible exercise of the
Comelec's power under Article IX, Section 4 of the Constitution to

supervise or regulate the enjoyment or utilization of all franchise or permits for the
operation of — media of communication or information — [for the purpose of
ensuring] equal opportunity, time and space, and the right of reply, including
reasonable, equal rates therefore, for public information campaigns and forums
among candidates in connection with the objective of holding free, orderly honest,
peaceful and credible elections —

is not ripe for judicial review for lack of an actual case or controversy involving, as the very lis
mota thereof, the constitutionality of Section 8.

Summarizing our conclusions:

1. Section 2 of Resolution No. 2772, in its present form and as interpreted by Comelec in its 22 March
1995 letter directives, purports to require print media enterprises to "donate" free print space to
Comelec. As such, Section 2 suffers from a fatal constitutional vice and must be set aside and
nullified.

2. To the extent it pertains to Section 8 of Resolution No. 2772, the Petition for Certiorari and
Prohibition must be dismissed for lack of an actual, justiciable case or controversy.

WHEREFORE, for all the foregoing, the Petition for Certiorari and Prohibition is GRANTED in part and
Section 2 of Resolution No. 2772 in its present form and the related letter-directives dated 22 March
1995 are hereby SET ASIDE as null and void, and the Temporary Restraining Order is hereby MADE
PERMANENT. The Petition is DISMISSED in part, to the extent it relates to Section 8 of Resolution No.
2772. No pronouncement as to costs.

Narvasa, C.J., Padilla, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza
and Francisco, JJ., concur. CITY GOVERNMENT OF QUEZON CITY and CITY COUNCIL OF QUEZON CITY,petitioners,
vs.
HON. JUDGE VICENTE G. ERICTA as Judge of the Court of First Instance of Rizal, Quezon
Quiason, J., is on leave. City, Branch XVIII; HIMLAYANG PILIPINO, INC., respondents.
Facts:

53
Section 9 of Ordinance No. 6118, S-64 provides that at least 6% of the total area of the memorial Under the provisions of municipal charters which are known as the general welfare clauses, a city, by
park cemetery shall be set aside for the charity burial of deceased persons who are paupers and have virtue of its police power, may adopt ordinances to the peace, safety, health, morals and the best and
been residents of Quezon City for at least 5 years prior to their death. As such, the Quezon City highest interests of the municipality. It is a well-settled principle, growing out of the nature of well-
engineer required the respondent, Himlayang Pilipino Inc, to stop any further selling and/or ordered and society, that every holder of property, however absolute and may be his title, holds it
transaction of memorial park lots in Quezon City where the owners thereof have failed to donate the under the implied liability that his use of it shall not be injurious to the equal enjoyment of others
required 6% space intended for paupers burial. having an equal right to the enjoyment of their property, nor injurious to the rights of the community.
A property in the state is held subject to its general regulations, which are necessary to the common
The then Court of First Instance and its judge, Hon. Ericta, declared Section 9 of Ordinance No. 6118, good and general welfare. Rights of property, like all other social and conventional rights, are subject
S-64 null and void. to such reasonable limitations in their enjoyment as shall prevent them from being injurious, and to
such reasonable restraints and regulations, established by law, as the legislature, under the governing
and controlling power vested in them by the constitution, may think necessary and expedient. The
Petitioners argued that the taking of the respondent’s property is a valid and reasonable exercise of state, under the police power, is possessed with plenary power to deal with all matters relating to the
police power and that the land is taken for a public use as it is intended for the burial ground of general health, morals, and safety of the people, so long as it does not contravene any positive
paupers. They further argued that the Quezon City Council is authorized under its charter, in the inhibition of the organic law and providing that such power is not exercised in such a manner as to
exercise of local police power, ” to make such further ordinances and resolutions not repugnant to law justify the interference of the courts to prevent positive wrong and oppression.
as may be necessary to carry into effect and discharge the powers and duties conferred by this Act
and such as it shall deem necessary and proper to provide for the health and safety, promote the
prosperity, improve the morals, peace, good order, comfort and convenience of the city and the However, in the case at hand, there is no reasonable relation between the setting aside of at least six
inhabitants thereof, and for the protection of property therein.” (6) percent of the total area of an private cemeteries for charity burial grounds of deceased paupers
and the promotion of health, morals, good order, safety, or the general welfare of the people. The
ordinance is actually a taking without compensation of a certain area from a private cemetery to
On the otherhand, respondent Himlayang Pilipino, Inc. contended that the taking or confiscation of benefit paupers who are charges of the municipal corporation. Instead of building or maintaining a
property was obvious because the questioned ordinance permanently restricts the use of the property public cemetery for this purpose, the city passes the burden to private cemeteries.
such that it cannot be used for any reasonable purpose and deprives the owner of all beneficial use of
his property.
The expropriation without compensation of a portion of private cemeteries is not covered by Section
12(t) of Republic Act 537, the Revised Charter of Quezon City which empowers the city council to
Issue: prohibit the burial of the dead within the center of population of the city and to provide for their burial
Is Section 9 of the ordinance in question a valid exercise of the police power? in a proper place subject to the provisions of general law regulating burial grounds and cemeteries.
Held: When the Local Government Code, Batas Pambansa Blg. 337 provides in Section 177 (q) that a
No. The Sec. 9 of the ordinance is not a valid exercise of the police power. Sangguniang panlungsod may “provide for the burial of the dead in such place and in such manner as
prescribed by law or ordinance” it simply authorizes the city to provide its own city owned land or to
Occupying the forefront in the bill of rights is the provision which states that ‘no person shall be buy or expropriate private properties to construct public cemeteries. This has been the law and
deprived of life, liberty or property without due process of law’ (Art. Ill, Section 1 subparagraph 1, practise in the past. It continues to the present. Expropriation, however, requires payment of just
Constitution). On the other hand, there are three inherent powers of government by which the state compensation. The questioned ordinance is different from laws and regulations requiring owners of
interferes with the property rights, namely-. (1) police power, (2) eminent domain, (3) taxation. subdivisions to set aside certain areas for streets, parks, playgrounds, and other public facilities from
These are said to exist independently of the Constitution as necessary attributes of sovereignty. the land they sell to buyers of subdivision lots. The necessities of public safety, health, and
convenience are very clear from said requirements which are intended to insure the development of
communities with salubrious and wholesome environments. The beneficiaries of the regulation, in
An examination of the Charter of Quezon City (Rep. Act No. 537), does not reveal any provision that
turn, are made to pay by the subdivision developer when individual lots are sold to home-owners.
would justify the ordinance in question except the provision granting police power to the City. Section
9 cannot be justified under the power granted to Quezon City to tax, fix the license fee, and regulate
such other business, trades, and occupation as may be established or practised in the City. The power WHEREFORE, the petition for review is hereby DISMISSED. The decision of the respondent court is
to regulate does not include the power to prohibit or confiscate. The ordinance in question not only affirmed.
confiscates but also prohibits the operation of a memorial park cemetery.

Police power is defined by Freund as ‘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 property of the owner. If he is deprived of his property outright, it is not taken for
public use but rather to destroy in order to promote the general welfare. In police power, the owner
does not recover from the government for injury sustained in consequence thereof.

G.R. No. L-34915 June 24, 1983

54
CITY GOVERNMENT OF QUEZON CITY and CITY COUNCIL OF QUEZON CITY, petitioners,  There being no issue of fact and the questions raised being purely legal both petitioners and
vs. respondent agreed to the rendition of a judgment on the pleadings. The respondent court, therefore,
HON. JUDGE VICENTE G. ERICTA as Judge of the Court of First Instance of Rizal, Quezon rendered the decision declaring Section 9 of Ordinance No. 6118, S-64 null and void. 
City, Branch XVIII; HIMLAYANG PILIPINO, INC., respondents.
A motion for reconsideration having been denied, the City Government and City Council filed the
City Fiscal for petitioners.  instant petition. 

Manuel Villaruel, Jr. and Feliciano Tumale for respondents.  Petitioners argue that the taking of the respondent's property is a valid and reasonable exercise of
police power and that the land is taken for a public use as it is intended for the burial ground of
paupers. They further argue that the Quezon City Council is authorized under its charter, in the
exercise of local police power, " to make such further ordinances and resolutions not repugnant to law
as may be necessary to carry into effect and discharge the powers and duties conferred by this Act
GUTIERREZ, JR., J.: and such as it shall deem necessary and proper to provide for the health and safety, promote the
prosperity, improve the morals, peace, good order, comfort and convenience of the city and the
This is a petition for review which seeks the reversal of the decision of the Court of First Instance of inhabitants thereof, and for the protection of property therein." 
Rizal, Branch XVIII declaring Section 9 of Ordinance No. 6118, S-64, of the Quezon City Council null
and void.  On the other hand, respondent Himlayang Pilipino, Inc. contends that the taking or confiscation of
property is obvious because the questioned ordinance permanently restricts the use of the property
Section 9 of Ordinance No. 6118, S-64, entitled "ORDINANCE REGULATING THE ESTABLISHMENT, such that it cannot be used for any reasonable purpose and deprives the owner of all beneficial use of
MAINTENANCE AND OPERATION OF PRIVATE MEMORIAL TYPE CEMETERY OR BURIAL GROUND his property. 
WITHIN THE JURISDICTION OF QUEZON CITY AND PROVIDING PENALTIES FOR THE VIOLATION
THEREOF" provides:  The respondent also stresses that the general welfare clause is not available as a source of power for
the taking of the property in this case because it refers to "the power of promoting the public welfare
Sec. 9. At least six (6) percent of the total area of the memorial park cemetery shall by restraining and regulating the use of liberty and property." The respondent points out that if an
be set aside for charity burial of deceased persons who are paupers and have been owner is deprived of his property outright under the State's police power, the property is generally
residents of Quezon City for at least 5 years prior to their death, to be determined not taken for public use but is urgently and summarily destroyed in order to promote the general
by competent City Authorities. The area so designated shall immediately be welfare. The respondent cites the case of a nuisance per se or the destruction of a house to prevent
developed and should be open for operation not later than six months from the date the spread of a conflagration. 
of approval of the application. 
We find the stand of the private respondent as well as the decision of the respondent Judge to be
For several years, the aforequoted section of the Ordinance was not enforced by city authorities but well-founded. We quote with approval the lower court's ruling which declared null and void Section 9
seven years after the enactment of the ordinance, the Quezon City Council passed the following of the questioned city ordinance: 
resolution: 
The issue is: Is Section 9 of the ordinance in question a valid exercise of the police
RESOLVED by the council of Quezon assembled, to request, as it does hereby power? 
request the City Engineer, Quezon City, to stop any further selling and/or
transaction of memorial park lots in Quezon City where the owners thereof have An examination of the Charter of Quezon City (Rep. Act No. 537), does not reveal
failed to donate the required 6% space intended for paupers burial.  any provision that would justify the ordinance in question except the provision
granting police power to the City. Section 9 cannot be justified under the power
Pursuant to this petition, the Quezon City Engineer notified respondent Himlayang Pilipino, Inc. in granted to Quezon City to tax, fix the license fee, and regulate such other business,
writing that Section 9 of Ordinance No. 6118, S-64 would be enforced  trades, and occupation as may be established or practised in the City.' (Subsections
'C', Sec. 12, R.A. 537). 

Respondent Himlayang Pilipino reacted by filing with the Court of First Instance of Rizal Branch XVIII
at Quezon City, a petition for declaratory relief, prohibition and mandamus with preliminary injunction The power to regulate does not include the power to prohibit (People vs. Esguerra,
(Sp. Proc. No. Q-16002) seeking to annul Section 9 of the Ordinance in question The respondent 81 PhiL 33, Vega vs. Municipal Board of Iloilo, L-6765, May 12, 1954; 39 N.J. Law,
alleged that the same is contrary to the Constitution, the Quezon City Charter, the Local Autonomy 70, Mich. 396). A fortiori, the power to regulate does not include the power to
Act, and the Revised Administrative Code.  confiscate. The ordinance in question not only confiscates but also prohibits the
operation of a memorial park cemetery, because under Section 13 of said
ordinance, 'Violation of the provision thereof is punishable with a fine and/or
55
imprisonment and that upon conviction thereof the permit to operate and maintain a most insistent, and always one of the least limitable of the powers of government
private cemetery shall be revoked or cancelled.' The confiscatory clause and the (Ruby vs. Provincial Board, 39 PhiL 660; Ichong vs. Hernandez, 1,7995, May 31,
penal provision in effect deter one from operating a memorial park cemetery. 1957). This power embraces the whole system of public regulation (U.S. vs. Linsuya
Neither can the ordinance in question be justified under sub- section "t", Section 12 Fan, 10 PhiL 104). The Supreme Court has said that police power is so far-reaching
of Republic Act 537 which authorizes the City Council to-  in scope that it has almost become impossible to limit its sweep. As it derives its
existence from the very existence of the state itself, it does not need to be
expressed or defined in its scope. Being coextensive with self-preservation and
'prohibit the burial of the dead within the center of population of
survival itself, it is the most positive and active of all governmental processes, the
the city and provide for their burial in such proper place and in
most essential insistent and illimitable Especially it is so under the modern
such manner as the council may determine, subject to the
democratic framework where the demands of society and nations have multiplied to
provisions of the general law regulating burial grounds and
almost unimaginable proportions. The field and scope of police power have become
cemeteries and governing funerals and disposal of the dead.'
almost boundless, just as the fields of public interest and public welfare have
(Sub-sec. (t), Sec. 12, Rep. Act No. 537). 
become almost all embracing and have transcended human foresight. Since the
Courts cannot foresee the needs and demands of public interest and welfare, they
There is nothing in the above provision which authorizes confiscation or as cannot delimit beforehand the extent or scope of the police power by which and
euphemistically termed by the respondents, 'donation'  through which the state seeks to attain or achieve public interest and welfare.
(Ichong vs. Hernandez, L-7995, May 31, 1957). 
We now come to the question whether or not Section 9 of the ordinance in question
is a valid exercise of police power. The police power of Quezon City is defined in The police power being the most active power of the government and the due
sub-section 00, Sec. 12, Rep. Act 537 which reads as follows:  process clause being the broadest station on governmental power, the conflict
between this power of government and the due process clause of the Constitution is
(00) To make such further ordinance and regulations not oftentimes inevitable. 
repugnant to law as may be necessary to carry into effect and
discharge the powers and duties conferred by this act and such as It will be seen from the foregoing authorities that police power is usually exercised
it shall deem necessary and proper to provide for the health and in the form of mere regulation or restriction in the use of liberty or property for the
safety, promote, the prosperity, improve the morals, peace, good promotion of the general welfare. It does not involve the taking or confiscation of
order, comfort and convenience of the city and the inhabitants property with the exception of a few cases where there is a necessity to confiscate
thereof, and for the protection of property therein; and enforce private property in order to destroy it for the purpose of protecting the peace and
obedience thereto with such lawful fines or penalties as the City order and of promoting the general welfare as for instance, the confiscation of an
Council may prescribe under the provisions of subsection (jj) of illegally possessed article, such as opium and firearms. 
this section.
It seems to the court that Section 9 of Ordinance No. 6118, Series of 1964 of
We start the discussion with a restatement of certain basic principles. Occupying the Quezon City is not a mere police regulation but an outright confiscation. It deprives
forefront in the bill of rights is the provision which states that 'no person shall be a person of his private property without due process of law, nay, even without
deprived of life, liberty or property without due process of law' (Art. Ill, Section 1 compensation. 
subparagraph 1, Constitution). 
In sustaining the decision of the respondent court, we are not unmindful of the heavy burden
On the other hand, there are three inherent powers of government by which the shouldered by whoever challenges the validity of duly enacted legislation whether national or local As
state interferes with the property rights, namely-. (1) police power, (2) eminent early as 1913, this Court ruled in Case v. Board of Health (24 PhiL 250) that the courts resolve every
domain, (3) taxation. These are said to exist independently of the Constitution as presumption in favor of validity and, more so, where the ma corporation asserts that the ordinance
necessary attributes of sovereignty.  was enacted to promote the common good and general welfare. 

Police power is defined by Freund as 'the power of promoting the public welfare by In the leading case of Ermita-Malate Hotel and Motel Operators Association Inc. v. City Mayor of
restraining and regulating the use of liberty and property' (Quoted in Political Law Manila (20 SCRA 849) the Court speaking through the then Associate Justice and now Chief Justice
by Tanada and Carreon, V-11, p. 50). It is usually exerted in order to merely Enrique M. Fernando stated 
regulate the use and enjoyment of property of the owner. If he is deprived of his
property outright, it is not taken for public use but rather to destroy in order to
Primarily what calls for a reversal of such a decision is the a of any evidence to
promote the general welfare. In police power, the owner does not recover from the
offset the presumption of validity that attaches to a statute or ordinance. As was
government for injury sustained in consequence thereof (12 C.J. 623). It has been
expressed categorically by Justice Malcolm 'The presumption is all in favor of
said that police power is the most essential of government powers, at times the
validity. ... The action of the elected representatives of the people cannot be lightly
56
set aside. The councilors must, in the very nature of things, be familiar with the practise in the past. It continues to the present. Expropriation, however, requires payment of just
necessities of their particular ... municipality and with all the facts and lances which compensation. The questioned ordinance is different from laws and regulations requiring owners of
surround the subject and necessitate action. The local legislative body, by enacting subdivisions to set aside certain areas for streets, parks, playgrounds, and other public facilities from
the ordinance, has in effect given notice that the regulations are essential to the the land they sell to buyers of subdivision lots. The necessities of public safety, health, and
well-being of the people. ... The Judiciary should not lightly set aside legislative convenience are very clear from said requirements which are intended to insure the development of
action when there is not a clear invasion of personal or property rights under the communities with salubrious and wholesome environments. The beneficiaries of the regulation, in
guise of police regulation. (U.S. v. Salaveria (1918], 39 Phil. 102, at p. 111. There turn, are made to pay by the subdivision developer when individual lots are sold to home-owners. 
was an affirmation of the presumption of validity of municipal ordinance as
announced in the leading Salaveria decision in Ebona v. Daet, [1950]85 Phil. 369.) 
As a matter of fact, the petitioners rely solely on the general welfare clause or on implied powers of
the municipal corporation, not on any express provision of law as statutory basis of their exercise of
We have likewise considered the principles earlier stated in Case v. Board of power. The clause has always received broad and liberal interpretation but we cannot stretch it to
Health supra : cover this particular taking. Moreover, the questioned ordinance was passed after Himlayang Pilipino,
Inc. had incorporated. received necessary licenses and permits and commenced operating. The
sequestration of six percent of the cemetery cannot even be considered as having been impliedly
... Under the provisions of municipal charters which are known as the general
acknowledged by the private respondent when it accepted the permits to commence operations. 
welfare clauses, a city, by virtue of its police power, may adopt ordinances to the
peace, safety, health, morals and the best and highest interests of the municipality.
It is a well-settled principle, growing out of the nature of well-ordered and society, WHEREFORE, the petition for review is hereby DISMISSED. The decision of the respondent court is
that every holder of property, however absolute and may be his title, holds it under affirmed. 
the implied liability that his use of it shall not be injurious to the equal enjoyment of
others having an equal right to the enjoyment of their property, nor injurious to the
SO ORDERED.
rights of the community. An property in the state is held subject to its general
regulations, which are necessary to the common good and general welfare. Rights
of property, like all other social and conventional rights, are subject to such
reasonable limitations in their enjoyment as shall prevent them from being
injurious, and to such reasonable restraints and regulations, established by law, as
the legislature, under the governing and controlling power vested in them by the
constitution, may think necessary and expedient. The state, under the police power,
is possessed with plenary power to deal with all matters relating to the general
health, morals, and safety of the people, so long as it does not contravene any
positive inhibition of the organic law and providing that such power is not exercised
in such a manner as to justify the interference of the courts to prevent positive
wrong and oppression. 

but find them not applicable to the facts of this case. 

There is no reasonable relation between the setting aside of at least six (6) percent of the total area
of an private cemeteries for charity burial grounds of deceased paupers and the promotion of health,
morals, good order, safety, or the general welfare of the people. The ordinance is actually a taking
without compensation of a certain area from a private cemetery to benefit paupers who are charges
of the municipal corporation. Instead of building or maintaining a public cemetery for this purpose,
the city passes the burden to private cemeteries. 

The expropriation without compensation of a portion of private cemeteries is not covered by Section
12(t) of Republic Act 537, the Revised Charter of Quezon City which empowers the city council to
prohibit the burial of the dead within the center of population of the city and to provide for their burial
in a proper place subject to the provisions of general law regulating burial grounds and cemeteries.
When the Local Government Code, Batas Pambansa Blg. 337 provides in Section 177 (q) that a
Sangguniang panlungsod may "provide for the burial of the dead in such place and in such manner as
prescribed by law or ordinance" it simply authorizes the city to provide its own city owned land or to
buy or expropriate private properties to construct public cemeteries. This has been the law and

57
(1) must not contravene the Constitution or any statute;
(2) must not be unfair or oppressive;
(3) must not be partial or discriminatory;
(4) must not prohibit but may regulate trade;
(5) must be general and consistent with public policy; and
(6) must not be unreasonable.

To successfully invoke the exercise of police power as the rationale for the enactment of the
Ordinance, and to free it from the imputation of constitutional infirmity, not only must it appear that
CITY OF MANILA, HON. ALFREDO S. LIM as the Mayor of the City of Manila, HON. JOSELITO the interests of the public generally, as distinguished from those of a particular class, require an
L. ATIENZA, in his capacity as Vice-Mayor of the City of Manila and Presiding Officer of the interference with private rights, but the means adopted must be reasonably necessary for the
City Council of Manila, HON. ERNESTO A. NIEVA, HON. GONZALO P. GONZALES, HON. accomplishment of the purpose and not unduly oppressive upon individuals
AVELINO S. CAILIAN, HON. ROBERTO C. OCAMPO, HON. ALBERTO DOMINGO, HON.
HONORIO U. LOPEZ, HON. FRANCISCO G. VARONA, JR., HON. ROMUALDO S. MARANAN, The police power of the City Council, however broad and far-reaching, is subordinate to the
HON. NESTOR C. PONCE, JR., HON. HUMBERTO B. BASCO, HON. FLAVIANO F. CONCEPCION, constitutional  limitations thereon; and is subject to the limitation that its exercise must be reasonable
JR., HON. ROMEO G. RIVERA, HON. MANUEL M. ZARCAL, HON. PEDRO S. DE JESUS, HON. and for the public good. In the case at bar, the enactment of the Ordinance was an invalid exercise of
BERNARDITO C. ANG, HON. MANUEL L. QUIN, HON. JHOSEP Y. LOPEZ, HON. CHIKA G. GO, delegated power as it is unconstitutional and repugnant to general laws.
HON. VICTORIANO A. MELENDEZ, HON. ERNESTO V.P. MACEDA, JR., HON. ROLANDO P.
NIETO, HON. DANILO V. ROLEDA, HON. GERINO A. TOLENTINO, JR., HON. MA. PAZ E. The Classification of Hotels, motels, Hostel, and lodging house are different from sauna parlors,
HERRERA, HON. JOEY D. HIZON, HON. FELIXBERTO D. ESPIRITU, HON. KARLO Q. BUTIONG, massage parlors, karaoke bars, night clubs, day clubs, super clubs, discotheques, cabarets, dance
HON. ROGELIO P. DELA PAZ, HON. BERNARDO D. RAGAZA, HON. MA. CORAZON R. halls. The Supreme Court Said that it is baseless and insupportable.
CABALLES, HON. CASIMIRO C. SISON, HON. BIENVINIDO M. ABANTE, JR., HON. MA.
LOURDES M. ISIP, HON. ALEXANDER S. RICAFORT, HON. ERNESTO F. RIVERA, HON. In addition, the Ordinance is unreasonable and oppressive as it substantially divests the respondent of
LEONARDO L. ANGAT, and HON. JOCELYN B. DAWIS, in their capacity as councilors of the the beneficial use of its property. Ordinances placing restrictions upon the lawful use of property
City of Manila,Petitioner,  must, in order to be valid and constitutional, specify the rules and conditions to be observed and
vs. conduct to avoid. The Ordinance  however is not a regulatory measure but is an exercise of an
HON. PERFECTO A.S. LAGUIO, JR., as Presiding Judge, RTC, Manila and MALATE TOURIST assumed power to prohibit The foregoing premises show that the Ordinance is an unwarranted and
DEVELOPMENT CORPORATION, Respondents. unlawful curtailment of property and personal rights of citizens. For being unreasonable and an undue
restraint of trade, it cannot, even under the guise of exercising police power, be upheld as valid

Facts:

On 30 Mar 1993, Mayor Lim signed into law Ord 7783 entitled AN ORDINANCE PROHIBITING THE
ESTABLISHMENT OR OPERATION OF BUSINESSES PROVIDING CERTAIN FORMS OF AMUSEMENT,
ENTERTAINMENT, SERVICES AND FACILITIES IN THE ERMITA-MALATE AREA, PRESCRIBING
PENALTIES FOR VIOLATION THEREOF, AND FOR OTHER PURPOSES. It basically prohibited
establishments such as bars, karaoke bars, motels and hotels from operating in the Malate District
which was notoriously viewed as a red light district harboring thrill seekers. Malate Tourist
Development Corporation avers that the ordinance is invalid as it includes hotels and motels in the
enumeration of places offering amusement or entertainment. MTDC reiterates that they do not
market such nor do they use women as tools for entertainment. MTDC also avers that under the LGC,
LGUs can only regulate motels but cannot prohibit their operation. The City reiterates that the
Ordinance is a valid exercise of Police Power as provided as well in the LGC. The City likewise
emphasized that the purpose of the law is to promote morality in the City.

ISSUE: Whether or not Ordinance 7783 is valid.

HELD: The SC ruled that the said Ordinance is null and void. The SC noted that for an ordinance to be
valid, it must not only be within the corporate powers of the local government unit to enact and must
be passed according to the procedure prescribed by law, it  must also conform to the following
substantive requirements:

58
J. Christopher  Gerald
Bonaparte in Egypt, Ch. I

The Court's commitment to the protection of morals is secondary to its fealty to the fundamental law
of the land. It is foremost a guardian of the Constitution but not the conscience of individuals. And if it
need be, the Court will not hesitate to "make the hammer fall, and heavily" in the words of Justice
Laurel, and uphold the constitutional guarantees when faced with laws that, though not lacking in zeal
to promote morality, nevertheless fail to pass the test of constitutionality.

The pivotal issue in this Petition1 under Rule 45 (then Rule 42) of the Revised Rules on Civil Procedure
seeking the reversal of the Decision2 in Civil Case No. 93-66511 of the Regional Trial Court (RTC) of
G.R. No. 118127             April 12, 2005 Manila, Branch 18 (lower court),3 is the validity of Ordinance No. 7783 (the Ordinance) of the City of
Manila.4 

CITY OF MANILA, HON. ALFREDO S. LIM as the Mayor of the City of Manila, HON. JOSELITO
L. ATIENZA, in his capacity as Vice-Mayor of the City of Manila and Presiding Officer of the The antecedents are as follows:
City Council of Manila, HON. ERNESTO A. NIEVA, HON. GONZALO P. GONZALES, HON.
AVELINO S. CAILIAN, HON. ROBERTO C. OCAMPO, HON. ALBERTO DOMINGO, HON. Private respondent Malate Tourist Development Corporation (MTDC) is a corporation engaged in the
HONORIO U. LOPEZ, HON. FRANCISCO G. VARONA, JR., HON. ROMUALDO S. MARANAN, business of operating hotels, motels, hostels and lodging houses.5 It built and opened Victoria Court in
HON. NESTOR C. PONCE, JR., HON. HUMBERTO B. BASCO, HON. FLAVIANO F. CONCEPCION, Malate which was licensed as a motel although duly accredited with the Department of Tourism as a
JR., HON. ROMEO G. RIVERA, HON. MANUEL M. ZARCAL, HON. PEDRO S. DE JESUS, HON. hotel.6 On 28 June 1993, MTDC filed a Petition for Declaratory Relief with Prayer for a Writ of
BERNARDITO C. ANG, HON. MANUEL L. QUIN, HON. JHOSEP Y. LOPEZ, HON. CHIKA G. GO, Preliminary Injunction and/or Temporary Restraining Order 7 (RTC Petition) with the lower court
HON. VICTORIANO A. MELENDEZ, HON. ERNESTO V.P. MACEDA, JR., HON. ROLANDO P. impleading as defendants, herein petitioners City of Manila, Hon. Alfredo S. Lim (Lim), Hon. Joselito L.
NIETO, HON. DANILO V. ROLEDA, HON. GERINO A. TOLENTINO, JR., HON. MA. PAZ E. Atienza, and the members of the City Council of Manila (City Council).  MTDC prayed that
HERRERA, HON. JOEY D. HIZON, HON. FELIXBERTO D. ESPIRITU, HON. KARLO Q. BUTIONG, the Ordinance, insofar as it includes motels and inns as among its prohibited establishments, be
HON. ROGELIO P. DELA PAZ, HON. BERNARDO D. RAGAZA, HON. MA. CORAZON R. declared invalid and unconstitutional.8 
CABALLES, HON. CASIMIRO C. SISON, HON. BIENVINIDO M. ABANTE, JR., HON. MA.
LOURDES M. ISIP, HON. ALEXANDER S. RICAFORT, HON. ERNESTO F. RIVERA, HON.
Enacted by the City Council9 on 9 March 1993 and approved by petitioner City Mayor on 30 March
LEONARDO L. ANGAT, and HON. JOCELYN B. DAWIS, in their capacity as councilors of the
1993, the said Ordinance is entitled–
City of Manila,Petitioner, 
vs.
HON. PERFECTO A.S. LAGUIO, JR., as Presiding Judge, RTC, Manila and MALATE TOURIST AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR OPERATION OF BUSINESSES
DEVELOPMENT CORPORATION, Respondents. PROVIDING CERTAIN FORMS OF AMUSEMENT, ENTERTAINMENT, SERVICES AND FACILITIES
IN THE ERMITA-MALATE AREA, PRESCRIBING PENALTIES FOR VIOLATION THEREOF, AND
FOR OTHER PURPOSES.10 
DECISION

The Ordinance is reproduced in full, hereunder:


TINGA, J.:

SECTION 1. Any provision of existing laws and ordinances to the contrary


I know only that what is moral is what you feel good after and what is immoral is what you
notwithstanding, no person, partnership, corporation or entity shall, in the Ermita-
feel bad after.
Malate area bounded by Teodoro M. Kalaw Sr. Street in the North, Taft Avenue in the East,
Vito Cruz Street in the South and Roxas Boulevard in the West, pursuant to P.D. 499 be
Ernest Hermingway allowed or authorized to contract and engage in, any business providing certain
Death in the Afternoon, Ch. 1 forms of amusement, entertainment, services and facilities where women are used
as tools in entertainment and which tend to disturb the community, annoy the
It is a moral and political axiom that any dishonorable act, if performed by oneself, is less inhabitants, and adversely affect the social and moral welfare of the
immoral than if performed by someone else, who would be well-intentioned in his community, such as but not limited to:
dishonesty.
1. Sauna Parlors

59
2. Massage Parlors 6. Restaurants

3. Karaoke Bars 7. Coffee shops

4. Beerhouses 8. Flower shops

5. Night Clubs 9. Music lounge and sing-along restaurants, with well-defined activities for
wholesome family entertainment that cater to both local and foreign clientele.
6. Day Clubs
10. Theaters engaged in the exhibition, not only of motion pictures but also of
cultural shows, stage and theatrical plays, art exhibitions, concerts and the like.
7. Super Clubs

11. Businesses allowable within the law and medium intensity districts as provided
8. Discotheques
for in the zoning ordinances for Metropolitan Manila, except new warehouse or
open-storage depot, dock or yard, motor repair shop, gasoline service station, light
9. Cabarets industry with any machinery, or funeral establishments.

10. Dance Halls SEC. 4. Any person violating any provisions of this ordinance, shall upon conviction,
be punished by imprisonment of one (1) year or fine of FIVE THOUSAND
11. Motels (P5,000.00) PESOS, or both, at the discretion of the Court, PROVIDED, that in case of
juridical person, the President, the General Manager, or person-in-charge of operation shall
be liable thereof; PROVIDED FURTHER, that in case of subsequent violation and
12. Inns conviction, the premises of the erring establishment shall be closed and padlocked
permanently.
SEC. 2 The City Mayor, the City Treasurer or any person acting in behalf of the said
officials are prohibited from issuing permits, temporary or otherwise, or from SEC. 5. This ordinance shall take effect upon approval.
granting licenses and accepting payments for the operation of business
enumerated in the preceding section.
Enacted by the City Council of Manila at its regular session today, March 9, 1993.

SEC. 3. Owners and/or operator of establishments engaged in, or devoted to, the


businesses enumerated in Section 1 hereof are hereby given three (3) months from the Approved by His Honor, the Mayor on March 30, 1993. (Emphasis supplied)
date of approval of this ordinance within which to wind up business operations or
to transfer to any place outside of the Ermita-Malate area or convert said In the RTC Petition, MTDC argued that the Ordinance erroneously and improperly included in its
businesses to other kinds of business allowable within the area, such as but not enumeration of prohibited establishments, motels and inns such as MTDC's Victoria Court considering
limited to: that these were not establishments for "amusement" or "entertainment" and they were not "services
or facilities for entertainment," nor did they use women as "tools for entertainment," and neither did
1. Curio or antique shop they "disturb the community," "annoy the inhabitants" or "adversely affect the social and moral
welfare of the community."11 

2. Souvenir Shops
MTDC further advanced that the Ordinance was invalid and unconstitutional for the following reasons:
(1) The City Council has no power to prohibit the operation of motels as Section 458 (a) 4 (iv) 12 of the
3. Handicrafts display centers Local Government Code of 1991 (the Code) grants to the City Council only the power to regulate the
establishment, operation and maintenance of hotels, motels, inns, pension houses, lodging houses
4. Art galleries and other similar establishments; (2) The Ordinance is void as it is violative of Presidential Decree
(P.D.) No. 49913 which specifically declared portions of the Ermita-Malate area as a commercial zone
with certain restrictions; (3) The Ordinance does not constitute a proper exercise of police power as
5. Records and music shops the compulsory closure of the motel business has no reasonable relation to the legitimate municipal
interests sought to be protected; (4) The Ordinance constitutes an ex post facto law by punishing the

60
operation of Victoria Court which was a legitimate business prior to its enactment; (5) .  .  .
The Ordinance violates MTDC's constitutional rights in that: (a) it is confiscatory and constitutes an
invasion of plaintiff's property rights; (b) the City Council has no power to find as a fact that a
Section 18. Legislative powers. – The Municipal Board shall have the following legislative
particular thing is a nuisance per se nor does it have the power to extrajudicially destroy it; and (6)
powers:
The Ordinance constitutes a denial of equal protection under the law as no reasonable basis exists for
prohibiting the operation of motels and inns, but not pension houses, hotels, lodging houses or other
similar establishments, and for prohibiting said business in the Ermita-Malate area but not outside of .  .  .
this area.14 
(kk) To enact all ordinances it may deem necessary and proper for the sanitation and safety,
In their Answer15 dated 23 July 1993, petitioners City of Manila and Lim maintained that the City the furtherance of the prosperity, and the promotion of the morality, peace, good order,
Council had the power to "prohibit certain forms of entertainment in order to protect the social and comfort, convenience, and general welfare of the city and its inhabitants, and such others as
moral welfare of the community" as provided for in Section 458 (a) 4 (vii) of the Local Government may be necessary to carry into effect and discharge the powers and duties conferred by this
Code,16 which  reads,  thus: chapter; and to fix penalties for the violation of ordinances which shall not exceed two
hundred pesos fine or six months' imprisonment, or both such fine and imprisonment, for a
single offense.
Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod,
as the legislative body of the city, shall enact ordinances, approve resolutions and
appropriate funds for the general welfare of the city and its inhabitants pursuant to Section Further, the petitioners noted, the Ordinance had the presumption of validity; hence, private
16 of this Code and in the proper exercise of the corporate powers of the city as provided for respondent had the burden to prove its illegality or unconstitutionality.21 
under Section 22 of this Code, and shall:
Petitioners also maintained that there was no inconsistency between P.D. 499 and the Ordinance as
. . . .  the latter simply disauthorized certain forms of businesses and allowed the Ermita-Malate area to
remain a commercial zone.22 The Ordinance, the petitioners likewise claimed, cannot be assailed as ex
post facto as it was prospective in operation.23 The Ordinance also did not infringe the equal protection
(4) Regulate activities relative to the use of land, buildings and structures within the city in
clause and cannot be denounced as class legislation as there existed substantial and real differences
order to promote the general welfare and for said purpose shall:
between the Ermita-Malate area and other places in the City of Manila.24 

. . . . 
On 28 June 1993, respondent Judge Perfecto A.S. Laguio, Jr. (Judge Laguio) issued an ex-parte
temporary restraining order against the enforcement of the Ordinance.25 And on 16 July 1993, again in
(vii) Regulate the establishment, operation, and maintenance of any entertainment an intrepid gesture, he granted the writ of preliminary injunction prayed for by MTDC.26 
or amusement facilities, including theatrical performances, circuses, billiard pools,
public dancing schools, public dance halls, sauna baths, massage parlors, and other
After trial, on 25 November 1994, Judge Laguio rendered the assailed Decision, enjoining the
places for entertainment or amusement; regulate such other events or activities for
petitioners from implementing the Ordinance. The dispositive portion of said Decision reads:27 
amusement or entertainment, particularly those which tend to disturb the
community or annoy the inhabitants, or require the suspension or suppression of
the same; or, prohibit certain forms of amusement or entertainment in order to WHEREFORE, judgment is hereby rendered declaring Ordinance No. 778[3], Series of 1993,
protect the social and moral welfare of the community. of the City of Manila null and void, and making permanent the writ of preliminary injunction
that had been issued by this Court against the defendant. No costs.
Citing Kwong Sing v. City of Manila,17 petitioners insisted that the power of regulation spoken of in the
above-quoted provision included the power to control, to govern and to restrain places of exhibition SO ORDERED.28 
and amusement.18 
Petitioners filed with the lower court a Notice of Appeal29 on 12 December 1994, manifesting that they
Petitioners likewise asserted that the Ordinance was enacted by the City Council of Manila to protect are elevating the case to this Court under then Rule 42 on pure questions of law.30 
the social and moral welfare of the community in conjunction with its police power as found in Article
III, Section 18(kk) of Republic Act No. 409, 19 otherwise known as the Revised Charter of the City of On 11 January 1995, petitioners filed the present Petition, alleging that the following errors were
Manila (Revised Charter of Manila)20 which reads, thus: committed by the lower court in its ruling: (1) It erred in concluding that the subject ordinance
is ultra vires, or otherwise, unfair, unreasonable and oppressive exercise of police power; (2) It erred
ARTICLE III in holding that the questioned Ordinancecontravenes P.D. 49931 which allows operators of all kinds of
commercial establishments, except those specified therein; and (3) It erred in declaring
the Ordinance void and unconstitutional.32 
THE MUNICIPAL BOARD
61
In the Petition and in its Memorandum,33 petitioners in essence repeat the assertions they made The Ordinance was passed by the City Council in the exercise of its police power, an enactment of the
before the lower court. They contend that the assailed Ordinance was enacted in the exercise of the City Council acting as agent of Congress. Local government units, as agencies of the State, are
inherent and plenary power of the State and the general welfare clause exercised by local government endowed with police power in order to effectively accomplish and carry out the declared objects of
units provided for in Art. 3, Sec. 18 (kk) of the Revised Charter of Manila and conjunctively, Section their creation.41 This delegated police power is found in Section 16 of the Code, known as the general
458 (a) 4 (vii) of the Code.34 They allege that the Ordinance is a valid exercise of police power; it does welfare clause, viz:
not contravene P.D. 499; and that it enjoys the presumption of validity.35 
SECTION 16. General Welfare.Every local government unit shall exercise the powers
In its Memorandum36 dated 27 May 1996, private respondent maintains that the Ordinance is ultra expressly granted, those necessarily implied therefrom, as well as powers necessary,
vires and that it is void for being repugnant to the general law. It reiterates that the appropriate, or incidental for its efficient and effective governance, and those which are
questioned Ordinance is not a valid exercise of police power; that it is violative of due process, essential to the promotion of the general welfare. Within their respective territorial
confiscatory and amounts to an arbitrary interference with its lawful business; that it is violative of jurisdictions, local government units shall ensure and support, among other things, the
the equal protection clause; and that it confers on petitioner City Mayor or any officer unregulated preservation and enrichment of culture, promote health and safety, enhance the right of the
discretion in the execution of the Ordinance absent rules to guide and control his actions. people to a balanced ecology, encourage and support the development of appropriate and
self-reliant scientific and technological capabilities, improve public morals, enhance economic
prosperity and social justice, promote full employment among their residents, maintain
This is an opportune time to express the Court's deep sentiment and tenderness for the Ermita-Malate
peace and order, and preserve the comfort and convenience of their inhabitants.
area being its home for several decades. A long-time resident, the Court witnessed the area's many
turn of events. It relished its glory days and endured its days of infamy. Much as the Court harks back
to the resplendent era of the Old Manila and yearns to restore its lost grandeur, it believes that Local government units exercise police power through their respective legislative bodies; in this case,
the Ordinance is not the fitting means to that end.  The Court is of the opinion, and so holds, that the the sangguniang panlungsod or the city council. The Code empowers the legislative bodies to "enact
lower court did not err in declaring the Ordinance, as it did, ultra vires and therefore null and void. ordinances, approve resolutions and appropriate funds for the general welfare of the
province/city/municipality and its inhabitants pursuant to Section 16 of the Code and in the proper
exercise of the corporate powers of the province/city/ municipality provided under the Code. 42 The
The Ordinance is so replete with constitutional infirmities that almost every sentence thereof violates
inquiry in this Petition is concerned with the validity of the exercise of such delegated power.
a constitutional provision. The prohibitions and sanctions therein transgress the cardinal rights of
persons enshrined by the Constitution. The Court is called upon to shelter these rights from attempts
at rendering them worthless. The Ordinance contravenes 
the Constitution
The tests of a valid ordinance are well established. A long line of decisions has held that for an
ordinance to be valid, it must not only be within the corporate powers of the local government unit to The police power of the City Council, however broad and far-reaching, is subordinate to the
enact and must be passed according to the procedure prescribed by law, it  must also conform to the constitutional limitations thereon; and is subject to the limitation that its exercise must be reasonable
following substantive requirements: (1) must not contravene the Constitution or any statute; (2) and for the public good.43 In the case at bar, the enactment of the Ordinance was an invalid exercise
must not be unfair or oppressive; (3) must not be partial or discriminatory; (4) must not prohibit but of delegated power as it is unconstitutional and repugnant to general laws.
may regulate trade; (5) must be general and consistent with public policy; and (6) must not be
unreasonable.37 
The relevant constitutional provisions are the following:

Anent the first criterion, ordinances shall only be valid when they are not contrary to the Constitution
SEC. 5. The maintenance of peace and order, the protection of life, liberty, and property, and
and to the laws.38 The Ordinance must satisfy two requirements: it must pass muster under the test of
the promotion of the general welfare are essential for the enjoyment by all the people of the
constitutionality and the test of consistency with the prevailing laws. That ordinances should be
blessings of democracy.44 
constitutional uphold the principle of the supremacy of the Constitution. The requirement that the
enactment must not violate existing law gives stress to the precept that local government units are
able to legislate only by virtue of their derivative legislative power, a delegation of legislative power SEC. 14. The State recognizes the role of women in nation-building, and shall ensure the
from the national legislature.  The delegate cannot be superior to the principal or exercise powers fundamental equality before the law of women and men.45 
higher than those of the latter.39 
SEC. 1. No person shall be deprived of life, liberty or property without due process of law,
This relationship between the national legislature and the local government units has not been nor shall any person be denied the equal protection of laws.46 
enfeebled by the new provisions in the Constitution strengthening the policy of local autonomy. The
national legislature is still the principal of the local government units, which cannot defy its will or Sec. 9. Private property shall not be taken for public use without just compensation.47 
modify or violate it.40 

A. The Ordinance infringes
the Due Process Clause
62
The constitutional safeguard of due process is embodied in the fiat "(N)o person shall be deprived of To successfully invoke the exercise of police power as the rationale for the enactment of
life, liberty or property without due process of law. . . ."48  the Ordinance, and to free it from the imputation of constitutional infirmity, not only must it appear
that the interests of the public generally, as distinguished from those of a particular class, require an
interference with private rights, but the means adopted must be reasonably necessary for the
There is no controlling and precise definition of due process.  It furnishes though a standard to which
accomplishment of the purpose and not unduly oppressive upon individuals. 60 It must be evident that
governmental action should conform in order that deprivation of life, liberty or property, in each
no other alternative for the accomplishment of the purpose less intrusive of private rights can work. 
appropriate case, be valid.  This standard is aptly described as a responsiveness to the supremacy of
A reasonable relation must exist between the purposes of the police measure and the means
reason, obedience to the dictates of justice,49 and as such it is a limitation upon the exercise of the
employed for its accomplishment, for even under the guise of protecting the public interest, personal
police power.50 
rights and those pertaining to private property will not be permitted to be arbitrarily invaded.61 

The purpose of the guaranty is to prevent governmental encroachment against the life, liberty and
Lacking a concurrence of these two requisites, the police measure shall be struck down as an arbitrary
property of individuals; to secure the individual from the arbitrary exercise of the powers of the
intrusion into private rights62 a violation of the due process clause.
government, unrestrained by the established principles of private rights and distributive justice; to
protect property from confiscation by legislative enactments, from seizure, forfeiture, and destruction
without a trial and conviction by the ordinary mode of judicial procedure; and to secure to all persons The Ordinance was enacted to address and arrest the social ills purportedly spawned by the
equal and impartial justice and the benefit of the general law.51  establishments in the Ermita-Malate area which are allegedly operated under the deceptive veneer of
legitimate, licensed and tax-paying nightclubs, bars, karaoke bars, girlie houses, cocktail lounges,
hotels and motels.  Petitioners insist that even the Court in the case of Ermita-Malate Hotel and Motel
The guaranty serves as a protection against arbitrary regulation, and private corporations and
Operators Association, Inc. v. City Mayor of Manila 63 had already taken judicial notice of the "alarming
partnerships are "persons" within the scope of the guaranty insofar as their property is concerned.52 
increase in the rate of prostitution, adultery and fornication in Manila traceable in great part to
existence of motels, which provide a necessary atmosphere for clandestine entry, presence and exit
This clause has been interpreted as imposing two separate limits on government, usually called and thus become the ideal haven for prostitutes and thrill-seekers."64 
"procedural due process" and "substantive due process."
The object of the Ordinance was, accordingly, the promotion and protection of the social and moral
Procedural due process, as the phrase implies, refers to the procedures that the government must values of the community. Granting for the sake of argument that the objectives of the Ordinance are
follow before it deprives a person of life, liberty, or property. Classic procedural due process issues within the scope of the City Council's police powers, the means employed for the accomplishment
are concerned with what kind of notice and what form of hearing the government must provide when thereof were unreasonable and unduly oppressive.
it takes a particular action.53 
It is undoubtedly one of the fundamental duties of the City of Manila to make all reasonable
Substantive due process, as that phrase connotes, asks whether the government has an adequate regulations looking to the promotion of the moral and social values of the community. However, the
reason for taking away a person's life, liberty, or property. In other words, substantive due process worthy aim of fostering public morals and the eradication of the community's social ills can be
looks to whether there is a sufficient justification for the government's action.54 Case law in the United achieved through means less restrictive of private rights; it can be attained by reasonable restrictions
States (U.S.) tells us that whether there is such a justification depends very much on the level of rather than by an absolute prohibition. The closing down and transfer of businesses or their
scrutiny used.55 For example, if a law is in an area where only rational basis review is applied, conversion into businesses "allowed" under the Ordinance have no reasonable relation to the
substantive due process is met so long as the law is rationally related to a legitimate government accomplishment of its purposes. Otherwise stated, the prohibition of the enumerated establishments
purpose.  But if it is an area where strict scrutiny is used, such as for protecting fundamental rights, will not per seprotect and promote the social and moral welfare of the community; it will not in itself
then the government will meet substantive due process only if it can prove that the law is necessary eradicate the alluded social ills of prostitution, adultery, fornication nor will it arrest the spread of
to achieve a compelling government purpose.56  sexual disease in Manila.

The police power granted to local government units must always be exercised with utmost observance Conceding for the nonce that the Ermita-Malate area teems with houses of ill-repute and
of the rights of the people to due process and equal protection of the law. Such power cannot be establishments of the like which the City Council may lawfully prohibit,65 it is baseless and
exercised whimsically, arbitrarily or despotically57 as its exercise is subject to a qualification, limitation insupportable to bring within that classification sauna parlors, massage parlors, karaoke bars, night
or restriction demanded by the respect and regard due to the prescription of the fundamental law, clubs, day clubs, super clubs, discotheques, cabarets, dance halls, motels and inns. This is not
particularly those forming part of the Bill of Rights. Individual rights, it bears emphasis, may be warranted under the accepted definitions of these terms. The enumerated establishments are lawful
adversely affected only to the extent that may fairly be required by the legitimate demands of public pursuits which are not per se offensive to the moral welfare of the community.
interest or public welfare.58 Due process requires the intrinsic validity of the law in interfering with the
rights of the person to his life, liberty and property.59 
That these are used as arenas to consummate illicit sexual affairs and as venues to further the illegal
prostitution is of no moment. We lay stress on the acrid truth that sexual immorality, being a human
Requisites for the valid exercise frailty, may take place in the most innocent of places that it may even take place in the substitute
of Police Power are not met establishments enumerated under Section 3 of the Ordinance.  If the flawed logic of

63
the Ordinance were to be followed, in the remote instance that an immoral sexual act transpires in a Liberty as guaranteed by the Constitution was defined by Justice Malcolm to include "the right to exist
church cloister or a court chamber, we would behold the spectacle of the City of Manila ordering the and the right to be free from arbitrary restraint or servitude. The term cannot be dwarfed into mere
closure of the church or court concerned.  Every house, building, park, curb, street or even vehicles freedom from physical restraint of the person of the citizen, but is deemed to embrace the right of
for that matter will not be exempt from the prohibition. Simply because there are no "pure" places man to enjoy the facilities with which he has been endowed by his Creator, subject only to such
where there are impure men. Indeed, even the Scripture and the Tradition of Christians churches restraint as are necessary for the common welfare."68 In accordance with this case, the rights of the
continually recall the presence and universality of sin in man's history.66  citizen to be free to use his faculties in all lawful ways; to live and work where he will; to earn his
livelihood by any lawful calling; and to pursue any avocation are all deemed embraced in the concept
of liberty.69 
The problem, it needs to be pointed out, is not the establishment, which by its nature cannot be said
to be injurious to the health or comfort of the community and which in itself is amoral, but the
deplorable human activity that may occur within its premises. While a motel may be used as a venue The U.S. Supreme Court in the case of Roth v. Board of Regents,70 sought to clarify the meaning of
for immoral sexual activity, it cannot for that reason alone be punished. It cannot be classified as a "liberty."  It said:
house of ill-repute or as a nuisance per se on a mere likelihood or a naked assumption. If that were
so and if that were allowed, then the Ermita-Malate area would not only be purged of its supposed
While the Court has not attempted to define with exactness the liberty. . . guaranteed [by
social ills, it would be extinguished of its soul as well as every human activity, reprehensible or not, in
the Fifth and Fourteenth Amendments], the term denotes not merely freedom from bodily
its every nook and cranny would be laid bare to the estimation of the authorities.
restraint but also the right of the individual to contract, to engage in any of the common
occupations of life, to acquire useful knowledge, to marry, establish a home and bring up
The Ordinance seeks to legislate morality but fails to address the core issues of morality. Try as children, to worship God according to the dictates of his own conscience, and generally to
the Ordinance may to shape morality, it should not foster the illusion that it can make a moral man enjoy those privileges long recognized…as essential to the orderly pursuit of happiness by
out of it because immorality is not a thing, a building or establishment; it is in the hearts of men. The free men. In a Constitution for a free people, there can be no doubt that the meaning of
City Council instead should regulate human conduct that occurs inside the establishments, but not to "liberty" must be broad indeed.
the detriment of liberty and privacy which are covenants, premiums and blessings of democracy.
In another case, it also confirmed that liberty protected by the due process clause includes personal
While petitioners' earnestness at curbing clearly objectionable social ills is commendable, they decisions relating to marriage, procreation, contraception, family relationships, child rearing, and
unwittingly punish even the proprietors and operators of "wholesome," "innocent" establishments. In education. In explaining the respect the Constitution demands for the autonomy of the person in
the instant case, there is a clear invasion of personal or property rights, personal in the case of those making these choices, the U.S. Supreme Court explained:
individuals desirous of owning, operating and patronizing those motels and property in terms of the
investments made and the salaries to be paid to those therein employed. If the City of Manila so
These matters, involving the most intimate and personal choices a person may make in a
desires to put an end to prostitution, fornication and other social ills, it can instead impose reasonable
lifetime, choices central to personal dignity and autonomy, are central to the liberty
regulations such as daily inspections of the establishments for any violation of the conditions of their
protected by the Fourteenth Amendment. At the heart of liberty is the right to define one's
licenses or permits; it may exercise its authority to suspend or revoke their licenses for these
own concept of existence, of meaning, of universe, and of the mystery of human life. Beliefs
violations;67 and it may even impose increased license fees. In other words, there are other means to
about these matters could not define the attributes of personhood where they formed under
reasonably accomplish the desired end.
compulsion of the State.71 

Means employed are


Persons desirous to own, operate and patronize the enumerated establishments under Section 1 of
constitutionally infirm
the Ordinancemay seek autonomy for these purposes. 

The Ordinance disallows the operation of sauna parlors, massage parlors, karaoke bars, beerhouses,
Motel patrons who are single and unmarried may invoke this right to autonomy to consummate their
night clubs, day clubs, super clubs, discotheques, cabarets, dance halls, motels and inns in the
bonds in intimate sexual conduct within the motel's premisesbe it stressed that their consensual
Ermita-Malate area. In Section 3 thereof, owners and/or operators of the enumerated establishments
sexual behavior does not contravene any fundamental state policy as contained in the Constitution.72  
are given three (3) months from the date of approval of the Ordinance within which "to wind up
Adults have a right to choose to forge such relationships with others in the confines of their own
business operations or to transfer to any place outside the Ermita-Malate area or convert said
private lives and still retain their dignity as free persons. The liberty protected by the Constitution
businesses to other kinds of business allowable within the area." Further, it states in Section 4 that in
allows persons the right to make this choice.73 Their right to liberty under the due process clause gives
cases of subsequent violations of the provisions of the Ordinance, the "premises of the erring
them the full right to engage in their conduct without intervention of the government, as long as they
establishment shall be closed and padlocked permanently."
do not run afoul of the law. Liberty should be the rule and restraint the exception.

It is readily apparent that the means employed by the Ordinance for the achievement of its purposes,
Liberty in the constitutional sense not only means freedom from unlawful government restraint; it
the governmental interference itself, infringes on the constitutional guarantees of a person's
must include privacy as well, if it is to be a repository of freedom. The right to be let alone is the
fundamental right to liberty and property.
beginning of all freedomit is the most comprehensive of rights and the right most valued by civilized
men.74 

64
The concept of liberty compels respect for the individual whose claim to privacy and interference magnitude, in most if not in all cases there must be an exercise of eminent domain and compensation
demands respect. As the case of Morfe v. Mutuc,75 borrowing the words of Laski, so very aptly stated: to support the act. While property may be regulated to a certain extent, if regulation goes too far it
will be recognized as a taking.82 
Man is one among many, obstinately refusing reduction to unity. His separateness, his
isolation, are indefeasible; indeed, they are so fundamental that they are the basis on which No formula or rule can be devised to answer the questions of what is too far and when regulation
his civic obligations are built. He cannot abandon the consequences of his isolation, which becomes a taking. In Mahon, Justice Holmes recognized that it was "a question of degree and
are, broadly speaking, that his experience is private, and the will built out of that experience therefore cannot be disposed of by general propositions." On many other occasions as well, the U.S.
personal to himself. If he surrenders his will to others, he surrenders himself. If his will is set Supreme Court has said that the issue of when regulation constitutes a taking is a matter of
by the will of others, he ceases to be a master of himself. I cannot believe that a man no considering the facts in each case. The Court asks whether justice and fairness require that the
longer a master of himself is in any real sense free. economic loss caused by public action must be compensated by the government and thus borne by
the public as a whole, or whether the loss should remain concentrated on those few persons subject
to the public action.83 
Indeed, the right to privacy as a constitutional right was recognized in Morfe, the invasion of which
should be justified by a compelling state interest. Morfe accorded recognition to the right to privacy
independently of its identification with liberty; in itself it is fully deserving of constitutional protection. What is crucial in judicial consideration of regulatory takings is that government regulation is a taking
Governmental powers should stop short of certain intrusions into the personal life of the citizen.76  if it leaves no reasonable economically viable use of property in a manner that interferes with
reasonable expectations for use.84 A regulation that permanently denies all economically beneficial or
productive use of land is, from the owner's point of view, equivalent to a "taking" unless principles of
There is a great temptation to have an extended discussion on these civil liberties but the Court
nuisance or property law that existed when the owner acquired the land make the use
chooses to exercise restraint and restrict itself to the issues presented when it should. The previous
prohibitable.85 When the owner of real property has been called upon to sacrifice all economically
pronouncements of the Court are not to be interpreted as a license for adults to engage in criminal
beneficial uses in the name of the common good, that is, to leave his property economically idle, he
conduct. The reprehensibility of such conduct is not diminished. The Court only reaffirms and
has suffered a taking.86 
guarantees their right to make this choice. Should they be prosecuted for their illegal conduct, they
should suffer the consequences of the choice they have made. That, ultimately, is their choice.
A regulation which denies all economically beneficial or productive use of land will require
compensation under the takings clause. Where a regulation places limitations on land that fall short of
Modality employed is
eliminating all economically beneficial use, a taking nonetheless may have occurred, depending on a
unlawful taking
complex of factors including the regulation's economic effect on the landowner, the extent to which
the regulation interferes with reasonable investment-backed expectations and the character of
In addition, the Ordinance is unreasonable and oppressive as it substantially divests the respondent of government action. These inquiries are informed by the purpose of the takings clause which is to
the beneficial use of its property.77 The Ordinance in Section 1 thereof forbids the running of the prevent the government from forcing some people alone to bear public burdens which, in all fairness
enumerated businesses in the Ermita-Malate area and in Section 3 instructs its owners/operators to and justice, should be borne by the public as a whole.87 
wind up business operations or to transfer outside the area or convert said businesses into allowed
businesses. An ordinance which permanently restricts the use of property that it can not be used for
A restriction on use of property may also constitute a "taking" if not reasonably necessary to the
any reasonable purpose goes beyond regulation and must be recognized as a taking of the property
effectuation of a substantial public purpose or if it has an unduly harsh impact on the distinct
without just compensation.78 It is intrusive and violative of the private property rights of individuals.
investment-backed expectations of the owner.88 

The Constitution expressly provides in Article III, Section 9, that "private property shall not be taken
The Ordinance gives the owners and operators of the "prohibited" establishments three (3) months
for public use without just compensation." The provision is the most important protection of property
from its approval within which to "wind up business operations or to transfer to any place outside of
rights in the Constitution. This is a restriction on the general power of the government to take
the Ermita-Malate area or convert said businesses to other kinds of business allowable within the
property. The constitutional provision is about ensuring that the government does not confiscate the
area." The directive to "wind up business operations" amounts to a closure of the establishment, a
property of some to give it to others. In part too, it is about loss spreading. If the government takes
permanent deprivation of property, and is practically confiscatory.  Unless the owner converts his
away a person's property to benefit society, then society should pay. The principal purpose of the
establishment to accommodate an "allowed" business, the structure which housed the previous
guarantee is "to bar the Government from forcing some people alone to bear public burdens which, in
business will be left empty and gathering dust. Suppose he transfers it to another area, he will
all fairness and justice, should be borne by the public as a whole.79 
likewise leave the entire establishment idle. Consideration must be given to the substantial amount of
money invested to build the edifices which the owner reasonably expects to be returned within a
There are two different types of taking that can be identified. A "possessory" taking occurs when the period of time. It is apparent that the Ordinance leaves no reasonable economically viable use of
government confiscates or physically occupies property. A "regulatory" taking occurs when the property in a manner that interferes with reasonable expectations for use.
government's regulation leaves no reasonable economically viable use of the property.80 
The second and third options to transfer to any place outside of the Ermita-Malate area or to
In the landmark case of Pennsylvania Coal v. Mahon,81 it was held that a taking also could be found if convert into allowed businessesare confiscatory as well. The penalty of permanent closure in cases
government regulation of the use of property went "too far."  When regulation reaches a certain
65
of subsequent violations found in Section 4 of the Ordinance is also equivalent to a "taking" of private sidewalk and there conduct themselves in a manner annoying to persons passing by." The ordinance
property. was nullified as it imposed no standard at all "because one may never know in advance what 'annoys
some people but does not annoy others.' "
The second option instructs the owners to abandon their property and build another one outside the
Ermita-Malate area.  In every sense, it qualifies as a taking without just compensation with an Similarly, the Ordinance does not specify the standards to ascertain which establishments "tend to
additional burden imposed on the owner to build another establishment solely from his coffers. The disturb the community," "annoy the inhabitants," and "adversely affect the social and moral welfare of
proffered solution does not put an end to the "problem," it merely relocates it. Not only is this the community." The cited case supports the nullification of the Ordinance for lack of comprehensible
impractical, it is unreasonable, onerous and oppressive. The conversion into allowed enterprises is standards to guide the law enforcers in carrying out its provisions.
just as ridiculous. How may the respondent convert a motel into a restaurant or a coffee shop, art
gallery or music lounge without essentially destroying its property? This is a taking of private property
Petitioners cannot therefore order the closure of the enumerated establishments without infringing the
without due process of law, nay, even without compensation.
due process clause. These lawful establishments may be regulated, but not prevented from carrying
on their business.  This is a sweeping exercise of police power that is a result of a lack of imagination
The penalty of closure likewise constitutes unlawful taking that should be compensated by the on the part of the City Council and which amounts to an interference into personal and private rights
government. The burden on the owner to convert or transfer his business, otherwise it will be closed which the Court will not countenance. In this regard, we take a resolute stand to uphold the
permanently after a subsequent violation should be borne by the public as this end benefits them as a constitutional guarantee of the right to liberty and property.
whole.
Worthy of note is an example derived from the U.S. of a reasonable regulation which is a far cry from
Petitioners cannot take refuge in classifying the measure as a zoning ordinance. A zoning ordinance, the ill-considered Ordinance enacted by the City Council.
although a valid exercise of police power, which limits a "wholesome" property to a use which can not
reasonably be made of it constitutes the taking of such property without just compensation.  Private
In FW/PBS, INC. v. Dallas,95 the city of Dallas adopted a comprehensive ordinance regulating "sexually
property which is not noxious nor intended for noxious purposes may not, by zoning, be destroyed
oriented businesses," which are defined to include adult arcades, bookstores, video stores, cabarets,
without compensation. Such principle finds no support in the principles of justice as we know them. 
motels, and theaters as well as escort agencies, nude model studio and sexual encounter centers.
The police powers of local government units which have always received broad and liberal
Among other things, the ordinance required that such businesses be licensed. A group of motel
interpretation cannot be stretched to cover this particular taking.
owners were among the three groups of businesses that filed separate suits challenging the
ordinance. The motel owners asserted that the city violated the due process clause by failing to
Distinction should be made between destruction from necessity and eminent domain.  It needs produce adequate support for its supposition that renting room for fewer than ten (10) hours resulted
restating that the property taken in the exercise of police power is destroyed because it is noxious or in increased crime and other secondary effects. They likewise argued than the ten (10)-hour limitation
intended for a noxious purpose while the property taken under the power of eminent domain is on the rental of motel rooms placed an unconstitutional burden on the right to freedom of association.
intended for a public use or purpose and is therefore "wholesome." 89 If it be of public benefit that a Anent the first contention, the U.S. Supreme Court held that the reasonableness of the legislative
"wholesome" property remain unused or relegated to a particular purpose, then certainly the public judgment combined with a study which the city considered, was adequate to support the city's
should bear the cost of reasonable compensation for the condemnation of private property for public determination that motels permitting room rentals for fewer than ten (10 ) hours should be included
use.90  within the licensing scheme. As regards the second point, the Court held that limiting motel room
rentals to ten (10) hours will have no discernible effect on personal bonds as those bonds that are
formed from the use of a motel room for fewer than ten (10) hours are not those that have played a
Further, the Ordinance fails to set up any standard to guide or limit the petitioners' actions. It in no
critical role in the culture and traditions of the nation by cultivating and transmitting shared ideals and
way controls or guides the discretion vested in them. It provides no definition of the establishments
beliefs.
covered by it and it fails to set forth the conditions when the establishments come within its ambit of
prohibition. The Ordinance confers upon the mayor arbitrary and unrestricted power to close down
establishments. Ordinances such as this, which make possible abuses in its execution, depending The ordinance challenged in the above-cited case merely regulated the targeted businesses. It
upon no conditions or qualifications whatsoever other than the unregulated arbitrary will of the city imposed reasonable restrictions; hence, its validity was upheld.
authorities as the touchstone by which its validity is to be tested, are unreasonable and invalid.
The Ordinance should have established a rule by which its impartial enforcement could be secured.91 
The case of Ermita Malate Hotel and Motel Operators Association, Inc. v. City Mayor of Manila ,96 it
needs pointing out, is also different from this case in that what was involved therein was a measure
Ordinances placing restrictions upon the lawful use of property must, in order to be valid and which regulated the mode in which motels may conduct business in order to put an end to practices
constitutional, specify the rules and conditions to be observed and conduct to avoid; and must not which could encourage vice and immorality. Necessarily, there was no valid objection on due process
admit of the exercise, or of an opportunity for the exercise, of unbridled discretion by the law or equal protection grounds as the ordinance did not prohibit motels. The Ordinance in this case
enforcers in carrying out its provisions.92  however is not a regulatory measure but is an exercise of an assumed power to prohibit.97 

Thus, in Coates v. City of Cincinnati,93 as cited in People v. Nazario,94      the U.S. Supreme Court
struck down an ordinance that had made it illegal for "three or more persons to assemble on any

66
The foregoing premises show that the Ordinance is an unwarranted and unlawful curtailment of 4) It must apply equally to all members of the class.104 
property and personal rights of citizens. For being unreasonable and an undue restraint of trade, it
cannot, even under the guise of exercising police power, be upheld as valid.
In the Court's view, there are no substantial distinctions between motels, inns, pension houses,
hotels, lodging houses or other similar establishments. By definition, all are commercial
B.  The Ordinance violates Equal establishments providing lodging and usually meals and other services for the public. No reason exists
Protection Clause for prohibiting motels and inns but not pension houses, hotels, lodging houses or other similar
establishments. The classification in the instant case is invalid as similar subjects are not similarly
treated, both as to rights conferred and obligations imposed. It is arbitrary as it does not rest on
Equal protection requires that all persons or things similarly situated should be treated alike, both as
substantial distinctions bearing a just and fair relation to the purpose of the Ordinance.
to rights conferred and responsibilities imposed. Similar subjects, in other words, should not be
treated differently, so as to give undue favor to some and unjustly discriminate against others.98 The
guarantee means that no person or class of persons shall be denied the same protection of laws which The Court likewise cannot see the logic for prohibiting the business and operation of motels in the
is enjoyed by other persons or other classes in like circumstances. 99 The "equal protection of the laws Ermita-Malate area but not outside of this area.  A noxious establishment does not become any less
is a pledge of the protection of equal laws." 100 It limits governmental discrimination. The equal noxious if located outside the area.
protection clause extends to artificial persons but only insofar as their property is concerned.101 
The standard "where women are used as tools for entertainment" is also discriminatory as
The Court has explained the scope of the equal protection clause in this wise: prostitutionone of the hinted ills the Ordinance aims to banishis not a profession exclusive to
women. Both men and women have an equal propensity to engage in prostitution. It is not any less
grave a sin when men engage in it. And why would the assumption that there is an ongoing immoral
… What does it signify? To quote from J.M. Tuason & Co. v. Land Tenure Administration:
activity apply only when women are employed and be inapposite when men are in harness? This
"The ideal situation is for the law's benefits to be available to all, that none be placed outside
discrimination based on gender violates equal protection as it is not substantially related to important
the sphere of its coverage. Only thus could chance and favor be excluded and the affairs of
government objectives.105 Thus, the discrimination is invalid.
men governed by that serene and impartial uniformity, which is of the very essence of the
idea of law." There is recognition, however, in the opinion that what in fact exists "cannot
approximate the ideal. Nor is the law susceptible to the reproach that it does not take into Failing the test of constitutionality, the Ordinance likewise failed to pass the test of consistency with
account the realities of the situation. The constitutional guarantee then is not to be given a prevailing laws.
meaning that disregards what is, what does in fact exist. To assure that the general welfare
be promoted, which is the end of law, a regulatory measure may cut into the rights to liberty
C.    The Ordinance is repugnant
and property. Those adversely affected may under such circumstances invoke the equal
to general laws; it is ultra vires
protection clause only if they can show that the governmental act assailed, far from being
inspired by the attainment of the common weal was prompted by the spirit of hostility, or at
the very least, discrimination that finds no support in reason." Classification is thus not ruled The Ordinance is in contravention of the Code as the latter merely empowers local government units
out, it being sufficient to quote from the Tuason decision anew "that the laws operate equally to regulate, and not prohibit, the establishments enumerated in Section 1 thereof.
and uniformly on all persons under similar circumstances or that all persons must be treated
in the same manner, the conditions not being different, both in the privileges conferred and The power of the City Council to regulate by ordinances the establishment, operation, and
the liabilities imposed. Favoritism and undue preference cannot be allowed. For the principle maintenance of motels, hotels and other similar establishments is found in Section 458 (a) 4 (iv),
is that equal protection and security shall be given to every person under circumstances which provides that:
which, if not identical, are analogous. If law be looked upon in terms of burden or charges,
those that fall within a class should be treated in the same fashion, whatever restrictions cast
on some in the group equally binding on the rest.102  Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod,
as the legislative body of the city, shall enact ordinances, approve resolutions and
appropriate funds for the general welfare of the city and its inhabitants pursuant to Section
Legislative bodies are allowed to classify the subjects of legislation. If the classification is reasonable, 16 of this Code and in the proper exercise of the corporate powers of the city as provided for
the law may operate only on some and not all of the people without violating the equal protection under Section 22 of this Code, and shall:
clause.103 The classification must, as an indispensable requisite, not be arbitrary. To be valid, it must
conform to the following requirements:
.  .  .

