Eminent Domain, Taking Cases

7/24/2019 Eminent Domain, Taking Cases

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REQUISITES

REPUBLIC OF THE PHILIPPINES, plaintiff-appellant,

vs.

CARMEN M. VDA. DE CASTELLVI, ET AL., defendants-appellees.

Office of the Solicitor General for plaintiff-appellant.

C.A. Mendoza & A. V. Raquiza and Alberto Cacnio & Associates for defendant-appellees.

ZALDIVAR, J.:p

Appeal from the decision of the Court of First Instance of Pampanga in its Civil Case No. 162, an

e!propriation proceeding.

Plaintiff-appellant, the "epu#lic of the Philippines, $hereinafter referred to as the "epu#lic% filed, on&une 26, 1'(', a complaint for eminent domain against defendant-appellee, Carmen ). *da. de

Castellvi, +udicial administratri! of the estate of the late Alfonso de Castellvi $hereinafter referred to

as Castellvi%, over a parcel of land situated in the #arrio of an &ose, Florida#lanca, Pampanga,

descri#ed as follos

A parcel of land, /ot No. 1''-0 0ureau of /ands Plan o 2666. 0ounded on the

N # )aria Nieves 3oledo-4o5un on the # national road on the 7 # AFP

reservation, and on the N7 # AFP reservation. Containing an area of 8(',2''

s9uare meters, more or less, and registered in the name of Alfonso Castellvi under

3C3 No. 161 of the "egister of Pampanga ...

and against defendant-appellee )aria Nieves 3oledo 4o5un $hereinafter referred to as 3oledo-4o5un over to parcels of land descri#ed as follos

A parcel of land $Portion /ot 0l:-1, 0ureau of /ands Plan Psd, 262(;. 0ounded on

the N # /ot , on the # /ot on the 7 # /ot 1-0, 0l:. 2 $e9uivalent to /ot

1''-0 o 2666 on the N7 # AFP militar reservation. Containing an area of

;(eeds of

Pampanga, ....

In its complaint, the "epu#lic alleged, among other things, that the fair mar:et value of the a#ove-

mentioned lands, according to the Committee on Appraisal for the Province of Pampanga, as not

more than P2,


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immediate possession of the lands upon deposit of that amount ith the Provincial 3reasurer of

Pampanga that the court appoints three commissioners to ascertain and report to the court the +ust

compensation for the propert sought to #e e!propriated, and that the court issues thereafter a final

order of condemnation.

?n &une 2', 1'(' the trial court issued an order fi!ing the provisional value of the lands at

P2(',66'.1


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3he trial Court appointed three commissioners Att. Amadeo u5on, Cler: of Court, as

commissioner for the court Att. Felicisimo 4. Pamandanan, counsel of the Philippine National 0an:

0ranch at Florida#lanca, for the plaintiff and Att. /eonardo F. /ansangan, Filipino legal counsel at

Clar: Air 0ase, for the defendants. 3he Commissioners, after having 9ualified themselves,

proceeded to the performance of their duties.

?n )arch 1(,1'61 the Commissioners su#mitted their report and recommendation, herein, after

having determined that the lands sought to #e e!propriated ere residential lands, the

recommended unanimousl that the loest price that should #e paid as P1


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?n &une 21, 1'61 the "epu#lic filed a motion for a ne trial andor reconsideration, upon the

grounds of nel-discovered evidence, that the decision as not supported # the evidence, and

that the decision as against the la, against hich motion defendants Castellvi and 3oledo-4o5un

filed their respective oppositions. ?n &ul =, 1'61 hen the motion of the "epu#lic for ne trial

andor reconsideration as called for hearing, the "epu#lic filed a supplemental motion for ne trial

upon the ground of additional nel-discovered evidence. 3his motion for ne trial andor

reconsideration as denied # the court on &ul 12, 1'61.

?n &ul 18, 1'61 the "epu#lic gave notice of its intention to appeal from the decision of )a 26,

1'61 and the order of &ul 12, 1'61. >efendant Castellvi also filed, on &ul 18, 1'61, her notice of

appeal from the decision of the trial court.

3he "epu#lic filed various e!-parte motions for e!tension of time ithin hich to file its record on

appeal. 3he "epu#licBs record on appeal as finall su#mitted on >ecem#er 6, 1'61.

>efendants Castellvi and 3oledo-4o5un filed not onl a +oint opposition to the approval of the

"epu#licBs record on appeal, #ut also a +oint memorandum in support of their opposition. 3he

"epu#lic also filed a memorandum in support of its praer for the approval of its record on appeal.?n >ecem#er 28, 1'61 the trial court issued an order declaring #oth the record on appeal filed #

the "epu#lic, and the record on appeal filed # defendant Castellvi as having #een filed out of time,

there# dismissing #oth appeals.

?n &anuar 11, 1'62 the "epu#lic filed a @motion to stri:e out the order of >ecem#er 28, 1'61 and

for reconsideration@, and su#se9uentl an amended record on appeal, against hich motion the

defendants Castellvi and 3oledo-4o5un filed their opposition. ?n &ul 26, 1'62 the trial court issued

an order, stating that @in the interest of e!pedienc, the 9uestions raised ma #e properl and finall

determined # the upreme Court,@ and at the same time it ordered the olicitor 4eneral to su#mit a

record on appeal containing copies of orders and pleadings specified therein. In an order dated

Novem#er 1', 1'62, the trial court approved the "epu#licBs record on appeal as amended.

>efendant Castellvi did not insist on her appeal. >efendant 3oledo-4o5un did not appeal.

3he motion to dismiss the "epu#licBs appeal as reiterated # appellees Castellvi and 3oledo-4o5un

#efore this Court, #ut this Court denied the motion.

In her motion of August 11, 1'6;, appellee Castellvi sought to increase the provisional value of her

land. 3he "epu#lic, in its comment on CastellviBs motion, opposed the same. 3his Court denied

CastellviBs motion in a resolution dated ?cto#er 2,1'6;.

3he motion of appellees, Castellvi and 3oledo-4o5un, dated ?cto#er 6, 1'6', praing that the #e

authori5ed to mortgage the lands su#+ect of e!propriation, as denied # this Court or ?cto#er 1;,

1'6'.

?n Fe#ruar 1;, 1'82, Atts. Al#erto Cacnio, and Associates, counsel for the estate of the late >on

Alfonso de Castellvi in the e!propriation proceedings, filed a notice of attorneBs lien, stating that as

per agreement ith the administrator of the estate of >on Alfonso de Castellvi the shall receive #

a of attorneBs fees, @the sum e9uivalent to ten per centum of hatever the court ma finall

decide as the e!propriated price of the propert su#+ect matter of the case.@


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---------

0efore this Court, the "epu#lic contends that the loer court erred

1. In finding the price of P1< per s9uare meter of the lands su#+ect of the instant

proceedings as +ust compensation

2. In holding that the @ta:ing@ of the properties under e!propriation commenced ith

the filing of this action

. In ordering plaintiff-appellant to pa 6 interest on the ad+udged value of the

Castellvi propert to start from &ul of 1'(6

;. In dening plaintiff-appellantBs motion for ne trial #ased on nel discovered

evidence.

In its #rief, the "epu#lic discusses the second error assigned as the first issue to #e considered. 7e

shall follo the se9uence of the "epu#licBs discussion.

1. In support of the assigned error that the loer court erred in holding that the @ta:ing@ of the

properties under e!propriation commenced ith the filing of the complaint in this case, the "epu#lic

argues that the @ta:ing@ should #e rec:oned from the ear 1';8 hen # virtue of a special lease

agreement #eteen the "epu#lic and appellee Castellvi, the former as granted the @right and

privilege@ to #u the propert should the lessor ish to terminate the lease, and that in the event of

such sale, it as stipulated that the fair mar:et value should #e as of the time of occupanc and that

the permanent improvements amounting to more that half a million pesos constructed during a

period of telve ears on the land, su#+ect of e!propriation, ere indicative of an agreed pattern of

permanenc and sta#ilit of occupanc # the Philippine Air Force in the interest of national

ecurit.7

Appellee Castellvi, on the other hand, maintains that the @ta:ing@ of propert under the poer of

eminent domain re9uires to essential elements, to it $1% entrance and occupation # condemn or

upon the private propert for more than a momentar or limited period, and $2% devoting it to a pu#lic

use in such a a as to oust the oner and deprive him of all #eneficial en+oment of the propert.

3his appellee argues that in the instant case the first element is anting, for the contract of lease

relied upon provides for a lease from ear to ear that the second element is also anting, #ecause

the "epu#lic as paing the lessor Castellvi a monthl rental of P;;(.(= and that the contract of

lease does not grant the "epu#lic the @right and privilege@ to #u the premises @at the value at the

time of occupanc.@8

Appellee 3oledo-4o5un did not comment on the "epu#licBs argument in support of the second error

assigned, #ecause as far as she as concerned the "epu#lic had not ta:en possession of her lands

prior to August 1


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C?N3"AC3 ?F /A

3his A4")N3 ?F /A )A> AN> N3"> into # and #eteen

IN33A3 3A3 ?F A/F?N? > CA3//*I, represented # CA")N ).

> CA3//*I, &udicial Administratri! ... hereinafter called the /?" and 3E

"PG0/IC ?F 3E PEI/IPPIN represented # )A&. 4N. CA/IH3? >GG,

Chief of taff of the A")> F?"C ?F 3E PEI/IPPIN, hereinafter called the

/,

7I3N3E

1. For and in consideration of the rentals hereinafter reserved and the mutual terms,

covenants and conditions of the parties, the /?" has, and # these presents

does, lease and let unto the / the folloing descri#ed land together ith the

improvements thereon and appurtenances thereof, viz

Gn 3erreno, /ote No. 28 del Plano de su#division Psu ;8(2, parte de la hacienda

de Campauit, situado en el 0arrio de an &ose, )unicipio de Florida#lancaPampanga. ... midiendo una e!tension superficial de cuatro milliones once mil cuatro

cientos trienta cinco $;,


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alteration, install facilities and fi!tures and errect additions ... hich facilities or

fi!tures ... so placed in, upon or attached to the said premises shall #e and remain

propert of the / and ma #e removed therefrom # the / prior to the

termination of this lease. 3he / shall surrender possession of the premises

upon the e!piration or termination of this lease and if so re9uired # the /?",

shall return the premises in su#stantiall the same condition as that e!isting at the

time same ere first occupied # the AFP, reasona#le and ordinar ear and tearand damages # the elements or # circumstances over hich the / has no

control e!cepted P"?*I>>, that if the /?" so re9uires the return of the

premises in such condition, the /?" shall give ritten notice thereof to the

/ at least tent $2


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ac9uisition of the propert # means of e!propriation proceedings ould #e recommended to the

President $!hi#it @8@ D Castellvi%.

>efendant Castellvi then #rought suit in the Court of First Instance of Pampanga, in Civil Case No.

1;(=, to e+ect the Philippine Air Force from the land. 7hile this e+ectment case as pending, the

"epu#lic instituted these e!propriation proceedings, and, as stated earlier in this opinion, the

"epu#lic as placed in possession of the lands on August 1ictionar, *olume

*I, page ('6% @lasting a ver short time transitor having a ver #rief life operative or recurring at

ever moment@ $7e#sterBs 3hird International >ictionar, 1'6 edition.% 3he ord @momentar@ hen

applied to possession or occupanc of $real% propert should #e construed to mean @a limited period@

D not indefinite or permanent. 3he aforecited lease contract as for a period of one ear, renea#le

from ear to ear. 3he entr on the propert, under the lease, is temporar, and considered


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transitor. 3he fact that the "epu#lic, through the AFP, constructed some installations of a

permanent nature does not alter the fact that the entr into the land as transitor, or intended to last

a ear, although renea#le from ear to ear # consent of B3he oner of the land. 0 e!press

provision of the lease agreement the "epu#lic, as lessee, undertoo: to return the preises in

su#stantiall the same condition as at the time the propert as first occupied # the AFP. It is

claimed that the intention of the lessee as to occup the land permanentl, as ma #e inferred from

the construction of permanent improvements. 0ut this @intention@ cannot prevail over the clear ande!press terms of the lease contract. Intent is to #e deduced from the language emploed # the

parties, and the terms Bof the contract, hen unam#iguous, as in the instant case, are conclusive in

the a#sence of averment and proof of mista:e or fraud D the 9uestion #eing not hat the intention

as, #ut hat is e!pressed in the language used. $Cit of )anila v. "i5al Par: Co., Inc., ( Phil. (1(,

(2(% )agdalena state, Inc. v. )ric:, 81 Phil. ;;, ;=%. )oreover, in order to +udge the intention

of the contracting parties, their contemporaneous and su#se9uent acts shall #e principall

considered $Art. 181, Civil Code%. If the intention of the lessee $"epu#lic% in 1';8 as reall to

occup permanentl CastellviBs propert, h as the contract of lease entered into on ear to ear

#asisM 7h as the lease agreement reneed from ear to earM 7h did not the "epu#lic

e!propriate this land of Castellvi in 1';' hen, according to the "epu#lic itself, it e!propriated the

other parcels of land that it occupied at the same time as the Castellvi land, for the purpose of

converting them into a +et air #aseM 14It might reall have #een the intention of the "epu#lic toe!propriate the lands in 9uestion at some future time, #ut certainl mere notice - much less an implied

notice D of such intention on the part of the "epu#lic to e!propriate the lands in the future did not, and

could not, #ind the landoner, nor #ind the land itself. 3he e!propriation must #e actuall commenced in

court $"epu#lic vs. 0alosis, et al., '6 Phil. ;61, ;=;%.

3hird, the entr into the propert should #e under arrant or color of legal authorit. 3his

circumstance in the @ta:ing@ ma #e considered as present in the instant case, #ecause the "epu#lic

entered the Castellvi propert as lessee.

Fourth, the propert must #e devoted to a pu#lic use or otherise informall appropriated or

in+uriousl affected. It ma #e conceded that the circumstance of the propert #eing devoted to

pu#lic use is present #ecause the propert as used # the air force of the AFP.

Fifth, the utili5ation of the propert for pu#lic use must #e in such a a as to oust the oner and

deprive him of all #eneficial en+oment of the propert. In the instant case, the entr of the "epu#lic

into the propert and its utili5ation of the same for pu#lic use did not oust Castellvi and deprive her of

all #eneficial en+oment of the propert. Castellvi remained as oner, and as continuousl

recogni5ed as oner # the "epu#lic, as shon # the reneal of the lease contract from ear to

ear, and # the provision in the lease contract here# the "epu#lic undertoo: to return the

propert to Castellvi hen the lease as terminated. Neither as Castellvi deprived of all the

#eneficial en+oment of the propert, #ecause the "epu#lic as #ound to pa, and had #een paing,

Castellvi the agreed monthl rentals until the time hen it filed the complaint for eminent domain on

&une 26, 1'('.

It is clear, therefore, that the @ta:ing@ of CatellviBs propert for purposes of eminent domain cannot #e

considered to have ta:en place in 1';8 hen the "epu#lic commenced to occup the propert as

lessee thereof. 7e find merit in the contention of Castellvi that to essential elements in the @ta:ing@

of propert under the poer of eminent domain, namel $1% that the entrance and occupation # the

condemnor must #e for a permanent, or indefinite period, and $2% that in devoting the propert to

pu#lic use the oner as ousted from the propert and deprived of its #eneficial use, ere not

present hen the "epu#lic entered and occupied the Castellvi propert in 1';8.


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Gntena#le also is the "epu#licBs contention that although the contract #eteen the parties as one

of lease on a ear to ear #asis, it as @in realit a more or less permanent right to occup the

premises under the guise of lease ith the Bright and privilegeB to #u the propert should the lessor

ish to terminate the lease,@ and @the right to #u the propert is merged as an integral part of the

lease relationship ... so much so that the fair mar:et value has #een agreed upon, not, as of the time

of purchase, #ut as of the time of occupanc@ 157e cannot accept the "epu#licBs contention that a

lease on a ear to ear #asis can give rise to a permanent right to occup, since # e!press legalprovision a lease made for a determinate time, as as the lease of CastellviBs land in the instant case,

ceases upon the da fi!ed, ithout need of a demand $Article 166', Civil Code%. Neither can it #e said

that the right of eminent domain ma #e e!ercised # simpl leasing the premises to #e e!propriated

$"ule 68, ection 1, "ules of Court%. Nor can it #e accepted that the "epu#lic ould enter into a contract

of lease here its real intention as to #u, or h the "epu#lic should enter into a simulated contract of

lease $@under the guise of lease@, as e!pressed # counsel for the "epu#lic% hen all the time the

"epu#lic had the right of eminent domain, and could e!propriate CastellviBs land if it anted to ithout

resorting to an guise hatsoever. Neither can e see ho a right to #u could #e merged in a contract of

lease in the a#sence of an agreement #eteen the parties to that effect. 3o sustain the contention of the