1) It must be based on substantial distinctions.


(4) Regulate activities relative to the use of land, buildings and structures within the city in
order to promote the general welfare and for said purpose shall:
2) It must be germane to the purposes of the law.

.  .  .
3) It must not be limited to existing conditions only.
67
(iv) Regulate the establishment, operation and maintenance of cafes, restaurants, (A)s a general rule when a municipal corporation is specifically given authority or power to
beerhouses, hotels, motels, inns, pension houses, lodging houses, and other similar regulate or to license and regulate the liquor traffic, power to prohibit is impliedly
establishments, including tourist guides and transports .  .  .  . withheld.109 

While its power to regulate the establishment, operation and maintenance of any entertainment or These doctrines still hold contrary to petitioners' assertion 110 that they were modified by the Code
amusement facilities, and to prohibit certain forms of amusement or entertainment is provided under vesting upon City Councils prohibitory powers.
Section 458 (a) 4 (vii) of the Code, which reads as follows:
Similarly, the City Council exercises regulatory powers over public dancing schools, public dance halls,
Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, sauna baths, massage parlors, and other places for entertainment or amusement as found in the first
as the legislative body of the city, shall enact ordinances, approve resolutions and clause of Section 458 (a) 4 (vii). Its powers to regulate, suppress and suspend "such other events or
appropriate funds for the general welfare of the city and its inhabitants pursuant to Section activities for amusement or entertainment, particularly those which tend to disturb the community or
16 of this Code and in the proper exercise of the corporate powers of the city as provided for annoy the inhabitants" and to "prohibit certain forms of amusement or entertainment in order to
under Section 22 of this Code, and shall: protect the social and moral welfare of the community" are stated in the second and third clauses,
respectively of the same Section.  The several powers of the City Council as provided in Section 458
(a) 4 (vii) of the Code, it is pertinent to emphasize, are separated by semi-colons (;), the use of
.  .  .
which indicates that the clauses in which these powers are set forth are independent of each other
albeit closely related to justify being put together in a single enumeration or paragraph. 111 These
(4) Regulate activities relative to the use of land, buildings and structures within the city in powers, therefore, should not be confused, commingled or consolidated as to create a conglomerated
order to promote the general welfare and for said purpose shall: and unified power of regulation, suppression and prohibition.112 

.  .  . The Congress unequivocably specified the establishments and forms of amusement or entertainment
subject to regulation among which are beerhouses, hotels, motels, inns, pension houses, lodging
(vii) Regulate the establishment, operation, and maintenance of any entertainment houses, and other similar establishments (Section 458 (a) 4 (iv)), public dancing schools, public
or amusement facilities, including theatrical performances, circuses, billiard pools, dance halls, sauna baths, massage parlors, and other places for entertainment or amusement
public dancing schools, public dance halls, sauna baths, massage parlors, and other (Section 458 (a) 4 (vii)). This enumeration therefore cannot be included as among "other events or
places for entertainment or amusement; regulate such other events or activities for activities for amusement or entertainment, particularly those which tend to disturb the community or
amusement or entertainment, particularly those which tend to disturb the annoy the inhabitants" or "certain forms of amusement or entertainment" which the City Council may
community or annoy the inhabitants, or require the suspension or suppression of suspend, suppress or prohibit.
the same; or, prohibit certain forms of amusement or entertainment in order to
protect the social and moral welfare of the community. The rule is that the City Council has only such powers as are expressly granted to it and those which
are necessarily implied or incidental to the exercise thereof.  By reason of its limited powers and the
Clearly, with respect to cafes, restaurants, beerhouses, hotels, motels, inns, pension houses, lodging nature thereof, said powers are to be construed strictissimi juris and any doubt or ambiguity arising
houses, and other similar establishments, the only power of the City Council to legislate relative out of the terms used in granting said powers must be construed against the City
thereto is to regulate them to promote the general welfare. The Code still withholds from cities the Council.113 Moreover, it is a general rule in statutory construction that the express mention of one
power to suppress and prohibit altogether the establishment, operation and maintenance of such person, thing, or consequence is tantamount to an express exclusion of all others. Expressio unius est
establishments. It is well to recall the rulings of the Court in Kwong Sing v. City of Manila106 that: exclusio alterium. This maxim is based upon the rules of logic and the natural workings of human
mind. It is particularly applicable in the construction of such statutes as create new rights or
remedies, impose penalties or punishments, or otherwise come under the rule of strict
The word "regulate," as used in subsection (l), section 2444 of the Administrative Code, construction.114 
means and includes the power to control, to govern, and to restrain; but "regulate" should
not be construed as synonymous with "suppress" or "prohibit." Consequently, under the
power to regulate laundries, the municipal authorities could make proper police regulations The argument that the City Council is empowered to enact the Ordinance by virtue of the general
as to the mode in which the employment or business shall be exercised.107  welfare clause of the Code and of Art. 3, Sec. 18 (kk) of the Revised Charter of Manila is likewise
without merit. On the first point, the ruling of the Court in People v. Esguerra,115 is instructive. It held
that:
And in People v. Esguerra,108 wherein the Court nullified an ordinance of the Municipality of Tacloban
which prohibited the selling, giving and dispensing of liquor ratiocinating that the municipality is
empowered only to regulate the same and not prohibit. The Court therein declared that: The powers conferred upon a municipal council in the general welfare clause, or section 2238
of the Revised Administrative Code, refers to matters not covered by the other provisions of
the same Code, and therefore it can not be applied to intoxicating liquors, for the power to
regulate the selling, giving away and dispensing thereof is granted specifically by section
2242 (g) to municipal councils. To hold that, under the general power granted by section
68
2238,  a municipal council may enact the ordinance in question, notwithstanding the .  .  .
provision of section 2242 (g), would be to make the latter superfluous and nugatory,
because the power to prohibit, includes the power to regulate, the selling, giving away and
(v) Enact ordinances intended to prevent, suppress and impose  appropriate penalties for
dispensing of intoxicating liquors.
habitual drunkenness in public places, vagrancy, mendicancy,  prostitution, establishment
and maintenance of      houses of ill repute, gambling and other prohibited games of chance, 
On the second point, it suffices to say that the Code being a later expression of the legislative will fraudulent devices and ways to obtain money or property, drug addiction, maintenance of
must necessarily prevail and override the earlier law, the Revised Charter of Manila. Legis posteriores drug dens, drug pushing, juvenile delinquency, the printing, distribution or exhibition of
priores contrarias abrogant, or later statute repeals prior ones which are repugnant thereto. As obscene or pornographic materials or publications, and such other activities inimical  to the
between two laws on the same subject matter, which are irreconcilably inconsistent, that which is welfare and morals of the inhabitants of the city; 
passed later prevails, since it is the latest expression of legislative will.116 If there is an inconsistency
or repugnance between two statutes, both relating to the same subject matter, which cannot be
.  .  .
removed by any fair and reasonable method of interpretation, it is the latest expression of the
legislative will which must prevail and override the earlier.117 
If it were the intention of Congress to confer upon the City Council the power to prohibit the
establishments enumerated in Section 1 of the Ordinance, it would have so declared in uncertain
Implied repeals are those which take place when a subsequently enacted law contains provisions
terms by adding them to the list of the matters it may prohibit under the above-quoted Section.
contrary to those of an existing law but no provisions expressly repealing them. Such repeals have
The Ordinance now vainly attempts to lump these establishments with houses of ill-repute and
been divided into two general classes: those which occur where an act is so inconsistent or
expand the City Council's powers in the second and third clauses of Section 458 (a) 4 (vii) of the Code
irreconcilable with an existing prior act that only one of the two can remain in force and those which
in an effort to overreach its prohibitory powers. It is evident that these establishments may only be
occur when an act covers the whole subject of an earlier act and is intended to be a substitute
regulated in their establishment, operation and maintenance.
therefor. The validity of such a repeal is sustained on the ground that the latest expression of the
legislative will should prevail.118 
It is important to distinguish the punishable activities from the establishments themselves. That these
establishments are recognized legitimate enterprises can be gleaned from another Section of the
In addition, Section 534(f) of the Code states that "All general and special laws, acts, city charters,
Code. Section 131 under the Title on Local Government Taxation expressly mentioned proprietors or
decrees, executive orders, proclamations and administrative regulations, or part or parts thereof
operators of massage clinics, sauna, Turkish and Swedish baths, hotels, motels and lodging houses as
which are inconsistent with any of the provisions of this Code are hereby repealed or modified
among the "contractors" defined in paragraph (h) thereof.  The same Section also defined
accordingly." Thus, submitting to petitioners' interpretation that the Revised Charter of Manila
"amusement" as a "pleasurable diversion and entertainment," "synonymous to relaxation, avocation,
empowers the City Council to prohibit motels, that portion of the Charter stating such must be
pastime or fun;" and "amusement places" to include "theaters, cinemas, concert halls, circuses and
considered repealed by the Code as it is at variance with the latter's provisions granting the City
other places of amusement where one seeks admission to entertain oneself by seeing or viewing the
Council mere regulatory powers.
show or performances." Thus, it can be inferred that the Code considers these establishments as
legitimate enterprises and activities. It is well to recall the maxim reddendo singula singulis which
It is well to point out that petitioners also cannot seek cover under the general welfare clause means that words in different parts of a statute must be referred to their appropriate connection,
authorizing the abatement of nuisances without judicial proceedings. That tenet applies to a giving to each in its place, its proper force and effect, and, if possible, rendering none of them useless
nuisance per se, or one which affects the immediate safety of persons and property and may be or superfluous, even if strict grammatical construction demands otherwise. Likewise, where words
summarily abated under the undefined law of necessity. It can not be said that motels are injurious to under consideration appear in different sections or are widely dispersed throughout an act the same
the rights of property, health or comfort of the community. It is a legitimate business. If it be a principle applies.120 
nuisance per accidens it may be so proven in a hearing conducted for that purpose. A motel is not per
se a nuisance warranting its summary abatement without judicial intervention.119 
Not only does the Ordinance contravene the Code, it likewise runs counter to the provisions of P.D.
499. As correctly argued by MTDC, the statute had already converted the residential Ermita-Malate
Notably, the City Council was conferred powers to prevent and prohibit certain activities and area into a commercial area. The decree allowed the establishment and operation of all kinds of
establishments in another section of the Code which is reproduced as follows:  commercial establishments except warehouse or open storage depot, dump or yard, motor repair
shop, gasoline service station, light industry with any machinery or funeral establishment. The rule is
that for an ordinance to be valid and to have force and effect, it must not only be within the powers of
Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod,
the council to enact but the same must not be in conflict with or repugnant to the general law. 121 As
as the legislative body of the city, shall enact ordinances, approve resolutions and
succinctly illustrated in Solicitor General v. Metropolitan Manila Authority:122 
appropriate funds for the general welfare of the city and its inhabitants pursuant to Section
16 of this Code and in the proper exercise of the corporate powers of the city as provided for
under Section 22 of this Code, and shall: The requirement that the enactment must not violate existing law explains itself. Local
political subdivisions are able to legislate only by virtue of a valid delegation of legislative
power from the national legislature (except only that the power to create their own sources
(1) Approve ordinances and pass resolutions necessary for an efficient and effective city
of revenue and to levy taxes is conferred by the Constitution itself). They are mere agents
government, and in this connection, shall:
vested with what is called the power of subordinate legislation. As delegates of the Congress,
69
the local government units cannot contravene but must obey at all times the will of their
principal. In the case before us, the enactment in question, which are merely local in origin
cannot prevail against the decree, which has the force and effect of a statute.123 

Petitioners contend that the Ordinance enjoys the presumption of validity. While this may be the rule,
it has already been held that although the presumption is always in favor of the validity or
reasonableness of the ordinance, such presumption must nevertheless be set aside when the
invalidity or unreasonableness appears on the face of the ordinance itself or is established by proper
evidence. The exercise of police power by the local government is valid unless it contravenes the
fundamental law of the land, or an act of the legislature, or unless it is against public policy or is
unreasonable, oppressive, partial, discriminating or in derogation of a common right.124 

Conclusion

All considered, the Ordinance invades fundamental personal and property rights and impairs personal
privileges. It is constitutionally infirm. The Ordinance contravenes statutes; it is discriminatory and
[G.R. NO. 142359. May 25, 2004]
unreasonable in its operation; it is not sufficiently detailed and explicit that abuses may attend the
enforcement of its sanctions. And not to be forgotten, the City Council under the Code had no power
to enact the Ordinance and is therefore ultra vires, null and void.

Concededly, the challenged Ordinance was enacted with the best of motives and shares the concern PASONG BAYABAS FARMERS ASSOCIATION, INC., represented by DOMINGO BANAAG, JR.,
of the public for the cleansing of the Ermita-Malate area of its social sins. Police power legislation of President; BERNARDO POBLETE, Vice-President, and its Members, petitioners, vs. The
such character deserves the full endorsement of the judiciary we reiterate our support for it. But Honorable COURT OF APPEALS, CREDITO ASIATIC, INC., ERNESTO TANCHI, SR., GEN.
inspite of its virtuous aims, the enactment of the Ordinance has no statutory or constitutional DIONISIO OJEDA (deceased), ELENA P. BIGAY, and LANRICO MINISTERIO, respondents.
authority to stand on. Local legislative bodies, in this case, the City Council, cannot prohibit the
operation of the enumerated establishments under Section 1 thereof or order their transfer or
conversion without infringing the constitutional guarantees of due process and equal protection of
laws not even under the guise of police power.
[G.R. No. 142980. May 25, 2004]

WHEREFORE, the Petition is hereby DENIED and the decision of the Regional Trial Court declaring
the Ordinancevoid is AFFIRMED.  Costs against petitioners.

DEPARTMENT OF AGRARIAN REFORM (DEPARTMENT OF AGRARIAN REFORM


SO ORDERED. ADJUDICATION BOARD), petitioners, vs. The Honorable COURT OF APPEALS,
CREDITO ASIATIC, INC., ERNESTO TANCHI, SR., GEN. DIONISIO OJEDA (deceased),
ELENA P. BIGAY, and LANRICO MINISTERIO, respondents.

DECISION

CALLEJO, SR., J.:

Before the Court are petitions for review on certiorari of the Decision[1] of the Court of Appeals,
in C.A.-G.R. SP No. 49363, which set aside and reversed the decision of the Department of Agrarian
Reform Adjudication Board (DARAB), in DARAB Case No. 5191, and reinstated the decision of the
Provincial Agrarian Reform Adjudication Board (PARAD) of Trece Martirez City, in DARAB Case No. CA-
0285-95 which, in turn, ordered the dismissal of the complaint for Maintenance for Peaceful
Possession and Cultivation with Damages with Prayer for the Issuance of a Temporary Restraining
Order/Preliminary Injunction of petitioner Pasong Bayabas Farmers Association, Inc. (PBFAI).

70
The Antecedents for each of the 728 lots were issued by the Register of Deeds of Cavite to and in the name of the CAI
on September 20, 1977.

Meanwhile, the CAI secured a locational clearance for the project from the Human Settlements
Sometime in 1964, Lakeview Development Corporation (LDC, for brevity) bought a parcel of
Regulatory Commission (HSRC).[8] Although the Municipal Council of Carmona had already approved
land with an area of 753,610 square meters (75.3610 hectares) located at Barrio Kabilang-Baybay,
the conversion of the property into a residential area, nevertheless, the CAI filed an application under
Carmona, Cavite,[2] covered by Transfer Certificate of Titles (TCT) No. T- 91584 and T-91585. On
Republic Act No. 3844 with the Office of the Minister of Agrarian Reform for the conversion of a
September 20, 1977, the aforesaid titles were cancelled by TCT No. T-62972 issued to and in the
portion of the 75-hectare property consisting of 35.80 hectares covered by TCT No. 62972 located in
name of the LDCs successor, the Credito Asiatic, Incorporated (CAI).[3] The property was subsequently
Barrio Kabilang-Baybay, Carmona, Cavite, from agricultural to residential. The property was to be
subdivided into two parcels of land, one of which was covered by TCT No. 116658, with an area of
used for the Hakone Housing Project. The Minister referred the matter to the Regional Director for
365,753 square meters, and the other covered by TCT No. 116659 with an area of 387,853 square
investigation and recommendation and to the Ministry of Local Government and Community
meters.[4]
Development. On July 3, 1979, then Minister of Agrarian Reform Conrado F. Estrella issued an Order
Meanwhile, the LDC/CAI undertook to develop its 75-hectare property into a residential and granting the petition and approved the conversion of the 35.80 hectare portion of TCT-62972 into a
industrial estate, where industrial sites and a low cost housing project inceptually called the Tamanli residential subdivision, pursuant to Rep. Act No. 3844, as amended. In so doing, it took into account
Housing Project would be established. The LDC applied with the Municipal Council of Carmona for an the resolution of the Municipal Council of Carmona, the recommendation of the Regional Director of
ordinance approving the zoning and the subdivision of the property. The subdivision plan was referred the Ministry of Agrarian Reform, the clearance from the HSRC as well as the Ministry of Local
by the council to the National Planning Commission as mandated by Administrative Order No. 152, Government and Community Development. The order in part reads:
Series of 1968. The Commission approved the plan and on May 30, 1976, the Tanggapan Ng
Sangguniang Bayan ng Karmona (Municipal Council of Carmona) approved Kapasiyahang Bilang Considering the parcel of land to be not covered by P.D. 27, it being untenanted and not devoted to
30, granting the application and affirming the project. The resolution reads: the production of palay and/or corn as reported by the Agrarian Reform Team Leader concerned and
favorably recommended for conversion by him and further, by the Regional Director for Region IV,
Kapasiyahang Bilang 30 Pasig, Metro Manila, and considering further, that the parcel of land subject hereof was found to be
suitable for conversion to residential subdivision by the Ministry of Local Government and Community
Development and considering finally, that the herein petitioner was issued a locational clearance by
Sapagkat, ang TAMANLI HOUSING PROJECT at LAKEVIEW DEVELOPMENT CORP. ay nagharap ng the Human Settlements Regulatory Commission, the instant request of the petitioner is hereby
kanilang kahilingan dito sa ating Kapulungan, sa pamamagitan ni G. BENJAMIN F. GOMEZ, Chief, GRANTED pursuant to the provisions of R.A. 3844, as amended, and P.D. 815.[9]
Physical Environmental Planning Service ng DLGCD, upang makapagpatayo sila ng murang pabahay
sa may Lote Blg. E-Psd-11882, na nasa Bo. Cabilang Baybay ng bayang ito at Lote Blg. 4 (LRC) PCS
15453 saklaw ng bayang ito, ayon sa pagkakasunod-sunod; The grant was, however, subjected to the fulfillment of the following conditions:

SAPAGKAT, ang bagay na ito ay makatutulong ng malaki sa ating mga kababayan, dahil sa ito ay 1. Physical development shall commence within one (1) year from receipt hereof;
nagbibigay ng murang pabahay;
2. A setback of three (3) meters measured from the property lines to the edge of the
SAPAGKAT, DAHIL DITO, sa mungkahi ni G. DOMINADOR ESPIRITU na pinangalawahan ni G. normal high waterline of the Pasong Bayabas and Patayod Rivers shall be observed
MELQUIADES MAHABO, ay pinagtibay, tulad nang itoy pinagtitibay, na pagtibayin ang kahilingan ng pursuant to the Water Code (P.D. 705);
Tamanli Housing Project at Lakeview Development Corp. na makapaglagay ng murang pabahay dito
sa ating bayan, sa isang pasubaling ang mga ito ay kailangang pumailalim sa hinihingi ng 3. Applicant-proponent shall undertake flood protective measures such as the construction
Administrative Order No. 152, S-1968 ng Pangulo ng Bansang Pilipinas at sa umiiral ng mga kautusan of rip-rap walls or terracing and cribbing along the river banks to avoid erosion and
at patakaran ng ating Pamahalaang Pambansa at Pamahalaang Pambayan.[5] flood;

Subsequently, after a consolidated survey was approved by the Bureau of Lands, the lots were 4. Clearance from the Laguna Lake Development Authority shall be secured since the
subdivided and the aforesaid titles were cancelled. TCT Nos. 144149, 144150 and T-144151 were proposed project is within the Laguna Lake Basin; and
issued in lieu of the said titles.[6]

The CAI embarked on the development of the housing project into three phases: First Phase, the 5. A permit to operate from the National Pollution Control Commission shall be secured and
Hakone Subdivision; Second Phase, the Sunshine Village & Casa de Monteverde; and, Third Phase, Anti-Pollution laws (R.A. 3981, P.D. 984 and others) shall be strictly observed.
the Mandarin Homes.[7] The project was registered with the National Housing Authority (NHA) as
required by Presidential Decree No. 957 which issued, on July 7, 1977, a license in favor of the LDC to Failure, however, to comply with the aforestated terms and conditions, this Ministry shall consider
sell the subdivision lots. such violations as sufficient ground for the cancellation of the permit-order and this Ministry by reason
The property was subdivided into 728 residential lots per the consolidation subdivision plan thereof may take any or all course of action mentioned in the Memorandum-Agreement between this
approved by the Bureau of Lands, each with an average area of 240 square meters. Separate titles Ministry, the Ministry of Local Government and Community Development and the Human Settlements

71
Regulatory Commission in addition to the penalties provided for in Presidential Decree 815, if so by reason of which the plaintiffs suffered actual damages. Furthermore, the plaintiffs alleged that the
applicable.[10] bulldozing was done without any permit from the concerned public authorities.

The plaintiffs, thus, prayed that a temporary restraining order be issued against the CAI from
On March 14, 1980, the Sangguniang Panlalawigan ng Cavite (Provincial Board of Cavite) passed continuing with the bulldozing of the property, and that after due hearing, judgment be rendered in
Resolution No. 40 declaring the midland areas composed of Carmona, Dasmarias, parts of Silang and their favor, ordering the defendants to refrain from implementing the July 3, 1979 Order of Agrarian
Trece Martirez (where the subject property is situated) and parts of Imus, as industrial areas. Reform Minister Estrella.[18]
[11]
 Under Batas Pambansa Blg. 76, approved on June 13, 1980, the resettlement areas under the
administration of the NHA in the barangays of San Gabriel, San Jose and a portion of Cabilang In its answer to the complaint, the CAI admitted its ownership of the 753,610 square meter
Baybay, all in the Municipality of Carmona, were separated from the said municipality and constituted property covered and described under TCT No. 62972 and the issuance of the Order of Conversion of
into a new and independent municipality known as General Mariano Alvarez (GMA), Cavite. [12] In the 35.8 hectare portion thereof. However, it denied that it allowed the plaintiffs to possess and
1983, Asiatic Development Corporation (ADC), a sister company of CAI, started developing the cultivate the landholding with fixed rentals therefor.[19] The CAI prayed that the prayer for preliminary
property located in GMA covered by TCT No. 144150 into a residential housing project, called the injunction be denied and that judgment be issued dismissing the complaint and absolving it from any
Sunshine Village Phase IV (originally Hakone) with an area of 20.05 hectares. The ADC also secured liability. It counterclaimed for the amount paid by it to E.M. Aragon Enterprises for expenses for the
in 1983[13] a preliminary approval and locational clearance from the HSRC for Sunshine Village Phase rent of the bulldozer and moral damages.[20]
IV.[14]
Meanwhile, the CAI and six of the fourteen plaintiffs, namely, Medy Vinzon, Luz Alvarez,
The CAI also secured the following for its Hakone Housing Project: Godofredo Inciong, Bernardo Poblete, Estelita Gaut and Victoria Valerio, entered into a compromise
agreement whereby the defendant donated parcels of land in consideration of the execution of deeds
1. HLURB License to Sell No. 0613 on November 7, 1983 of quitclaims and waivers. Conformably to the said agreement, the plaintiffs executed separate deeds
of quitclaim in favor of the CAI over the portion of the property which they claimed they
occupied. The six plaintiffs filed a Motion to Dismiss the complaint on June 19, 1989.[21] On June 20,
2. HSRC Development Permit on April 11, 1984 1989, the RTC of Cavite issued an Order dismissing the complaint but only insofar as the plaintiffs
Vinzon, Alvarez, Inciong, Poblete, Gaut and Valerio were concerned.[22] With respect to the other eight
3. HLURB Preliminary Approval and Locational Clearance on November 11, 1985 (8) plaintiffs, the court proceeded with the scheduled hearing.

The civil case notwithstanding, the CAI decided to proceed with the third phase of its project. It
4. HSRC Preliminary Approval and Locational Clearance on November 17, 1983 developed its eleven-hectare property into a residential property called the Mandarin Homes. The CAI
applied for and was granted a separate Order of Conversion on January 2, 1990 by the Department of
5. HSRC Certificate of Registration No. 1069 on February 1, 1985 Agrarian Reform (DAR).[23] In 1991, the CAI started selling the houses in its Mandarin Homes Project.
[24]

6. HSRC License to Sell No. 1053 on March 18, 1985.[15] In the meantime, the remaining plaintiffs in Civil Case No. BCV-87-13 entered into a
compromise agreement in which the CAI executed Deeds of Donation[25] in their favor over parcels of
land.The said plaintiffs, in turn, executed quitclaims[26] and waivers over the portions of the property
In 1987, the CAI decided to continue with the development of its Hakone Housing Project and
which they claimed they occupied. Thereafter, the plaintiffs and the CAI filed a motion to dismiss the
contracted with E.M. Aragon Enterprises for the bulldozing of the property. However, the project was
complaint. The trial court issued an Order granting the motion and dismissing the complaint on June
stymied by a Complaint for Damages with Prayer for Temporary Restraining Order and Preliminary
20, 1991.[27] Consequently, all the plaintiffs were issued separate titles over the parcels of land
Injunction filed on May 22, 1987 against the CAI in the Regional Trial Court of Cavite. [16] The case was
donated to them by the CAI which were declared, for taxation purposes, in the names of the latter.[28]
docketed as Civil Case No. BCV-87-13 and was raffled to Branch 19.[17]
With the settlement of the civil case, the CAI continued with its development of the rest of the
The plaintiffs alleged, inter alia, that while the defendant CAI was the owner of the 75.36-
Hakone Housing Project by causing a survey of the property. However, the CAI was stymied anew
hectare land covered by TCT-62972, they were the actual tillers of the land. The defendant had
when, on November 25, 1992, a Petition for Compulsory Coverage under Rep. Act No. 6657,
surreptitiously applied for the conversion of the 35.8-hectare portion of the aforesaid property from
otherwise known as the Comprehensive Agrarian Reform Law (CARL) was filed before the DAR by
agricultural to residential and the same was granted by the Ministry of Agrarian Reform, as can be
seventeen (17) individuals.[29] They alleged that they were farmers of Bo. 14, Pasong Bayabas River,
gleaned from the July 3, 1979 Order of Agrarian Reform Minister Estrella. According to the plaintiffs,
Barangay F. De Castro, GMA, Cavite.[30] The petitioners claimed that since 1961, they had been
they came to know of the conversion only in January 1987. Notwithstanding the issuance of the order
occupying a parcel of public agricultural land originally owned by General Dionisio Ojeda with an area
of conversion, Ramie Cabusbusan, the representative of the CAI, allowed them to continue cultivating
of twenty-seven hectares, more or less, adjacent to Pasong Bayabas River. They tilled the said
the aforementioned property. They were, however, required to pay a rental of P400 a year per
agricultural lands and planted it with rice, corn, vegetables, root crops, fruit trees and raised small
hectare. They paid the rental and continued to occupy and till the aforesaid property pursuant to the
livestock for daily survival.[31]
agreement. On October 28, 1986 and November 11, 1986, the plaintiffs, together with other tillers of
the land, met Cabusbusan at the Municipal Branch of the then Ministry of Agrarian Reform and The petitioners requested that the DAR order an official survey of the aforesaid agricultural
reached an agreement that the plaintiffs would remain in the peaceful possession of their lands. Pending resolution of their petition, the petitioners and twenty (20) others banded together and
farmholdings. Notwithstanding such agreement, the defendant ordered the bulldozing of the property,

72
formed a group called Pasong Bayabas Farmers Association, Inc. (PBFAI) affiliated with Kalipunan ng P50,000.00 in reimbursement of litigation expenses.
Samahan ng Mamamayan, Inc. (KASAMA).[32]

On June 10, 1994, Domingo Banaag, in his capacity as President of PBFAI, filed a petition for 6. That the Defendants pay for the costs of this suit; and
compulsory coverage of a portion of the CAI property covered by TCT No. 91585,[33] with an area of
47 hectares under Rep. Act No. 6657. On August 18, 1994, Legal Officer Maria Laarni N. Morallos of 7. That other reliefs and remedies be afforded to the Plaintiffs as may be just and equitable
the DAR, in her Memorandum to Regional Director Percival C. Dalugdug, reported that the Municipal under the premises.[39]
Agrarian Reform Office (MARO) had taken preliminary steps for the compulsory coverage of the
property and, in fact, had interviewed its occupants. The processing was stalled, however, because
On October 27, 1995, Provincial Adjudicator Barbara P. Tan issued a Temporary Restraining
documents such as the titles and tax declarations covering the property had not yet been submitted,
Order worded as follows:
and the formal application had yet to be made by the petitioners. [34] She recommended that the
petition be indorsed to the MARO Office. Pending the resolution of the petition of the PBFAI, the CAI
decided to continue with its Hakone Housing Project and ordered a survey of the property on October WHEREFORE, premises considered let a TEMPORARY RESTRAINING ORDER hereby issue to take effect
6, 1995. The survey was completed on October 9, 1995. On October 14 and 15, 1995, the CAI caused for a period of twenty (20) days from receipt hereof;
the bulldozing and other development activities, which resulted in the destruction of plants and trees.

The PBFAI-KASAMA, representing the farmers-tenants, filed a complaint for Maintenance of 1) Enjoining the defendant landowner and any/all persons acting for and in its behalf or under its
Peaceful Possession and Cultivation with Damages with Prayer for the Issuance of a Temporary authority to cease and desist from further bulldozing the premises in question and committing acts of
Restraining Order and Preliminary Injunction before the Department of Agrarian Reform Adjudication dispossession or tending to disturb the peaceful possession and cultivation of the complainants of the
Board (DARAB), Region IV, Trece Martirez City, Cavite, against the CAI, Tan Chi, Dionisio Ojeda, landholdings in question.
Elena Bigay, Lanrico Ministerio and Alfredo Espiritu over a portion of the property of the CAI. The case
was docketed as DARAB Case No. CA-0285-95.[35] Meantime, let the hearing of the Preliminary Injunction incident be set on November 9, 1995 at 1:30
P.M.[40]
The plaintiffs therein alleged that since 1961, its members had been in actual possession, as
tenants of General Dionisio Ojeda, of the 27-hectare property, located in Pasong Bayabas, Cabilang
Baybay, Carmona, Cavite[36] covered by TCT No. T-69813 in the name of Pan Asiatic Commercial Co., The defendants filed their Answer with Motion to Lift Restraining Order and Preliminary
Inc.;[37] T-91584[38] and T-69810 owned by the LDC. They applied for the compulsory coverage of the Injunction.[41] Therein, they denied the personal circumstances of the plaintiffs and the personal
property under CARL before the DAR in 1992, and on October 6, 1995, the CAI caused the survey of circumstances of the defendants Lanrico Ministerio and Alfredo Espiritu. The defendants admitted that
the property. The CAI commenced the bulldozing activities on the property on October 14, 1995 the CAI was the registered owner of the property, but specifically denied that the plaintiffs were
without any permit from the Department of Environment and Natural Resources (DENR) or from the recognized by the CAI as tenants-occupants of the aforesaid property since 1961. They asserted that
Office of the Barangay Captain. According to the petitioners, the said illegal bulldozing activities would the CAI did not consent to the cultivation of the property nor to the erection of the plaintiffs houses.
convert the land from agricultural to non-agricultural land, thereby depriving the members of the They further averred that the CAI had entered into a compromise agreement with the occupants of
PBFAI of their tenancy rights over the property. For this reason, the petitioners prayed that a the property, the plaintiffs in Civil Case No. BCV-87-13 in the RTC of Cavite. They also alleged that
temporary restraining order be issued ex-parte to stop the bulldozing of the property, and that a they secured a permit from the Municipal Planning and Development Offices before bulldozing
preliminary injunction or a status quo order be later issued to enjoin the same. activities on the property were ordered.

The complainants prayed that, after due proceedings, judgment be rendered in their favor, viz: The defendants raised the following as their special and affirmative defenses: (a) the plaintiffs
action is barred by the dismissal of their complaint in Civil Case No. BCV-87-13, per Order of the RTC
of Cavite, Branch 19, dated June 20, 1991; (b) the plaintiffs had waived their rights and interests
... over the property when they executed deeds of waiver and quitclaim in favor of the defendant CAI;
(c) then Agrarian Reform Minister Estrella had issued an Order dated July 3, 1979, converting the
3. That the Defendants Tan Chi and Dionisio Ojeda, as the most responsible officers of the property into a residential area and withdrawing the property from the coverage of the CARL; (d) the
Defendant Corporation be ordered to direct persons acting under their authority to defendant partitioned the development of the area into Phase I, II, III and IV, while the residential
respect the peaceful possession and cultivation of the Plaintiffs, of the subject land; property subject of the petition is in Phase IV thereof; (e) before embarking in the development of the
property, the respondent CAI secured the following: (1) preliminary approval and locational clearance
for phase IV; (2) development permit for 844 units; (3) Certificate of Registration No. 1069 issued by
4. That the Defendants Lanrico Ministerio and Alfredo Espiritu be ordered to respect and
the HSRC; and (4) License to Sell No. 1053.[42] Finally, the defendants contended that the property
maintain the peaceful tenancy of the Plaintiffs, of the subject land;
had an 18% slope and was undeveloped; as such, it was exempt from the coverage of the CARL,
under Section 10 of Rep. Act No. 6657.
5. That the Defendants be ordered jointly and severally to pay to the Plaintiffs:
As compulsory counterclaim, the defendants alleged that it had entered into an Equipment
Rental Requisition Contract with E.M. Aragon Enterprises for the bulldozing of the property, for which
P500,000.00 as moral damages; it incurred the following expenses: an advance payment of P200,000; rental rate of P1,000 per hour
P250,000.00 by way of exemplary damages; for 8 hours a day plus transportation of P50,000; and, salaries of not less than P5,000 per month for
73
the mechanics and drivers. They prayed that after due proceedings, judgment be rendered dismissing After due hearings, PARAD Barbara P. Tan rendered a Decision on August 8, 1996 in DARAB
the plaintiffs complaint and absolving it of any liability.[43] Case No. CA-0285-95 in favor of the defendants. The dispositive portion of the decision reads:

The plaintiffs, for their part, averred that Civil Case No. BCV-87-13 was not decided on the
merits, but was merely based upon a compromise agreement between the parties. Moreover, there WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered:
was no identity of parties between Civil Case No. BCV-87-13 and the present case, as the sole
defendant was the CAI, while of the plaintiffs in DARAB Case No. CA No. 0285-95, only Domingo 1. Finding Plaintiffs Domingo Banaag, Conrado Banaag, Leoncio Banaag, Herminia Demillo, Myrna
Banaag and Leoncio Banaag were the plaintiffs in Civil Case No. BCV-87-13. On the claim of the Javier, Elena, Layaban, Maria Layaban and Oscar Layaban to have abandoned and renounced their
defendants that the CAI was released and discharged from any and all liabilities of the plaintiffs by tenancy rights over the land in question and barred from instituting the instant complaint on the
virtue of the Deeds of Waiver and Quitclaim executed by the fourteen plaintiffs in Civil Case No. BCV- ground of Res Judicata;
87-13, the plaintiffs averred that only two of the plaintiffs, namely, Domingo Banaag and Leoncio
Banaag were among the thirty-seven (37) complainants-members of PBFAI who filed the petition
2. Finding the remaining Twenty-Nine (29) other Plaintiffs not bonafide tenants but mere interlopers
before the DARAB.
on the land in question and consequently not entitled to security of tenure;
The plaintiffs posited that the conversion orders and other deeds issued by the HSRC and its
successor, the HLURB, were issued before the effectivity of Rep. Act No. 6657 when agricultural land 3. Ordering the instant complaint DISMISSED for lack of merit.
was limited to those planted with rice and corn crops. But upon the enactment of Rep. Act No. 6657,
the reclassification of agricultural lands included those planted with fruit-bearing trees, such as, the
subject property. Hence, Agrarian Reform Minister Estrella did not have the authority to exempt the No pronouncement as to damages, attorneys fees, litigation expenses and cost of suit.[48]
property from the coverage of Rep. Act No. 6657. The plaintiffs averred that the documents procured
by the respondents from the HSRC and the HLURB cannot be given probative weight, as the authority The PARAD held that the plaintiffs were bound by the order of dismissal of the RTC in Civil Case
to issue the said clearance/license is vested solely in the DAR. No. BCV-87-13. It declared that the plaintiffs in Civil Case No. BCV-87-13 were the kins, siblings or
spouses of the complainants in the case before it. Moreover, the complainants had executed deeds of
As to the defense that the property subject of the suit has some parts with an 18% slope, the quitclaim or waiver covering the portions of the property which they purportedly occupied. Thus, the
plaintiffs contended that what the law exempts are undeveloped parcels of land with an 18% complainants had already waived their rights of possession and cultivation over the portions of the
slope.The entire property, however, was fully developed and planted with fruit-bearing trees of varied property which they claimed to be occupying.
kinds, with houses of strong materials constructed thereon by the members of the PBFAI.
As to the remaining complainants, the PARAD ruled that they failed to prove that their
To determine the veracity of the conflicting claims of the parties, the Provincial Agrarian Reform cultivation and possession, were based on a valid agricultural tenancy. It held that the complainants
Adjudicator (PARAD) issued an Order on November 23, 1995, setting an ocular inspection of the were merely farm helpers of their relatives. However, the PARAD ruled that it had no jurisdiction to
property. The parties were required to submit their respective position papers.[44] The ocular resolve the issues of whether the property was covered by Rep. Act No. 6657 and exempted from the
inspection proceeded as scheduled. On December 12, 1995, the PARAD issued an Order[45] containing said coverage, or whether the conversion of the property to non-agricultural was legal and
the results of the inspection. efficacious; hence, the PARAD declined to resolve the same.
The individual tillages of the complainants were not inspected, and, as agreed upon, the physical Aggrieved, the plaintiffs interposed an appeal to the Department of Agrarian Reform
inventory thereof was to be undertaken by Brgy. Captain Lanrico Ministerio. The inventory was Adjudication Board on the following grounds:
designed to determine who among the petitioners were actual tillers, the area of tillage and the crops
produced thereon; and to determine the value of the improvements in connection with a possible pay
off, as the landowner had offered to reimburse the planters the value of their permanent 1. That errors in the findings of fact and conclusions of law were committed which, if not
improvements. The PARAD noted that the area over which the respondent CAI conducted quarrying corrected, would cause grave and irreparable damage and injury to the
activities had not been cultivated by any of the members of the PBFAI, and permitted the grading and plaintiffs/complainants-appellants; and
leveling activities thereon.
2. That there is grave abuse of discretion on the part of the Provincial Agrarian Reform
On April 16, 1996, the PARAD issued an order directing the provincial sheriff of Cavite to conduct
Adjudicator of Cavite. [49]
a physical inventory of the permanent improvements introduced by each of the complainants
consisting of fruits and other horticultural growths, in substitution of the Barangay Captain.
The appeal was docketed as DARAB Case No. 5191. The defendants, for their part, filed a motion
On July 15, 1996, the DAR Region IV issued a Cease and Desist Order against the respondents. for reconsideration of the decision, on the ground that it failed to rule that the order of conversion of
 The defendants, in a Letter dated July 16, 1996, informed the DAR, Region IV Office, that the land
[46]
then Agrarian Reform Minister Estrella merely confirmed the re-classification of the property, from
subject of the cease and desist order was also subject of DARAB Case No. 0285-95 and, as such, was agricultural to residential, made by the Municipal Council of Carmona, the HSRC and the HLURB as
under the jurisdiction of PARAD Barbara Tan. The defendants, likewise, raised the issue of forum early as 1976, and that the PARAD failed to order the eviction of the complainants despite its finding
shopping, per our ruling in Crisostomo v. SEC.[47] that some had abandoned their tenancy rights by entering into a compromise settlement and
executing quitclaims with the CAI. The respondents, thus, prayed:

74
a. That the subject property has been reclassified as residential land as early as 30 May WHEREFORE, premises considered the challenged decision is hereby REVERSED and a new judgment
1976; is hereby rendered as follows:

b. That the Certificate of Registration No. RS-0495, dated 9 July 1977 and License to Sell 1. Declaring the subject landholding to be within the coverage of Section 4 of R.A. 6657;
LS-0449, dated 09 July 1977 were issued in compliance to NHA Circular No. 1,
Series of 1976;
2. Ordering the PARO, MARO and all DAR officials concerned to take the necessary steps for the
acquisition of the subject land pursuant to Administrative Order No. 9, Series of 1990;
c. That the approval of the Consolidation Subdivision Plan and the consequent issuance of and 
individual titles by the Bureau of Lands were made in compliance of the
requirements of NHA Circular No. 1;
3. Ordering the PARO, MARO and all DAR officials concerned to distribute the subject land to
qualified farmer-beneficiaries pursuant to Administrative Order No. 10, series of 1990,
d. That the Order of Conversion dated 3 July 1979 was merely a confirmation of a 1976 giving preference to the plaintiffs as actual occupants and cultivators of the subject land.[58]
valid re-classification of the subject property from agricultural to residential and said
Order is still valid and subsisting;
The respondents-appellees filed a motion for reconsideration[59] of the decision which was denied
by the DARAB in a Resolution dated August 28, 1998.[60]
e. That an Order of ejectment be issued against the complainants.

As a corollary, other reliefs which are just and proper under the premises are likewise prayed.[50]
The Case in the Court of Appeals

The PARAD treated the motion as an appeal, and transmitted the same to the DARAB. [51]

Aggrieved, the CAI filed a petition for review in the Court of Appeals under Rule 45 [61] of the
On September 26, 1996, the plaintiffs Clarito Sanganbayan, Edgardo Uniforme and Francisco
Revised Rules of Court seeking the reversal of the Resolution dated August 28, 1998. The following
Joven, in consideration of P40,000, executed quitclaims, waiving their rights from the property in suit.
issues were raised:
[52]
 Likewise, plaintiffs Manuel Layaban, Dante Javier, Ederlinda dela Cruz, Conrado Banaag, Eduardo
Sabalsa, Diosdado Canaria, Herminia Demillo, Elizabeth Cristo, Buena Layaban, Elena Layaban, Maria
Layaban, Betty Banaag, Oscar Layaban, Carmelita Caalete, Manuel Canaria, Alfredo Diaz, Alejandro 1. WHETHER OR NOT THE LAND IN SUIT IS COVERED BY CARP;
Sanganbayan, Soledad Alcantara, Felicisimo Galzote, Vivencio Boral, Edilberto Banaag and Jose
Canaria, executed quitclaims in favor of the CAI after receiving money from it.[53]
2. WHETHER OR NOT THE MEMBERS OF PBFAI NUMBERING 37 ARE LEGITIMATE TENANTS
On October 16, 1996, the respondents filed a Motion to Lift Status Quo Order and Motion to THEREOF;
Dismiss[54] alleging that the status quo order illegally extended the restraining order issued on
September 13, 1996. It was also alleged that the complainants-appellants were not qualified 3. WHETHER OR NOT THE DARAB APPRECIATED THE FACTS AND LAW OF THE CASE;
beneficiaries of the CARL. The CAI asserted that the re-classification of the land use was valid and
legal, and concluded that since the property was not agricultural, it was not covered by the CARL and,
4. WHETHER OR NOT THE DARAB IN THE EXERCISE OF ITS POWERS ACTED WITH GRAVE
thus, beyond the jurisdiction of the DARAB. The CAI, thus, prayed:
ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION.[62]

WHEREFORE, premises considered, it is respectfully prayed that the status quo order be immediately


On March 15, 2000, the CA rendered a Decision reversing the decision of the DARAB and
lifted and the writ of preliminary injunction applied for be denied for utter lack of merit by upholding
reinstating the decision of the PARAD, to wit:
the Decision of the Honorable Provincial Adjudicator dated 8 August 1996 with a modification which
shall include an order of ejectment. [55]
WHEREFORE, the petition is GIVEN DUE COURSE, the assailed DARAB Decision is hereby REVERSED
and SET ASIDE, while the PARO Decision is REINSTATED and AFFIRMED.[63]
In the meantime, more members of the PBFAI executed deeds of quitclaims on October 1, 1996,
October 9, 1996, November 18, 1996, February 28, 1997 and March 6, 1997, respectively, all in favor
of the respondent CAI over the property subject of their petition. All in all, during the period from The CA ruled that under Section 10 of Rep. Act No. 6657, all lands with eighteen percent (18%)
September 26 1996 to March 6, 1997,[56] twenty-five complainants (members of PBFAI) executed slope and over, except those already developed, shall be exempt from the coverage of the said
separate deeds of quitclaims in favor of the CAI.[57] The foregoing notwithstanding, the DARAB Act. The CA noted that the exception speaks of 18% in slope and undeveloped land. Per report of the
rendered a Decision on September 2, 1997 reversing the decision of PARAD. The dispositive portion of PARAD, the property subject of the suit has an 18% slope and was still undeveloped; hence, it falls
the decision reads: within the exemption.

75
Further, the CA held that as early as May 30, 1976, the Municipality of Carmona, Cavite, already 1991. They also insist that the conversion of the property under Kapasiyahang Blg. 30 of the
reclassified the land as residential in Resolution No. 30, when it allowed the LDC to build low-cost Municipal Council of Carmona on May 30, 1976, was subject to the approval of the DAR, conformably
housing projects in the subject area. According to the Court, the ruling in Fortich v. Corona[64] and to DOJ Opinion No. 44, Series of 1990. Moreover, the development of the property had not yet been
reiterated in Province of Camarines Sur, et al. v. Court of Appeals, [65] settled is the rule that local completed even after Rep. Act No. 6657 took effect. Hence, it was incumbent upon the respondent to
government units need not obtain the approval of DAR to convert or reclassify lands from agricultural secure an exemption thereto, after complying with DAR Administrative Order No. 6, Series of 1994.
to non-agricultural use. Thus, the subject land was validly declared residential since 1976 by
competent authority through Kapasiyahang Bilang 30. As such, the DARAB erred in ruling that the In its Comment on the petition, the respondent CAI asserts that the property was validly
land in suit was still covered by Rep. Act No. 6657. Consequently, since the subject land is not reclassified by the Municipal Council of Carmona on May 30, 1976, pursuant to its authority under
agricultural and not covered by the CARL, the PBFAI members could not be considered Section 3, Rep. Act No. 2264, otherwise known as the Local Autonomy Act of 1959. Until revoked, the
tillers/beneficiaries thereof.[66] reclassification made by the council remained valid. Per DOJ Opinion No. 40, Series of 1990, the
private respondent was not required to secure clearance or approval from the DAR since the
Aggrieved, the PBFAI filed a petition for review under Rule 45 of the Rules of Court on April 11, reclassification took place on June 15, 1988, when Rep. Act No. 6657 took effect. The respondent
2000 before this Court. For its part, DARAB filed a motion for extension of time to file a petition for asserts that it had complied with all the requirements under P.D. No. 957, as amended.
the reversal of the decision in CA-GR SP No. 49363. The same was docketed as G.R. No. 142980. On
May 11, 2000, the DARAB manifested that it was adopting as its own the petition for review filed by The respondent contends that, aside from the Municipal Council of Carmona, the Secretary of
PBFAI. In our Resolution dated June 28, 2000, we granted the motion of the DARAB and ordered the Agrarian Reform and administrative agencies of the government such as the NHA, the Bureau of
consolidation of G.R. Nos. 142980 and 142359. Lands, the HSRC, and the HLURB, found the property unsuitable for agricultural purposes. The
respondent asserts that the petitioners-individuals are mere squatters and not tenants on the
property of the private respondent. Hence, the PARAD had no jurisdiction over the petition of the
PBFAI, as well as the individual petitioners. Consequently, the DARAB had no appellate jurisdiction
The Issues over the appeals from the decision of the PARAD.

The core issues for resolution are the following: (1) whether the property subject of the suit is
The Courts Ruling
covered by Rep. Act No. 6657, the Agrarian Reform Law (CARL); (2) whether the DARAB had original
and appellate jurisdiction over the complaint of the petitioner PBFAI against the private respondent;
(3) whether the petitioners-members of the PBFAI have a cause of action against the private
respondent for possession and cultivation of the property in suit; (4) whether the dismissal by the The contention of the petitioners has no merit.
RTC of the complaint in Civil Case No. BCV-87-13 is a bar to the complaint of the petitioners-
Under Section 3(c) of Rep. Act No. 6657, agricultural lands refer to lands devoted to agriculture
members of the PBFAI; and (5) whether the appellate court committed a reversible error in dismissing
as conferred in the said law and not classified as industrial land. Agricultural lands are only those
the petition for review in CA-G.R. SP No. 49363.
lands which are arable or suitable lands that do not include commercial, industrial and residential
It is well-settled that in a petition for review on certiorari under Rule 45 of the Rules of Court, lands.[72] Section 4(e) of the law provides that it covers all private lands devoted to or suitable for
only questions of law may be raised.[67] We have time and again ruled that the factual findings of fact agriculture regardless of the agricultural products raised or that can be raised thereon. Rep. Act No.
by administrative agencies are generally accorded great respect, if not finality, by the 6657 took effect only on June 15, 1988. But long before the law took effect, the property subject of
courts[68] because of the special knowledge and expertise of administrative departments over matters the suit had already been reclassified and converted from agricultural to non-agricultural or residential
falling under their jurisdiction.[69] However, due to the divergence of the findings of the PARAD, on the land by the following administrative agencies: (a) the Bureau of Lands, when it approved the
one hand, and the DARAB on the other, and considering the findings of the DARAB and the Court of subdivision plan of the property consisting of 728 subdivision lots; (b) the National Planning
Appeals, we are constrained to review the records and resolve the factual and the legal issues Commission which approved the subdivision plan subdivided by the LDC/CAI for the development of
involved. the property into a low-cost housing project; (c) the Municipal Council of Carmona, Cavite, when it
approved Kapasiyahang Blg. 30 on May 30, 1976; (d) Agrarian Reform Minister Conrado F. Estrella,
On the first and second issues, the petitioners contend that the property subject of the suit is on July 3, 1979, when he granted the application of the respondent for the development of the
agricultural land; hence, covered by the CARL, more particularly, Rep. Act No. 6657. They assert that Hakone Housing Project with an area of 35.80 hectares upon the recommendation of the Agrarian
the reclassification of the property made by the Municipal Council of Carmona, Cavite, under Reform Team, Regional Director of Region IV, which found, after verification and investigation, that
Kapasiyahang Blg. 30 on May 30, 1976 was subject to the approval of the HSRC, now the HLURB, as the property was not covered by P.D. No. 27, it being untenanted and not devoted to the production
provided for by Section 5 of Executive Order No. 648.[70] Since there was no such approval, the said of palay/or corn and that the property was suitable for conversion to residential subdivision; (e) by
resolution of the Municipal Council of Carmona was ineffective. The petitioners aver that, the appellate the Ministry of Local Government and Community Development; (f) the Human Settlements
courts reliance on the ruling of this Court in Province of Camarines Sur v. Court of Appeals, et al. [71] is Regulatory Commission which issued a location clearance, development permit, Certificate of
misplaced because the said case involves the power of local government units to initiate Inspection and License to Sell to the LDC/private respondent; and, (g) the Housing and Land Use
condemnation proceedings of properties for public use or purpose. They argue that under Section 65 Regulatory Board which also issued to the respondent CAI/LDC a license to sell the subdivision lots.
of Rep. Act No. 6657, the DAR is vested with exclusive authority to reclassify a landholding from
agricultural to residential. The petitioners submit that the exclusive authority of the DAR is not In issuing a location clearance, a development permit, a certificate of inspection over the
negated by Section 20 of Rep. Act No. 7160, otherwise known as the Local Government Code of housing project, and a license to sell the subdivision lots in favor of LDC/CAI pursuant to its charter,

76
the HSRC approved and confirmed the reclassification and conversion of the land made by the  Section 65 of Rep. Act No. 6657 relied upon by the petitioner applies only to applications by the
[79]

Municipal Council of Carmona and Agrarian Reform Minister Estrella. landlord or the beneficiary for the conversion of lands previously placed under the agrarian reform law
after the lapse of five years from its award. It does not apply to agricultural lands already converted
In Natalia Realty Inc. and Estate Developers and Investors Corp. v. Department of Agrarian as residential lands prior to the passage of Rep. Act No. 6657.[80]
Reform, et al.,[73] we held, thus:
When Agrarian Reform Minister Conrado F. Estrella confirmed the reclassification of the property
by the Municipal Council of Carmona to non-agricultural land when he approved, on July 3, 1979, the
We now determine whether such lands are covered by the CARL. Section 4 of R.A. 6657 provides that
application of the private respondent/LDC for the conversion of 35.80 hectares of the property
the CARL shall cover, regardless of tenurial arrangement and commodity produced, all public and
covered by TCT No. 62972 into non-agricultural land, he did so pursuant to his authority under Rep.
private agricultural lands. As to what constitutes agricultural land it is referred to as land devoted to
Act No. 3844, as amended, by P.D. No. 815 and P.D. No. 946.[81]
agricultural activity as defined in this Act and not classified as mineral, forest, residential, commercial
or industrial land. The deliberations of the Constitutional Commission confirm this limitation. It bears stressing that in his Order, the Agrarian Reform Minister declared that the property was
Agricultural lands are only those lands which are arable and suitable agricultural lands and do not not tenanted and not devoted to the production of palay and/or corn, and that the land was suitable
include commercial, industrial and residential lands. for conversion to a residential subdivision. The order of the Minister was not reversed by the Office of
the President; as such, it became final and executory. By declaring, in its Decision of September 2,
Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills Subdivision 1997, that the property subject of the suit, was agricultural land, the petitioner DARAB thereby
cannot in any language be considered as agricultural lands. These lots were intended for residential reversed the Order of Agrarian Reform Minister Estrella, issued almost eighteen (18) years before,
use. They ceased to be agricultural lands upon approval of their inclusion in the Lungsod Silangan and nullified Resolution No. 30 of the Municipal Council of Carmona, approved twenty-one (21) years
Reservation. Even today, the areas in question continued to be developed as a low-cost housing earlier, on May 30, 1976, as well as the issuances of the NHA, the HSRC, the HLURB, the Ministry of
subdivision, albeit at a snails pace. This can readily be gleaned from the fact that SAMBA members Local Government and the National Planning Commission. Thus, the petitioner DARAB acted with
even instituted an action to restrain petitioners from continuing with such development. The enormity grave abuse of its discretion amounting to excess or lack of jurisdiction.
of the resources needed for developing a subdivision may have delayed its completion but this does
not detract from the fact that these lands are still residential lands and outside the ambit of the CARL. The failure of the respondent to complete the housing project before June 15, 1988, even if true,
did not have the effect of reverting the property as agricultural land.

Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. These include The petitioners reliance on DOJ Opinion No. 44, Series of 1990 and DAR Administrative Order
lands previously converted to non-agricultural uses prior to the effectivity of CARL by No. 6, Series of 1994 is misplaced. In the said opinion, the Secretary of Justice declared, viz:
government agencies other than respondent DAR. In its Revised Rules and Regulations
Governing Conversion of Private Agricultural Lands to Non-Agricultural Uses, DAR itself defined Based on the foregoing premises, we reiterate the view that with respect to conversions of
agricultural land thus  agricultural lands covered by R.A. No. 6657 to non-agricultural uses, the authority of DAR to approve
such conversions may be exercised from the date of the laws effectivity on June 15, 1988. This
x x x Agricultural land refers to those devoted to agricultural activity as defined in R.A. 6657 and not conclusion is based on a liberal interpretation of R.A. No. 6657 in the light of DARs mandate and the
classified as mineral or forest by the Department of Environment and Natural Resources (DENR) and extensive coverage of the agrarian reform program.
its predecessor agencies, and not classified in town plans and zoning ordinances as approved
by the Housing and Land Use Regulatory Board (HLURB) and its preceding competent Following the DOJ opinion, the DAR issued Administrative Order No. 6, Series of 1994, stating
authorities prior to 15 June 1988 for residential,  commercial or industrial use.[74] that lands already classified as non-agricultural before the enactment of Rep. Act No. 6657 no longer
needed any conversion clearance:
Our ruling in Natalia Realty, Inc. v. DAR was reiterated in National Housing Authority v. Allarde,
[75]
 and Sta. Rosa Realty Development Corporation v. Court of Appeals,[76] where we stated, viz: I. Prefatory Statement

The authority of the municipality of Cabuyao, Laguna to issue zoning classification is an exercise of its In order to streamline the issuance of exemption clearances, based on DOJ Opinion No. 44, the
police power, not the power of eminent domain. A zoning ordinance is defined as a local city or following guidelines are being issued for the guidance of the DAR and the public in general.
municipal legislation which logically arranges, prescribed, defines and apportions a given political
subdivision into specific land uses as present and future projection of needs.
II. Legal Basis

Section 3 of Rep. Act No. 2264,  amending the Local Government Code, specifically empowers
[77]

municipal and/or city councils to adopt zoning and subdivision ordinances or regulations in Sec. 3(c) of RA 6657 states that agricultural lands refers to the land devoted to agricultural activity as
consultation with the National Planning Commission. A zoning ordinance prescribes, defines, and defined in this act and not classified as mineral, forest, residential, commercial or industrial land.
apportions a given political subdivision into specific land uses as present and future projection of
needs.[78] The power of the local government to convert or reclassify lands to residential lands to non- Department of Justice Opinion No. 44, series of 1990 has ruled that, with respect to the conversion of
agricultural lands reclassified is not subject to the approval of the Department of Agrarian Reform. agricultural lands covered by RA No. 6657 to non-agricultural uses, the authority of DAR to approve

77
such conversion may be exercised from the date of its effectivity, on June 15, 1988. Thus, all lands (6) The harvest is shared between the landowner and the tenant or agricultural lessee.[85]
that are already classified as commercial, industrial, or residential before 15 June 1988 no longer
need any conversion clearance.
There is no allegation in the complaint of the petitioner PBFAI in DARAB Case No. CA-0285-95
that its members were tenants of the private respondent CAI. Neither did the petitioner adduce
With our finding that the property subject of the suit was classified as residential land since substantial evidence that the private respondent was the landlord of its members from 1961, nor at
1976, the DARAB had no original and appellate jurisdiction over the property subject of the action of any time for that matter. Indeed, as found by the PARAD:
the petitioner PBFAI and its members. Consequently, the DARAB should have ordered the dismissal of
the complaint.
Moreover, their waiver of rights constitutes abandonment of their rights of possession and cultivation
The jurisdiction of a tribunal or quasi-judicial body over the subject matter is determined by the which may yet be borne out of a legitimate tenancy relationship. Their re-entry or continuous
averments of the complaint/petition and the law extant at the time of the commencement of the possession and cultivation of the land in question without the landowners knowledge and/or consent
suit/complaint/petition.[82] All proceedings before a tribunal or quasi-judicial agency bereft of negates the existence of tenancy relationship. Since security of tenure is a right to which only a bona
jurisdiction over the subject matter of the action are null and void.[83] fide tenant farmer is entitled their lack of such tenurial status denies them of its exercise and
enjoyment.
Section 1, Rule II of the Revised Rules of Procedure of the DARAB provides that:
As to the remaining twenty and more other complainants, it is unfortunate that they have not shown
SECTION 1. Primary. Original and appellate jurisdiction The Agrarian Reform Adjudication Board shall that their cultivation, possession and enjoyment of the lands they claim to till have been by authority
have primary jurisdiction, both original and appellate, to determine and adjudicate all agrarian of a valid contract of agricultural tenancy. On the contrary, as admitted in their complaint a number of
disputes, cases, controversies, and matters or incidents involving the implementation of the them have simply occupied the premises in suit without any specific area of tillage being primarily
Comprehensive Agrarian Reform Program under Republic Act No. 6657, Executive Order Nos. 229, mere farm helpers of their relatives.Banking on their application for CARP coverage still awaiting
228 and 129-A, Republic Act No. 3844 as amended by Republic Act No. 6389, Presidential Decree No. action and disposition in some DAR operations office, these complainants have tenaciously held on to
27 and other agrarian laws and their implementing rules and regulations. their occupied areas in the hope of eventual redemption under the Comprehensive Agrarian Reform
Program. [86]
Section 3(d) of Rep. Act No. 6657 defines an agrarian dispute as:
Since the members of the petitioner PBFAI were not the tenants of the private respondent CAI,
the petitioners and its members had no cause of action against the private respondent for possession
Agrarian Dispute refers to any controversy relating to tenurial arrangements, whether leasehold,
of the landholding to maintain possession thereof and for damages. Besides, when the complaint was
tenancy, stewardship or otherwise, over lands devoted to agriculture, including disputes concerning
filed, twenty-five (25) of the thirty-seven (37) members of the petitioners had already executed
farmworkers associations or representation of persons negotiating, fixing, maintaining, changing or
separate deeds of quitclaim in favor of the private respondent CAI over the portions of the
seeking to arrange terms or conditions of such tenurial arrangements.
landholding they respectively claimed, after receiving from the private respondent CAI varied sums of
money. In executing the said deeds, the members of the petitioner PBFAI thereby waived their
It includes any controversy relating to compensation of lands acquired under this Act and other terms respective claims over the property. Hence, they have no right whatsoever to still remain in
and conditions of transfer of ownership from landowners to farmworkers, tenants and other agrarian possession of the same.
reform beneficiaries, whether the disputants stand in the proximate relation of farm operator and
beneficiary, landowner and tenant, or lessor and lessee. IN LIGHT OF THE FOREGOING, the petitions are DENIED. The assailed decision of the Court
of Appeals is AFFIRMED WITH MODIFICATIONS. The complaint of the petitioner PBFAI in DARAB Case
No. CA-0285-95 is DISMISSED. The counterclaim of the private respondent for damages in DARAB
In Monsanto v. Zerna,[84] we held that for the DARAB to have jurisdiction over a case, there must Case No. CA-0285-95 is, likewise, DISMISSED. The thirty-seven (37) members of the petitioner PBFAI
exist a tenancy relationship between the parties. In order for a tenancy agreement to take hold over a and all those occupying the property subject of the complaint in DARAB Case No. CA-0285-95 in their
dispute, it is essential to establish all the indispensable elements, to wit: behalf are ORDERED to vacate the landholding.

(1) The parties are the landowner and the tenant or agricultural lessee; SO ORDERED.

(2) The subject matter of the relationship is an agricultural land;

(3) There is consent between the parties to the relationship;

(4) The purpose of the relationship is to bring about agricultural production;

(5) There is personal cultivation on the part of the tenant or agricultural lessee; and

78
development and community recreation in the area, which is the Rainforest Park, available to all
residents of Pasig City, including those of Caniogan.
MASIKIP vs PASIG G.R. No. 136349 January 23, 2006 Power of Eminent Domain,
Expropriation, Genuine Necessity
 
NOVEMBER 3, 2017

  Constitution attaches to the property of the individual requires not only that the purpose for the
taking of private property be specified. The genuine necessity for the taking, which must be of a
public character, must also be shown to exist.
 FACTS:

Petitioner Lourdes Dela Paz Masikip is the registered owner of a parcel of land located at Pag-Asa,
Caniogan, Pasig City, Metro Manila. The City of Pasig notified petitioner of its intention to expropriate
a 1,500 square meter portion of her property to be used for the “sports development and recreational
activities” of the residents of Barangay Caniogan. This was pursuant to Ordinance No. 42, Series of
1993 enacted by the then Sangguniang Bayan of Pasig.

Petitioner replied stating that the intended expropriation of her property is unconstitutional, invalid,
and oppressive.

Respondent reiterated that the purpose of the expropriation of petitioner’s property is “to provide
sports and recreational facilities to its poor residents” and subsequently filed with the trial court a
complaint for expropriation,

ISSUE:

Was the City of Pasig able to establish “genuine necessity”?

RULING:

The Court holds that respondent City of Pasig has failed to establish that there is a genuine necessity
to expropriate petitioner’s property. A scrutiny of the records shows that the Certification issued by
the Caniogan Barangay Council, the basis for the passage of Ordinance No. 42 s. 1993 authorizing the
expropriation, indicates that the intended beneficiary is the Melendres Compound Homeowners
Association, a private, non-profit organization, not the residents of Caniogan. Petitioner’s lot is the
nearest vacant space available. The purpose is, therefore, not clearly and categorically public. The
necessity has not been shown, especially considering that there exists an alternative facility for sports

79
On May 2, 1994, petitioner sent a reply to respondent stating that the intended expropriation of her
property is unconstitutional, invalid, and oppressive, as the area of her lot is neither sufficient nor
suitable to "provide land opportunities to deserving poor sectors of our community."

In its letter of December 20, 1994, respondent reiterated that the purpose of the expropriation of
petitioner’s property is "to provide sports and recreational facilities to its poor residents."

G.R. No. 136349             January 23, 2006


Subsequently, on February 21, 1995, respondent filed with the trial court a complaint for
expropriation, docketed as SCA No. 873. Respondent prayed that the trial court, after due notice and
LOURDES DE LA PAZ MASIKIP, Petitioner,  hearing, issue an order for the condemnation of the property; that commissioners be appointed for
vs. the purpose of determining the just compensation; and that judgment be rendered based on the
THE CITY OF PASIG, HON. MARIETTA A. LEGASPI, in her capacity as Presiding Judge of the report of the commissioners.
Regional Trial Court of Pasig City, Branch 165 and THE COURT OF APPEALS, Respondents.
On April 25, 1995, petitioner filed a Motion to Dismiss the complaint on the following grounds:
 
I
DECISION
PLAINTIFF HAS NO CAUSE OF ACTION FOR THE EXERCISE OF THE POWER OF EMINENT DOMAIN,
SANDOVAL GUTIERREZ, J.: CONSIDERING THAT:

Where the taking by the State of private property is done for the benefit of a small community which (A) THERE IS NO GENUINE NECESSITY FOR THE TAKING OF THE PROPERTY SOUGHT TO BE
seeks to have its own sports and recreational facility, notwithstanding that there is such a recreational EXPROPRIATED.
facility only a short distance away, such taking cannot be considered to be for public use. Its
expropriation is not valid. In this case, the Court defines what constitutes a genuine necessity for
(B) PLAINTIFF HAS ARBITRARILY AND CAPRICIOUSLY CHOSEN THE PROPERTY SOUGHT TO
public use.
BE EXPROPRIATED.