"epu#lic is to sanction a practice here# in order to secure a lo price for a land hich the government

intends to e!propriate $or ould eventuall e!propriate% it ould first negotiate ith the oner of the land

to lease the land $for sa ten or tent ears% then e!propriate the same hen the lease is a#out toterminate, then claim that the @ta:ing@ of the propert for the purposes of the e!propriation #e rec:oned as

of the date hen the 4overnment started to occup the propert under the lease, and then assert that the

value of the propert #eing e!propriated #e rec:oned as of the start of the lease, in spite of the fact that

the value of the propert, for man good reasons, had in the meantime increased during the period of the

lease. 3his ould #e sanctioning hat o#viousl is a deceptive scheme, hich ould have the effect of

depriving the oner of the propert of its true and fair mar:et value at the time hen the e!propriation

proceedings ere actuall instituted in court. !he Republic"s clai that it had the #ri$ht and privile$e# to

bu% the propert% at the value that it had at the tie hen it first occupied the propert% as lessee nohere

appears in the lease contract. 7hat as agreed e!pressl in paragraph No. ( of the lease agreement as

that, should the lessor re9uire the lessee to return the premises in the same condition as at the time the

same as first occupied # the AFP, the lessee ould have the @right and privilege@ $or option% of paing

the lessor hat it ould fairl cost to put the premises in the same condition as it as at the

commencement of the lease, in lieu of the lesseeBs performance of the underta:ing to put the land in said

condition. 3he @fair value@ at the time of occupanc, mentioned in the lease agreement, does not refer to

the value of the propert if #ought # the lessee, #ut refers to the cost of restoring the propert in the

same condition as of the time hen the lessee too: possession of the propert. uch fair value cannot

refer to the purchase price, for purchase as never intended # the parties to the lease contract. It is a

rule in the interpretation of contracts that @Eoever general the terms of a contract ma #e, the shall not

#e understood to comprehend things that are distinct and cases that are different from those upon hich

the parties intended to agree@ $Art. 182, Civil Code%.

7e hold, therefore, that the @ta:ing@ of the Castellvi propert should not #e rec:oned as of the ear

1';8 hen the "epu#lic first occupied the same pursuant to the contract of lease, and that the +ust

compensation to #e paid for the Castellvi propert should not #e determined on the #asis of the

value of the propert as of that ear. 3he loer court did not commit an error hen it held that the@ta:ing@ of the propert under e!propriation commenced ith the filing of the complaint in this case.

Gnder ection ; of "ule 68 of the "ules of Court, 16the @+ust compensation@ is to #e determined as ofthe date of the filing of the complaint. 3his Court has ruled that hen the ta:ing of the propert sought to

#e e!propriated coincides ith the commencement of the e!propriation proceedings, or ta:es place

su#se9uent to the filing of the complaint for eminent domain, the +ust compensation should #e determined

as of the date of the filing of the complaint. $"epu#lic vs. Philippine National 0an:, /-1;1(=, April 12,


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1'61, 1 C"A '(8, '61-'62%. In the instant case, it is undisputed that the "epu#lic as placed in

possession of the Castellvi propert, # authorit of the court, on August 1


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In e!propriation proceedings, therefore, the oner of the land has the right to its value for the use for

hich it ould #ring the most in the mar:et. 173he oner ma thus sho ever advantage that his

propert possesses, present and prospective, in order that the price it could #e sold for in the mar:et ma

#e satisfactoril determined. 183he oner ma also sho that the propert is suita#le for division into

village or ton lots. 1

3he trial court, therefore, correctl considered, among other circumstances, the proposedsu#division plans of the lands sought to #e e!propriated in finding that those lands are residential

lots. 3his finding of the loer court is supported not onl # the unanimous opinion of the

commissioners, as em#odied in their report, #ut also # the Provincial Appraisal Committee of the

province of Pampanga composed of the Provincial 3reasurer, the Provincial Auditor and the >istrict

ngineer. In the minutes of the meeting of the Provincial Appraisal Committee, held on )a 1;, 1'('

$!h. 1-Castellvi% 7e read in its "esolution No. 1< the folloing

. ince 1'(8 the land has #een classified as residential in vie of its pro!imit to the

air #ase and due to the fact that it as not #eing devoted to agriculture. In fact, there

is a plan to convert it into a su#division for residential purposes. 3he ta!es due on

the propert have #een paid #ased on its classification as residential land

3he evidence shos that Castellvi #roached the idea of su#dividing her land into residential lots as

earl as &ul 11, 1'(6 in her letter to the Chief of taff of the Armed Forces of the Philippines. $!h.

(-Castellvi% As a matter of fact, the laout of the su#division plan as tentativel approved # the

National Planning Commission on eptem#er 8, 1'(6. $!h. =-Castellvi%. 3he land of Castellvi had

not #een devoted to agriculture since 1';8 hen it as leased to the Philippine Arm. In 1'(8 said

land as classified as residential, and ta!es #ased on its classification as residential had #een paid

since then $!h. 1-Castellvi%. 3he location of the Castellvi land +ustifies its suita#ilit for a residential

su#division. As found # the trial court, @It is at the left side of the entrance of the 0asa Air 0ase and

#ounded on to sides # roads $!h. 1-Castellvi%, paragraphs 1 and 2, !h. 12-Castellvi%, the

po#lacion, $of Florida#lanca% the municipal #uilding, and the Pampanga ugar )ills are closed #.

3he #arrio schoolhouse and chapel are also near $3..N. Novem#er 2,1'6


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3he "epu#lic asserts that the fair mar:et value of the lands of the appellees is P.2< per s9uare

meter. 3he "epu#lic cites the case of Republic vs. (arciso' et al., /-6(';, hich this Court decided

on )a 1=, 1'(6. 3he Narciso case involved lands that #elonged to Castellvi and 3oledo-4o5un, and

to one >onata )ontemaor, hich ere e!propriated # the "epu#lic in 1';' and hich are no the

site of the 0asa Air 0ase. In the Narciso case this Court fi!ed the fair mar:et value at P.2< per

s9uare meter. 3he lands that are sought to #e e!propriated in the present case #eing contiguous to

the lands involved in the Narciso case, it is the stand of the "epu#lic that the price that should #efi!ed for the lands no in 9uestion should also #e at P.2< per s9uare meter.

7e can not sustain the stand of the "epu#lic. 7e find that the price of P.2< per s9uare meter, as

fi!ed # this Court in the Narciso case, as #ased on the allegation of the defendants $oners% in

their anser to the complaint for eminent domain in that case that the price of their lands as

P2,


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1'(8, ere alread classified and assessed for ta!ation purposes as residential lands. 3he

certification of the assessor refers to the ear 1'(< as far as the lands of 3oledo-4o5un are

concerned, and to the ear 1'(6 as far as the land of Castellvi is concerned. )oreover, this Court

has held that the valuation fi!ed for the purposes of the assessment of the land for ta!ation purposes

can not #ind the landoner here the latter did not intervene in fi!ing it. 25

?n the other hand, the Commissioners, appointed # the court to appraise the lands that ere #eing

e!propriated, recommended to the court that the price of P1


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Commission finds that the loest price that can #e aarded to the lands in 9uestion

is P1


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price of the lands that are #eing e!propriated the Court arrived at a happ medium #eteen the price

as recommended # the commissioners and approved # the court, and the price advocated # the

"epu#lic. 3his Court has also ta:en +udicial notice of the fact that the value of the Philippine peso

has considera#l gone don since the ear 1'('. 3!Considering that the lands of Castellvi and 3oledo-4o5un are ad+oining each other, and are of the same nature, the Court has deemed it proper to fi! the

same price for all these lands.

. 3he third issue raised # the "epu#lic relates to the pament of interest. 3he

"epu#lic maintains that the loer court erred hen it ordered the "epu#lic to pa

Castellvi interest at the rate of 6 per annum on the total amount ad+udged as the

value of the land of Castellvi, from &ul 1, 1'(6 to &ul 1


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piculs, covered # P.A. No. 18eeds to chec:

conveances hich ma #e presented in the evidence in this case as it is no

sought to #e done # virtue of the motions at #ar, Fiscal /agman, one of the laers

of the plaintiff, did not e!ercise reasona#le diligence as re9uired # the rules. 3he

assertion that he onl ent to the office of the "egister of >eeds Bno and thenB to

chec: the records in that office onl shos the half-ha5ard JsicK manner # hich the


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plaintiff loo:ed for evidence to #e presented during the hearing #efore the

Commissioners, if it is at all true that Fiscal /agman did hat he is supposed to have

done according to olicitor Padua. It ould have #een the easiest matter for plaintiff

to move for the issuance of a su#poena duces tecu directing the "egister of >eeds

of Pampanga to come to testif and to #ring ith him all documents found in his

office pertaining to sales of land in Florida#lanca ad+acent to or near the lands in

9uestion e!ecuted or recorded from 1'(= to the present. ven this elementarprecaution as not done # plaintiffBs numerous attornes.

3he same can #e said of the deeds of sale attached to the supplementar motion.

3he refer to lands covered # certificate of title issued # the "egister of >eeds of

Pampanga. For the same reason the could have #een easil discovered if

reasona#le diligence has #een e!erted # the numerous laers of the plaintiff in this

case. It is noteorth that all these deeds of sale could #e found in several

government offices, namel, in the ?ffice of the "egister of >eeds of Pampanga, the

?ffice of the Provincial Assessor of Pampanga, the ?ffice of the Cler: of Court as a

part of notarial reports of notaries pu#lic that ac:noledged these documents, or in

the archives of the National /i#rar. In respect to Anne! B0B of the supplementar

motion cop of the document could also #e found in the ?ffice of the /and 3enure

Administration, another government entit. An laer ith a modicum of a#ilit

handling this e!propriation case ould have right aa though JsicK of digging up

documents diligentl shoing conveances of lands near or around the parcels of

land sought to #e e!propriated in this case in the offices that ould have naturall

come to his mind such as the offices mentioned a#ove, and had counsel for the

movant reall e!ercised the reasona#le diligence re9uired # the "uleB undou#tedl

the ould have #een a#le to find these documents andor caused the issuance of

su#poena duces tecum. ...

It is also recalled that during the hearing #efore the Court of the "eport and

"ecommendation of the Commissioners and o#+ection thereto, olicitor Padua madethe o#servation

I understand, our Eonor, that there as a sale that too: place in this place of land

recentl here the land as sold for P


19/61

do not see an a#use of discretion on the part of the loer court hen it denied the motions for a ne

trial.

7E"F?", the decision appealed from is modified, as follos

$a% the lands of appellees Carmen *da. de Castellvi and )aria Nieves 3oledo-4o5un,

as descri#ed in the complaint, are declared e!propriated for pu#lic use

$#% the fair mar:et value of the lands of the appellees is fi!ed at P(.


20/61

propert at ?ne 3housand $P1,ecem#er , 1'8;.

NAP?C?" alleged that the su#+ect land as until then possessed and administered# )arai Cit so that in e!change for the citBs aiver and 9uitclaim of an right

over the propert, NAP?C?" had paid the cit a @financial assistance@ of P;


21/61

P1(< "esidential /ot P1


22/61

?n Fe#ruar 12, 1''2, NAP?C?"Bs general counsel filed a memorandum for its

president finding no legal impediment if the, in the meantime ere to pa

)angondato P1


23/61

0efore the loer court could resolve the pending incident on the rit of preliminar

mandator in+unction, and instead of filing a motion to dismiss, NAP?C?", on &ul

28, 1''2, filed also #efore the loer court, Civil Case No. 61epositJ,K NAP?C?"

opposed the provisional value 9uoted # the loer court saing that the #asis of the

provisional value of the land should #e the assessed value of the propert as of the

time of the ta:ing hich in this case is 1'8= hen the assessed value of the land

under 3a! >eclaration No. 8'; as P1


24/61

aim of pursuing NAP?C?"Bs #usiness and purpose #ut to legitimi5e a patentl illegal

possession and at the same time continue dictating its on valuation of the propert.

aid motion as hoever, later ithdran # )angondato $id., pp. 8-' and ;8%.

In the meanhile, the commissioners filed their respective reports. ?n &ul 2=, 1''2,

Commissioner >oromal filed his report recommending a fair mar:et value of P


25/61

?n ?cto#er 1, 1''2 the intervenors filed their )otion 3o "econsider the ?rder ?f

August 2(, 1''2 and the >ecision >ated August 21, 1''2 hich as hoever denied

# the loer court in an ?rder dated Novem#er 26, 1''2 $id., pp. 162-1=;%.

!he /ssues

3o errors ere raised #efore this Court # the petitioner, thus8

AI4N)N3 ?F ""?"

3E "P?N>N3 C?G"3 ""> IN AFFI")IN4 3EA3 3E &G3

C?)PNA3I?N F?" 3E P"?P"3 I I3 *A/G IN 1''2, 7EN 3E

C?)P/AIN3 7A FI/>, AN> N?3 I3 *A/G IN 1'8=, 7EN 3E P"?P"3

7A 3AON 0 P3I3I?N.

3E C?G"3 ""> IN FIHIN4 3E *A/G ?F &G3 C?)PNA3I?N A3

P1,


26/61

time of filing of the complaint consistent ith the a#ove provision of the "ules. o too, here the

institution of the action precedes entr into the propert, the +ust compensation is to #e ascertained

as of the time of the filing of the complaint. 13

3he general rule, hoever, admits of an e!ception here this Court fi!ed the value of the propert as

of the date, it as ta:en and not at the date of the commencement of the e!propriation proceedings.

In the old case of ,rovincial Governent of Rizal vs. Caro de

Araullo14, the Court ruled that @. . . the oners of the land have no right to recover damages for thisunearned increment resulting from the construction of the pu#lic improvement $lengthening of 3aft Avenue

from )anila to Pasa% for hich the land as ta:en. 3o permit them to do so ould #e to allo them to

recover more than the value of the land at the time hen it as ta:en, hich is the true measure of the

damages, or +ust compensation, and ould discourage the construction of important pu#lic

improvements.@

In su#se9uent cases 15the Court, folloing the a#ove doctrine, invaria#l held that the time of ta:ing isthe critical date in determining laful or +ust compensation. &ustifing this stance, )r. &ustice $later Chief

&ustice% nri9ue Fernando, spea:ing for the Court in Municipalit% of *a Carlota vs. !he Spouses )elicidad

3altazar and Vicente Gan16, said, @. . . the oner as is the constitutional intent, is paid hat he is entitled

to according to the value of the propert so devoted to pu#lic use as of the date of the ta:ing. From that

time, he had #een deprived thereof. Ee had no choice #ut to su#mit. Ee is not, hoever, to #e despoiled

of such a right. No less than the fundamental la guaranteeBs +ust compensation. It ould #e an in+ustice

to him certainl if from such a period, he could not recover the value of hat as lost. 3here could #e on

the other hand, in+ustice to the e!propriator if # a dela in the collection, the increment in price ould

accrue to the oner. 3he doctrine to hich this Court has #een committed is intended precisel to avoid

either contingenc fraught ith unfairness.@

impl stated, the e!ception finds application here the oner ould #e given undue incremental

advantages arising from the use to hich the government devotes the propert e!propriated D as

for instance, the e!tension of a main thoroughfare as as the case in Caro de Araullo. In the instant

case, hoever, it is difficult to conceive of ho there could have #een an etra-ordinar%increase inthe value of the onerBs land arising from the e!propriation, as indeed the records do not sho an

evidence that the valuation of P1,


27/61

propert must #e devoted to a pu#lic use or otherise informall appropriated or

in+uriousl affected and $(% the utili5ation of the propert for pu#lic use must #e in

such a a to oust the oner and deprive him of all #eneficial en+oment of the

propert. $mphasis supplied%

In this case, the petitionerBs entrance in 1'8= as ithout intent to epropriate or as not ade

under arrant or color of le$al authorit%, for it #elieved the propert as pu#lic land covered #

proclamation No. 1(;. 7hen the private respondent raised his claim of onership sometime in

1'8', the petitioner flatl refused the claim for compensation, na:edl insisted that the propert as

pu#lic land and rongl +ustified its possession # alleging it had alread paid @financial assistance@

to )arai Cit in e!change for the rights over the propert. ?nl in 1''eed of ale ith provisional pament and su#+ect to

negotiations for the correct price as then e!ecuted. Clearl, this is not the intent nor the

e!propriation contemplated # la. 3his is a simple attempt at a voluntar purchase and sale.

?#viousl, the petitioner neglected andor refused to e!ercise the poer of eminent domain.

?nl in 1''2, after the private respondent sued to recover possession and petitioner filed its

Complaint to e!propriate, did petitioner manifest its intention to e!ercise the poer of eminent

domain. 3hus, the respondent Court correctl held 1

If 7e decree that the fair mar:et value of the land #e determined as of 1'8=, then

7e ould #e sanctioning a deceptive scheme here# NAP?C?", for an reason

other than for eminent domain ould occup anotherBs propert and hen later

pressed for pament, first negotiate for a lo price and then convenientl e!propriate

the propert hen the landoner refuses to accept its offer claiming that the ta:ing of

the propert for the purpose of eminent domain should #e rec:oned as of the date

hen it started to occup the propert and that the value of the propert should #e

computed as of the date of the ta:ing despite the increase in the meantime in the

value of the propert.