This petition for review on certiorari assails the Decision1 of the Court of Appeals dated October 31,
(C) EVEN ASSUMING ARGUENDO THAT DEFENDANT’S PROPERTY MAY BE EXPROPRIATED BY
1997 in CA-G.R. SP No. 41860 affirming the Order2 of the Regional Trial Court, Branch 165, Pasig
PLAINTIFF, THE FAIR MARKET VALUE OF THE PROPERTY TO BE EXPROPRIATED FAR
City, dated May 7, 1996 in S.C.A. No. 873. Likewise assailed is the Resolution3 of the same court
EXCEEDS SEVENTY-EIGHT THOUSAND PESOS (P78,000.00)
dated November 20, 1998 denying petitioner’s Motion for Reconsideration.

II
The facts of the case are:

PLAINTIFF’S COMPLAINT IS DEFECTIVE IN FORM AND SUBSTANCE, CONSIDERING THAT:


Petitioner Lourdes Dela Paz Masikip is the registered owner of a parcel of land with an area of 4,521
square meters located at Pag-Asa, Caniogan, Pasig City, Metro Manila.
(A) PLAINTIFF FAILS TO ALLEGE WITH CERTAINTY THE PURPOSE OF THE EXPROPRIATION.
In a letter dated January 6, 1994, the then Municipality of Pasig, now City of Pasig, respondent,
notified petitioner of its intention to expropriate a 1,500 square meter portion of her property to be (B) PLAINTIFF HAS FAILED TO COMPLY WITH THE PREREQUISITES LAID DOWN IN SECTION
used for the "sports development and recreational activities" of the residents of Barangay Caniogan. 34, RULE VI OF THE RULES AND REGULATIONS IMPLEMENTING THE LOCAL GOVERNMENT
This was pursuant to Ordinance No. 42, Series of 1993 enacted by the then Sangguniang Bayan of CODE; THUS, THE INSTANT EXPROPRIATION PROCEEDING IS PREMATURE.
Pasig.
III
Again, on March 23, 1994, respondent wrote another letter to petitioner, but this time the purpose
was allegedly "in line with the program of the Municipal Government to provide land opportunities to
THE GRANTING OF THE EXPROPRIATION WOULD VIOLATE SECTION 261 (V) OF THE OMNIBUS
deserving poor sectors of our community."
ELECTION CODE.

IV
80
PLAINTIFF CANNOT TAKE POSSESSION OF THE SUBJECT PROPERTY BY MERELY DEPOSITING AN THE COURT OF APPEALS GRAVELY ERRED IN APPLYING THE RULE ON HYPOTHETICAL ADMISSION OF
AMOUNT EQUAL TO FIFTEEN PERCENT (15%) OF THE VALUE OF THE PROPERTY BASED ON THE FACTS ALLEGED IN A COMPLAINT CONSIDERING THAT THE MOTION TO DISMISS FILED BY
CURRENT TAX DECLARATION OF THE SUBJECT PROPERTY.4 PETITIONER IN THE EXPROPRIATION CASE BELOW WAS THE RESPONSIVE PLEADING REQUIRED TO
BE FILED UNDER THE THEN RULE 67 OF THE RULES OF COURT AND NOT AN ORIDNARY MOTION TO
DISMISS UNDER RULE 16 OF THE RULES OF COURT.
On May 7, 1996, the trial court issued an Order denying the Motion to Dismiss, 5 on the ground
that there is a genuine necessity to expropriate the property for the sports and recreational
activities of the residents of Pasig. As to the issue of just compensation, the trial court held that The foregoing arguments may be synthesized into two main issues – one substantive and one
the same is to be determined in accordance with the Revised Rules of Court. procedural. We will first address the procedural issue.

Petitioner filed a motion for reconsideration but it was denied by the trial court in its Order of July 31, Petitioner filed her Motion to Dismiss the complaint for expropriation on April 25, 1995. It was denied
1996. Forthwith, it appointed the City Assessor and City Treasurer of Pasig City as commissioners to by the trial court on May 7, 1996. At that time, the rule on expropriation was governed by Section 3,
ascertain the just compensation. This prompted petitioner to file with the Court of Appeals a special Rule 67 of the Revised Rules of Court which provides:
civil action for certiorari, docketed as CA-G.R. SP No. 41860. On October 31, 1997, the Appellate
Court dismissed the petition for lack of merit. Petitioner’s Motion for Reconsideration was denied in a
"SEC. 3. Defenses and objections. – Within the time specified in the summons, each defendant, in lieu
Resolution dated November 20, 1998. 
of an answer, shall present in a single motion to dismiss or for other appropriate relief, all his
objections and defenses to the right of the plaintiff to take his property for the use or purpose
Hence, this petition anchored on the following grounds: specified in the complaint. All such objections and defenses not so presented are waived. A copy of
the motion shall be served on the plaintiff’s attorney of record and filed with the court with proof of
service."
THE QUESTIONED DECISION DATED 31 OCTOBER 1997 (ATTACHMENT "A") AND RESOLUTION DATED
20 NOVEMBER 1998 (ATTACHMENT "B") ARE CONTRARY TO LAW, THE RULES OF COURT AND
JURISPRUDENCE CONSIDERING THAT: The motion to dismiss contemplated in the above Rule clearly constitutes the responsive pleading
which takes the place of an answer to the complaint for expropriation. Such motion is the pleading
that puts in issue the right of the plaintiff to expropriate the defendant’s property for the use specified
I
in the complaint. All that the law requires is that a copy of the said motion be served on plaintiff’s
attorney of record. It is the court that at its convenience will set the case for trial after the filing of the
A. THERE IS NO EVIDENCE TO PROVE THAT THERE IS GENUINE NECESSITY FOR THE said pleading.6
TAKING OF THE PETITIONER’S PROPERTY.
The Court of Appeals therefore erred in holding that the motion to dismiss filed by petitioner
B. THERE IS NO EVIDENCE TO PROVE THAT THE PUBLIC USE REQUIREMENT FOR THE hypothetically admitted the truth of the facts alleged in the complaint, "specifically that there is a
EXERCISE OF THE POWER OF EMINENT DOMAIN HAS BEEN COMPLIED WITH. genuine necessity to expropriate petitioner’s property for public use." Pursuant to the above Rule, the
motion is a responsive pleading joining the issues. What the trial court should have done was to set
C. THERE IS NO EVIDENCE TO PROVE THAT RESPONDENT CITY OF PASIG HAS COMPLIED the case for the reception of evidence to determine whether there is indeed a genuine necessity for
WITH ALL CONDITIONS PRECEDENT FOR THE EXERCISE OF THE POWER OF EMINENT the taking of the property, instead of summarily making a finding that the taking is for public use and
DOMAIN. appointing commissioners to fix just compensation. This is especially so considering that the purpose
of the expropriation was squarely challenged and put in issue by petitioner in her motion to dismiss.

THE COURT A QUO’S ORDER DATED 07 MAY 1996 AND 31 JULY 1996, WHICH WERE AFFIRMED BY
THE COURT OF APPEALS, EFFECTIVELY AMOUNT TO THE TAKING OF PETITIONER’S PROPERTY Significantly, the above Rule allowing a defendant in an expropriation case to file a motion to dismiss
WITHOUT DUE PROCESS OF LAW: in lieu of an answer was amended by the 1997 Rules of Civil Procedure, which took effect on July 1,
1997. Section 3, Rule 67 now expressly mandates that any objection or defense to the taking of the
property of a defendant must be set forth in an answer.
II

The fact that the Court of Appeals rendered its Decision in CA-G.R. SP No. 41860 on October 31, after
THE COURT OF APPEALS GRAVELY ERRED IN APPLYING OF RULE ON ACTIONABLE DOCUMENTS TO the 1997 Rules of Civil Procedure took effect, is of no moment. It is only fair that the Rule at the time
THE DOCUMENTS ATTACHED TO RESPONDENT CITY OF PASIG’S COMPLAINT DATED 07 APRIL 1995 petitioner filed her motion to dismiss should govern. The new provision cannot be applied
TO JUSTIFY THE COURT A QUO’S DENIAL OF PETITIONER’S RESPONSIVE PLEADING TO THE retroactively to her prejudice.
COMPLAINT FOR EXPROPRIATION (THE MOTION TO DISMISS DATED 21 APRIL 1995).

We now proceed to address the substantive issue.


III

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In the early case of US v. Toribio,7 this Court defined the power of eminent domain as "the right of a Certification14 issued by the Caniogan Barangay Council dated November 20, 1994, the basis for the
government to take and appropriate private property to public use, whenever the public exigency passage of Ordinance No. 42 s. 1993 authorizing the expropriation, indicates that the intended
requires it, which can be done only on condition of providing a reasonable compensation therefor." It beneficiary is the Melendres Compound Homeowners Association, a private, non-profit organization,
has also been described as the power of the State or its instrumentalities to take private property for not the residents of Caniogan. It can be gleaned that the members of the said Association are
public use and is inseparable from sovereignty and inherent in government.8 desirous of having their own private playground and recreational facility. Petitioner’s lot is the nearest
vacant space available. The purpose is, therefore, not clearly and categorically public. The necessity
has not been shown, especially considering that there exists an alternative facility for sports
The power of eminent domain is lodged in the legislative branch of the government. It delegates the
development and community recreation in the area, which is the Rainforest Park, available to all
exercise thereof to local government units, other public entities and public utility
residents of Pasig City, including those of Caniogan.
corporations,9 subject only to Constitutional limitations. Local governments have no inherent power of
eminent domain and may exercise it only when expressly authorized by statute. 10 Section 19 of the
Local Government Code of 1991 (Republic Act No. 7160) prescribes the delegation by Congress of the The right to own and possess property is one of the most cherished rights of men. It is so
power of eminent domain to local government units and lays down the parameters for its exercise, fundamental that it has been written into organic law of every nation where the rule of law prevails.
thus: Unless the requisite of genuine necessity for the expropriation of one’s property is clearly established,
it shall be the duty of the courts to protect the rights of individuals to their private property.
Important as the power of eminent domain may be, the inviolable sanctity which the Constitution
"SEC. 19. Eminent Domain. – A local government unit may, through its chief executive and acting
attaches to the property of the individual requires not only that the purpose for the taking of private
pursuant to an ordinance, exercise the power of eminent domain for public use, purpose or welfare for
property be specified. The genuine necessity for the taking, which must be of a public character, must
the benefit of the poor and the landless, upon payment of just compensation, pursuant to the
also be shown to exist.
provisions of the Constitution and pertinent laws: Provided, however, That, the power of eminent
domain may not be exercised unless a valid and definite offer has been previously made to the owner
and such offer was not accepted: Provided, further, That, the local government unit may immediately WHEREFORE, the petition for review is GRANTED. The challenged Decision and Resolution of the
take possession of the property upon the filing of expropriation proceedings and upon making a Court of Appeals in CA-G.R. SP No. 41860 are REVERSED. The complaint for expropriation filed
deposit with the proper court of at least fifteen percent (15%) of the fair market value of the property before the trial court by respondent City of Pasig, docketed as SCA No. 873, is ordered DISMISSED.
based on the current tax declaration of the property to be expropriated: Provided, finally, That, the
amount to be paid for expropriated property shall be determined by the proper court, based on the
SO ORDERED.
fair market value at the time of the taking of the property."

Judicial review of the exercise of eminent domain is limited to the following areas of concern: (a) the
adequacy of the compensation, (b) the necessity of the taking, and (c) the public use character of the
purpose of the taking.11

In this case, petitioner contends that respondent City of Pasig failed to establish a genuine necessity
which justifies the condemnation of her property. While she does not dispute the intended public
purpose, nonetheless, she insists that there must be a genuine necessity for the proposed use and
purposes. According to petitioner, there is already an established sports development and recreational
activity center at Rainforest Park in Pasig City, fully operational and being utilized by its residents,
including those from Barangay Caniogan. Respondent does not dispute this. Evidently, there is no
"genuine necessity" to justify the expropriation.

The right to take private property for public purposes necessarily originates from "the necessity" and
the taking must be limited to such necessity. In City of Manila v. Chinese Community of Manila,12 we
held that the very foundation of the right to exercise eminent domain is a genuine necessity
and that necessity must be of a public character. Moreover, the ascertainment of the necessity
must precede or accompany and not follow, the taking of the land. In City of Manila v. Arellano Law
College,13 we ruled that "necessity within the rule that the particular property to be expropriated must
be necessary, does not mean an absolute but only a reasonable or practical necessity, such as would
combine the greatest benefit to the public with the least inconvenience and expense to the
condemning party and the property owner consistent with such benefit."

Applying this standard, we hold that respondent City of Pasig has failed to establish that there is a
genuine necessity to expropriate petitioner’s property. Our scrutiny of the records shows that the
82
ISSUE: whether a municipality may expropriate private property by virtue of a municipal resolution
which was disapproved by the Sangguniang Panlalawigan.

HELD: YES.
Eminent domain, the power which the Municipality of Bunawan exercised in the instant case, is a
fundamental State power that is inseparable from sovereignty. It is government’s right to appropriate,
in the nature of a compulsory sale to the State, private property for public use or purpose. Inherently
possessed by the national legislature the power of eminent domain may be validly delegated to local
governments, other public entities and public utilities. For the taking of private property by the
government to be valid, the taking must be for public use and there must be just compensation
The Municipality of Bunawan’s power to exercise the right of eminent domain is not disputed as it is
expressly provided for in Batas Pambansa Blg. 337, the Local Government Code 18 in force at the
time expropriation proceedings were initiated. Section 9 of said law states:
“Section 9.Eminent Domain. — A local government unit may, through its head and acting pursuant to
a resolution of its sanggunian, exercise the right of eminent domain and institute condemnation
proceedings for public use or purpose.”
POLITICAL LAW; LOCAL GOVERNMENT CODE (B.P. 337); POWER OF THE SANGGUNIANG
PANLALAWIGAN TO REVIEW ORDINANCES, RESOLUTIONS AND EXECUTIVE ORDERS PROMULGATED
BY THE MUNICIPAL MAYOR; DECLARATION OF INVALIDITY MUST BE ON THE SOLE GROUND THAT IT
PERCIVAL MODAY vs COURT OF APPEALS IS BEYOND THE POWER OF THE SANGGUNIAN BAYAN OR MAYOR TO ISSUE THE RESOLUTION,
Posted on July 25, 2013 by winnieclaire ORDINANCE OR ORDER UNDER REVIEW. — The Sangguniang Panlalawigan’s disapproval of Municipal
Standard Resolution No. 43-89 is an infirm action which does not render said resolution null and void. The law,
[G.R. No. 107916. February 20, 1997.] as expressed in Section 153 of B.P. BLG. 337, grants the Sangguniang Panlalawigan the power to
declare a municipal resolution invalid on the sole ground that it is beyond the power of the
FACTS: Sangguniang Bayan or the Mayor to issue. Although pertaining to a similar provision of law but
• On July 23, 1989, the Sangguniang Bayan of the Municipality of Bunawan in Agusan del Sur passed different factual milieu then obtaining, the Court’s pronouncements in Velazco vs. Blas, where we
Resolution No. 43-89, cited significant early jurisprudence, are applicable to the case at bar. “The only ground upon which a
“Authorizing the Municipal Mayor to Initiate the Petition for Expropriation of a One (1) Hectare Portion provincial board may declare any municipal resolution, ordinance, or order invalid is when such
of Lot No. 6138-Pls-4 Along the National Highway Owned by Percival Moday for the Site of Bunawan resolution, ordinance, or order is ‘beyond the powers conferred upon the council or president making
Farmers Center and Other Government Sports Facilities. the same.’ Absolutely no other ground is recognized by the law. A strictly legal question is before the
• In due time, Resolution No. 43-89 was approved by then Municipal Mayor Anuncio C. Bustillo and provincial board in its consideration of a municipal resolution, ordinance, or order. The provincial
transmitted to the Sangguniang Panlalawigan for its approval (board’s) disapproval of any resolution, ordinance, or order must be premised specifically upon the
• Sangguniang Panlalawigan disapproved said Resolution and returned it with the comment that fact that such resolution, ordinance, or order is outside the scope of the legal powers conferred by
“expropriation is unnecessary considering that there are still available lots in Bunawan for the law. If a provincial board passes these limits, it usurps the legislative functions of the municipal
establishment of the government center.” council or president. Such has been the consistent course of executive authority.” Thus, the
• The Municipality of Bunawan, herein public respondent, subsequently filed a Petition for Eminent Sangguniang Panlalawigan was without the authority to disapprove Municipal Resolution No. 43-89 for
Domain against petitioner Percival Moday before the RTC the Municipality of Bunawan clearly has the power to exercise the right of eminent domain and its
• , public respondent municipality filed a Motion to Take or Enter Upon the Possession of Subject Sangguniang Bayan the capacity to promulgate said resolution, pursuant to the earlier-quoted Section
Matter of This Case stating that it had already deposited with the municipal treasurer the necessary 9 of B.P. Blg. 337. Perforce, it follows that Resolution No. 43-89 is valid and binding and could be
amount in accordance with Section 2, Rule 67 of the Revised Rules of Court and that it would be in used as lawful authority to petition for the condemnation of petitioners’ property.
the government’s best interest for public respondent to be allowed to take possession of the property
• the Regional Trial Court granted respondent municipality’s motion to take possession of the land
o that the Sangguniang Panlalawigan’s failure to declare the resolution invalid leaves it effective.
o that the duty of the Sangguniang Panlalawigan is merely to review the ordinances and resolutions
passed by the Sangguniang Bayan under the old LGC
o that the exercise of eminent domain is not one of the two acts enumerated in Section 19 thereof
requiring the approval of the Sangguniang Panlalawigan
CA upheld the trial court. Meanwhile, the Municipality of Bunawan had erected three buildings on the
subject property.

83
On March 6, 1991, public respondent municipality filed a Motion to Take or Enter Upon the Possession
of Subject Matter of This Case stating that it had already deposited with the municipal treasurer the
necessary amount in accordance with Section 2, Rule 67 of the Revised Rules of Court and that it
would be in the government's best interest for public respondent to be allowed to take possession of
the property.

Despite petitioners' opposition and after a hearing on the merits, the Regional Trial Court granted
respondent municipality's motion to take possession of the land. The lower court held that the
Sangguniang Panlalawigan's failure to declare the resolution invalid leaves it effective. It added that
the duty of the Sangguniang Panlalawigan is merely to review the ordinances and resolutions passed
by the Sangguniang Bayan under Section 208 (1) of B.P. Blg. 337, old Local Government Code and
that the exercise of eminent domain is not one of the two acts enumerated in Section 19 thereof
requiring the approval of the Sangguniang Panlalawigan. 5 The dispositive portion of the lower court's
Order dated July 2, 1991 reads:

WHEREFORE, it appearing that the amount of P632.39 had been deposited as per
Official Receipt No. 5379647 on December 12, 1989 which this Court now
determines as the provisional value of the land, the Motion to Take or Enter Upon
the Possession of the Property filed by petitioner through counsel is hereby
GRANTED. The Sheriff of this Court is ordered to forthwith place the plaintiff in
possession of the property involved.
G.R. No. 107916 February 20, 1997
Let the hearing be set on August 9, 1991 at 8:30 o'clock in the morning for the
PERCIVAL MODAY, ZOTICO MODAY (deceased) and LEONORA MODAY, petitioners,  purpose of ascertaining the just compensation or fair market value of the property
vs. sought to be taken, with notice to all the parties concerned.
COURT OF APPEALS, JUDGE EVANGELINE S. YUIPCO OF BRANCH 6, REGIONAL TRIAL
COURT, AGUSAN DEL SUR AND MUNICIPALITY OF BUNAWAN, respondents. SO ORDERED. 6

The main issue presented in this case is whether a municipality may expropriate private property by Petitioners' motion for reconsideration was denied by the trial court on October 31, 1991.
virtue of a municipal resolution which was disapproved by the Sangguniang Panlalawigan. Petitioner
seeks the reversal of the Court of Appeals decision and resolution, promulgated on July 15, 1992 and
October 22, 1992 respectively, 1 and a declaration that Municipal Resolution No. 43-89 of the Petitioners elevated the case in a petition for certiorari alleging grave abuse of discretion on the part
Bunawan Sangguniang Bayan is null and void. of the trial court, but the same was dismissed by respondent appellate court on July 15, 1992. 7 The
Court of Appeals held that the public purpose for the expropriation is clear from Resolution No. 43-89
and that since the Sangguniang Panlalawigan of Agusan del Sur did not declare Resolution No. 43-89
On July 23, 1989, the Sangguniang Bayan of the Municipality of Bunawan in Agusan del Sur passed invalid, expropriation of petitioners' property could proceed.
Resolution No. 43-89, "Authorizing the Municipal Mayor to Initiate the Petition for Expropriation of a
One (1) Hectare Portion of Lot No. 6138-Pls-4 Along the National Highway Owned by Percival Moday
for the Site of Bunawan Farmers Center and Other Government Sports Facilities." 2 Respondent appellate court also denied petitioners' motion for reconsideration on October 22, 1992. 8

In due time, Resolution No. 43-89 was approved by then Municipal Mayor Anuncio C. Bustillo and Meanwhile, the Municipality of Bunawan had erected three buildings on the subject property: the
transmitted to the Sangguniang Panlalawigan for its approval. On September 11, 1989, the Association of Barangay Councils (ABC) Hall, the Municipal Motorpool, both wooden structures, and
Sangguniang Panlalawigan disapproved said Resolution and returned it with the comment that the Bunawan Municipal Gymnasium, which is made of concrete.
"expropriation is unnecessary considering that there are still available lots in Bunawan for the
establishment of the government center." 3 In the instant petition for review filed on November 23, 1992, petitioner seeks the reversal of the
decision and resolution of the Court of Appeals and a declaration that Resolution No. 43-89 of the
The Municipality of Bunawan, herein public respondent, subsequently filed a petition for Eminent Municipality of Bunawan is null and void.
Domain against petitioner Percival Moday before the Regional Trial Court at Prosperidad, Agusan del
Sur. 4 The complaint was later amended to include the registered owners, Percival Moday's parents, On December 8, 1993, the Court issued a temporary restraining order enjoining and restraining public
Zotico and Leonora Moday, as party defendants. respondent Judge Evangeline Yuipco from enforcing her July 2, 1991 Order and respondent
84
municipality from using and occupying all the buildings constructed and from further constructing any Sec. 153. Sangguniang Panlalawigan Review. — (1) Within thirty days after
building on the land subject of this petition. 9 receiving copies of approved ordinances, resolutions and executive orders
promulgated by the municipal mayor, the sangguniang panlalawigan shall examine
the documents or transmit them to the provincial attorney, or if there be none, to
Acting on petitioners' Omnibus Motion for Enforcement of Restraining Order and for Contempt, the
the provincial fiscal, who shall examine them promptly and inform the sangguniang
Court issued a Resolution on March 15, 1995, citing incumbent municipal mayor Anuncio C. Bustillo
panlalawigan in writing of any defect or impropriety which he may discover therein
for contempt, ordering him to pay the fine and to demolish the "blocktiendas" which were built in
and make such comments or recommendations as shall appear to him proper.
violation of the restraining order. 10

(2) If the sangguniang panlalawigan shall find that any municipal ordinance,
Former Mayor Anuncio C. Bustillo paid the fine and manifested that he lost in the May 8, 1995
resolution or executive order is beyond the power conferred upon the sangguniang
election. 11 The incumbent Mayor Leonardo Barrios, filed a Manifestation, Motion to Resolve "Urgent
bayan or the mayor, it shall declare such ordinance, resolution or executive order
Motion for Immediate Dissolution of the Temporary Restraining Order" and Memorandum on June 11,
invalid in whole or in part, entering its actions upon the minutes and advising the
1996 for the Municipality of Bunawan. 12
proper municipal authorities thereof. The effect of such an action shall be to annul
the ordinance, resolution or executive order in question in whole or in part. The
Petitioners contend that the Court of Appeals erred in upholding the legality of the condemnation action of the sangguniang panlalawigan shall be final.
proceedings initiated by the municipality. According to petitioners, the expropriation was politically
motivated and Resolution No. 43-89 was correctly disapproved by the Sangguniang Panlalawigan,
xxx xxx xxx (Emphasis supplied.)
there being other municipal properties available for the purpose. Petitioners also pray that the former
Mayor Anuncio C. Bustillo be ordered to pay damages for insisting on the enforcement of a void
municipal resolution. The Sangguniang Panlalawigan's disapproval of Municipal Resolution No. 43-89 is an infirm action
which does not render said resolution null and void. The law, as expressed in Section 153 of B.P. Blg.
337, grants the Sangguniang Panlalawigan the power to declare a municipal resolution invalid on the
The Court of Appeals declared that the Sangguniang Panlalawigan's reason for disapproving the
sole ground that it is beyond the power of the Sangguniang Bayan or the Mayor to issue. Although
resolution "could be baseless, because it failed to point out which and where are those available lots.'"
pertaining to a similar provision of law but different factual milieu then obtaining, the Court's
Respondent court also concluded that since the Sangguniang Panlalawigan did not declare the
pronouncements in Velazco v. Blas, 19 where we cited significant early jurisprudence, are applicable to
municipal board's resolution as invalid, expropriation of petitioners' property could
the case at bar.
proceed. 13

The only ground upon which a provincial board may declare any municipal
The Court finds no merit in the petition and affirms the decision of the Court of Appeals.
resolution, ordinance, or order invalid is when such resolution, ordinance, or order is
"beyond the powers conferred upon the council or president making the same."
Eminent domain, the power which the Municipality of Bunawan exercised in the instant case, is a Absolutely no other ground is recognized by the law. A strictly legal question is
fundamental State power that is inseparable from sovereignty. 14 It is government's right to before the provincial board in its consideration of a municipal resolution, ordinance,
appropriate, in the nature of a compulsory sale to the State, private property for public use or or order. The provincial (board's) disapproval of any resolution, ordinance, or order
purpose. 15 Inherently possessed by the national legislature, the power of eminent domain may be must be premised specifically upon the fact that such resolution, ordinance, or order
validly delegated to local governments, other public entities and public utilities. 16For the taking of is outside the scope of the legal powers conferred by law. If a provincial board
private property by the government to be valid, the taking must be for public use and there must be passes these limits, it usurps the legislative function of the municipal council or
just compensation. 17 president. Such has been the consistent course of executive authority. 20

The Municipality of Bunawan's power to exercise the right of eminent domain is not disputed as it is Thus, the Sangguniang Panlalawigan was without the authority to disapprove Municipal Resolution No.
expressly provided for in Batas Pambansa Blg. 337, the local Government Code 18 in force at the time 43-89 for the Municipality of Bunawan clearly has the power to exercise the right of eminent domain
expropriation proceedings were initiated. Section 9 of said law states: and its Sangguniang Bayan the capacity to promulgate said resolution, pursuant to the earlier-quoted
Section 9 of B.P. Blg. 337. Perforce, it follows that Resolution No. 43-89 is valid and binding and could
Sec. 9. Eminent Domain. — A local government unit may, through its head and be used as lawful authority to petition for the condemnation of petitioners' property.
acting pursuant to a resolution of its sanggunian, exercise the right of eminent
domain and institute condemnation proceedings for public use or purpose. As regards the accusation of political oppression, it is alleged that Percival Moday incurred the ire of
then Mayor Anuncio C. Bustillo when he refused to support the latter's candidacy for mayor in
What petitioners question is the lack of authority of the municipality to exercise this right since the previous elections. Petitioners claim that then incumbent Mayor C. Bustillo used the expropriation to
Sangguniang Panlalawigan disapproved Resolution No. 43-89. retaliate by expropriating their land even if there were other properties belonging to the municipality
and available for the purpose. Specifically, they allege that the municipality owns a vacant seven-
hectare property adjacent to petitioners' land, evidenced by a sketch plan. 21
Section 153 of B.P. Blg. 337 provides:
85
The limitations on the power of eminent domain are that the use must be public, compensation must The RTC denied the two motions. Filstream filed a Petition for Certiorari with the CA which dismissed
be made and due process of law must be  the petition for being insufficient in form and substance, aside from the fact that copies of the
observed. 22 The Supreme Court, taking cognizance of such issues as the adequacy of compensation, pleadings attached to the petition are blurred and unreadable.
necessity of the taking and the public use character or the purpose of the taking, 23 has ruled that the
necessity of exercising eminent domain must be genuine and of a public character. 24 Government ISSUES/HELD: 
may not capriciously choose what private property should be taken.
1. WON City of Manila may exercise right of eminent domain despite the existence of a final
and executory judgment ordering private respondents to vacate the lots. 
After a careful study of the records of the case, however, we find no evidentiary support for
petitioners' allegations. The uncertified photocopy of the sketch plan does not conclusively prove that
YES. Petitioner Filstream anchors its claim by virtue of its ownership over the properties and the
the municipality does own vacant land adjacent to petitioners' property suited to the purpose of the
existence of a final and executory judgment against private respondents ordering the latter’s
expropriation. In the questioned decision, respondent appellate court similarly held that the pleadings
ejectment from the premises.
and documents on record have not pointed out any of respondent municipality's "other available
properties available for the same purpose." 25 The accusations of political reprisal are likewise
Private respondents’ claim on the other hand hinges on an alleged supervening event which has
unsupported by competent evidence. Consequently, the Court holds that petitioners' demand that the
rendered the enforcement of petitioner’s rights moot, that is, the expropriation proceedings
former municipal mayor be personally liable for damages is without basis.
undertaken by the City of Manila over the disputed premises for the benefit of herein private
respondents.  For its part, the City of Manila is merely exercising its power of eminent domain within
WHEREFORE, the instant petition is hereby DENIED. The questioned Decision and Resolution of the its jurisdiction by expropriating petitioner’s properties for public use.
Court of Appeals in the case of "Percival Moday." et al. v. Municipality of Bunawan, et al." (CA G.R. SP
No. 26712) are AFFIRMED. The Temporary Restraining Order issued by the Court on December 8, There is no dispute as to the existence of a final and executory judgment in favor of petitioner
1993 is LIFTED. Filstream ordering the ejectment of private respondents from the properties subject of this dispute. 
Thus, petitioner has every right to assert the execution of this decision as it had already became final
SO ORDERED. and executory.

However, it must also be conceded that the City of Manila has an undeniable right to exercise its
(Filstream International Inc. vs. CA,  G.R. No. 125218 Jan. 23, 1998) power of eminent domain within its jurisdiction. The right to expropriate private property for public
use is expressly granted to it under Sec 19 of the Local Government Code. Sec 100 of the Revised
FACTS:  Charter of the City of Manila further empowers the city government to expropriate private property in
the pursuit of its urban land reform and housing program. The city’s right to exercise these
Filstream International is the registered owner of parcels of land located in Antonio Rivera St., Tondo prerogatives notwithstanding the existence of a final and executory judgment over the property to be
II Manila. On January 7, 1993, it filed an ejectment suit against the occupants (private respondents) expropriated had already been previously upheld by the court in the case of Philippine Columbian
of the said parcels of land on the grounds of termination of the lease contract and non-payment of Association vs Panis:
rentals. The ejectment suit became final and executory as no further action was taken beyond the
CA.  “The City of Manila, acting through its legislative branch, has the express power to acquire private
lands in the city and subdivide these lands into home lots for sale to bona-fide tenants or occupants
During the pendency of the ejectment proceedings private respondents filed a complaint for thereof, and to laborers and low-salaried employees of the city.
Annulment of Deed of Exchange against Filstream. The City of Manila came into the picture when it
approved Ordinance No. 7813 authorizing Mayor Alfredo Lim to initiate acquisition through legal That only a few could actually benefit from the expropriation of the property does not diminish its
means of certain parcels of land. Subsequently, the City of Manila approved Ordinance No. 7855 public use character.  It is simply not possible to provide all at once land and shelter for all who need
declaring the expropriation of certain parcels of land which formed part of the properties of Filstream. them (Sumulong v. Guerrero, 154 SCRA 461 [1987]).
The said properties were sold and distributed to qualified tenants pursuant to the Land
Use Development Program of the City of Manila. The City of Manila then filed a complaint for eminent Corollary to the expanded notion of public use, expropriation is not anymore confined to vast tracts of
domain seeking to expropriate lands in Antonio Rivera St. The RTC issued a Writ of Possession in land and landed estates.  It is therefore of no moment that the land sought to be expropriated in this
favor of the City. case is less than the half a hectare only (Pulido v. Court of Appeals, 122 SCRA 63 [1983]).

Filstream filed a motion to dismiss and a motion to quash the writ of possession. The motion to 2. WON expropriation of Filstream’s lots were legally and validly undertaken. 
dismiss was premised on the following grounds:  no valid cause of action; the petition does not satisfy
the requirements of public use and a mere clandestine maneuver to circumvent the writ execution NO. We take judicial notice of the fact that urban land reform has become a paramount task in view
issued by the RTC of Manila in the ejectment suit; violation of the constitutional guarantee against of the acute shortage of decent housing in urban areas particularly in Metro Manila.  Nevertheless,
non-impairment of obligation and contract; price offered was too low hence violative of the just despite the existence of a serious dilemma, local government units are not given an unbridled
compensation provision of the constitution.  authority when exercising their power of eminent domain in pursuit of solutions to these
problems.  Constitutional provisions on due process and just compensation for the expropriation of

86
private property must be complied with. Other laws have also set down specific rules in SOMVILLO, LEONARDO MANICAD, OPRENG MICLAT, BENITA MATA, GREGORIO LOPEZ,
the exercise of the power of eminent domain, to wit: MARCELINA SAPNO, JESUS MERCADO and CALIXTO GOMEZ, respondents.

• Sec 19 of LGC provides that such exercise must be pursuant to the provisions of the Constitution
and pertinent laws. 

• Sec 9 of the Urban Development and Housing Act of 1992 (UDHA) provides an order of priority in FRANCISCO, J.:
the acquisition of land for socialized housing, with private lands listed as the last option.
In resolving the instant petitions, the Court is tasked to strike a balance between the contending
• Sec 10 of UDHA provides that expropriation shall be resorted to only when other modes of interests when the state exercises its power of eminent domain. On one side we have the owners of
acquisition such as community mortgage, land swapping, donation to the government, etc. have been the property to be expropriated who must be duly compensated for the loss of their property, while
exhausted, and, where expropriation is resorted to, parcels of land owned by small property owners on the other is the State which must take the property for public use.
shall be exempted. 

Compliance with the above legislated conditions are deemed mandatory because these are the only Petitioner, Filstream International, Inc., is the registered owner of the properties subject of this
safeguards in securing the right of owners of private property to DUE PROCESS when their property is dispute consisting of adjacent parcels of land situated in Antonio Rivera Street, Tondo II, Manila, with
expropriated for public use.  a total area of 3,571.10 square meters and covered by T.C.T. Nos. 203937, 203936, 169198, 169199,
169200 and 169202 of the Register of Deeds of Manila.
There is nothing in the records which would indicate that the City of Manila complied with the above
conditions. Filstream’s properties were expropriated and ordered condemned in favor of the City of On January 7, 1993, petitioner filed an ejectment suit before the Metropolitan Trial Court of Manila
Manila sans any showing that resort to the acquisition of other lands listed under Sec. 9 of RA 7279 (Branch 15) docketed as Civil Case No. 140817-CV against the occupants of the abovementioned
have proved futile. Evidently, there was a violation of petitioner Filstream’s right to due process. parcels of land (herein private respondents in G. R. No. 128077) on the grounds of termination of the
lease contract and non-payment of rentals. Judgment was rendered by the MTC on September 14,
It must be emphasized that the State has a paramount interest in exercising its power of eminent 1993 ordering private respondents to vacate the premises and pay back rentals to petitioner.1
domain for the general good considering that the right of the State to expropriate private property as
long as it is for public use always takes precedence over the interest of private property owners. 
However we must not lose sight of the fact that the individual rights affected by the exercise of such Not satisfied, private respondents appealed the decision to the Regional Trial Court of Manila, Branch
right are also entitled to protection, bearing in mind that the exercise of this superior right cannot 4 (Civil Case No. 93-68130) which in turn affirmed the decision of the MTC in its decision dated
override the guarantee of due process extended by the law to owners of the property to be February 22, 1994. Still not content, private respondents proceeded to the Court of Appeals via a
expropriated.  (Filstream International Inc. vs. CA, G.R. No. 125218 Jan. 23, 1998) petition for review (CA-G.R. SP No. 33714). The result however remained the same as the CA
affirmed the decision of the RTC in its decision dated August 25, 1994.2 Thereafter, no further action
was taken by the private respondents, as a result of which the decision in the ejectment suit became
G.R. No. 125218 January 23, 1998 final and executory.

FILSTREAM INTERNATIONAL INCORPORATED, petitioner,  However, it appeared that during the pendency of the ejectment proceedings private respondents
vs. filed on May 25, 1993, a complaint for Annulment of Deed of Exchange against petitioner Filstream
COURT OF APPEALS, JUDGE FELIPE S. TONGCO and THE CITY OF MANILA, respondents. which was docketed in Civil Case No. 93-66059 before the RTC of Manila, Branch 43. It was at this
stage that respondent City of Manila came into the picture when the city government approved
G.R. No. 128077 January 23, 1998 Ordinance No. 78133 on November 5, 1993, authorizing Mayor Alfredo S. Lim to initiate the
acquisition by negotiation, expropriation, purchase, or other legal means certain parcels of land
registered under T.C.T. Nos. 169193, 169198, 169190, 169200, 169202 and 169192 of the Registry
FILSTREAM INTERNATIONAL INCORPORATED, petitioner,  of Deeds of Manila which formed part of the properties of petitioner then occupied by private
vs. respondents. Subsequently, the City of Manila approved Ordinance No. 7855 4 declaring the
COURT OF APPEALS, ORLANDO MALIT, ANTONIO CAGUIAT, ALICIA CABRERA, ARMANDO expropriation of certain parcels of land situated along Antonio Rivera and Fernando Ma. Guerrero
LACHICA, JACINTO CAGUIAT, GLORIA ANTONIO, ELIZALDE NAVARRA, DOLORES FUENTES, streets in Tondo, Manila which were owned by Mr. Enrique Quijano Gutierrez, petitioner's
SUSANA ROY, ANTONIO IBANEZ, BENIGNO BASILIO, LUCERIA DEMATULAC, FLORENCIA predecessor-in-interest. The said properties were to be sold and distributed to qualified tenants of the
GOMEZ, LAZARO GOMEZ, JOSE GOMEZ VENANCIO MANALOTO, CRISTINO UMALI, DEMETRIA area pursuant to the Land Use Development Program of the City of Manila.
GATUS, PRISCILLA MALONG, DOMINGO AGUILA, RAMON SAN AGUSTIN, JULIAN FERRER,
JR., FRANCISCO GALANG, FLORENTINO MALIWAT, SEVERINA VILLAR, TRINIDAD NAGUIT,
JOSE NAGUIT, FORTUNATO AGUSTIN CABRERA, GAUDENCIO INTAL, DANILO DAVID, On May 23, 1994, respondent City of Manila filed a complaint for eminent domain (Civil Case No. 94-
ENRIQUE DAVID, VICENTE DE GUZMAN, POLICARPIO LUMBA, BELEN PALMA, ELEN 70560) before the RTC of Manila, Branch 42,5 seeking to expropriate the aforecited parcels of land
owned by petitioner Filstream which are situated at Antonio Rivera Street, Tondo II, Manila.6

87
Pursuant to the complaint filed by respondent City of Manila, the trial court issued a Writ of Petitioner filed a motion for reconsideration and attached clearer copies of the pertinent documents
Possession 7 in favor of the former which ordered the transfer of possession over the disputed and papers pursuant to Section 2(a), Rule 6 of the Revised Internal Rules of the Court of Appeals. But
premises to the City of Manila. on May 20, 1996, respondent CA issued a resolution denying the motion as petitioner failed to submit
clearer and readable copies of the pleadings. 17 This prompted petitioner to proceed to this Court
giving rise to the instant petition for review on certiorari under Rule 45 and docketed herein as G.R.
At this juncture, petitioner Filstream filed a motion to dismiss the complaint for eminent domain as
No. 125218, assailing the dismissal of its petition by the CA in its resolution dated March 18, 1996 as
well as a motion to quash the writ of possession. The motion to dismiss was premised on the following
well as that of its motion for reconsideration in the resolution dated May 20, 1996.
grounds: no valid cause of action; the petition does not satisfy the requirements of public use and a
mere clandestine maneuver to circumvent the writ of execution issued by the RTC of Manila, Branch 4
in the ejectment suit; violation of the constitutional guarantee against non-impairment of obligations Meanwhile, owing to the finality of the decision in the ejectment suit (Civil Case No. 140817-CV), the
and contracts; price offered was too low hence violative of the just compensation provision of the MTC of Manila, Branch 15, upon motion of petitioner Filstream, issued a Writ of Execution as well as a
constitution and the said amount is without the certification of the City Treasurer for availability of Notice to Vacate the disputed premises. 18 Private respondents filed a Motion to Recall/Quash the Writ
funds.8 With respect to the motion to quash the writ of possession, petitioner raised the following of Execution and Notice to Vacate 19 alleging the existence of a supervening event in that the
objections: failure to comply with Section 2 of Rule 67 of the Rules of Court, Ordinance No. 7813 is a properties subject of the dispute have already been ordered condemned in an expropriation
void enactment for it was approved without a public hearing and violative of the constitutional proceeding in favor of the City of Manila for the benefit of the qualified occupants thereof, thus
guarantee against impairment of obligations and contracts; the price is too low and unconscionable execution shall be stayed. Petitioner opposed the motion, reiterating that the decision in the
violating the just compensation provision of the constitution, and the said writ is tainted with infirmity ejectment case is already final and executory and disputed private respondents' right to interpose the
considering the absence of a certification from the City of Manila that there is an immediately expropriation proceedings as a defense because the latter were not parties to the same.
available fund for the subject expropriation.9
For its part, the City of Manila filed on March 13, 1996, a motion for intervention with prayer to
Respondent City of Manila filed its opposition 10 to petitioner Filstream's two motions and to which stay/quash the writ of execution on the ground that it is the present possessor of the property subject
petitioner accordingly filed a reply. 11 On September 30, 1994, the RTC of Manila, Branch 42, issued of execution.
an order denying petitioner Filstream's motion to dismiss and the motion to quash the Writ of
Possession and declared as follows:
In its order dated March 14, 1996, the MTC of Manila, Branch 14, denied private respondents' motion
as it found the allegations therein bereft of merit and upheld the issuance of the Writ of Execution and
IN FINE, the defendant's motion to dismiss and motion to quash writ of possession Notice to Vacate in petitioner's favor. 20 Subsequently, the trial court also denied the motion filed by
are both without merit and are hereby DENIED and the subject parcels of lands the City of Manila.
covered by TCT Nos. 203937, 203936, 169198, 169199, 169200 and 169202 (of
the Register of Deeds of Manila) located at Antonio Rivera Street, Tondo II, Manila
On April 22, 1996, the trial court issued an order commanding the demolition of the structure erected
with a total area of 3,571.10 square meters are hereby declared CONDEMNED in
on the disputed premises. To avert the demolition, private respondents filed before the RTC of Manila,
favor of the City of Manila for distribution and resale to all poor and landless
Branch 14, a Petition for Certiorari and Prohibition with prayer for the issuance of a temporary
qualified residents/tenants in the said area under the city's "land-for-the landless"
restraining order and preliminary injunction (docketed as Civil Case No. 96-78098). On April 29,
program upon payment of just compensation which is yet to be determined by this
1996, the RTC of Manila, Branch 33, issued a TRO enjoining the execution of the writ issued in Civil
Court.12
Case No. 140817-CV by the MTC of Manila, Branch 14. 21 Subsequently, the RTC issued a writ of
preliminary injunction on May 14, 1996.22
Petitioner filed a motion for reconsideration 13 as well as a supplemental motion for
reconsideration 14seeking the reversal of the above-quoted order but the same were denied. 15 Still,
On May 15, 1996, the City of Manila filed its Petition for Certiorari and Prohibition with prayer for the
petitioner filed a subsequent motion to be allowed to file a second motion for reconsideration but it
issuance of a temporary restraining order and preliminary injunction which was raffled to Branch 23 of
was also denied.
the RTC of Manila (docketed as Civil Case No. 96-78382), seeking the reversal of the orders issued by
the MTC of Manila, Branch 14, which denied its motion to intervene and quash the writ of execution in
Aggrieved, petitioner filed on March 31, 1996, a Petition for Certiorari with the Court of Appeals (CA- Civil Case No. 140817-CV.
G.R. SP No. 36904) seeking to set aside the September 30, 1994 order of the RTC of Manila, Branch
42. However, on March 18, 1996, respondent CA issued a resolution dismissing the petition in this
Thereafter, upon motion filed by the City of Manila, an order was issued by the RTC of Manila, Branch
wise:
10, ordering the consolidation of Civil Case No. 96-78382 with Civil Case No. 96-78098 pending
before Branch 14 of the RTC of Manila. 23 On May 21, 1996, the RTC of Manila, Branch 14, issued an
It appearing that the above-entitled petition is insufficient in form and substance — injunction in Civil Case No. 96-78098 enjoining the implementation of the writ of execution until
it does not comply with Section 2(a), Rule 6 of the Revised Internal Rules of the further orders from the court. 24Petitioner Filstream filed a Motion to Dissolve the Writ of Preliminary
Court of Appeals which requires that the "petition shall be . . . accompanied by . . . Injunction and to be allowed to post a counter-bond but the trial court denied the same. Filstream
other pertinent documents and papers," aside from the fact that copies of the then filed a motion for reconsideration from the order of denial but pending resolution of this motion,
pleadings attached to the petition are blurred and unreadable — this Court resolved it filed a motion for voluntary inhibition of the presiding judge of the RTC of Manila, Branch 14. The
to summarily DISMISS the same (petition).16
88
motion for inhibition was granted 25 and as a result, the consolidated cases (Civil Case No. 96-78382 February 18, 1997 which granted herein private respondents' prayer for a TRO and Writ of Preliminary
and 96-78098) were re-raffled to the RTC of Manila, Branch 33. Injunction, the same being null and void for having been issued in grave abuse of discretion.

During the proceedings before the RTC of Manila, Branch 33, petitioner Filstream moved for the Upon motion filed by petitioner Filstream, in order to avoid any conflicting decisions on the legal
dismissal of the consolidated cases (Civil Case No. 96-78382 and No. 96-78098) for violation of issues raised in the petitions, the Court ordered that the later petition, G.R. No. 128077 be
Supreme Court Circular No. 04-94 (forum shopping) because the same parties, causes of action and consolidated with G.R. No. 128077 in the resolution of March 5, 1997.31
subject matter involved therein have already been disposed of in the decision in the ejectment case
(Civil Case No. 140817) which has already became final and executory prior to the filing of these
The issue raised in G.R. No. 125218 is purely a procedural and technical matter. Petitioner takes
consolidated cases.
exception to the resolutions of respondent CA dated March 18, 1996 and May 20, 1996 which ordered
the dismissal of its Petition for Certiorari for non-compliance with Sec. 2(a) of Rule 6 of the Revised
On December 9, 1996, an order was issued by the RTC of Manila, Branch 33, ordering the dismissal of Internal Rules of the Court of Appeals by failing to attach to its petition other pertinent documents
Civil Case Nos. 96-78382 and 96-78098 for violation of Supreme Court Circular No. 04- and papers and for attaching copies of pleadings which are blurred and unreadable. Petitioner argues
94. 26 Immediately thereafter, petitioner Filstream filed an Ex-parte Motion for Issuance of an Alias that respondent appellate court seriously erred in giving more premium to form rather than
Writ of Demolition and Ejectment and a supplemental motion to the same dated January 10 and 13, substance.
1997, respectively, 27 before the MTC of Manila, Branch 15, which promulgated the decision in the
ejectment suit (Civil Case No. 140817-CV). On January 23, 1997, the court granted the motion and
We agree with the petitioner. A strict adherence to the technical and procedural rules in this case
issued the corresponding writ of demolition.
would defeat rather than meet the ends of justice as it would result in the violation of the substantial
rights of petitioner. At stake in the appeal filed by petitioner before the CA is the exercise of their
As a consequence of the dismissal of the consolidated cases, herein private respondents filed a property rights over the disputed premises which have been expropriated and have in fact been
Petition for Certiorari and Prohibition with prayer for the issuance of a temporary restraining order ordered condemned in favor of the City of Manila. In effect, the dismissal of their appeal in the
and preliminary injunction before the Court of Appeals (docketed as CA-G.R. SP No. expropriation proceedings based on the aforementioned grounds is tantamount to a deprivation of
43101) 28 assailing the above-mentioned order of dismissal by the RTC of Manila, Branch 33, as property without due process of law as it would automatically validate the expropriation proceedings
having been issued with grave abuse of discretion tantamount to lack or in excess of jurisdiction. which the petitioner is still disputing. It must be emphasized that where substantial rights are
affected, as in this case, the stringent application of procedural rules may be relaxed if only to meet
the ends of substantial justice.
In a resolution dated January 28, 1997, the Court of Appeals granted herein private respondents
prayer for the issuance of a temporary restraining order and directed the MTC of Manila, Branch 15,
to desist from implementing the order of demolition dated January 23, 1997, unless otherwise In these instances, respondent CA can exercise its discretion to suspend its internal rules and allow
directed. 29 the parties to present and litigate their causes of action so that the Court can make an actual and
complete disposition of the issues presented in the case. Rather than simply dismissing the petition
summarily for non-compliance with respondent court's internal rules, respondent CA should have
At the conclusion of the hearing for the issuance of a writ of preliminary injunction, the Court of
instead entertained petitioner Filstream's petition for review on certiorari, and ordered petitioner to
Appeals, in its resolution dated February 18, 1997, found merit in private respondents' allegations in
submit the corresponding pleadings which it deems relevant and replace those which are unreadable.
support of their application of the issuance of the writ and granted the same, to wit:
This leniency could not have caused any prejudice to the rights of the other parties.

Finding that the enforcement or implementation of the writ of execution and notice
With regard to the other petition, G.R. No. 128077, petitioner Filstream objects to the issuance by
to vacate issued in Civil Case No. 140817-CV, the ejectment case before respondent
respondent CA of the restraining order and the preliminary injunction enjoining the execution of the
Judge Jiro, during the pendency of the instant petition, would probably be in
writ of demolition issued in the ejectment suit (Civil Case No. 140817-CV) as an incident to private
violation of petitioners' right, and would tend to render the judgment in the instant
respondents' pending petition assailing the dismissal by the RTC of Manila, Branch 33, of the
case ineffectual, and probably work injustice to the petitioners, the application for
consolidated petitions for certiorari filed by private respondents and the City of Manila on the ground
the issuance of a writ of preliminary injunction is hereby GRANTED.
of forum shopping.

WHEREFORE, upon the filing of a bond in the amount of P150,000.00, let a writ of
The propriety of the issuance of the restraining order and the writ of preliminary injunction is but a
preliminary injunction be issued enjoining respondents, their employees, agents,
mere incident to the actual controversy which is rooted in the assertion of the conflicting rights of the
representatives and anyone acting in their behalf from enforcing or executing the
parties in this case over the disputed premises. In order to determine whether private respondents
writ of execution and notice to vacate issued in Civil Case No. 140817-CV of the
are entitled to the injunctive reliefs granted by respondent CA, we deemed it proper to extract the
court of respondent Judge Jiro, or otherwise disturbing the status quo, until further
source of discord.
orders of this Court.30

In turn, petitioner Filstream is now before this Court via a Petition for Certiorari under Rule 65 (G.R.
No. 128077), seeking to nullify the Resolutions of the Court of Appeals dated January 28, 1997 and
89
Petitioner Filstream anchors its claim by virtue of its ownership over the properties and the existence Sec. 100. The City of Manila is authorized to acquire private lands in the city and to
of a final and executory judgment against private respondents ordering the latter's ejectment from subdivide the same into home lots for sale on easy terms to city residents, giving
the premises (Civil Case No. 140817-CV). first priority to the bona fide tenants or occupants of said lands, and second priority
to laborers and low-salaried employees. For the purpose of this section, the city
may raise the necessary funds by appropriations of general funds, by securing loans
Private respondents' claim on the other hand hinges on an alleged supervening event which has
or by issuing bonds, and, if necessary, may acquire the lands through expropriation
rendered the enforcement of petitioner's rights moot, that is, the expropriation proceedings (Civil
proceedings in accordance with law, with the approval of the President . . . .
Case No. 94-70560) undertaken by the City of Manila over the disputed premises for the benefit of
(Emphasis supplied).
herein private respondents. For its part, the City of Manila is merely exercising its power of eminent
domain within its jurisdiction by expropriating petitioner's properties for public use.
In fact, the City of Manila's right to exercise these prerogatives notwithstanding the existence of a
final and executory judgment over the property to be expropriated has been upheld by this Court in
There is no dispute as to the existence of a final and executory judgment in favor of petitioner
the case of Philippine Columbian Association vs. Panis, G.R. No. 106528, December 21,
Filstream ordering the ejectment of private respondents from the properties subject of this dispute.
1993. 32 Relying on the aforementioned provisions of the Revised Charter of the City of Manila, the
The judgment in the ejectment suit became final and executory after private respondents failed to
Court declared that:
interpose any appeal from the adverse decision of the Court of Appeals dated August 25, 1994 in CA-
G.R. SP No. 33714. Thus, petitioner has every right to assert the execution of this decision as it had
already become final and executory. The City of Manila, acting through its legislative branch, has the express power to
acquire private lands in the city and subdivide these lands into home lots for sale
to bona-fide tenants or occupants thereof, and to laborers and low-salaried
However, it must also be conceded that the City of Manila has an undeniable right to exercise its
employees of the city.
power of eminent domain within its jurisdiction. The right to expropriate private property for public
use is expressly granted to it under Section 19 of the 1991 Local Government Code, to wit:
That only a few could actually benefit from the expropriation of the property does
not diminish its public use character. It is simply not possible to provide all at once
Sec. 19. Eminent Domain. — A local government unit may, through its chief
land and shelter for all who need them (Sumulong v. Guerrero, 154 SCRA 461
executive and acting pursuant to an ordinance, exercise the power of eminent
[1987]).
domain for public use, or purpose, or welfare for the benefit of the poor and the
landless, upon payment of just compensation, pursuant to the provisions of the
Constitution and pertinent laws: Provided, however, That the power of eminent Corollary to the expanded notion of public use, expropriation is not anymore
domain may not be exercised unless a valid and definite offer has been previously confined to vast tracts of land and landed estates (Province of Camarines Sur v.
made to the owner, and such offer was not accepted; Provided, further, That the Court of Appeals, G. R. No. 103125, May 17, 1993; J. M. Tuason and Co., Inc. v.
local government unit may immediately take possession of the property upon the Land Tenure Administration, 31 SCRA 413 [1970]). It is therefore of no moment
filing of the expropriation proceedings and upon making a deposit with the proper that the land sought to be expropriated in this case is less than half a hectare only
court of at least fifteen (15%) of the fair market value of the property based on the (Pulido v. Court of Appeals, 122 SCRA 63 [1983]).
current tax declaration of the property to be expropriated: Provided, finally, That,
the amount to be paid for the expropriated property shall be determined by the
Through the years, the public use requirement in eminent domain has evolved into
proper court, based on the fair market value at the time of the taking of the
a flexible concept, influenced by changing conditions (Sumulong v. Guerrero, supra;
property. (Emphasis supplied).
Manotok v. National Housing Authority, 150 SCRA 89 [1987]; Heirs of Juancho
Ardona v. Reyes, 125 SCRA 220 [1983]). Public use now includes the broader
More specifically, the City of Manila has the power to expropriate private property in the pursuit of its notion of indirect public benefit or advantage, including in particular, urban land
urban land reform and housing program as explicitly laid out in the Revised Charter of the City of reform and housing.33
Manila (R.A. No. 409) as follows:
We take judicial notice of the fact that urban land reform has become a paramount task in view of the
General powers. — The city may have a common seal and alter the same at acute shortage of decent housing in urban areas particularly in Metro Manila. Nevertheless, despite
pleasure, and may take, purchase, receive, hold, lease, convey, and dispose of real the existence of a serious dilemma, local government units are not given an unbridled authority when
and personal property for the general interest of the city, condemn private property exercising their power of eminent domain in pursuit of solutions to these problems. The basic rules
for public use, contract and be contracted with, sue and be sued, and prosecute and still have to be followed, which are as follows: "no person shall be deprived of life, liberty, or property
defend to final judgment and execution, and exercise all the powers hereinafter without due process of law, nor shall any person be denied the equal protection of the laws (Art. 3,
conferred. (R.A. 409, Sec. 3; Emphasis supplied). Sec. 1, 1987 Constitution); private property shall not be taken for public use without just
compensation (Art. 3, Section 9, 1987 Constitution)". Thus, the exercise by local government units of
the power of eminent domain is not without limitations. Even Section 19 of the 1991 Local
x x x           x x x          x x x
Government Code is very explicit that it must comply with the provisions of the Constitution and
pertinent laws, to wit:
90
Sec. 19. Eminent Domain. — A local government unit may, through its chief For the purpose of socialized housing, government-owned and foreclosed properties
executive and acting pursuant to an ordinance, exercise the power of eminent shall be acquired by the local government units, or by the National Housing
domain for public use, or purpose, or welfare for the benefit of the poor and the Authority primarily through negotiated purchase: Provided, That qualified
landless, upon payment of just compensation, pursuant to the provisions of the beneficiaries who are actual occupants of the land shall be given the right of first
Constitution and pertinent laws: . . . (Emphasis supplied). refusal. (Emphasis supplied).

The governing law that deals with the subject of expropriation for purposes of urban land reform and Very clear from the abovequoted provisions are the limitations with respect to the order of priority in
housing is Republic Act No. 7279 (Urban Development and Housing Act of 1992) and Sections 9 and acquiring private lands and in resorting to expropriation proceedings as a means to acquire the same.
10 of which specifically provide as follows: Private lands rank last in the order of priority for purposes of socialized housing. In the same vein,
expropriation proceedings are to be resorted to only when the other modes of acquisition have been
exhausted. Compliance with these conditions must be deemed mandatory because these are the only
Sec. 9. Priorities in the acquisition of Land. — Lands for socialized housing shall be
safeguards in securing the right of owners of private property to due process when their property is
acquired in the following order:
expropriated for public use.

(a) Those owned by the Government or any of its subdivisions, instrumentalities, or


Proceeding from the parameters laid out in the above disquisitions, we now pose the crucial question:
agencies, including government-owned or controlled corporations and their
Did the City of Manila comply with the abovementioned conditions when it expropriated petitioner
subsidiaries;
Filstream's properties? We have carefully scrutinized the records of this case and found nothing that
would indicate that respondent City of Manila complied with Sec. 9 and Sec. 10 of R.A. 7279.
(b) Alienable lands of the public domain; Petitioner Filstream's properties were expropriated and ordered condemned in favor of the City of
Manila sans any showing that resort to the acquisition of other lands listed under Sec. 9 of RA 7279
(c) Unregistered or abandoned and idle lands; have proved futile. Evidently, there was a violation of petitioner Filstream's right to due process which
must accordingly be rectified.

(d) Those within the declared Areas for Priority Development, Zonal Improvement
sites, and Slum Improvement and Resettlement Program sites which have not yet Indeed, it must be emphasized that the State has a paramount interest in exercising its power of
been acquired; eminent domain for the general good considering that the right of the State to expropriate private
property as long as it is for public use always takes precedence over the interest of private property
owners. However we must not lose sight of the fact that the individual rights affected by the exercise
(e) Bagong Lipunan Improvement of Sites and Services or BLISS sites which have of such right are also entitled to protection, bearing in mind that the exercise of this superior right
not yet been acquired; and cannot override the guarantee of due process extended by the law to owners of the property to be
expropriated. In this regard, vigilance over compliance with the due process requirements is in order.
(f) Privately-owned lands.
WHEREFORE, the petitions are hereby GRANTED. In G.R. 125218, the resolutions of the Court of
Where on-site development is found more practicable and advantageous to the Appeals in CA-G. R. SP NO. 36904 dated March 18, 1996 and May 20, 1996 are hereby REVERSED
beneficiaries, the priorities mentioned in this section shall not apply. The local and SET ASIDE. In G.R. No. 128077, the resolution of the Court of Appeals in CA-G.R. SP No. 43101
government units shall give budgetary priority to on-site development of dated January 28, 1997 and February 18, 1997 are REVERSED and SET ASIDE.
government lands.
SO ORDERED.
Sec. 10. Modes of Land Acquisition. — The modes of acquiring lands for purposes of
this Act shall include, among others, community mortgage, land swapping, land
assembly or consolidation, land banking, donation to the Government, joint-venture
agreement, negotiated purchase, and expropriation. Provided, however, That
expropriation shall be resorted to only when other modes of acquisition have been
exhausted. Provided further, That where expropriation is resorted to, parcels of land
owned by small property owners shall be exempted for purposes of this Act.
Provided, finally, That abandoned property, as herein defined, shall be reverted and
escheated to the State in a proceeding analogous to the procedure laid down in Rule
91 of the Rules of Court.

91
SAN ROQUE REALTY AND DEVELOPMENT CORPORATION, petitioner, 
vs.
REPUBLIC OF THE PHILIPPINES (through the Armed Forces of the Philippines), respondent.

In Republic v. Lim, we emphasized that no piece of land can be finally and irrevocably taken
from an unwilling owner until compensation in paid.

Without FULL PAYMENT OF JUST COMPENSATION, there can be no transfer of title from the landowner
to the expropriator. Thus, the Republic's failure to pay just compensation precluded the perfection of
its title over the lot sought to be expropriated. In fact, we went even further and recognized the right
of the unpaid owner to recover the property if within 5 years from the decision of the expropriation
court, the expropriator fails to effect payment of just compensation.

Time and again, we have declared that EMINENT DOMAIN cases are to be strictly construed against
the expropriator. The payment of just compensation for private property taken for public use is an
indispensable requisite for the exercise of the State's sovereign power of eminent domain. Failure to
observe this requirement renders the taking ineffectual, notwithstanding the avowed public purpose.
To disregard this limitation on the exercise of governmental power to expropriate is to ride roughshod
over private rights.

From the records of this case and our previous findings in the related case, the Republic manifestly
failed to present clear and convincing evidence of full payment of just compensation and receipt
thereof by the property owners. More importantly, if the Republic had actually made full payment of
just compensation, in the ordinary course of things, it would have led to the cancellation of title, or at
least, the annotation of the lien in favor of the government on the certificate of title.

The registration with the Registry of Deeds of the Republic's interest arising from the exercise of it's
power or eminent domain is in consonance with the Land Registration Act. There is no showing that
the Republic complied with the aforesaid registration requirement. 

From the foregoing, it is clear that it was incumbent upon the Republic to cause the registration of the
subject properties in its name or record the decree of expropriation on the title. Yet, not only did the
Republic fail to register the subject properties in its name, it failed to do so for 56 years.

This brings us to the question: Is the Republic, by its failure or neglect to assert its claim, barred by
laches?

LACHES is the failure or neglect, for an unreasonable and unexplained length of time, to do that which
by exercising due diligence could or should have been done earlier; it is negligence or omission to
assert a right within a reasonable time, warranting a presumption that the party entitled to assert it
either has abandoned it or declined to assert it.

The general rule is that the State cannot be put in estoppel or laches by the mistakes or errors of its
officials or agents. This rule, however, admits of exceptions. One exception is when the strict

92
application of the rule will defeat the effectiveness of a policy adopted to protect the public, such as
the Torrens system.

Very telling of the Republic's silence and inaction, whether intentional or by sheer negligence, is the
testimony of Infante, the Republic's witness in the proceedings before the RTC, testifying that several
surveys were conducted on a number of expropriated lots, which surveys showed that the subject lot
was still registered in the name of the original owners. As such, Infante recommended in his report
that legal action be taken. Yet despite aforesaid recommendation, title to subject lot remained
registered in the name of the original owners, ans subsequently, its transferees. This silence and
unexplained inaction by the Republic clearly constitute laches.

The trial court correctly held that title registered under the Torrens system is notice to the whole
world. Every person dealing with registered land may safely rely on the correctness of its certificate of G.R. No. 163130             September 7, 2007
title and the law will not oblige him to go beyond what appears on the face thereof to determine the
condition of the property.
SAN ROQUE REALTY AND DEVELOPMENT CORPORATION, petitioner, 
An innocent purchaser for value is one who, relying on the certificate of title, bought the property vs.
from the registered owner, without notice that some other person has a right to, or interest in such REPUBLIC OF THE PHILIPPINES (through the Armed Forces of the Philippines), respondent.
property and pays a full and fair price for the same, at the time of such purchase, or before ha has
notice of the claim or interest of some other person in the property. DECISION

NACHURA, J.:

This is a petition for review on certiorari of a Decision1 of the Court of Appeals (CA) in CA-G.R. CV.
No. 61758 ordering the cancellation of petitioner San Roque Realty Development Corporation's
(SRRDC's) Transfer Certificates of Title (TCT) Nos. 128197 and 128198, thereby reversing the
Decision2 of the Regional Trial Court (RTC) of Cebu City, Branch 12, in Civil Case No. CEB-1843.

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

The subject parcels of land are located at Lahug, Cebu City and were part of Lot No. 933. Lot
No. 933 was covered by Transfer Certificate of Title No. 11946. It was originally owned by
Ismael D. Rosales, Pantaleon Cabrera and Francisco Racaza. On 5 September 1938, subject
parcels of land, together with seventeen (17) others, were the subject of an expropriation
proceeding initiated by the then Commonwealth of the Philippines docketed as Civil Case No.
781. On 19 October 1938, Judge Felix Martinez ordered the initial deposit of P9,500.00 as
pre-condition for the entry on the lands sought to be expropriated. On 14 May 1940, a
Decision was rendered (Exhibit "D," Records, pp. 204-214) condemning the parcels of land.
However, the title of the subject parcel of land was not transferred to the government.

Eventually, the land was subdivided and T.C.T. No. 11946 was cancelled and new titles were
issued by the Register of Deeds of Cebu. Two parcels covered by T.C.T. Nos. 128197 (Lot
No. 933-B-3) and 128198 (Lot No. 933-B-4) were acquired by defendant-appellee. In 1995,
defendant-appellee begun construction of townhouses on the subject parcels of land.