In (oble vs. Cit% of Manila,2!the Cit entered into a lease-purchase agreement of a #uilding constructed# the petitionerBs predecessor-in-interest in accordance ith the specifications of the former. 3he Court

held that #eing #ound # the said contract, the Cit could not e!propriate the #uilding. !propriation could

#e reported to @onl hen it is made necessar # the opposition of the oner to the sale or # the lac: of

an agreement as to the price@. aid the Court

3he contract, therefore, in so far as it refers to the purchase of the #uilding, as e

have interpreted it, is in force, not having #een revo:ed # the parties or # +udicial

decision. 3his #eing the case, the cit #eing #ound to #u the #uilding at an agreed

price, under a valid and su#sisting contract, and the plaintiff #eing agreea#le to its

sale, the e!propriation thereof, as sought # the defendant, is #aseless.propriationlies onl% hen it is ade necessar% b% the opposition of the oner to the sale or b%

the lac+ of an% a$reeent as to the price. 3here #eing in the present case a valid

and su#sisting contract, #eteen the oner of the #uilding and the cit, for the

purchase thereof at an agreed price, there is no reason for the e!propriation.

$mphasis supplied%.


28/61

In the instant case, petitioner effectivel repudiated the deed of sale it entered into ith the private

respondent hen it passed "esolution No. '2-121 on )a 2(, 1''2 authori5ing its president to

negotiate, inter alia, that pament@ shall #e effected onl after Agus I E pro+ect has #een placed in

operation@. It as onl then that petitionerBs intent to e!propriate #ecame manifest as private

respondent disagreed and, #arel a month after, filed suit.

!he Second /ssueValuation

7e no come to the issue of valuation.

3he fair mar:et value as held # the respondent Court, is the amount of P1,


29/61

"HAT MA' BE TA(EN

NATIONAL PO"ER CORPORATION, petitioner,

vs.

SPS. MISERICORDIA &UTIERREZ #$% RICARDO MALIT #$% THE HONORABLE COURT OF

APPEALS,respondents.

,edro S. 0abu for private respondents.

BIDIN, J.:p

3his is a petition for revie on certiorarifiled # the National Poer Corporation $NPC% see:ing the

reversal or modification of the )arch ', 1'=6 >ecision of the Court of Appeals in CA 4.". No.

(;2'1-" entitled @National Poer Corporation v. ps. )isericordia 4utierre5 and "icardo )alit@,

affirming the >ecem#er ;, 1'82 >ecision of the then Court of First Instance of Pampanga, Fifth

&udicial >istrict, 0ranch II, in Civil Case No. 28


30/61

)eanhile, for the purpose of determining the fair and +ust compensation due the

defendants, the court appointed three commissioners, comprised of one

representative of the plaintiff, one for the defendants and the other from the court,

ho then ere empoered to receive evidence, conduct ocular inspection of the

premises, and thereafter, prepare their appraisals as to the fair and +ust

compensation to #e paid to the oners of the lots. Eearings ere conse9uentl held

#efore said commissioners and during their hearings, the case of defendant Eeirs ofNatalia Paule as amica#l settled # virtue of a "ight of 7a 4rant $!h. C%

e!ecuted # 4uadalupe angalang for herself and in #ehalf of her co-heirs in favor of

the plaintiff corporation. 3he case against )atias Cru5 as earlier decided # the

court, there# leaving onl the case against the defendant spouses "icardo )alit and

)isericordia 4utierre5 still to #e resolved. Accordingl, the commissioners su#mitted

their individual reports. 3he commissioner for the plaintiff corporation recommended

the folloing

. . . that plaintiff #e granted right of a easement over the 86GC> to P6,==8,8(8.;< and P(


37/61

proprietar rights # imposing restrictions on the use of the propert. 3he CA, therefore, ordered

NPC to pa its admitted o#ligation to respondents amounting to P6,21',==8.2ecision

JNPCK, # its selective 9uotations from the >ecision in 4.". No. 16=82, ould have Gs

suppose that the Eigh Court, in decreeing that JNPCK pa the full value of the propert as +ust

compensation, implied that JNPCK as entitled to the entire land, including the surface area and

not +ust the su#terranean portion. No such inference can #e dran from JtheK reading of the

entiret of the Eigh CourtQs >ecision. ?n the contrar, a perusal of the su#+ect >ecision ields to

this Court the unmista:a#le sense that the Eigh Court intended JNPCK to pa the full value of the

su#+ect propert as +ust compensation ithout ordering the transfer oJfK respondentsQ title to the

land. 3his is patent from the folloing language of the Eigh Court as 9uoted # JNPCK itself

In disregarding this procedure and failing to recogni5e respondentsQ onership of the su#-terrain

portion, petitioner too: a ris: and e!posed itself to greater lia#ilit ith the passage of time. It

must #e emphasi5ed that the ac9uisition of the easement is not ithout e!pense. 3he

underground tunnels impose limitations on respondentsQ use of the propert for an indefinite

period and deprive them of its ordinar use. 0ased upon the foregoing, respondents are clearl

entitled to the pament of +ust compensation. Notithstanding the fact that JNPCK onl occupies
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the su#-terrain portion, it is lia#le to pa not merel an easement #ut rather the full

compensation for land. 3his is so #ecause in this case, the nature of the easement practicall

deprives the oners of its normal #eneficial use. "espondents, as the oners of the propert

thus e!propriated, are entitled to a +ust compensation hich should #e neither more nor less,

henever it is possi#le to ma:e the assessment, than the mone e9uivalent of said propert.1;

Clearl, the rit of e!ecution issued # the "3C and affirmed # the CA does not var, #ut is, in

fact, consistent ith the final decision in this case. 3he assailed rit is, therefore, valid.

Indeed, e!propriation is not limited to the ac9uisition of real propert ith a corresponding

transfer of title or possession. 3he right-of-a easement resulting in a restriction or limitation

on propert rights over the land traversed # transmission lines also falls ithin the am#it of the

term e!propriation.1(

As e e!plained in Camarines Norte lectric Cooperative, Inc. v. Court of Appeals16

3he ac9uisition of an easement of a right-of-a falls ithin the purvie of the poer of eminent

domain. uch conclusion finds support in easements of right-of-a here the upreme Court

sustained the aard of +ust compensation for private propert condemned for pu#lic use. 3he

upreme Court, in "epu#lic v. P/>3 thus held that

@Normall, of course, the poer of eminent domain results in the ta:ing or appropriation of title

to, and possession of, the e!propriated propert #ut no cogent reason appears h said poer

ma not #e availed of to impose onl a #urden upon the oner of condemned propert, ithout

loss of title and possession. It is un9uestiona#le that real propert ma, through e!propriation,

#e su#+ected to an easement of right-of-a.@

Eoever, a simple right-of-a easement transmits no rights, e!cept the easement. *ines

"ealt retains full onership and it is not totall deprived of the use of the land. It can continuedoing hat it ants to do ith the land, e!cept those that ould result in contact ith the ires. 6avvphi6

3he ac9uisition of this easement, nevertheless, is not gratis. Considering the nature and effect

of the installation poer lines, the limitations on the use of the land for an indefinite period

deprives private respondents of its ordinar use. For these reasons, *ines "ealt is entitled to

pament of +ust compensation, hich must #e neither more nor less than the mone e9uivalent

of the propert.18

It is, therefore, clear that NPCQs ac9uisition of an easement of right-of-a on the lands of

respondents amounted to e!propriation of the portions of the latterQs propert for hich the are

entitled to a reasona#le and +ust compensation.

3he term +ust compensation had #een defined as the full and fair e9uivalent of the propert

ta:en from its oner # the e!propriator. 3he measure is not the ta:erBs gain, #ut the onerBs

loss. 3he ord +ust is used to intensif the meaning of the ord compensation and to conve

there# the idea that the e9uivalent to #e rendered for the propert to #e ta:en shall #e real,

su#stantial, full, and ample.1=
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In Camarines Norte lectric Cooperative, Inc. v. Court of Appeals 1'and National Poer

Corporation v. )anu#a Agro-Industrial >evelopment Corporation,2NI>. 3he assailed >ecision of the Court of Appeals in CA-4.". P No. ">.

NATIONAL PO"ER CORPORATION,petitioner,

vs.

LUCMAN &. IBRAHIM, OMAR &. MARUHOM, ELIAS &.MARUHOM, BUCA' &. MARUHOM,

FAROU( &. MARUHOM, HID)ARA &. MARUHOM, ROCANIA &. MARUHOM, POTRISAM &.

MARUHOM, LUMBA &. MARUHOM, SINAB &. MARUHOM, ACMAD &. MARUHOM,

SOLA'MAN &. MARUHOM, MOHAMAD M. IBRAHIM, #$% CAIRONESA M.IBRAHIM,respondents.

> C I I ? N

AZCUNA, J.:
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40/61

3his is a petition for revie on certiorari under "ule ;( of the "ules of Court see:ing to annul

the >ecision1dated &une =, 2isputing respondentsQ claim, NAP?C?" filed an anser ith counterclaim dening the

material allegations of the complaint and interposing affirmative and special defenses, namelthat $1% there is a failure to state a cause of action since respondents see: possession of the

su#-terrain portion hen the ere never in possession of the same, $2% respondents have no

cause of action #ecause the failed to sho proof that the ere the oners of the propert, and

$% the tunnels are a government pro+ect for the #enefit of all and all private lands are su#+ect to

such easement as ma #e necessar for the same.2
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?n August 8, 1''6, the "3C rendered a >ecision, the decretal portion of hich reads as

follos

7E"F?", +udgment is here# rendered

1. >ening plaintiffsQ Jprivate respondentsQK praer for defendant JpetitionerK National PoerCorporation to dismantle the underground tunnels constructed #eteen the lands of plaintiffs in

/ots 1, 2, and of urve Plan FP $*II-(% 228=

2. ?rdering defendant to pa to plaintiffs the fair mar:et value of said 8


42/61

1% the did not file a motion to reconsider or appeal the decision ithin the reglementar period

of fifteen $1(% das from receipt of +udgment #ecause the #elieved in good faith that the

decision as for damages and rentals and attorneQs fees onl as praed for in the complaint

2% it as onl on August 26, 1''6 that the learned that the amounts aarded to the plaintiffs

represented not onl rentals, damages and attorneQs fees #ut the greatest portion of hich as

pament of +ust compensation hich in effect ould ma:e the defendant NPC the oner of the

parcels of land involved in the case

% hen the learned of the nature of the +udgment, the period of appeal has alread e!pired

;% the ere prevented # fraud, mista:e, accident, or e!cusa#le negligence from ta:ing legal

steps to protect and preserve their rights over their parcels of land in so far as the part of the

decision decreeing +ust compensation for petitionersQ properties

(% the ould never have agreed to the alienation of their propert in favor of an#od,

considering the fact that the parcels of land involved in this case ere among the valua#le

properties the inherited from their dear father and the ould rather see their land crum#le to

dust than sell it to an#od.;

3he "3C granted the petition and rendered a modified +udgment dated eptem#er =, 1''8,

thus

7E"F?", a modified +udgment is here# rendered

1% "educing the +udgment aard of plaintiffs for the fair mar:et value of P;=,


43/61

7E"F?", premises considered, herein Appeals are here# partiall 4"AN3>, the

)odified &udgment is ordered 3 AI> and rendered of no force and effect and the original

>ecision of the court a 9uo dated 8 August 1''6 is here# "3?"> ith the

)?>IFICA3I?N that the aard of moral damages is >/3> and the amounts of rentals and

attorneQs fees are ">GC> to P6,===,8(8.;< and P(NI> 3E 0NFICIA/ G ?F 3EI" G0&C3

P"?P"3I 3? N3I3/ 3E) 3? &G3 C?)PNA3I?N 0 7A ?F >A)A4

$#% AG)IN4 3EA3 "P?N>N3 A" N3I3/> 3? &G3 C?)PNA3I?N 0 7A

?F >A)A4, N? *I>NC 7A P"N3> ANN3 3E *A/GA3I?N ?F

"P?N>N3Q P"?P"3 A3 3E 3I) ?F I3 3AOIN4 IN 3E A" 1'8= 3? &G3IF

3E A7A"> ?F ?N 3E?GAN> GA" )3" $P1


44/61

of the Court in cases #rought to it from the CA is limited to revieing and revising the errors of

la imputed to it, its findings of fact #eing as a rule conclusive and #inding on the Court.

In the present case, petitioner failed to point to an evidence demonstrating grave a#use of

discretion on the part of the CA or to an other circumstances hich ould call for the

application of the e!ceptions to the a#ove rule. Conse9uentl, the CAQs findings hich upheld

those of the trial court that respondents oned and possessed the propert and that its

su#strata as possessed # petitioner since 1'8= for the underground tunnels, cannot #e

distur#ed. )oreover, the Court sustains the finding of the loer courts that the su#-terrain

portion of the propert similarl #elongs to respondents. 3his conclusion is dran from Article

;8 of the Civil Code hich provides

A"3. ;8. 3he oner of a parcel of land is the oner of its surface and of everthing under it,

and he can construct thereon an or:s or ma:e an plantations and e!cavations hich he ma

deem proper, ithout detriment to servitudes and su#+ect to special las and ordinances. Ee

cannot complain of the reasona#le re9uirements of aerial navigation.

3hus, the onership of land e!tends to the surface as ell as to the su#soil under it. In Republic

of the ,hilippines v. Court of Appeals,'this principle as applied to sho that rights over lands

are indivisi#le and, conse9uentl, re9uire a definitive and categorical classification, thus

3he Court of Appeals +ustified this # saing there is @no conflict of interest@ #eteen the oners

of the surface rights and the oners of the su#-surface rights. 3his is rather strange doctrine, for

it is a ell-:non principle that the oner of a piece of land has rights not onl to its surface #ut

also to everthing underneath and the airspace a#ove it up to a reasona#le height. Gnder the

aforesaid ruling, the land is classified as mineral underneath and agricultural on the surface,

su#+ect to separate claims of title. 3his is also difficult to understand, especiall in its practical

application.

Gnder the theor of the respondent court, the surface oner ill #e planting on the land hile

the mining locator ill #e #oring tunnels underneath. 3he farmer cannot dig a ell #ecause he

ma interfere ith the mining operations #elo and the miner cannot #last a tunnel lest he

destro the crops a#ove. Eo deep can the farmer, and ho high can the miner go ithout

encroaching on each others rightsM 7here is the dividing line #eteen the surface and the su#-

surface rightsM

3he Court feels that the rights over the land are indivisi#le and that the land itself cannot #e half

agricultural and half mineral. 3he classification must #e categorical the land must #e either

completel mineral or completel agricultural.

"egistered landoners ma even #e ousted of onership and possession of their properties in

the event the latter are reclassified as mineral lands #ecause real properties are

characteristicall indivisi#le. For the loss sustained # such oners, the are entitled to +ust

compensation under the )ining /as or in appropriate e!propriation proceedings.1istrict for permit to

construct a motori5ed deep ell over /ot for his residential house $!h. %. Ee as refused

the permit @#ecause the construction of the deep ell as $sic% the parcels of land ill cause

danger to lives and propert.@ Ee as informed that @#eneath our lands are constructed the

Napocor underground tunnel in connection ith Agua Edroelectric plant@ $!h. -2%. 3here in

fact e!ists ample evidence that this construction of the tunnel ithout the prior consent of

plaintiffs #eneath the latterQs propert endangered the lives and properties of said plaintiffs. It

has #een proved indu#ita#l that )arai Cit lies in an area of local volcanic and tectonic

activit. /a:e /anao has #een formed # e!tensive earth movements and is considered to #e a

droned #asin of volcanotectonic origin. In )arai Cit, there are a num#er of formervolcanoes and an e!tensive amount of faulting. ome of these faults are still moving. $Feasi#ilit

"eport on )arai Cit 7ater >istrict # Oampsa-Oruger, Consulting ngineers, Architects and

conomists, !h. "%. )oreover, it has #een shon that the underground tunnels JhaveK

deprived the plaintiffs of the laful use of the land and considera#l reduced its value. ?n )arch

6, 1''(, plaintiffs applied for a to-million peso loan ith the Amanah Islamic 0an: for the

e!pansion of the operation of the Ameer Construction and Integrated ervices to #e secured #

said land $!h. N%, #ut the application as disapproved # the #an: in its letter of April 2(, 1''(

$!h. ?% stating that

@Apropos to this, e regret to inform ou that e cannot consider our loan application due to

the folloing reasons, to it

3hat per m actual ocular inspection and verification, su#+ect propert offered as collateral has

an e!isting underground tunnel # the NPC for the Agus I Pro+ect, hich tunnel is traversing

underneath our propert, hence, an encum#rance. As a matter of #an: polic, propert ith an

e!isting encum#rance cannot #e considered neither accepted as collateral for a loan.@
http://www.lawphil.net/judjuris/juri2007/jun2007/gr_168732_2007.html#fnt11http://www.lawphil.net/judjuris/juri2007/jun2007/gr_168732_2007.html#fnt11


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All the foregoing evidence and findings convince this Court that preponderantl plaintiffs have

esta#lished the condemnation of their land covering an area of ;=,


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JpetitionerK of portion of /ot 1 of the su#division plan $/"C% P> 1161(' hich is ad+acent to

/ots 2 and of the same su#division plan hich is the su#+ect of the instant controvers.@ 2epartment Eead, e9uita#le rates of charges formessages handled # the sstem andor for time calls and other services that ma #erendered # said sstem

$d% 3o esta#lish and maintain coastal stations to serve ships at sea or aircrafts and, henpu#lic interest so re9uires, to engage in the international telecommunication service inagreement ith other countries desiring to esta#lish such service ith the "epu#lic of thePhilippines and

$e% 3o a#ide # all e!isting rules and regulations prescri#ed # the International3elecommunication Convention relative to the accounting, disposition and e!change ofmessages handled in the international service, and those that ma hereafter #e promulgated# said convention and adhered to # the 4overnment of the "epu#lic of the Philippines. 1

3he defendant, Philippine /ong >istance 3elephone Compan $P/>3 for short%, is a pu#licservice corporation holding a legislative franchise, Act ;26, as amended # Commonealth Act;


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pu#lic use of the service furnished the telephone su#scri#er for his private use. = 3he 0ureau hase!tended its services to the general pu#lic since 1';=, ' using the same trun: lines oned #,and rented from, the P/>3, and prescri#ing its $the 0ureauBs% on schedule of rates. 1< 3hroughthese trun: lines, a 4overnment 3elephone stem $43% su#scri#er could ma:e a call to aP/>3 su#scri#er in the same a that the latter could ma:e a call to the former.