On 22 February 1996, plaintiff-appellant filed the present case (Records, pp. 1-15) alleging
that it is the owner of the subject parcels of land by virtue of the 1938 Decision in the
expropriation case, thus, T.C.T. Nos. 128197 and 128198 are null and void. It argued that

93
defendant-appellee, had no right to possess the subject properties because it was not its of the subdivision plan Psd-114779 and Lot 933-B-4 of the subdivision plan Psd-27-023209,
lawful owner. respectively; that subject parcels of land belong to plaintiff and registration thereof in the
name of defendant San Roque is null and void. Consequently, defendant San Roque’s
possession and ownership over the subject property are without legal basis.
In its Answer (Records, pp. 28-38), defendant-appellee claimed that it was a buyer in good
faith. It also claimed that there was no valid expropriation because it was initiated by the
executive branch without legislative approval. It also alleged that the expropriation was On the other hand, defendant San Roque alleged that subject parcels of land have been
never consummated because the government did not actually enter the land nor were the covered by the Torrens System for decades and any transactions involving the same
owners paid any compensation.3 including the alleged expropriation should have been registered and annotated on the
Transfer Certificates of Title; that there has been no registration much less annotation of said
expropriation on TCTs issued to defendant San Roque nor any [of] its predecessors-in-
The appellate court then quotes, verbatim, the evidence and positions of the parties, as found by the
interest. (Exhibits "20" to "24," "25," "25-A" to "25-C," Exhibits "2," "2-A" to "2-C," "3," "3-
trial court, viz.:
A" and "3-B"); that plaintiff never secured a title in its name, never actually took possession
of subject parcels of land from the date of the Decision in Civil Case No. 781 up to the
Plaintiff alleged that the Republic of the Philippines is the absolute owner of Lot No. 933 of present; that despite the fact that defendant San Roque’s Park Vista Project is within viewing
Cebu Cadastre (covered by Transfer Certificate of Title 11946), a part and parcel of the and walking distance from Camp Lapu-lapu, it was able to introduce substantial
Camp Lapu-lapu military reservation; that said parcel of land was originally private property improvements (Exhibits "36," "36-A" to "36-Q") with no action being taken by plaintiff; that
registered in the names of Francisco Racaza, Pantaleon Cabrera and Josefina Martinez; that there are other developments on Lot 933 such as the Cebu Civic and Trade Center which
on October 19, 1938, plaintiff (then Commonwealth now Republic of the Philippines) include areas within the military camp as well (Exhibits "36-R" to "36-V," "38," "38-A" to
instituted condemnation proceeding against the owners of eighteen (18) parcels of land "38-R"); that plaintiff’s only proof of its claim is the Camp Lapu-lapu Development Plan
including Lot 933 in Banilad Estate Lahug (Exhibits "A" and "A-1") before the Court of First (Exhibit "F") which is a private survey of plaintiff; that plaintiff knew and was fully aware of
Instance of the Province of Cebu, 8th Judicial District, that the purpose of expropriation was all transactions involving Lot No. 933 up to this date; that defendant San Roque is an
to carry out the development program of the Philippine Army as provided in the National innocent purchaser for value and, therefore, entitled to the protection of the law as it has
Defense Act, i.e., military reservation; that sometime in October 1938, Judge Felix Martinez every right to rely on the correctness of the certificates of title issued therefor; that
ordered plaintiff to make an initial deposit of P9,500.00 with any depository of the latter defendant San Roque and its predecessors-in-interest have been in open, notorious and
payable to the Provincial Treasurer as pre-condition for the entry on the lands sought to be continuous possession and enjoyment of subject property(ies) since 1930; that there is a
expropriated (Exhibit "B"); that, accordingly, plaintiff deposited said amount with the presumption of regularity in the issuance of subject TCT Nos. 128197 and 128198 by
Philippine National Bank to the credit of the Provincial Treasurer (Exhibit "C"); that said defendant Register of Deeds; that the alleged Camp Lapu-lapu Development Plan, in the
amount was subsequently disbursed in full but due to the destruction of the vouchers, absence of any Transfer Certificate of Title in plaintiff’s name, cannot prevail over defendant
journal and cash book in the Office of the Provincial Treasurer during the last World War, the San Roque’s Transfer Certificate of Title; that defendant San Roque’s (sic) commenced
names of the payees could not reasonably be ascertained (Exhibit "P"); that on May 14, development of subject parcels of land as early as 1993 and started construction in April
1940, Judge Martinez issued a Decision condemning the properties in favor of plaintiffs and, 1994 upon issuance of titles in its name, two and a half years prior to institution of the
at the same time, fixing the just compensation thereof (Exhibits "D" and "E"); that defendant instant case; that it has been paying real taxes since the acquisition of subject properties
San Roque’s predecessors namely Ismael D. Rosales, Pantaleon Cabrera and Francisco (Exhibits "4," "4-A" and "4-B," "5," "5-A" and "5-B," "26" to "35"); that all requirements for
Racaza interposed and (sic) Exception and Notice of Intention to Appeal and filed their such development, such as securing permits and licenses from government agencies were
corresponding appeal bond (Exhibits "N" & "O"); that naturally, the filing held temporarily in complied with (Exhibits "9" to "18-C"); that it was only on 24 July 1995 that plaintiff initiated
abeyance the finality of the Decision and prevented plaintiff from recording the Decision with steps to recover possession starting with the letter dated 24 July 1995 (Exhibit "1," "6," "7"
the Register of Deeds; that plaintiffs, nonetheless, started using the expropriated properties and "8") and even addressed to a wrong entity; that it took plaintiff fifty-six (56) years
including Lot 933, devoting the properties to military use; that to show use of subject (counted from the Decision dated 14 May 1940) to take action to secure its "claimed"
properties, plaintiff submitted (1) the historical account of the National Historical Commission ownership and possession; that private ownership of portions of Lot 933 have been affirmed
embodied in a metal marker located in Lot 932 adjacent to Lot 933 (TSN, January 21, 1997, by the appellate court by ordering the City Government of Cebu to pay the private landowner
pp. 6-7; 9; Exhibits "I," "I-1," "I-2;" (2) the testimonial accounts of Sgt. Suralta, Barangay for the portion used for the expansion of Geongson Road in the case of Perpetua Magno, et
Captain Rosales, Lt. Colonel Infante and Col. Reynaldo Correa; and, (3) the remnant of the al. versus City of Cebu, CA-G.R. No. 40604-CV (Exhibits "51" to "55," "55-A" to "55-C"); that
Lahug Airport, particularly its runway (originally devoted exclusively for military airport and in fact, the plaintiff paid rental for another allegedly expropriated property in the case of
landing field as can be gleaned from Executive Orders 73, 75 and 154 dated December 3, another expropriated Lot 934 subject of the case of Segura v. CAA, et al., CA-G.R. No.
1936, August 12, 1947 and June 24, 1938, respectively) situated on Lot 933 itself; that 12728-CV (Exh. "56," "56-A" to "56-B"); that the alleged expropriation of Lot 933 was never
survey maps of defendant and plaintiff have shown the exact location of the runway; that Lot consummated as plaintiff never entered, much less take possession, of subject parcels of
933 was devoted to military use by plaintiff not only for building structures but also military land and ever paid any compensation to the original owners despite its being a requisite for
training of the Riverine Battalion (Lot 932, as per testimony of M/Sgt. Renato Suralta); that valid exercise of the power of eminent domain; that there is nother (sic) on record which will
these training continued up to the present (TSN, January 27, 1997, pp. 4-8); that the area show that compensation for the expropriated lots was ever paid to, much less received by
where Park Vista is being built was used as training ground (TSN, April 3, 1997, p. 2). the landowners/predecessors-in-interest of defendant San Roque; that plaintiff abandoned
Plaintiff further alleged that defendant San Roque secured Certificates of Title in its favor to the public use, much less did it do so within a reasonable time, the Lahug Airport had long
the prejudice of plaintiff specifically TCT Nos. 128197 and 128198 covering Lot No. 933-B-3 transferred to Mactan and the areas said airport used to occupy are now being developed by
94
or on long term lease to private entities; that alleged initial deposit of P9,500.00 payable to THE COURT OF APPEALS ERRED IN HOLDING THAT RESPONDENT HAD A BETTER RIGHT TO
Provincial Treasurer does not specify for which property the same was intended for; that if THE SUBJECT PROPERTIES. THE SUBJECT PROPERTIES BEING UNDER THE TORRENS
indeed plaintiff actually entered subject property and introduced improvements thereon it SYSTEM, PETITIONER'S RIGHT AS THE REGISTERED OWNER FAR OUTWEIGHS
would not have been possible for defendant San Roque or its predecessors-in-interest to RESPONDENT'S. ASIDE FROM THE FACT THAT ITS CLAIM IS OF DOUBTFUL VALIDITY,
have actually possessed and enjoyed the property from 1938 up to the present to the RESPONDENT, FOR SEVERAL DECADES, FAILED TO REGISTER ITS INTEREST, IF ANY, OVER
exclusion of plaintiff; that the expropriation requires legislative action and thus the alleged THE SUBJECT PROPERTIES.
expropriation of Lot 933 is null and void; that City Ordinances have classified Lot 933 and
neighboring lots initially as residential and presently as commercial (Exhibits "39," "40,"
III.
"41"); and, finally that the AFP-Viscom is not the proper party to initiate much less institute
suit even assuming the alleged expropriation is valid as the expropriated lots were placed
under the control and supervision of the Civil Aeronautics Board.4 THE COURT OF APPEALS ERRED IN HOLDING THAT RESPONDENT IS NOT GUILTY OF LACHES
DESPITE THE FACT THAT IT FAILED TO ASSERT ITS RIGHT, IF ANY, OVER THE SUBJECT
PROPERTIES FOR 56 LONG YEARS.
On August 25, 1998, the RTC rendered a Decision5 dismissing the Republic's complaint and upholding
SRRDC's ownership over the subject properties as supported by SRRDC's actual possession thereof
and its unqualified title thereto. The RTC ruled that SRRDC's ownership is borne out by the original IV.
owner's title to Lot No. 933 and the subsequent transferees’ respective titles all of which bore no
annotation of the fact of expropriation and did not indicate the Republic's favorable lien. It also found THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER IS NOT A BUYER IN GOOD
that there was no valid expropriation since the records are bereft of a showing that consideration was FAITH.12
paid for the subject properties.6

At the outset, we note that issues of ownership and possession of several lots included in the 18
Aggrieved, the Republic appealed the decision to the CA insisting on its absolute ownership over the parcels of land covering the Banilad Friar Lands Estate had been the subject of earlier controversies
subject properties grounded on the following: (1) the CFI Decision in the expropriation case, Civil which we already had occasion to rule upon. Lot Nos. 932 and 939 were the subject of Valdehueza v.
Case No. 781; (2) the ruling of this Court in Valdehueza v. Republic; 7 and (3) the expropriated Republic13 which is ubiquitously invoked by the Republic in this case. Republic v. Lim14 dealt with the
properties, including Lot No. 933, are devoted to public use. special circumstances surrounding the incomplete and ineffectual expropriation of Lot No. 932. On the
other hand, Federated Realty Corporation v. Court of Appeals 15 preliminarily determined the state of
The CA reversed the RTC Decision on the finding that the appeal from the CFI Decision in the ownership and possession of a portion of Lot No. 933, particularly Lot 3, covered by TCT No. 119929.
expropriation case was never perfected by the original owners of the subject properties, 8 and thus,
the expropriation of Lot No. 933 became final and binding on the original owners, and SRRDC, which In Valdehueza, we held that the registered lot owners were not entitled to recover possession of the
merely stepped into the latter's shoes, is similarly bound.9 The CA further held that laches and expropriated lots considering that the titles contained annotations of the right of the National Airports
estoppel cannot work against the Republic despite its failure from 1940 to register Lot No. 933 in its Corporation (now CAA) to pay for and acquire said lots.16
name, or to record the decree of expropriation on the title.10 Accordingly, the CA found no necessity to
rule on the applicability of Valdehueza v. Republic in the case.11
In Republic v. Lim,17 we rejected the Republic’s invocation of our Decision in Valdehueza to retain
ownership over said lots, and upheld the principle that title to the expropriated property shall pass
Hence, the instant petition. from the owner to the expropriator only upon full payment of just compensation. 18 We struck down
the Republic’s claim of ownership over Lot No. 932 in light of its blatant disregard of the explicit order
In this appeal, SRRDC assigned the following errors: in Valdehueza to effect payment of just compensation.

I. In Federated Realty Corporation v. Court of Appeals 19 we upheld Federated Realty Corporation’s
(FRC’s) clear and unmistakable right, as the title holder, to the lot in question, necessitating the
issuance of a writ of injunction to prevent serious damage to its interests. 20 Even as the Republic
THE COURT OF APPEALS ERRED IN HOLDING THAT THE VALIDITY OF THE EXPROPRIATION
invoked Valdehueza and the CFI Decision in Civil Case No. 781 to defeat the rights of the registered
PROCEEDINGS IN CIVIL CASE NO. 781 MAY NO LONGER BE QUESTIONED. RESPONDENT'S
owner and actual possessor, we applied the settled principle in land registration that a certificate of
OWN (REBUTTAL) EVIDENCE SHOWS THAT THE DECISION IN CIVIL CASE NO. 781 IS NOT
title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the
YET FINAL. FURTHERMORE, THE CONDUCT OF EXPROPRIATION PROCEEDINGS ALONE DOES
person named therein.21
NOT CONFER TITLE UPON RESPONDENT.

It is against this backdrop that we resolve the main issue at bench: the ownership of Lot Nos. 933-B-
II.
3 and 933-B-4. To do so, however, we must answer a number of fundamental questions.

95
First, was there a valid and complete expropriation of the 18 parcels of land, inclusive of subject Lot the presumption that official duty had been regularly performed in assuming that the owners of the
No. 933? Corollary thereto, did the CFI Decision in Civil Case No. 781 attain finality and, as such, now 18 lots expropriated were adequately paid.
evade review?
We are not convinced.
To these questions, the CA responded in the affirmative. It found that no timely appeal had been filed
by the original owners of Lot No. 933, and thus, the CFI Decision became final. Accordingly, the CA
The Republic’s bare contention and assumption cannot defeat SRRDC’s apparent ownership over the
ruled that the validity of the expropriation, including the authority to expropriate, was no longer open
subject properties. As we have previously found in Valdehueza, Republic v. Lim 24 and Federated
to question. Therefore, the appellate court saw no necessity to delve into the applicability
Realty Corporation v. CA,25 by the very admission of the Republic, there was no record of payment of
of Valdehueza.
compensation to the land owners.

We cannot subscribe to the CA’s ruling.


In Republic v. Lim,26 we emphasized that no piece of land can be finally and irrevocably taken from an
unwilling owner until compensation is paid.27 Without full payment of just compensation, there can be
In its effort to simplify the issues, the CA disregarded relevant facts and ignored the evidence, no transfer of title from the landowner to the expropriator.28 Thus, we ruled that the Republic’s failure
noteworthy among which is that when the Republic filed its complaint with the RTC, it alleged that the to pay just compensation precluded the perfection of its title over Lot No. 932. 29 In fact, we went even
CFI Decision in Civil Case No. 781 had long become final and executory. However, this assertion further and recognized the right of the unpaid owner to recover the property if within five years from
would compound the Republic’s predicament, because the Republic could not adequately explain its the decision of the expropriation court the expropriator fails to effect payment of just compensation.
failure to register its ownership over the subject property or, at least, annotate its lien on the title.
Trying to extricate itself from this quandary, the Republic belatedly presented a copy of an Exception
Time and again, we have declared that eminent domain cases are to be strictly construed against the
and Notice of Intention to Appeal dated July 9, 1940, to show that an appeal filed by the original
expropriator.30 The payment of just compensation for private property taken for public use is an
owners of Lot No. 933 effectively prevented the Republic from registering its title, or even only
indispensable requisite for the exercise of the State’s sovereign power of eminent domain. Failure to
annotating its lien, over the property.
observe this requirement renders the taking ineffectual, notwithstanding the avowed public purpose.
To disregard this limitation on the exercise of governmental power to expropriate is to ride roughshod
The CA’s categorical pronouncement that the CFI Decision had become final as no appeal was over private rights.
perfected by SRRDC’s predecessor-in-interest is, therefore, contradicted by the Republic’s own
allegation that an appeal had been filed by the original owners of Lot No. 933. Not only did the CA fail
From the records of this case and our previous findings in the related cases, the Republic manifestly
to resolve the issue of the Republic’s failure to register the property in its name, it also did not give
failed to present clear and convincing evidence of full payment of just compensation and receipt
any explanation as to why title and continuous possession of the property remained with SRRDC and
thereof by the property owners.31 Notably, the CFI Decision in Civil Case No. 781 makes no mention of
its predecessors-in-interest for fifty-six years. The CA ruling that disregards these established facts
the initial deposit allegedly made by the Republic.32 Furthermore, based on the CFI Decision fixing the
and neglects to reconcile the contradiction mentioned above does not deserve concurrence by this
amount of just compensation for some of the lots, the initial deposit, if it was indeed disbursed, would
Court.
still not adequately recompense all the owners of the 18 expropriated lots.33 More importantly, if the
Republic had actually made full payment of just compensation, in the ordinary course of things, it
Furthermore, as correctly pointed out by SRRDC, even if the appellate court adverted to our finding would have led to the cancellation of title, or at least, the annotation of the lien in favor of the
in Valdehuezaon the finality of the expropriation over the lots subject of that case, still, SRRDC and its government on the certificate of title covering Lot No. 933.34
predecessors-in-interest would not be bound. The reference to the finality of the CFI Decision in Civil
Case No. 781 in Valdehueza applies to different parties and separate parcels of land. We confirmed
In Federated Realty Corporation v. CA,35 we expounded on the registration requirement in
this in Federated Realty Corporation v. CA,22 and noted that our decision in Valdehueza and
expropriation proceedings as provided in the law in force at the time of the CFI Decision, thus:
in Republic v. Lim23 did not involve the ownership of Lot No. 933 which was not subject of those
cases.
The registration with the Registry of Deeds of the Republic’s interest arising from the
exercise of its power of eminent domain is in consonance with Section 88 of Act No. 496 or
Second, assuming that the CFI Decision in Civil Case No. 781 is final and executory, and that the
the Land Registration Act (now Section 85 of P.D. 1529 also known as the Property
expropriation proceedings before that court had been completed, did the Republic pay just
Registration Decree), to wit:
compensation for Lot No. 933?

SEC. 88. Whenever any land of a registered owner, or any right or interest therein,
Regrettably, the CA did not dispose of this issue.
is taken by eminent domain, the Government or municipality or corporation or other
authority exercising such right shall file for registration in the proper province a
The Republic submits that the P9,500.00 initial deposit it made was disbursed in full to the owners of description of the registered land so taken, giving the name of such owner thereof,
the 18 lots subject of expropriation, and assumes that the owners of Lot No. 933 were among the referring by number and place of registration in the registration book to each
recipients of such disbursement. The Republic admits that records of payment were destroyed by fire certificate of title, and stating what amount or interest in the land is taken, and for
during World War II, and it cannot be ascertained who received the money. It would rely simply on what purpose. A memorandum of the right or interest taken, shall be made on each
96
certificate of title by the register of deeds, and where the fee simple is taken a new The general rule is that the State cannot be put in estoppel or laches by the mistakes or errors of its
certificate shall be entered to the owner for the land remaining to him after such officials or agents.38 This rule, however, admits of exceptions. One exception is when the strict
taking, and a new certificate shall be entered to the Government, municipality, application of the rule will defeat the effectiveness of a policy adopted to protect the public 39 such as
corporation, or other authority exercising such right for the land so taken. All fees the Torrens system.
on account of any memorandum of registration or entry of new certificate shall be
paid by the authority taking the land.
In Republic v. Court of Appeals,40 we ruled that the immunity of government from laches and estoppel
is not absolute, and the government’s silence or inaction for nearly twenty (20) years (starting from
Furthermore, Section 251 of the Code of Civil Procedure, the law in force at the time of the issuance of St. Jude’s titles in 1966 up to the filing of the Complaint in 1985) to correct and
the Commonwealthcase likewise provides for the recording of the judgment of expropriation recover the alleged increase in the land area of St. Jude was tantamount to laches.
in the Registry of Deeds. Said provision reads, to wit:
In the case at bench, the Republic failed to register the subject properties in its name and incurred in
SEC. 251. Final Judgment, Its Record and Effect. – The record of the final judgment laches spanning more than five-and-a-half (5 ½) decades. Even if we were to accede to the Republic’s
in such action shall state definitely by metes and bounds and adequate description. contention that the Exception and Notice of Intention to Appeal filed by the original owners of Lot No.
The particular land or interest in land condemned to the public use, and the nature 933 initially prevented it from registering said property in its name, we would still be hard pressed to
of the public use. A certified copy of the record of judgment shall be recorded find justification for the Republic’s silence and inaction for an excessively long time.
in the office of the registrar of deeds for the province in which the estate is
situated, and its effect shall be to vest in the plaintiff for the public use
Very telling of the Republic’s silence and inaction, whether intentional or by sheer negligence, is the
stated the land and estate so described. (Emphasis supplied)
testimony of Antonio L. Infante, the Republic’s witness in the proceedings before the RTC.41 On cross-
examination, he testified that several surveys42 were conducted on a number of expropriated lots,
There is no showing that the Republic complied with the aforestated registration including Lot No. 933.43 The results of these surveys showed that Lot No. 933 was still registered in
requirement. Without such compliance, it cannot be said that FRC had notice of the the name of the original owners.44 As such, Infante recommended in his report that legal action be
Republic’s adverse claim sufficient to consider the former in bad faith, for the law gives the taken.45 Yet, despite the aforesaid recommendation, title to Lot No. 933 remained registered in the
public the right to rely on the face of the Torrens title and to dispense with the need of name of the original owners, and subsequently its transferees. This silence and unexplained inaction
further inquiry, except only when one has actual knowledge of facts and circumstances that by the Republic clearly constitute laches.
should impel a reasonably cautious man to inquire further into its integrity. Such is the very
essence of our Torrens system as ruled in Legarda v. Saleeby, 31 Phil. 590, thus:
A fourth basic question is whether or not SRRDC is a buyer in good faith.

The real purpose of the system is to quiet title of land; to put a stop forever to any
The CA found SRRDC wanting in good faith because it should be imputed with constructive
question of the legality of the title, except claims which were noted at the time of
knowledge, or at least, sufficiently warned that the Republic had claims over the property in view of
registration, in the certificate, or which may arise subsequent thereto. That being
indications that the subject land belonged to a military reservation.
the purpose of the law, it would seem that once a title is registered, the owner may
rest secure, without the necessity of waiting in the portals of the courts, or sitting in
the "mirador de su casa," to avoid the possibility of losing his land. x x x The Contrary to the CA’s findings, however, Infante testified that there were no facilities installed by the
certificate, in the absence of fraud, is the evidence of title and shows exactly the AFP on Lot No. 933, although sometime in 1984 to 1985, there began some illegal construction
real interest of its owner. The title once registered, with very few exceptions, should thereon.46 He was uncertain as to whether a criminal case was filed against those responsible for the
not thereafter be impugned, except in some direct proceeding permitted by law. illegal construction, and simply referred to an arrangement between the AFP and an Amores Realty
Otherwise, all security in registered titles would be lost.36 which prevented the former from filing a case against the latter.47

From the foregoing, it is clear that it was incumbent upon the Republic to cause the registration of the Significantly, the records also reveal that the Republic’s possession of the 18 expropriated lots pertain
subject properties in its name or record the decree of expropriation on the title. Yet, not only did the only to the lots adjacent to Lot No. 933. At most, the Lahug Airport runway traverses only a portion of
Republic fail to register the subject properties in its name, it failed to do so for fifty-six (56) years. Lot No. 933 situated in Lot No. 933-A, and not Lot No. 933-B which is the subject of this case. Even if
these lots were originally part of Lot No. 933, the lack of annotation on the title of the decree of
expropriation, and its eventual segregation into several lots covered by separate titles enabled SRRDC
This brings us to the third question that begs resolution: Is the Republic, by its failure or neglect to
to purchase the subject properties, for value, free from any lien, and without knowledge of the
assert its claim, barred by laches?
Republic’s adverse claim of ownership.

Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which
The trial court correctly held that title registered under the Torrens system is notice to the
by exercising due diligence could or should have been done earlier; it is negligence or omission to
world.48 Every person dealing with registered land may safely rely on the correctness of its certificate
assert a right within a reasonable time, warranting a presumption that the party entitled to assert it
of title and the law will not oblige him to go beyond what appears on the face thereof to determine
either has abandoned it or declined to assert it.37
the condition of the property.49
97
The conveyance history of the subject properties is clearly shown on the titles of SRRDC’s In fine, we hold that the operative facts in the case at bar, to wit: (1) the incomplete expropriation of
predecessors-in-interest. Absent a showing that SRRDC had any participation, voluntary or otherwise, Lot No. 933 in view of Republic’s failure to prove payment in full of just compensation; (2) the
in the transfers by the original owners of Lot No. 933, prior to its eventual acquisition of the same, we registration under the Torrens system of the subject properties in the name of SRRDC and its
affirm that SRRDC is a buyer in good faith and an innocent purchaser for value. predecessors-in-interest; (3) the estoppel and laches of the Republic for 56 years; (4) the status of
SRRDC as an innocent purchaser for value; and (5) the passage of R.A. No. 9443, all warrant the
reversal of the CA Decision.
An innocent purchaser for value is one who, relying on the certificate of title, bought the property
from the registered owner, without notice that some other person has a right to, or interest in, such
property, and pays a full and fair price for the same, at the time of such purchase, or before he has WHEREFORE, premises considered, the petition is GRANTED. The August 15, 2003 Decision of the
notice of the claim or interest of some other person in the property.50 Court of Appeals is hereby REVERSED and the August 25, 1998 Decision of the Regional Trial Court
is REINSTATED. TCT Nos. 128197 and 128198, in the name of petitioner San Roque Realty and
Development Corporation, are upheld and declared valid.
Likewise, Section 32 of Presidential Decree No. 152951 provides:

SO ORDERED.
SECTION 32. Review of decree of registration; Innocent purchaser for value. – The decree
of registration shall not be reopened or revised by reason of absence, minority, or other
disability of any person adversely affected thereby, nor by any proceeding in any court for
reversing judgments, subject, however, to the right of any person, including the government
and the branches thereof, deprived of land or of any estate or interest therein by such
adjudication or confirmation of title obtained by actual fraud, to file in the proper Court of
First Instance a petition for reopening and review of the decree of registration not later than
one year from and after the date of the entry of such decree of registration, but in no case
shall such petition be entertained by the court where an innocent purchaser for value has
acquired the land or an interest therein, whose rights may be prejudiced. Whenever the
phrase "innocent purchaser for value" or an equivalent phrase occurs in this Decree, it shall
be deemed to include an innocent lessee, mortgagee, or other encumbrancer for value.

Upon the expiration of said period of one year, the decree of registration and the certificate
of title issued shall become incontrovertible. Any person aggrieved by such decree of
registration in any case may pursue his remedy by action for damages against the applicant
or any other persons responsible for the fraud.

In the instant case, the Republic’s adverse claim of ownership over the subject properties may have
given SRRDC’s predecessors-in-interest, the sellers, voidable title to the subject properties. However,
we stress that prior to SRRDC’s acquisition of the subject properties, Lot No. 933 had already been
subdivided and covered by separate titles of the subsequent transferees. These titles, including the
titles to the subject properties, had not been voided at the time of the sale to SRRDC in 1994. As
G.R. No. 146886             April 30, 2003
such, SRRDC acquired good title to the subject properties, having purchased them in good faith, for
value, and without notice of the seller’s defect of title, if any.
DEVORAH E. BARDILLON, petitioner, 
vs.
Finally, there is a recent development that has sealed the fate of the Republic in its claim of
BARANGAY MASILI OF CALAMBA, LAGUNA, respondent.
ownership over the subject properties. This is the passage of Republic Act No. 9443 (RA 9443),
entitled "AN ACT CONFIRMING AND DECLARING, SUBJECT TO CERTAIN EXCEPTIONS, THE VALIDITY
OF EXISTING TRANSFER CERTIFICATES OF TITLE AND RECONSTITUTED CERTIFICATES OF TITLE PANGANIBAN, J.:
COVERING THE BANILAD FRIAR LANDS ESTATE, SITUATED IN THE FIRST DISTRICT OF THE CITY OF
CEBU."52 The law confirms and declares valid all existing TCTs and Reconstituted Certificates of Title
An expropriation suit is incapable of pecuniary estimation. Accordingly, it falls within the jurisdiction of
duly issued by the Register of Deeds of Cebu Province and/or Cebu City covering any portion of the
regional trial courts, regardless of the value of the subject property.
Banilad Friar Lands Estate.53 Thus, by legislative fiat, SRRDC’s titles covering Lot Nos. 933B-3 and
933B-4 must be recognized as valid and subsisting.
The Case

98
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to set aside the herein respondent to produce the authority for the expropriation through the Municipal
January 10, 2001 Decision and the February 5, 2001 Resolution of the Court of Appeals 2 (CA) in CA- Council of Calamba, Laguna, the assailed Order dated August 4, 2000 was issued in favor of
GR SP No. 61088. The dispositive part of the Decision reads: Barangay Masili x x x and, on August 16, 2000, the corresponding order for the issuance of
the [W]rit of [P]ossession over Lot 4381-D."5
"WHEREFORE, premises considered, the present [P]etition for [C]ertiorari is hereby DENIED
DUE COURSE and accordingly DISMISSED, for lack of merit."3 Ruling of the Court of Appeals

The assailed Resolution4 denied petitioner's Motion for Reconsideration. In dismissing the Petition, the CA held that the Regional Trial Court (RTC) of Calamba, Laguna
(Branch 37)6 did not commit grave abuse of discretion in issuing the assailed Orders. It ruled that the
second Complaint for eminent domain (Civil Case No. 2845-99-C) was not barred by res judicata. The
The Facts
reason is that the Municipal Trial Court (MTC), which dismissed the first Complaint for eminent
domain (Civil Case No. 3648), had no jurisdiction over the action.
The factual antecedents are summarized by the CA as follows:
Hence, this Petition.7
"At the root of this present [P]etition is the controversy surrounding the two (2) [C]omplaints
for eminent domain which were filed by herein respondent for the purpose of expropriating a
The Issues
ONE HUNDRED FORTY FOUR (144) square meter-parcel of land, otherwise known as Lot
4381-D situated in Barangay Masili, Calamba, Laguna and owned by herein petitioner under
Transfer Certificate of Title No. 383605 of the Registry of Deeds of Calamba, Laguna. In her Memorandum, petitioner raises the following issues for our consideration:
Petitioner acquired from Makiling Consolidated Credit Corporation the said lot pursuant to a
Deed of Absolute Sale which was executed by and between the former and the latter on
"A. Whether or not, the Honorable Respondent Court committed grave abuse of discretion
October 7, 1996.
amounting to lack of jurisdiction when it denied and dismissed petitioner's appeal;

"The first [C]omplaint for eminent domain, docketed as Civil Case No. 3648 and entitled
"B. Whether or not, the Honorable Respondent Court committed grave abuse of discretion
'Brgy. Masili, Calamba, Laguna v. Emelita A. Reblara, Eugenia Almazan & Devorah E.
when it did not pass upon and consider the pending Motion for Reconsideration which was
Bardillon,' was filed before the Municipal Trial Court of Calamba, Laguna ('MTC') on February
not resolved by the Regional Trial Court before issuing the questioned Orders of 4 and 16
23, 1998, following the failure of Barangay Masili to reach an agreement with herein
August 2000;
petitioner on the purchase offer of TWO HUNDRED THOUSAND PESOS (P200,000.00). The
expropriation of Lot 4381-D was being pursued in view of providing Barangay Masili a multi-
purpose hall for the use and benefit of its constituents. "C. Whether or not, the Honorable Respondent Court committed grave abuse of discretion in
taking the total amount of the assessed value of the land and building to confer jurisdiction
to the court a quo;
"On March 5, 1999, the MTC issued an order dismissing Civil Case No. 3648 'for lack of
interest' for failure of the [respondent] and its counsel to appear at the pre-trial. The MTC, in
its Order dated May 3, 1999, denied [respondent's] [M]otion for [R]econsideration thereof. "D. Whether or not, the Honorable Respondent Court committed grave abuse of discretion in
ignoring the fact that there is an existing multi-purpose hall erected in the land owned by
Eugenia Almazan which should be subject of expropriation; and
"The second [C]omplaint for eminent domain, docketed as Civil Case No. 2845-99-C and
entitled 'Brgy. Masili, Calamba, Laguna v. Devorah E. Bardillon' was filed before Branch 37 of
the Regional Trial Court of Calamba, Laguna ('RTC') on October 18, 1999. This [C]omplaint "E. Whether or not, the Honorable Respondent Court committed grave abuse of discretion in
also sought the expropriation of the said Lot 4381-D for the erection of a multi-purpose hall failing to consider the issue of forum shopping committed by Respondent Masili."8
of Barangay Masili, but petitioner, by way of a Motion to Dismiss, opposed this [C]omplaint
by alleging in the main that it violated Section 19(f) of Rule 16 in that [respondent's] cause Simply put, the issues are as follows: (1) whether the MTC had jurisdiction over the expropriation
of action is barred by prior judgment, pursuant to the doctrine of res judicata. case; (2) whether the dismissal of that case before the MTC constituted res judicata; (3) whether the
CA erred when it ignored the issue of entry upon the premises; and (4) whether respondent is guilty
"On January 21, 2000, [the] Judge issued an order denying petitioner's Motion to Dismiss, of forum shopping.
holding that the MTC which ordered the dismissal of Civil Case No. 3648 has no jurisdiction
over the said expropriation proceeding. The Court's Ruling

"With the subsequent approval of Municipal Ordinance No. 2000-261 on July 10, 2000, and The Petition has no merit.
the submission thereof in compliance with [the] Judge's Order dated June 9, 2000 requiring
99
First Issue: Res judicata literally means a matter adjudged, judicially acted upon or decided, or settled by
Jurisdiction Over Expropriation judgment.15 It provides that a final judgment on the merits rendered by a court of competent
jurisdiction is conclusive as to the rights of the parties and their privies; and constitutes an absolute
bar to subsequent actions involving the same claim, demand or cause of action.16
Petitioner claims that, since the value of the land is only P11,448, the MTC had jurisdiction over the
case.9
The following are the requisites of res judicata: (1) the former judgment must be final; (2) the court
that rendered it had jurisdiction over the subject matter and the parties; (3) it is a judgment on the
On the other hand, the appellate court held that the assessed value of the property was
merits; and (4) there is — between the first and the second actions — an identity of parties, subject
P28,960.10 Thus, the MTC did not have jurisdiction over the expropriation proceedings, because the
matter and cause of action.17
amount involved was beyond the P20,000 jurisdictional amount cognizable by MTCs.

Since the MTC had no jurisdiction over expropriation proceedings, the doctrine of res judicata finds no
An expropriation suit does not involve the recovery of a sum of money. Rather, it deals with the
application even if the Order of dismissal may have been an adjudication on the merits.
exercise by the government of its authority and right to take property for public use.11 As such, it is
incapable of pecuniary estimation and should be filed with the regional trial courts.12
Third Issue:
Legality of Entry Into Premises
This was explained by the Court in Barangay San Roque v. Heirs of Francisco Pastor: 13

Petitioner argues that the CA erred when it ignored the RTC's Writ of Possession over her property,
"It should be stressed that the primary consideration in an expropriation suit is whether the
issued despite the pending Motion for Reconsideration of the ruling dismissing the Complaint. We are
government or any of its instrumentalities has complied with the requisites for the taking of
not persuaded.
private property. Hence, the courts determine the authority of the government entity, the
necessity of the expropriation, and the observance of due process. In the main, the subject
of an expropriation suit is the government's exercise of eminent domain, a matter that is The requirements for the issuance of a writ of possession in an expropriation case are expressly and
incapable of pecuniary estimation. specifically governed by Section 2 of Rule 67 of the 1997 Rules of Civil Procedure.18 On the part of
local government units, expropriation is also governed by Section 19 of the Local Government
Code.19 Accordingly, in expropriation proceedings, the requisites for authorizing immediate entry are
"True, the value of the property to be expropriated is estimated in monetary terms, for the
as follows: (1) the filing of a complaint for expropriation sufficient in form and substance; and (2) the
court is duty-bound to determine the just compensation for it. This, however, is merely
deposit of the amount equivalent to 15 percent of the fair market value of the property to be
incidental to the expropriation suit. Indeed, that amount is determined only after the court is
expropriated based on its current tax declaration.20
satisfied with the propriety of the expropriation."

In the instant case, the issuance of the Writ of Possession in favor of respondent after it had filed the
"Verily, the Court held in Republic of the Philippines v. Zurbano that 'condemnation
Complaint for expropriation and deposited the amount required was proper, because it had complied
proceedings are within the jurisdiction of Courts of First Instance,' the forerunners of the
with the foregoing requisites.
regional trial courts. The said case was decided during the effectivity of the Judiciary Act of
1948 which, like BP 129 in respect to RTCs, provided that courts of first instance had original
jurisdiction over 'all civil actions in which the subject of the litigation is not capable of The issue of the necessity of the expropriation is a matter properly addressed to the RTC in the course
pecuniary estimation.' The 1997 amendments to the Rules of Court were not intended to of the expropriation proceedings. If petitioner objects to the necessity of the takeover of her property,
change these jurisprudential precedents.14 she should say so in her Answer to the Complaint.21 The RTC has the power to inquire into the legality
of the exercise of the right of eminent domain and to determine whether there is a genuine necessity
for it.22
To reiterate, an expropriation suit is within the jurisdiction of the RTC regardless of the value of the
land, because the subject of the action is the government's exercise of eminent domain — a matter
that is incapable of pecuniary estimation. Fourth Issue:
Forum Shopping
Second Issue:
Res Judicata Petitioner claims that respondent is guilty of forum shopping, because it scouted for another forum
after obtaining an unfavorable Decision from the MTC.
Petitioner claims that the MTC's dismissal of the first Complaint for eminent domain was with
prejudice, since there was no indication to the contrary in the Order of dismissal. She contends that The test for determining the presence of forum shopping is whether the elements of litis
the filing of the second Complaint before the RTC should therefore be dismissed on account of res pendentia are present in two or more pending cases, such that a final judgment in one case will
judicata. amount to res judicata in another.23

100
Be it noted that the earlier case lodged with the MTC had already been dismissed when the Complaint
was filed before the RTC. Even granting arguendo that both cases were still pending, a final judgment
in the MTC case will not constitute res judicata in the RTC, since the former had no jurisdiction over
the expropriation case.

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

SO ORDERED.

[G.R. No. 147511. January 20, 2003]

101
MARINA Z. REYES; ALFREDO A. FRANCISCO; ANGELITA Z. GARCIA; ALFREDO Z. FRANCISCO,
JR; ARMANDO Z. FRANCISCO; ALMA C. FRANCISCO; EUGENIA Z. LUNA; CLARITA Z.
ZABALLERO, LEONARDO Z. ZABALLERO, JR, and TEODORO Z. ZABALLERO, in
substitution of LEONARDO M. ZABALLERO; AUGUSTO M. ZABALLERO; FRINE A.
ZABALLERO; ELENA FRONDA ZABALLERO; VICTOR GREGORIO F. ZABALLERO;
MARIA ELENA F. ZABALLERO; LOURDES ZABALLERO-LAVA; SOCORRO EMILIA
ZABALLERO-YAP; and TERESITA F. ZABALLERO, petitioners, vs. NATIONAL
HOUSING AUTHORITY, respondent.

Facts: Respondent National Housing Authority (NHA) filed complaints for the expropriation of
sugarcane lands belonging to the petitioners. The stated public purpose of the expropriation was the
expansion of the Dasmariñas Resettlement Project to accommodate the squatters who were relocated
from the Metropolitan Manila area. The trial court rendered judgment ordering the expropriation of
these lots and the payment of just compensation. The Supreme Court affirmed the judgment of the
lower court. 

A few years later, petitioners contended that respondent NHA violated the stated public purpose for
the expansion of the Dasmariñas Resettlement Project when it failed to relocate the squatters from
the Metro Manila area, as borne out by the ocular inspection conducted by the trial court which
showed that most of the expropriated properties remain unoccupied. Petitioners likewise question the
public nature of the use by respondent NHA when it entered into a contract for the construction of
low cost housing units, which is allegedly different from the stated public purpose in the expropriation
proceedings. Hence, it is claimed that respondent NHA has forfeited its rights and interests by virtue
of the expropriation judgment and the expropriated properties should now be returned to herein
petitioners. 

Issue: Whether or not the judgment of expropriation was forfeited in the light of the failure of
respondent NHA to use the expropriated property for the intended purpose but for a totally different
purpose.

Held: The Supreme Court held in favor of the respondent NHA. Accordingly, petitioners cannot insist
on a restrictive view of the eminentdomain provision of the Constitution by contending that
the contract for low cost housing is a deviation from the stated public use. It is now
settled doctrine that the concept of public use is no longer limited to traditional purposes. The term
"public use" has now been held to be synonymous with "public interest," "public benefit," "public
welfare," and "public convenience." Thus, whatever may be beneficially employed for the general
welfare satisfies the requirement of public use." 

In addition, the expropriation of private land for slum clearance and urban development is for a public
purpose even if the developed area is later sold to private homeowners, commercials firms,
entertainment and service companies, and other private concerns. Moreover, the Constitution itself
allows the State to undertake, for the common goodand in cooperation with the private sector, a
continuing program of urban land reform and housing which will make at affordable cost decent
housing and basic services to underprivileged and homeless citizens in urban centers and
resettlement areas. The expropriation of private property for the purpose of socialized housing for the
marginalized sector is in furtherance of social justice.

102
[G.R. No. 147511. January 20, 2003] (2) Plaintiff National Housing Authority is likewise hereby ordered, under pain of contempt, to
immediately pay the defendants, the amounts stated in the Writ of Execution as the adjudicated
compensation of their expropriated properties, which process was received by it according to the
records, on September 26, 1988, segregating therefrom, and in separate check, the lawyers fees in
favor of Atty. Bobby P. Yuseco, in the amount of P322,123.05, as sustained by their contract as
MARINA Z. REYES; ALFREDO A. FRANCISCO; ANGELITA Z. GARCIA; ALFREDO Z. FRANCISCO, gleaned from the records, with no other deduction, paying on its own (NHA) account, the necessary
JR; ARMANDO Z. FRANCISCO; ALMA C. FRANCISCO; EUGENIA Z. LUNA; CLARITA Z. legal expenses incident to the registration or issuance of new certificates of title, pursuant to the
ZABALLERO, LEONARDO Z. ZABALLERO, JR, and TEODORO Z. ZABALLERO, in provisions of the Property Registration Law (PD 1529);
substitution of LEONARDO M. ZABALLERO; AUGUSTO M. ZABALLERO; FRINE A.
ZABALLERO; ELENA FRONDA ZABALLERO; VICTOR GREGORIO F. ZABALLERO;
MARIA ELENA F. ZABALLERO; LOURDES ZABALLERO-LAVA; SOCORRO EMILIA (3) Defendants, however, are directed to pay the corresponding capital gains tax on the subject
ZABALLERO-YAP; and TERESITA F. ZABALLERO, petitioners, vs. NATIONAL properties, directing them additionally, to coordinate with the plaintiff NHA in this regard, in order to
HOUSING AUTHORITY, respondent. facilitate the termination of this case, put an end to this controversy and consign the same to its final
rest.

DECISION
For the alleged failure of respondent NHA to comply with the above order, petitioners filed on
PUNO, J.: April 28, 1992 a complaint[5] for forfeiture of rights before the Regional Trial Court of Quezon City,
Branch 79, in Civil Case No. Q-92-12093. They alleged that respondent NHA had not relocated
squatters from the Metropolitan Manila area on the expropriated lands in violation of the stated public
This is an appeal by certiorari from the decision of the Court of Appeals in CA-GR CV No. 51641
purpose for expropriation and had not paid the just compensation fixed by the court. They prayed
dated September 29, 2000[1] affirming the judgment of the Regional Trial Court of Quezon City,
that respondent NHA be enjoined from disposing and alienating the expropriated properties and that
Branch 79 which dismissed the complaint for forfeiture of rights filed by herein petitioners, as well as
judgment be rendered forfeiting all its rights and interests under the expropriation judgment. In its
the Resolution dated March 13, 2001 denying petitioners motion for reconsideration.
Answer,[6] respondent NHA averred that it had already paid a substantial amount to herein petitioners
Records show that in 1977, respondent National Housing Authority (NHA) filed separate and that the expropriation judgment could not be executed in view of several issues raised by
complaints for the expropriation of sugarcane lands, particularly Lot Nos. 6450, 6448-E, 6198-A and respondent NHA before the expropriation court (now Branch 18, RTC, Tagaytay City) concerning
6199 of the cadastral survey of Dasmarias, Cavite belonging to the petitioners, before the then Court capital gains tax, registration fees and other expenses for the transfer of title to respondent NHA, as
of First Instance of Cavite, and docketed as Civil Case Nos. T.G.-392, T.G.-396 and T.G.-417. The well as the claims for attorneys fees of Atty. Joaquin Yuseco, Jr., collaborating counsel for petitioners.
stated public purpose of the expropriation was the expansion of the Dasmarias Resettlement Project
Ocular inspections[7] conducted by the trial court on the subject properties show that:
to accommodate the squatters who were relocated from the Metropolitan Manila area. The trial court
rendered judgment ordering the expropriation of these lots and the payment of just
compensation. This was affirmed by the Supreme Court in a decision rendered on October 29, 1987 in 1. 80% of Lot No. 6198-A with an area of 120,146 square meters is already occupied by relocatees
the case of NHA vs. Zaballero[2] and which became final on November 26, 1987.[3] whose houses are made of light materials with very few houses partly made of hollow blocks. The
relocatees were relocated only on (sic) March of 1994;
On February 24, 1989, the expropriation court (now Branch 18, Regional Trial Court of Tagaytay
City) issued an Order[4] the dispositive portion of which reads:
2. Most of the area covered by Lot No. 2075 is almost occupied by houses and structures, most of
which are made of concrete materials. These houses are not being occupied by squatters relocated to
WHEREFORE, and resolving thus, let an Alias Writ of Execution be immediately issued and that: the said lot by the defendant NHA;

(1) The Register of Deeds of the Province of Cavite is hereby ordered to transfer, in the name of the 3. Lot No. 6199 is also occupied by concrete houses and structures but likewise there are no
plaintiff National Housing Authority, the following: relocatees in said lot. A large area of the same is still unoccupied.

(a) Transfer Certificate No. RT-638 containing an area of 79,167 square meters On September 29, 1995, the trial court rendered judgment dismissing the complaint. Finding
situated in Barrio Bangkal, Dasmarias, Cavite; that the failure of respondent NHA to pay just compensation and of petitioners to pay capital gains tax
are both unjustified and unreasonable, the trial court held that: (1) respondent NHA is not deemed to
(b) Transfer Certificate of Title No. T-55702 containing an area of 20,872 square have abandoned the public purpose for which the subject properties were expropriated because the
meters situated in Barrio Bangkal, Dasmarias, Cavite; relocation of squatters involves a long and tedious process. It ruled that respondent NHA actually
pursued the public purpose of the expropriation when it entered into a contract with Arceo C. Cruz
involving the construction of low cost housing on the expropriated lots to be sold to qualified low
(c) Transfer Certificate of Title No. RT-639 and RT-4641 covering Lot Nos. 6198-A and income beneficiaries; (2) there is no condition imposed in the expropriation judgment that the subject
6199 with an aggregate area of 159,985 square meters also situated in Barrio properties shall revert back to its original owners in case the purpose of expropriation is terminated or
Bangkal, Dasmarias, Cavite. abandoned; (3) the payment of just compensation is independent of the obligation of herein
103
petitioners to pay capital gains tax; and (4) in the payment of just compensation, the basis should be x x x x x x x x x
the value at the time the property was taken. On appeal, the Court of Appeals affirmed the decision of
the trial court.
The taking to be valid must be for public use. There was a time when it was felt that a literal meaning
Petitioners are now before us raising the following assignment of errors: 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
1. The Honorable Court of Appeals had decided a question of substance not in accord with into play. As just noted, the constitution in at least two cases, to remove any doubt, determines what
justice and equity when it ruled that, as the judgment of the expropriation court did is public use. One is the expropriation of lands to be subdivided into small lots for resale at cost to
not contain a condition that should the expropriated property be not used for the individuals. The other is in the transfer, through the exercise of this power, of utilities and other
intended purpose it would revert to the condemnee, the action to declare the private enterprise to the government. It is accurate to state then that at present whatever may be
forfeiture of rights under the expropriation judgment can not prosper; beneficially employed for the general welfare satisfies the requirement of public use.
(emphasis supplied)
2. The Honorable Court of Appeals decided a question of substance not in accord with
jurisprudence, justice and equity when it ruled that the non-payment is not a ground The act of respondent NHA in entering into a contract with a real estate developer for the
for forfeiture; construction of low cost housing on the expropriated lots to be sold to qualified low income
beneficiaries cannot be taken to mean as a deviation from the stated public purpose of their
3. The Honorable Court of Appeals erred in not declaring the judgment of expropriation taking. Jurisprudence has it that the expropriation of private land for slum clearance and urban
forfeited in light of the failure of respondent to use the expropriated property for the development is for a public purpose even if the developed area is later sold to private homeowners,
intended purpose but for a totally different purpose. commercials firms, entertainment and service companies, and other private concerns.[10]

Moreover, the Constitution itself allows the State to undertake, for the common good and in
The petition is not impressed with merit. cooperation with the private sector, a continuing program of urban land reform and
housing which will make at affordable cost decent housing and basic services to underprivileged and
Petitioners contend that respondent NHA violated the stated public purpose for the expansion of homeless citizens in urban centers and resettlement areas.[11] The expropriation of private property
the Dasmarias Resettlement Project when it failed to relocate the squatters from the Metro Manila for the purpose of socialized housing for the marginalized sector is in furtherance of the social justice
area, as borne out by the ocular inspection conducted by the trial court which showed that most of provision under Section 1, Article XIII of the Constitution which provides that:
the expropriated properties remain unoccupied. Petitioners likewise question the public nature of the
use by respondent NHA when it entered into a contract for the construction of low cost housing units,
which is allegedly different from the stated public purpose in the expropriation proceedings.Hence, it SECTION 1. The Congress shall give highest priority to the enactment of measures that protect and
is claimed that respondent NHA has forfeited its rights and interests by virtue of the expropriation enhance the right of all the people to human dignity, reduce social, economic, and political
judgment and the expropriated properties should now be returned to herein petitioners. We are not inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the
persuaded. common good.

The 1987 Constitution explicitly provides for the exercise of the power of eminent domain over
To this end, the State shall require the acquisition, ownership, use and disposition of property and its
private properties upon payment of just compensation. More specifically, section 9, Article III states
increments.
that private property shall not be taken for public use without just compensation. The constitutional
restraints are public use and just compensation.
It follows that the low cost housing project of respondent NHA on the expropriated lots is
Petitioners cannot insist on a restrictive view of the eminent domain provision of the Constitution compliant with the public use requirement.
by contending that the contract for low cost housing is a deviation from the stated public use. It is
now settled doctrine that the concept of public use is no longer limited to traditional purposes. Here, We likewise do not subscribe to petitioners contention that the stated public purpose was
as elsewhere, the idea that public use is strictly limited to clear cases of use by the public has been abandoned when respondent NHA failed to occupy the expropriated lots by relocating squatters from
abandoned. The term public use has now been held to be synonymous with public interest, public the Metro Manila area. The expropriation judgment declared that respondent NHA has a lawful right to
benefit, public welfare, and public convenience.[8] The rationale for this new approach is well explained take petitioners properties for the public use or purpose of expanding the Dasmarias Resettlement
in the case of Heirs of Juancho Ardona, et al. vs. Reyes, et al., [9] to wit: Project. The taking here is absolute, without any condition, restriction or qualification. Contrary to
petitioners submission, the ruling enunciated in the early case of Fery vs. Municipality of
Cabanatuan,[12] is still good and sound doctrine, viz.:
The restrictive view of public use may be appropriate for a nation which circumscribes the scope of
government activities and public concerns and which possesses big and correctly located public lands
that obviate the need to take private property for public purposes. Neither circumstance applies to the x x x If, for example, land is expropriated for a particular purpose, with the condition that when that
Philippines. We have never been a laissez faire State. And the necessities which impel the exertion of purpose is ended or abandoned the property shall return to its former owner, then, of course, when
sovereign power are all too often found in areas of scarce public land or limited government the purpose is terminated or abandoned the former owner reacquires the property so expropriated. x
resources.

104
x x If, upon the contrary, however, the decree of expropriation gives to the entity a fee simple title, apply. An in rem proceeding, condemnation acts upon the property. After condemnation, the
then, of course, the land becomes the absolute property of the expropriator x x x. paramount title is in the public under a new and independent title; thus, by giving notice to all
claimants to a disputed title, condemnation proceedings provide a judicial process for securing better
title against all the world than may be obtained by voluntary conveyance. (emphasis supplied)
When land has been acquired for public use in fee simple unconditionally, either by the
exercise of eminent domain or by purchase, the former owner retains no rights in the land,
and the public use may be abandoned, or the land may be devoted to a different use, We, however, likewise find the refusal of respondent NHA to pay just compensation, allegedly for
without any impairment of the estate or title acquired, or any reversion to the former failure of petitioners to pay capital gains tax and surrender the owners duplicate certificates of title, to
owner. be unfounded and unjustified.

First, under the expropriation judgment the payment of just compensation is not subject to any
Petitioners further aver that the continued failure of respondent NHA to pay just compensation condition. Second, it is a recognized rule that although the right to enter upon and appropriate the
for a long period of time justifies the forfeiture of its rights and interests over the expropriated land to public use is completed prior to payment, title to the property expropriated shall pass from the
lots.They demand the return of the expropriated lots. Respondent NHA justifies the delay to pay just owner to the expropriator only upon full payment of the just compensation. In the case
compensation by reason of the failure of petitioners to pay the capital gains tax and to surrender the of Association of Small Landowners in the Phils., Inc., et al. vs. Secretary of Agrarian
owners duplicate certificates of title. Reform,[14] it was held that:
In the recent case of Republic of the Philippines vs. Court of Appeals, et al.,[13] the Court
ruled that non-payment of just compensation does not entitle the private landowners to recover Title to property which is the subject of condemnation proceedings does not vest the condemnor until
possession of their expropriated lots. Thus: the judgment fixing just compensation is entered and paid, but the condemnors title relates back to
the date on which the petition under the Eminent Domain Act, or the commissioners report under the
Local Improvement Act, is filed.
Thus, in Valdehueza vs. Republic where the private landowners had remained unpaid ten years after
the termination of the expropriation proceedings, this Court ruled 
x x x Although the right to appropriate and use land taken for a canal is complete at the
time of entry, title to the property taken remains in the owner until payment is actually
The points in dispute are whether such payment can still be made and, if so, in what amount. Said
made.
lots have been the subject of expropriation proceedings. By final and executory judgment in said
proceedings, they were condemned for public use, as part of an airport, and ordered sold to the
government. x x x. It follows that both by virtue of the judgment, long final, in the expropriation suit, In Kennedy v. Indianapolis, the US Supreme Court cited several cases holding that title to property
as well as the annotations upon their title certificates, plaintiffs are not entitled to recover possession does not pass to the condemnor until just compensation had actually been made. In fact, the
of their expropriated lots which are still devoted to the public use for which they were expropriated decisions appear to be uniformly to this effect. As early as 1838, in Rubottom v. McLure, it was held
but only to demand the market value of the same. that actual payment to the owner of the condemned property was a condition precedent to the
investment of the title to the property in the State albeit not to the appropriation of it to public use. In
Rexford v. Knight, the Court of Appeals of New York said that the construction upon the statutes was
Said relief may be granted under plaintiffs prayer for such other remedies, which may be deemed just
that the fee did not vest in the State until the payment of the compensation although the authority to
and equitable under the premises.
enter upon and appropriate the land was complete prior to the payment. Kennedy further said that
both on principle and authority the rule is x x x that the right to enter on and use the property is
The Court proceeded to reiterate its pronouncement in Alfonso vs. Pasay City where the recovery of complete, as soon as the property is actually appropriated under the authority of law for a
possession of property taken for public use prayed for by the unpaid landowner was denied even public use, but that the title does not pass from the owner without his consent, until just
while no requisite expropriation proceedings were first instituted. The landowner was merely given the compensation has been made to him.
relief of recovering compensation for his property computed at its market value at the time it was
taken and appropriated by the State.
Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes, that:

The judgment rendered by the Bulacan RTC in 1979 on the expropriation proceedings provides not
If the laws which we have exhibited or cited in the preceding discussion are attentively examined it
only for the payment of just compensation to herein respondents but likewise adjudges the
will be apparent that the method of expropriation adopted in this jurisdiction is such as to afford
property condemned in favor of petitioner over which parties, as well as their privies, are
absolute reassurance that no piece of land can be finally and irrevocably taken from an unwilling
bound. Petitioner has occupied, utilized and, for all intents and purposes, exercised
owner until compensation is paid. x x x. (emphasis supplied)
dominion over the property pursuant to the judgment.The exercise of such rights vested to
it as the condemnee indeed has amounted to at least a partial compliance or satisfaction of
the 1979 judgment, thereby preempting any claim of bar by prescription on grounds of non- With respect to the amount of the just compensation still due and demandable from respondent
execution. In arguing for the return of their property on the basis of non-payment, NHA, the lower courts erred in not awarding interest computed from the time the property is actually
respondents ignore the fact that the right of the expropriating authority is far from that of taken to the time when compensation is actually paid or deposited in court. In Republic, et al. vs.
an unpaid seller in ordinary sales, to which the remedy of rescission might perhaps

105
Court of Appeals, et al.,[15] the Court imposed interest at 12% per annum in order to help eliminate
the issue of the constant fluctuation and inflation of the value of the currency over time, thus:

The constitutional limitation of just compensation is considered to be the sum equivalent to the
market value of the property, broadly described to be the price fixed by the seller in open market in
the usual and ordinary course of legal action and competition or the fair value of the property as
between one who receives, and one who desires to sell, it being fixed at the time of the actual taking
by the government. Thus, if property is taken for public use before compensation is deposited with
the court having jurisdiction over the case, the final compensation must include interests on its just
value to be computed from the time the property is taken to the time when compensation is actually
paid or deposited with the court. In fine, between the taking of the property and the actual payment,
legal interests accrue in order to place the owner in a position as good as (but not better than) the
position he was in before the taking occurred.

x x x This allowance of interest on the amount found to be the value of the property as of the time of
the taking computed, being an effective forbearance, at 12% per annum should help eliminate the
issue of the constant fluctuation and inflation of the value of the currency over time. Article 1250 of
the Civil Code, providing that, in case of extraordinary inflation or deflation, the value of the currency
at the time of the establishment of the obligation shall be the basis for the payment when no
agreement to the contrary is stipulated, has strict application only to contractual obligations. In other
words, a contractual agreement is needed for the effects of extraordinary inflation to be taken into
account to alter the value of the currency.

Records show that there is an outstanding balance of P1,218,574.35 that ought to be paid to
petitioners.[16] It is not disputed that respondent NHA took actual possession of the expropriated
properties in 1977.[17] Perforce, while petitioners are not entitled to the return of the expropriated
property, they are entitled to be paid the balance of P1,218,574.35 with legal interest thereon at 12%
per annum computed from the taking of the property in 1977 until the due amount shall have been
fully paid.

WHEREFORE, the appealed judgment is modified as follows:

1. Ordering respondent National Housing Authority to pay petitioners the amount


of P1,218,574.35 with legal interest thereon at 12% per annum computed from the
taking of the expropriated properties in 1997 until the amount due shall have been fully
paid;

2. Ordering petitioners to pay the capital gains tax; and

3. Ordering petitioners to surrender to respondent National Housing Authority the owners


duplicate certificates of title of the expropriated properties upon full payment of just
compensation.

SO ORDERED.

106
Held: No, petitioners have also failed to overcome the deference that is appropriately accorded to
formulations of national policy expressed in legislation. The expressions of national policy are found in
the revised charter of the Philippine Tourism Authority, Presidential Decree No. 564: 2. Acquisition of
Private Lands, Power of Eminent Domain. — To acquire by purchase, by negotiation or by
condemnation proceedings any private land within and without the tourist zones for any of the
following reasons: (a) consolidation of lands for tourist zone development purposes, (b) prevention of
land speculation in areas declared as tourist zones, (c) acquisition of right of way to the zones, (d)
protection of water shed areas and natural assets with tourism value, and (e) for any other purpose
expressly authorized under this Decree and accordingly, to exercise the power of eminent domain
under its own name, which shall proceed in the manner prescribed by law and/or the Rules of Court
on condemnation proceedings. The Authority may use any mode of payment which it may deem
expedient and acceptable to the land owners: Provided, That in case bonds are used as payment, the
conditions and restrictions set forth in Chapter III, Section 8 to 13 inclusively, of this Decree shall
apply.

Heirs of Juancho Ardona vs. Reyes, 125 SCRA 220 (1983) G.R. Nos. L-60549, 60553 to
60555 October 26, 1983

Fact:  The Philippine Tourism Authority filed four (4) Complaints with the Court of First Instance of
Cebu City for the expropriation of some 282 hectares of rolling land situated in barangays Malubog
and Babag, Cebu City, The defendants filed their respective Opposition with Motion to Dismiss and/or
Reconsideration, manifestation adopting the answer.

In their motions to dismiss, the petitioners alleged, in addition to the issue of public use, that there is
no specific constitutional provision authorizing the taking of private property for tourism purposes;
that assuming that PTA has such power, the intended use cannot be paramount to the determination
of the land as a land reform area; that limiting the amount of compensation by Legislative fiat is
constitutionally repugnant; and that since the land is under the land reform program, it is the Court of
Agrarian Relations and not the Court of First Instance that has jurisdiction over the expropriation
cases.

The Philippine Tourism Authority having deposited with The Philippine National Bank, Cebu City
Branch, an amount equivalent to 10% of the value of the properties pursuant to Presidential Decree
No. 1533. the lower court issued separate orders authorizing PTA to take immediate possession of the
premises and directing the issuance of writs of possession.

Issue: Whether the actions to expropriate properties are constitutionally infirm in the taking of private
property for the promotion of tourism?

107
F.A. Sugue & Elino B. Lingas for Philippine Tourism Authoirity 

GUTIERREZ, JR., J.:

This is a petition for certiorari with preliminary injunction challenging the constitutionality of
Presidential Decree No. 564, the Revised Charter of the Philippine Tourism Authority, and
Proclamation No. 2052 declaring the barangays of Sibugay, Malubog, Babag and Sirao including the
proposed Lusaran Dam in the City of Cebu and in the municipalities of Argao and Dalaguete in the
province of Cebu as tourist zones. The petitioners ask that we restrain respondent Court of First
Instance of Cebu and the Philippine Tourism Authority (PTA) from enforcing and implementing the
writs of possession issued in four (4) expropriation cases filed by PTA against the petitioners: Civil
Cases Nos. R-19562, R-19684, R-20701, and R-21608 of the Court of First Instance of Cebu (Branch
1). 

The Philippine Tourism Authority filed four (4) Complaints with the Court of First Instance of Cebu City
for the expropriation of some 282 hectares of rolling land situated in barangays Malubog and Babag,
Cebu City, under PTA's express authority "to acquire by purchase, by negotiation or by condemnation
proceedings any private land within and without the tourist zones" for the purposes indicated in
G.R. Nos. L-60549, 60553 to 60555 October 26, 1983 Section 5, paragraph B(2), of its Revised Charter (PD 564), more specifically, for the development
into integrated resort complexes of selected and well-defined geographic areas with potential tourism
value. As uniformly alleged in the complaints, the purposes of the expropriation are: 
HEIRS OF JUANCHO ARDONA (represented by Gloria Ardona) ANASTACIO C. CABILAO,
HEIRS OF CIPRIANO CABILAO (represented by Jose Cabilao) MODESTA CABILAO, HEIRS OF
ROMAN CABUENAS (represented by Alberto Cabuenas), AGRIPINO GABISAY and xxx xxx xxx
PRUDENCIA MABINI, ANTONIO LABRADOR and LUCIA GABISAY, GERONIMO MABINI and
MARCELINA SABAL, INOCENCIO MABINI and ARSENIA REYES, PATRICIO MABINI and V 
GREGORIA BORRES, ANICETO GADAPAN and MAXIMA GABISAY, BARTOLOME MAGNO and
CALINECA E. MAGNO, ALBERTO CABUENAS, NARCISO CABUENAS and VICTORIA CABUENAS,
EUTIQUIOSENO, HEIRS OF ESPERIDION CABUENAS (represented by Alberto Cabuenas), Plaintiff, in line with the policy of the government to promote tourism and
MAXIMINA NAVARO, SULPICIO NAVARO, EDUARDO NAVARO, MARTINIANO ROMA (in development of tourism projects will construct in Barangays Malubog, Busay and
representation of Arcadio Mabini, deceased), MARTIN SENO, FAUSTO ARDA, MAXIMA Babag, all of Cebu City, a sports complex (basketball courts, tennis courts,
CABILAO, ESTRELLA SENO, EDUVEGIS S. CABILAO, ROSARIO CABILAO, MINORS DANILO, volleyball courts, track and field, baseball and softball diamonds, and swimming
SOCORRO, JOSEFINA and MARITES, all surnamed Cabilao, JUAN BORRES (represented by pools), clubhouse, gold course, children's playground and a nature area for picnics
Francisca Borres), RAMON JABADAN, JESUS ALIPAR and LEONILA KABAHAR, ANTONIO and horseback riding for the use of the public. 
LABRADOR, HEIRS OF NICASIO GABISAY (represented by Arsenio Gabisay), PACIFICO
LABRADOR, DEMETRIO LABRADOR and FRUCTOSA TABURA, VENANCIO DEL MAR, MARINO The development plan, covering approximately 1,000 hectares, includes the
DEL MAR, HEIRS OF TEODORA ARCILLO (represented by Brigida Arcillo) DIONISIA establishment of an electric power grid in the area by the National Power
GABUNADA, HEIRS OF BUENAVENTURA FRANCISCO (represented by Felicidad Sadaya Corporation, thus assuring the supply of electricity therein for the benefit of the
Francisco), HEIRS OF VICTORIA C. CABUENAS (represented by Alberto Cabuenas) HEIRS OF whole community. Deep wells will also be constructed to generate water supply
CIPRIANO GABUNADA (represented by Claudio Gabunada), petitioners,  within the area. Likewise, a complex sewerage and drainage system will be devised
vs. and constructed to protect the tourists and nearby residents from the dangers of
HON. JUAN Y. REYES, Executive Judge and Presiding Judge of Branch I, COURT OF FIRST pollution. 
instance OF CEBU, and the PHILIPPINE TOURISM AUTHORITY, respondents.
Complimentary and support facilities for the project will be constructed, including
George M. Baladjay, Mario G. dela Victoria, Olegario Sarmiento, Jr., and Democrito Barcenas for public rest houses, lockers, dressing rooms, coffee shops, shopping malls, etc. Said
petitioners.  facilities will create and offer employment opportunities to residents of the
community and further generate income for the whole of Cebu City.
The Solicitor General for respondent Judge. 

108
Plaintiff needs the property above described which is directly covered by the area, it is the Court of Agrarian Relations, not the lower court, that has jurisdiction
proposed golf court. pursuant to Pres. Decree No. 946; 

xxx xxx xxx F. The forcible ejectment of defendants from the premises constitutes a criminal act
under Pres. Decree No. 583; 
The defendants in Civil Cases Nos. R-20701 and R-21608 filed their respective Opposition with Motion
to Dismiss and/or Reconsideration. The defendants in Civil Case No. R-19562 filed a manifestation In their memorandum, the petitioners have summarized the issues as follows: 
adopting the answer of defendants in Civil Case No. R-19864. The defendants, now petitioners, had a
common allegation in that the taking is allegedly not impressed with public use under the
I. Enforcement of the Writ of Possession is Premature: 
Constitution. 

II. Presidential Decree 564 Amending Presidential Decree l89 is Constitutionally


In their motions to dismiss, the petitioners alleged, in addition to the issue of public use, that there is
Repugnant: 
no specific constitutional provision authorizing the taking of private property for tourism purposes;
that assuming that PTA has such power, the intended use cannot be paramount to the determination
of the land as a land reform area; that limiting the amount of compensation by Legislative fiat is III. The Condemnation is not for Public Use, Therefore, Unconstitutional: 
constitutionally repugnant; and that since the land is under the land reform program, it is the Court of
Agrarian Relations and not the Court of First Instance that has jurisdiction over the expropriation IV. The Expropriation for Tourism Purposes of Lands Covered by the Land Reform
cases.  Program Violates the Constitution: 

The Philippine Tourism Authority having deposited with The Philippine National Bank, Cebu City V. Presidential Proclamation 2052 is Unconstitutional: 
Branch, an amount equivalent to 10% of the value of the properties pursuant to Presidential Decree
No. 1533. the lower court issued separate orders authorizing PTA to take immediate possession of the
premises and directing the issuance of writs of possession.  VI. Presidential Decree No 1533 is Unconstitutional: 

On May 25, 1982, petitioners filed this petition questioning the orders of the respondent Judge, The VII. The Court of First Instance has no Jurisdiction: 
respondents have correctly restated the grounds in the petition as follows: 
VIII. The Filing of the Present Petition is not Premature. 
xxx xxx xxx
The issues raised by the petitioners revolve around the proposition that the actions to expropriate
A. The complaints for expropriation lack basis because the Constitution does not their properties are constitutionally infirm because nowhere in the Constitution can a provision be
provide for the expropriation of private property for tourism or other related found which allows the taking of private property for the promotion of tourism. 
purposes; 
The petitioners' arguments in their pleadings in support of the above proposition are subsumed under
B. The writs of possession or orders authorizing PTA to take immediate possession is the following headings: 
premature because the "public use" character of the taking has not been previously
demonstrated;  1. Non-compliance with the "public use" requirement under the eminent domain
provision of the Bill of Rights. 
C. The taking is not for public use in contemplation of eminent domain law; 
2. Disregard of the land reform nature of the property being expropriated. 
D. The properties in question have been previously declared a land reform area;
consequently, the implementation of the social justice pro- ,vision of the 3. Impairment of the obligation of contracts. 
Constitution on agrarian reform is paramount to the right of the State to expropriate
for the purposes intended; 
There are three provisions of the Constitution which directly provide for the exercise of the power of
eminent domain. Section 2, Article IV states that private property shall not be taken for public use
E. Proclamation No. 2052 declaring certain barangays in Cebu City, which include without just compensation. Section 6, Article XIV allows the State, in the interest of national welfare
the lands subject of expropriation as within a tourist zone, is unconstitutional for it or defense and upon payment of just compensation to transfer to public ownership, utilities and other
impairs the obligation of contracts; "F. Since the properties are within a land reform private enterprises to be operated by the government. Section 13, Article XIV states that the

109
Batasang Pambansa may authorize upon payment of just compensation the expropriation of private In the leading case of Visayan Refining Co. v. Camus (supra), this Court emphasized that the power
lands to be subdivided into small lots and conveyed at cost to deserving citizens.  of eminent domain is inseparable from sovereignty being essential to the existence of the State and
inherent in government even in its most primitive forms. The only purpose of the provision in the Bill
of Rights is to provide some form of restraint on the sovereign power. It is not a grant of authority - 
While not directly mentioning the expropriation of private properties upon payment of just
compensation, the provisions on social justice and agrarian reforms which allow the exercise of police
power together with the power of eminent domain in the implementation of constitutional objectives The power of eminent domain does not depend for its existence on a specific grant
are even more far-reaching insofar as taking of private property is concerned.  in the constitution. It is inherent in sovereignty and exists in a sovereign state
without any recognition of it in the constitution. The provision found in most of the
state constitutions relating to the taking of property for the public use do not by
Section 6, Article II provides: 
implication grant the power to the government of the state, but limit a power which
would otherwise be without limit.
Sec. 6. The State shall promote social justice to ensure the dignity, welfare, and
security of all the people. Towards its end, the State shall regulate the acquisition,
The constitutional restraints are public use and just compensation. 
ownership, use, enjoyment, and disposition of private property, and equitably
diffuse property ownership and profits.
Do the purposes of the taking in this case constitute "public use"?
xxx xxx xxx
The petitioners ask us to adopt a strict construction and declare that "public use" means literally use
by the public and that "public use" is not synonymous with "public interest", "public benefit", or
Section 12, Article XIV provides: 
"public welfare" and much less "public convenience. " 

See. 12. The State shall formulate and implement an agrarian reform program
The petitioners face two major obstacles. First, their contention which is rather sweeping in its call for
aimed at emancipating the tenant from the bondage of the soil and achieving the
a retreat from the public welfare orientation is unduly restrictive and outmoded. Second, no less than
goals enunciated in this Constitution.
the lawmaker has made a policy determination that the power of eminent domain may be exercised in
the promotion and development of Philippine tourism. 
The equitable diffusion of property ownership in the promotion of social justice implies the exercise,
whenever necessary, of the power to expropriate private property. Likewise there can be no
The restrictive view of public use may be appropriate for a nation which circumscribes the scope of
meaningful agrarian reform program unless the power to expropriate is utilized. 
government activities and public concerns and which possesses big and correctly located public lands
that obviate the need to take private property for public purposes. Neither circumstance applies to the
We cite all the above provisions on the power to expropriate because of the petitioners' insistence on Philippines. We have never been a laissez faire State, And the necessities which impel the exertion of
a restrictive view of the eminent domain provision. The thrust of all constitutional provisions on sovereign power are all too often found in areas of scarce public land or limited government
expropriation is in the opposite direction.  resources. 