?n ( )arch 1'(=, the plaintiff, through the >irector of 3elecommunications, entered into anagreement ith "CA Communications, Inc., for a +oint overseas telephone service here# the0ureau ould conve radio-telephone overseas calls received # "CABs station to and fromlocal residents. 11Actuall, the inaugurated this +oint operation on 2 Fe#ruar 1'(=, under a@provisional@ agreement. 12

?n 8 April 1'(=, the defendant Philippine /ong >istance 3elephone Compan, complained tothe 0ureau of 3elecommunications that said #ureau as violating the conditions under hichtheir Private 0ranch !change $P0H% is inter-connected ith the P/>3Bs facilities, referring tothe rented trun: lines, for the 0ureau had used the trun: lines not onl for the use ofgovernment offices #ut even to serve private persons or the general pu#lic, in competition iththe #usiness of the P/>3 and gave notice that if said violations ere not stopped # midnight of

12 April 1'(=, the P/>3 ould sever the telephone connections. 1 7hen the P/>3 received norepl, it disconnected the trun: lines #eing rented # the 0ureau at midnight on 12 April1'(=. 1; 3he result as the isolation of the Philippines, on telephone services, from the rest ofthe orld, e!cept the Gnited tates. 1(

At that time, the 0ureau as maintaining (,


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$1% to forthith reconnect and restore the sevent-eight $8=% trun: lines that it hasdisconnected #eteen the facilities of the 4overnment 3elephone stem, including itsoverseas telephone services, and the facilities of defendant $2% to refrain from carring intoeffect its threat to sever the e!isting telephone communication #eteen the 0ureau of3elecommunications and defendant, and not to ma:e connection over its telephone sstemof telephone calls coming to the Philippines from foreign countries through the said 0ureauBs

telephone facilities and the radio facilities of "CA Communications, Inc. and $% to acceptand connect through its telephone sstem all such telephone calls coming to the Philippinesfrom foreign countries D until further order of this Court.

?n 2= April 1'(=, the defendant compan filed its anser, ith counterclaims.

It denied an o#ligation on its part to e!ecute a contrar of services ith the 0ureau of3elecommunications contested the +urisdiction of the Court of First Instance to compel it toenter into interconnecting agreements, and averred that it as +ustified to disconnect the trun:lines heretofore leased to the 0ureau of 3elecommunications under the e!isting agreement#ecause its facilities ere #eing used in fraud of its rights. P/>3 further claimed that the 0ureauas engaging in commercial telephone operations in e!cess of authorit, in competition ith,

and to the pre+udice of, the P/>3, using defendants on telephone poles, ithout properaccounting of revenues.

After trial, the loer court rendered +udgment that it could not compel the P/>3 to enter into anagreement ith the 0ureau #ecause the parties ere not in agreement that under !ecutive?rder ';, esta#lishing the 0ureau of 3elecommunications, said 0ureau as not limited toservicing government offices alone, nor as there an in the contract of lease of the trun: lines,since the P/>3 :ne, or ought to have :non, at the time that their use # the 0ureau as to#e pu#lic throughout the Islands, hence the 0ureau as neither guilt of fraud, a#use, or misuseof the poles of the P/>3 and, in vie of serious pu#lic pre+udice that ould result from thedisconnection of the trun: lines, declared the preliminar in+unction permanent, although itdismissed #oth the complaint and the counterclaims.

0oth parties appealed.

3a:ing up first the appeal of the "epu#lic, the latter complains of the action of the trial court indismissing the part of its complaint see:ing to compel the defendant to enter into aninterconnecting contract ith it, #ecause the parties could not agree on the terms and conditionsof the interconnection, and of its refusal to fi! the terms and conditions therefor.

7e agree ith the court #elo that parties can not #e coerced to enter into a contract hereno agreement is had #eteen them as to the principal terms and conditions of the contract.Freedom to stipulate such terms and conditions is of the essence of our contractual sstem, and# e!press provision of the statute, a contract ma #e annulled if tainted # violence,

intimidation, or undue influence $Articles 13, as the needs of the government service ma re9uire, su#+ect tothe pament of +ust compensation to #e determined # the court. Nominall, of course, thepoer of eminent domain results in the ta:ing or appropriation of title to, and possession of, thee!propriated propert #ut no cogent reason appears h the said poer ma not #e availed of


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to impose onl a #urden upon the oner of condemned propert, ithout loss of title andpossession. It is un9uestiona#le that real propert ma, through e!propriation, #e su#+ected toan easement of right of a. 3he use of the P/>3Bs lines and services to allo inter-serviceconnection #eteen #oth telephone sstems is not much different. In either case privatepropert is su#+ected to a #urden for pu#lic use and #enefit. If, under section 6, Article HIII, ofthe Constitution, the tate ma, in the interest of national elfare, transfer utilities to pu#lic

onership upon pament of +ust compensation, there is no reason h the tate ma notre9uire a pu#lic utilit to render services in the general interest, provided +ust compensation ispaid therefor. Gltimatel, the #eneficiar of the interconnecting service ould #e the users of#oth telephone sstems, so that the condemnation ould #e for pu#lic use.

3he 0ureau of 3elecommunications, under section 8= $#% of !ecutive ?rder No. ';, maoperate and maintain ire telephone or radio telephone communications throughout thePhilippines # utili5ing e!isting facilities in cities, tons, and provinces under such terms andconditions or arrangement ith present oners or operators as ma #e agreed upon to thesatisfaction of all concerned #ut there is nothing in this section that ould e!clude resort tocondemnation proceedings here unreasona#le or un+ust terms and conditions are e!acted, tothe e!tent of crippling or seriousl hampering the operations of said 0ureau.

A perusal of the complaint shos that the "epu#licBs cause of action is predicated upon theradio telephonic isolation of the 0ureauBs facilities from the outside orld if the severance ofinterconnection ere to #e carried out # the P/>3, there# preventing the 0ureau of3elecommunications from properl discharging its functions, to the pre+udice of the generalpu#lic. ave for the praer to compel the P/>3 to enter into a contract $and the praer is noessential part of the pleading%, the averments ma:e out a case for compulsor rendering ofinter-connecting services # the telephone compan upon such terms and conditions as thecourt ma determine to #e +ust. And since the loer court found that #oth parties @are practicallat one that defendant $P/>3% is entitled to reasona#le compensation from plaintiff for thereasona#le use of the formerBs telephone facilities@ $>ecision, "ecord on Appeal, page 22;%, theloer court should have proceeded to treat the case as one of condemnation of such services

independentl of contract and proceeded to determine the +ust and reasona#le compensationfor the same, instead of dismissing the petition.

3his vie e have ta:en of the true nature of the "epu#licBs petition necessaril results inoverruling the plea of defendant-appellant P/>3 that the court of first instance had no

+urisdiction to entertain the petition and that the proper forum for the action as the Pu#licervice Commission. 3hat #od, under the la, has no authorit to pass upon actions for theta:ing of private propert under the sovereign right of eminent domain. Furthermore, hile thedefendant telephone compan is a pu#lic utilit corporation hose franchise, e9uipment andother properties are under the +urisdiction, supervision and control of the Pu#lic erviceCommission $ec. 1, Pu#lic ervice Act%, et the plaintiffBs telecommunications netor: is apu#lic service oned # the "epu#lic and operated # an instrumentalit of the National

4overnment, hence e!empt, under ection 1; of the Pu#lic ervice Act, from such +urisdiction,supervision and control. 3he 0ureau of 3elecommunications as created in pursuance of a statepolic reorgani5ing the government offices D

to meet the e!igencies attendant upon the esta#lishment of the free and independent4overnment of the "epu#lic of the Philippines, and for the purpose of promoting simplicit,econom and efficienc in its operation $ection 1, "epu#lic Act No. (1% D


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and the determination of state polic is not vested in the Commission $Gtilities Com. vs.0artonville 0us /ine, 2'< Ill. (8; 12; N.. 8%.