As early as 1919, this Court in Visayan Refining Co. v. Samus (40 Phil. 550) categorized the Certain aspects of parliamentary government were introduced by the 1973 amendments to the
restrictive view as wholly erroneous and based on a misconception of fundamentals.  Constitution with further modifications in the 1976 and 1981 amendments. Insofar as the executive
and legislative departments are concerned, the traditional concept of checks and balances in a
The petitioners look for the word "tourism" in the Constitution. Understandably the search would be in presidential form was considerably modified to remove some roadblocks in the expeditious
vain. The policy objectives of the framers can be expressed only in general terms such as social implementation of national policies. There was no such change for the judiciary. We remain as a
justice, local autonomy, conservation and development of the national patrimony, public interest, and checking and balancing department even as all strive to maintain respect for constitutional
general welfare, among others. The programs to achieve these objectives vary from time to time and boundaries. At the same time, the philosophy of coordination in the pursuit of developmental goals
according to place, To freeze specific programs like Tourism into express constitutional provisions implicit in the amendments also constrains in the judiciary to defer to legislative discretion iii the
would make the Constitution more prolix than a bulky code and require of the framers a prescience judicial review of programs for economic development and social progress unless a clear case of
beyond Delphic proportions. The particular mention in the Constitution of agrarian reform and the constitutional infirmity is established. We cannot stop the legitimate exercise of power on an
transfer of utilities and other private enterprises to public ownership merely underscores the invocation of grounds better left interred in a bygone age and time.* As we review the efforts of the
magnitude of the problems sought to be remedied by these programs. They do not preclude nor limit political departments to bring about self-sufficiency, if not eventual abundance, we continue to
the exercise of the power of eminent domain for such purposes like tourism and other development maintain the liberal approach because the primary responsibility and the discretion belong to them. 
programs.
There can be no doubt that expropriation for such traditions' purposes as the construction of roads,
bridges, ports, waterworks, schools, electric and telecommunications systems, hydroelectric power
plants, markets and slaughterhouses, parks, hospitals, government office buildings, and flood control
110
or irrigation systems is valid. However, the concept of public use is not limited to traditional purposes. xxx xxx xxx
Here as elsewhere the Idea that "public use" is strictly limited to clear cases of "use by the public" has
been discarded. 
... But whatever may be the scope of the judicial power to determine what is a
"public use" in Fourteenth Amendment controversies, this Court has said that when
In the United States, the rule was enunciated in Berman v. Parker (348 U.S. 25; 99 L. ed. 27) as Congress has spoken on this subject "Its decision is entitled to deference until it is
follows:  shown to involve an impossibility." Old Dominion Land Co. v. United States, 269, US
55, 66, 70 L ed 162, 46 S Ct 39. Any departure from this judicial restraint would
result in courts deciding on what is and is not a governmental function and in their
We do not sit to determine whether a particular housing project is or is not
invalidating legislation on the basis of their view on that question at the moment of
desirable. The concept of the public welfare is broad and inclusive. See DayBrite
decision, a practice which has proved impracticable in other fields. See Case v.
Lighting, Inc. v. Missouri, 342 US 421, 424, 96 L ed 469, 472, 72 S Ct 405. The
Bowles decided February 4, 1946, 437 US 92, 101, ante, 552, 559, 66 S Ct 438.
values it represents are spiritual as well as physical, aesthetic as well as monetary.
New York v. United States, 326 US 572 ante 326, 66 S Ct 310). We hold that the
It is within the power of the legislature to determine that the community should be
T.V.A. took the tracts here involved for a public purpose, if, as we think is the case,
beautiful as well as healthy, spacious as well as clean, well-balanced as well as
Congress authorized the Authority to acquire, hold, and use the lands to carry out
carefully patrolled. In the present case, the Congress and its authorized agencies
the purposes of the T.V.A. Act.
have made determinations that take into account a wide variety of values. It is not
for us to reappraise them. If those who govern the District of Columbia decide that
the Nation's Capital should be beautiful as well as sanitary, there is nothing in the In the Philippines, Chief Justice Enrique M. Fernando has aptly summarized the statutory and judicial
Fifth Amendment that stands in the way.  trend as follows: 

Once the object is within the authority of Congress, the right to realize it through The taking to be valid must be for public use. There was a time when it was felt that
the exercise of eminent domain is clear. For the power of eminent domain is merely a literal meaning should be attached to such a requirement. Whatever project is
the means to the end. See Luxton v. North River Bridge Co. 153 US 525, 529, 530, undertaken must be for the public to enjoy, as in the case of streets or parks.
38 L ed 808, 810, 14 S Ct 891; United States v. Gettysburg Electric R. Co. 160 US Otherwise, expropriation is not allowable. It is not any more. As long as the purpose
668, 679, 40 L ed 576, 580, 16 S Ct 427.  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
In an earlier American case, where a village was isolated from the rest of North Carolina because of
resale at cost to individuals. The other is in the transfer, through the exercise of this
the flooding of the reservoir of a dam thus making the provision of police, school, and health services
power, of utilities and other private enterprise to the government. It is accurate to
unjustifiably expensive, the government decided to expropriate the private properties in the village
state then that at present whatever may be beneficially employed for the general
and the entire area was made part of an adjoining national park. The district court and the appellate
welfare satisfies the requirement of public use. (Fernando, The Constitution of the
court ruled against the expropriation or excess condemnation. The Court of Appeals applied the "use
Philippines, 2nd ed., pp. 523-524) 
by the public" test and stated that the only land needed for public use was the area directly flooded
by the reservoir. The village may have been cut off by the dam but to also condemn it was excess
condemnation not valid under the "Public use" requirement. The U.S. Supreme Court in United States The petitioners' contention that the promotion of tourism is not "public use" because private
ex rel TVA v. Welch (327 U.S, 546; 90 L. ed 843) unanimously reversed the lower courts. It stated:  concessioners would be allowed to maintain various facilities such as restaurants, hotels, stores, etc.
inside the tourist complex is impressed with even less merit. Private bus firms, taxicab fleets,
roadside restaurants, and other private businesses using public streets end highways do not diminish
The Circuit Court of Appeals, without expressly relying on a compelling rule of
in the least bit the public character of expropriations for roads and streets. The lease of store spaces
construction that would give the restrictive scope to the T.V.A. Act given it by the
in underpasses of streets built on expropriated land does not make the taking for a private purpose.
district court, also interpreted the statute narrowly. It first analyzed the facts by
Airports and piers catering exclusively to private airlines and shipping companies are still for public
segregating the total problem into distinct parts, and thus came to the conclusion
use. The expropriation of private land for slum clearance and urban development is for a public
that T.V.A.'s purpose in condemning the land in question was only one to reduce its
purpose even if the developed area is later sold to private homeowners, commercial firms,
liability arising from the destruction of the highway. The Court held that use of the
entertainment and service companies, and other private concerns. 
lands for that purpose is a "private" and not a "public use" or, at best, a "public use"
not authorized by the statute. we are unable to agree with the reasoning and
conclusion of the Circuit Court of Appeals.  The petitioners have also failed to overcome the deference that is appropriately accorded to
formulations of national policy expressed in legislation. The rule in Berman u. Parker (supra) of
deference to legislative policy even if such policy might mean taking from one private person and
We think that it is the function of Congress to decide what type of taking is for a
conferring on another private person applies as well as in the Philippines. 
public use and that the agency authorized to do the taking may do so to the still
extent of its statutory authority, United States v. Gettysburg Electric R. Co. 160 US
668, 679, 40 L ed 576, 580, 16 S Ct 427. ... ... Once the object is within the authority of Congress, the means by which it will be
attained is also for Congress to determine. Here one of the means chosen is the use
111
of private enterprise for redevelopment of the area. Appellants argue that this expedient and acceptable to the land owners: Provided, That in case bonds are used
makes the project a taking from one businessman for the benefit of another as payment, the conditions and restrictions set forth in Chapter III, Section 8 to 13
businessman. But the means of executing the project are for Congress and inclusively, of this Decree shall apply.
Congress alone to determine, once the public purpose has been established. Selb
Luxton v. North River Bridge Co. (US) supra; cf. Highland v. Russel Car & Snow
xxx xxx xxx
Plow Co. 279 US 253, 73 L ed 688, 49 S Ct 314. The public end may be as well or
better served through an agency of private enterprise than through a department of
government-or so the Congress might conclude. We cannot say that public The petitioners rely on the Land Reform Program of the government in raising their second argument.
ownership is the sole method of promoting the public purposes of community According to them, assuming that PTA has the right to expropriate, the properties subject of
redevelopment projects. What we have said also disposes of any contention expropriation may not be taken for the purposes intended since they are within the coverage of
concerning the fact that certain property owners in the area may be permitted to "operation land transfer" under the land reform program. Petitioners claim that certificates of land
repurchase their properties for redevelopment in harmony with the over-all plan. transfer (CLT'S) and emancipation patents have already been issued to them thereby making the
That, too, is a legitimate means which Congress and its agencies may adopt, if they lands expropriated within the coverage of the land reform area under Presidential Decree No. 2; that
choose. (Berman v. Parker, 99 L ed 38, 348 US 33, 34)  the agrarian reform program occupies a higher level in the order of priorities than other State policies
like those relating to the health and physical well- being of the people; and that property already
taken for public use may not be taken for another public use. 
An examination of the language in the 1919 cases of City of Manila v. Chinese Community of
Manila (40 Phil, 349) and Visayan Refining Co. vs. Camus, earlier cited, shows that from the very
start of constitutional government in our country judicial deference to legislative policy has been clear We have considered the above arguments with scrupulous and thorough circumspection. For indeed
and manifest in eminent domain proceedings.  any claim of rights under the social justice and land reform provisions of the Constitution deserves the
most serious consideration. The Petitioners, however, have failed to show that the area being
developed is indeed a land reform area and that the affected persons have emancipation patents and
The expressions of national policy are found in the revised charter of the Philippine Tourism Authority,
certificates of land transfer. 
Presidential Decree No. 564: 

The records show that the area being developed into a tourism complex consists of more than 808
WHEREAS, it is the avowed aim of the government to promote Philippine tourism
hectares, almost all of which is not affected by the land reform program. The portion being
and work for its accelerated and balanced growth as well as for economy and
expropriated is 282 hectares of hilly and unproductive land where even subsistence farming of crops
expediency in the development of the tourism plant of the country;
other than rice and corn can hardly survive. And of the 282 disputed hectares, only 8,970 square
meters-less than one hectare-is affected by Operation Land Transfer. Of the 40 defendants, only two
xxx xxx xxx have emancipation patents for the less than one hectare of land affected. And this 8,970 square
meters parcel of land is not even within the sports complex proper but forms part of the 32 hectares
resettlement area where the petitioners and others similarly situated would be provided with proper
SECTION 1. Declaration of Policy. - It is hereby declared to be the policy of the
housing, subsidiary employment, community centers, schools, and essential services like water and
State to promote, encourage, and develop Philippine tourism as an instrument in
electricity-which are non-existent in the expropriated lands. We see no need under the facts of this
accelerating the development of the country, of strengthening the country's foreign
petition to rule on whether one public purpose is superior or inferior to another purpose or engage in
exchange reserve position, and of protecting Philippine culture, history, traditions
a balancing of competing public interests. The petitioners have also failed to overcome the showing
and natural beauty, internationally as well as domestically.
that the taking of the 8,970 square meters covered by Operation Land Transfer forms a necessary
part of an inseparable transaction involving the development of the 808 hectares tourism complex.
The power of eminent domain is expressly provided for under Section 5 B(2) as follows:  And certainly, the human settlement needs of the many beneficiaries of the 32 hectares resettlement
area should prevail over the property rights of two of their compatriots. 
xxx xxx xxx
The invocation of the contracts clause has no merit. The non-impairment clause has never been a
2. Acquisition of Private Lands, Power of Eminent Domain. — To acquire by barrier to the exercise of police power and likewise eminent domain. As stated in Manigault v.
purchase, by negotiation or by condemnation proceedings any private land within Springs (199 U.S. 473) "parties by entering into contracts may not stop the legislature from enacting
and without the tourist zones for any of the following reasons: (a) consolidation of laws intended for the public good." 
lands for tourist zone development purposes, (b) prevention of land speculation in
areas declared as tourist zones, (c) acquisition of right of way to the zones, (d) The applicable doctrine is expressed in Arce v. Genato (69 SCRA 544) which involved the
protection of water shed areas and natural assets with tourism value, and (e) for expropriation of land for a public plaza. The Court stated: 
any other purpose expressly authorized under this Decree and accordingly, to
exercise the power of eminent domain under its own name, which shall proceed in
xxx xxx xxx
the manner prescribed by law and/or the Rules of Court on condemnation
proceedings. The Authority may use any mode of payment which it may deem
112
... What is claimed is that there must be a showing of necessity for such ... whether the order of respondent Judge in an expropriation case allowing the
condemnation and that it was not done in this case in support of such a view, other respondent, ... to take immediate possession of the parcel of land sought to
reliance is placed on City of Manila v. Arenano Law Colleges. (85 Phil. 663 [1950]) be condemned for the beautification of its public plaza, without a prior hearing to
That doctrine itself is based on the earlier case of City of Manila v. Chinese determine the necessity for the exercise of the power of eminent domain, is vitiated
Community of Manila, (50 Phil. 349) also, like Camus, a 1919 decision. As could be by jurisdictional defect, ...
discerned, however, in the Arellano Law Colleges decision. it was the antiquarian
view of Blackstone with its sanctification of the right to one's estate on which such
this Court held that: 
an observation was based. As did appear in his Commentaries: "So great is the
regard of the law for private property that it will not, authorize the least violation of
it, even for the public good, unless there exists a very great necessity thereof." ... It is not disputed that in issuing such order, respondent Judge relied on
Even the most , cursory glance at such well-nigh absolutist concept of property Presidential Decree No. 42 issued on the 9th of November, 1972. (Presidential
would show its obsolete character at least for Philippine constitutional law. It cannot Decree No. 42 is entitled "Authorizing the Plaintiff in Eminent Domain Proceedings to
survive the test of the 1935 Constitution with its mandates on social justice and Take Possession of the Property involved Upon Depositing the Assessed Value for
protection to labor. (Article II, Section 5 of the 1935 Constitution reads: "The Purposes of Taxation.") The question as thus posed does not occasion any difficulty
promotion of social justice to unsure the well-being and economic security of all the as to the answer to be given. This petition for certiorari must fail, there being no
people should be the concern of the State." Article XI, Section 6 of the same showing that compliance with the Presidential Decree, which under the Transitory
Constitution provides: "The State shall afford protection to labor, especially to Provisions is deemed a part of the law of the land, (According to Article XVII,
working women and minors, and shall regulate the relation between landowner and Section 3 par. (2) of the Constitution: "All proclamations, orders, decrees,
tenant, and between labor and capital in industry and in agriculture. The State may instructions and acts promulgated, issued, or done by the incumbent President shall
provide for compulsory arbitration.") What is more, the present Constitution pays be part of the law of the land, and shall remain valid, legal, binding, and effective
even less heed to the claims of property and rightly so. After stating that the State even after lifting of martial law or the ratification of this Constitution, unless
shall promote social justice, it continues: "Towards this end, the State shall regulate modified, revoked, or superseded by subsequent proclamations. orders, decrees
the acquisition, ownership, use, enjoyment, and disposition of private property, and instructions, or other acts of the incumbent President, or unless expressly and
equitably diffuse property ownership and profits." (That is the second sentence of explicitly modified or repealed by the regular National Assembly") would be
Article II, Section 6 of the Constitution) If there is any need for explicit confirmation characterized as either an act in excess of jurisdiction or a grave abuse of
of what was set forth in Presidential Decree No. 42, the above provision supplies it. discretion. So we rule.
Moreover, that is merely to accord to what of late has been the consistent course of
decisions of this Court whenever property rights are pressed unduly. (Cf. Alalayan v. Likewise in Ramos v. Philippine Tourism Authority (G.R. Nos. 52449-50, June 9, 1980), this Court
National Power Corporation, L-24396, July 29, 1968, 24 SCRA 172; Agricultural held: 
Credit and Cooperative Financing Administration v. Confederation of Unions, L-
21484, Nov. 29, 1969, 30 SCRA 649; Edu v. Ericta, L-32096, Oct. 24, 1970, 35
SCRA 481; Phil. Virginia Tobacco Administration v. Court of Industrial Relations, L- ... condemnation or expropriation proceedings is in the nature of one that is quasi-
32052, July 25, 1975, 65 SCRA 416) The statement therefore, that there could be in-rem wherein the fact that the owner of the property is made a party is not
discerned a constitutional objection to a lower court applying a Presidential Decree, essentially indispensable insofar was least as it conncerns is the immediate taking of
when it leaves no doubt that a grantee of the power of eminent domain need not possession of the property and the preliminary determination of its value, including
prove the necessity for the expropriation, carries its own refutation. the amount to be deposited.

xxx xxx xxx In their last argument, the petitioners claim that a consequence of the expropriation proceedings
would be their forcible ejectment. They contend that such forcible ejectment is a criminal act under
Presidential Decree No. 583. This contention is not valid. Presidential Decree No. 583 prohibits the
The issue of prematurity is also raised by the petitioners. They claim that since the necessity for the taking cognizance or implementation of orders designed to obstruct the land reform program. It refers
taking has not been previously established, the issuance of the orders authorizing the PTA to take to the harassment of tenant- farmers who try to enforce emancipation rights. It has nothing to do
immediate possession of the premises, as well as the corresponding writs of possession was with the expropriation by the State of lands needed for public purposes. As a matter of fact, the
premature.  expropriated area does not appear in the master lists of the Ministry of Agrarian Reforms as a
teranted area. The petitioners' bare allegations have not been supported with particulars pointing to
Under Presidential Decree No. 42, as amended by Presidential Decree No. 1533, the government, its specific parcels which are subject of tenancy contracts. The petitioners may be owner-tillers or may
agency or instrumentality, as plaintiff in an expropriation proceedings is authorized to take immediate have some form of possessory or ownership rights but there has been no showing of their being
possession, control and disposition of the property and the improvements, with power of demolition, tenants on the disputed lands. 
notwithstanding the pendency of the issues before the court, upon deposit with the Philippine National
Bank of an amount equivalent to 10% of the value of the property expropriated. The issue of The petitioners have failed to overcome the burden of anyone trying to strike down a statute or
immediate possession has been settled in Arce v. Genato (supra). In answer to the issue:  decree whose avowed purpose is the legislative perception is the public good. A statute has in its
favor the presumption of validity. All reasonable doubts should be resolved in favor of the
113
constitutionality of a law. The courts will not set aside a law as violative of the Constitution except in a G.R. No. 152436               June 20, 2003
clear case (People v. Vera, 65 Phil. 56). And in the absence of factual findings or evidence to rebut
the presumption of validity, the presumption prevails (Ermita-Malate Hotel, etc. v. Mayor of Manila,
NATIONAL POWER CORPORATION, Petitioner, 
20 SCRA 849; Morfe v. Mutuc, 22 SCRA 424). 
vs.
SPOUSES IGMEDIO and LIWAYWAY CHIONG and the HEIRS OF AGRIFINA ANGELES,
The public respondents have stressed that the development of the 808 hectares includes plans that represented by FRANCISCO MERCURIO, Respondents.
would give the petitioners and other displaced persons productive employment, higher incomes,
decent housing, water and electric facilities, and better living standards. Our dismissing this petition
DECISION
is, in part, predicated on those assurances. The right of the PTA to proceed with the expropriation of
the 282 hectares already Identified as fit for the establishment of a resort complex to promote
tourism is, therefore, sustained.  QUISUMBING, J.:

WHEREFORE, the instant petition for certiorari is hereby DISMISSE D for lack of merit.  This is a petition for review of the decision 1 of the Court of Appeals, dated October 26, 2001, in CA-
G.R. SP No. 60716, affirming the Order of the Regional Trial Court (RTC) of Iba, Zambales, Branch
71, dated June 7, 2000 in Civil Case No. 1442-I. The trial court directed petitioner National Power
SO ORDERED.
Corporation (NPC) to pay the value of the land expropriated from respondents herein for use in NPC’s
Northwestern Luzon Transmission Line Project. Likewise assailed in this petition is the resolution 2 of
the appellate court, dated February 26, 2002, denying herein petitioner’s motion for reconsideration.

The undisputed facts of this case are as follows:

Petitioner is a government owned and controlled corporation, created and existing pursuant to
Republic Act No. 6395,3 as amended, for the purpose of undertaking the development of hydroelectric
power, the production of electrical power from any source, particularly by constructing, operating, and
maintaining power plants, auxiliary plants, dams, reservoirs, pipes, mains, transmission lines, power
stations, and similar works to tap the power generated from any river, creek, lake, spring, or waterfall
in the country and supplying such power to the inhabitants thereof. In order to carry out said
purposes, NPC is authorized to exercise the power of eminent domain.

On February 19, 1998, NPC filed a complaint for eminent domain with the RTC of Iba, Zambales. It
sought the acquisition of an easement of right-of-way and certain portions of agricultural lands owned
by Igmedio and Liwayway Chiong and the Heirs of Agrifina4 Angeles, as represented by Francisco
Mercurio, to be used in its Northwestern Luzon Transmission Line Project. The complaint, which was
docketed as Civil Case No. 1442-I, prayed for the issuance of a writ of possession and an order of
expropriation, the appointment of three (3) commissioners to determine the just compensation, and
to adjudge NPC as having a lawful right to enter, take, and acquire an easement of right-of-way over
portions of the properties owned by herein respondents.

In their answer, the Heirs of Agrifina Angeles did not dispute the purpose of NPC in instituting the
expropriation proceedings. However, they pointed out that NPC had already entered and taken
possession of a portion of their realty with an area of 4,000 square meters, more or less (Lot "A") and
wanted to occupy another 4,000 square meters of the adjacent property (Lot "B"). Respondents
averred that the fair market value for both properties was ₱1,100.00 per square meter or a total of
₱8,800,000.00 and prayed that the trial court direct NPC to pay them said amount.

On March 31, 1998, NPC filed an ex parte motion for the issuance of a writ of possession, which the
trial court granted.

114
At the pre-trial conference, the parties agreed that the controversy would be limited to determining amount of just compensation to be paid. Second, NPC could not claim that it was denied due process
the actual land area taken by NPC and the just compensation to be paid by petitioner. because the trial court issued the order without first conducting a hearing on the commissioners’
report. The court a quo noted that formal-type hearings are not necessary in expropriation
proceedings, as long as the parties are afforded a fair and reasonable opportunity to be heard before
On September 28, 1999, the trial court appointed as commissioners, Atty. Henry P. Alog, Atty.
the order to pay compensation is issued. NPC was afforded ample time or opportunity to object to the
Regalado Castillo, and Ms. Roselyn B. Regadio, Legal Researcher of the trial court, to determine the
commissioners’ report before said order was issued. This it failed to do. It likewise failed to move for
fair market value of the land, as well as the total area taken by NPC from respondents.
reconsideration or to appeal the trial court’s order. Hence, NPC was now estopped from claiming that
it had been denied due process. The appellate court likewise found the assessed value of ₱500.00 per
On March 9, 2000, Atty. Castillo and Ms. Ragadio submitted their report to the court finding that the square meter to be fair as opposed to the NPC-appointed commissioner’s valuation of ₱22.50 per
property classified as "unirrigated riceland shall have a fair market value of ₱500.00 per square square meter. Finally, the CA held that as NPC failed to appeal the trial court’s order, certiorari could
meter"5 considering that "the property is situated at Baytan, Babali, Lomboy, Sta. Cruz, Zambales not be a substitute for a lost or lapsed right to appeal.
which is more than 900 meters from the town proper."6 
NPC moved for reconsideration, but this was denied by the appellate court in its resolution of
On May 5, 2000, Atty. Alog submitted his report recommending that NPC pay the Heirs of Agrifina February 26, 2002.
Angeles an easement fee of ₱20,957.88 and the Spouses Chiong be paid total easement fees of
₱9,187.05.7 The affected properties of the Heirs of Agrifina Angeles were assessed by Atty. Alog to
Hence, the instant recourse to this Court, with petitioner submitting the following issues for our
have a fair market value of ₱22.50 per square meter, while those of the Spouses Chiong were
resolution:
assigned a fair market value of ₱15.75 per square meter.8 

I
After considering the reports of the Commissioners, the trial court on June 7, 2000 decreed as
follows:
WHETHER OR NOT THE COURT OF APPEALS COMMITTED A GRAVE ERROR IN UPHOLDING THE
DECISION OF THE COURT A QUO IN DIRECTING THE PETITIONER TO PAY THE COMPENSATION FOR
The Commissioner’s Report dated March 9, 2000 filed by Commissioner Roselyn B. Ragadio and Atty.
THE LAND SOUGHT TO BE EXPROPRIATED WITHOUT FIRST ORDERING ITS EXPROPRIATION.
Regalado Castillo is given due course.

II
WHEREFORE, the plaintiff is directed to pay the defendants Mercurio their land containing an area of
4,000 square meters at P500.00 per square meter and an interest of six (6%) percent per annum
from April 16, 1998 until fully paid. WHETHER OR NOT THE COURT OF APPEALS COMMITTED A GRAVE ERROR WHEN IT UPHELD THE
DECISION OF THE TRIAL COURT ADOPTING IN TOTO THE UNSUBSTANTIATED REPORT OF THE
APPOINTED COMMISSIONERS MS. REGADIO AND ATTY. CASTILLO, WITHOUT CONSIDERING THE
SO ORDERED.9 
THIRD COMMISSIONER, ATTY. ALOG AND WITHOUT CONDUCTING A HEARING.

Dissatisfied, NPC filed a special civil action for certiorari with the appellate court, docketed as CA-G.R.
III
SP No. 60716. NPC averred that the trial court committed grave abuse of discretion amounting to
excess or want of jurisdiction when it: (a) directed NPC to pay just compensation for the land taken
without first issuing an order of expropriation; (b) adopted the compensation recommended by the WHETHER OR NOT THE COURT OF APPEALS COMMITTED A GRAVE ERROR WHEN IT UPHELD THE
two commissioners without a hearing; and (c) directed petitioner to pay the full market value of the DECISION OF THE TRIAL COURT IN DIRECTING PETITIONER TO PAY THE FULL MARKET VALUE OF
property instead of a mere easement fee. THE LAND INSTEAD OF THE EASEMENT FEE AS PRAYED FOR IN THE COMPLAINT AND PROVIDED
UNDER REPUBLIC ACT NO. 6395 AS AMENDED, WHICH IS OTHERWISE KNOWN AS THE REVISED NPC
CHARTER.11 
On October 26, 2001, the appellate court decided CA-G.R. SP No. 60716 as follows:

In sum, we find that the pertinent issues before us are the following: (1) whether petitioner NPC was
WHEREFORE, in view of the foregoing, the instant petition is hereby DISMISSED for lack of merit.
deprived of due process; and (2) whether the Court of Appeals erred in sustaining the Order of the
RTC of Iba, Zambales, dated June 7, 2000, by dismissing NPC’s petition for certiorari.
SO ORDERED.10 
On the first issue, petitioner contends that the appellate court gravely erred in affirming the trial
In holding that NPC was not entitled to a writ of certiorari, the Court of Appeals found that the trial court’s order directing it to pay the respondent the compensation recommended by the majority
court did not commit a grave abuse of discretion when it failed to issue an expropriation order. The report of the commissioners. Petitioner points out that there were two reports submitted by the
appellate court pointed out that as early as the pre-trial, respondents did not question NPC’s right to commissioners, with conflicting findings as to the market values of the expropriated properties. It
expropriate their properties. Hence, the only matter to be addressed by the trial court was the insists that, given said situation, the trial court should have conducted hearings on the two reports, as
115
required by Rule 67, Sections 712 and 813 of the 1997 Rules of Civil Procedure, before accepting the The duty of the court in considering the commissioners’ report is to satisfy itself that just
majority report. In failing to do so, the trial court not only blatantly violated the Rules; it likewise compensation will be made to the defendant by its final judgment in the matter, and in order to fulfill
denied petitioner due process, as the latter was not afforded a chance to raise its objections to the its duty in this respect, the court will be obliged to exercise its discretion in dealing with the report as
majority report in a hearing held for that purpose. It was, thus, grievous error for the appellate court the particular circumstances of the case may require.16 Rule 67, Section 8, of the 1997 Rules of Civil
to have sustained the trial court. Procedure clearly shows that the trial court has the discretion to act upon the commissioners’ report
in any of the following ways: (1) it may accept the same and render judgment therewith; or (2) for
cause shown, it may: [a] recommit the report to the commissioners for further report of facts; or [b]
The respondents, Heirs of Agrifina Angeles, point out that the petitioner’s contentions are without
set aside the report and appoint new commissioners; or [c] accept the report in part and reject it in
basis, since it was given ample time and/or opportunity by the trial court to object to the questioned
part; and it may make such order or render such judgment as shall secure to the plaintiff the property
order. The respondents assert that the petitioner, had it been so minded, could have moved for
essential to the exercise of his right of expropriation, and to the defendant just compensation for the
reconsideration or filed an appeal therefrom within the reglementary period, but it did not. Instead, it
property so taken.17 
opted for the wrong remedy by filing a special civil action for certiorari with the Court of Appeals, after
the period to appeal had lapsed. Having made an erroneous choice in its remedies, petitioner cannot
now come to this Tribunal crying that it was denied due process. From March 9, 2000 to June 7, 2000, petitioner did not object to the majority report. On record, it did
not, at the time, signify its opposition thereto, or specify that not all of the evidence, pertinent and
material thereto, had been considered by the commissioners or presented to the court. The option of
On record we find that the majority report of Commissioners Ragadio and Atty. Castillo was submitted
recommitting the report of the commissioners, which petitioner now claims, was not ventilated before
to the trial court on March 9, 2000, while the minority report of Commissioner Atty. Alog, was
the trial court. No claim appears on record that fraud or prejudice tainted the majority report. When it
submitted on May 5, 2000. It is not disputed that petitioner was furnished copies of said reports. After
still had the opportunity below, herein petitioner did not challenge the majority report on the ground
petitioner NPC obtained its copy of the majority report, it did nothing. The records do not disclose any
that the commissioners concerned disregarded the evidence before them, or used an improper rule of
objection thereto or any comment opposing the findings and recommendations of the two
assessment, in their submission to the trial court. As previously held, where there was no opposition
commissioners in their report.
filed to the Commissioners’ Report in the lower court, the findings in said Report will not be
disturbed.18 Absent the objections raised by the petitioner, it became the duty of the trial court to
The majority report was submitted on March 9, 2000. The trial court issued its order adopting the make a final order and judgment in which the proper award will be made and thus end the
majority report on June 7, 2000. Clearly, petitioner had ample time to make its objections or ventilate controversy.
its opposition to the majority report before the trial court. A formal hearing or trial was not required
for the petitioner to avail of its opportunity to object and oppose the majority report. Petitioner could
Moreover, after its receipt of the trial court’s order dated June 7, 2000, which decided the issue of
have filed a motion raising all possible grounds for objecting to the findings and recommendations of
compensation as delineated at the pre-trial, petitioner resorted to a special civil action, rather than an
the commissioners. It could have moved the trial court to remand the report to the commissioners for
appeal before the Court of Appeals. As aptly pointed out, petitioner could not utilize certiorari as a
additional facts. Or it could have moved to expunge the majority report, for reasons petitioner could
substitute for its lost right of appeal. We also agree that the trial court did not abuse its discretion in
muster. Petitioner, however, failed to seize the opportunity to register its opposition or objections
ruling on the very issue of just compensation for the land taken, as delineated by the party
before the trial court. It is a bit too late in the day now to be asking for a hearing on the pretext that
themselves at the pre-trial.
it had not been afforded due process.

Nevertheless, we shall now take up the matter of valuation and just compensation if only to avoid any
The elements of due process are well established, viz:
further delay in its resolution.1âwphi1

(1) There must be a court or tribunal clothed with judicial power to hear and determine the
The fair market value of the 4,000 square meters occupied by the petitioner was fixed by the trial
matter before it;
court in its order of June 7, 2000 at ₱500.00 per square meter. The appellate court affirmed the said
valuation.
(2) Jurisdiction must be lawfully acquired over the person of the defendant or property which
is the subject of the proceedings;
In contesting the valuation, petitioner argues now that the Court of Appeals gravely erred in
upholding the RTC order requiring it to pay the full market value of the expropriated properties,
(3) The defendant must be given an opportunity to be heard; and notwithstanding the fact that the petitioner was only acquiring an easement of right-of-way. The
petitioner points out under Section 3-A19 of RA No. 6395, where only an easement of right-of-way
(4) Judgment must be rendered upon lawful hearing.14  shall be acquired, with the principal purpose for which the land is actually devoted is unimpaired, the
compensation should not exceed ten percent (10%) of the market value of the property. Thus, in
sustaining the order of the lower court directing the petitioner to pay the respondents the full
What is repugnant to due process is the denial of the opportunity to be heard. 15 As pointed out that recommended value of their properties, the Court of Appeals completely violated and disregarded RA
the petitioner was afforded this opportunity is beyond question. Having failed to make use of this No. 6395, as amended.
opportunity, the petitioner cannot justifiably claim now that its right to due process has been violated.

116
Petitioner averred in its complaint in Civil Case No. 1442-I, that it sought to acquire "an easement of
right-of-way" over portions of the properties owned by respondents, for a total of 10,950 square
meters.20 However, a perusal of its complaint shows that petitioner also stated that it would erect
structures for its transmission lines on portions of the expropriated property. In other words, the
expropriation was not to be limited for the purpose of "easement of right-of-way." In fact, in their
Answer, the Heirs of Agrifina Angeles, alleged that petitioner had actually occupied an area of 4,000
square meters wherein it constructed structures for its transmission lines and was seeking to occupy
another 4,000 square meters.21 Petitioner failed to controvert this material allegation. Justifiably, the
market value of these 4,000 square meters allegedly occupied by the petitioner has became the very
crux of the present case.

In eminent domain or expropriation proceedings, the general rule is that the just compensation to
which the owner of condemned property is entitled to is the market value.22 Market value is "that sum
of money which a person desirous but not compelled to buy, and an owner willing but not compelled
to sell, would agree on as a price to be given and received therefor." 23 The aforementioned rule, G.R. No. 148512             June 26, 2006
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. In addition to the market value of the
portion taken, he is also entitled to recover for the consequential damage, if any, to the remaining COMMISSIONER OF INTERNAL REVENUE, Petitioner, 
part of the property. At the same time, from the total compensation must be deducted the value of vs.
the consequential benefits.24  CENTRAL LUZON DRUG CORPORATION, Respondent. 

In fixing the valuation at ₱500.00 per square meter, the Court of Appeals noted that the trial court DECISION
had considered the reports of the commissioners and the proofs submitted by the parties. This
included the fair market value of ₱1,100.00 per square meter proffered by the respondents. 25 This AZCUNA, J.:
valuation by owners of the property may not be binding upon the petitioner or the court, although it
should at least set a ceiling price for the compensation to be awarded. 26 The trial court found that the
This is a petition for review under Rule 45 of the Rules of Court seeking the nullification of the
parcels of land sought to be expropriated are agricultural land, with minimal improvements. It is the
Decision, dated May 31, 2001, of the Court of Appeals (CA) in CA-G.R. SP No. 60057, entitled
nature and character of the land at the time of its taking that is the principal criterion to determine
"Central Luzon Drug Corporation v. Commissioner of Internal Revenue," granting herein respondent
just compensation to the landowner.27 Hence, the trial court accepted not the owner’s valuation of
Central Luzon Drug Corporation’s claim for tax credit equal to the amount of the 20% discount that it
₱1,100 per square meter but only ₱500 as recommended in the majority report of the commissioners.
extended to senior citizens on the latter’s purchase of medicines pursuant to Section 4(a) of Republic
Act (R.A.) No. 7432, entitled "An Act to Maximize the Contribution of Senior Citizens to Nation
As to the price of ₱22.50 per square meter recommended by the minority report of Commissioner Building, Grant Benefits and Special Privileges and for other Purposes" otherwise known as the Senior
Atty. Alog, the Court of Appeals found it unconscionably inadequate. It was rightly rejected by the Citizens Act.
trial court.
The antecedents are as follows:
In finding that the trial court did not abuse its authority in evaluating the evidence and the reports
placed before it nor did it misapply the rules governing fair valuation, the Court of Appeals found the
Central Luzon Drug Corporation has been a retailer of medicines and other pharmaceutical products
majority report’s valuation of ₱500 per square meter to be fair. Said factual finding of the Court of
since December 19, 1994. In 1995, it opened three (3) drugstores as a franchisee under the business
Appeals, absent any showing that the valuation is exorbitant or otherwise unjustified, is binding on
name and style of "Mercury Drug." 
the parties as well as this Court.

For the period January 1995 to December 1995, in conformity to the mandate of Sec. 4(a) of R.A. No.
WHEREFORE, the instant petition is DENIED for lack of merit. The decision of the Court of Appeals,
7432, petitioner granted a 20% discount on the sale of medicines to qualified senior citizens
dated October 26, 2001 as well as its resolution of February 26, 2002, denying the petitioner’s motion
amounting to P219,778.
for reconsideration, in CA-G.R. SP No. 60716 are AFFIRMED. Costs against petitioner.

Pursuant to Revenue Regulations No. 2-941 implementing R.A. No. 7432, which states that the
SO ORDERED.
discount given to senior citizens shall be deducted by the establishment from its gross sales for value-
added tax and other percentage tax purposes, respondent deducted the total amount of P219,778
from its gross income for the taxable year 1995. For said taxable period, respondent reported a net

117
loss of P20,963 in its corporate income tax return. As a consequence, respondent did not pay income As shown above, the amount of P150,193 claimed as a refund represents the tax credit allegedly due
tax for 1995. to respondent under R.A. No. 7432. Since the Commissioner of Internal Revenue "was not able to
decide the claim for refund on time,"2 respondent filed a Petition for Review with the Court of Tax
Appeals (CTA) on March 18, 1998.
Subsequently, on December 27, 1996, claiming that according to Sec. 4(a) of R.A. No. 7432, the
amount of P219,778 should be applied as a tax credit, respondent filed a claim for refund in the
amount of P150,193, thus:  On April 24, 2000, the CTA dismissed the petition, declaring that even if the law treats the 20% sales
discounts granted to senior citizens as a tax credit, the same cannot apply when there is no tax
liability or the amount of the tax credit is greater than the tax due. In the latter case, the tax credit
Net Sales  P 37,014,807.00 will only be to the extent of the tax liability. 3Also, no refund can be granted as no tax was
erroneously, illegally and actually collected based on the provisions of Section 230, now Section 229,
Add: Cost of 20% Discount to Senior Citizens  219,778.00 of the Tax Code. Furthermore, the law does not state that a refund can be claimed by the private
establishment concerned as an alternative to the tax credit.

Gross Sales P 37,234,585.00 Thus, respondent filed with the CA a Petition for Review on August 3, 2000.

Less: Cost of Sales


On May 31, 2001, the CA rendered a Decision stating that Section 229 of the Tax Code does not apply
in this case. It concluded that the 20% discount given to senior citizens which is treated as a tax
Merchandise Inventory, beg  P 1,232,740.00 credit pursuant to Sec. 4(a) of R.A. No. 7432 is considered just compensation and, as such, may be
carried over to the next taxable period if there is no current tax liability. In view of this, the CA held:
Purchases  41,145,138.00

8,521,557.00 33,856,621.00 WHEREFORE, the instant petition is hereby GRANTED and the decision of the CTA dated 24 April 2000
Merchandise Inventory, end  and its resolution dated 06 July 2000 are SET ASIDE. A new one is entered granting petitioner’s claim
for tax credit in the amount of Php: 150,193.00. No costs.

Gross Profit  P 3,377,964.00


SO ORDERED.4
Miscellaneous Income  39,014.00
Hence, this petition raising the sole issue of whether the 20% sales discount granted by respondent to
qualified senior citizens pursuant to Sec. 4(a) of R.A. No. 7432 may be claimed as a tax credit or as a
Total Income 3,416,978.00 deduction from gross sales in accordance with Sec. 2(1) of Revenue Regulations No. 2-94.

Operating Expenses  3,199,230.00 Sec. 4(a) of R.A. No. 7432 provides:

Sec. 4. Privileges for the Senior citizens. – The senior citizens shall be entitled to the following:
Net Income Before Tax P 217,748.00
(a) the grant of twenty percent (20%) discount from all establishments relative to utilization of
Income Tax (35%)  69,585.00
transportations services, hotels and similar lodging establishments, restaurants and recreation centers
and purchase of medicines anywhere in the country: Provided, That private establishments may claim
Less:  Tax Credit
the cost as tax credit.
(Cost of 20% Discount to Senior Citizens)  219,778.00
The CA and the CTA correctly ruled that based on the plain wording of the law discounts given under
R.A. No. 7432 should be treated as tax credits, not deductions from income.
Income Tax Payable (P 150,193.00)
It is a fundamental rule in statutory construction that the legislative intent must be determined from
Income Tax Actually Paid  -0- the language of the statute itself especially when the words and phrases therein are clear and
unequivocal. The statute in such a case must be taken to mean exactly what it says. 5 Its literal
Tax Refundable/Overpaid Income Tax (P 150,193.00) meaning should be followed;6 to depart from the meaning expressed by the words is to alter the
statute.7

118
The above provision explicitly employed the word "tax credit." Nothing in the provision suggests for it
to mean a "deduction" from gross sales. To construe it otherwise would be a departure from the clear
mandate of the law.

Thus, the 20% discount required by the Act to be given to senior citizens is a tax credit, not a
deduction from the gross sales of the establishment concerned. As a corollary to this, the definition of
‘tax credit’ found in Section 2(1) of Revenue Regulations No. 2-94 is erroneous as it refers to tax
credit as the amount representing the 20% discount that "shall be deducted by the said establishment
from their gross sales for value added tax and other percentage tax purposes." This definition is
contrary to what our lawmakers had envisioned with regard to the treatment of the discount granted
to senior citizens. 

Accordingly, when the law says that the cost of the discount may be claimed as a tax credit, it means
that the amount -- when claimed – shall be treated as a reduction from any tax liability. 8 The law
cannot be amended by a mere regulation. The administrative agencies issuing these regulations may
not enlarge, alter or restrict the provisions of the law they administer. 9 In fact, a regulation that
"operates to create a rule out of harmony with the statute is a mere nullity."10

Finally, for purposes of clarity, Sec. 22911 of the Tax Code does not apply to cases that fall under Sec.
4 of R.A. No. 7432 because the former provision governs exclusively all kinds of refund or credit of
internal revenue taxes that were erroneously or illegally imposed and collected pursuant to the Tax
Code while the latter extends the tax credit benefit to the private establishments concerned even LAND BANK OF THE PIDLIPPINES, Petitioner, 
before tax payments have been made. The tax credit that is contemplated under the Act is a form of vs.
just compensation, not a remedy for taxes that were erroneously or illegally assessed and collected. EUGENIO DALAUTA, Respondent
In the same vein, prior payment of any tax liability is not a precondition before a taxable entity can
benefit from the tax credit. The credit may be availed of upon payment of the tax due, if any. Where FACTS: Respondent was the registered owner of an agricultural land in Butuan City with an area of
there is no tax liability or where a private establishment reports a net loss for the period, the tax 25.2160 hectares and which was placed by DAR under compulsory acquisition of CARP as reflected in
credit can be availed of and carried over to the next taxable year.  the Notice of Coverage. Petitioner LBP offered ₱192,782.59 as compensation for the land, but Dalauta
rejected such valuation for being too low.
It must also be stressed that unlike in Sec. 229 of the Tax Code wherein the remedy of refund is
available to the taxpayer, Sec. 4 of the law speaks only of a tax credit, not a refund.  The case was referred to the DAR Adjudication Board (DARAB) through the Provincial Agrarian Reform
Adjudicator (PARAD) of Butuan City, who affirmed the valuation made by LBP, after a summary
As earlier mentioned, the tax credit benefit granted to the establishments can be deemed as their just administrative proceeding was conducted.
compensation for private property taken by the State for public use. The privilege enjoyed by the
senior citizens does not come directly from the State, but rather from the private establishments
Respondent filed a petition for determination of just compensation with the RTC, sitting as SAC. He
concerned.12
alleged that LBP’s valuation of the land was inconsistent with the rules and regulations prescribed in
DAR Administrative Order (A.O.) No. 06, series of 1992, for determining the just compensation of
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. lands covered by CARP’s compulsory acquisition scheme.
60057, dated May 31, 2001, is AFFIRMED.

The Board of Commissioners constituted by SAC inspected the land and recommended that the value
No pronouncement as to costs.
of the land be pegged at ₱100,000.00 per hectarei  in which both parties objected.

SO ORDERED.
DAR Admin. Order  No. 06 (1992) – II (A) 

There shall be one basic formula for the valuation of lands covered by VOS or CA regardless of the
date of offer or coverage of the claim:

119
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1) Dalauta alleges to have sold all the falcata trees in the property to Fonacier in 1993. After Fonacier
Where:  LV = Land Value; CNI = Capitalized Net Income; CS = Comparable Sales; MV = Market finished harvesting in January 1994, he claims that, per advice of his lawyer, he immediately caused
Value per Tax Declaration the date of effectivity of this Joint Memorandum Circular x x x.” It is submitted, however, that
The above formula shall be used if all the three factors are present, relevant, and applicable. applying the above formula to compute just compensation for respondent’s land would be the most
A.1         When the CS factor is not present and CNI and MV are applicable, the formula shall be: equitable course of action under the circumstances. Without JMC No. 11 (2003), Dalauta’s property
LV=(CNI x 0.9) + (MV x 0.1) would have to be valued using the formula for idle lands, the CNI and CS factors not being applicable.
A.2         When the CNI factor is not present, and CS and MV are applicable, the formula shall be: Following this formula, just compensation for Dalauta’s property would only amount to ₱225,300.00,
LV = (CS x 0.9) + (MV x 0.1) computed as follows:
A.3         When both the CS and CNI are not present and only MV is applicable, the formula shall be:
LV = MV x 2
LV = MVx2
Where: LV = Land Value; MV = Market Value per Tax Declaration*
A.4      In all the above, the computed value using the applicable formula or the Declared Value by  For the area planted to corn, ₱7,740.00/hectare
Landowner (DV), whichever is lower, shall be adopted as the Land Value.  For idle/pasture land, ₱3,890/hectare
Thus:
For the 4 hectares planted to corn: LV = (P7, 7 40/hectare x 4 hectares) x 2 = ₱61,920.00
xxx For the 21 hectares of idle/pasture land: LV = (₱3,890/hectare x 21) x 2 = ₱163,380.00
Total Land Value = P61,920.00 + Pl63,380.00 = P225,300.00
Dalauta claimed that he had a net income of Php350,000.00 in 1993 from sales of trees to one
person, Fonacier, thus the formula of  LV = CNI x 0.9 + MV x 0.1 should be used, which yields a total
value of ₱2,639,557.oo.

LBP alleged that the land had no income and the corn production found during the ocular inspection in
1994 was only for family consumption. Thus they used the formula LV= MVx 2 which yielded a total
value of ₱192,782.59.

G.R. No. 190004


ISSUE: Whether or not respondent is considered the trial court correctly computed the just
compensation of the subject property.
LAND BANK OF THE PIDLIPPINES, Petitioner, 
vs.
RULING: Upon an assiduous assessment of the different valuations arrived at by the DAR, the SAC EUGENIO DALAUTA, Respondent
and the CA, the Court agrees with the position of Justice Francis Jardeleza that just compensation
for respondent Dalauta’s land should be computed based on the formula provided under DECISION
DAR-LBP Joint Memorandum Circular No. 11, series of 2003 (JMC No. 11 (2003)). This
Memorandum Circular, which provides for the specific guidelines for properties with standing
commercial trees, explains: MENDOZA, J.:

This petition for review on certiorari under Rule 45 seeks to review, reverse and set aside the
The Capitalized Net Income (CNI) approach to land valuation assumes that there would be uniform September 18, 2009 Decision1 of the Court of Appeals-Cagayan de Oro (CA) in CA-G.R. SP No.
streams of future income that would be realized in perpetuity from the seasonal/permanent crops 01222-MIN, modifying the May 30, 2006 Decision 2 of the Regional Trial Court, Branch 5, Butuan
planted to the land. In the case of commercial trees (hardwood and soft wood species), City (RTC), sitting as Special Agrarian Court (SAC), in Civil Case No. 4972 - an action for
however, only a  one-time income  is realized when the trees are due for harvest. The determination of just compensation.
regular CNI approach in the valuation of lands planted to commercial trees would therefore
not apply. (Emphasis and underscoring supplied.)
The Facts

Dalauta’s sale of falcata trees indeed appears to be a one-time transaction. He did not claim to have
derived any other income from the property prior to receiving the Notice of Coverage from the DAR in Respondent Eugenio Dalauta (Dalauta) was the registered owner of an agricultural land in Florida,
February 1994. For this reason, his property would be more appropriately covered by the formula Butuan City, with an area of 25.2160 hectares and covered by Transfer Certificate of Title (TCT) No.
provided under JMC No. 11 (2003). T-1624. The land was placed by the Department of Agrarian Reform (DAR) under compulsory
acquisition of the Comprehensive Agrarian Reform Program (CARP) as reflected in the Notice of

120
Coverage,3 dated January 17, 1994, which Dalauta received on February 7, 1994. Petitioner Land based on the valuation guidelines provided by DAR; and Alex G. Carido (Carido), LBP Agrarian
Bank of the Philippines (LBP) offered ₱192,782.59 as compensation for the land, but Dalauta rejected Operation Specialist of CDO Branch, whose function was to compute the value of land offered by a
such valuation for being too low.4 landowner to the DAR, using the latter's guidelines.

The case was referred to the DAR Adjudication Board (DARAB) through the Provincial Agrarian Reform Based on Penaso's testimony, 3.0734 hectares of the subject land were planted with com for family
Adjudicator (PARAD) of Butuan City. A summary administrative proceeding was conducted to consumption while the 22.1426 hectares were idle, although there were second-growth trees thereon.
determine the appropriate just compensation for the subject property. In its Resolution, 5 dated He reported that the trees had no value and could be considered as weeds. Likewise, Penaso indicated
December 4, 1995, the PARAD affirmed the valuation made by LBP in the amount of ₱192,782.59. "none" under the column of Infrastructures in the report, although there was a small house made of
wood and cut logs in the center of the corn land. He posited that an infrastructure should be made of
concrete and hollow blocks. Penaso stated that the sources of their data were the guide, the BARC
On February 28, 2000, Dalauta filed a petition for determination of just compensation with the RTC,
representative, and the farmers from the neighboring lots. On cross-examination, he admitted that
sitting as SAC. He alleged that LBP's valuation of the land was inconsistent with the rules and
there were coconut trees scattered throughout the land; that he did not ask the guide about the first-
regulations prescribed in DAR Administrative Order (A.O.) No. 06, series of 1992, for determining the
growth trees or inquire from the landowner about the land's income; and that he used the land's
just compensation of lands covered by CARP's compulsory acquisition scheme.
market value as reflected in its 1984 tax declaration.8

During the trial, the SAC constituted the Board of Commissioners (Commissioners) tasked to inspect
Per testimony of Carido, the valuation of Dalauta's land was computed in September 1994 pursuant to
the land and to make a report thereon. The Report of the Commissioners,6 dated July 10, 2002,
the Memorandum Request to Value the Land9 addressed to the LBP president. He alleged that the
recommended that the value of the land be pegged at ₱100,000.00 per hectare. With both Dalauta
entries in the Claims Valuation and Processing Forms were the findings of their credit investigator.
and the DAR objecting to the recommended valuation, the SAC allowed the parties to adduce
Carido explained that they used the formula L V = MV x 2 in determining the value of Dalauta's land
evidence to support their respective claims.
because the land had no income. The land's com production during the ocular inspection in 1994 was
only for family consumption. Hence, pursuant to DAR A.O. No. 6, series of 1992, the total value of
Dalauta's Computation Dalauta's land should be computed as LV = MV x 2, where MV was the Market Value per Tax
Declaration based on the Tax Declaration issued in 1994.10 Carido explained that:
Dalauta argued that the valuation of his land should be determined using the formula in DAR A.O. No.
6, series of 1992, which was Land Value (LV) = Capitalized Net Income (CNI) x 0.9 + Market Value xxx using the formula MV x 2, this is now the computation. Land Value= Market Value (6,730.07) x 2
(MV) per tax declaration x 0.1, as he had a net income of ₱350,000.00 in 1993 from the sale of the = 13,460.14 - this is the price of the land per hectare, x the area of corn land which is 3.0734, we
trees that were grown on the said land. Norberto C. Fonacier (Fonacier), the purchaser of the trees, gave the total Land Value for corn ₱41,368.39. For Idle Land, the Market Value which is computed in
testified that he and Dalauta executed their Agreement 7before Atty. Estanislao G. Ebarle, Jr., which the second page of this paper is P3,419.07 by using the formula MV x 2 = ₱3,419.07 x 2, we come up
showed that he undertook to bear all expenses in harvesting the trees and to give Dalauta the with the Land Value per hectare = 6,838.14 multiplied by the area of the idle land which is 22.1426
amount of ₱350,000.00 as net purchase payment, for which he issued a check. He said that it was his hectares. The total Land Value for idle is ₱151,414.20. Adding the total Land Value for corn and idle,
first and only transaction with Dalauta. Fonacier also claimed that a portion of Dalauta's land was we get the grand total of ₱192,782.59, representing the value of the 25.2160 hectares.11
planted with corn and other trees such as ipil-ipil, lingalong, and other wild trees.
On cross and re-cross-examinations, Carido admitted that there were different ways of computing the
During his cross-examination, Dalauta clarified that about 2,500 trees per hectare were planted on land value under DAR A.O. No. 6. He claimed that no CNI and/or Comparable Sales (CS) were given
about twenty-one (21) hectares of his land, while the remaining four (4) hectares were reserved by to him because the land production was only for family consumption, hence, CNI would not apply.
his brother for planting com. He also claimed to have replanted the land with gemelina trees, as Further, he explained that the net income and/or production of the land within twelve (12) months
advised by his lawyer, after Fonacier harvested the trees in January 1994. Such plants were the prior to the ocular inspection was considered in determining the land value.12
improvements found by the Commissioners during their inspection. Dalauta added that he had no
tenants on the land. He prayed that the compensation for his land be pegged at ₱2,639,566.90.
The Ruling of the SAC

LBP's Computation
On May 30, 2006, the SAC rendered its decision as follows:

LBP argued that the valuation of Dalauta's land should be determined using the formula LV= MVx
WHEREFORE, AND IN VIEW OF ALL OF THE FOREGOING, DAR and LBP are directed to pay to:
2, which yielded a total value of ₱192,782.59 for the 25.2160 hectares of Dalauta's land.

1.) Land Owner Mr. Eugenio Dalauta the following:


LBP claimed that during the ocular inspection/investigation, only 36 coconut trees existed on the
subject land; that three (3) hectares of it were planted with corn; and the rest was idle with few
second-growth trees. To support its claim, LBP presented, as witnesses, Ruben P. Penaso (Penaso), a. Two Million Six Hundred Thirty Nine Thousand Five Hundred Fifty Seven (₱2,639,557.oo)
LBP Property Appraiser of CDO Branch, whose basic function was to value the land covered by CARP Pesos, Philippine Currency, as value of the Land;

121
b. One Hundred Thousand (₱100,ooo.oo) Pesos, Philippine Currency for the farmhouse; Whenever one of the factors in the general formula is not available, the computation of land value will
be any of the three (3) computations or formulae:
c. One Hundred Fifty Thousand (₱150,000.00) Pesos, Philippine Currency, as reasonable
attorney's fees; LV = (CNI x 0.9) + (MV x 0.1)

d. Fifty Thousand (₱50,000.00) Pesos, Philippine Currency as litigation expenses; (If the comparable sales factor is missing)

2.) The Members of the Board of Commissioners: LV = (CS x 0.9) + (MV x 0.1)

a. Ten Thousand (P10,ooo.oo) Pesos, Philippine Currency for the Chairman of the Board; (If the capitalize net income is unavailable)

b. Seven Thousand Five Hundred (₱7,500.00) Pesos, Philippine Currency for each of the two LV = MV x 2 (If only the market value factor is available)
(2) members of the Board;
(Agrarian Law and Jurisprudence as compiled by DAR and UNDP pp. 94-95)
SO ORDERED.13
Since the Capitalized Net Income in this case is available, the formula to be used is:
The SAC explained its decision in this wise:
LV = (CNI x 0.9) + (MVx 0.1)
Going over the records of this case, taking into consideration the Commissioners Report which is
replete with pictures of the improvements introduced which pictures are admitted into evidence not as
Whence:
illustrated testimony of a human witness but as probative evidence in itself of what it shows (Basic
Evidence, Bautista, 2004 Edition), this Court is of the considered view that the Report
(Commissioners) must be given weight. LV = (₱350,000.00/.12 x 0.9) + (₱145,570 x 0.1)

While LBP's witness Ruben P. Penaso may have gone to the area, but he did not, at least, list down = (₱2,916,666.67 x 0.9) + (₱145,557.oo) [sic]
the improvements. The members of the Board of Commissioners on the other hand, went into the
area, surveyed its metes and bounds and listed the improvements they found including the farmhouse = ₱2,625,000.00 + ₱14,557.00
made of wood with galvanized iron roofing (Annex "C", Commissioner's Report, p. 132, Record)

= ₱2,639,557.00 plus ₱100,000.00 for the Farmhouse.14


All told, the basic formula for the valuation of lands covered by Voluntary Offer to Sell and
Compulsory Acquisition is:
Unsatisfied, LBP filed a motion for reconsideration, but it was denied by the SAC on July 18, 2006.

LV = (CNI x o.6) + (CS x 0.3) + (MV x 0.1)


Hence, LBP filed a petition for review under Rule 42 of the Rules of Court before the CA, arguing: 1]
that the SAC erred in taking cognizance of the case when the DARAB decision sustaining the LBP
Where: LV =Land Value valuation had long attained finality; 2] that the SAC erred in taking judicial notice of the
Commissioners' Report without conducting a hearing; and 3] that the SAC violated Republic Act (R.A.)
CNI =Capitalized Net Income No. 665715 and DAR A.O. No. 6, series of 1992, in fixing the just compensation.

CS = Comparable Sales The CA Ruling

MV =Market Value per Tax Declaration In its September 18, 2009 Decision, the CA ruled that the SAC correctly took cognizance of the case,
citing LBP v. Wycoco16 and LBP v. Suntay.17 It reiterated that the SAC had original and exclusive
jurisdiction over all petitions for the determination of just compensation. The appellate court stated
The above formula is used if all the three (3) factors are present, relevant and applicable. In any
that the original and exclusive jurisdiction of the SAC would be undermined if the DAR would vest in
case, the resulting figure in the equation is always multiplied to the number of area or hectarage of
administrative officials the original jurisdiction in compensation cases and make the SAC an appellate
land valued for just compensation.
court for the review of administrative decisions.18
122
With regard to just compensation, the CA sustained the valuation by the SAC for being well within experience and services of the administrative tribunal to determine technical and intricate matters of
R.A. No. 6657, its implementing rules and regulations, and in accordance with settled jurisprudence. fact.25
The factors laid down under Section 17 of R.A. No. 6657, which were translated into a basic formula
in DAR A.O. No. 6, series of 1992, were used in determining the value of Dalauta's property. It stated
In agrarian reform cases, primary jurisdiction is vested in the DAR, more specifically, in the DARAB
that the courts were not at liberty to disregard the formula which was devised to implement Section 1
as provided for in Section 50 of R.A. No. 6657 which reads:
7 of R.A. No. 6657. The CA, however, disagreed with the SAC's valuation of the farmhouse, which was
made of wood and galvanized iron, for it was inexistent during the taking of the subject land.19
SEC. 50. Quasi-Judicial Powers of the DAR. - The DAR is hereby vested with primary jurisdiction to
determine and adjudicate agrarian reform matters and shall have exclusive original jurisdiction over
The appellate court also disallowed the awards of attorney's fees and litigation expenses for failure of
all matters involving the implementation of agrarian reform, except those falling under the exclusive
the SAC to state its factual and legal basis. As to the award of commissioner's fees, the CA sustained
jurisdiction of the Department of Agriculture (DA) and the Department of Environment and Natural
it with modification to conform with Section 15, Rule 14120 of the Rules of Court. Considering that the
Resources (DENR). [Emphasis supplied]
Commissioners worked for a total of fifteen (15) days, the CA ruled that they were only entitled to a
fee of ₱3,000.00 each or a total of ₱9,000.00.21 The dispositive portion reads:
Meanwhile, Executive Order (E.O.) No. 229 also vested the DAR with (1) quasi-judicial powers to
determine and adjudicate agrarian reform matters; and (2) jurisdiction over all matters involving the
WHEREFORE, in view of all the foregoing, the instant petition is PARTIALLY GRANTED, and the
implementation of agrarian reform, except those falling under the exclusive original jurisdiction of the
assailed Decision dated May 30, 2006 of the RTC, Branch 5, Butuan City, in Civil Case No. 4972, is
Department of Agriculture and the Department of Environment and Natural Resources.26
hereby MODIFIED as follows: (1) the compensation for the farmhouse (₱100,000.00), as well
as the awards for attorney's fees (₱150,000.00) and litigation expenses (₱50,000.00), are
hereby DELETED; and (2) the members of the Board of Commissioners shall each be paid a On the other hand, the SACs are the Regional Trial Courts expressly granted by law
commissioner's fee of Three Thousand Pesos (₱3,000.00) by petitioner Land Bank of the with original and exclusive jurisdiction over all petitions for the determination of just
Philippines. The assailed Decision is AFFIRMED in all other respect. compensation to landowners. Section 57 of R.A. No. 6657 provides:

SO ORDERED.22 SEC. 57. Special Jurisdiction. - The Special Agrarian Courts shall have original and exclusive
jurisdiction over all petitions for the determination of just compensation to landowners, and the
prosecution of all criminal offenses under this Act. The Rules of Court shall apply to all proceedings
Not in conformity, LBP filed this petition raising the following:
before the Special Agrarian Courts, unless modified by this Act.

ISSUES
The Special Agrarian Courts shall decide all appropriate cases under their special jurisdiction within
thirty (30) days from submission of the case for decision. [Emphases supplied]
1. Whether or not the trial court had properly taken jurisdiction over the case despite the
finality of the PARAD Resolution.
Adhering thereto, in Land Bank of the Philippines v. Heir of Trinidad S. V da. De Arieta, 27 it was
written:
2. Whether or not the trial court correctly computed the just compensation of the subject property.
In both voluntary and compulsory acquisitions, wherein the landowner rejects the offer, the DAR
The Court's Ruling opens an account in the name of the landowner and conducts a summary administrative proceeding.
If the landowner disagrees with the valuation, the matter may be brought to the RTC, acting as a
special agrarian court. But as with the DAR-awarded compensation, LBP's valuation of lands covered
Primary Jurisdiction of the DARAB 
by CARL is considered only as an initial determination, which is not conclusive, as it is the RTC,
and Original Jurisdiction of the SAC
sitting as a Special Agrarian Court, that should make the final determination of just
compensation, taking into consideration the factors enumerated in Section 17 of R.A. No. 6657 and
Jurisdiction is defined as the power and authority of a court to hear, try and decide a the applicable DAR regulations. xxx.28 [Emphases and underscoring supplied]
case.23 Jurisdiction over the subject matter is conferred only by the Constitution or the law. 24 The
courts, as well as administrative bodies exercising quasi-judicial functions, have their respective
The DARAB Rules and 
jurisdiction as may be granted by law. In connection with the courts' jurisdiction vis-a-vis jurisdiction
Subsequent Rulings
of administrative bodies, the doctrine of primary jurisdiction takes into play.

Recognizing the separate jurisdictions of the two bodies, the DARAB came out with its own rules to
The doctrine of primary jurisdiction tells us that courts cannot, and will not, resolve a controversy
avert any confusion. Section 11, Rule XIII of the 1994 DARAB Rules of Procedure reads:
involving a question which is within the jurisdiction of an administrative tribunal, especially where the
question demands the exercise of sound administrative discretion requiring the special knowledge,

123
Land Valuation Determination and Payment of Just Compensation. - The decision of the Adjudicator The jurisdiction of the Regional Trial Courts is not any less "original and exclusive" because the
on land valuation and preliminary determination and payment of just compensation shall not be question is first passed upon by the DAR, as the judicial proceedings are not a continuation of the
appealable to the Board but shall be brought directly to the Regional Trial Courts designated administrative determination. For that matter, the law may provide that the decision of the DAR is
as Special Agrarian Courts within fifteen (15) days from receipt of the notice thereof.  Any final and unappealable.
party shall be entitled to only one motion for reconsideration. [Emphasis supplied]
Nevertheless, resort to the courts cannot be foreclosed on the theory that courts are the guarantors
The Court stamped its imprimatur on the rule in Philippine Veterans Bank v. CA (Veterans of the legality of administrative action.
Bank);29 LBP v. Martinez (Martinez); 30 and Soriano v. Republic (Soriano). 31 In all these cases, it was
uniformly decided that the petition for determination of just compensation before the SAC should be
Accordingly, as the petition in the Regional Trial Court was filed beyond the 15-day
filed within the period prescribed under the DARAB Rules, that is, "within fifteen (15) days from
period provided in Rule XIII, §u of the Rules of Procedure of the DARAB, the trial court correctly
receipt of the notice thereof." In Philippine Veterans Bank, it was written:
dismissed the case and the Court of Appeals correctly affirmed the order of
dismissal. xxx33 [Emphases and underscoring supplied; Citations omitted]
There is nothing contradictory between the provision of §so granting the DAR primary jurisdiction
to determine and adjudicate "agrarian reform matters" and exclusive original jurisdiction over "all
Any uncertainty with the foregoing ruling was cleared when the Court adhered to the Veterans Bank
matters involving the implementation of agrarian reform," which includes the determination of
ruling in its July 31, 2008 Resolution in Land Bank v. Martinez:34
questions of just compensation, and the provision of §57 granting Regional Trial Courts "original and
exclusive jurisdiction" over (1) all petitions for the determination of just compensation to landowner,
and (2) prosecutions of criminal offenses under R.A. No. 6657. The first refers to administrative On the supposedly conflicting pronouncements in the cited decisions, the Court reiterates its ruling in
proceedings,while the second refers to judicial proceedings. Under R.A. No. 6657, the Land Bank of this case that the agrarian reform adjudicator's decision on land valuation attains finality
the Philippines is charged with the preliminary determination of the value of lands placed under land after the lapse of the 15-day period stated in the DARAB Rules. The petition for the fixing of just
reform program and the compensation to be paid for their taking. It initiates the acquisition of compensation should therefore, following the law and settled jurisprudence, be filed with the SAC
agricultural lands by notifying the landowner of the government's intention to acquire his land and the within the said period. This conclusion, as already explained in the assailed decision, is based on the
valuation of the same as determined by the Land Bank. Within 30 days from receipt of notice, the doctrines laid down in Philippine Veterans Bank v. Court of Appeals and Department of Agrarian
landowner shall inform the DAR of his acceptance or rejection of the offer. In the event the landowner Reform Adjudication Board v. Lubrica. [Emphases and underscoring supplied]
rejects the offer, a summary administrative proceeding is held by the provincial (PARAD), the regional
(RARAD) or the central (DARAB) adjudicator, as the case may be, depending on the value of the land, Jurisdiction of the SAC 
for the purpose of determining the compensation for the land. The landowner, the Land Bank, and is Original and Exclusive; 
other interested parties are then required to submit evidence as to the just compensation for the The Courts Ruling in Veterans 
land. The DAR adjudicator decides the case within 30 days after it is submitted for decision. If the Bank and Martinez should be 
landowner finds the price unsatisfactory, he may bring the matter directly to the appropriate Regional Abandoned
Trial Court.

Citing the rulings in Veterans and Martinez, the LBP argues that the PARAD resolution already
To implement the provisions of R.A. No. 6657, particularly §50 thereof, Rule XIII, §u of the DARAB attained finality when Dalauta filed the petition for determination of just compensation before the RTC
Rules of Procedure provides: sitting as SAC. The petition was filed beyond the 15-day prescriptive period or, specifically, more than
five (5) years after the issuance of the PARAD Resolution.
Land Valuation Determination and Payment of Just Compensation. - The decision of the Adjudicator
on land valuation and preliminary determination and payment of just compensation shall not be This issue on jurisdiction and prescription was timely raised by LBP as an affirmative defense, but the
appealable to the Board but shall be brought directly to the Regional Trial Courts designated as SAC just glossed over it and never really delved on it. When the issue was raised again before the CA,
Special Agrarian Courts within fifteen (15) days from receipt of the notice thereof. Any party the appellate court, citing LBP v. Wycoco35 and LBP v. Suntay,36 stressed that the RTC, acting as SAC,
shall be entitled to only one motion for reconsideration. had original and exclusive jurisdiction over all petitions for the determination of just compensation. It
explained that the original and exclusive jurisdiction of the SAC would be undermined if the DAR
As we held in Republic v. Court of Appeals,32 this rule is an acknowledgment by the DARAB that the would vest in administrative officials the original jurisdiction in compensation cases and make the SAC
power to decide just compensation cases for the taking of lands under R.A. No. 6657 is vested in the an appellate court for the review of administrative decisions.37
courts. It is error to think that, because of Rule XIII, §n, the original and exclusive jurisdiction given
to the courts to decide petitions for determination of just compensation has thereby been transformed The Court agrees with the CA in this regard. Section 9, Article III of the 1987 Constitution provides
into an appellate jurisdiction. It only means that, in accordance with settled principles of that "[p]rivate property shall not be taken for public use without just compensation." In Export
administrative law, primary jurisdiction is vested in the DAR as an administrative agency to determine Processing Zone Authority v. Dulay,38 the Court ruled that the valuation of property in eminent
in a preliminary manner the reasonable compensation to be paid for the lands taken under the domain is essentially a judicial function which cannot be vested in administrative
Comprehensive Agrarian Reform Program, but such determination is subject to challenge in the agencies. "The executive department or the legislature may make the initial determination, but when
courts. a party claims a violation of the guarantee in the Bill of Rights that private property may not be taken
124
for public use without just compensation, no statute, decree, or executive order can mandate that its years from the time the landowner received the notice of coverage. The Constitution itself
own determination shall prevail over the court's findings. Much less can the courts be precluded from provides for the payment of just compensation in eminent domain cases.41 Under Article 1144, such
looking into the 'justness' of the decreed compensation. "39 Any law or rule in derogation of this actions must be brought within ten (10) years from the time the right of action accrues. Article 1144
proposition is contrary to the letter and spirit of the Constitution, and is to be struck down as void or reads:
invalid. These were reiterated in Land Bank of the Philippines v. Montalvan,40 when the Court
explained:
Art. 1144. The following actions must be brought within ten years from the time the right of action
accrues:
It is clear from Sec. 57 that the RTC, sitting as a Special Agrarian Court, has "original and
exclusive jurisdiction over all petitions for the determination of just compensation to
(1) Upon a written contract;
landowners." This "original and exclusive" jurisdiction of the RTC would be undermined if the DAR
would vest in administrative officials original jurisdiction in compensation cases and make the RTC an
appellate court for the review of administrative decisions. Thus, although the new rules speak of (2) Upon an obligation created by law;
directly appealing the decision of adjudicators to the RTCs sitting as Special Agrarian Courts, it is
clear from Sec. 57 that the original and exclusive jurisdiction to determine such cases is in (3) Upon a judgment. (n)
the RTCs. Any effort to transfer such jurisdiction to the adjudicators and to convert the
original jurisdiction of the RTCs into appellate jurisdiction would be contrary to Sec. 57 and
therefore would be void. Thus, direct resort to the SAC by private respondent is valid. Nevertheless, any interruption or delay caused by the government like proceedings in the DAR should
toll the running of the prescriptive period. The statute of limitations has been devised to operate
against those who slept on their rights, but not against those desirous to act but cannot do so for
It would be well to emphasize that the taking of property under R.A. No. 6657 is an exercise of the causes beyond their control.42
power of eminent domain by the State.1âwphi1 The valuation of property or determination of just
compensation in eminent domain proceedings is essentially a judicial function which is vested
with the courts and not with administrative agencies. Consequently, the SAC properly took In this case, Dalauta received the Notice of Coverage on February 7, 1994.43 He then filed a petition
cognizance of respondent's petition for determination of just compensation. [Emphases and for determination of just compensation on February 28, 2000. Clearly, the filing date was well within
underscoring supplied] the ten year prescriptive period under Article 1141.

Since the determination of just compensation is a judicial function, the Court must abandon its ruling Concurrent Exercise of 
in Veterans Bank, Martinez and Soriano that a petition for determination of just compensation before Jurisdiction
the SAC shall be proscribed and adjudged dismissible if not filed within the 15-day period prescribed
under the DARAB Rules. There may be situations where a landowner, who has a pending administrative case before the DAR
for determination of just compensation, still files a petition before the SAC for the same objective.
To maintain the rulings would be incompatible and inconsistent with the legislative intent to vest the Such recourse is not strictly a case of forum shopping, the administrative determination being not
original and exclusive jurisdiction in the determination of just compensation with the SAC. Indeed, resjudicata binding on the SAC.44 This was allowed by the Court in LBP v. Celada45 and other several
such rulings judicially reduced the SAC to merely an appellate court to review the administrative cases. Some of these cases were enumerated in Land Bank of the Philippines v. Umandap46 as
decisions of the DAR. This was never the intention of the Congress. follows:

As earlier cited, in Section 57 of R.A. No. 6657, Congress expressly granted the RTC, acting as SAC, 1. In the 1999 case of Land Bank of the Philippines v. Court of Appeals, 47 we held that the
the original and exclusive jurisdiction over all petitions for the determination of just compensation to SAC properly acquired jurisdiction over the petition to determine just compensation filed by
landowners. Only the legislature can recall that power. The DAR has no authority to qualify or undo the landowner without waiting for the completion of DARAB's re-evaluation of the land.
that. The Court's pronouncement in Veterans Bank, Martinez, Soriano, and Limkaichong, reconciling
the power of the DAR and the SAC essentially barring any petition to the SAC for having been filed 2. In the 2004 case of Land Bank of the Philippines v. Wycoco, 48 we allowed a direct resort
beyond the 15-day period provided in Section 11, Rule XIII of the DARAB Rules of Procedure, cannot to the SAC even where no summary administrative proceedings have been held before the
be sustained. The DAR regulation simply has no statutory basis. DARAB.

On Prescription 3. In the 2006 case of Land Bank of the Philippines v. Celada, 49 this Court upheld the
jurisdiction of the SAC despite the pendency of administrative proceedings before the
While R.A. No. 6657 itself does not provide for a period within which a landowner can file a petition DARAB. x x x. xxxx
for the determination of just compensation before the SAC, it cannot be imprescriptible because the
parties cannot be placed in limbo indefinitely. The Civil Code settles such conundrum. Considering
that the payment of just compensation is an obligation created by law, it should only be ten (10)

125
4. In the 2009 case of Land Bank of the Philippines v. Belista,50 this Court permitted a direct JMC No. 11 (2003) provides for several valuation procedures and formulas, depending on whether the
recourse to the SAC without an intermediate appeal to the DARAB as mandated under the commercial trees found in the land in question are harvestable or not, naturally grown, planted by the
new provision in the 2003 DARAB Rules of Procedure. We ruled: farmer-beneficiary or lessee or at random. It also provides for the valuation procedure depending on
when the commercial trees are cut (i.e., while the land transfer claim is pending or when the
landholding is already awarded to the farmer-beneficiaries).
Although Section 5, Rule XIX of the 2003 DARAB Rules of Procedure provides that the land
valuation cases decided by the adjudicator are now appealable to the Board, such rule could
not change the clear import of Section 57 of RA No. 6657 that the original and exclusive Dalauta alleges to have sold all the falcata trees in the property to Fonacier in 1993. 56 After Fonacier
jurisdiction to determine just compensation is in the RTC. Thus, Section 57 authorizes direct finished harvesting in January 1994, he claims that, per advice of his lawyer, he immediately caused
resort to the SAC in cases involving petitions for the determination of just compensation. In the date of effectivity of this Joint Memorandum Circular x x x." It is submitted, however, that
accordance with the said Section 57, petitioner properly filed the petition before the RTC and, applying the above formula to compute just compensation for respondent's land would be the most
hence, the RTC erred in dismissing the case. Jurisdiction over the subject matter is conferred equitable course of action under the circumstances. Without JMC No. 11 (2003), Dalauta's property
by law. Only a statute can confer jurisdiction on courts and administrative agencies while would have to be valued using the formula for idle lands, the CNI and CS factors not being applicable.
rules of procedure cannot.51 Following this formula, just compensation for Dalauta's property would only amount to ₱225,300.00,
computed as follows:
Nevertheless, the practice should be discouraged. Everyone can only agree that simultaneous
hearings are a waste of time, energy and resources. To prevent such a messy situation, a landowner LV = MVx2
should withdraw his case with the DAR before filing his petition before the SAC and manifest the fact
of withdrawal by alleging it in the petition itself. Failure to do so, should be a ground for a motion to
Where:
suspend judicial proceedings until the administrative proceedings would be terminated. It is simply
ludicruous to allow two procedures to continue at the same time.
LV = Land Value
On Just Compensation
MV = Market Value per Tax Declaration*
Upon an assiduous assessment of the different valuations arrived at by the DAR, the SAC and the CA,
the Court agrees with the position of Justice Francis Jardeleza that just compensation for • For the area planted to corn,
respondent Dalauta's land should be computed based on the formula provided under DAR-
LBP Joint Memorandum Circular No. 11, series of 2003 (JMC No. 11 (2003)).  This ₱7,740.00/hectare
Memorandum Circular, which provides for the specific guidelines for properties with standing
commercial trees, explains:
• For idle/pasture land, ₱3,890/hectare

The Capitalized Net Income (CNI) approach to land valuation assumes that there would be uniform
streams of future income that would be realized in perpetuity from the seasonal/permanent crops Thus:
planted to the land. In the case of commercial trees (hardwood and soft wood species),
however, only a one-time income is realized when the trees are due for harvest. The For the 4 hectares planted to corn:
regular CNI approach in the valuation of lands planted to commercial trees would therefore
not apply.52 (Emphasis and underscoring supplied.)
LV = (P7, 7 40/hectare x 4 hectares) x 2

During the proceedings before the SAC, Dalauta testified that he derived a net income of ₱350,000.00
in 1993 from the sale to Fonacier of falcata trees grown in the property. He presented the following = ₱61,920.00
evidence to bolster his claim of income: (1) Agreement between Dalauta and Fonacier over the sale of
falcata trees;53 (2) copy of deposit slip of amount of ₱350,000.00;54 and (3) Certification from Allied For the 21 hectares of idle/pasture land:
Bank as to fact of deposit of the amount of ₱350,000.00 on November 15, 1993.55
LV = (₱3,890/hectare x 21) x 2
Dalauta's sale of falcata trees indeed appears to be a one-time transaction. He did not claim to have
derived any other income from the property prior to receiving the Notice of Coverage from the DAR in
= ₱163,380.00
February 1994. For this reason, his property would be more appropriately covered by the formula
provided under JMC No. 11 (2003).
Total Land Value = P61,920.00 + Pl63,380.00

126
= P225,300.00

As above stated, the amount would be more equitable if it would be computed pursuant to JMC No.
11 (2003). Moreover, the award shall earn legal interest. Pursuant to Nacar v. Gallery Frames,57 the
interest shall be computed from the time of taking at the rate of twelve percent (12%) per
annum until June 30, 2013. Thereafter, the rate shall be six percent (6%) per annum until fully paid.

WHEREFORE, the Court hereby DECLARES that the final determination of just compensation is a


judicial function; that the jurisdiction of the Regional Trial Court, sitting as Special Agrarian Court, is
original and exclusive, not appellate; that the action to file judicial determination of just compensation
shall be ten (10) years from the time of the taking; and that at the time of the filing of judicial
determination, there should be no pending administrative action for the determination of just
compensation.

As to the just compensation, the September 18, 2009 Decision of the Court of Appeals decreeing
payment of ₱2,639,557 .00 as the value of the subject property is SET ASIDE. Let the case be
remanded to the Regional Trial Court, Branch 5, Butuan City, sitting as Special Agrarian Court, for
purposes of computing just compensation in accordance with JMC No. 11 (2003) and this disposition.

The amount shall earn legal interest from the time of taking at the rate of twelve percent (12%) per
annum until June 30, 2013. Thereafter, the rate shall be six percent (6%) per annum until fully paid.

SO ORDERED.

G.R. No. 112526             March 16, 2005

127
STA. ROSA REALTY DEVELOPMENT CORPORATION, Petitioner,  ISKO CABILION, MANGUIAT, IGME OPINA, VILARETE, PEDRO BENEDICTO, HECTOR BICO,
vs. RUFO SANCHEZ, LARRY DE LEON, BARIVAR SAMSON and ROMEO NAVARRO, Respondents.
JUAN B. AMANTE, FRANCISCO L. ANDAL, LUCIA ANDAL, ANDREA P. AYENDE, LETICIA P.
BALAT, FILOMENA B. BATINO, ANICETO A. BURGOS, JAIME A. BURGOS, FLORENCIA
DECISION
CANUBAS, LORETO A. CANUBAS, MAXIMO A. CANUBAS, REYNALDO CARINGAL, QUIRINO C.
CASALME, BENIGNO A. CRUZAT, ELINO A. CRUZAT, GREGORIO F. CRUZAT, RUFINO C.
CRUZAT, SERGIO CRUZAT, SEVERINO F. CRUZAT, VICTORIA DE SAGUN, SEVERINO DE AUSTRIA-MARTINEZ, J.:
SAGUN, FELICISIMO A. GONZALES, FRANCISCO A. GONZALES, GREGORIO A. GONZALES,
LEODEGARIO N. GONZALES, PASCUAL P. GONZALES, ROLANDO A. GONZALES, FRANCISCO By virtue of the En Banc Resolution issued on January 13, 2004, the Court authorized the Special First
A. JUANGCO, GERVACIO A. JUANGCO, LOURDES U. LUNA, ANSELMO M. MANDANAS, Division to suspend the Rules so as to allow it to consider and resolve the second Motion for
CRISANTO MANDANAS, EMILIO M. MANDANAS, GREGORIO A. MANDANAS, MARIO G. Reconsideration of respondents,1after the motion was heard on oral arguments on August 13, 2003.
MANDANAS, TEODORO MANDANAS, CONSTANCIO B. MARQUEZ, EUGENIO B. MARQUEZ, On July 9, 2004,2 the Court resolved to submit for resolution the second Motion for Reconsideration
ARMANDO P. MATIENZO, DANIEL D. MATIENZO, MAXIMINO MATIENZO, PACENCIA P. in G.R. No. 112526 together with G.R. No. 118338 in view of the Resolution of the Court dated
MATIENZO, DOROTEA L. PANGANIBAN, JUANITO T. PEREZ, MARIANITO T. PEREZ, SEVERO January 15, 2001 issued in G.R. No. 118838,3 consolidating the latter case with G.R. No. 112526,
M. PEREZ, INOCENCIA S. PASQUIZA, BIENVENIDO F. PETATE, IGNACIO F. PETATE, JUANITO the issues therein being interrelated.4 Hence, the herein Amended Decision.
PETATE, PABLO A. PLATON, PRECILLO V. PLATON, AQUILINO B. SUBOL, CASIANO T. VILLA,
DOMINGO VILLA, JUAN T. VILLA, MARIO C. VILLA, NATIVIDAD B. VILLA, JACINTA S.
ALVARADO, RODOLFO ANGELES, DOMINGO A. CANUBAS, EDGARDO L. CASALME, QUIRINO The factual background of the two cases is as follows:
DE LEON, LEONILO M. ENRIQUEZ, CLAUDIA P. GONZALES, FELISA R. LANGUE,
QUINTILLANO LANGUE, REYNALDO LANGUE, ROMEO S. LANGUE, MARIANITO T. PEREZ, The Canlubang Estate in Laguna is a vast landholding previously titled in the name of the late Speaker
INOCENCIA S. PASQUIZA, AQUILINO B. SUBOL, BONIFACIO VILLA, ROGELIO AYENDE, and Chief Justice Jose Yulo, Sr. Within this estate are two parcels of land (hereinafter referred to as
ANTONIO B. FERNANDEZ, ZACARIAS HERRERA, REYNARIO U. LAZO, AGAPITO MATIENZO, the "subject property") covered by TCT Nos. 81949 and 84891 measuring 254.766 hectares and part
DIONISIO F. PETATE, LITO G. REYES, JOSE M. SUBOL, CELESTINO G. TOPI NO, ROSA C. of Barangay Casile, subsequently titled in the name of Sta. Rosa Realty Development Corporation
AMANTE, SOTERA CASALME, REMIGIO M. SILVERIO, THE COURT OF APPEALS, THE (SRRDC), the majority stockholder of which is C.J. Yulo and Sons, Inc.
SECRETARY OF AGRARIAN REFORM, DEPARTMENT OF AGRARIAN REFORM ADJUDICATION
BOARD, LAND BANK OF THE PHILIPPINES, REGISTER OF DEEDS OF LAGUNA, DEPARTMENT
OF ENVIRONMENT AND NATURAL RESOURCES REGIONAL EXECUTIVE DIRECTOR FOR The subject property was involved in civil suits and administrative proceedings that led to the filing
REGION IV and REGIONAL AGRARIAN REFORM OFFICER FOR REGION IV., Respondents. of G.R. Nos. 112526 and 118838, thus:

x-------------------x Injunction Case  Filed by Amante, et al.

G.R. No. 118838             March 16, 2005 On December 6, 1985, Amante, et al., who are the private respondents in G.R. No. 112526 and
petitioners in G.R. No. 118838, instituted an action for injunction with damages in the Regional Trial
Court of Laguna (Branch 24) against Luis Yulo, SRRDC, and several SRRDC security personnel,
JUAN B. AMANTE, IGNACIO PETATE, DOMINGO CANUBAS, FLORENCIO CANUBAS, docketed as Civil Case No. B-2333. Amante, et al. alleged that: they are residents of Barangay Casile,
CRESENCIO AMANTE, QUIRINO CASALME, LEODEGARIO GONZALES, DOMINGO VILLA, Cabuyao, Laguna, which covers an area of around 300 hectares; in 1910, their ancestors started
JAIME BURGOS, NICOMEDES PETATE, MAXIMINO MATIENZO, MAXIMO CANUBAS, ELINO occupying the area, built their houses and planted fruit-bearing trees thereon, and since then, have
CRUZAT, RUFINO CRUZAT, FELICISIMO GONZALES, QUINTILLANO LANGUE, TEODORO been peacefully occupying the land; some time in June 3, 1985, SRRDC’s security people illegally
MANDANAS, SERGIO CRUZAT, AGAPITO MATIENZO and SEVERINO DE SAGUM, Petitioner,  entered Bgy. Casile and fenced the area; SRRDC’s men also entered the barangay on November 4,
vs. 1985, cut down the trees, burned their huts, and barred the lone jeepney from entering the
LUIS YULO, JESUS MIGUEL YULO, C-J YULO & SONS, INC., STA. ROSA REALTY Canlubang Sugar Estate; as a result of these acts, Amante, et al. were deprived of possession and
DEVELOPMENT CORPORATION, JOSE LAMBATIN, LAUREANO LAUREL, GALICANO MAILOM, cultivation of their lands. Thus, they claimed damages, sought the issuance of permanent injunction
JR., REYNALDO OPENA, AGAPITO PRECILLA, DANILO SUMADSAD, ALFREDO SUMADSAD, and proposed that a right of way be declared.5
JUAN CANTAL, INIGO MENDOZA, ALEJANDRO SANCHEZ, SENADOR RODRIGUEZ, VICTOR
MOLINAR, DANILO CANLOBO, RESTING CARAAN, IGNACIO VERGARA, HANDO MERCADO,
FAUSTINO MAILOM, CONRADO BARRIENTOS, RENATO VISAYA, DANTE BATHAN, SERAPIO In their Answer, the defendants denied the allegations and disclaimed any control and supervision
NATIVIDAD, HONESTO TENORIO, NESTOR MERCADO, BIENVENIDO OLFATO, RENE over its security personnel. Defendant SRRDC also alleged that as the real owner of the property, it
LIRAZAN, RUDY CANLOBO, BASIOLIO MULINGTAPANG, ITO GONZALES, RENATO RINO, was the one that suffered damages due to the encroachment on the property.6
TINOY MABAGA, PACIO PADILLA, JOHNNY REAMILLO, ROLANDO CARINGAL, IGNOY
VILLAMAYOR, ROMEO TANTENGCO, LODRING CARAAN, FREDO MERCADO, TOMMY A writ of preliminary injunction was issued by the trial court on August 17, 1987, 7 but this was
MENDOZA, RAFAEL ONTE, REY MANAIG, DICK GASPAR, ANTONIO MALLARI, ALFREDO subsequently dissolved by the Court of Appeals (CA) on April 22, 1988 in its decision in CA-G.R. SP
ANIEL, BARIT, ALBERTO MANGUE, AGATON LUCIDO, ONYONG CANTAL, BAYANI LACSON, No. 13908.8
128
After trial on the merits, the trial court, on January 20, 1992, rendered a decision ordering Amante, et 4.1. The Court of Appeals decided the case contrary to law or applicable Supreme Court
al. to vacate the property, the dispositive portion of which reads: decisions because:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the defendants 4.1.1 First, petitioners may not be lawfully evicted from their landholdings considering that:
and against the plaintiffs hereby dismissing the complaint and amended complaint.
-- (a) Petitioners are already the registered owners under the torrens system of the
The plaintiffs are hereby ordered to vacate the parcels of land belonging to the defendants properties in question since February 26, 1992 by virtue of RA 6657 or the
Luis Yulo and Sta. Rosa Realty. They are likewise enjoined from entering the subject parcels Comprehensive Agrarian Reform Law;
of land.
-- (b) The Court of Appeals has affirmed the Regional Trial Court of Laguna’s
Although attorney’s fees and expenses of litigation are recoverable in case of a clearly dismissal of the ejectment cases filed by respondent SRRDC against petitionerS;
unfounded civil action against the plaintiff (Enervida vs. De la Torre, 55 SCRA 339), this and 
Court resolves not to award attorney’s fees etc. in favor of the defendants because the
plaintiffs appear to have acted in good faith in filing the present civil action (Salao vs. Salao,
-- (c) Assuming for the sake of argument only that petitioners are not yet the
70 SCRA 65) and that it would not be just and equitable to award the same in the case at
registered owners of the properties in question, respondents may not raise the issue
bar. (Liwanag vs. Court of Appeals, 121 SCRA 354) Accordingly, the other reliefs prayed for
of ownership in this case for injunction with damages, the same to be ventilated in a
by the defendants are hereby dismissed.
separate action, not in this case brought to prevent respondents from committing
further acts of dispossession [Bacar v. del Rosario et al., 171 SCRA 451 (1989)].
SO ORDERED.9
4.1.2 Second, petitioners are entitled to moral, exemplary damages and attorney’s fees,
Amante, et al. appealed the aforesaid decision to the CA, docketed as CA-G.R. CV No. 38182. instead of mere nominal damages, considering that the Court of Appeals found respondents
to have unlawfully and illegally disturbed petitioners’ peaceful and continuous possession.15
On June 28, 1994, the CA affirmed with modification the decision of the trial court in the injunction
case. The dispositive portion of the appellate court’s decision10 reads as follows: Ejectment Cases  Filed by SRRDC

WHEREFORE, the judgment herein appealed from is hereby AFFIRMED, with the modification Between October 1986 and August 1987, after the injunction case was filed by Amante, et al., SRRDC
that the defendants-appellees are hereby ordered, jointly and severally, to pay the plaintiffs- filed with the Municipal Trial Court (MTC) of Cabuyao, Laguna, several complaints for forcible entry
appellants nominal damages in the amount of P5,000.00 per plaintiff. No pronouncement as with preliminary injunction and damages against Amante, et al., docketed as Civil Cases Nos. 250,
to costs. 258, 260, 262 and 266. SRRDC alleged that some time in July 1987, they learned that Amante, et al.,
without their authority and through stealth and strategy, were clearing, cultivating and planting on
the subject property; and that despite requests from SRRDC’s counsel, Amante, et al. refused to
SO ORDERED.11
vacate the property, prompting them to file the ejectment cases. 16 Amante, et al. denied that SRRDC
are the absolute owners of the property, stating that they have been in peaceful possession thereof,
Nominal damages were awarded by the CA because it found that SRRDC violated Amante, et al.’s through their predecessors-in-interest, since 1910.17
rights as possessors of the subject property.12
On May 24, 1991, the MTC-Cabuyao rendered its decision in favor of SRRDC. Amante, et al. were
Amante, et al. filed a motion for reconsideration thereof, pointing out the DARAB’s decision placing ordered to surrender possession and vacate the subject property. The decision was appealed to the
the property under compulsory acquisition, and the CA decision in CA-G.R. SP No. 27234, affirming Regional Trial Court of Biñan, Laguna (Assisting Court).
the same.13 The CA, however, denied the motion, with the modification that only SRRDC and the
defendants-security guards should be held jointly and severally liable for the nominal damages
On February 18, 1992, the RTC dismissed the ejectment cases on the ground that the subject
awarded. It also made the clarification that the decision should not preempt any judgment or
property is an agricultural land being tilled by Amante, et al., hence it is the Department of Agrarian
prejudice the right of any party in the agrarian reform case pending before the Supreme Court (G.R.
Reform (DAR), which has jurisdiction over the dispute. 18 The RTC’s dismissal of the complaints was
No. 112526).14
brought to the CA via a petition for review, docketed as CA-G.R. SP No. 33382.19 In turn, the CA
dismissed the petition per its Decision dated January 17, 1995 on the ground that SRRDC failed to
Thus, Amante, et al. filed on March 2, 1995, herein petition, docketed as G.R. No. 118838 on the show any prior physical possession of the subject property that would have justified the filing of the
following grounds: ejectment cases.20 Also, the CA did not sustain the RTC’s finding that the subject properties are
agricultural lands and Amante, et al. are tenant/farmers thereof, as the evidence on record does not

129
support such finding. The parties did not file any motion for reconsideration from the Court of On March 28, 1990, Executive Director Emmanuel S. Galvez wrote the Land Bank
Appeals’ dismissal, hence, it became final and executory.21 President Deogracias Vistan to forward the two (2) claim folders involving the
property of SRRDC to the DARAB for it to conduct summary proceedings to
determine the just compensation for the land.
Administrative Proceedings

On April 6, 1990, petitioner sent a letter to the Land Bank of the Philippines stating that its
While the injunction and ejectment cases were still in process, it appears that in August, 1989, the
property under the aforesaid land titles were exempt from CARP coverage because they had
Municipal Agrarian Reform Office (MARO) issued a Notice of Coverage to SRRDC, informing petitioners
been classified as watershed area and were the subject of a pending petition for land
that the property covered by TCT Nos. T-81949, T-84891 and T-92014 is scheduled for compulsory
conversion.
acquisition under the Comprehensive Agrarian Reform Program (CARP). 22 SRRDC filed its "Protest and
Objection" with the MARO on the grounds that the area was not appropriate for agricultural purposes,
as it was rugged in terrain with slopes of 18% and above, and that the occupants of the land were On May 10, 1990, Director Narciso Villapando of BLAD turned over the two (2) claim folders
squatters, who were not entitled to any land as beneficiaries. 23 Thereafter, as narrated in the Decision (CACF’s) to the Executive Director of the DAR Adjudication Board for proper administrative
of the Court dated October 12, 2001 in G.R. No. 112526, the following proceedings ensued: valuation. Acting on the CACF’s, on September 10, 1990, the Board promulgated a
resolution asking the office of the Secretary of Agrarian Reform (DAR) to first
resolve two (2) issues before it proceeds with the summary land valuation
On August 29, 1989, the farmer beneficiaries together with the BARC chairman answered the protest
proceedings.
and objection stating that the slope of the land is not 18% but only 5-10% and that the land is
suitable and economically viable for agricultural purposes, as evidenced by the Certification of the
Department of Agriculture, municipality of Cabuyao, Laguna. The issues that need to be threshed out were as follows: (1) whether the subject parcels of
land fall within the coverage of the Compulsory Acquisition Program of the CARP; and (2)
whether the petition for land conversion of the parcels of land may be granted.
On September 8, 1989, MARO Belen dela Torre made a summary investigation report and forwarded
the Compulsory Acquisition Folder Indorsement (CAFI) to the Provincial Agrarian Reform Officer
(hereafter, PARO). On December 7, 1990, the Office of the Secretary, DAR, through the Undersecretary
for Operations (Assistant Secretary for Luzon Operations) and the Regional
Director of Region IV, submitted a report answering the two issues raised.
On September 21, 1989, PARO Durante Ubeda forwarded his endorsement of the compulsory
According to them, firstly, by virtue of the issuance of the notice of coverage on
acquisition to the Secretary of Agrarian Reform.
August 11, 1989, and notice of acquisition on December 12, 1989, the property is
covered under compulsory acquisition. Secondly, Administrative Order No. 1, Series
On November 23, 1989, Acting Director Eduardo C. Visperas of the Bureau of Land of 1990, Section IV D also supports the DAR position on the coverage of the said
Acquisition and Development, DAR forwarded two (2) Compulsory Acquisition Claim Folders property. During the consideration of the case by the Board, there was no pending
covering the landholding of SRRDC, covered by TCT Nos. T-81949 and T-84891 to the petition for land conversion specifically concerning the parcels of land in question.
President, Land Bank of the Philippines for further review and evaluation.
On February 19, 1991, the Board sent a notice of hearing to all the parties interested, setting
On December 12, 1989, Secretary of Agrarian Reform Miriam Defensor Santiago the hearing for the administrative valuation of the subject parcels of land on March 6, 1991.
sent two (2) notices of acquisition to petitioner, stating that petitioner’s However, on February 22, 1991, Atty. Ma. Elena P. Hernandez-Cueva, counsel for SRRDC,
landholdings covered by TCT Nos. T-81949 and T-84891, containing an area of wrote the Board requesting for its assistance in the reconstruction of the records of the case
188.2858 and 58.5800 hectares, valued at P4,417,735.65 and P1,220,229.93, because the records could not be found as her co-counsel, Atty. Ricardo Blancaflor, who
respectively, had been placed under the Comprehensive Agrarian Reform Program. originally handled the case for SRRDC and had possession of all the records of the case was
on indefinite leave and could not be contacted. The Board granted counsel’s request and
On February 6, 1990, petitioner SRRDC in two letters separately addressed to Secretary moved the hearing on April 4, 1991.
Florencio B. Abad and the Director, Bureau of Land Acquisition and Distribution, sent its
formal protest, protesting not only the amount of compensation offered by DAR for the On March 18, 1991, SRRDC submitted a petition to the Board for the latter to
property but also the two (2) notices of acquisition. resolve SRRDC’s petition for exemption from CARP coverage before any
administrative valuation of their landholding could be had by the Board.
On March 17, 1990, Secretary Abad referred the case to the DARAB for summary
proceedings to determine just compensation under R.A. No. 6657, Section 16. On April 4, 1991, the initial DARAB hearing of the case was held and subsequently, different
dates of hearing were set without objection from counsel of SRRDC. During the April 15,
On March 23, 1990, the LBP returned the two (2) claim folders previously referred for review 1991 hearing, the subdivision plan of subject property at Casile, Cabuyao, Laguna was
and evaluation to the Director of BLAD mentioning its inability to value the SRRDC submitted and marked as Exhibit "5" for SRRDC. At the hearing on April 23, 1991, the Land
landholding due to some deficiencies. Bank asked for a period of one month to value the land in dispute.

130
At the hearing on April 23, 1991, certification from Deputy Zoning Administrator Generoso B. The titles in the name of SRRDC were cancelled and corresponding TCTs were issued in the
Opina was presented. The certification issued on September 8, 1989, stated that the parcels name of the Republic of the Philippines on February 11, 1992, 26 after which Certificates of
of land subject of the case were classified as "Industrial Park" per Sangguniang Bayan Land Ownership Award (CLOA) were issued in the name of the farmers-beneficiaries on
Resolution No. 45-89 dated March 29, 1989. February 26, 1992.27

To avert any opportunity that the DARAB might distribute the lands to the farmer In the meantime, SRRDC had filed with the CA a petition for review of the DARAB’s decision, docketed
beneficiaries, on April 30, 1991, petitioner filed a petition with DARAB to disqualify private as CA-G.R. SP No. 27234.
respondents as beneficiaries. However, DARAB refused to address the issue of beneficiaries.24
On November 5, 1993, the CA affirmed the decision of DARAB, to wit:
...
WHEREFORE, premises considered, the DARAB decision dated December 19, 1991 is
On December 19, 1991, the DARAB promulgated a decision, affirming the dismissal of the protest of AFFIRMED, without prejudice to petitioner Sta. Rosa Realty Development Corporation
SRRDC against the compulsory coverage of the property covered by TCT Nos. 81949 and 84891. The ventilating its case with the Special Agrarian Court on the issue of just compensation.28
decretal portion of the decision reads:
Hence, SRRDC filed on November 24, 1993, herein petition, docketed as G.R. No. 112526 on the
WHEREFORE, based on the foregoing premises, the Board hereby orders: following grounds:

1. The dismissal for lack of merit of the protest against the compulsory coverage of the I
landholdings of Sta. Rosa Realty Development Corporation (Transfer Certificates of Title Nos.
81949 and 84891 with an area of 254.766 hectares) in Barangay Casile, Municipality of
THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION TANTAMOUNT TO
Cabuyao, Province of Laguna under the Comprehensive Agrarian Reform Program is hereby
LACK OR EXCESS OF ITS JURISDICTION IN RULING THAT THE SRRDC PROPERTIES, DESPITE
affirmed;
THE UNDISPUTED FACT OF THEIR NON-AGRICULTURAL CLASSIFICATION PRIOR TO RA
6657, ARE COVERED BY THE CARP CONTRARY TO THE NATALIA REALTY DECISION OF THIS
2. The Land Bank of the Philippines (LBP) to pay Sta. Rosa Realty Development Corporation HONORABLE COURT.
the amount of Seven Million Eight Hundred Forty-One Thousand, Nine Hundred Ninety Seven
Pesos and Sixty-Four centavos (P7,841,997.64) for its landholdings covered by the two (2)
i. The SRRDC properties have been zoned and approved as ‘PARK’ since 1979.
Transfer Certificates of Title mentioned above. Should there be a rejection of the payment
tendered, to open, if none has yet been made, a trust account for said amount in the name
of Sta. Rosa Realty Development Corporation; ii. The SRRDC properties form part of a watershed area.

3. The Register of Deeds of the Province of Laguna to cancel with dispatch Transfer II
Certificate of Title Nos. 84891 and 81949 and new one be issued in the name of the Republic
of the Philippines, free from liens and encumbrances; THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION TANTAMOUNT TO
LACK OR EXCESS OF ITS JURISDICTION IN DISREGARDING ECOLOGICAL CONSIDERATIONS
4. The Department of Environment and Natural Resources either through its Provincial Office AS MANDATED BY LAW.
in Laguna or the Regional Office, Region IV, to conduct a final segregation survey on the
lands covered by Transfer Certificate of Title Nos. 84891 and 81949 so the same can be III
transferred by the Register of Deeds to the name of the Republic of the Philippines;

THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION TANTAMOUNT TO


5. The Regional Office of the Department of Agrarian Reform through its Municipal and LACK OR EXCESS OF ITS JURISDICTION IN AFFIRMING THE DISTRIBUTION OF THE SRRDC
Provincial Agrarian Reform Office to take immediate possession on the said landholding after PROPERTIES TO PRIVATE RESPONDENTS WHO HAVE BEEN JUDICIALLY DECLARED AS
Title shall have been transferred to the name of the Republic of the Philippines, and SQUATTERS AND THEREFORE ARE NOT QUALIFIED BENEFICIARIES PURSUANT TO THE
distribute the same to the immediate issuance of Emancipation Patents to the farmer- CENTRAL MINDANAO UNIVERSITY DECISION OF THIS HONORABLE COURT.
beneficiaries as determined by the Municipal Agrarian Reform Office of Cabuyao, Laguna.25

i. The acquisition of the SRRDC properties cannot be valid for future beneficiaries.
On July 11, 1991, DAR Secretary Benjamin T. Leong issued a memorandum directing the Land Bank
of the Philippines (LBP) to open a trust account in favor of SRRDC, for P5,637,965.55, as valuation for
the SRRDC property.
131
ii. Section 22 of RA 6657 insofar as it expands the coverage of the CARP to ‘landless 2.3 The Decision did not express clearly and distinctly the facts and the law on which it is
residents’ is unconstitutional. based;

IV 2.4 The Decision renewed the Temporary Restraining Order issued on 15 December 1993,
issuance of which is barred by Sec. 55 of R.A. 6657; and
THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION TANTAMOUNT TO
LACK OR EXCESS OF ITS JURISDICTION IN HOLDING THAT THE DARAB HAS JURISDICTION 2.5 This Honorable Court denied private respondents’ Motion for Reconsideration although
TO PASS UPON THE ISSUE OF WHETHER THE SRRDC PROPERTIES ARE SUBJECT TO CARP issues raised therein were never passed upon in the 12 October 2001 Decision or
COVERAGE.29 elsewhere.33

On October 12, 2001, the Court rendered its Decision in G.R. No. 112526 only, setting aside the The DAR and the DARAB, through the Office of the Solicitor General, did not interpose any objection
decision of the CA in CA-G.R. SP No. 27234 and ordering the remand of the case to the DARAB for re- to the second motion for reconsideration. It also maintained that if SRRDC’s claim that the property is
evaluation and determination of the nature of the land. The dispositive portion of the Decision reads watershed is true, then it is the DENR that should exercise control and supervision in the disposition,
as follows: utilization, management, renewal and conservation of the property.34

IN VIEW WHEREOF, the Court SETS ASIDE the decision of the Court of Appeals in CA-G.R. SP SRRDC meanwhile insists that there are no compelling reasons to give due course to the second
No. 27234. motion for reconsideration.35

In lieu thereof, the Court REMANDS the case to the DARAB for re-evaluation and At the outset, the Court notes that petitioner designated its petition in G.R. No. 112526 as one for
determination of the nature of the parcels of land involved to resolve the issue of its review on certiorari of the decision of the CA. In the same breath, it likewise averred that it was also
coverage by the Comprehensive Land Reform Program. being filed as a special civil action for certiorari as public respondents committed grave abuse of
discretion.36 Petitioner should not have been allowed, in the first place, to pursue such remedies
simultaneously as these are mutually exclusive.37
In the meantime, the effects of the CLOAs issued by the DAR to supposed farmer
beneficiaries shall continue to be stayed by the temporary restraining order issued on
December 15, 1993, which shall remain in effect until final decision on the case. It is SRRDC’s claim that the CA committed grave abuse of discretion in holding that the subject
property is agricultural in nature. In support of its contention, it argued, among others, that the
subject property had already been classified as "park" since 1979 under the Zoning Ordinance of
No costs.
Cabuyao, as approved by the Housing and Land Use Regulatory Board (HLURB); that it forms part of
a watershed; and that the CA disregarded ecological considerations. 38 SRRDC also claimed that
SO ORDERED.30 Amante, et al. are not qualified beneficiaries.39

It is the opinion of the Court in G.R. No. 112526, that the property is part of a watershed, and that Clearly, these issues are factual in nature, which the Court, as a rule, should not have considered in
during the hearing at the DARAB, "there was proof that the land may be excluded from the coverage this case. However, there are recognized exceptions, e.g., when the factual inferences of the
of the CARP because of its high slopes." 31 Thus, the Court concluded that a remand of the case to the appellate court are manifestly mistaken; the judgment is based on a misapprehension of facts; or the
DARAB for re-evaluation of the issue of coverage is appropriate in order to resolve the true nature of CA manifestly overlooked certain relevant and undisputed facts that, if properly considered, would
the subject property.32 justify a different legal conclusion.40 The present cases fall under the above exceptions.

In their Memorandum, Amante, et al. argues that there exist compelling reasons to grant the second Thus, in order to finally set these cases to rest, the Court shall resolve the substantive matters raised,
motion for reconsideration of the assailed decision of the Court, to wit: which in effect comes down to the issue of the validity of the acquisition of the subject property by
the Government under Republic Act (R.A.) No. 6657, or the Comprehensive Agrarian Reform Law of
2.1 Only QUESTIONS OF LAW are admittedly and undeniably at issue; yet the Honorable 1988 (CARL).
Court reviewed the findings of facts of the Court of Appeals and the DARAB although the
case does not fall into any of the well-recognized exceptions to conduct a factual review. As noted earlier, the DARAB made its finding regarding the nature of the property in question, i.e.,
Worse, the 12 October 2001 Decision assumed facts not proven before any administrative, the parcels of land are agricultural and may be the subject of compulsory acquisition for distribution
quasi-judicial or judicial bodies; to farmer-beneficiaries, thus:

2.2 The DARAB and the Court of Appeals already found the land to be CARPable; yet the Ocular inspections conducted by the Board show that the subject landholdings have been
Honorable Court remanded the case to DARAB to re-evaluate if the land is CARPable; under the possession and tillage of the DAR identified potential beneficiaries which they
132
inherited from their forebears (workers of the Yulo Estate). They are bonafide residents and 1. Certification dated March 1, 1991 by the Municipality of Cabuyao, Laguna that the entire
registered voters (DARAB Exhibits "C" and "J") of Barangay Casile, Cabuyao, Laguna. There barangay of Casile is delineated as Municipal Park;46
is a barangay road leading toward the barangay school and sites and the settlement has a
barangay hall, church, elementary school buildings (DARAB Exhibit "Q"), Comelec precincts
2. Certification dated March 11, 1991 by the Housing and Land Use Regulatory Board that
(DARAB Exhibits "J-1" and J-2"), and other structures extant in progressive communities.
the parcels of land located in Barangay Casile are within the Municipal Park, based on the
The barangay progressive development agencies, like the DECS, DA, COMELEC, DAR and
municipality’s approved General Land Use Plan ratified by the Housing and Land Use
Support Services of Land Bank, DPWH, DTI and the Cooperative Development Authority have
Regulatory Board as per Resolution No. 38-2 dated June 25, 1980;47
extended support services to the community (DARAB Exhibits "I", "K" to "K-3", "L", "M", "N",
"O", "P" to "P-6"). More importantly, subject landholdings are suitable for
agriculture. Their topography is flat to undulating 3-15% slope. (Testimony of 3. Photocopies of pictures taken by Mr. Ernesto Garcia, Officer-in-Charge of the Special
Rosalina Jumaquio, Agricultural Engineer, DAR, TSN, June 21, 1991, DARAB Project Section of CJ Yulo and Sons, Inc., of portions of Barangay Casile;48
Exhibits "F" and "H"). Though some portions are over 18% slope, nevertheless,
clearly visible thereat are fruit-bearing trees, like coconut, coffee, and pineapple The Court recognizes the power of a local government to reclassify and convert lands through local
plantations, etc. (see Petitioners Exhibits "A" to "YYY" and DARAB Exhibits "A" to ordinance, especially if said ordinance is approved by the HLURB. 49 Municipal Ordinance No. 110-54
"S", Records). In other words, they are already productive and fully developed. dated November 3, 1979, enacted by the Municipality of Cabuyao, divided the municipality into
residential, commercial, industrial, agricultural and institutional districts, and districts and parks for
... open spaces.50 It did not convert, however, existing agricultural lands into residential, commercial,
industrial, or institutional. While it classified Barangay Casile into a municipal park, as shown in its
permitted uses of land map, the ordinance did not provide for the retroactivity of its classification.
As the landholdings of SRRDC subject of the instant proceedings are already
In Co vs. Intermediate Appellate Court,51 it was held that an ordinance converting agricultural lands
developed not only as a community but also as an agricultural farm capable of
into residential or light industrial should be given prospective application only, and should not change
sustaining daily existence and growth, We find no infirmity in placing said parcels
the nature of existing agricultural lands in the area or the legal relationships existing over such lands.
of land under compulsory coverage. They do not belong to the exempt class of
Thus, it was stated:
lands. The claim that the landholding of SRRDC is a watershed; hence, belonging to
the exempt class of lands is literally "throwing punches at the moon" because the
DENR certified that "the only declared watershed in Laguna Province and San Pablo A reading of Metro Manila Zoning Ordinance No. 81-01, series of 1981, does not disclose any
City is the Caliraya-Lumot Rivers (Petitioner’s Exhibit "A"). A sensu contrario, the provision converting existing agricultural lands in the covered area into residential or light
landholdings subject herein are not. 41 (Emphasis supplied) industrial. While it declared that after the passage of the measure, the subject area shall be
used only for residential or light industrial purposes, it is not provided therein that it shall
have retroactive effect so as to discontinue all rights previously acquired over lands located
The evidence on record supports these findings, to wit:
within the zone which are neither residential nor light industrial in nature. This simply
means that, if we apply the general rule, as we must, the ordinance should be given
1. Certification dated January 16, 1989 by the OIC Provincial Environment and Natural prospective operation only. The further implication is that it should not change the
Resources Office of Laguna that the only declared watershed in the Laguna province and San nature of existing agricultural lands in the area or the legal relationships existing
Pablo City is the Caliraya-Lumot Rivers No. 1570 dated September 1, 1976;42 over such lands …52 (Emphasis supplied)

2. Map prepared by Agricultural Engineer Rosalina H. Jumaquio showing that: a) the Under Section 3 (c) of R.A. No. 6657, agricultural land is defined as land devoted to agricultural
topography of the property covered by TCT No. T-84891 topography is flat to undulating with activity and not classified as mineral, forest, residential, commercial or industrial land. Section 3 (b)
a 5 to 10% slope; (b) it is suitable to agricultural crops; and (c) the land is presently planted meanwhile defines agricultural activity as the cultivation of the soil, planting of crops, growing of fruit
with diversified crops;43 trees, raising of livestock, poultry or fish, including the harvesting of such products, and other farm
activities, and practices performed by a farmer in conjunction with such farming operations done by
persons whether natural or juridical. 
3. Certification dated August 28, 1989 by APT Felicito Buban of the Department of
Agriculture of Laguna that, per his ocular inspection, the subject property is an agricultural
area, and that the inhabitants’ main occupation is farming;44 Before Barangay Casile was classified into a municipal park by the local government of Cabuyao,
Laguna in November 1979, it was part of a vast property popularly known as the Canlubang Sugar
Estate. SRRDC claimed that in May 1979, "the late Miguel Yulo … allowed the employees of the Yulo
4. Pictures taken by MARO Belen La Torre of Cabuyao, Laguna, showing that the property is
group of companies to cultivate a maximum area of one hectare each subject to the condition that
cultivated and inhabited by the farmer-beneficiaries;45
they should not plant crops being grown by the Canlubang Sugar Estate, like coconuts and coffee, to
avoid confusion as to ownership of crops."53 The consolidation and subdivision plan surveyed for
SRRDC however, insists that the property has already been classified as a "municipal park" and SRRDC on March 10-15, 198454 also show that the subject property is sugar land. Evidently, the
beyond the scope of CARP. To prove this, SRRDC submitted the following: subject property is already agricultural at the time the municipality of Cabuyao enacted the zoning

133
ordinance, and such ordinance should not affect the nature of the land. More so since the The DARAB stated:
municipality of Cabuyao did not even take any step to utilize the property as a park.
Noting the absence of evidence which, in the nature of things, should have been submitted
SRRDC cites the case of Natalia Realty, Inc. vs. DAR,55 wherein it was ruled that lands not devoted to by landowner SRRDC and to avoid any claim of deprivation of its right to prove its claim to
agricultural activity and not classified as mineral or forest by the DENR and its predecessor agencies, just compensation (Uy v. Genato, 57 SCRA 123). We practically directed its counsel in not
and not classified in town plans and zoning ordinances as approved by the HLURB and its preceding only one instance, during the series of hearings conducted, to do so. We even granted
competent authorities prior to the enactment of R.A. No. 6657 on June 15, 1988, are outside the continuances to give it enough time to prepare and be ready with the proof and documents.
coverage of the CARP. Said ruling, however, finds no application in the present case. As previously To Our dismay, none was submitted and this constrained Us to take the failure/refusal of
stated, Municipal Ordinance No. 110-54 of the Municipality of Cabuyao did not provide for any SRRDC to present evidence as a waiver or, at least, an implied acceptance of the valuation
retroactive application nor did it convert existing agricultural lands into residential, commercial, made by the DAR.66
industrial, or institutional. Consequently, the subject property remains agricultural in nature and
therefore within the coverage of the CARP.
The same goes with the CA, which did not have the discretion to consider evidence in a petition
for certiorari or petition for review on certiorari outside than that submitted before the DARAB. The CA
Only on March 9, 2004, SRRDC filed with the Court a Manifestation pointing out DAR Order No. (E)4- noted petitioner’s failure to present evidence in behalf of its arguments, thus:
03-507-309 dated February 17, 2004, exempting from CARP coverage two parcels of land owned by
SRRDC and covered by TCT Nos. T-85573 and T-92014.56 The DAR found that these properties have
. . . It must be recalled that petitioner Sta. Rosa Realty itself had asked the DARAB in a
been re-classified into Municipal Parks by the Municipal Ordinance of Cabuyao, Laguna, and are part
petition dated March 18, 1991 to allow it ‘to adduce evidence in support of its position that
of the Kabangaan-Casile watershed, as certified by the DENR.57
the subject parcels of land are not covered by the CARP beginning on the scheduled hearing
dated April 4, 1991.’ And DARAB obliged as in fact the petitioner commenced to introduce
The Court notes however that the said DAR Order has absolutely no bearing on these cases. The evidence. If petitioner failed to complete the presentation of evidence to support its claim of
herein subject property is covered by TCT Nos. 81949 and 34891, totally different, although adjacent, exemption from CARP coverage, it has only itself to blame for which DARAB cannot be
from the property referred to in said DAR Order. accused of not being impartial.67

SRRDC also contends that the property has an 18% slope and over and therefore exempt from Consequently, there is no need to order the remand of the case to the DARAB "for re-evaluation and
acquisition and distribution under Section 10 of R.A. No. 6657. What SRRDC opted to ignore is that determination of the nature of the parcels of land involved." It runs contrary to orderly administration
Section 10, as implemented by DAR Administrative Order No. 13 dated August 30, 1990, also of justice and would give petitioner undue opportunity to present evidence in support of its stance, an
provides that those with 18% slope and over but already developed for agricultural opportunity it already had during the DARAB proceedings, and which opportunity it regrettably failed
purposes as of June 15, 1988, may be allocated to qualified occupants.58Hence, even to take advantage of.
assuming that the property has an 18% slope and above, since it is already developed for agricultural
purposes, then it cannot be exempt from acquisition and distribution. Moreover, the topography maps
More significantly however, it is the DAR Secretary that originally declared the subject
prepared by Agricultural Engineer Rosalina H. Jumaquio show that the property to be acquired has a
property as falling under the coverage of the CARP.
5-10% flat to undulating scope;59 that it is suitable to agricultural crops; 60 and it is in fact already
planted with diversified crops.61
Moreover, DAR Administrative Order No. 13, Series of 1990 (Rules and Procedure Governing
Exemption of Lands from CARP Coverage under Section 10, R.A. No. 6657) provides:
Also, the Certification dated July 1, 1991 by Geodetic Engineer Conrado R. Rigor that the top portion
of Barangay Casile has a 0 to 18% slope while the side of the hill has a 19 to 75% slope, 62 was
presented by SRRDC only during the proceedings before the CA which had no probative value in a I. LEGAL MANDATE
petition for review proceedings. The Court notes that SRRDC had been given ample time and
opportunity by the DARAB to prove the grounds for its protest and objection but miserably failed to The general policy under CARP is to cover as much lands suitable for agriculture as possible.
take advantage of such time and opportunity63 in the DARAB proceedings. However, Section 10, RA 6657 excludes and exempts certain types of lands from the
coverage of CARP, to wit:
SRRDC also contends that the property is part of a watershed, citing as evidence, the Certification
dated June 26, 1991 by the Laguna Lake Development Authority that Barangay Casile is part of the A. Lands actually, directly and exclusively used and found to be necessary for parks, wildlife,
watershed area of the Laguna Lake Basin, 64 and the Final Report for Watershed Area Assessment forest reserves, reforestation, fish sanctuaries and breeding grounds, watersheds and
Study for the Canlubang Estate dated July 1991 undertaken by the Engineering & Development mangroves, national defense, school sites and campuses including experimental farm
Corporation of the Philippines.65 It must be noted, however, that these pieces of evidence were stations operated by public or private schools for educational purposes, seeds and seedlings
likewise brought to record only when petitioner filed its petition for review with the CA. The DARAB research and pilot production centers, church sites and convents appurtenant thereto,
never had the opportunity to assess these pieces of evidence. mosque sites and Islamic centers appurtenant thereof, communal burial grounds and

134
cemeteries, penal colonies and penal farms actually worked by the inmates, government and undertaken by the Ecosystems Research and Development Bureau (ERDB) of the DENR entitled,
private research and quarantine centers; and "Environmental Assessment of the Casile and Kabanga-an River Watersheds." 73 The study, according
to SRRDC, was made pursuant to a handwritten instruction issued by then President Fidel V. Ramos.
The study noted that, "the continuing threat of widespread deforestation and unwise land use
...
practices have resulted in the deteriorating condition of the watersheds."74 But the Court also notes
the Memorandum for the President dated September 1993 by then DENR Secretary Angel C. Alcala
II. POLICIES that, after a field inspection conducted by the DENR’s Regional Executive Director and the Provincial
and Community Natural Resource Officers, it was found that:
In the application of the aforecited provision of law, the following guidelines shall be
observed: ...

A. For an area in I.A to be exempted from CARP coverage, it must be "actually, directly and 2. Many bankal trees were found growing in the watershed/CARP areas, including some
exclusively used and found to be necessary" for the purpose so stated. which have been coppiced, and that water conduits for domestic and industrial uses were
found installed at the watershed area claimed by the Yulos. Records further show that in the
... 1970s, a Private Land Timber Permit was issued to Canlubang Sugar Estate thru its
marketing arm, the Sta. Rosa Realty Devpt. Corp.

C. Lands which have been classified or proclaimed, and/or actually directly and exclusively
used and found to be necessary for parks, wildlife, forest reserves, fish sanctuaries and 3. Resident farmers denied that they have been cutting bankal trees and volunteered the
breeding grounds, and watersheds and mangroves shall be exempted from the coverage of information that one of the Estates’ security guards was dismissed for cutting and
CARP until Congress, taking into account ecological, developmental and equity transporting bankal trees. The trees cut by the dismissed security guard were found stacked
considerations, shall have determined by law, the specific limits of public domain, as adjacent to the Canlubang Security Agency’s headquarters.75
provided for under Sec. 4(a) of RA 6657, and a reclassification of the said areas or portions
thereof as alienable and disposable has been approved. (Emphasis supplied) Evidently, SRRDC had a hand in the degradation of the area, and now wants to put the entire blame
on the farmer-beneficiaries. It is reasonable to conclude that SRRDC is merely using "ecological
In order to be exempt from coverage, the land must have been classified or proclaimed and actually, considerations" to avert any disposition of the property adverse to it.
directly and exclusively used and found to be necessary for watershed purposes.68 In this case, at the
time the DAR issued the Notices of Coverage up to the time the DARAB rendered its decision on the SRRDC also objects to the identification of Amante, et al. as beneficiaries of the subject property.
dispute, the subject property is yet to be officially classified or proclaimed as a watershed and has in Suffice it to say that under Section 15 of R.A. No. 6657, the identification of beneficiaries is a matter
fact long been used for agricultural purposes. SRRDC relies on the case of Central Mindanao involving strictly the administrative implementation of the CARP, a matter which is exclusively vested
University (CMU) vs. DARAB,69 wherein the Court ruled that CMU is in the best position to determine in the Secretary of Agrarian Reform, through its authorized offices. Section 15 reads:
what property is found necessary for its use. SRRDC claims that it is in the best position to determine
whether its properties are "necessary" for development as park and watershed area.70
SECTION 15. Registration of Beneficiaries. — The DAR in coordination with the Barangay
Agrarian Reform Committee (BARC) as organized in this Act, shall register all agricultural
But SRRDC’s reliance on the CMU case is flawed. In the CMU case, the subject property from the very lessees, tenants and farmworkers who are qualified to be beneficiaries of the CARP. These
beginning was not alienable and disposable because Proclamation No. 476 issued by the late President potential beneficiaries with the assistance of the BARC and the DAR shall provide the
Carlos P. Garcia already reserved the property for the use of the school. Besides, the subject property following data:
in the CMU case was actually, directly and exclusively used and found to be necessary for educational
purposes.
(a) names and members of their immediate farm household; 

In the present case, the property is agricultural and was not actually and exclusively used for
(b) owners or administrators of the lands they work on and the length of tenurial
watershed purposes. As records show, the subject property was first utilized for the purposes of the
relationship;
Canlubang Sugar Estate.71 Later, petitioner claimed that the occupants were allowed to cultivate the
area so long as they do not plant crops being grown by the Canlubang Sugar Estate in order to avoid
confusion as to ownership thereof.72 Thus, based on its own assertions, it appears that it had (c) location and area of the land they work;
benefited from the fruits of the land as agricultural land. Now, in a complete turnaround, it is claiming
that the property is part of a watershed.
(d) crops planted; and

Furthermore, in a belated attempt to prove that the subject property is part of a watershed that must
(e) their share in the harvest or amount of rental paid or wages received.
be environmentally protected, SRRDC submitted before the Court a Final Report dated February 1994
135
A copy of the registry or list of all potential CARP beneficiaries in the barangay shall be (e) actual tillers or occupants of public lands;
posted in the barangay hall, school or other public buildings in the barangay where it shall be
open to inspection by the public at all reasonable hours.
(f) collectives or cooperatives of the above beneficiaries; and

Meanwhile, Administrative Order No. 10 (Rules and Procedures Governing the Registration of
(g) others directly working on the land.
Beneficiaries), Series of 1989, provides:

...
SUBJECT: I. PREFATORY STATEMENT

SRRDC argues that Section 22 "sweepingly declares landless residents as beneficiaries of the CARP
Pursuant to Section 15, Chapter IV, of the Comprehensive Agrarian Reform Law of 1988, the
(to mean also squatters)," in violation of Article XIII, Section 4 of the Constitution, which aims to
DAR, in coordination with the Barangay Agrarian Reform Committee (BARC), as organized
benefit only the landless farmers and regular farmworkers.79
pursuant to RA 6657, shall register all agricultural lessees, tenants and farmworkers who are
qualified beneficiaries of the CARP. This Administrative Order provides the Implementing
Rules and Procedures for the said registration. The Court cannot entertain such constitutional challenge. The requirements before a litigant can
challenge the constitutionality of a law are well-delineated, viz.:
...
(1) The existence of an actual and appropriate case;
B. Specific
(2) A personal and substantial interest of the party raising the constitutional question;
1. Identify the actual and potential farmer-beneficiaries of the CARP.
(3) The exercise of judicial review is pleaded at the earliest opportunity; and
In Lercana vs. Jalandoni,  the Court categorically stated that:
76

(4) The constitutional question is the lis mota of the case.80 (Emphasis supplied)


… the identification and selection of CARP beneficiaries are matters involving strictly the
administrative implementation of the CARP, a matter exclusively cognizable by the Secretary Earliest opportunity means that the question of unconstitutionality of the act in question should have
of the Department of Agrarian Reform, and beyond the jurisdiction of the DARAB.77 been immediately raised in the proceedings in the court below,81 in this case, the DAR Secretary. It
must be pointed out that all controversies on the implementation of the CARP fall under the
jurisdiction of the DAR, even though they raise questions that are also legal or constitutional
The farmer-beneficiaries have already been identified in this case. Also, the DAR Secretary has
in nature.82 The earliest opportunity to raise a constitutional issue is to raise it in the pleadings
already issued Notices of Coverage and Notices of Acquisition pertaining to the subject property. It
before a competent court that can resolve the same, such that, "if it is not raised in the pleadings, it
behooves the courts to exercise great caution in substituting its own determination of the issue,
cannot be considered at the trial, and, if not considered at the trial, it cannot be considered on
unless there is grave abuse of discretion committed by the administrative agency,78 which in these
appeal."83 Records show that SRRDC raised such constitutional challenge only before this Court
cases the Court finds none.
despite the fact that it had the opportunity to do so before the DAR Secretary. The DARAB correctly
refused to deal on this issue as it is the DAR Secretary who, under the law, has the authority to
SRRDC questions the constitutionality of Section 22 of R.A. No. 6657, which reads in part: determine the beneficiaries of the CARP. This Court will not entertain questions on the invalidity of a
statute where that issue was not specifically raised, insisted upon, and adequately argued84 in the
DAR.
SECTION 22. Qualified Beneficiaries. The lands covered by the CARP shall be distributed as
much as possible to landless residents of the same barangay, or in the absence thereof,
landless residents of the same municipality in the following order of priority. Likewise, the constitutional question raised by SRRDC is not the very lis mota in the present case.
Basic is the rule that every law has in its favor the presumption of constitutionality, and to justify its
nullification, there must be a clear and unequivocal breach of the Constitution, and not one that is
(a) agricultural lessees and share tenants;
doubtful, speculative or argumentative.85 The controversy at hand is principally anchored on the
coverage of the subject property under the CARP, an issue that can be determined without delving
(b) regular farmworkers; into the constitutionality of Section 22 of R.A. No. 6657. While the identification of Amante, et al. as
farmer-beneficiaries is a corollary matter, yet, the same may be resolved by the DAR.
(c) seasonal farmworkers;
SRRDC questions the DARAB’s jurisdiction to entertain the question of whether the subject property is
(d) other farmworkers; subject to CARP coverage.