>efendant P/>3, as appellant, contends that the court #elo as in error in not holding thatthe 0ureau of 3elecommunications as not empoered to engage in commercial telephone#usiness, and in ruling that said defendant as not +ustified in disconnecting the telephone trun:

lines it had previousl leased to the 0ureau. 7e find that the court a 9uo ruled correctl inre+ecting #oth assertions.

!ecutive ?rder No. ';, eries of 1';8, reorgani5ing the 0ureau of 3elecommunications,e!pressl empoered the latter in its ection 8', su#section $#%, to @negotiate for, operate andmaintain ire telephone or radio telephone communication service throughout the Philippines@,and, in su#section $c%, @to prescri#e, su#+ect to approval # the >epartment Eead, e9uita#lerates of charges for messages handled # the sstem andor for time calls and other servicesthat ma #e rendered # the sstem@. Nothing in these provisions limits the 0ureau to non-commercial activities or prevents it from serving the general pu#lic. It ma #e that in its originalprospectuses the 0ureau officials had stated that the service ould #e limited to governmentoffices #ut such limitations could not #loc: future e!pansion of the sstem, as authori5ed # the

terms of the !ecutive ?rder, nor could the officials of the 0ureau #ind the 4overnment not toengage in services that are authori5ed # la. It is a ell-:non rule that erroneous applicationand enforcement of the la # pu#lic officers do not #loc: su#se9uent correct application of thestatute $P/>3 vs. Collector of Internal "evenue, '< Phil. 686%, and that the 4overnment is neverestopped # mista:e or error on the part of its agents $Pineda vs. Court of First Instance of3aa#as, (2 Phil. =


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facilities, and it is not no at li#ert to unilaterall sever the phsical connection of the trun:lines.

..., #ut there is high authorit for the position that, hen such phsical connection has #eenvoluntaril made, under a fair and or:a#le arrangement and guaranteed # contract andthe continuous line has come to #e patroni5ed and esta#lished as a great pu#lic

convenience, such connection shall not in #reach of the agreement #e severed # one of theparties. In that case, the pu#lic is held to have such an interest in the arrangement that itsrights must receive due consideration. 3his position finds approval in tate e! rel. vs.Cadaller, 182 Ind. 61', 66, =8 N.. 6(3 lies in the fact that said appellantdid not e!pect that the 0ureauBs telephone sstem ould e!pand ith such rapidit as it hasdone #ut this e!pansion is no ground for the discontinuance of the service agreed upon.

3he last issue urged # the P/>3 as appellant is its right to compensation for the use of itspoles for #earing telephone ires of the 0ureau of 3elecommunications. Admitting that section1' of the P/>3 charter reserves to the 4overnment D

the privilege ithout compensation of using the poles of the grantee to attach one ten-pincross-arm, and to install, maintain and operate ires of its telegraph sstemthereon ,rovided' hoever, 3hat the 0ureau of Posts shall have the right to place additionalcross-arms and ires on the poles of the grantee # paing a compensation, the rate ofhich is to #e agreed upon # the >irector of Posts and the grantee D

the defendant counterclaimed for P=,882.3 more than thetelegraph ires, nor that the cause more damage than the ires of the telegraph sstem, orthat the 4overnment has attached to the poles more than one ten-pin cross-arm as permitted #the P/>3 charter, e see no point in this assignment of error. o long as the #urden to #e #orne# the P/>3 poles is not increased, e see no reason h the reservation in favor of the


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telegraph ires of the government should not #e e!tended to its telephone lines, an time thatthe government decided to engage also in this :ind of communication.

In the ultimate analsis, the true o#+ection of the P/>3 to continue the lin: #eteen its netor:and that of the 4overnment is that the latter competes @parasiticall@ $sic% ith its on telephoneservices. Considering, hoever, that the P/>3 franchise is non-e!clusive that it is ell-:non

that defendant P/>3 is una#le to ade9uatel cope ith the current demands for telephoneservice, as shon # the num#er of pending applications therefor and that the P/>3Bs right to

+ust compensation for the services rendered to the 4overnment telephone sstem and its usersis herein recogni5ed and preserved, the o#+ections of defendant-appellant are ithout merit. 3ouphold the P/>3Bs contention is to su#ordinate the needs of the general pu#lic to the right of theP/>3 to derive profit from the future e!pansion of its services under its non-e!clusive franchise.

7E"F?", the decision of the Court of First Instance, no under appeal, is affirmed,e!cept in so far as it dismisses the petition of the "epu#lic of the Philippines to compel thePhilippine /ong >istance 3elephone Compan to continue servicing the 4overnment telephonesstem upon such terms, and for a compensation, that the trial court ma determine to #e +ust,including the period elapsed from the filing of the original complaint or petition. And for this

purpose, the records are ordered returned to the court of origin for further hearings and otherproceedings not inconsistent ith this opinion. No costs.

"HEN TA(IN& IS NOT COMPENSABLE

CARLOS SUPERDRU& -. DS"D 2!!7

MARINE RADIO COMMUNICATIONS ASSOCIATION OF THE PHILIPPINES, INC.

MARCAPI, ROBERTO &A'A, DAVID ZAFRA #$% SE&UNDO P. LUSTRE, )R., petitioners,

vs.HON. RAINERIO O. RE'ES, $ - ##0 #- S+*+#*0 + D+#*9+$

T*#$-*#$ #$% C99:$#$- DOTC, HON. )OSE LUIS ALCUAZ, #-

C99--$+* + N#$#; T+;+99:$#$- C99--$ NTC, #$% HON.

ROSAURO SIBAL, #- C+ + T+;+99:$#$- O+ TELOF

DOTC, respondents.

). Re%es Cabi$ao for petitioners.

SARMIENTO, J.:

3he petitioners are self-descri#ed @Filipino enterpreneurs deepl involved in the #usiness of marine

radio communications in the countr. 13he are also operators of @shore-to-ship and ship-to-shore

pu#lic marine coastal radio stations, 2and are holders of certificates of pu#lic convenience dul issued #

the National 3elecommunications Commission. Among other things, the handle correspondence

#eteen vessel passengers or cre and the pu#lic. 3


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ometime in &ul, 1'==, the >epartment of 3ransportation and Communications unveiled an P==ona Pa5, the National

3elecommunications Commission and )A"INA conducted constant monitoring #

sending distress signals. ?ut of 1,


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?n Fe#ruar 2


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the mar:et. 3he Constitution does not #ar, hoever, the 4overnment from underta:ing its on initiatives,

especiall in the domain of pu#lic service, and neither does it repudiate its primac as chief economic

careta:er of the nation.

3he principle of laissez fairehas long #een denied validit in this +urisdiction. In 1'6', the Court

promulgatedA$ricultural Credit and Cooperative )inancin$ Adinistration v. Confederation of ;nions

in Governent Corporations and offices'14here it as held

!!! !!! !!!

... 3he areas hich used to #e left to private enterprise and initiative and hich the

government as called upon to enter optionall and onl #ecause it as #etter

e9uipped to administer for the pu#lic elfare than in an private individual or group of

individuals,@ continue to lose their ell-defined #oundaries and to #e a#sor#ed ithin

activities that the government must underta:e in its sovereign capacit if it is to meet

the increasing social challenges of the times. Eere as almost everhere else the

tendenc is undou#tedl toards a greater sociali5ation of economic forces. Eere of

course this development as envisioned, indeed adopted as a national polic, # the

Constitution itself in its declaration of principle concerning the promotion of social

+ustice. 15

3he re9uirements of social +ustice and the necessit for a redistri#ution of the national ealth and

economic opportunit find in fact a greater emphasis in the 1'=8 Constitution, notithstanding the

novel concepts inscri#ed there. 16And to decades after this Court rote it, ACCFAs message remainsthe same and its lesson holds true as ever.

3he Court is not of the thin:ing that the act complained of is e9uivalent to a ta:ing ithout +ust

compensation. Al#eit e have held that @JKhere the oner is deprived of the ordinar and #eneficial

use of his propert or of its value # its #eing diverted to pu#lic use, there is ta:ing ithin the

constitutional sense,17

it does not seem to us that the >epartment of 3ransportation and Communication,# providing for free pu#lic correspondence, is guilt of an uncompensated ta:ing. "ather, the

4overnment merel #uilt a #ridge that made the #oat o#solete, although not entirel useless. Certainl,

the oner of the #oat can not charge the #uilder of the #ridge for lost income. And certainl, the

4overnment has all the right to #uild the #ridge.

7E"F?", the petition is >I)I>. No costs.

? ?">">.

Documents

Eminent Domain, Taking Cases