136
According to SRRDC, such authority is vested with the DAR Secretary who has the exclusive d) Cases arising from, or connected with membership or representation in compact farms,
prerogative to resolve matters involving the administrative implementation of the CARP and agrarian farmers’ cooperatives and other registered farmers’ associations or organizations, related to
laws and regulations.86 land covered by the CARP and other agrarian laws;

There is no question that the power to determine whether a property is subject to CARP coverage lies e) Cases involving the sale, alienation, mortgage, foreclosure, pre-emption and redemption
with the DAR Secretary. Section 50 of R.A. No. 6657 provides that: of agricultural lands under the coverage of the CARP or other agrarian laws;

SEC. 50. Quasi-Judicial Powers of the DAR. - The DAR is hereby vested with primary f) Cases involving the issuance of Certificate of Land Transfer (CLT), Certificate of Land
jurisdiction to determine and adjudicate agrarian reform matters and shall have exclusive Ownership Award (CLOA) and Emancipation Patent (EP) and the administrative correction
original jurisdiction over all matters involving the implementation of agrarian reform, except thereof;
those falling under the exclusive jurisdiction of the Department of Agriculture (DA) and the
Department of Environment and Natural Resources (DENR).
g) And such other agrarian cases, disputes, matters or concerns referred to it by the
Secretary of the DAR.
. . . 
Provided, however, that matters involving strictly the administrative
The DAR’s jurisdiction under Section 50 of R.A. No. 6657 is two-fold. The first is essentially executive implementation of the CARP and other agrarian laws and regulations, shall be the
and pertains to the enforcement and administration of the laws, carrying them into practical operation exclusive prerogative of and cognizable by the Secretary of the DAR. (Emphasis
and enforcing their due observance, while the second is judicial and involves the determination of supplied)
rights and obligations of the parties.87
On the other hand, Administrative Order No. 06-00,89 which provides for the Rules of Procedure for
Pursuant to its judicial mandate of achieving a just, expeditious and inexpensive determination of Agrarian Law Implementation (ALI) Cases, govern the administrative function of the DAR. Under said
every action or proceeding before it,88 the DAR adopted the DARAB Revised Rules, Rule II (Jurisdiction Rules of Procedure, the DAR Secretary has exclusive jurisdiction over classification and identification
of the Adjudication Board) of which provides: of landholdings for coverage under the CARP, including protests or oppositions thereto and petitions
for lifting of coverage. Section 2 of the said Rules specifically provides, inter alia, that:
SECTION 1. Primary, Original and Appellate Jurisdiction. – The Agrarian Reform Adjudication
Board shall have primary jurisdiction, both original and appellate, to determine and SECTION 2. Cases Covered. - These Rules shall govern cases falling within the exclusive
adjudicate all agrarian disputes, cases, controversies, and matters or incidents involving the jurisdiction of the DAR Secretary which shall include the following:
implementation of the Comprehensive Agrarian Reform Program under Republic Act No.
6657, Executive Order Nos. 229, 228 and 129-A, Republic Act No. 3844 as amended by
(a) Classification and identification of landholdings for coverage under the
Republic Act No. 6389, Presidential Decree No. 27 and other agrarian laws and their
Comprehensive Agrarian Reform Program (CARP), including protests or oppositions
implementing rules and regulations.
thereto and petitions for lifting of coverage;

Specifically, such jurisdiction shall extend over but not be limited to the following:
(b) Identification, qualification or disqualification of potential farmer-beneficiaries;

a) Cases involving the rights and obligations of persons engaged in the cultivation and use of
(c) Subdivision surveys of lands under CARP;
agricultural land covered by the Comprehensive Agrarian Reform Program (CARP) and other
agrarian laws;
(d) Issuance, recall or cancellation of Certificates of Land Transfer (CLTs) and CARP
Beneficiary Certificates (CBCs) in cases outside the purview of Presidential Decree (PD) No.
b) Cases involving the valuation of land, and determination and payment of just
816, including the issuance, recall or cancellation of Emancipation Patents (EPs) or
compensation, fixing and collection of lease rentals, disturbance compensation, amortization
Certificates of Land Ownership Awards (CLOAs) not yet registered with the Register of
payments, and similar disputes concerning the functions of the Land Bank;
Deeds;

c) Cases involving the annulment or cancellation of orders or decisions of DAR officials other
(e) Exercise of the right of retention by landowner; . . . (Emphasis supplied)
than the Secretary, lease contracts or deeds of sale or their amendments under the
administration and disposition of the DAR and LBP;
Thus, the power to determine whether a property is agricultural and subject to CARP coverage
together with the identification, qualification or disqualification of farmer-beneficiaries lies with the
DAR Secretary.90

137
Significantly, the DAR had already determined that the properties are subject to case. But SRRDC itself insisted that DARAB should take cognizance thereof in the
expropriation under the CARP and has distributed the same to the farmer-beneficiaries. same land valuation proceeding. And, SRRDC, through its lawyers, actively
participated in the hearings conducted.
Initially, the LBP forwarded the two Compulsory Acquisition Claim Folders (CACF) covering the subject
properties to the DARAB for summary proceedings for the sole purpose of determining just 4.5.4. It was only when an adverse decision was rendered by DARAB that the
compensation. SRRDC then sent a letter to the LBP claiming that the subject properties were exempt jurisdictional issue was raised in the petition for review it filed with the Honorable
from CARP coverage and subject of a pending petition for land conversion. As a consequence, the Court of Appeals. It was also only then that petitioner presented proof/evidence.
DARAB asked the DAR Secretary to first resolve the issues raised by SRRDC before it can proceed
with the land valuation proceedings. In response, the DAR, through the Undersecretary for Operations
...
and the Regional Director of Region IV, submitted its report stating that: (1) the property is subject to
compulsory acquisition by virtue of the Notice of Coverage issued on August 11, 1989, and Notice of
Acquisition issued on December 12, 1989, and that it was subject to CARP coverage per Section IV D 4.5.6. Public respondents (DAR/DARAB) are not unmindful of the rule that matter of
of DAR Administrative Order No. 1, Series of 1990; and (2) there was no pending petition for land jurisdiction may be raised at any stage of the proceeding. But for two serious considerations,
conversion involving the subject property. When SRRDC petitioned the DARAB to resolve the issue of the applicability thereof in the case at bar should not be allowed.
exemption from coverage, it was only then that the DARAB took cognizance of said issue.91
4.5.6.1. The fact [part (municipal/industrial) and/or watershed] upon which the jurisdictional
As the DARAB succinctly pointed out, it was SRRDC that initiated and invoked the DARAB’s jurisdiction issue interchangeably hinges were not established during the hearing of the case. No proof
to pass upon the question of CARP coverage. As stated by the DARAB: was adduced. That the matter of CARP coverage is strictly administrative implementation of
CARP and, therefore, beyond the competence of DARAB, belonging, as it does, to the DAR
Secretary, was not even alleged, either before DARAB or the Honorable Court of Appeals, the
4.5.2.2. The ISSUE ON CARP COVERAGE was initiated and incorporated in said
numerous petitions/incidents filed notwithstanding. Be it that as it may, the records of the
proceeding, at the instance of petitioner itself, by filing a petition dated March 18, 1991,
case show that initially DARAB refused to take cognizance thereof and, in fact, forwarded the
… Prayed therein were that DARAB:
issue of CARP coverage to the office of the DAR Secretary. It was only when it was returned
to DARAB by said office that proceedings thereon commenced pursuant to Section 1(g) of
1. Take cognizance and assume jurisdiction  over the question of CARP coverage  of the Rule II of the DARAB Revised Rules of Procedure.
subject parcels of land;
4.5.6.2. Petitioner is now estopped from assailing the jurisdiction of DARAB. First,
2. Defer or hold in abeyance the proceedings for administrative valuation of the subject it expressly acknowledged the same, in fact invoked it, when it filed its petition
properties pending determination of the question of CARP coverage; (Annex "4"); and, second, during the scheduled hearings, SRRDC, through its
counsel, actively participated, one of its counsel (sic) even testifying. It may not
now be allowed to impugn the jurisdiction of public respondent …92(Emphasis
3. Allow respondent SRRDC to adduce evidence in support of its position that the subject
supplied)
parcels of land are not covered by the CARP beginning on the scheduled hearing date of April
4, 1991" (p.3; emphasis and underscoring supplied).
In CA-G.R. SP No. 27234, the CA likewise found that it was SRRDC that called upon the DARAB to
determine the issue and it, in fact, actively participated in the proceedings before it. 93 It was SRRDC’s
Upon persistent request of petitioner SRRDC, it was accommodated by DARAB and a counsel
own act of summoning the DARAB’s authority that cured whatever jurisdictional defect it now raises.
of SRRDC even took the witness stand. Its lawyers were always in attendance during the
It is elementary that the active participation of a party in a case pending against him before a court or
scheduled hearings until it was time for SRRDC to present its own evidence.
a quasi-judicial body, is tantamount to a recognition of that court’s or body’s jurisdiction and a
willingness to abide by the resolution of the case and will bar said party from later on impugning the
4.5.2.3. But, as earlier stated, despite the open session proddings by DARAB for SRRDC to court’s or body’s jurisdiction.94
submit evidence and the rescheduling for, allegedly, they are still collating the evidence, nay,
the request that it be allowed to adduce evidence, none was adduced and this constrained
Moreover, the issue of jurisdiction was raised by SRRDC only before the CA. It was never presented or
public respondent to declare SRRDC as having waived its right to present evidence. And,
discussed before the DARAB for obvious reasons, i.e., it was SRRDC itself that invoked the latter’s
after the remaining parties were heard, the hearing was formally terminated.
jurisdiction. As a rule, when a party adopts a certain theory, and the case is tried and decided upon
that theory in the court below, he will not be permitted to change his theory on appeal.95 Points of
... law, theories, issues and arguments not brought to the attention of the lower court need not be, and
ordinarily will not be, considered by a reviewing court, as these cannot be raised for the first time at
4.5.3. Needless to state, the jurisdictional objection (CARP coverage), now being such late stage.96 To permit SRRDC to change its theory on appeal would not only be unfair to
raised herein was not one of the original matters in issue. Principally, DARAB was Amante, et al. but would also be offensive to the basic scales of fair play, justice and due process.97
called upon under Section 16 of Republic Act No. 6657 to resolve a land valuation
138
Finally, the Court notes that then DAR Secretary Benjamin T. Leong issued a Memorandum on July protecting its interests thereon. As was ruled by the CA, Amante, et al. is merely entitled to nominal
11, 1991, ordering the opening of a trust account in favor of SRRDC. In Land Bank of the Philippines damages as a result of SRRDC’s acts.102
vs. Court of Appeals, this Court struck down as void DAR Administrative Circular No. 9, Series of
1990, providing for the opening of trust accounts in lieu of the deposit in cash or in bonds
All is not lost in this case. In its Memorandum dated September 29, 1993, to the DAR Secretary, the
contemplated in Section 16 (e) of R.A. No. 6657. As a result, the DAR issued Administrative Order No.
DENR manifested that:
2, Series of 1996, converting trust accounts in the name of landowners into deposit accounts. 98 Thus,
the trust account opened by the LBP per instructions of DAR Secretary Benjamin T. Leong should be
converted to a deposit account, to be retroactive in application in order to rectify the error committed . . . the farmers themselves could be tapped to undertake watershed management and
by the DAR in opening a trust account and to grant the landowners the benefits concomitant to protection. This community-based approach in natural resource management, is in fact,
payment in cash or LBP bonds prior to the ruling of the Court in Land Bank of the Philippines vs. Court being used in numerous watershed management projects nationwide. Adopting the same
of Appeals. The account shall earn a 12% interest per annum from the time the LBP opened a trust approach in the area is deemed the best possible solution to the case since it will not
account up to the time said account was actually converted into cash and LBP bonds deposit prejudice the CLOAs issued to the farmer-beneficiaries. They should, however, be required to
accounts.  undertake the necessary reforestation and other watershed management/rehabilitation
measures in the area.
Given the foregoing conclusions, the petition filed in G.R. No. 118838, which primarily rests on G.R.
No. 112526, should be granted. In view of the foregoing, we recommend that a watershed management plan for the area espousing
the community-based approach be drawn-up jointly by the DAR and DENR. . . .103
The judgments of the trial court in the injunction case (Civil Case No. B-2333) and the CA in CA-G.R.
SP No. 38182were premised on SRRDC’s transfer certificates of title over the subject property. The If SRRDC sincerely wants to preserve the property for ecological considerations, it can be done
trial court and the CA cannot be faulted for denying the writ of injunction prayed for by Amante, et al. regardless of who owns it. After all, we are all stewards of this earth, and it rests on all of us to tend
since at the time the trial court rendered its decision in the injunction case on January 20, 1992, to it.
SRRDC was still the holder of the titles covering the subject property. The titles in its name were
cancelled and corresponding TCTs were issued in the name of the Republic of the Philippines on WHEREFORE, the Second Motion for Reconsideration is GRANTED. The Court’s Decision dated
February 11, 1992, and CLOAs were issued to the farmer-beneficiaries on February 26, 1992. When October 12, 2001 in G.R. No. 112526 is SET ASIDE and the Decision of the Court of Appeals dated
Amante, et al., in their motion for reconsideration filed in CA-G.R. SP No. 38182, brought to the CA’s November 5, 1993 in CA-G.R. SP No. 27234 is AFFIRMED with MODIFICATION, in that the Land Bank
attention the issuance of the CLOAs, the CA, per Resolution dated January 19, 1995, reiterated its of the Philippines is ordered to convert the trust account in the name of Sta. Rosa Realty
ruling that "whether or not the subject property is covered by the Comprehensive Agrarian Reform Development Corporation to a deposit account, subject to a 12% interest per annum from the time
Law (R.A. No. 6657) is the subject matter of a separate case, and we cannot interfere with the same the LBP opened a trust account up to the time said account was actually converted into cash and LBP
at the present time." The CA further stated that "(O)ur present decision is, therefore, not intended to bonds deposit accounts. The temporary restraining order issued by the Court on December 15, 1993,
preempt any judgment or prejudice the right of any party in the said case." 99 It must be noted that at is LIFTED.
that juncture, the DARAB Decision and the CA decision in CA-G.R. SP No. 27234, finding the subject
property covered by the CARP Law, is yet to be finally resolved by this Court in G.R. No. 112526and
in fact, a temporary restraining order was issued by the Court on December 15, 1993, enjoining the The petition filed by Amante, et al. in G.R. No. 118838 is GRANTED in that Sta. Rosa Realty
DARAB from enforcing the effects of the CLOAs. Amante, et al. was likewise restrained from further Development Corporation is hereby ENJOINED from disturbing the peaceful possession of the
clearing the subject property.100 Hence, the decision of the trial court and the CA denying the writ of farmer-beneficiaries with CLOAs. The Decision of the Court of Appeals dated June 28, 1994 in CA-G.R.
injunction was warranted. CV No. 38182 is AFFIRMED insofar as the award of nominal damages is concerned.

Nevertheless, considering that the subject property is agricultural and may be acquired for The Department of Environment and Natural Resources and the Department of Agrarian Reform, in
distribution to farmer-beneficiaries identified by the DAR under the CARP, the transfer certificates of coordination with the farmer-beneficiaries identified by the DAR, are URGED to formulate a
title issued in the name of the Republic of the Philippines and the CLOAs issued by the DAR in the community-based watershed plan for the management and rehabilitation of Barangay Casile.
names of Amante, et al.,101 are valid titles and therefore must be upheld. By virtue thereof,
Amante, et al. who have been issued CLOAs are now the owners of the subject property . SO ORDERED.
Consequently, the decisions of the trial court in the injunction case and the CA in CA-G.R. SP No.
38182 must now be set aside, insofar as it orders Amante, et al. to vacate and/or enjoins them from
entering the subject property.

The Court, however, agrees with the CA that Amante, et al. is not entitled to actual, moral and
exemplary damages, as well as attorney’s fees. SRRDC’s right of possession over the subject property
was predicated on its claim of ownership, and it cannot be sanctioned in exercising its rights or

139
Petitioners assail the February 29, 2000 decision1 and October 12, 2000 resolution of the Court of
Appeals (CA) in CA-G.R. CV No. 56461 affirming with modification the decision of the Regional Trial
Court (RTC) of Surigao City, Branch 32, in Civil Case No. 4570.

Civil Case No. 4570 was a complaint for "Recovery of Real Property and/or its Market Value" filed by
petitioner Maria Paz Nepomuceno to recover a 652 sq. m. portion2 of her 50,000 sq. m. lot3 which was
occupied, developed and used as a city road by the city government of Surigao. Maria Paz alleged
that the city government neither asked her permission to use the land nor instituted expropriation
proceedings for its acquisition. On October 4, 1994, she and her husband, co-petitioner, Fermin A.
Nepomuceno, wrote respondent (then Surigao City Mayor) Salvador Sering a letter proposing an
amicable settlement for the payment of the portion taken over by the city. They subsequently met
with Mayor Sering to discuss their proposal but the mayor rebuffed them in public and refused to pay
them anything. In a letter dated January 30, 1995, petitioners sought reconsideration of the mayor’s
stand. But again, the city mayor turned this down in his reply dated January 31, 1995. As a
consequence, petitioners claimed that they suffered mental anguish, embarrassment, disappointment
and emotional distress which entitled them to moral damages.

In their answer, respondents admitted the existence of the road in question but alleged that it was
constructed way back in the 1960s during the administration of former Mayor Pedro Espina. At that
time, the lot was owned by the spouses Vicente and Josefa Fernandez who signed a road right-of-way
agreement in favor of the municipal government. However, a copy of the agreement could no longer
be found because the records were completely destroyed and lost when the Office of the City
Engineer was demolished by typhoon Nitang in 1994.

After hearing the parties and evaluating their respective evidence, the RTC rendered its decision 4 and
held:

WHEREFORE, premises considered, judgment is hereby rendered ordering the City of Surigao to pay
to Maria Paz V. Nepomuceno and her husband, Fermin Nepomuceno, the sum of ₱5,000.00 as
attorney’s fees, and the further sum of ₱3,260.00 as compensation for the portion of land in dispute,
with legal interest thereon from 1960 until fully paid, and upon payment, directing her to execute the
corresponding deed of conveyance in favor of the said defendant. The Clerk of Court shall execute the
necessary instrument in the event of her failure to do so.

The claims for moral and exemplary damages are denied for lack of basis. No pronouncement as to
costs.

G.R. No. 146091               July 28, 2008


SO ORDERED.5

MARIA PAZ V. NEPOMUCENO, joined by her husband, FERMIN A. NEPOMUCENO, Petitioners, 


vs. Unsatisfied with that decision, the petitioners appealed to the CA. As stated earlier, the CA modified
CITY OF SURIGAO and SALVADOR SERING in his capacity as City Mayor of the RTC decision and held that petitioners were entitled to ₱30,000 as moral damages for having been
Surigao, Respondents. rebuffed by Mayor Sering in the presence of other people. It also awarded petitioners ₱20,000 as
attorney’s fees and litigation expenses considering that they were forced to litigate to protect their
rights and had to travel to Surigao City from their residence in Ormoc City to prosecute their claim.
DECISION The CA affirmed the decision of the trial court in all other respects. Petitioners filed a motion for
reconsideration but it was denied. Hence, this petition.
CORONA, J.:
Petitioners claim that, in fixing the value of their property, justice and equity demand that the value
at the time of actual payment should be the basis, not the value at the time of the taking as the RTC
140
and CA held. They demand ₱200/sq. m. or a total sum of ₱130,400 plus legal interest. In the Finally, we deny petitioners’ prayer for exemplary damages. Exemplary damages may be imposed by
alternative, petitioners pray for the re-examination of the meaning of just compensation and cite the way of example or correction for the public good.15 The award of these damages is meant to be a
separate concurring opinion of Justice Antonio Barredo in Municipality of La Carlota v. Spouses Gan.6 deterrent to socially deleterious actions.16 Exemplary damages would have been appropriate had it
been shown that the city government indeed misused its power of eminent domain. 17 In this case,
both the RTC and the CA found there was no socially deleterious action or misuse of power to speak
Petitioners also assert that the CA decision in Spouses Mamerto Espina, Sr. and Flor Espina v. City of
of. We see no reason to rule otherwise.
Ormoc7should be applied to this case because of the substantial factual similarity between the two
cases. In that case, the City of Ormoc was directed to institute a separate expropriation proceeding
over the subject property. WHEREFORE, the petition is hereby DENIED.

Moreover, petitioners maintain that exemplary damages should be awarded because respondent City Costs against petitioners.
of Surigao illegally took their property.
SO ORDERED.
Petitioners’ arguments are without merit.

In a long line of cases, we have consistently ruled that where actual taking is made without the
benefit of expropriation proceedings and the owner seeks recovery of the possession of the property
prior to the filing of expropriation proceedings, it is the value of the property at the time of taking that
is controlling for purposes of compensation.8 As pointed out in Republic v. Lara,9 the reason for this
rule is:

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. This is the only way the
compensation to be paid can be truly just; i.e., "just" not only to the individual whose property is
taken, "but to the public, which is to pay for it."

Thus, the value of petitioners’ property must be ascertained as of 1960 when it was actually taken. It
is as of that time that the real measure of their loss may fairly be adjudged. The value, once fixed,
shall earn interest at the legal rate until full payment is effected, conformably with other principles
laid down by case law.10

Regarding petitioners’ contention on the applicability of Article 1250 of the Civil Code,11 Republic v.
CA12 is enlightening:

Article 1250 of the Civil Code, providing that, in case of extraordinary inflation or deflation, the
value of the currency at the time of the establishment of the obligation shall be the basis for the
payment when no agreement to the contrary is stipulated, has strict application only to
contractual obligations. In other words, a contractual agreement is needed for the effects of
extraordinary inflation to be taken into account to alter the value of the currency. (emphasis
supplied)1avvphi1

Since there was never any contractual obligation between the parties in this case, Article 1250 of the
Civil Code finds no application.

Moreover, petitioners cannot properly insist on the application of the CA decision in Spouses Mamerto
Espina, Sr. and Flor Espina v. City of Ormoc. 13 A decision of the CA does not establish judicial
precedent. A ruling of the CA on any question of law is not binding on this Court. 14 In fact, the Court
may review, modify or reverse any such ruling of the CA.
141
REPUBLIC OF THE PHILIPPINES, represented by the General Manager of the PHILIPPINE
INFORMATION AGENCY (PIA), petitioner, vs. THE HONORABLE COURT OF APPEALS
and the HEIRS OF LUIS SANTOS as herein represented by DR. SABINO SANTOS and
PURIFICACION SANTOS IMPERIAL, respondents.

DECISION

VITUG, J.:

Petitioner instituted expropriation proceedings on 19 September 1969 before the Regional Trial
Court ("RTC") of Bulacan, docketed Civil Cases No. 3839-M, No. 3840-M, No. 3841-M and No. 3842-
M, covering a total of 544,980 square meters of contiguous land situated along MacArthur Highway,
Malolos, Bulacan, to be utilized for the continued broadcast operation and use of radio transmitter
facilities for the Voice of the Philippines project. Petitioner, through the Philippine Information Agency
(PIA), took over the premises after the previous lessee, the Voice of America, had ceased its
operations thereat. Petitioner made a deposit of P517,558.80, the sum provisionally fixed as being the
reasonable value of the property. On 26 February 1979, or more than nine years after the institution
of the expropriation proceedings, the trial court issued this order -

"WHEREFORE, premises considered, judgment is hereby rendered:

"Condemning the properties of the defendants in Civil Cases Nos. 3839-M to 3842-M located at KM
43, MacArthur Highway, Malolos, Bulacan and covered by several transfer certificates of title
appearing in the Commissioners Appraisal Report consisting of the total area of 544,980 square
meters, as indicated in plan, Exhibit A, for plaintiff, also marked as Exhibit I for the defendants, and
as Appendix A attached to the Commissioners Appraisal Report, for the purpose stated by the plaintiff
in its complaint;

"Ordering the plaintiff to pay the defendants the just compensation for said property which is the fair
market value of the land condemned, computed at the rate of six pesos (P6.00) per square meter,
with legal rate of interest from September 19, 1969, until fully paid; and

"Ordering the plaintiff to pay the costs of suit, which includes the aforesaid fees of commissioners,
Atty. Victorino P. Evangelista and Mr. Pablo Domingo."[1]

The bone of contention in the instant controversy is the 76,589-square meter property
previously owned by Luis Santos, predecessor-in-interest of herein respondents, which forms part of
the expropriated area. 

It would appear that the national government failed to pay to herein respondents the
compensation pursuant to the foregoing decision, such that a little over five years later, or on 09 May
1984, respondents filed a manifestation with a motion seeking payment for the expropriated
property. On 07 June 1984, the Bulacan RTC, after ascertaining that the heirs remained unpaid in the
sum of P1,058,655.05, issued a writ of execution served on the plaintiff, through the Office of the
Solicitor General, for the implementation thereof. When the order was not complied with, respondents
again filed a motion urging the trial court to direct the provincial treasurer of Bulacan to release to
them the amount of P72,683.55, a portion of the sum deposited by petitioner at the inception of the
expropriation proceedings in 1969, corresponding to their share of the deposit. The trial court, in its
[G.R. No. 146587. July 2, 2002] order of 10 July 1984, granted the motion.

142
In the meantime, President Joseph Ejercito Estrada issued Proclamation No. 22, [2] transferring In Narzoles vs. NLRC,[4] the Court has said:
20 hectares of the expropriated property to the Bulacan State University for the expansion of its
facilities and another 5 hectares to be used exclusively for the propagation of the Philippine carabao.
The Court has observed that Circular No. 39-98 has generated tremendous confusion resulting in the
The remaining portion was retained by the PIA. This fact notwithstanding, and despite the 1984 court
dismissal of numerous cases for late filing. This may have been because, historically, i.e., even before
order, the Santos heirs remained unpaid, and no action was taken on their case until 16 September
the 1997 revision to the Rules of Civil Procedure, a party had a fresh period from receipt of the order
1999 when petitioner filed its manifestation and motion to permit the deposit in court of the amount
denying the motion for reconsideration to file a petition for certiorari. Were it not for the amendments
of P4,664,000.00 by way of just compensation for the expropriated property of the late Luis Santos
brought about by Circular No. 39-98, the cases so dismissed would have been resolved on the merits.
subject to such final computation as might be approved by the court. This time, the Santos heirs,
Hence, the Court deemed it wise to revert to the old rule allowing a party a fresh 60-day period from
opposing the manifestation and motion, submitted a counter-motion to adjust the compensation from
notice of the denial of the motion for reconsideration to file a petition for certiorari. x x x
P6.00 per square meter previously fixed in the 1979 decision to its current zonal valuation pegged at
P5,000.00 per square meter or, in the alternative, to cause the return to them of the expropriated
property. On 01 March 2000, the Bulacan RTC ruled in favor of respondents and issued the assailed The latest amendments took effect on September 1, 2000, following its publication in the Manila
order, vacating its decision of 26 February 1979 and declaring it to be unenforceable on the ground of Bulletin on August 4, 2000 and in the Philippine Daily Inquirer on August 7, 2000, two newspapers of
prescription - general circulation.

"WHEREFORE, premises considered, the court hereby: In view of its purpose, the Resolution further amending Section 4, Rule 65, can only be described as
curative in nature, and the principles governing curative statutes are applicable.
"1) declares the decision rendered by this Court on February 26, 1979 no longer enforceable,
execution of the same by either a motion or an independent action having already prescribed in Curative statutes are enacted to cure defects in a prior law or to validate legal proceedings which
accordance with Section 6, Rule 39 of both the 1964 Revised Rules of Court and the 1997 Rules of would otherwise be void for want of conformity with certain legal requirements. (Erectors, Inc. vs.
Civil Procedure; National Labor Relations Commission, 256 SCRA 629 [1996].) They are intended to supply defects,
abridge superfluities and curb certain evils. They are intended to enable persons to carry into effect
that which they have designed or intended, but has failed of expected legal consequence by reason of
"2) denies the plaintiffs Manifestation and Motion to Permit Plaintiff to Deposit in Court Payment for
some statutory disability or irregularity in their own action. They make valid that which, before the
Expropriated Properties dated September 16, 1999 for the reason stated in the next preceding
enactment of the statute was invalid. Their purpose is to give validity to acts done that would have
paragraph hereof; and
been invalid under existing laws, as if existing laws have been complied with. (Batong Buhay Gold
Mines, Inc. vs. Dela Serna, 312 SCRA 22 [1999].) Curative statutes, therefore, by their very essence,
"3) orders the return of the expropriated property of the late defendant Luis Santos to his heirs are retroactive. (Municipality of San Narciso, Quezon vs. Mendez, Sr., 239 SCRA 11 [1994].)[5]
conformably with the ruling of the Supreme Court in Government of Sorsogon vs. Vda. De Villaroya,
153 SCRA 291, without prejudice to any case which the parties may deem appropriate to institute in
At all events, petitioner has a valid point in emphasizing the "public nature" of the expropriated
relation with the amount already paid to herein oppositors and the purported transfer of a portion of
property. The petition being imbued with public interest, the Court has resolved to give it due course
the said realty to the Bulacan State University pursuant to Proclamation No. 22 issued by President
and to decide the case on its merits.
Joseph Ejercito."[3]
Assailing the finding of prescription by the trial court, petitioner here posited that a motion which
Petitioner brought the matter up to the Court of Appeals but the petition was outrightly respondents had filed on 17 February 1984, followed up by other motions subsequent thereto, was
denied. It would appear that the denial was based on Section 4, Rule 65, of the 1997 Rules of Civil made within the reglementary period that thereby interrupted the 5-year prescriptive period within
Procedure which provided that the filing of a motion for reconsideration in due time after filing of the which to enforce the 1979 judgment. Furthermore, petitioner claimed, the receipt by respondents of
judgment, order or resolution interrupted the running of the sixty-day period within which to file a partial compensation in the sum of P72,683.55 on 23 July 1984 constituted partial compliance on the
petition for certiorari; and that if a motion for reconsideration was denied, the aggrieved party could part of petitioners and effectively estopped respondents from invoking prescription expressed in
file the petition only within the remaining period, but which should not be less than five days in any Section 6, Rule 39, of the Rules of Court.[6]
event, reckoned from the notice of such denial. The reglementary period, however, was later modified
In opposing the petition, respondents advanced the view that pursuant to Section 6, Rule 39, of
by A.M. No. 00-2-03 S.C., now reading thusly:
the Rules of Court, the failure of petitioner to execute the judgment, dated 26 February 1979, within
five years after it had become final and executory, rendered it unenforceable by mere motion. The
Sec. 4. When and where petition filed. --- The petition shall be filed not later than sixty (60) days motion for payment, dated 09 May 1984, as well as the subsequent disbursement to them of the sum
from notice of the judgment, order or resolution. In case a motion for reconsideration or new trial is of P72,683.55 by the provincial treasurer of Bulacan, could not be considered as having interrupted
timely filed, whether such motion is required or not, the sixty (60) day period shall be counted from the five-year period, since a motion, to be considered otherwise, should instead be made by the
notice of the denial of said motion. prevailing party, in this case by petitioner. Respondents maintained that the P72,683.55 paid to them
by the provincial treasurer of Bulacan pursuant to the 1984 order of the trial court was part of the
The amendatory provision, being curative in nature, should be made applicable to all cases still initial deposit made by petitioner when it first entered possession of the property in 1969 and should
pending with the courts at the time of its effectivity. not be so regarded as a partial payment. Respondents further questioned the right of PIA to transfer

143
ownership of a portion of the property to the Bulacan State University even while the just The points in dispute are whether such payment can still be made and, if so, in what amount. Said
compensation due the heirs had yet to be finally settled. lots have been the subject of expropriation proceedings. By final and executory judgment in said
proceedings, they were condemned for public use, as part of an airport, and ordered sold to the
The right of eminent domain is usually understood to be an ultimate right of the sovereign power government. x x x It follows that both by virtue of the judgment, long final, in the expropriation suit,
to appropriate any property within its territorial sovereignty for a public purpose. [7] Fundamental to as well as the annotations upon their title certificates, plaintiffs are not entitled to recover possession
the independent existence of a State, it requires no recognition by the Constitution, whose provisions of their expropriated lots - which are still devoted to the public use for which they were expropriated -
are taken as being merely confirmatory of its presence and as being regulatory, at most, in the due but only to demand the fair market value of the same.
exercise of the power. In the hands of the legislature, the power is inherent, its scope matching that
of taxation, even that of police power itself, in many respects. It reaches to every form of property
the State needs for public use and, as an old case so puts it, all separate interests of individuals in "Said relief may be granted under plaintiffs' prayer for: `such other remedies, which may be deemed
property are held under a tacit agreement or implied reservation vesting upon the sovereign the right just and equitable under the premises'."[18]
to resume the possession of the property whenever the public interest so requires it.[8]
The Court proceeded to reiterate its pronouncement in Alfonso vs. Pasay City[19] where the recovery of
The ubiquitous character of eminent domain is manifest in the nature of the expropriation possession of property taken for public use prayed for by the unpaid landowner was denied even
proceedings. Expropriation proceedings are not adversarial in the conventional sense, for the while no requisite expropriation proceedings were first instituted. The landowner was merely given the
condemning authority is not required to assert any conflicting interest in the property. Thus, by filing relief of recovering compensation for his property computed at its market value at the time it was
the action, the condemnor in effect merely serves notice that it is taking title and possession of the taken and appropriated by the State.
property, and the defendant asserts title or interest in the property, not to prove a right to
possession, but to prove a right to compensation for the taking.[9] The judgment rendered by the Bulacan RTC in 1979 on the expropriation proceedings provides
not only for the payment of just compensation to herein respondents but likewise adjudges the
Obviously, however, the power is not without its limits: first, the taking must be for public use, property condemned in favor of petitioner over which parties, as well as their privies, are bound.
and second, that just compensation must be given to the private owner of the property. [10] These twin [20]
 Petitioner has occupied, utilized and, for all intents and purposes, exercised dominion over the
proscriptions have their origin in the recognition of the necessity for achieving balance between the property pursuant to the judgment. The exercise of such rights vested to it as the condemnee indeed
State interests, on the one hand, and private rights, upon the other hand, by effectively restraining has amounted to at least a partial compliance or satisfaction of the 1979 judgment, thereby
the former and affording protection to the latter.[11] In determining public use, two approaches are preempting any claim of bar by prescription on grounds of non-execution. In arguing for the return of
utilized - the first is public employment or the actual use by the public, and the second is public their property on the basis of non-payment, respondents ignore the fact that the right of the
advantage or benefit.[12] It is also useful to view the matter as being subject to constant growth, expropriatory authority is far from that of an unpaid seller in ordinary sales, to which the remedy of
which is to say that as society advances, its demands upon the individual so increases, and each rescission might perhaps apply. An in rem proceeding, condemnation acts upon the property.[21] After
demand is a new use to which the resources of the individual may be devoted.[13] condemnation, the paramount title is in the public under a new and independent title; [22] thus, by
The expropriated property has been shown to be for the continued utilization by the PIA, a giving notice to all claimants to a disputed title, condemnation proceedings provide a judicial process
significant portion thereof being ceded for the expansion of the facilities of the Bulacan State for securing better title against all the world than may be obtained by voluntary conveyance.[23]
University and for the propagation of the Philippine carabao, themselves in line with the requirements Respondents, in arguing laches against petitioner did not take into account that the same
of public purpose. Respondents question the public nature of the utilization by petitioner of the argument could likewise apply against them. Respondents first instituted proceedings for payment
condemned property, pointing out that its present use differs from the purpose originally against petitioner on 09 May 1984, or five years after the 1979 judgment had become final. The
contemplated in the 1969 expropriation proceedings. The argument is of no moment. The property unusually long delay in bringing the action to compel payment against herein petitioner would militate
has assumed a public character upon its expropriation. Surely, petitioner, as the condemnor and as against them. Consistently with the rule that one should take good care of his own concern,
the owner of the property, is well within its rights to alter and decide the use of that property, the respondents should have commenced the proper action upon the finality of the judgment which,
only limitation being that it be for public use, which, decidedly, it is. indeed, resulted in a permanent deprivation of their ownership and possession of the property.[24]
In insisting on the return of the expropriated property, respondents would exhort on the The constitutional limitation of just compensation is considered to be the sum equivalent to the
pronouncement in Provincial Government of Sorsogon vs. Vda. de Villaroya [14] where the unpaid market value of the property, broadly described to be the price fixed by the seller in open market in
landowners were allowed the alternative remedy of recovery of the property there in question. It the usual and ordinary course of legal action and competition or the fair value of the property as
might be borne in mind that the case involved the municipal government of Sorsogon, to which the between one who receives, and one who desires to sell, it fixed at the time of the actual taking by the
power of eminent domain is not inherent, but merely delegated and of limited application. The grant government.[25] Thus, if property is taken for public use before compensation is deposited with the
of the power of eminent domain to local governments under Republic Act No. 7160[15] cannot be court having jurisdiction over the case, the final compensation must include interests on its just value
understood as being the pervasive and all-encompassing power vested in the legislative branch of to be computed from the time the property is taken to the time when compensation is actually paid or
government. For local governments to be able to wield the power, it must, by enabling law, be deposited with the court.[26] In fine, between the taking of the property and the actual payment, legal
delegated to it by the national legislature, but even then, this delegated power of eminent domain is interests accrue in order to place the owner in a position as good as (but not better than) the position
not, strictly speaking, a power of eminent, but only of inferior, domain or only as broad or confined as he was in before the taking occurred.[27]
the real authority would want it to be.[16]
The Bulacan trial court, in its 1979 decision, was correct in imposing interests on the zonal value
Thus, in Valdehueza vs. Republic [17] where the private landowners had remained unpaid ten of the property to be computed from the time petitioner instituted condemnation proceedings and
years after the termination of the expropriation proceedings, this Court ruled -
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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[28] should help eliminate the issue of the constant fluctuation and inflation of the value of the
currency over time.[29] Article 1250 of the Civil Code, providing that, in case of extraordinary inflation
or deflation, the value of the currency at the time of the establishment of the obligation shall be the
basis for the payment when no agreement to the contrary is stipulated, has strict application only to
contractual obligations.[30] In other words, a contractual agreement is needed for the effects of
extraordinary inflation to be taken into account to alter the value of the currency.[31] Republic v. Lim, G.R. 161656, June 29, 2005

All given, the trial court of Bulacan in issuing its order, dated 01 March 2000, vacating its
Fact: On September 5, 1938, the Republic of the Philippines (Republic) instituted a special civil action
decision of 26 February 1979 has acted beyond its lawful cognizance, the only authority left to it
for expropriation with the Court of First Instance (CFI) of Cebu, involving Lots of the Banilad Friar
being to order its execution. Verily, private respondents, although not entitled to the return of the
Land Estate, Lahug, Cebu City, for the purpose of establishing a military reservation for the Philippine
expropriated property, deserve to be paid promptly on the yet unpaid award of just compensation
Army. After depositing ₱9,500.00 with the Philippine National Bank, the Republic took possession of
already fixed by final judgment of the Bulacan RTC on 26 February 1979 at P6.00 per square meter,
the lots. Thereafter, the CFI rendered its Decision ordering the Republic to pay the Denzons the sum
with legal interest thereon at 12% per annum computed from the date of "taking" of the property,
of ₱4,062.10 as just compensation. In 1950, Jose Galeos, one of the heirs of the Denzons, filed with
i.e., 19 September 1969, until the due amount shall have been fully paid.
the National Airports Corporation a claim for rentals for the two lots, but it “denied knowledge of the
WHEREFORE, the petition is GRANTED. The resolution, dated 31 July 2000, of the Court of matter.” Another heir, Nestor Belocura, brought the claim to the Office of then President Carlos Garcia
Appeals dismissing the petition for certiorari, as well as its resolution of 04 January 2001 denying the who wrote the Civil Aeronautics Administration and the Secretary of National Defense to expedite
motion for reconsideration, and the decision of the Regional Trial Court of Bulacan, dated 01 March action on said claim. in 1962, the CFI promulgated its Decision in favor of Valdehueza and Panerio,
2000, are SET ASIDE. Let the case be forthwith remanded to the Regional Trial Court of Bulacan for holding that they are the owners and have retained their right as such over Lots 932 and 939 because
the proper execution of its decision promulgated on 26 February 1979 which is hereby of the Republic’s failure to pay the amount of ₱4,062.10, adjudged in the expropriation proceedings.
REINSTATED. No costs. In view of “the differences in money value from 1940 up to the present,” the court adjusted the
market value at ₱16,248.40, to be paid with 6% interest per annum from April 5, 1948, date of entry
SO ORDERED. in the expropriation proceedings, until full payment.

Meanwhile, in 1964, Valdehueza and Panerio mortgaged and foreclosed Lot 932 to Vicente Lim for
failure to pay. in 1992, respondent filed a complaint for quieting of title with the (RTC) seeking an
absolute and exclusive possession of the property. in 2001, the RTC rendered a decision in favor of
respondent. Petitioners elevated the case to the CA but the Ruling of the RTC was upheld and
affirmed.

Issue: Whether the owner of the expropriated land is entitled for the repossession of his property
when party condemning refuses to pay the compensation which has been assessed or agreed upon?

Held: Yes, while the prevailing doctrine is that “the non-payment of just compensation does not
entitle the private landowner to recover possession of the expropriated lots,26 however, in cases
where the government failed to pay just compensation within five (5) years from the finality of the
judgment in the expropriation proceedings, the owners concerned shall have the right to recover
possession of their property. This is in consonance with the principle that “the government cannot
keep the property and dishonor the judgment.” To be sure, the five-year period limitation will
encourage the government to pay just compensation punctually. This is in keeping with justice and
equity. After all, it is the duty of the government, whenever it takes property from private persons
against their will, to facilitate the payment of just compensation which the court defined as not only
the correct determination of the amount to be paid to the property owner but also the payment of the

145
property within a reasonable time. Without prompt payment, compensation cannot be considered
“just.”

G.R. No. 161656               June 29, 2005

REPUBLIC OF THE PHILIPPINES, GENERAL ROMEO ZULUETA, COMMODORE EDGARDO


GALEOS, ANTONIO CABALUNA, DOROTEO MANTOS & FLORENCIO BELOTINDOS, petitioners, 
vs.
VICENTE G. LIM, respondent.

RESOLUTION

SANDOVAL-GUTIERREZ, J.:

Justice is the first virtue of social institutions. 1 When the state wields its power of eminent domain,
there arises a correlative obligation on its part to pay the owner of the expropriated property a just
compensation. If it fails, there is a clear case of injustice that must be redressed. In the present case,
fifty-seven (57) years have lapsed from the time the Decision in the subject expropriation proceedings
became final, but still the Republic of the Philippines, herein petitioner, has not compensated the
owner of the property. To tolerate such prolonged inaction on its part is to encourage distrust and
resentment among our people – the very vices that corrode the ties of civility and tempt men to act in
ways they would otherwise shun.

A revisit of the pertinent facts in the instant case is imperative.

On September 5, 1938, the Republic of the Philippines (Republic) instituted a special civil action for
expropriation with the Court of First Instance (CFI) of Cebu, docketed as Civil Case No. 781, involving
Lots 932 and 939 of the Banilad Friar Land Estate, Lahug, Cebu City, for the purpose of establishing a
military reservation for the Philippine Army. Lot 932 was registered in the name of Gervasia Denzon
under Transfer Certificate of Title (TCT) No. 14921 with an area of 25,137 square meters, while Lot
939 was in the name of Eulalia Denzon and covered by TCT No. 12560 consisting of 13,164 square
meters.

After depositing ₱9,500.00 with the Philippine National Bank, pursuant to the Order of the CFI dated
October 19, 1938, the Republic took possession of the lots. Thereafter, or on May 14, 1940, the CFI
rendered its Decision ordering the Republic to pay the Denzons the sum of ₱4,062.10 as just
compensation.

146
The Denzons interposed an appeal to the Court of Appeals but it was dismissed on March 11, 1948. deposited by it, and said deposit had been disbursed. With the records lost, however, it cannot be
An entry of judgment was made on April 5, 1948. known who received the money (Exh. 14 says: ‘It is further certified that the corresponding Vouchers
and pertinent Journal and Cash Book were destroyed during the last World War, and therefore the
names of the payees concerned cannot be ascertained.’) And the Government now admits that
In 1950, Jose Galeos, one of the heirs of the Denzons, filed with the National Airports Corporation a
there is no available record showing that payment for the value of the lots in question has
claim for rentals for the two lots, but it "denied knowledge of the matter." Another heir, Nestor
been made (Stipulation of Facts, par. 9, Rec. on Appeal, p. 28).
Belocura, brought the claim to the Office of then President Carlos Garcia who wrote the Civil
Aeronautics Administration and the Secretary of National Defense to expedite action on said claim. On
September 6, 1961, Lt. Manuel Cabal rejected the claim but expressed willingness to pay the The points in dispute are whether such payment can still be made and, if so, in what
appraised value of the lots within a reasonable time. amount. Said lots have been the subject of expropriation proceedings. By final and
executory judgment in said proceedings, they were condemned for public use, as part of an
airport, and ordered sold to the Government. In fact, the abovementioned title certificates
For failure of the Republic to pay for the lots, on September 20, 1961, the Denzons’ successors-in-
secured by plaintiffs over said lots contained annotations of the right of the National
interest, Francisca Galeos-Valdehueza and Josefina Galeos-Panerio,2 filed with the same CFI an
Airports Corporation (now CAA) to pay for and acquire them. It follows that both by virtue
action for recovery of possession with damages against the Republic and officers of the Armed Forces
of the judgment, long final, in the expropriation suit, as well as the annotations upon their
of the Philippines in possession of the property. The case was docketed as Civil Case No. R-7208.
title certificates, plaintiffs are not entitled to recover possession of their expropriated lots –
which are still devoted to the public use for which they were expropriated – but only to
In the interim or on November 9, 1961, TCT Nos. 23934 and 23935 covering Lots 932 and 939 were demand the fair market value of the same."
issued in the names of Francisca Valdehueza and Josefina Panerio, respectively. Annotated thereon
was the phrase "subject to the priority of the National Airports Corporation to acquire said parcels of
Meanwhile, in 1964, Valdehueza and Panerio mortgaged Lot 932 to Vicente Lim, herein
land, Lots 932 and 939 upon previous payment of a reasonable market value."
respondent,4 as security for their loans. For their failure to pay Lim despite demand, he had the
mortgage foreclosed in 1976. Thus, TCT No. 23934 was cancelled, and in lieu thereof, TCT No. 63894
On July 31, 1962, the CFI promulgated its Decision in favor of Valdehueza and Panerio, holding that was issued in his name.
they are the owners and have retained their right as such over Lots 932 and 939 because of the
Republic’s failure to pay the amount of ₱4,062.10, adjudged in the expropriation proceedings.
On August 20, 1992, respondent Lim filed a complaint for quieting of title with the Regional Trial
However, in view of the annotation on their land titles, they were ordered to execute a deed of sale in
Court (RTC), Branch 10, Cebu City, against General Romeo Zulueta, as Commander of the Armed
favor of the Republic. In view of "the differences in money value from 1940 up to the present," the
Forces of the Philippines, Commodore Edgardo Galeos, as Commander of Naval District V of the
court adjusted the market value at ₱16,248.40, to be paid with 6% interest per annum from April 5,
Philippine Navy, Antonio Cabaluna, Doroteo Mantos and Florencio Belotindos, herein petitioners.
1948, date of entry in the expropriation proceedings, until full payment.
Subsequently, he amended the complaint to implead the Republic.

After their motion for reconsideration was denied, Valdehueza and Panerio appealed from the CFI
On May 4, 2001, the RTC rendered a decision in favor of respondent, thus:
Decision, in view of the amount in controversy, directly to this Court. The case was docketed as No. L-
21032.3 On May 19, 1966, this Court rendered its Decision affirming the CFI Decision. It held that
Valdehueza and Panerio are still the registered owners of Lots 932 and 939, there having been no "WHEREFORE, judgment is hereby rendered in favor of plaintiff Vicente Lim and against all
payment of just compensation by the Republic. Apparently, this Court found nothing in the records to defendants, public and private, declaring plaintiff Vicente Lim the absolute and exclusive
show that the Republic paid the owners or their successors-in-interest according to the CFI decision. owner of Lot No. 932 with all the rights of an absolute owner including the right to
While it deposited the amount of ₱9,500,00, and said deposit was allegedly disbursed, however, the possession. The monetary claims in the complaint and in the counter claims contained in the answer
payees could not be ascertained. of defendants are ordered Dismissed.

Notwithstanding the above finding, this Court still ruled that Valdehueza and Panerio are not entitled Petitioners elevated the case to the Court of Appeals, docketed therein as CA-G.R. CV No. 72915. In
to recover possession of the lots but may only demand the payment of their fair market value, its Decision5dated September 18, 2003, the Appellate Court sustained the RTC Decision, thus:
ratiocinating as follows:
"Obviously, defendant-appellant Republic evaded its duty of paying what was due to the
"Appellants would contend that: (1) possession of Lots 932 and 939 should be restored to them as landowners. The expropriation proceedings had already become final in the late 1940’s and
owners of the same; (2) the Republic should be ordered to pay rentals for the use of said lots, plus yet, up to now, or more than fifty (50) years after, the Republic had not yet paid the
attorney’s fees; and (3) the court a quo in the present suit had no power to fix the value of the lots compensation fixed by the court while continuously reaping benefits from the expropriated
and order the execution of the deed of sale after payment. property to the prejudice of the landowner. x x x. This is contrary to the rules of fair play
because the concept of just compensation embraces not only the correct determination of
the amount to be paid to the owners of the land, but also the payment for the land within a
It is true that plaintiffs are still the registered owners of the land, there not having been a transfer of
reasonable time from its taking. Without prompt payment, compensation cannot be
said lots in favor of the Government. The records do not show that the Government paid the owners
considered "just" for the property owner is made to suffer the consequence of being
or their successors-in-interest according to the 1940 CFI decision although, as stated, ₱9,500.00 was
147
immediately deprived of his land while being made to wait for a decade or more, in this Initially, we must rule on the procedural obstacle.
case more than 50 years, before actually receiving the amount necessary to cope with the
loss. To allow the taking of the landowners’ properties, and in the meantime leave them
While we commend the Republic for the zeal with which it pursues the present case, we reiterate that
empty-handed by withholding payment of compensation while the government speculates
its urgent motion for clarification filed on July 7, 2004 is actually a second motion for reconsideration.
on whether or not it will pursue expropriation, or worse, for government to subsequently
This motion is prohibited under Section 2, Rule 52, of the 1997 Rules of Civil Procedure, as amended,
decide to abandon the property and return it to the landowners, is undoubtedly an
which provides:
oppressive exercise of eminent domain that must never be sanctioned. (Land Bank of the
Philippines vs. Court of Appeals, 258 SCRA 404).
"Sec. 2. Second motion for reconsideration. – No second motion for reconsideration of a judgment or
final resolution by the same party shall be entertained."
xxxxxx

Consequently, as mentioned earlier, we simply noted without action the motion since petitioners’
An action to quiet title is a common law remedy for the removal of any cloud or doubt or uncertainty
petition was already denied with finality.
on the title to real property. It is essential for the plaintiff or complainant to have a legal or equitable
title or interest in the real property, which is the subject matter of the action. Also the deed, claim,
encumbrance or proceeding that is being alleged as cloud on plaintiff’s title must be shown to be in Considering the Republic’s urgent and serious insistence that it is still the owner of Lot 932 and in the
fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy (Robles vs. interest of justice, we take another hard look at the controversial issue in order to determine the
Court of Appeals, 328 SCRA 97). In view of the foregoing discussion, clearly, the claim of veracity of petitioner’s stance.
defendant-appellant Republic constitutes a cloud, doubt or uncertainty on the title of
plaintiff-appellee Vicente Lim that can be removed by an action to quiet title. One of the basic principles enshrined in our Constitution is that no person shall be deprived of his
private property without due process of law; and in expropriation cases, an essential element of due
WHEREFORE, in view of the foregoing, and finding no reversible error in the appealed May 4, 2001 process is that there must be just compensation whenever private property is taken for public
Decision of Branch 9, Regional Trial Court of Cebu City, in Civil Case No. CEB-12701, the said decision use.7 Accordingly, Section 9, Article III, of our Constitution mandates: "Private property shall not be
is UPHELD AND AFFIRMED. Accordingly, the appeal is DISMISSED for lack of merit." taken for public use without just compensation."

Undaunted, petitioners, through the Office of the Solicitor General, filed with this Court a petition for The Republic disregarded the foregoing provision when it failed and refused to pay respondent’s
review on certiorari alleging that the Republic has remained the owner of Lot 932 as held by this predecessors-in-interest the just compensation for Lots 932 and 939. The length of time and the
Court in Valdehueza vs. Republic.6 manner with which it evaded payment demonstrate its arbitrary high-handedness and confiscatory
attitude. The final judgment in the expropriation proceedings (Civil Case No. 781) was entered
on April 5, 1948. More than half of a century has passed, yet, to this day, the landowner, now
In our Resolution dated March 1, 2004, we denied the petition outright on the ground that the Court
respondent, has remained empty-handed. Undoubtedly, over 50 years of delayed payment cannot, in
of Appeals did not commit a reversible error. Petitioners filed an urgent motion for reconsideration but
any way, be viewed as fair. This is more so when such delay is accompanied by bureaucratic hassles.
we denied the same with finality in our Resolution of May 17, 2004.
Apparent from Valdehueza is the fact that respondent’s predecessors-in-interest were given a "run
around" by the Republic’s officials and agents. In 1950, despite the benefits it derived from the use of
On May 18, 2004, respondent filed an ex-parte motion for the issuance of an entry of judgment. We the two lots, the National Airports Corporation denied knowledge of the claim of respondent’s
only noted the motion in our Resolution of July 12, 2004. predecessors-in-interest. Even President Garcia, who sent a letter to the Civil Aeronautics
Administration and the Secretary of National Defense to expedite the payment, failed in granting relief
to them. And, on September 6, 1961, while the Chief of Staff of the Armed Forces expressed
On July 7, 2004, petitioners filed an urgent plea/motion for clarification, which is actually a second
willingness to pay the appraised value of the lots, nothing happened.lawphil.net
motion for reconsideration. Thus, in our Resolution of September 6, 2004, we simply noted
without action the motion considering that the instant petition was already denied with finality in our
Resolution of May 17, 2004. The Court of Appeals is correct in saying that Republic’s delay is contrary to the rules of fair play,
as "just compensation embraces not only the correct determination of the amount to be
paid to the owners of the land, but also the payment for the land within a reasonable time
On October 29, 2004, petitioners filed a very urgent motion for leave to file a motion for
from its taking. Without prompt payment, compensation cannot be considered ‘just.’" In
reconsideration of our Resolution dated September 6, 2004 (with prayer to refer the case to the En
jurisdictions similar to ours, where an entry to the expropriated property precedes the payment of
Banc). They maintain that the Republic’s right of ownership has been settled in Valdehueza.
compensation, it has been held that if the compensation is not paid in a reasonable time, the party
may be treated as a trespasser ab initio.8
The basic issue for our resolution is whether the Republic has retained ownership of Lot 932 despite
its failure to pay respondent’s predecessors-in-interest the just compensation therefor pursuant to the
Corollarily, in Provincial Government of Sorsogon vs. Vda. De Villaroya,9 similar to the present case,
judgment of the CFI rendered as early as May 14, 1940.
this Court expressed its disgust over the government’s vexatious delay in the payment of just
compensation, thus:
148
"The petitioners have been waiting for more than thirty years to be paid for their land that ‘actual payment to the owner of the condemned property was a condition precedent to
which was taken for use as a public high school. As a matter of fair procedure, it is the duty of the investment of the title to the property in the State’ albeit ‘not to the appropriation of it
the Government, whenever it takes property from private persons against their will, to supply all to public use.’ In Rexford v. Knight, the Court of Appeals of New York said that the construction
required documentation and facilitate payment of just compensation. The imposition of upon the statutes was that the fee did not vest in the State until the payment of the compensation
unreasonable requirements and vexatious delays before effecting payment is not only although the authority to enter upon and appropriate the land was complete prior to the payment.
galling and arbitrary but a rich source of discontent with government. There should be Kennedy further said that ‘both on principle and authority the rule is . . . that the right to
some kind of swift and effective recourse against unfeeling and uncaring acts of middle or enter on and use the property is complete, as soon as the property is actually appropriated
lower level bureaucrats." under the authority of law for a public use, but that the title does not pass from the owner
without his consent, until just compensation has been made to him."
We feel the same way in the instant case.
Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes, that:
More than anything else, however, it is the obstinacy of the Republic that prompted us to dismiss its
petition outright. As early as May 19, 1966, in Valdehueza, this Court mandated the Republic to pay ‘If the laws which we have exhibited or cited in the preceding discussion are attentively
respondent’s predecessors-in-interest the sum of ₱16,248.40 as "reasonable market value of the two examined it will be apparent that the method of expropriation adopted in this jurisdiction is
lots in question." Unfortunately, it did not comply and allowed several decades to pass without such as to afford absolute reassurance that no piece of land can be finally and irrevocably
obeying this Court’s mandate. Such prolonged obstinacy bespeaks of lack of respect to private rights taken from an unwilling owner until compensation is paid...’"(Emphasis supplied.)
and to the rule of law, which we cannot countenance. It is tantamount to confiscation of private
property. While it is true that all private properties are subject to the need of government, and the
Clearly, without full payment of just compensation, there can be no transfer of title from the
government may take them whenever the necessity or the exigency of the occasion demands,
landowner to the expropriator. Otherwise stated, the Republic’s acquisition of ownership is
however, the Constitution guarantees that when this governmental right of expropriation is exercised,
conditioned upon the full payment of just compensation within a reasonable time.14
it shall be attended by compensation. 10 From the taking of private property by the government under
the power of eminent domain, there arises an implied promise to compensate the owner for his loss.11
Significantly, in Municipality of Biñan v. Garcia 15 this Court ruled that the expropriation of lands
consists of two stages, to wit:
Significantly, the above-mentioned provision of Section 9, Article III of the Constitution is not a grant
but a limitationof power. This limiting function is in keeping with the philosophy of the Bill of Rights
against the arbitrary exercise of governmental powers to the detriment of the individual’s rights. "x x x The first is concerned with the determination of the authority of the plaintiff to exercise the
Given this function, the provision should therefore be strictly interpreted against the expropriator, power of eminent domain and the propriety of its exercise in the context of the facts involved in the
the government, and liberally in favor of the property owner.12 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
Ironically, in opposing respondent’s claim, the Republic is invoking this Court’s Decision
the filing of the complaint" x x x.
in Valdehueza, a Decision it utterly defied. How could the Republic acquire ownership over Lot 932
when it has not paid its owner the just compensation, required by law, for more than 50 years?  The
recognized rule is that title to the property expropriated shall pass from the owner to the expropriator The second phase of the eminent domain action is concerned with the determination by the court of
only upon full payment of the just compensation. Jurisprudence on this settled principle is "the just compensation for the property sought to be taken." This is done by the court with the
consistent both here and in other democratic jurisdictions. In Association of Small Landowners in the assistance of not more than three (3) commissioners. x x x.
Philippines, Inc. et al., vs. Secretary of Agrarian Reform, 13 thus:
It is only upon the completion of these two stages that expropriation is said to have been completed.
"Title to property which is the subject of condemnation proceedings does not vest the In Republic v. Salem Investment Corporation,16 we ruled that, "the process is not completed until
condemnor until the judgment fixing just compensation is entered and paid,  but the payment of just compensation." Thus, here, the failure of the Republic to pay respondent and his
condemnor’s title relates back to the date on which the petition under the Eminent Domain Act, or the predecessors-in-interest for a period of 57 years rendered the expropriation process incomplete.
commissioner’s report under the Local Improvement Act, is filed.
The Republic now argues that under Valdehueza, respondent is not entitled to recover possession of
x x x Although the right to appropriate and use land taken for a canal is complete at the Lot 932 but only to demand payment of its fair market value. Of course, we are aware of the doctrine
time of entry, title to the property taken remains in the owner until payment is actually that "non-payment of just compensation (in an expropriation proceedings) does not entitle the private
made. (Emphasis supplied.) landowners to recover possession of the expropriated lots." This is our ruling in the recent cases
of Republic of the Philippines vs. Court of Appeals, et al.,17and Reyes vs. National Housing
Authority.18 However, the facts of the present case do not justify its application. It bears stressing
In Kennedy v. Indianapolis, the US Supreme Court cited several cases holding that title to property
that the Republic was ordered to pay just compensation twice, the first was in the expropriation
does not pass to the condemnor until just compensation had actually been made. In fact, the
proceedings and the second, in Valdehueza. Fifty-seven (57) years have passed since then. We
decisions appear to be uniform to this effect. As early as 1838, in Rubottom v. McLure, it was held
cannot but construe the Republic’s failure to pay just compensation as a deliberate refusal
149
on its part. Under such circumstance, recovery of possession is in order. In several jurisdictions, Lot 932 is "subject to the priority of the National Airports Corporation [to acquire said
the courts held that recovery of possession may be had when property has been wrongfully taken or parcels of land] x x x upon previous payment of a reasonable market value."
is wrongfully retained by one claiming to act under the power of eminent domain 19 or where a
rightful entry is made and the party condemning refuses to pay the compensation which
The issue of whether or not respondent acted in bad faith is immaterial considering that the Republic
has been assessed or agreed upon; 20 or fails or refuses to have the compensation assessed and
did not complete the expropriation process. In short, it failed to perfect its title over Lot 932 by its
paid.21
failure to pay just compensation. The issue of bad faith would have assumed relevance if the Republic
actually acquired title over Lot 932. In such a case, even if respondent’s title was registered first, it
The Republic also contends that where there have been constructions being used by the military, as in would be the Republic’s title or right of ownership that shall be upheld. But now, assuming that
this case, public interest demands that the present suit should not be sustained. respondent was in bad faith, can such fact vest upon the Republic a better title over Lot
932? We believe not. This is because in the first place, the Republic has no title to speak of.
It must be emphasized that an individual cannot be deprived of his property for the public
convenience.22 In Association of Small Landowners in the Philippines, Inc. vs. Secretary of Agrarian At any rate, assuming that respondent had indeed knowledge of the annotation, still nothing would
Reform,23 we ruled: have prevented him from entering into a mortgage contract involving Lot 932 while the expropriation
proceeding was pending. Any person who deals with a property subject of an expropriation does so
at his own risk, taking into account the ultimate possibility of losing the property in favor of the
"One of the basic principles of the democratic system is that where the rights of the individual are
government. Here, the annotation merely served as a caveatthat the Republic had
concerned, the end does not justify the means. It is not enough that there be a valid objective; it is
a preferential right to acquire Lot 932 upon its payment of a "reasonable market value." It did
also necessary that the means employed to pursue it be in keeping with the Constitution. Mere
not proscribe Valdehueza and Panerio from exercising their rights of ownership including their right to
expediency will not excuse constitutional shortcuts. There is no question that not even the
mortgage or even to dispose of their property. In Republic vs. Salem Investment Corporation,24 we
strongest moral conviction or the most urgent public need, subject only to a few notable
recognized the owner’s absolute right over his property pending completion of the expropriation
exceptions, will excuse the bypassing of an individual's rights. It is no exaggeration to say
proceeding, thus:
that a person invoking a right guaranteed under Article III of the Constitution is a majority
of one even as against the rest of the nation who would deny him that right.
"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
The right covers the person’s life, his liberty and his property under Section 1 of Article III
government. Therefore, until the action for expropriation has been completed and terminated,
of the Constitution. With regard to his property, the owner enjoys the added protection of
ownership over the property being expropriated remains with the registered owner. Consequently,
Section 9, which reaffirms the familiar rule that private property shall not be taken for
the latter can exercise all rights pertaining to an owner, including the right to dispose of his
public use without just compensation."
property subject to the power of the State ultimately to acquire it through expropriation.

The Republic’s assertion that the defense of the State will be in grave danger if we shall order the
It bears emphasis that when Valdehueza and Panerio mortgaged Lot 932 to respondent in 1964, they
reversion of Lot 932 to respondent is an overstatement. First, Lot 932 had ceased to operate as an
were still the owners thereof and their title had not yet passed to the petitioner Republic. In fact, it
airport. What remains in the site is just the National Historical Institute’s marking stating that Lot 932
never did. Such title or ownership was rendered conclusive when we categorically ruled
is the "former location of Lahug Airport." And second, there are only thirteen (13) structures located
in Valdehueza that: "It is true that plaintiffs are still the registered owners of the land, there
on Lot 932, eight (8) of which are residence apartments  of military personnel. Only two (2)
not having been a transfer of said lots in favor of the Government."
buildings are actually used as training centers. Thus, practically speaking, the reversion of Lot 932 to
respondent will only affect a handful of military personnel. It will not result to "irreparable damage" or
"damage beyond pecuniary estimation," as what the Republic vehemently claims. For respondent’s part, it is reasonable to conclude that he entered into the contract of mortgage with
Valdehueza and Panerio fully aware of the extent of his right as a mortgagee. A mortgage is merely
an accessory contract intended to secure the performance of the principal obligation. One of its
We thus rule that the special circumstances prevailing in this case entitle respondent to recover
characteristics is that it is inseparablefrom the property. It adheres to the property regardless of
possession of the expropriated lot from the Republic. Unless this form of swift and effective relief is
who its owner may subsequently be.25 Respondent must have known that even if Lot 932 is ultimately
granted to him, the grave injustice committed against his predecessors-in-interest, though no fault or
expropriated by the Republic, still, his right as a mortgagee is protected. In this regard, Article 2127
negligence on their part, will be perpetuated. Let this case, therefore, serve as a wake-up call to the
of the Civil Code provides:
Republic that in the exercise of its power of eminent domain, necessarily in derogation of private
rights, it must comply with the Constitutional limitations. This Court, as the guardian of the people’s
right, will not stand still in the face of the Republic’s oppressive and confiscatory taking of private "Art. 2127. The mortgage extends to the natural accessions, to the improvements, growing fruits,
property, as in this case. and the rents or income not yet received when the obligation becomes due, and to the amount of
the indemnity granted or owing to the proprietor from the insurers of the property mortgaged,
or in virtue of expropriation for public use, with the declarations, amplifications, and limitations
At this point, it may be argued that respondent Vicente Lim acted in bad faith in entering into a
established by law, whether the estate remains in the possession of the mortgagor or it
contract of mortgage with Valdehueza and Panerio despite the clear annotation in TCT No. 23934 that
passes in the hands of a third person.

150
In summation, while the prevailing doctrine is that "the non-payment of just compensation does not
entitle the private landowner to recover possession of the expropriated lots, 26 however, in cases
where the government failed to pay just compensation within five (5)27 years from the finality of
the judgment in the expropriation proceedings, the owners concerned shall have the right to
recover possession of their property. This is in consonance with the principle that "the government
cannot keep the property and dishonor the judgment."28 To be sure, the five-year period limitation will
encourage the government to pay just compensation punctually. This is in keeping with justice and
equity. After all, it is the duty of the government, whenever it takes property from private persons
against their will, to facilitate the payment of just compensation. In Cosculluela v. Court of
Appeals,29 we defined just compensation as not only the correct determination of the amount to be
paid to the property owner but also the payment of the property within a reasonable time. Without
prompt payment, compensation cannot be considered "just."

WHEREFORE, the assailed Decision of the Court of Appeals in CA-G.R. CV No. 72915 is AFFIRMED in
toto.

The Republic’s motion for reconsideration of our Resolution dated March 1, 2004 is DENIED with
FINALITY. No further pleadings will be allowed.

Let an entry of judgment be made in this case.

SO ORDERED.

Randolf David vs President Gloria Macapagal-Arroyo

489 SCRA 160 – Political Law – The Executive Branch – Presidential Proclamation 1017 – Take Care
Clause – Take Over Power – Calling Out Power
Bill of Rights – Freedom of Speech – Overbreadth
In February 2006, due to the escape of some Magdalo members and the discovery of a plan (Oplan
Hackle I) to assassinate the president, then president Gloria Macapagal-Arroyo (GMA)
issued Presidential Proclamation 1017 (PP1017) and is to be implemented by General Order No. 5 (GO
5). The said law was aimed to suppress lawlessness and the connivance of extremists to bring down
the government.
Pursuant to such PP, GMA cancelled all plans to celebrate EDSA I and at the same time revoked all
permits issued for rallies and other public organization/meeting. Notwithstanding the cancellation of
their rally permit, Kilusang Mayo Uno (KMU) head Randolf David proceeded to rally which led to his
arrest.

151
Later that day, the Daily Tribune, which Cacho-Olivares is the editor, was raided by the CIDG and PP 1017 pertains to a spectrum of conduct, not free speech, which is manifestly subject to state
they seized and confiscated anti-GMA articles and write ups. Later still, another known anti-GMA news regulation.
agency (Malaya) was raided and seized. On the same day, Beltran of Anakpawis, was also arrested.
His arrest was however grounded on a warrant of arrest issued way back in 1985 for his actions Resolution by the SC on the Calling Out Power Doctrine
against Marcos. His supporters cannot visit him in jail because of the current imposition of PP 1017 On the basis of Sec 17, Art 7 of the Constitution, GMA declared PP 1017.  The SC considered the
and GO 5. President’s ‘calling-out’ power as a discretionary power solely vested in his wisdom, it stressed that
In March, GMA issued PP 1021 which declared that the state of national emergency ceased to exist. ‘this does not prevent an examination of whether such power was exercised within permissible
David and some opposition Congressmen averred that PP1017 is unconstitutional for it has no factual constitutional limits or whether it was exercised in a manner constituting grave abuse of discretion.
basis and it cannot be validly declared by the president for such power is reposed in Congress.  Also The SC ruled that GMA has validly declared PP 1017 for the Constitution grants the President, as
such declaration is actually a declaration of martial law. Olivares-Cacho also averred that the Commander-in-Chief, a ‘sequence’ of graduated powers.  From the most to the least benign, these
emergency contemplated in the Constitution are those of natural calamities and that such is an are: the calling-out power, the power to suspend the privilege of the writ of habeas corpus, and the
overbreadth. Petitioners claim that PP 1017 is an overbreadth because it encroaches upon protected power to declare Martial Law. The only criterion for the exercise of the calling-out power is that
and unprotected rights. The Sol-Gen argued that the issue has become moot and academic by reason ‘whenever it becomes necessary,’ the President may call the armed forces ‘to prevent or suppress
of the lifting of PP 1017 by virtue of the declaration of PP 1021. The Sol-Gen averred that PP 1017 is lawless violence, invasion or rebellion.’ And such criterion has been met.
within the president’s calling out power, take care power and take over power. Resolution by the SC on the Take Care Doctrine
ISSUE: Whether or not PP 1017 and GO 5 is constitutional. Pursuant to the 2nd sentence of Sec 17, Art 7 of the Constitution (He shall ensure that the laws be
HELD: PP 1017 and its implementing GO are partly constitutional and partly unconstitutional. faithfully executed.) the president declared PP 1017. David et al averred that PP 1017 however
violated Sec 1, Art 6 of the Constitution for it arrogated legislative power to the President. Such power
The issue cannot be considered as moot and academic by reason of the lifting of the questioned PP. It is vested in Congress. They assail the clause ‘to enforce obedience to all the laws and to all decrees,
is still in fact operative because there are parties still affected due to the alleged violation of the said orders and regulations promulgated by me personally or upon my direction.’ The SC noted that such
PP. Hence, the SC can take cognition of the case at bar. The SC ruled that PP 1017 is constitutional in provision is similar to the power that granted former President Marcos legislative powers (as provided
part and at the same time some provisions of which are unconstitutional. The SC ruled in the in PP 1081).  The SC ruled that the assailed PP 1017 is unconstitutional insofar as it grants GMA the
following way; authority to promulgate ‘decrees.’  Legislative power is peculiarly within the province of the
Legislature.  Sec 1, Article 6 categorically states that ‘[t]he legislative power shall be vested in the
Resolution by the SC  on the Factual Basis of its declaration Congress of the Philippines which shall consist of a Senate and a House of Representatives.’  To be
The petitioners were not able to prove that GMA has no factual basis in issuing PP 1017 and GO 5. A sure, neither Martial Law nor a state of rebellion nor a state of emergency can justify GMA’[s exercise
reading of the Solicitor General’s Consolidated Comment and Memorandum shows a detailed narration of legislative power by issuing decrees. The president can only “take care” of the carrying out of laws
of the events leading to the issuance of PP 1017, with supporting reports forming part of the records.  but cannot create or enact laws.
Mentioned are the escape of the Magdalo Group, their audacious threat of the Magdalo D-Day, the Resolution by the SC on the Take Over Power Doctrine
defections in the military, particularly in the Philippine Marines, and the reproving statements from
the communist leaders. There was also the Minutes of the Intelligence Report and Security Group of The president cannot validly order the taking over of private corporations or institutions such as the
the Philippine Army showing the growing alliance between the NPA and the military.   Petitioners Daily Tribune without any authority from Congress. On the other hand, the word emergency
presented nothing to refute such events.  Thus, absent any contrary allegations, the Court is contemplated in the constitution is not limited to natural calamities but rather it also includes
convinced that the President was justified in issuing PP 1017 calling for military aid. Indeed, judging rebellion. The SC made a distinction; the president can declare the state of national emergency but
the seriousness of the incidents, GMA was not expected to simply fold her arms and do nothing to her exercise of emergency powers does not come automatically after it for such exercise needs
prevent or suppress what she believed was lawless violence, invasion or rebellion.   However, the authority from Congress. The authority from Congress must be based on the following:
exercise of such power or duty must not stifle liberty.
(1) There must be a war or other emergency.
Resolution by the SC on the Overbreadth Theory
(2)   The delegation must be for a limited period only.
First and foremost, the overbreadth doctrine is an analytical tool developed for testing ‘on their faces’
statutes in free speech cases. The 7 consolidated cases at bar are not primarily ‘freedom of speech’ (3)  The delegation must be subject to such restrictions as the Congress may prescribe.
cases. Also, a plain reading of PP 1017 shows that it is not primarily directed to speech or even (4)  The emergency powers must be exercised to carry out a national policy declared by Congress.
speech-related conduct.  It is actually a call upon the AFP to prevent or suppress all forms of lawless
violence. Moreover, the overbreadth doctrine is not intended for testing the validity of a law that Resolution by the SC on the Issue that PP 1017 is a Martial Law Declaration
‘reflects legitimate state interest in maintaining comprehensive control over harmful, constitutionally
The SC ruled that PP 1017 is not a Martial Law declaration and is not tantamount to it. It is a valid
unprotected conduct.’ Undoubtedly, lawless violence, insurrection and rebellion are considered
exercise of the calling out power of the president by the president.
‘harmful’ and ‘constitutionally unprotected conduct.’ Thus, claims of facial overbreadth are entertained
in cases involving statutes which, by their terms, seek to regulate only ‘spoken words’ and again, that
‘overbreadth claims, if entertained at all, have been curtailed when invoked against ordinary criminal
laws that are sought to be applied to protected conduct.’ Here, the incontrovertible fact remains that

152
G.R. No. 159796 July 17, 2007
ROMEO P. GEROCHI, KATULONG NG BAYAN (KB) and ENVIRONMENTALIST CONSUMERS
NETWORK, INC. (ECN), petitioners
vs
DEPARTMENT OF ENERGY (DOE), ENERGY REGULATORY COMMISSION (ERC), NATIONAL
POWER CORPORATION (NPC), POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT
GROUP (PSALM Corp.), STRATEGIC POWER UTILITIES GROUP (SPUG), and PANAY
ELECTRIC COMPANY INC. (PECO),respondents.
153
FACTS:
On June 8, 2001 Congress enacted RA 9136 or the Electric Power Industry Act of 2001. Petitioners
Romeo P. Gerochi and company assail the validity of Section 34 of the EPIRA Law for being an undue
delegation of the power of taxation. Section 34 provides for the imposition of a “Universal Charge” to
all electricity end users after a period of (1) one year after the effectively of the EPIRA Law. The
universal charge to be collected would serve as payment for government debts, missionary
electrification, equalization of taxes and royalties applied to renewable energy and imported energy,
environmental charge and for a charge to account for all forms of cross subsidies for a period not
exceeding three years. The universal charge shall be collected by the ERC on a monthly basis from all
end users and will then be managed by the PSALM Corp. through the creation of a special trust fund.

ISSUE:
Whether or not there is an undue delegation of the power to tax on the part of the ERC

HELD:
No, the universal charge as provided for in section 34 is not a tax but an exaction of the regulatory
power (police power) of the state. The universal charge under section 34 is incidental to the
regulatory duties of the ERC, hence the provision assailed is not for generation of revenue and
therefore it cannot be considered as tax, but an execution of the states police power thru regulation.

Moreover, the amount collected is not made certain by the ERC, but by the legislative parameters
provided for in the law (RA 9136) itself, it therefore cannot be understood as a rule solely coming
from the ERC. The ERC in this case is only a specialized administrative agency which is tasked of
executing a subordinate legislation issued by congress; which before execution must pass both the
completeness test and the sufficiency of standard test. The court in appreciating Section 34 of RA
9136 in its entirety finds the said law and the assailed portions free from any constitutional defect and
thus deemed complete and sufficient in form.

G.R. No. 159796               July 17, 2007

ROMEO P. GEROCHI, KATULONG NG BAYAN (KB) and ENVIRONMENTALIST CONSUMERS


NETWORK, INC. (ECN), Petitioners, 
vs.
DEPARTMENT OF ENERGY (DOE), ENERGY REGULATORY COMMISSION (ERC), NATIONAL
POWER CORPORATION (NPC), POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT

154
GROUP (PSALM Corp.), STRATEGIC POWER UTILITIES GROUP (SPUG), and PANAY The Facts
ELECTRIC COMPANY INC. (PECO),Respondents.
Congress enacted the EPIRA on June 8, 2001; on June 26, 2001, it took effect.7
DECISION
On April 5, 2002, respondent National Power Corporation-Strategic Power Utilities Group8 (NPC-SPUG)
NACHURA, J.: filed with respondent Energy Regulatory Commission (ERC) a petition for the availment from the
Universal Charge of its share for Missionary Electrification, docketed as ERC Case No. 2002-165.9
Petitioners Romeo P. Gerochi, Katulong Ng Bayan (KB), and Environmentalist Consumers Network,
Inc. (ECN) (petitioners), come before this Court in this original action praying that Section 34 of On May 7, 2002, NPC filed another petition with ERC, docketed as ERC Case No. 2002-194, praying
Republic Act (RA) 9136, otherwise known as the "Electric Power Industry Reform Act of 2001" that the proposed share from the Universal Charge for the Environmental charge of ₱0.0025 per
(EPIRA), imposing the Universal Charge,1and Rule 18 of the Rules and Regulations (IRR) 2 which seeks kilowatt-hour (/kWh), or a total of ₱119,488,847.59, be approved for withdrawal from the Special
to implement the said imposition, be declared unconstitutional. Petitioners also pray that the Trust Fund (STF) managed by respondent Power Sector Assets and
Universal Charge imposed upon the consumers be refunded and that a preliminary injunction and/or
temporary restraining order (TRO) be issued directing the respondents to refrain from implementing,
Liabilities Management Group (PSALM)10 for the rehabilitation and management of watershed areas.11
charging, and collecting the said charge.3 The assailed provision of law reads:

On December 20, 2002, the ERC issued an Order12 in ERC Case No. 2002-165 provisionally approving
SECTION 34. Universal Charge. — Within one (1) year from the effectivity of this Act, a universal
the computed amount of ₱0.0168/kWh as the share of the NPC-SPUG from the Universal Charge for
charge to be determined, fixed and approved by the ERC, shall be imposed on all electricity end-users
Missionary Electrification and authorizing the National Transmission Corporation (TRANSCO) and
for the following purposes:
Distribution Utilities to collect the same from its end-users on a monthly basis.

(a) Payment for the stranded debts4 in excess of the amount assumed by the National
On June 26, 2003, the ERC rendered its Decision13 (for ERC Case No. 2002-165) modifying its Order
Government and stranded contract costs of NPC5 and as well as qualified stranded contract
of December 20, 2002, thus:
costs of distribution utilities resulting from the restructuring of the industry;

WHEREFORE, the foregoing premises considered, the provisional authority granted to petitioner
(b) Missionary electrification;6
National Power Corporation-Strategic Power Utilities Group (NPC-SPUG) in the Order dated December
20, 2002 is hereby modified to the effect that an additional amount of ₱0.0205 per kilowatt-hour
(c) The equalization of the taxes and royalties applied to indigenous or renewable sources of should be added to the ₱0.0168 per kilowatt-hour provisionally authorized by the Commission in the
energy vis-à-vis imported energy fuels; said Order. Accordingly, a total amount of ₱0.0373 per kilowatt-hour is hereby APPROVED for
withdrawal from the Special Trust Fund managed by PSALM as its share from the Universal Charge for
Missionary Electrification (UC-ME) effective on the following billing cycles:
(d) An environmental charge equivalent to one-fourth of one centavo per kilowatt-hour
(₱0.0025/kWh), which shall accrue to an environmental fund to be used solely for watershed
rehabilitation and management. Said fund shall be managed by NPC under existing (a) June 26-July 25, 2003 for National Transmission Corporation (TRANSCO); and
arrangements; and
(b) July 2003 for Distribution Utilities (Dus).
(e) A charge to account for all forms of cross-subsidies for a period not exceeding three (3)
years.
Relative thereto, TRANSCO and Dus are directed to collect the UC-ME in the amount of ₱0.0373 per
kilowatt-hour and remit the same to PSALM on or before the 15th day of the succeeding month.
The universal charge shall be a non-bypassable charge which shall be passed on and collected from all
end-users on a monthly basis by the distribution utilities. Collections by the distribution utilities and
In the meantime, NPC-SPUG is directed to submit, not later than April 30, 2004, a detailed report to
the TRANSCO in any given month shall be remitted to the PSALM Corp. on or before the fifteenth
include Audited Financial Statements and physical status (percentage of completion) of the projects
(15th) of the succeeding month, net of any amount due to the distribution utility. Any end-user or
using the prescribed format.1avvphi1
self-generating entity not connected to a distribution utility shall remit its corresponding universal
charge directly to the TRANSCO. The PSALM Corp., as administrator of the fund, shall create a Special
Trust Fund which shall be disbursed only for the purposes specified herein in an open and transparent Let copies of this Order be furnished petitioner NPC-SPUG and all distribution utilities (Dus).
manner. All amount collected for the universal charge shall be distributed to the respective
beneficiaries within a reasonable period to be provided by the ERC. SO ORDERED.

155
On August 13, 2003, NPC-SPUG filed a Motion for Reconsideration asking the ERC, among others, 14 to 2) The ERC is also empowered to approve and determine where the funds collected should
set aside the above-mentioned Decision, which the ERC granted in its Order dated October 7, 2003, be used.
disposing:
3) The imposition of the Universal Charge on all end-users is oppressive and confiscatory and
WHEREFORE, the foregoing premises considered, the "Motion for Reconsideration" filed by petitioner amounts to taxation without representation as the consumers were not given a chance to be
National Power Corporation-Small Power Utilities Group (NPC-SPUG) is hereby GRANTED. Accordingly, heard and represented.18
the Decision dated June 26, 2003 is hereby modified accordingly.
Petitioners contend that the Universal Charge has the characteristics of a tax and is collected to fund
Relative thereto, NPC-SPUG is directed to submit a quarterly report on the following: the operations of the NPC. They argue that the cases 19 invoked by the respondents clearly show the
regulatory purpose of the charges imposed therein, which is not so in the case at bench. In said
cases, the respective funds20 were created in order to balance and stabilize the prices of oil and sugar,
1. Projects for CY 2002 undertaken;
and to act as buffer to counteract the changes and adjustments in prices, peso devaluation, and other
variables which cannot be adequately and timely monitored by the legislature. Thus, there was a need
2. Location to delegate powers to administrative bodies.21 Petitioners posit that the Universal Charge is imposed
not for a similar purpose.
3. Actual amount utilized to complete the project;
On the other hand, respondent PSALM through the Office of the Government Corporate Counsel
4. Period of completion; (OGCC) contends that unlike a tax which is imposed to provide income for public purposes, such as
support of the government, administration of the law, or payment of public expenses, the assailed
Universal Charge is levied for a specific regulatory purpose, which is to ensure the viability of the
5. Start of Operation; and country's electric power industry. Thus, it is exacted by the State in the exercise of its inherent police
power. On this premise, PSALM submits that there is no undue delegation of legislative power to the
6. Explanation of the reallocation of UC-ME funds, if any. ERC since the latter merely exercises a limited authority or discretion as to the execution and
implementation of the provisions of the EPIRA.22
SO ORDERED.15
Respondents Department of Energy (DOE), ERC, and NPC, through the Office of the Solicitor General
(OSG), share the same view that the Universal Charge is not a tax because it is levied for a specific
Meanwhile, on April 2, 2003, ERC decided ERC Case No. 2002-194, authorizing the NPC to draw up to regulatory purpose, which is to ensure the viability of the country's electric power industry, and is,
₱70,000,000.00 from PSALM for its 2003 Watershed Rehabilitation Budget subject to the availability therefore, an exaction in the exercise of the State's police power. Respondents further contend that
of funds for the Environmental Fund component of the Universal Charge.16 said Universal Charge does not possess the essential characteristics of a tax, that its imposition would
redound to the benefit of the electric power industry and not to the public, and that its rate is
On the basis of the said ERC decisions, respondent Panay Electric Company, Inc. (PECO) charged uniformly levied on electricity end-users, unlike a tax which is imposed based on the individual
petitioner Romeo P. Gerochi and all other end-users with the Universal Charge as reflected in their taxpayer's ability to pay. Moreover, respondents deny that there is undue delegation of legislative
respective electric bills starting from the month of July 2003.17 power to the ERC since the EPIRA sets forth sufficient determinable standards which would guide the
ERC in the exercise of the powers granted to it. Lastly, respondents argue that the imposition of the
Universal Charge is not oppressive and confiscatory since it is an exercise of the police power of the
Hence, this original action.
State and it complies with the requirements of due process.23

Petitioners submit that the assailed provision of law and its IRR which sought to implement the same
On its part, respondent PECO argues that it is duty-bound to collect and remit the amount pertaining
are unconstitutional on the following grounds:
to the Missionary Electrification and Environmental Fund components of the Universal Charge,
pursuant to Sec. 34 of the EPIRA and the Decisions in ERC Case Nos. 2002-194 and 2002-165.
1) The universal charge provided for under Sec. 34 of the EPIRA and sought to be Otherwise, PECO could be held liable under Sec. 4624 of the EPIRA, which imposes fines and penalties
implemented under Sec. 2, Rule 18 of the IRR of the said law is a tax which is to be collected for any violation of its provisions or its IRR.25
from all electric end-users and self-generating entities. The power to tax is strictly a
legislative function and as such, the delegation of said power to any executive or
The Issues
administrative agency like the ERC is unconstitutional, giving the same unlimited authority.
The assailed provision clearly provides that the Universal Charge is to be determined, fixed
and approved by the ERC, hence leaving to the latter complete discretionary legislative The ultimate issues in the case at bar are:
authority.
1) Whether or not, the Universal Charge imposed under Sec. 34 of the EPIRA is a tax; and
156
2) Whether or not there is undue delegation of legislative power to tax on the part of the To resolve the first issue, it is necessary to distinguish the State’s power of taxation from the police
ERC.26 power.

Before we discuss the issues, the Court shall first deal with an obvious procedural lapse. The power to tax is an incident of sovereignty and is unlimited in its range, acknowledging in its very
nature no limits, so that security against its abuse is to be found only in the responsibility of the
legislature which imposes the tax on the constituency that is to pay it. 30 It is based on the principle
Petitioners filed before us an original action particularly denominated as a Complaint assailing the
that taxes are the lifeblood of the government, and their prompt and certain availability is an
constitutionality of Sec. 34 of the EPIRA imposing the Universal Charge and Rule 18 of the EPIRA's
imperious need.31 Thus, the theory behind the exercise of the power to tax emanates from necessity;
IRR. No doubt, petitioners havelocus standi. They impugn the constitutionality of Sec. 34 of the EPIRA
without taxes, government cannot fulfill its mandate of promoting the general welfare and well-being
because they sustained a direct injury as a result of the imposition of the Universal Charge as
of the people.32
reflected in their electric bills.

On the other hand, police power is the power of the state to promote public welfare by restraining and
However, petitioners violated the doctrine of hierarchy of courts when they filed this "Complaint"
regulating the use of liberty and property.33 It is the most pervasive, the least limitable, and the most
directly with us. Furthermore, the Complaint is bereft of any allegation of grave abuse of discretion on
demanding of the three fundamental powers of the State. The justification is found in the Latin
the part of the ERC or any of the public respondents, in order for the Court to consider it as a petition
maxims salus populi est suprema lex (the welfare of the people is the supreme law) and sic utere tuo
for certiorari or prohibition.
ut alienum non laedas (so use your property as not to injure the property of others). As an inherent
attribute of sovereignty which virtually extends to all public needs, police power grants a wide panoply
Article VIII, Section 5(1) and (2) of the 1987 Constitution27 categorically provides that: of instruments through which the State, as parens patriae, gives effect to a host of its regulatory
powers.34 We have held that the power to "regulate" means the power to protect, foster, promote,
SECTION 5. The Supreme Court shall have the following powers: preserve, and control, with due regard for the interests, first and foremost, of the public, then of the
utility and of its patrons.35

1. Exercise original jurisdiction over cases affecting ambassadors, other public ministers and


consuls, and over petitions for certiorari, prohibition, mandamus, quo warranto, and habeas The conservative and pivotal distinction between these two powers rests in the purpose for which the
corpus. charge is made. If generation of revenue is the primary purpose and regulation is merely incidental,
the imposition is a tax; but if regulation is the primary purpose, the fact that revenue is incidentally
raised does not make the imposition a tax.36
2. Review, revise, reverse, modify, or affirm on appeal or certiorari, as the law or the rules of
court may provide, final judgments and orders of lower courts in:
In exacting the assailed Universal Charge through Sec. 34 of the EPIRA, the State's police power,
particularly its regulatory dimension, is invoked. Such can be deduced from Sec. 34 which
(a) All cases in which the constitutionality or validity of any treaty, international or executive enumerates the purposes for which the Universal Charge is imposed37 and which can be amply
agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in discerned as regulatory in character. The EPIRA resonates such regulatory purposes, thus:
question.

SECTION 2. Declaration of Policy. — It is hereby declared the policy of the State:


But this Court's jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto,
and habeas corpus, while concurrent with that of the regional trial courts and the Court of Appeals,
does not give litigants unrestrained freedom of choice of forum from which to seek such relief.28 It has (a) To ensure and accelerate the total electrification of the country;
long been established that this Court will not entertain direct resort to it unless the redress desired
cannot be obtained in the appropriate courts, or where exceptional and compelling circumstances (b) To ensure the quality, reliability, security and affordability of the supply of electric power;
justify availment of a remedy within and call for the exercise of our primary jurisdiction.29 This
circumstance alone warrants the outright dismissal of the present action.
(c) To ensure transparent and reasonable prices of electricity in a regime of free and fair
competition and full public accountability to achieve greater operational and economic
This procedural infirmity notwithstanding, we opt to resolve the constitutional issue raised herein. We efficiency and enhance the competitiveness of Philippine products in the global market;
are aware that if the constitutionality of Sec. 34 of the EPIRA is not resolved now, the issue will
certainly resurface in the near future, resulting in a repeat of this litigation, and probably involving the
(d) To enhance the inflow of private capital and broaden the ownership base of the power
same parties. In the public interest and to avoid unnecessary delay, this Court renders its ruling now.
generation, transmission and distribution sectors;

The instant complaint is bereft of merit.


(e) To ensure fair and non-discriminatory treatment of public and private sector entities in
the process of restructuring the electric power industry;
The First Issue

157
(f) To protect the public interest as it is affected by the rates and services of electric utilities Evidently, the establishment and maintenance of the Special Trust Fund, under the last paragraph of
and other providers of electric power; Section 34, R.A. No. 9136, is well within the pervasive and non-waivable power and responsibility of
the government to secure the physical and economic survival and well-being of the community, that
comprehensive sovereign authority we designate as the police power of the State.46
(g) To assure socially and environmentally compatible energy sources and infrastructure;

This feature of the Universal Charge further boosts the position that the same is an exaction imposed
(h) To promote the utilization of indigenous and new and renewable energy resources in
primarily in pursuit of the State's police objectives. The STF reasonably serves and assures the
power generation in order to reduce dependence on imported energy;
attainment and perpetuity of the purposes for which the Universal Charge is imposed, i.e., to ensure
the viability of the country's electric power industry.
(i) To provide for an orderly and transparent privatization of the assets and liabilities of the
National Power Corporation (NPC);
The Second Issue

(j) To establish a strong and purely independent regulatory body and system to ensure
The principle of separation of powers ordains that each of the three branches of government has
consumer protection and enhance the competitive operation of the electricity market; and
exclusive cognizance of and is supreme in matters falling within its own constitutionally allocated
sphere. A logical corollary to the doctrine of separation of powers is the principle of non-delegation of
(k) To encourage the efficient use of energy and other modalities of demand side powers, as expressed in the Latin maxim potestas delegata non delegari potest (what has been
management. delegated cannot be delegated). This is based on the ethical principle that such delegated power
constitutes not only a right but a duty to be performed by the delegate through the instrumentality of
From the aforementioned purposes, it can be gleaned that the assailed Universal Charge is not a tax, his own judgment and not through the intervening mind of another. 47
but an exaction in the exercise of the State's police power. Public welfare is surely promoted.
In the face of the increasing complexity of modern life, delegation of legislative power to various
Moreover, it is a well-established doctrine that the taxing power may be used as an implement of specialized administrative agencies is allowed as an exception to this principle. 48 Given the volume
police power.38 In Valmonte v. Energy Regulatory Board, et al. 39 and in Gaston v. Republic Planters and variety of interactions in today's society, it is doubtful if the legislature can promulgate laws that
Bank,40 this Court held that the Oil Price Stabilization Fund (OPSF) and the Sugar Stabilization Fund will deal adequately with and respond promptly to the minutiae of everyday life. Hence, the need to
(SSF) were exactions made in the exercise of the police power. The doctrine was reiterated delegate to administrative bodies - the principal agencies tasked to execute laws in their specialized
in Osmeña v. Orbos41 with respect to the OPSF. Thus, we disagree with petitioners that the instant fields - the authority to promulgate rules and regulations to implement a given statute and effectuate
case is different from the aforementioned cases. With the Universal Charge, a Special Trust Fund its policies. All that is required for the valid exercise of this power of subordinate legislation is that the
(STF) is also created under the administration of PSALM. 42 The STF has some notable characteristics regulation be germane to the objects and purposes of the law and that the regulation be not in
similar to the OPSF and the SSF, viz.: contradiction to, but in conformity with, the standards prescribed by the law. These requirements are
denominated as the completeness test and the sufficient standard test.

1) In the implementation of stranded cost recovery, the ERC shall conduct a review to
determine whether there is under-recovery or over recovery and adjust (true-up) the level of Under the first test, the law must be complete in all its terms and conditions when it leaves the
the stranded cost recovery charge. In case of an over-recovery, the ERC shall ensure that legislature such that when it reaches the delegate, the only thing he will have to do is to enforce it.
any excess amount shall be remitted to the STF. A separate account shall be created for The second test mandates adequate guidelines or limitations in the law to determine the boundaries
these amounts which shall be held in trust for any future claims of distribution utilities for of the delegate's authority and prevent the delegation from running riot.49
stranded cost recovery. At the end of the stranded cost recovery period, any remaining
amount in this account shall be used to reduce the electricity rates to the end-users.43 The Court finds that the EPIRA, read and appreciated in its entirety, in relation to Sec. 34 thereof, is
complete in all its essential terms and conditions, and that it contains sufficient standards.
2) With respect to the assailed Universal Charge, if the total amount collected for the same is
greater than the actual availments against it, the PSALM shall retain the balance within the Although Sec. 34 of the EPIRA merely provides that "within one (1) year from the effectivity thereof,
STF to pay for periods where a shortfall occurs.44 a Universal Charge to be determined, fixed and approved by the ERC, shall be imposed on all
electricity end-users," and therefore, does not state the specific amount to be paid as Universal
3) Upon expiration of the term of PSALM, the administration of the STF shall be transferred Charge, the amount nevertheless is made certain by the legislative parameters provided in the law
to the DOF or any of the DOF attached agencies as designated by the DOF Secretary.45 itself. For one, Sec. 43(b)(ii) of the EPIRA provides:

The OSG is in point when it asseverates: SECTION 43. Functions of the ERC. — The ERC shall promote competition, encourage market
development, ensure customer choice and penalize abuse of market power in the restructured
electricity industry. In appropriate cases, the ERC is authorized to issue cease and desist order after

158
due notice and hearing. Towards this end, it shall be responsible for the following key functions in the In determining the extent of powers possessed by the ERC, the provisions of the EPIRA must not be
restructured industry: read in separate parts. Rather, the law must be read in its entirety, because a statute is passed as a
whole, and is animated by one general purpose and intent. Its meaning cannot to be extracted from
any single part thereof but from a general consideration of the statute as a whole. Considering the
xxxx
intent of Congress in enacting the EPIRA and reading the statute in its entirety, it is plain to see that
the law has expanded the jurisdiction of the regulatory body, the ERC in this case, to enable the latter
(b) Within six (6) months from the effectivity of this Act, promulgate and enforce, in accordance with to implement the reforms sought to be accomplished by the EPIRA. When the legislators decided to
law, a National Grid Code and a Distribution Code which shall include, but not limited to the following: broaden the jurisdiction of the ERC, they did not intend to abolish or reduce the powers already
conferred upon ERC's predecessors. To sustain the view that the ERC possesses only the powers and
xxxx functions listed under Section 43 of the EPIRA is to frustrate the objectives of the law.

(ii) Financial capability standards for the generating companies, the TRANSCO, distribution utilities In his Concurring and Dissenting Opinion62 in the same case, then Associate Justice, now Chief
and suppliers: Provided, That in the formulation of the financial capability standards, the nature and Justice, Reynato S. Puno described the immensity of police power in relation to the delegation of
function of the entity shall be considered: Provided, further, That such standards are set to ensure powers to the ERC and its regulatory functions over electric power as a vital public utility, to wit:
that the electric power industry participants meet the minimum financial standards to protect the
public interest. Determine, fix, and approve, after due notice and public hearings the universal Over the years, however, the range of police power was no longer limited to the preservation of public
charge, to be imposed on all electricity end-users pursuant to Section 34 hereof; health, safety and morals, which used to be the primary social interests in earlier times. Police power
now requires the State to "assume an affirmative duty to eliminate the excesses and injustices that
Moreover, contrary to the petitioners’ contention, the ERC does not enjoy a wide latitude of discretion are the concomitants of an unrestrained industrial economy." Police power is now exerted "to further
in the determination of the Universal Charge. Sec. 51(d) and (e) of the EPIRA50 clearly provides: the public welfare — a concept as vast as the good of society itself." Hence, "police power is but
another name for the governmental authority to further the welfare of society that is the basic end of
all government." When police power is delegated to administrative bodies with regulatory functions,
SECTION 51. Powers. — The PSALM Corp. shall, in the performance of its functions and for the its exercise should be given a wide latitude. Police power takes on an even broader dimension in
attainment of its objective, have the following powers: developing countries such as ours, where the State must take a more active role in balancing the
many conflicting interests in society. The Questioned Order was issued by the ERC, acting as an agent
xxxx of the State in the exercise of police power. We should have exceptionally good grounds to curtail its
exercise. This approach is more compelling in the field of rate-regulation of electric power
rates. Electric power generation and distribution is a traditional instrument of economic growth that
(d) To calculate the amount of the stranded debts and stranded contract costs of NPC affects not only a few but the entire nation. It is an important factor in encouraging investment and
which shall form the basis for ERC in the determination of the universal charge; promoting business. The engines of progress may come to a screeching halt if the delivery of electric
power is impaired. Billions of pesos would be lost as a result of power outages or unreliable electric
(e) To liquidate the NPC stranded contract costs, utilizing the proceeds from sales and other power services. The State thru the ERC should be able to exercise its police power with great
property contributed to it, including the proceeds from the universal charge. flexibility, when the need arises.

Thus, the law is complete and passes the first test for valid delegation of legislative power. This was reiterated in National Association of Electricity Consumers for Reforms v. Energy Regulatory
Commission63 where the Court held that the ERC, as regulator, should have sufficient power to
respond in real time to changes wrought by multifarious factors affecting public utilities.
As to the second test, this Court had, in the past, accepted as sufficient standards the following:
"interest of law and order;"51 "adequate and efficient instruction;"52 "public interest;"53 "justice and
equity;"54 "public convenience and welfare;"55 "simplicity, economy and efficiency;"56 "standardization From the foregoing disquisitions, we therefore hold that there is no undue delegation of legislative
and regulation of medical education;"57 and "fair and equitable employment practices." 58 Provisions of power to the ERC.
the EPIRA such as, among others, "to ensure the total electrification of the country and the quality,
reliability, security and affordability of the supply of electric power"59 and "watershed rehabilitation Petitioners failed to pursue in their Memorandum the contention in the Complaint that the imposition
and management"60 meet the requirements for valid delegation, as they provide the limitations on the of the Universal Charge on all end-users is oppressive and confiscatory, and amounts to taxation
ERC’s power to formulate the IRR. These are sufficient standards. without representation. Hence, such contention is deemed waived or abandoned per Resolution 64 of
August 3, 2004.65 Moreover, the determination of whether or not a tax is excessive, oppressive or
It may be noted that this is not the first time that the ERC's conferred powers were challenged. confiscatory is an issue which essentially involves questions of fact, and thus, this Court is precluded
In Freedom from Debt Coalition v. Energy Regulatory Commission,61 the Court had occasion to say: from reviewing the same.66

As a penultimate statement, it may be well to recall what this Court said of EPIRA:

159
One of the landmark pieces of legislation enacted by Congress in recent years is the EPIRA. It
established a new policy, legal structure and regulatory framework for the electric power industry.
The new thrust is to tap private capital for the expansion and improvement of the industry as the
large government debt and the highly capital-intensive character of the industry itself have long been
acknowledged as the critical constraints to the program. To attract private investment, largely
foreign, the jaded structure of the industry had to be addressed. While the generation and
transmission sectors were centralized and monopolistic, the distribution side was fragmented with
over 130 utilities, mostly small and uneconomic. The pervasive flaws have caused a low utilization of
existing generation capacity; extremely high and uncompetitive power rates; poor quality of service
to consumers; dismal to forgettable performance of the government power sector; high system
losses; and an inability to develop a clear strategy for overcoming these shortcomings.

Thus, the EPIRA provides a framework for the restructuring of the industry, including the privatization
of the assets of the National Power Corporation (NPC), the transition to a competitive structure, and
the delineation of the roles of various government agencies and the private entities. The law ordains
the division of the industry into four (4) distinct sectors, namely: generation, transmission,
distribution and supply.

Corollarily, the NPC generating plants have to privatized and its transmission business spun off and
privatized thereafter.67

Finally, every law has in its favor the presumption of constitutionality, and to justify its nullification,
there must be a clear and unequivocal breach of the Constitution and not one that is doubtful,
speculative, or argumentative.68Indubitably, petitioners failed to overcome this presumption in favor
of the EPIRA. We find no clear violation of the Constitution which would warrant a pronouncement
that Sec. 34 of the EPIRA and Rule 18 of its IRR are unconstitutional and void.

WHEREFORE, the instant case is hereby DISMISSED for lack of merit.

SO ORDERED.

160
AN ORDINANCE REGULATING THE OPERATION OF MASSAGE CLINICS IN THE CITY OF
MANILA AND PROVIDING PENALTIES FOR VIOLATIONS THEREOF.

Be it ordained by the Municipal Board of the City of Manila, that:

Section 1. Definition. — For the purpose of this Ordinance the following words and phrases
shall be taken in the sense hereinbelow indicated:

(a) Massage clinic shall include any place or establishment used in the practice of hygienic
and aesthetic massage;

(b) Hygienic and aesthetic massage shall include any system of manipulation of treatment of
G.R. No. L-10448             August 30, 1957 the superficial parts of the human body of hygienic and aesthetic purposes by rubbing,
stroking, kneading, or tapping with the hand or an instrument;
IN THE MATTER OF A PETITION FOR DECLARATORY JUDGMENT REGARDING THE VALIDITY
OF MUNICIPAL ORDINANCE NO. 3659 OF THE CITY OF MANILA. PHYSICAL THERAPY (c) Massagist shall include any person who shall have passed the required examination and
ORGANIZATION OF THE PHILIPPINES, INC., petitioner-appellant,  shall have been issued a massagist certificate by the Committee of Examiners of Massagist,
vs. or by the Director of Health or his authorized representative;
THE MUNICIPAL BOARD OF THE CITY OF MANILA and ARSENIO H. LACSON, as Mayor of the
City of Manila, respondents-appellees.
(d) Attendant or helper shall include any person employed by a duly qualified massagist in
any message clinic to assist the latter in the practice of hygienic and aesthethic massage;
Mariano M. de Joya for appellant.
City Fiscal Eugenio Angeles and Assistant Fiscal Arsenio Nañawa for appellees.
(e) Operator shall include the owner, manager, administrator, or any person who operates or
is responsible for the operation of a message clinic.
MONTEMAYOR, J.:

SEC. 2. Permit Fees. — No person shall engage in the operation of a massage clinic or in the
The petitioner-appellant, an association of registered massagists and licensed operators of massage occupation of attendant or helper therein without first having obtained a permit therefor from
clinics in the City of Manila and other parts of the country, filed an action in the Court of First Instance the Mayor. For every permit granted under the provisions of this Ordinance, there shall be
of Manila for declaratory judgment regarding the validity of Municipal Ordinance No. 3659, paid to the City Treasurer the following annual fees:
promulgated by the Municipal Board and approved by the City Mayor. To stop the City from enforcing
said ordinance, the petitioner secured an injunction upon filing of a bond in the sum of P1,000.00. A
hearing was held, but the parties without introducing any evidence submitted the case for decision on (a) Operator of a massage       P100.00
the pleadings, although they submitted written memoranda. Thereafter, the trial court dismissed the
petition and later dissolved the writ of injunction previously issued. (b) Attendant or helper                       5.00

The petitioner appealed said order of dismissal directly to this Court. In support of its appeal, Said permit, which shall be renewed every year, may be revoked by the Mayor at any time
petitioner-appellant contends among other things that the trial court erred in holding that the for the violation of this Ordinance.
Ordinance in question has not restricted the practice of massotherapy in massage clinics to hygienic
and aesthetic massage, that the Ordinance is valid as it does not regulate the practice of massage,
that the Municipal Board of Manila has the power to enact the Ordinance in question by virtue of SEC. 3. Building requirement. — (a) In each massage clinic, there shall be separate rooms
Section 18, Subsection (kk), Republic Act 409, and that permit fee of P100.00 is moderate and not for the male and female customers. Rooms where massage operations are performed shall
unreasonable. Inasmuch as the appellant assails and discuss certain provisions regarding the be provided with sliding curtains only instead of swinging doors. The clinic shall be properly
ordinance in question, and it is necessary to pass upon the same, for purposes of ready reference, we ventilated, well lighted and maintained under sanitary conditions at all times while the
are reproducing said ordinance in toto. establishment is open for business and shall be provided with the necessary toilet and
washing facilities.

ORDINANCE No. 3659


(b) In every clinic there shall be no private rooms or separated compartment except those
assigned for toilet, lavatories, dressing room, office or kitchen.

161
(c) Every massage clinic shall "provided with only one entrance and it shall have no direct or Approved, September 7, 1954.
indirect communication whatsoever with any dwelling place, house or building.
The main contention of the appellant in its appeal and the principal ground of its petition for
SEC. 4. Regulations for the operation of massage clinics. — (a) It shall be unlawful for any declaratory judgment is that the City of Manila is without authority to regulate the operation of
operator massagist, attendant or helper to use, or allow the use of, a massage clinic as a massagists and the operation of massage clinics within its jurisdiction; that whereas under the Old
place of assignation or permit the commission therein of any incident or immoral act. City Charter, particularly, Section 2444 (e) of the Revised Administrative Code, the Municipal Board
Massage clinics shall be used only for hygienic and aesthetic massage. was expressly granted the power to regulate and fix the license fee for the occupation of massagists,
under the New Charter of Manila, Republic Act 409, said power has been withdrawn or omitted and
that now the Director of Health, pursuant to authority conferred by Section 938 of the Revised
(b) Massage clinics shall open at eight o'clock a.m. and shall close at eleven o'clock p.m.
Administrative Code and Executive Order No. 317, series of 1941, as amended by Executive Order No.
392, series, 1951, is the one who exercises supervision over the practice of massage and over
(c) While engaged in the actual performance of their duties, massagists, attendants and massage clinics in the Philippines; that the Director of Health has issued Administrative Order No. 10,
helpers in a massage clinic shall be as properly and sufficiently clad as to avoid suspicion of dated May 5, 1953, prescribing "rules and regulations governing the examination for admission to the
intent to commit an indecent or immoral act; practice of massage, and the operation of massage clinics, offices, or establishments in the
Philippines", which order was approved by the Secretary of Health and duly published in the Official
(d) Attendants or helpers may render service to any individual customer only for hygienic Gazette; that Section 1 (a) of Ordinance No. 3659 has restricted the practice of massage to only
and aesthetic purposes under the order, direction, supervision, control and responsibility of a hygienic and aesthetic massage prohibits or does not allow qualified massagists to practice
qualified massagist. therapeutic massage in their massage clinics. Appellant also contends that the license fee of P100.00
for operator in Section 2 of the Ordinance is unreasonable, nay, unconscionable.

SEC. 5. Qualifications — No person who has previously been convicted by final judgment of
competent court of any violation of the provisions of paragraphs 3 and 5 of Art. 202 and If we can ascertain the intention of the Manila Municipal Board in promulgating the Ordinance in
Arts. 335, 336, 340 and 342 of the Revised Penal Code, or Secs. 819 of the City of Manila, or question, much of the objection of appellant to its legality may be solved. It would appear to us that
who is suffering from any venereal or communicable disease shall engage in the occupation the purpose of the Ordinance is not to regulate the practice of massage, much less to restrict the
of massagist, attendant or helper in any massage clinic. Applicants for Mayor's permit shall practice of licensed and qualified massagists of therapeutic massage in the Philippines. The end
attach to their application a police clearance and health certificate duly issued by the City sought to be attained in the Ordinance is to prevent the commission of immorality and the practice of
Health Officers as well as a massagist certificate duly issued by the Committee or Examiners prostitution in an establishment masquerading as a massage clinic where the operators thereof offer
for Massagists or by the Director of Health or his authorized representatives, in case of to massage or manipulate superficial parts of the bodies of customers for hygienic and aesthetic
massagists. purposes. This intention can readily be understood by the building requirements in Section 3 of the
Ordinance, requiring that there be separate rooms for male and female customers; that instead of
said rooms being separated by permanent partitions and swinging doors, there should only be sliding
SEC. 6. Duty of operator of massage clinic. — No operator of massage clinic shall allow such curtains between them; that there should be "no private rooms or separated compartments, except
clinic to operate without a duly qualified massagist nor allow, any man or woman to act as those assigned for toilet, lavatories, dressing room, office or kitchen"; that every massage clinic
massagist, attendant or helper therein without the Mayor's permit provided for in the should be provided with only one entrance and shall have no direct or indirect communication
preceding sections. He shall submit whenever required by the Mayor or his authorized whatsoever with any dwelling place, house or building; and that no operator, massagists, attendant or
representative the persons acting as massagists, attendants or helpers in his clinic. He shall helper will be allowed "to use or allow the use of a massage clinic as a place of assignation or permit
place the massage clinic open to inspection at all times by the police, health officers, and the commission therein of any immoral or incident act", and in fixing the operating hours of such
other law enforcement agencies of the government, shall be held liable for anything which clinic between 8:00 a.m. and 11:00 p.m. This intention of the Ordinance was correctly ascertained by
may happen with the premises of the massage clinic. Judge Hermogenes Concepcion, presiding in the trial court, in his order of dismissal where he said:
"What the Ordinance tries to avoid is that the massage clinic run by an operator who may not be a
SEC. 7. Penalty. — Any person violating any of the provisions of this Ordinance shall upon masseur or massagista may be used as cover for the running or maintaining a house of prostitution."
conviction, be punished by a fine of not less than fifty pesos nor more than two hundred
pesos or by imprisonment for not less than six days nor more than six months, or both such Ordinance No. 3659, particularly, Sections 1 to 4, should be considered as limited to massage clinics
fine and imprisonment, at the discretion of the court. used in the practice of hygienic and aesthetic massage. We do not believe that Municipal Board of the
City of Manila and the Mayor wanted or intended to regulate the practice of massage in general or
SEC. 8. Repealing Clause. — All ordinances or parts of ordinances, which are inconsistent restrict the same to hygienic and aesthetic only.
herewith, are hereby repealed.
As to the authority of the City Board to enact the Ordinance in question, the City Fiscal, in
SEC. 9. Effectivity. — This Ordinance shall take effect upon its approval. representation of the appellees, calls our attention to Section 18 of the New Charter of the City of
Manila, Act No. 409, which gives legislative powers to the Municipal Board to enact all ordinances it
may deem necessary and proper for the promotion of the morality, peace, good order, comfort,
Enacted, August 27, 1954.
162
convenience and general welfare of the City and its inhabitants. This is generally referred to as the
General Welfare Clause, a delegation in statutory form of the police power, under which municipal
corporations, are authorized to enact ordinances to provide for the health and safety, and promote
the morality, peace and general welfare of its inhabitants. We agree with the City Fiscal.

As regards the permit fee of P100.00, it will be seen that said fee is made payable not by the masseur
or massagist, but by the operator of a massage clinic who may not be a massagist himself. Compared
to permit fees required in other operations, P100.00 may appear to be too large and rather
unreasonable. However, much discretion is given to municipal corporations in determining the amount
of said fee without considering it as a tax for revenue purposes:

The amount of the fee or charge is properly considered in determining whether it is a tax or
an exercise of the police power. The amount may be so large as to itself show that the
purpose was to raise revenue and not to regulate, but in regard to this matter there is a
marked distinction between license fees imposed upon useful and beneficial occupations
which the sovereign wishes to regulate but not restrict, and those which are inimical and
dangerous to public health, morals or safety. In the latter case the fee may be very large
without necessarily being a tax. (Cooley on Taxation, Vol. IV, pp. 3516-17; underlining
supplied.)

Evidently, the Manila Municipal Board considered the practice of hygienic and aesthetic massage not
as a useful and beneficial occupation which will promote and is conducive to public morals, and
consequently, imposed the said permit fee for its regulation.

In conclusion, we find and hold that the Ordinance in question as we interpret it and as intended by
the appellees is valid. We deem it unnecessary to discuss and pass upon the other points raised in the
appeal. The order appealed from is hereby affirmed. No costs.

163
wherein the state has the authority to enact legislation that may interfere with personal liberty or
property in order to promote the general welfare. 

2.) The City of Manila, being a mere Municipal Corporation has no inherent right to impose taxes. Its
charter was created by Congress, therefore subject to its control. Also, local governments have no
power to tax instrumentalities of the National Government. 

3.) Equal protection clause of the Constitution does not preclude classification of individuals who may
be accorded different treatment under the law, provided it is not unreasonable or arbitrary. The
clause does not prohibit the legislature from establishing classes of individuals or objects upon which
different rules shall operate. 

4.) The Judiciary does not settle policy issues which are within the domain of the political branches of
government and the people themselves as the repository of all state power.

Every law has in its favor the presumption of constitutionality, thus, to be nullified, it must be shown
that there is a clear and unequivocal breach of the Constitution. In this case, the grounds raised by
petitioners have failed to overcome the presumption. Therefore, it is hereby dismissed for lack of
merit.

Basco v. PAGCOR
GRN 91649, 14 May 1991)

FACTS:
On July 11, 1983, PAGCOR was created under Presidential Decree 1869, pursuant to the policy of the
government, “ to regulate and centralize through an appropriate institution all games of chance
authorized by existing franchise or permitted by law.” This was subsequently proven to be beneficial
not just to the government but also to the society in general. It is a reliable source of much needed
revenue for the cash-strapped Government.

Petitioners filed an instant petition seeking to annul the PAGCOR because it is allegedly contrary to
morals, public policy and public order, among others.

ISSUES:
Whether PD 1869 is unconstitutional because:
1.) it is contrary to morals, public policy and public order; 

2.) it constitutes a waiver of the right of the City of Manila to improve taxes and legal fees; and that
the exemption clause in PD 1869 is violative of constitutional principle of Local Autonomy; 

3.) it violates the equal protection clause of the Constitution in that it legalizes gambling thru PAGCOR
while most other forms are outlawed together with prostitution, drug trafficking and other vices; and 

4.) it is contrary to the avowed trend of the Cory Government, away from monopolistic and crony
economy and toward free enterprise and privatization.

HELD:
1.) Gambling, in all its forms, is generally prohibited, unless allowed by law. But the prohibition of
gambling does not mean that the government can not regulate it in the exercise of its police power,

164
A. It constitutes a waiver of a right prejudicial to a third person with a right recognized by
law. It waived the Manila City government's right to impose taxes and license fees, which is
recognized by law;

B. For the same reason stated in the immediately preceding paragraph, the law has intruded
into the local government's right to impose local taxes and license fees. This, in
contravention of the constitutionally enshrined principle of local autonomy;

C. It violates the equal protection clause of the constitution in that it legalizes PAGCOR —
conducted gambling, while most other forms of gambling are outlawed, together with
prostitution, drug trafficking and other vices;

D. It violates the avowed trend of the Cory government away from monopolistic and crony
economy, and toward free enterprise and privatization. (p. 2, Amended Petition; p. 7, Rollo)

In their Second Amended Petition, petitioners also claim that PD 1869 is contrary to the declared
national policy of the "new restored democracy" and the people's will as expressed in the 1987
Constitution. The decree is said to have a "gambling objective" and therefore is contrary to Sections
11, 12 and 13 of Article II, Sec. 1 of Article VIII and Section 3 (2) of Article XIV, of the present
Constitution (p. 3, Second Amended Petition; p. 21, Rollo).

The procedural issue is whether petitioners, as taxpayers and practicing lawyers (petitioner Basco
G.R. No. 91649             May 14, 1991 being also the Chairman of the Committee on Laws of the City Council of Manila), can question and
seek the annulment of PD 1869 on the alleged grounds mentioned above.
ATTORNEYS HUMBERTO BASCO, EDILBERTO BALCE, SOCRATES MARANAN AND LORENZO
SANCHEZ,petitioners,  The Philippine Amusements and Gaming Corporation (PAGCOR) was created by virtue of P.D. 1067-A
vs. dated January 1, 1977 and was granted a franchise under P.D. 1067-B also dated January 1, 1977 "to
PHILIPPINE AMUSEMENTS AND GAMING CORPORATION (PAGCOR), respondent. establish, operate and maintain gambling casinos on land or water within the territorial jurisdiction of
the Philippines." Its operation was originally conducted in the well known floating casino "Philippine
Tourist." The operation was considered a success for it proved to be a potential source of revenue to
H.B. Basco & Associates for petitioners. fund infrastructure and socio-economic projects, thus, P.D. 1399 was passed on June 2, 1978 for
Valmonte Law Offices collaborating counsel for petitioners. PAGCOR to fully attain this objective.
Aguirre, Laborte and Capule for respondent PAGCOR.

Subsequently, on July 11, 1983, PAGCOR was created under P.D. 1869 to enable the Government to
regulate and centralize all games of chance authorized by existing franchise or permitted by law,
under the following declared policy —

PARAS, J.: Sec. 1. Declaration of Policy. — It is hereby declared to be the policy of the State to
centralize and integrate all games of chance not heretofore authorized by existing franchises
or permitted by law in order to attain the following objectives:
A TV ad proudly announces:

(a) To centralize and integrate the right and authority to operate and conduct games of
"The new PAGCOR — responding through responsible gaming."
chance into one corporate entity to be controlled, administered and supervised by the
Government.
But the petitioners think otherwise, that is why, they filed the instant petition seeking to annul the
Philippine Amusement and Gaming Corporation (PAGCOR) Charter — PD 1869, because it is allegedly
(b) To establish and operate clubs and casinos, for amusement and recreation, including
contrary to morals, public policy and order, and because —
sports gaming pools, (basketball, football, lotteries, etc.) and such other forms of
amusement and recreation including games of chance, which may be allowed by law within
165
the territorial jurisdiction of the Philippines and which will: (1) generate sources of additional favor of constitutionality; one who attacks a statute alleging unconstitutionality must prove
revenue to fund infrastructure and socio-civic projects, such as flood control programs, its invalidity beyond a reasonable doubt; that a law may work hardship does not render it
beautification, sewerage and sewage projects, Tulungan ng Bayan Centers, Nutritional unconstitutional; that if any reasonable basis may be conceived which supports the statute,
Programs, Population Control and such other essential public services; (2) create recreation it will be upheld and the challenger must negate all possible basis; that the courts are not
and integrated facilities which will expand and improve the country's existing tourist concerned with the wisdom, justice, policy or expediency of a statute and that a liberal
attractions; and (3) minimize, if not totally eradicate, all the evils, malpractices and interpretation of the constitution in favor of the constitutionality of legislation should be
corruptions that are normally prevalent on the conduct and operation of gambling clubs and adopted. (Danner v. Hass, 194 N.W. 2nd534, 539; Spurbeck v. Statton, 106 N.W. 2nd 660,
casinos without direct government involvement. (Section 1, P.D. 1869) 663; 59 SCRA 66; see also e.g. Salas v. Jarencio, 46 SCRA 734, 739 [1970]; Peralta v.
Commission on Elections, 82 SCRA 30, 55 [1978]; and Heirs of Ordona v. Reyes, 125 SCRA
220, 241-242 [1983] cited in Citizens Alliance for Consumer Protection v. Energy Regulatory
To attain these objectives PAGCOR is given territorial jurisdiction all over the Philippines. Under its
Board, 162 SCRA 521, 540)
Charter's repealing clause, all laws, decrees, executive orders, rules and regulations, inconsistent
therewith, are accordingly repealed, amended or modified.
Of course, there is first, the procedural issue. The respondents are questioning the legal personality of
petitioners to file the instant petition.
It is reported that PAGCOR is the third largest source of government revenue, next to the Bureau of
Internal Revenue and the Bureau of Customs. In 1989 alone, PAGCOR earned P3.43 Billion, and
directly remitted to the National Government a total of P2.5 Billion in form of franchise tax, Considering however the importance to the public of the case at bar, and in keeping with the Court's
government's income share, the President's Social Fund and Host Cities' share. In addition, PAGCOR duty, under the 1987 Constitution, to determine whether or not the other branches of government
sponsored other socio-cultural and charitable projects on its own or in cooperation with various have kept themselves within the limits of the Constitution and the laws and that they have not abused
governmental agencies, and other private associations and organizations. In its 3 1/2 years of the discretion given to them, the Court has brushed aside technicalities of procedure and has taken
operation under the present administration, PAGCOR remitted to the government a total of P6.2 cognizance of this petition. (Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas Inc. v. Tan,
Billion. As of December 31, 1989, PAGCOR was employing 4,494 employees in its nine (9) casinos 163 SCRA 371)
nationwide, directly supporting the livelihood of Four Thousand Four Hundred Ninety-Four (4,494)
families.
With particular regard to the requirement of proper party as applied in the cases before us,
We hold that the same is satisfied by the petitioners and intervenors because each of them
But the petitioners, are questioning the validity of P.D. No. 1869. They allege that the same is "null has sustained or is in danger of sustaining an immediate injury as a result of the acts or
and void" for being "contrary to morals, public policy and public order," monopolistic and tends measures complained of. And even if, strictly speaking they are not covered by the
toward "crony economy", and is violative of the equal protection clause and local autonomy as well as definition, it is still within the wide discretion of the Court to waive the requirement and so
for running counter to the state policies enunciated in Sections 11 (Personal Dignity and Human remove the impediment to its addressing and resolving the serious constitutional questions
Rights), 12 (Family) and 13 (Role of Youth) of Article II, Section 1 (Social Justice) of Article XIII and raised.
Section 2 (Educational Values) of Article XIV of the 1987 Constitution.
In the first Emergency Powers Cases, ordinary citizens and taxpayers were allowed to
This challenge to P.D. No. 1869 deserves a searching and thorough scrutiny and the most deliberate question the constitutionality of several executive orders issued by President Quirino
consideration by the Court, involving as it does the exercise of what has been described as "the although they were involving only an indirect and general interest shared in common with
highest and most delicate function which belongs to the judicial department of the government." the public. The Court dismissed the objection that they were not proper parties and ruled
(State v. Manuel, 20 N.C. 144; Lozano v. Martinez, 146 SCRA 323). that "the transcendental importance to the public of these cases demands that they be
settled promptly and definitely, brushing aside, if we must technicalities of procedure." We
have since then applied the exception in many other cases. (Association of Small Landowners
As We enter upon the task of passing on the validity of an act of a co-equal and coordinate branch of
in the Philippines, Inc. v. Sec. of Agrarian Reform, 175 SCRA 343).
the government We need not be reminded of the time-honored principle, deeply ingrained in our
jurisprudence, that a statute is presumed to be valid. Every presumption must be indulged in favor of
its constitutionality. This is not to say that We approach Our task with diffidence or timidity. Where it Having disposed of the procedural issue, We will now discuss the substantive issues raised.
is clear that the legislature or the executive for that matter, has over-stepped the limits of its
authority under the constitution, We should not hesitate to wield the axe and let it fall heavily, as fall
Gambling in all its forms, unless allowed by law, is generally prohibited. But the prohibition of
it must, on the offending statute (Lozano v. Martinez, supra).
gambling does not mean that the Government cannot regulate it in the exercise of its police power.

In Victoriano v. Elizalde Rope Workers' Union, et al, 59 SCRA 54, the Court thru Mr. Justice Zaldivar
The concept of police power is well-established in this jurisdiction. It has been defined as the "state
underscored the —
authority to enact legislation that may interfere with personal liberty or property in order to promote
the general welfare." (Edu v. Ericta, 35 SCRA 481, 487) As defined, it consists of (1) an imposition or
. . . thoroughly established principle which must be followed in all cases where questions of restraint upon liberty or property, (2) in order to foster the common good. It is not capable of an
constitutionality as obtain in the instant cases are involved. All presumptions are indulged in

166
exact definition but has been, purposely, veiled in general terms to underscore its all-comprehensive (a) The City of Manila, being a mere Municipal corporation has no inherent right to impose taxes
embrace. (Philippine Association of Service Exporters, Inc. v. Drilon, 163 SCRA 386). (Icard v. City of Baguio, 83 Phil. 870; City of Iloilo v. Villanueva, 105 Phil. 337; Santos v. Municipality
of Caloocan, 7 SCRA 643). Thus, "the Charter or statute must plainly show an intent to confer that
power or the municipality cannot assume it" (Medina v. City of Baguio, 12 SCRA 62). Its "power to
Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future where it
tax" therefore must always yield to a legislative act which is superior having been passed upon by the
could be done, provides enough room for an efficient and flexible response to conditions and
state itself which has the "inherent power to tax" (Bernas, the Revised [1973] Philippine Constitution,
circumstances thus assuming the greatest benefits. (Edu v. Ericta, supra)
Vol. 1, 1983 ed. p. 445).

It finds no specific Constitutional grant for the plain reason that it does not owe its origin to the
(b) The Charter of the City of Manila is subject to control by Congress. It should be stressed that
charter. Along with the taxing power and eminent domain, it is inborn in the very fact of statehood
"municipal corporations are mere creatures of Congress" (Unson v. Lacson, G.R. No. 7909, January
and sovereignty. It is a fundamental attribute of government that has enabled it to perform the most
18, 1957) which has the power to "create and abolish municipal corporations" due to its "general
vital functions of governance. Marshall, to whom the expression has been credited, refers to it
legislative powers" (Asuncion v. Yriantes, 28 Phil. 67; Merdanillo v. Orandia, 5 SCRA 541). Congress,
succinctly as the plenary power of the state "to govern its citizens". (Tribe, American Constitutional
therefore, has the power of control over Local governments (Hebron v. Reyes, G.R. No. 9124, July 2,
Law, 323, 1978). The police power of the State is a power co-extensive with self-protection and is
1950). And if Congress can grant the City of Manila the power to tax certain matters, it can also
most aptly termed the "law of overwhelming necessity." (Rubi v. Provincial Board of Mindoro, 39 Phil.
provide for exemptions or even take back the power.
660, 708) It is "the most essential, insistent, and illimitable of powers." (Smith Bell & Co. v. National,
40 Phil. 136) It is a dynamic force that enables the state to meet the agencies of the winds of change.
(c) The City of Manila's power to impose license fees on gambling, has long been revoked. As early as
1975, the power of local governments to regulate gambling thru the grant of "franchise, licenses or
What was the reason behind the enactment of P.D. 1869?
permits" was withdrawn by P.D. No. 771 and was vested exclusively on the National Government,
thus:
P.D. 1869 was enacted pursuant to the policy of the government to "regulate and centralize thru an
appropriate institution all games of chance authorized by existing franchise or permitted by law" (1st
Sec. 1. Any provision of law to the contrary notwithstanding, the authority of chartered cities
whereas clause, PD 1869). As was subsequently proved, regulating and centralizing gambling
and other local governments to issue license, permit or other form of franchise to operate,
operations in one corporate entity — the PAGCOR, was beneficial not just to the Government but to
maintain and establish horse and dog race tracks, jai-alai and other forms of gambling is
society in general. It is a reliable source of much needed revenue for the cash strapped Government.
hereby revoked.
It provided funds for social impact projects and subjected gambling to "close scrutiny, regulation,
supervision and control of the Government" (4th Whereas Clause, PD 1869). With the creation of
PAGCOR and the direct intervention of the Government, the evil practices and corruptions that go Sec. 2. Hereafter, all permits or franchises to operate, maintain and establish, horse and dog
with gambling will be minimized if not totally eradicated. Public welfare, then, lies at the bottom of the race tracks, jai-alai and other forms of gambling shall be issued by the national government
enactment of PD 1896. upon proper application and verification of the qualification of the applicant . . .

Petitioners contend that P.D. 1869 constitutes a waiver of the right of the City of Manila to impose Therefore, only the National Government has the power to issue "licenses or permits" for the
taxes and legal fees; that the exemption clause in P.D. 1869 is violative of the principle of local operation of gambling. Necessarily, the power to demand or collect license fees which is a
autonomy. They must be referring to Section 13 par. (2) of P.D. 1869 which exempts PAGCOR, as the consequence of the issuance of "licenses or permits" is no longer vested in the City of Manila.
franchise holder from paying any "tax of any kind or form, income or otherwise, as well as fees,
charges or levies of whatever nature, whether National or Local."
(d) Local governments have no power to tax instrumentalities of the National Government. PAGCOR is
a government owned or controlled corporation with an original charter, PD 1869. All of its shares of
(2) Income and other taxes. — a) Franchise Holder: No tax of any kind or form, income or stocks are owned by the National Government. In addition to its corporate powers (Sec. 3, Title II, PD
otherwise as well as fees, charges or levies of whatever nature, whether National or Local, 1869) it also exercises regulatory powers thus:
shall be assessed and collected under this franchise from the Corporation; nor shall any form
or tax or charge attach in any way to the earnings of the Corporation, except a franchise tax
Sec. 9. Regulatory Power. — The Corporation shall maintain a Registry of the affiliated
of five (5%) percent of the gross revenues or earnings derived by the Corporation from its
entities, and shall exercise all the powers, authority and the responsibilities vested in the
operations under this franchise. Such tax shall be due and payable quarterly to the National
Securities and Exchange Commission over such affiliating entities mentioned under the
Government and shall be in lieu of all kinds of taxes, levies, fees or assessments of any kind,
preceding section, including, but not limited to amendments of Articles of Incorporation and
nature or description, levied, established or collected by any municipal, provincial or national
By-Laws, changes in corporate term, structure, capitalization and other matters concerning
government authority (Section 13 [2]).
the operation of the affiliated entities, the provisions of the Corporation Code of the
Philippines to the contrary notwithstanding, except only with respect to original
Their contention stated hereinabove is without merit for the following reasons: incorporation.

167
PAGCOR has a dual role, to operate and to regulate gambling casinos. The latter role is governmental, Local Government has been described as a political subdivision of a nation or state which is
which places it in the category of an agency or instrumentality of the Government. Being an constituted by law and has substantial control of local affairs. In a unitary system of
instrumentality of the Government, PAGCOR should be and actually is exempt from local taxes. government, such as the government under the Philippine Constitution, local governments
Otherwise, its operation might be burdened, impeded or subjected to control by a mere Local can only be an intra sovereign subdivision of one sovereign nation, it cannot be
government. an imperium in imperio. Local government in such a system can only mean a measure of
decentralization of the function of government. (emphasis supplied)
The states have no power by taxation or otherwise, to retard, impede, burden or in any
manner control the operation of constitutional laws enacted by Congress to carry into As to what state powers should be "decentralized" and what may be delegated to local government
execution the powers vested in the federal government. (MC Culloch v. Marland, 4 Wheat units remains a matter of policy, which concerns wisdom. It is therefore a political question. (Citizens
316, 4 L Ed. 579) Alliance for Consumer Protection v. Energy Regulatory Board, 162 SCRA 539).

This doctrine emanates from the "supremacy" of the National Government over local governments. What is settled is that the matter of regulating, taxing or otherwise dealing with gambling is a State
concern and hence, it is the sole prerogative of the State to retain it or delegate it to local
governments.
Justice Holmes, speaking for the Supreme Court, made reference to the entire absence of
power on the part of the States to touch, in that way (taxation) at least, the instrumentalities
of the United States (Johnson v. Maryland, 254 US 51) and it can be agreed that no state or As gambling is usually an offense against the State, legislative grant or express charter
political subdivision can regulate a federal instrumentality in such a way as to prevent it from power is generally necessary to empower the local corporation to deal with the subject . . . .
consummating its federal responsibilities, or even to seriously burden it in the In the absence of express grant of power to enact, ordinance provisions on this subject
accomplishment of them. (Antieau, Modern Constitutional Law, Vol. 2, p. 140, emphasis which are inconsistent with the state laws are void. (Ligan v. Gadsden, Ala App. 107 So. 733
supplied) Ex-Parte Solomon, 9, Cals. 440, 27 PAC 757 following in re Ah You, 88 Cal. 99, 25 PAC 974,
22 Am St. Rep. 280, 11 LRA 480, as cited in Mc Quinllan Vol. 3 Ibid, p. 548, emphasis
supplied)
Otherwise, mere creatures of the State can defeat National policies thru extermination of what local
authorities may perceive to be undesirable activities or enterprise using the power to tax as "a tool for
regulation" (U.S. v. Sanchez, 340 US 42). Petitioners next contend that P.D. 1869 violates the equal protection clause of the Constitution,
because "it legalized PAGCOR — conducted gambling, while most gambling are outlawed together
with prostitution, drug trafficking and other vices" (p. 82, Rollo).
The power to tax which was called by Justice Marshall as the "power to destroy" (Mc Culloch v.
Maryland, supra) cannot be allowed to defeat an instrumentality or creation of the very entity which
has the inherent power to wield it. We, likewise, find no valid ground to sustain this contention. The petitioners' posture ignores the well-
accepted meaning of the clause "equal protection of the laws." The clause does not preclude
classification of individuals who may be accorded different treatment under the law as long as the
(e) Petitioners also argue that the Local Autonomy Clause of the Constitution will be violated by P.D.
classification is not unreasonable or arbitrary (Itchong v. Hernandez, 101 Phil. 1155). A law does not
1869. This is a pointless argument. Article X of the 1987 Constitution (on Local Autonomy) provides:
have to operate in equal force on all persons or things to be conformable to Article III, Section 1 of
the Constitution (DECS v. San Diego, G.R. No. 89572, December 21, 1989).
Sec. 5. Each local government unit shall have the power to create its own source of revenue
and to levy taxes, fees, and other charges subject to such guidelines and limitation as the
The "equal protection clause" does not prohibit the Legislature from establishing classes of individuals
congress may provide, consistent with the basic policy on local autonomy. Such taxes, fees
or objects upon which different rules shall operate (Laurel v. Misa, 43 O.G. 2847). The Constitution
and charges shall accrue exclusively to the local government. (emphasis supplied)
does not require situations which are different in fact or opinion to be treated in law as though they
were the same (Gomez v. Palomar, 25 SCRA 827).
The power of local government to "impose taxes and fees" is always subject to "limitations" which
Congress may provide by law. Since PD 1869 remains an "operative" law until "amended, repealed or
Just how P.D. 1869 in legalizing gambling conducted by PAGCOR is violative of the equal protection is
revoked" (Sec. 3, Art. XVIII, 1987 Constitution), its "exemption clause" remains as an exception to
not clearly explained in the petition. The mere fact that some gambling activities like cockfighting (P.D
the exercise of the power of local governments to impose taxes and fees. It cannot therefore be
449) horse racing (R.A. 306 as amended by RA 983), sweepstakes, lotteries and races (RA 1169 as
violative but rather is consistent with the principle of local autonomy.
amended by B.P. 42) are legalized under certain conditions, while others are prohibited, does not
render the applicable laws, P.D. 1869 for one, unconstitutional.
Besides, the principle of local autonomy under the 1987 Constitution simply means "decentralization"
(III Records of the 1987 Constitutional Commission, pp. 435-436, as cited in Bernas, The Constitution
If the law presumably hits the evil where it is most felt, it is not to be overthrown because
of the Republic of the Philippines, Vol. II, First Ed., 1988, p. 374). It does not make local governments
there are other instances to which it might have been applied. (Gomez v. Palomar, 25 SCRA
sovereign within the state or an "imperium in imperio."
827)

168
The equal protection clause of the 14th Amendment does not mean that all occupations remains a wise legislation considering the issues of "morality, monopoly, trend to free enterprise,
called by the same name must be treated the same way; the state may do what it can to privatization as well as the state principles on social justice, role of youth and educational values"
prevent which is deemed as evil and stop short of those cases in which harm to the few being raised, is up for Congress to determine.
concerned is not less than the harm to the public that would insure if the rule laid down were
made mathematically exact. (Dominican Hotel v. Arizona, 249 US 2651).
As this Court held in Citizens' Alliance for Consumer Protection v. Energy Regulatory Board, 162 SCRA
521 —
Anent petitioners' claim that PD 1869 is contrary to the "avowed trend of the Cory Government away
from monopolies and crony economy and toward free enterprise and privatization" suffice it to state
Presidential Decree No. 1956, as amended by Executive Order No. 137 has, in any case, in
that this is not a ground for this Court to nullify P.D. 1869. If, indeed, PD 1869 runs counter to the
its favor the presumption of validity and constitutionality which petitioners Valmonte and the
government's policies then it is for the Executive Department to recommend to Congress its repeal or
KMU have not overturned. Petitioners have not undertaken to identify the provisions in the
amendment.
Constitution which they claim to have been violated by that statute. This Court, however, is
not compelled to speculate and to imagine how the assailed legislation may possibly offend
The judiciary does not settle policy issues. The Court can only declare what the law is and some provision of the Constitution. The Court notes, further, in this respect that petitioners
not what the law should be.1âwphi1 Under our system of government, policy issues are have in the main put in question the wisdom, justice and expediency of the establishment of
within the domain of the political branches of government and of the people themselves as the OPSF, issues which are not properly addressed to this Court and which this Court may
the repository of all state power. (Valmonte v. Belmonte, Jr., 170 SCRA 256). not constitutionally pass upon. Those issues should be addressed rather to the political
departments of government: the President and the Congress.
On the issue of "monopoly," however, the Constitution provides that:
Parenthetically, We wish to state that gambling is generally immoral, and this is precisely so when the
gambling resorted to is excessive. This excessiveness necessarily depends not only on the financial
Sec. 19. The State shall regulate or prohibit monopolies when public interest so requires. No
resources of the gambler and his family but also on his mental, social, and spiritual outlook on life.
combinations in restraint of trade or unfair competition shall be allowed. (Art. XII, National
However, the mere fact that some persons may have lost their material fortunes, mental control,
Economy and Patrimony)
physical health, or even their lives does not necessarily mean that the same are directly attributable
to gambling. Gambling may have been the antecedent, but certainly not necessarily the cause. For
It should be noted that, as the provision is worded, monopolies are not necessarily prohibited by the the same consequences could have been preceded by an overdose of food, drink, exercise, work, and
Constitution. The state must still decide whether public interest demands that monopolies be even sex.
regulated or prohibited. Again, this is a matter of policy for the Legislature to decide.
WHEREFORE, the petition is DISMISSED for lack of merit.
On petitioners' allegation that P.D. 1869 violates Sections 11 (Personality Dignity) 12 (Family) and 13
(Role of Youth) of Article II; Section 13 (Social Justice) of Article XIII and Section 2 (Educational
SO ORDERED.
Values) of Article XIV of the 1987 Constitution, suffice it to state also that these are merely
statements of principles and, policies. As such, they are basically not self-executing, meaning a law
should be passed by Congress to clearly define and effectuate such principles.

In general, therefore, the 1935 provisions were not intended to be self-executing principles
ready for enforcement through the courts. They were rather directives addressed to the
executive and the legislature. If the executive and the legislature failed to heed the directives
of the articles the available remedy was not judicial or political. The electorate could express
their displeasure with the failure of the executive and the legislature through the language of
the ballot. (Bernas, Vol. II, p. 2)

Every law has in its favor the presumption of constitutionality (Yu Cong Eng v. Trinidad, 47 Phil. 387;
Salas v. Jarencio, 48 SCRA 734; Peralta v. Comelec, 82 SCRA 30; Abbas v. Comelec, 179 SCRA 287).
Therefore, for PD 1869 to be nullified, it must be shown that there is a clear and unequivocal breach
of the Constitution, not merely a doubtful and equivocal one. In other words, the grounds for nullity
must be clear and beyond reasonable doubt. (Peralta v. Comelec, supra) Those who petition this
Court to declare a law, or parts thereof, unconstitutional must clearly establish the basis for such a
declaration. Otherwise, their petition must fail. Based on the grounds raised by petitioners to
challenge the constitutionality of P.D. 1869, the Court finds that petitioners have failed to overcome
the presumption. The dismissal of this petition is therefore, inevitable. But as to whether P.D. 1869
169

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